Accord Pacific Holdings Pty Ltd v Gleeson as liquidator of Accord Pacific Land Pty Ltd (in liq)  NSWSC 1021 (2 September 2011)
Last Updated: 5 September 2011
CORPORATIONS – application for removal of liquidator pursuant to s 503 of the Corporations Act 2001 (Cth) on grounds of apprehended bias – HELD – application dismissed – ESTOPPEL – whether plaintiff estopped from seeking removal of liquidator on Anshun principles – whether application for removal otherwise an abuse of process – HELD – Anshun estoppel established
Corporations Act 2001 (Cth)
Accord Pacific Holdings Pty Ltd v Accord Pacific Land Pty Ltd (in liq)  NSWSC 707
Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230
Apple Computer Australia Pty Ltd v Wily  NSWSC 719; (2003) 46 ASR 729
Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (in liq); Bluecrest Holdings Pty Ltd v Karren Holdings Pty Ltd  NSWSC 491;(2002) 169 FLR 111
Blair v Curran  HCA 23; (1939) 62 CLR 464
Carbotech-Australia Pty Ltd v Yates  NSWSC 540
Champerslife Pty Ltd v Manojlovski & anor  NSWCA 33; (2010) 75 NSWLR 245
Charben Haulage Pty Ltd (in liq) V Beilby (t/as Costello)  NSWSC 510
Domino Hire Pty Ltd v Pioneer Park Pty Ltd (in liq) NSWSC 1046;  NSWSC 1046;(2000) 18 ACLC 13
Domino Hire Pty Ltd v Pioneer Park Pty Ltd (in liq) NSWSC 496; (2000) 21 ACLC 1330
Ebner v Official Trustee in Bankruptcy  HCA 63; (2000) 205 CLR 337
Gibbs v Kinna  VSCA 52;  2 VR 19
Hamilton v Oades  HCA 21; (1989) 166 CLR 486
Henderson v Henderson  EngR 917; (1843) 3 Hare 100
Johnson v Johnson  HCA 48; (2000) 201 CLR 488
Jones v Dunkel  HCA 8; (1959) 101 CLR 298
Ling v Commonwealth of Australia  FCA 1646;(1996) 68 FCR 180
Lo v Nielsen & Moller Autoglass (NSW) Pty Ltd NSWSC 407; (2008) 26 ACLC 497
Murphy & Ors v Abi-Saab & Ors (1995) 37 NSWLR 280
Najjar v Haines & Ors (1991) 25 NSWLR 224
Port of Melbourne Authority v Anshun Pty Ltd (1981)147 CLR 589
Re Allebart Pty Ltd (in liq) and The Companies Act 1 NSWLR 24
Re Bipso Pty Ltd; Condon v Rodgers (1995) 120 FLR 399
Re Club Superstores Australia Pty Ltd (in liq) (1993) 10 ACSR 730
Re JRL; Ex Parte CJL  HCA 39; (1986) 161 CLR 342
Re Laurie Cottier Productions Pty Ltd (in liq) (1992) 9 ACSR 513
Re Leisure Developments (Qld) Pty Ltd (in liq); Ell v Palmer & Ors  NSWSC 248; (2002) 41 ACSR 276
Re Mendarma Pty Ltd (in liq)  NSWSC 1306; (2006) 24 ACLC 1611
Re Northumberland Insurance Co Ltd (No 2) (1975) 1 ACLR 142
Rippon v Chilcotin Pty Ltd & Ors  NSWCA 142; (2001) 53 NSWLR 198
Ross Wood & Sons Pty Ltd (in liq), Re; Wood v Targett (1997) 23 ACSR 291
Sandhurst Trustees Ltd v Harvey  SASC 157; SASC 157; (2004) 88 SASR 519
Vakauta v Kelly  HCA 44; (1989) 167 CLR 568
Young (as representative for the Australian partnership known as Accenture) v Sherman  NSWCA 281; (2002) 170 FLR 86
Zavodnyik & Ors v Alex Constructions Pty Ltd NSWCA 438; (2005) 67 NSWLR 457
- HER HONOUR : On 8 July this year, I handed down judgment ( Accord Pacific Holdings Pty Ltd v Accord Pacific Land Pty Ltd (in liq)  NSWSC 707) on an application by Accord Pacific Holdings Pty Limited (APH) for orders under ss 596A, 596B and 1321 of the Corporations Act 2001 (Cth) to set aside various examination summonses and orders for production of documents issued on the application of the liquidator of its wholly owned subsidiary, Accord Pacific Land Pty Limited (APL). The basis on which APH sought to have the summonses and orders set aside was its allegation that they were an abuse of process.
- APH (one of the two creditors of APL) took the view that it could not possibly be said that APL was engaged in insolvent trading in the period up to the placement of the company into external administration and therefore that there was no utility in the proposed investigations and accordingly they must be an abuse of process.
- Relevantly, for present purposes, it contended that the examination summonses and orders were sought by the liquidator not for the benefit of APL (the company in liquidation) but, rather, for the benefit of the only other creditor of APL (Hyperion Syndicates Limited). Hyperion’s claimed debt (the quantum of which is in dispute) relates to the lease by it to APL of a commercial car park which it acquired from a related entity in the Accord Pacific group of companies, Accord Pacific Properties (APP).
- It was alleged by APH that the use of the examination summons procedure by the liquidator was an abuse of process as an attempt to put commercial pressure upon APH (to settle a potential claim by Hyperion against APH or its officers) or to obtain information as to a potential claim by Hyperion against APP (in relation to representations made at the time of the sale to Hyperion of the car park). The liquidator denied any such abuse of process and maintained that the examination summons procedure was to investigate the company’s solvency and potential claims the company or the liquidator might have. One of those potential claims that the liquidator was seeking to investigate (through the examination summonses and the orders for production) was whether the whether the directors of APL had acted in breach of their fiduciary duties in committing APL in 2007 to a lease of a commercial car park in Sydney at an unsustainable rent.
- For the reasons set out in my judgment of 8 July 2011, I found that the issue of the examination summonses and orders for production was not an abuse of process. I was not satisfied that APH had demonstrated that the predominant purpose of the liquidator in seeking to conduct the examinations was improper. Rather, I was satisfied that predominant purposes of the liquidator (Mr Bruce Gleeson), as emerging from the material before me, fell within what have been recognised to be the permissible purposes for the conduct of such examinations (those including the determination as to whether proceedings are sufficiently meritorious to warrant them being commenced or continued and their likely prospects of success; to demonstrate the viability of a proposed proceeding; and to gather information to assist in the administration of a corporation).
- I therefore dismissed the application to set aside the examination summonses and orders for production (though I narrowed the scope of the latter in specific areas). At  of my reasons I noted that I had some doubts as to whether some of the issues sought to be examined upon (in particular the circumstances of the sale at least from the perspective of the vendor, APP) were strictly part of the examinable affairs of APL but I considered that any objection to that line of questioning should be left for debate at the time of the examinations. I did not rule out the possibility that the relevance of that matter to the examinable affairs of APL might be established at that point.
- The examinations in question were to be of a number of individuals, including two directors who reside overseas (the Kho brothers) and who have not yet been able to be served. I have referred in my earlier judgment to the resistance seemingly encountered by the liquidator in his attempts to obtain assistance from those directors in relation to his enquiries. It would seem that this state of affairs has continued.
- Scheduled for 6 September 2011 (the examinations having been postponed until then given the timing of the previous application before me) are examinations of three individuals (Mr Gargano, Mr McDonald and Mr Ellis, at least the first two of whom have already previously been examined).
- What has transpired since the hearing (and determination) by me of the abuse of process application, is that APH has now (by an originating process filed on 8 August 2011 but not apparently served until a week later and made returnable in the ordinary course, with no application by APH for expedition, on 31 August 2011) sought the removal of the liquidator (Mr Gleeson) from the office of liquidator of APL and his replacement by a liquidator nominated by APH (Mr Krejci). Mr Krejci’s consent so to act was tendered by APH on the application before me.
- That application (which was brought before me in the duty list last week on an application by the liquidator, having regard to the timing of the scheduled examinations), which I listed as a matter of urgency for hearing on 31 August 2011, is made by APH on the basis of apprehended bias. Senior Counsel for APH (Mr Aldridge SC) has expressly disavowed any claim of actual bias (although, until amended during the course of oral submissions before me, the written submissions for APH maintained that the evidence would permit such an inference to be drawn).
- The basis on which it is said that a reasonable, fair-minded lay observer would have an apprehension of bias on the part of the liquidator in this case is said to be Mr Gleeson’s “relationship and association with” Hyperion (based almost solely on the material that was before me on the abuse of process application). It is once again said that the liquidator can be seen (or should be apprehended) to be favouring the interests of Hyperion over those of APH.
- Counsel for the liquidator (Mr Golledge) submits that it should be inferred that this application has been brought for the primary purpose of halting the forthcoming examination hearings and that APH is precluded, by reason of an Anshun estoppel ( i.e. an estoppel arising on the principles set out in Port of Melbourne Authority Pty Ltd v Anshun Pty Limited  HCA 45; (1981) 147 CLR 589), from maintaining the present application (or that this application is itself an abuse of process). Mr Aldridge was, however, at pains to emphasise that there has been no application before me to vacate the examinations scheduled for 6 September 2011 (although I note that there has been no undertaking proffered by APH not to seek a decision to that effect by any incoming liquidator – it being said, in effect, that this would be a matter for the incoming liquidator and that both creditors would be at liberty to make submissions to him or her in relation to the utility of the forthcoming examinations). APH’s solicitor, Mr Harkin, who was cross-examined on the present application, also denied that the purpose of the application was to bring to a halt or thwart the examinations.
- The factual background to the present dispute is set out in my earlier reasons for judgment and I do not repeat that here, save briefly to note that Mr Gleeson was appointed as the liquidator of APL in March 2011 by unanimous resolution of the creditors of the company (thus including APH) following the retirement at that time of the liquidators who had initially appointed to the company in December 2010, Messrs Hancock and Hird. (APL was placed in voluntary administration by its directors in November 2010.) Prior to his appointment as liquidator, there had been some communications between Mr Gleeson and the principals of Hyperion (Messrs Greenwood and Higgins), those being accountants who carry on business in partnership as R&G Consulting. Broadly, reliance is placed by APH on those communications on the present application (just as reliance was placed on them, albeit for a different argument, on the previous application before me). Complaint is also made (as was the case on the previous application) as to the adequacy of the disclosure made by the liquidator of his association with Hyperion, which I will consider in due course.
- The only matters on which reliance is placed on this application which were not before the Court when the earlier application was heard (on 23 and 27 June this year) are the correspondence between the respective solicitors in June/July in relation to the assertion of apprehended bias (and the call for Mr Gleeson’s resignation as liquidator) and the making of a without admissions offer by Mr Gleeson to retire as liquidator on certain terms. Complaint is made as to the terms of that offer by the liquidator (said in itself to be further support for a reasonable apprehension of bias).
- On the present application the following issues arise for determination:
(i) Whether a case of apprehended bias has been established by APH and, if so, whether the Court should exercise its discretion under s 503 of theCorporations Act 2001 (Cth) to remove the liquidator from office and replace him with the nominated replacement liquidator or some other liquidator; and
(ii) Whether APH is estopped from seeking the removal of the liquidator based on the principles enunciated in Port of Melbourne Authority v Anshun  HCA 45; (1981) 147 CLR 589 or whether, in the alternative, this application should be dismissed as an abuse of process.
- For the reasons set out below, I am of the view that the Anshun principles are applicable and that it was unreasonable for the present application not to have been brought in the course of the earlier hearing. I further think that there is a reasonable basis on which to infer that the motivating purpose of the present application on the part of APH is to bring to a halt the forthcoming examinations (although I accept that this is not the motivating purpose of the solicitor acting for APH). However, in any event, on balance I do not accept that a case of apprehended bias has been made out.
- I think the offer made by Mr Gleeson to retire as liquidator after the completion of the forthcoming examinations (if, at that stage, Mr Gleeson is of the view that there is a reasonable basis to consider that APL was trading while insolvent prior to the appointment of external administrators or that the company in liquidation would have a claim against the directors for breach of fiduciary duty or otherwise) removes any reasonable apprehension of bias that might otherwise have arisen from the manner in which he responded to requests for disclosure of any association with Hyperion or R&G Consulting and that such an offer is appropriate in the light of the events that have transpired in relation to the proceedings. If Mr Gleeson is not of that view, and all that remains after completion of the 6 September examinations is the formalities of finalising the liquidation, then I see no reason for his removal as liquidator and no perception of bias that could reasonably arise in relation thereto.
- I turn then to the issues for determination. Although logically the Anshun issue should probably be considered first, it is necessary to consider both issues for completeness in any event so I approach them in the order in which they were argued before me.
(i) Removal for apprehended bias
- The present winding up is a voluntary winding up and, accordingly, the power to remove Mr Gleeson from office is to be found in s 503 of theCorporations Act . There is no dispute that apprehended bias is a basis on which application may be made under that section for the removal of a liquidator from office on basis of perceived bias; nor is it disputed that a creditor of the company in liquidation (here, APH) has standing to bring such an application ( Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (1994) 14 ACSR 230 at  being cited for that proposition, together with McPherson’s Law of Company Liquidation at [8.3200]).
- Mr Aldridge summarised the applicable principles on an apprehended bias application in the following seven propositions.
- First, that the test is whether it would be perceived by a reasonable (and I would add there a fair-minded, disinterested and informed) observer that the liquidator has manifested a tendency to favour certain interests in the winding up at the expense of others (referring to the observations of Young J (as his Honour then was) in Re Bipso Pty Ltd; Condon v Rodgers (1995) 120 FLR 399 at pp 404 and 406; Re Allebart Pty Ltd (in liq) and The Companies Act  1 NSWLR 24 at pp 29E and 30G; and Ross Wood & Sons Pty Ltd (in liq), Re; Wood v Targett (1997) 23 ACSR 291 at pp 298-299). Mr Aldridge submits that this extends to ‘over-familiarity’ with a creditor in the winding up.
- Second, that the liquidator must not only be independent but must be seen to be independent (citing Re Bipso at pp 405-6 and Re Allebart at p 28D). InRe Allebart Street J, as his Honour then was, said at p 28:
A liquidator is bound to be on guard lest he compromise his position of independence and impartiality in all respects in the discharge of his functions as an officer of the Court administering the winding up of a company. Not only is it his prerogative to decide what steps should be taken, but it is his duty to exercise himself, according to the dictates of his own opinions, what should and what should not be done in the course of any given winding up.
- Pausing there, it must be noted that, as a liquidator in a voluntary winding up, Mr Gleeson is not an officer of the Court as such (see Bergin J, as her Honour then was, in Australian Security Estates Pty Ltd v Bluecrest Holdings Pty Ltd (in liq); Bluecrest Holdings Pty Ltd v Karren Holdings Pty Ltd  NSWSC 491; (2002) 169 FLR 111). Though it is not suggested by Mr Golledge that he was not in a position where he should be and be seen to be independent, he points out that to the extent that APH’s submissions (and, I might add, the evidence of Mr Harkin in the witness box) emphasised the position of Mr Gleeson of an officer of the Court, this is incorrect.
- Third, that the Court approaches the matter by looking at the matter as a whole in terms of whether it is in the public interest that the liquidator be removed and whether such removal is to the general advantage of those interested in the winding up (referring to Re Bipso at pp 403 and 405; Advance Housing at p 233; and Domino Hire Pty Ltd v Pioneer Park Pty Ltd (in liq)  NSWSC 496; (2000) 21 ACLC 1330 at p 1345 ). In that regard, while Mr Aldridge stressed that the question is not whether another liquidator (not so tainted) would have taken the same steps, it seems to me that if the question is whether limited further steps should be taken to complete a winding up that any other liquidator would do then there would not be a strong case for removal of the liquidator in the interests of creditors in any event.
- Fourth (though for the reason stated above this submission does not appear to take into account the fact that this is a voluntary winding up), that in applying the above principles, the Court will be mindful that the liquidator is an officer of the Court. Mr Aldridge relies upon the following statement in Re Bipso at :
The court will be very jealous of its delegate exercising the powers that it is given. The court will take every precaution to make sure that those powers are used impartially and for a proper purpose.
- Mr Aldridge also relies on what was said in Re Club Superstores Australia Pty Ltd (in liq) (1993) 10 ACSR 730 at , to the effect that, in the administration of justice, it is important that there be no possibility of criticism of an officer of the Court. There, Thomas J said at :
The principles are not in doubt. The following statements [from the National Safety Council of Australia case] illustrate both the principle and the care with which courts act in order to ensure that its officers in company liquidation retain the confidence of those who may be affected by their actions. (my emphasis)
The guiding principle in the appointment by the court of a liquidator is that he must be independent and must be seen to be independent: Re National Safety Council of Australia Victorian Division  VicRp 2;  VR 29 at 34, citing with approval McPherson on Company Liquidations, 3rd ed, p 209.
I should apply the same principles to an application to remove a liquidator as I would apply to an application to appoint a person to be a liquidator: Re Shanks Byrne Industries Pty Ltd  2 NSWLR 880 at 883 ; 4 ACLR 676 per Needham J.
and (at ):
It does seem to me that the liquidator is put into a position where he may have to review transactions in respect to which his partner has given advice, and payments into and disbursements from a trust account of which his partner is an auditor. That places him, in my opinion, in a position where his independence might seem to be in question. There is no suggestion that the liquidator would not perform his duties with complete integrity and to the best of his ability. But a liquidator must be independent and must be seen to be independent: Re Queensland Stations Pty Ltd (in liq) (1991) 9 ACLC 1341 at 1344 per Ryan J.
Notwithstanding the professional standing of the proposed liquidator, it is inappropriate that he as scheme manager of the creditor should also be liquidator of the company which is indebted to the creditor: Re Kabat Pty Ltd (1985) 3 ACLC 828 at 830 per Master Lee QC.
It is of the greatest importance that there should be no possibility of criticism attaching to one of the court’s own officers on the ground of a conflict of interest. The liquidator needs to be seen to be independent in any matter which his duties as liquidator may require him to investigate: Re Giant Resources Ltd  1 Qd R 107 at 117 per Ryan J.
There is… evidence which does indicate some nexus between the provisional liquidators and members of their firm with companies which will require to be investigated if the liquidation is to be properly carried out. Having regard to this, and to the opposition to their appointment expressed by a majority of unsecured creditors, I consider that I should make an order that they be removed and replaced by another provisional liquidator. I consider that this should be done, notwithstanding the difficulties which the newly appointed liquidator will no doubt experience…: ibid at 117.
The National Safety Council of Australia case above involved the possibility that some action might ultimately be taken against the firm of which the liquidator was a member. The court, in setting aside the appointment of the liquidator observed that it would be a substantial injustice to the creditors if the relationship between that firm and the company could not be fairly, promptly and independently investigated and be seen to be independently investigated: ibid at 34. I accept the submission of Mr Jackson QC for the liquidator that some realistic prospect of embarrassment or a serious possibility of conflict in his continuing to act needs to be seen before a dismissal is required. But once a realistic possibility of conflict arises, it is not possible to wait and see. It is necessary in the interests of efficiency and of avoiding disquiet that an order be made.
In the present matter although [the liquidator] intended merely to provide the advice of the kind that may commonly be given at “pre-appointment conferences” events went well beyond preliminary advice to the company on the effects of liquidation. It is difficult, and often impossible to draw clear lines between advice given to a person as a director of a company and advice to that person personally. Whatever limitations [the liquidator] initially intended to place upon the advice, the personal affairs of [the directors] and their unit trust and companies were plainly introduced, and became the subject of specific advice.
It is true that no fee was charged either to the company or [the directors] for the services that were provided. On this basis it was submitted on behalf of the liquidator that there was no retainer, and no professional relationship between [them]. It seems to me that there probably was a species of retainer, in some respects the converse of a solicitor’s speculative retainer. In the solicitor’s case he or she is paid if the client wins, and is unpaid if the client loses. In the accountant’s case he or she is paid (ie the emoluments of the liquidator are obtained) if the client succumbs, but nothing is received if the client trades out of the difficulties. In the end it does not greatly matter whether this is characterised as a retainer or a contingent arrangement. The accountant accepts an obligation to give advice in circumstances that considerably increase his chances of being appointed liquidator of the company. The prospect that no fees will be recovered for the advice is commercially acceptable when balanced against the strong probability of significant remuneration in the liquidation.
(at 736) The correspondence in the present matter shows that the line was clearly crossed. The fact that no charge was made for the advice and that it was given with the best of motives is not really to the point.
- I would interpose here to note that the issue with which the Court was concerned in Re Club Superstores was whether there might be an apprehension of lack of independence (or potential conflict) where the liquidator in question had given advice to directors against whom the company might have a claim and against whom he might later be accused of not rigorously prosecuting that claim. Here, on APH’s own case (asserted in emphatic terms in its correspondence), there could be no claim against Hyperion because APH has consistently maintained that the company was not trading while insolvent.
- Although the failure by the liquidator to take steps to investigate a potential cause of action for the payment of an unfair preference to Hyperion was asserted at an earlier stage by APH as a basis for the allged abuse of process, and also it would seem the apprehension of bias, (and Mr Harkin maintained in the witness box that one of his concerns was that the examinations were only of persons involved with the related entities and not an investigation of a claim against Hyperion), it seems to me that the liquidator’s position (that he considered it appropriate first to investigate whether APL was trading while insolvent before considering unfair preference claims that would be predicated on such insolvency) was objectively reasonable. The logic of that position was ultimately conceded by Mr Harkin in the witness box (although somewhat reluctantly, insofar as he was at first only prepared to say that “hypothetically” that would be the case and did not appear to accept that this would be the case in the present matter). Nevertheless, when it was put to Mr Harkin that the reason that APH had not pursued with its earlier stated intention to seek the appointment of a special purpose liquidator to investigate the claim against Hyperion, Mr Harkin’s response was that this avenue was not pursued because he had come to see the logic that such a claim could only succeed if the stepping stone of insolvency were established.
- Therefore, while the statements of principle in Re Club Superstores are obviously of relevance, the present case is somewhat different from the case there under consideration. That said, I accept that there would be a potential conflict if the issue of a claim against Hyperion for an unfair preference became a real or serious possibility (as it seems would be the case if, as APH denies, APL was trading while insolvent at a time when it made payments to Hyperion of rent claimed in a statutory demand).
- Fifth, that in considering the case as a whole, the Court will take into the facts and circumstances of the case, including such factors as the exchange of information and documents between the liquidator and a creditor, the use of common solicitors, the provision of advice (whether for a fee or not), and the failure to disclose the relationship between the liquidator and a creditor in notices requiring the same (referring to Re Allebart at p 29; Re Club Superstores at pp 735-736; Domino Hire Pty Ltd v Pioneer Park Pty Ltd (in liq)  NSWSC 1046; (2000) 18 ACLC 13 at –  and ; and Domino Hire (cited earlier) at p1344 -).
- Pausing there, Mr Aldridge places reliance in the present case on the flow of information and advice from Mr Gleeson (prior to his appointment) in the direction of Hyperion; that there was and is a commonality of legal representation between the liquidator and Hyperion, in the form of Gillis Delaney; that there has been the provision of advice to Hyperion interests by Mr Gleeson whilst in office; and the alleged failure to disclose the relationship between Mr Gleeson and the Hyperion interests prior to his appointment both in the context of the APL administration and the referral relationship. Those matters, it must be said, are all matters that were considered in the context of the abuse of process application.
- Sixth, that the Court should take into account the likely duration of the winding up and the stage at which the application for removal is made, being mindful of the need to avoid wasted costs and the delay in the conclusion of the winding up which is likely to occur if another liquidator is appointed to complete the winding up. Mr Aldridge notes that the Court is less likely to discharge the liquidator towards the end of a winding up then at the beginning (referring toAdvance Housing at p 230 at ; Re Bipso at ; and Wood v Targett at ). (In this regard, Mr Aldridge submits that this is not a complicated winding up since there are only two creditors and the business of APL was solely that of leasing the car park. Hence, he submits that the cost of changing liquidators would be modest. It should be noted, however, that this submission also seems to be based on the proposition that there are “no obvious causes of action” to be pursued by the liquidator and that preparation by an incoming liquidator for the examinations would take little time, which rather begs the question as to the ongoing examinations (which are for the purpose of ascertaining what causes of action there may be in relation to insolvent trading or breach of directors’ duties) and does not take into account that the preparation for those examinations seems to have been ongoing for some months).
- Seventh, Mr Aldridge stresses that no finding of actual partiality or bias is required (citing Apple Computer Australia Pty Ltd v Wily  NSWSC 719; (2003) 46 ACSR 729 at ) and, as noted earlier, disavows any assertion of actual bias.
- In response, Mr Golledge notes that the power to remove a liquidator is to be exercised in light of, and so as to serve, the interests of those concerned in the winding up and that the onus is on those asserting that the liquidator should be removed to establish that it is for the general advantage of those persons that the incumbent be replaced. It is submitted that notwithstanding that apprehended bias can, in the particular circumstances of a winding up, establish sufficient cause for the exercise of the power to remove a liquidator, even if apprehended bias is established the question for the Court remains whether, in the circumstances of the particular liquidation, the removal of the liquidator is likely to be to the advantage of those with an interest in the winding up.
- It is not in dispute that the test for apprehended bias is whether a fair-minded and disinterested lay observer might reasonably apprehend that the relevant decision-maker (here, a liquidator who is not an officer of the Court but who nevertheless performs a public role in the liquidation of the company) might not bring an impartial and unprejudiced mind to the resolution of the question that decision-maker is required to decide.
- The application of this test requires two steps: first, the identification of what it is said might lead the decision-maker to decide a question other than on its merits; second, the articulation of a logical connection between the matter identified and the feared deviation from the course of deciding the question other than on its merits ( Ebner v Official Trustee in Bankruptcy  HCA 63; (2000) 205 CLR 337 at ). Mr Golledge emphasises that it is not enough to simply advert to a range of circumstances without addressing the second stage of that process.
- In Ebner (there a case involving a judicial position), Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ said, from -:
Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that , subject to qualifications relating to waiver (which is not presently relevant) or necessity (which may be relevant to the second appeal), a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide . That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined. There are, however, some other aspects of the apprehension of bias principle which should be recognised. Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.
The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits . The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed .
- More recently, in Johnson v Johnson  HCA 48; (2000) 201 CLR 488, Gleeson CJ, Gaudron, McHugh, Gummow, Kirby, Hayne and Callinan JJ said (from ):
… It has been established by a series of decisions of this Court that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.
That test has been adopted, in preference to a differently expressed test that has been applied in England, for the reason that it gives due recognition to the fundamental principle that justice must both be done, and be seen to be done. It is based upon the need for public confidence in the administration of justice. “If fair-minded people reasonably apprehend or suspect that the tribunal has prejudged the case, they cannot have confidence in the decision”. The hypothetical reasonable observer of the judge’s conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is “a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial”.
Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of “the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case”. Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them.
There was argument in this Court, prompted by Anderson J’s explanation of what he intended to communicate, about whether the effect of a statement that might indicate prejudgment can be removed by a later statement which withdraws or qualifies it. Clearly, in some cases it can. So much has been expressly acknowledged in the cases. No doubt some statements, or some behaviour, may produce an ineradicable apprehension of prejudgment. On other occasions, however, a preliminary impression created by what is said or done may be altered by a later statement. It depends upon the circumstances of the particular case.The hypothetical observer is no more entitled to make snap judgments than the person under observation .
- Mr Golledge places emphasis on the requirement, there adverted to, that the hypothetical reasonable observer be reasonable and that he or she would not be entitled to make “snap judgments”.
- All the relevant circumstances of the particular case may be taken into account in applying the test, though only such knowledge of matters of legal or other specialist practice and process as can reasonably be attributed to the lay observer (including, perhaps, matters of which the observer would inform him or herself before reasonably forming any firm apprehension) will be taken into account ( Vakauta v Kelly  HCA 44; (1989) 167 CLR 568 at  –  per Toohey J; Najjar v Haines & Ors (1991) 25 NSWLR 224 at  –  per Rogers JA).
- In Carbotech Australia Pty Limited v Yates  NSWSC 540 at , Brereton J (considering the import of an ex parte communication with a referee and contrasting that with the situation where such a communication is made with a judicial officer and citing Re JRL; Ex parte CJL  HCA 39; (1986) 161 CLR 342)) noted that it was necessary to look at the facts of each case to see whether the context and content of such a communication might give rise to a reasonable apprehension of bias. There, his Honour had regard (among other things) to the circumstance that the referee was not required to engage in the evaluation of competing cases, evidence and submissions, his function being more akin to that of a court-appointed expert witness, and that the relevant communications were (with a possible exception) entirely procedural or administrative in nature.
- What are the relevant facts to which the above principles must be applied?
- Mr Aldridge, in his written submissions, sets out in some detail the chronology of events that is said to lead to the conclusion that a reasonable third party observer would form the opinion that Mr Gleeson has displayed a tendency to advance the interests of Hyperion at the expense of APH and hence to warrant a finding of reasonable apprehension of bias on his part.
- In summary, reliance was placed on Mr Gleeson’s conduct in four periods:
(i) the period prior to his appointment as liquidator in December 2010;
(ii) the period from the time he became liquidator (commencing with the declaration of independence made by Mr Gleeson which it is said did not sufficiently disclose the relationship with Hyperion and those standing behind it) up to late May 2010;
(iii) the period from late May 2010 (when Mr Gleeson was questioned by Mr McDonald, a director of APL, as to his independence) up to shortly before the present application; and
(iv) the period after service of the originating process for the present application during which Mr Gleeson proffered (on a without admission basis) the terms on which he would be prepared to retire as liquidator.
- I consider the material on which reliance was placed in relation to each of those periods below.
- Period prior to Mr Gleeson’s appointment as liquidator in February 2011
- As to the first, what is said is that during the period of approximately two and half months prior to Mr Gleeson’s appointment as liquidator, he had been advising the Hyperion interests (i.e. from at least 2 December 2010 to 21 February 2011).
- Mr Aldridge refers to Mr Gleeson’s letter of 2 December 2010 to Messrs Greenwood and Higgins of R&G Consulting as disclosing that there are two sides to the administration (Accord and Hyperion) (something, with respect, the potential for which would have been obvious as soon as it was realised that there were only two creditors and one was associated with the company in administration); that Mr Gleeson’s objective is to advance the interests of Hyperion in the administration (by reference to the prospect of a proposal from APH); that Mr Gleeson is providing advice as to the matters which Messrs Greenwood and Higgins need to progress in advance of the administrators issuing the substantial report to creditors and the second meeting of creditors and recommends that a letter be sent to the administrators ascertained certain matters (including as to the financial position of APH so as to be able to comment on voidable transaction claims against it and as to the financial position of the directors for the purpose of progressing insolvent trading claims against them); that Mr Gleeson was proposing to brief Mr Hayter of Gillis Delaney, including for the purpose of assisting Hyperion at the then forthcoming creditors meeting of 9 December 2010; and that Mr Gleeson was willing to act as liquidator of APL. He notes that on 3 December 2010, Mr Greenwood followed Mr Gleeson’s advice by sending an email to the administrators raising the issues identified by Mr Gleeson and that Mr Gleeson was privy to these exchanges and informed Mr Higgins that Mr Hayter had been verbally briefed.
- Mr Aldridge also seeks to draw some significance from the fact that on 3 December 2010, Mr Gleeson received the Report to Creditors of 1 December 2010 and that each of Messrs Gleeson, Greenwood and Higgins noted the absence of any consideration of a s 588V claim against APH and both Mr Gleeson and Hyperion saw this as an avenue for recovery (noting that this was a line of inquiry which Mr Gleeson advanced following his appointment on 21 February 2011). Reference is made to correspondence in which Mr Gleeson gave a direction to recalculate Hyperion’s claim by reference to amounts preceding and post-dating the voluntary administration (4 November 2010) because of Mr Higgins’ concerns that Hyperion’s claim had been noted by the administrators at only $153,000 (and suggests that when Mr Higgins responded with calculations showing a gross claim of $9.4m and a net claim of $6.3M, Mr Gleeson “has immediately embarked upon a course of action to champion a claim for Hyperion in the ‘millions'”.
- Mr Aldridge points to the fact that Mr Hayter received a verbal and written briefing from Mr Gleeson on 3 December 2010, received a copy of the Report to Creditors, and a copy of the 2 December 2010 letter to R & G Consulting and finds it significant that Mr Gleeson informed Mr Hayter that the objective of Hyperion was to pursue claims against APL’s parent (APH) pursuant to s 588V; that the prospects of a claim by Hyperion were in the region of $9m “on a worst case scenario”; and that R&G (Messrs Greenwood and Higgins) referred work to Mr Gleeson from time to time.
- Significance is seemingly drawn from the fact that by this correspondence Mr Hayter is “aware at a general level of the antecedent relationship between the parties” in advance of his appointment by the then administrators and the appointment of Mr Gleeson as liquidator on 21 February 2011 (although it is difficult to see how Mr Hayter’s awareness is relevant to an apprehended bias claim against Mr Gleeson).
- It is noted that, by the time of the second meeting of creditors of APL on 9 December 2010, Mr Gleeson has given Hyperion advice in relation to the progress of its claim in the liquidation of APL and has briefed Mr Hayter in the interests of Hyperion. Mr Aldridge places weight on the fact that none of this is disclosed at the meeting when Mr Gleeson urged upon the administrators Hyperion’s claims, the conduct of examinations of directors, and the retention of Mr Hayter to which Mr Hancock agrees. Stopping there, Mr Gleeson attended the meeting and spoke on behalf of Hyperion at that meeting. I have considered this issue already in my earlier judgment. I remain of the view that it must have been obvious to APH’s representatives that he was there in the capacity as adviser to Hyperion in some fashion. A reasonable observer surely would have taken the suggestion of examinations of the directors to have indicated that Hyperion and Mr Gleeson were of the view that this was a step that should be considered and/or undertaken by the liquidator. There seems to have been nothing ‘covert’ in that suggestion.
- Mr Aldridge takes issue with the fact that Mr Gleeson, by his letter of 8 December 2010, ‘understates’ his relationship between the Hyperion interests “by describing it as no more than an approach by Hyperion for the purpose of his appointment as creditor” and that his Declaration of Independence:
- omits any reference to the advice which he had already given to the Hyperion interests in the administration;
- positively asserts that he had undertaken an assessment to the risks of his independence and that there were no real or potential risks to his independence; and
- positively asserts the absence of any relationship between his firm and him (on the one hand) and R&G Consulting (on the other) in the preceding 24 months.
- Much is made of this declaration of independence although, in form, it is broadly couched at the same level of detail as that now supplied by Mr Krejci. I will consider this in due course.
- Reference is made to a letter sent by Mr Gleeson on the on the day that APL is placed into liquidation (9 December 2010) to the Hyperion interests in which it is noted that the liquidators had been pointed in the right direction in terms of investigating the financial relationship between APH and APL (said to indicate that he is continuing to manoeuvre the administration towards the pursuit of APH) and that it will be necessary to ensure that the minutes of meeting record the agreement of the liquidators to the retention of Gillis Delaney for the purpose of conducting the examination of the directors (said to be an instance of Mr Gleeson securing the liquidators’ use of lawyers briefed for the benefit of Hyperion’s interests “without disclosure of the background briefing provided to them”); that it identifies the proposed examinees and advises the manner in which Hyperion should secure the recovery of their funding costs under s 564 of the Corporations Act; and that it urges communications to advance Hyperion’s claims, but notes the foregoing as the minimum necessary to maintain pressure on APH and its directors. It is also noted that in this letter, Mr Gleeson indicates his intention to charge for all future work and advice. (It is submitted that the inference is that Mr Gleeson was remunerated by the Hyperion interests, though there is no evidence of this.)
- Reliance is then placed on Mr Hayter’s draft of a letter for Hyperion to send to the liquidators “having been briefed by Mr Gleeson about the outcome of the meeting of 9 December 2010 and received a copy of Mr Gleeson’s letter of the same date” confirming Hyperion’s desire to conduct public examinations; to pursue claims against the directors and APH; and that Gillis Delaney be retained by the liquidators. Implicitly there is criticism of the omission from both the cover letter to R&G Consulting and the draft letter to the liquidators of “any mention of [Mr Hayter’s] pre-existing involvement or role”; which is followed by a letter of 13 December 2010 from Hyperion to the liquidators. Mr Aldridge refers to the fact that the latter is in almost identical terms to that prepared by Mr Hayter and suggests that “Of course Hyperion has an agenda set by Mr Gleeson (of which Mr Hayter is aware)…”.
- The retention on 16 December 2010 by the liquidators of APL of Gillis Delaney to act in the examinations is then said to be evidence that “Mr Gleeson with the full knowledge of Mr Hayter had secured Gillis Delaney as the liquidator’s lawyers, notwithstanding that Mr Hayter had been briefed by Mr Gleeson since 3 December 2010 for the benefit of Hyperion’s interests”. Pausing there, the retention of Mr Hayter by the liquidators had been the subject of discussion with Mr Hancock prior to the second creditors’ meeting so the suggestion of a covert plan or agenda in that regard seems far-fetched. It was open to Mr Hancock not to choose to retain Mr Hayter. He clearly did so knowing that Mr Hayter had been put forward by Mr Gleeson and that Mr Gleeson had at least in some capacity been assisting or speaking for Hyperion in relation to the administration. He also knew that there had been a suggestion that Hyperion would put forward Mr Gleeson as liquidator.
- The culmination of the above is that Mr Aldridge submits that, whether or not Mr Gleeson was in fact paid by Hyperion, he was effectively retained by Hyperion or advising it during that period and that it was through Mr Gleeson that the services of Mr Hayter (of Gillis Delaney Lawyers), who was at the time advising Hyperion, were retained by the then liquidators on 16 December 2010 (though in oral submissions he then said that there was nothing ‘sinister’ in this of itself).
- Reference is then made to Mr Hayter’s letter of advice on 21 December 2010, to the liquidator of APL which it is said ‘promotes the notion’ that Hyperion’s claim was likely to be for “a substantial amount” (something said to have had ‘its origins in the exchanges of 3 December 2010 between Mr Gleeson and the Hyperion interests’); directs the investigation towards claim against the directors and APH (the only other creditor) for insolvent trading pursuant to s 588V (which is said to have ‘its origins’ in Mr Gleeson’s advice of 2 and 3 December 2010; identifies the range of examinees as including common directors of APH and APL; and identifies a range of documents linking the sale and lease in 2006 said to be ‘geared towards showing APL’s dependence on APH for financial support’ and establishing the s 588V claim.
- Mr Aldridge notes that on 24 December 2010, Mr Higgins expressed to Mr Gleeson what he describes as ‘complete satisfaction’ (“All moving according to plan. Thanks again for your help”).
- Reference is then made to correspondence in February as relating to what is described by Mr Aldridge as the gathering of “evidence to be gathered to sheet home liability to APH” (referring to a letter of 10 February 2011 and email exchanges of 14-17 February 2011) and then to the proffering by Mr Gleeson in January 2011 of his ‘candidature for the office of liquidator’.
- Pausing there, there is no suggestion that Mr Gleeson was in any way responsible for Mr Hancock deciding that he could not continue to act as liquidator. That decision seems to have been the perception of Mr Hancock of a potential conflict. However, the fact of Mr Gleeson’s appointment is relied upon in the written submissions in terms that suggest this was part of a concerted plan from the outset (“the circle is complete” …”the Hyperion interest had secured its adviser … to the office of APL liquidator”. True it is that prior to the second creditors’ meeting there had been a proposal that Hyperion would put forward Mr Gleeson as liquidator. It did not pursue that course, apparently being satisfied by Mr Hancock’s assurance that he would investigate matters in relation to the company that Hyperion considered warranted investigation. There seems no basis for the suggestion that after Mr Hancock was appointed there was some sort of continuing covert plan to manoeuvre Mr Gleeson into office, yet that is the thrust of the submission, as I read it.
- Tellingly perhaps, in the context of the Anshun arguments that I consider below, in Mr Aldridge’s written submissions support for the submission that the relationship or association between Mr Gleeson and Hyperion in this first period gives rise to some apprehension of bias is seemingly sought to be drawn from the observations that I made at  of my earlier judgment, namely as to the retention of the same solicitor as he who had advised the funding creditor:
 The aspects of the matter that have caused me concern are the reference in the liquidator’s email of 17 May 2011 (after the initial examinations) to “leverage points” and the fact that the liquidator is represented by the same solicitor as the funding creditor (who has seemingly advised the funding creditor from the outset of the administration as to the claims it seeks to make for recovery of its losses) in circumstances where this is a liquidation in which there are only two creditors and the proposed lines of enquiry can only ultimately be for the benefit of one of those creditors to the disadvantage of the other.
- As to that aspect of the matter to which I referred to in para  of my earlier judgment, I ultimately concluded that although the facts of the present case (where the battle lines were clearly drawn between Hyperion and one or more of the Accord Pacific group and the benefit of any litigation which produces a recovery for the company in liquidation would in practical terms be a benefit for Hyperion, even if it might share only pro rata in any such recovery) seemed much closer to the situation where the liquidator might be said to be acting, in effect, for the benefit of the creditor and not the benefit of the company than was the case in Re Laurie Cottier Productions Pty Ltd (in liq) (1992) 9 ACSR 513 , and the scope for conflict had been highlighted by the (then) complaint by APH that no attention had been given to alleged preferential payments to Hyperion during the period under investigation, the representation of the liquidator by the solicitor who had given some advice to Hyperion (the funding creditor) is did not lead to the conclusion that there was an improper purpose in the examinations in question.
- At -, I observed that:
 However, while the investigations now being sought to be carried our may ultimately be only for the financial benefit of one of the two creditors (and against the interests of the other) that does not necessarily mean that the proper administration of the winding up of the company does not warrant an investigation into matters such as the potential breach of directors’ duties as being in the public interest. Focus on the dispute as between the two creditors seems not to take into account the public interest rationale for the examinations power (as identified in Hamilton v Oades ).
 It has been said that the possibility of recoveries for insolvent trading or otherwise in a winding up should not be lightly overlooked ( Young (as representative for the Australian partnership known as Accenture) v Sherman (2002) 170 FLR 86; (2002) 20 ACLC 1559;  NSWCA 281, at  per Davies AJA) and (albeit in the context of an administration – where creditors will have to make a decision as to a company’s future – that as a matter of public policy) that creditors (and this would include Hyperion) are entitled to a proper investigation of such matters notwithstanding the practical constraints faced by an administrator ( DCT v Portinex (2000) 156 FLR 453; (2000) 34 ACSR 391;  NSWSC 99, at  and ).
- The fact that these proceedings may be to the ultimate benefit of the funding creditor is not of itself something that leads to an inference of improper purpose. Doyle CJ, in the context of considering the discretion in relation to examinations by liquidators in Sandhurst Trustees Ltd v Harvey  SASC 157; (2004) 88 SASR 519, noted at  that:
The fact that a consequence of an examination order may be a forensic advantage to a particular class of creditors, or to a particular creditor, of the corporation, or to a particular person, does not of itself lead to the conclusion that the order was not made for a proper purpose. Nor does the fact that the order was made at the instance of that person or creditor. (my emphasis)
- Similarly, the fact that one creditor might seek to fund a liquidator to pursue, through causes of action available to the company, moneys owing to that creditor by a company in liquidation is not of itself indicative of improper purpose or a lack of independence on the part of the liquidator in receipt of such funding (as was implicitly recognised in Lo v Nielsen & Moller Autoglass (NSW) Pty Ltd  NSWSC 407; (2008) 26 ACLC 497 , where Barrett J was prepared to appoint a special purpose liquidator to be funded by a judgment creditor of the company there in liquidation in order to explore the recovery of assets for the benefit of the company – where the judgment creditor funding the special purpose liquidator would be likely to reap the most benefit from such a course if the recovery action were to be successful).
- While, in Re Leisure Developments (Qld) Pty Ltd (in liq); Ell v Palmer  NSWSC 248; (2002) 41 ACSR 276 Austin J expressly took into account (as relevant matters when assessing whether liquidator’s examinations were an abuse of process) facts such as that the liquidator’s investigations were being funded by the ATO; that the ATO had claimed an enormous amount of tax from the company in liquidation; and that one of the case officers of the ATO subsequently became the solicitor for the liquidator actively instructing counsel in the examination process and other proceeding (), for the reasons I set out in my earlier judgment I was not persuaded that the role of Mr Hayter in this liquidation was such as to warrant a conclusion that the examination summons procedure had been invoked as an abuse of process. I remain of that view.
- It is recognised by the legislature that creditors may provide an indemnity for the cost of proceedings by the liquidator (since s 564 permits priority to be given over other creditors in distribution of the proceeds of successful proceedings. Ford’s Principles of Corporations Law suggests (at [27.171]) that if a creditor or contributory wishes the liquidator to incur expense to investigate possible misfeasance or to recover assets for the company and there are not enough assets available to meet the expense, then the appropriate course is for the liquidator to require the creditor or contributory to provide an indemnity and, in some cases, provide security for the amount of the indemnity as a condition of the liquidator taking action (citing Re Northumberland Insurance Co Ltd (No 2) (1975) 1 ACLR 142.)
- Mr Harkin himself conceded in cross-examination that it was not uncommon for a liquidator to seek funding from creditors, to engage in correspondence with creditors to obtain information and to discuss potential claims with funding creditors (although Mr Harkin was at pains to point out that where a funding creditor was seeking priority it was usual for all creditors to be notified – there referring, as I understand it, to the procedure under s 564 of the Act). Mr Harkin agreed that in the present situation where there was only one other creditor and that creditor was the potential subject of a claim by the company or the liquidator, it would not be expected that details of the strengths and weaknesses of the claim would be made known to that creditor.
- Nevertheless, the nub of the abuse of process claim (and of the present apprehended bias claim) seems to be that there was an association between Mr Gleeson, Mr Hayter and Mr Greenwood of Hyperion, however brief that may have been, during the period prior to Mr Gleeson’s appointment as liquidator (which has or may be perceived to have the effect of favouring that creditor and is not for the benefit of the company or is to the disadvantage of the other creditor). I say this because Mr Harkin, in the witness box, maintained an objection to Mr Gleeson even doing no more than formal matters such as lodgment of ASIC forms. His response to such a question (apart from a non-responsive answer that the question was asking about something that has not happened) was to say that he proceeded from the proposition that the problem with the current liquidator was that he was tainted by an apprehension of bias because he was ‘relying upon advice by a solicitor who in correspondence seems to be acting in part for Hyperion’. (I should add that I have prepared these reasons as a matter of urgency without the benefit of transcript and I do not profess to be quoting Mr Harkin verbatim – nevertheless this, and other references to his evidence, is my recollection of what he said in the witness box, as noted by me at the time.)
- Period from appointment as liquidator to May 2011
- As to the second period of time, during which Mr Aldridge has focused attention, much weight is placed on the fact that Mr Gleeson’s Declaration of Independence does not disclose the advice which Mr Gleeson provided to the Hyperion interests since at least 2 December 2010; his remuneration for that advice since at least 9 December 2010 (though there is no evidence that he did in fact receive any, simply a letter suggesting that he would charge for his time from then, which may well have been overtaken by events); and the “referral relationship” between Mr Gleeson and R&G Consulting.
- What is said by Mr Aldridge is that when Mr Gleeson provided his Declaration of Independence in the context of his appointment as liquidator he should have gone further than he did and should have added words to the effect “I have been advising one of the creditors of the company and I do not think that this prevents me from taking the appointment as liquidator”. In this regard, Mr Golledge points to the declaration of independence provided by Mr Krejci in the context of his now proposed appointment as nominated by APH (which, it must be said, goes into little detail as to what Mr Harkin in the witness box confirmed was a substantial history of dealings by Mr Krejci at least with the solicitors acting for the Accord group in these proceedings).
- Mr Aldridge points not only to the fact that there was no disclosure of an advisory relationship with Hyperion in the context of the APL administration or of the referral relationship with what are described as ‘allied interests’ (namely the accounting firm in which the principals of Hyperion were partners) but also to the content of the information and advice provided by Mr Gleeson to the Hyperion interests during this period.
- In this regard, it is submitted that “Mr Gleeson positioned and directed the investigations and examinations so as to progress the S.588V insolvent trading claim against APH” and “suppressed the flow of information about the liquidation to APH, whilst providing full information and advice to Hyperion”. Again, Mr Aldridge calls in aid in this context the comments made by me in my earlier judgment (at , which I have extracted above, and at :
 As to the first, while I accept that the meaning of ‘leverage points’ is uncertain, it seems to me that it cannot logically refer (as the word ‘pressure’ seems to have done) to gaining leverage in order to force the overseas directors to attend for examination. It must refer to leverage either in other proceedings or in some form of settlement negotiations. If the reference is to proceedings for the benefit of the company (say, in relation to insolvent trading) then this may not necessarily be inconsistent with the liquidator having a proper purpose. If this were a reference to leverage in negotiations to compromise a claim by Hyperion then it would be an improper purpose.
- It is submitted that the correspondence (to which I was taken in great detail on the hearing in June this year and to which I was again taken, though in less detail on the present application) indicates that Mr Gleeson conducted the liquidation “seemingly for the purpose of putting pressure on the Accord side for the benefit of Hyperion”. In particular, I was taken in oral submissions again to the letter of 10 February 2011 (at p 129 of the exhibit to Mr Harkin’s affidavit, which for convenience I will refer to as the CB), an email of 11 March 2011 from Mr Gleeson to Mr Higgins (p 154 CB), a letter dated 5 May 2011 from Gillis Delaney to Mr Greenwood (p 183 CB), an email dated 9 May 2011 from Mr Gleeson to Mr Hayter; (p 189 CB); and an email from Mr Gleeson to Messrs Higgins and Greenwood, copied to Mr Hayter on 17 May 2011 (p 197 CB) – described as ‘unwise’ letters for a person supposed to be independent.
- The submission is that the liquidation has been progressed with the aim of advancing Hyperion’s claims in five ways.
- First, because efforts were made to schedule examination on dates convenient to Messrs Greenwood and Higgins (something that does not seem to me to have any sinister connotation to it – given that one might expect the funding creditor to have an interest in the examinations and particularly where the individuals in question are accountants and might be thought to have the ability to follow any examinations as to financial matters).
- Second, on the basis that the Hyperion interests received “private progress briefings” (including a ‘briefing’ of 17 May 2011 in which Mr Gleeson shared his view with Messrs Greenwood and Higgins that the Australian based director, Mr Gargano, was the stooge of the overseas directors (the Khos); that both Hyperion and he as liquidator have ‘some leverage points’; that the Report to Creditors will be less than ample in its disclosure (suggesting, it is said, that only the Hyperion and not the APH interests would be kept informed). As noted above, Mr Harkin appeared to concede in the witness box both that it was commonplace for funding creditors to be kept informed of matters in relation to the progress of claims in more detail than might other creditors and that it would not be expected that a potential defendant would be provided with information as to the strengths and weaknesses of the potential claim – a matter one might think of commonsense and not indicative of any bias.
- Reference is also made to the fact that the Hyperion interests “expressed their satisfaction to Mr Gleeson’s offsider” in terms that they “were very happy with the outcome of round” and had grown in confidence as to their recovery prospects – a matter that seems to me indicative of no more than Hyperion’s interest in recovering what it claims, not bias on the part of Mr Gleeson or his ‘offsider’.
- Third, that Mr Gleeson is said to have provided advice to the Hyperion interests to allay concerns about the need to take action to ensure that APH does not dissipate its assets prior to the claim against it being determined (when all that seems to have happened was that Mr Gleeson responded to a query made of him by Hyperion) and to indicate that he holds “aces” to pressure APH and its directors and representatives, such as a claim against Mr McDonald as a shadow director (the ‘pressure’ emails having already been considered in some detail in my earlier judgment).
- Fourth, it is said that “not content to allow Hyperion to quantify its own loss”, Messrs Gleeson and Hayter exchanged communications on 9 May 2011 with a view to establishing a methodology to quantify Hyperion’s losses in the liquidation “so as to increase the amount to be recovered in APL’s liquidation”. Mr Aldridge goes on to submit that “Mr Hayter labours under the misapprehension that Hyperion’s claim may be of the order of $1.5m until Mr Gleeson corrects him that it is of the order of $5.25m” and to place weight on the communications in which reference is made to a likely settlement range for Hyperion as underscoring that the liquidation is being advanced for the benefit of the Hyperion interests.
- Fifth, reliance is placed on the issue of Orders for Production “calculated to marry the sale of the Property to the lease of the Property and the inability of APL to meet its lease obligations, all for the purpose of advancing Hyperion’s insolvent trading claim” (reference being made to the Orders for Production issued to James Lee and CB Richard Ellis and it is suggested that the orders I made on 14 July 2011 “stymied” Mr Gleeson’s efforts).
- With all due respect to the advocate’s flourish, I do not regard it as an apt characterisation of the intent or effect of the orders that were made. There was a respectable argument advanced by Mr Golledge when the matter was before me in June as to the reasonableness of the ambit of the orders sought in relation to production of documents in relation to the sale. Ultimately, I took the view that the orders were too broad in that respect, but I do not think that a fair-minded observer would form the view that the liquidator was biased in seeking such documents when there was a reasonable basis for contending that they were relevant to a claim to be investigated for the benefit of the company against its directors.
- I also note that up to this point all of the material now relied upon for the allegation of apprehended bias (and, in particular, each of the five matters set out above) is material which I have already considered does not establish any improper purpose on the part of the liquidator (and as to which I expressed my reasons in some detail in a judgment that, as Mr Golledge points out, has not been the subject of appeal). In this regard, Mr Golledge submits that any reasonable and fair-minded observer would take into account, when considering whether there was any apprehension of bias, the fact that no improper purpose on the liquidator’s part had been found on a review of the very same material now relied upon by APH to found an accusation of apprehended bias. I think there is force in that submission. It also supports the reliance on an Anshun estoppel for reasons that I consider below.
- May 2011 – August 2011
- As to the third period, focus is placed on the response by Mr Gleeson on 31 May 2011 (p 217 CB) to Mr McDonald’s complaint by letter dated 27 May 2011 (p 215 CB) as to Mr Gleeson’s independence, insofar as it says (in answer to questions as to whether he had ever taken an appointment from the accountancy firm associated with Hyperion and as to any correspondence with Hyperion in relation to the matter) and expressed to be in response to comments regarding his independence that “other than being initially asked to provide a Consent to Act as Liquidator” he had not received “any instruction from Hyperion’s representatives concerning the conduct of the external administration of the Company” and would not accept any such future instructions (without answering the question as to what other appointments he may have had with Hyperion or what correspondence he had entered into with Hyperion and, in particular, without disclosing that there was regular correspondence between he, Mr Hayter and Hyperion in relation to the investigations).
- Mr Aldridge concedes that it is not inappropriate for a liquidator to talk to creditors (such as Hyperion) and that it may be an appropriate source of information, but submits that it is the “way” he did so that compounds the problem of apprehended bias.
- The exchange between Mr McDonald and Mr Gleeson seems to have been prompted by a conversation alleged to have taken place between Mr Greenwood (not Mr Gleeson) and Mr McDonald during the course of the first round of examinations in May 2011, to which reference was made in the earlier proceedings before me (in which Mr McDonald says that Mr Greenwood made it clear that the liquidator’s investigations and examinations were directed towards returning Hyperion to the position it was in prior to the sale and lease of the property).
- As noted above, Mr McDonald then wrote to Mr Gleeson on 27 May 2011 asking him to confirm whether Mr Gleeson had accepted appointments from Hyperion and whether the examinations which had taken place in May 2011 were directed towards assisting Hyperion in its unspecified claims.
- Mr Gleeson’s letter of 31 May 2011 in response is criticised for not addressing the nature of his relationship with R&G Consulting (though the question put to him related to appointments from Hyperion representatives and for making the statement (described as disingenuous) that “Other than being initially asked to provide Consent to Act as Liquidator, I confirm that I have not received any instructions from Hyperion representatives concerning the conduct of the external administration of the Company and nor will I be accepting any such future instructions from the Hyperion representatives.”
- Mr Aldridge places weight on the fact that Mr Gleeson did not disclose (in response to Mr McDonald’s complaint) that he had initially advised Hyperion (although, as I noted in my earlier judgment, that must have been apparent to APH’s representatives at the initial creditors’ meeting when Mr Gleeson attended with and raised queries on behalf of Hyperion – all that would not have been known was the extent or content of the advice and, frankly, that does not seem to have gone beyond an identification of the kinds of claims or avenues for recovery that Hyperion might have and what would be necessary to establish them). He also submits that the correspondence reveals an attempt to put pressure on Accord for the benefit of Hyperion (a matter I addressed, by reference to the relevant correspondence, in my earlier judgment).
- Reliance is then placed on what was said to be a ‘change of tack’ in the letter of 6 July 2011 from the liquidator’s solicitors (at p 250 CB), insofar as, there, reference is made to investigation as to potential matters in contrast with the ‘dogmatic statements’ in the correspondence not sent to APH to the effect of ‘this is what we have to got prove”. Mr Golledge, for his part, relies on that letter as setting out logically the basis on which the liquidator was deferring consideration of the allegations made against Hyperion of an unfair preference claim until after the insolvency issue had been explored (something for which the liquidator was previously criticised as showing partiality to Hyperion.)
- It is said by Mr Aldridge that it was not until 22 June 2011, on receipt and review of the documents answering the Notice to Produce of 17 June 2011 and the eve of the application before me to set aside the examination summonses, that APH realised the position and its solicitors then wrote to Mr Gleeson’s solicitors to point out that the liquidator was in an untenable position on the basis of a perceived lack of independence. In the witness box, Mr Harkin was cross-examined as to the circumstances in which that view was formed and I will consider this in more detail when addressing the Anshun estoppel issue.
- APH’s solicitors then wrote (at a point which is said to have been mid-way through the abuse of process hearing but is in fact the day after the first day of the hearing and three days before it resumed, thus not halfway from a strict timing viewpoint) to Gillis Delaney on 24 June 2011 inviting their client to resign.
- After a further exchange of correspondence, Mr Gleeson’s solicitors wrote to APH’s solicitors on 7 July 2011 (CB pp 249-253), in which they noted that R&G Consulting had provided referral work over the years and that he had accepted a small insolvency assignment from that firm in the 12 month period preceding his appointment (described by Mr Aldridge as “disclosures omitted from the Declarations of Independence of 8 December 2010 and 25 January 2011”). In this letter it is said that they “half heartedly” asserted that it was Messrs Hancock and Hird who had invited Mr Gleeson to accept the appointment (a statement said to be disingenuous “when regard is had to Mr Gleeson’s instructions since 2 December 2010 and his efforts to secure the office prior to the meeting of 9 December 2010”).
- I consider the effect of this correspondence on the perception of a reasonable and fair-minded observer below.
- August 2011
- Finally, it is submitted that the offer to retire (on the terms set out in the letter of 22 August 2011) is a “belated acceptance” by Mr Gleeson that his position is untenable and that he must resign (or that resignation is an appropriate course of conduct) but that the imposition of terms on that offer reinforces the apprehension of bias. Mr Harkin, in the witness box, confirmed his belief that this letter was an acknowledgment of bias.
- I do not accept that this letter can or should be so construed as any kind of admission that it is incumbent on Mr Gleeson to resign or as to any lack of independence on his part. It is clearly written on a without admissions basis. It would be open to infer that the offer was made in order to save the company the continuing costs of the ongoing dispute as to the liquidator’s in office but with a desire in the interests of creditors not to waste the investment of funds made in relation to the preparation for the examinations to date.
- Mr Aldridge submits that the making of the resignation offer on terms is an untenable position but it is by no means clear why that is so. What Mr Gleeson has said, in effect, as clarified during the course of the hearing, is that once the examinations on 6 September 2010 have been completed then if he forms the view that there is a cause of action open to be pursued against APH’s directors, then he will retire and an incoming liquidator can make the decision to pursue that course or not with the benefit of whatever advice he or she receives and with the benefit of the information emerging from the examinations; but that if with the benefit of the examinations and the advice he forms the view that there is no cause of action that should be pursued, then all that will remain (and Mr Harkin appears to concede that this is the case) is for the formalities of the winding up to be completed and he considers it to be in the interests of the company for those to be completed without the added cost of an incoming liquidator.
- Mr Aldridge maintains that this is untenable because if the liquidator is tainted by bias then any step he now takes is tainted (and it is not to the point that another liquidator might take the same step or that it might be a reasonable step to take) – but it is not suggested how it would prejudice the company or his client for formal matters such as the lodgement of ASIC forms to be completed in those circumstances. In that regard, the propositions outlined by Mr Aldridge in submissions at the outset acknowledge that what must be considered is the stage of the winding up at which an application for removal is made and the general interests of the creditors. If all that relevantly remains (assuming a view that there is no cause of action is formed after the examinations are completed) is the completion and lodgement of ASIC forms, I cannot see how it could possibly be said that it is in the general interests of creditors to appoint another liquidator for that purpose. APH’s insistence (through its legal representatives) on this point, highlights the level of suspicion (and apparent lack of objectivity on its part) that in my view has characterised the present (and previous) application.
- Mr Aldridge seeks to draw significance from the fact that Mr Gleeson did not put on any evidence to explain his actions both before and after his appointment and seeks to draw a Jones v Dunkel  HCA 8; (1959) 101 CLR 298 inference that such evidence as he could give would not assist Mr Gleeson. In that regard, Mr Golledge points to the fact that when the hearing of this application was listed (as a matter of urgency on 25 August 2011), it was expressly done by reference to Mr Gleeson’s availability. It is submitted, however, that where the allegation of actual bias was expressly disavowed on that occasion, the need for Mr Gleeson to give evidence as to his motivations in effect fell away as that is irrelevant to the issues to be determined in relation to apprehended bias (and hence no adverse inference can be drawn from the fact that he did not give evidence on this application).
- A somewhat similar submission was made in the earlier proceedings as to the failure of the liquidator to put on evidence articulating his purpose for the examinations and I noted at  of my reasons the view that had been taken by White J, in Re Mendarma Pty Ltd (in liq)  NSWSC 1306; (2006) 24 ACLC 1611, expressly disagreeing with a submission there made that improper purpose could be inferred from the fact that the liquidator had not responded to certain correspondence and had not sworn a further affidavit responding to matters raised with him, saying:
…. In my view, there was no occasion for [the liquidator] to do so. The applicants cannot establish he had an improper purpose merely by making a wide range of allegations which were patently without substance, and then relying on his not responding to those allegations as a basis for inferring that he had an improper purpose.
- Relevantly, in Ebner , the High Court made it clear (in the passage cited earlier) that, where the question is as to a decision yet to be made there is no need to predict how the decision would in fact be approached, saying that :
,,, The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.
- In those circumstances, no adverse inference can be drawn from the fact that Mr Gleeson did not give evidence on the applications before me.
- Mr Aldridge submits that it is significant that Mr McDonald, as APH’s proxy at the relevant meeting, has given evidence that had be been aware of the nature and extent of the association between the Hyperion interests and Mr Gleeson, he would not have voted for the appointment of Mr Gleeson to the office of liquidator. (Of course, this evidence is given with the benefit of hindsight as to what the liquidator has done in the context of the liquidation – steps that have clearly not endeared himself to APH or its directors and officers.)
- This seems to me to be based on the assumption (not proven) that there was a substantial association in fact. That is what was asserted by Mr Harkin in his letter of 24 August 2011 – namely, that a significant portion of Mr Gleeson’s work derived from R&G Consulting – however, as Mr Harkin ultimately conceded in the witness box, the only basis on which that assertion was made in the correspondence was the simple statement that R&G Consulting referred work to Mr Gleeson from time to time. That is hardly a basis for an assertion that a substantial portion of work was derived from that firm, yet Mr Harkin was unable to point to any other document on the basis of which that assertion (made as the foundation for an apprehension of bias claim that he concedes he would not lightly make) was made. (Indeed the material produced on the various subpoenas and notices to produce on the present application did not seem to reveal more than a couple of seemingly minor matters in which there was a referral from R&G Consulting was involved with Mr Gleeson – at least by reference to Exhibit D.)
- What it is that Mr Gleeson should have disclosed at the second creditors’ meeting, according to Mr Aldridge’s submissions was something to the effect that “I have been giving advice to the creditor and I propose to charge a fee for that advice”. Yet APH must have been aware that Mr Gleeson attended the second creditors’ meeting and did so in some capacity on behalf of Hyperion.
- Mr Aldridge asserts that, as unpalatable as the prospect of investigations of, and claims against, APH and its directors may be, this is not the reason for this application. He submits that APH accepts that the liquidators have a duty to investigate and inquire; and that in due course this may result in claims against it. (The acceptance of that proposition by APH has seemingly not extended to its overseas directors assisting in the course of those investigations.) Nevertheless, what Mr Aldridge focuses on is the “manner in which this has been engineered by Mr Gleeson and the Hyperion interests”. It is submitted that the “manoeuvreing behind scenes between Messrs Gleeson, Hayter, Greenwood and Higgins prior to the appointment of Mr Gleeson as liquidator” makes Mr Gleeson’s position as liquidator difficult to sustain. Having considered in some detail (now twice) the material on which Mr Aldridge relies for the proposition that there has been some form of ‘covert’ or sinister ‘manouevring’, I reject the proposition that a reasonable fair-minded observer would see what has transpired as indicative of bias on the part of the liquidator.
- Mr Aldridge submits that the documents produced by Mr Gleeson on 22 June 2011 (in response to APH’s Notice to Produce of 17 June 2011) on the eve of the abuse of process application heard by me on 23 and 27 June 2011, show “a covert relationship between Mr Gleeson (the liquidator in waiting), Messrs Greenwood and Higgins (the principals of R&G and the governing mind of Hyperion) and Mr Hayter (Mr Gleeson’s tool) which would be perceived by any reasonable observer as demonstrating a lack of impartiality and independence in Mr Gleeson, as an officer of the Court, in the discharge the office of liquidator of APL”. (Mr Golledge, apart from noting that Mr Gleeson is not an officer of the Court as such in his present role, notes that as at December 2011 Mr Hayter was the solicitor who had been retained by the former liquidators. Further, it is a serious allegation to make against a solicitor who is the officer of the Court when that solicitor has given evidence by affidavit on both applications and not been required for cross-examination such that no such suggestion has been put to him.)
- I should also note that when the matter was last before me, reliance for the submission that there was an improper purpose was placed on the fact that steps had not been taken, it was said, to pursue claims against Hyperion for an unfair preference in the receipt of payment following a statutory demand. That now seems to have been abandoned. Similarly, the assertion made in Mr Harkin’s July correspondence that any suggestion of a breach of fiduciary duty claim had only recently been raised by the liquidator is inconsistent with the earlier correspondence to which Mr Harkin was taken in the witness box.
- Mr Harkin gave his evidence in the witness box in general in a measured and considered way. I accept that he has considerable experience in the area of insolvency law and that he firmly believes that it is inappropriate for the liquidator to continue in office. He had a tendency to seek to argue his or his client’s point of view on certain matters (such as when responding to a question as to the association between his firm and the nominated liquidator, when he was quick to refer back to the position with Mr Gleeson, and when he was at pains to point out that Mr Gleeson had not given evidence on the this occasion either when being asked about the evidence on the previous application) and seemingly sought ‘to score points’ in cross-examination on at least one occasion (when adding that Counsel for the liquidator had previously been retained on occasion by matters in which Mr Krejci was involved – an answer unresponsive to the question he had been asked). It might be thought that this betrayed a (perhaps understandable) desire to justify the position he had adopted in relation to the apprehension of bias (that being a matter that he seems to have been hopeful would be resolved by the liquidator’s agreement to retire).
- I accept that Mr Harkin has approached the matter in what he considers to be a proper way. However, I am left with the impression that the position of APH has been strongly influenced by the conversation that apparently took place in May 2011 with Mr Greenwood and that, thereafter, considerable suspicion has attached to everything said or done by the liquidator. I cannot test the reasonable disinterested observer by reference to the APH position.
- Mr Golledge submits that, in a winding up with only 2 creditors, references to other cases where a liquidator’s fraternisation with one creditor or a director has proven to be decisive are of little relevance to the present application. It is submitted that the putative lay observer would appreciate that, with only 2 creditors, any proper investigation of claims against either of them would necessarily place the liquidator, at least temporarily, apparently in the ‘camp’ of the other creditor but that no adverse inference would be drawn from that circumstance (particularly where the investigation has already been found not to be for an improper purpose).
- It is further submitted that where that other creditor was funding, in an entirely proper way, part of that investigation, the lay observer would find nothing improper or suspicious about contact between the liquidator and his lawyers with that other creditor provided it is connected, as the Court has already found to be the case, with the conduct of that investigation. Mr Harkin, himself, appeared to concede that communication of that kind would not be uncommon.
- In relation to Mr Harkin’s evidence I accept that he has not lightly made the allegations of apprehended bias and (dogmatic as the assertions in some of his correspondence have been) they have in the main been in measured terms. Mr Harkin says that this is only the second time in 25 years that such an application has been made by him.
- Nevertheless, it is difficult not to form the impression that a view was taken by APH (even if not by its representatives) at the least from the time of the conversation between Mr McDonald and Mr Greenwood (whatever the actual terms of that conversation might turn out to have been, since Mr Greenwood’s version has not been tested), evidenced by the correspondence both from Mr McDonald and Mr Patrick Kho and presumably reflected to some degree in the correspondence emanating from their legal representatives and the submissions put to the Court (both on the last occasion and this) that there was a conspiracy or scheme of some kind on foot, to which Mr Gleeson was a party, and that all communications and actions taken since then have been viewed with a jaundiced eye having regard to that view.
Conclusion as to apprehended bias
- As Mr Golledge notes, the lay observer must be taken to be appraised of all of the facts relevant to the actions or conduct of the liquidator and the question of apprehended bias must be determined by reference to the connection between those matters and the relevant decision that might be affected by the perceived bias.
- He submits that those facts include the fact that APH has previously asserted that the liquidator is acting ‘in the interests of Hyperion’ and that both he and his solicitor have been overly deferential to Hyperion but that the Court has rejected those complaints and has found the liquidator has acted properly in securing the examination orders and proceeding with the examination hearings. Thus, Mr Golledge submits that APH faces the difficulty of establishing that a reasonable lay observer would reject the Court’s previous finding that there was nothing improper in the conduct of the liquidator in the decision to proceed with the examinations nor the manner in which that was being done and would conclude, rather, that contrary to the Court’s findings, the evidence gives rise to an apprehension of a real, and not merely theoretical, likelihood that the liquidator had failed and would continue to fail to act impartially in the winding up. In short, Mr Golledge submits that no reasonable lay observer would be concerned to second-guess the Court’s earlier finding, which has not been the subject of appeal.
- In that regard, I note what I said in my earlier judgment when considering the import of the communications in which reference to pressure and leverage points was made. Having noted that, if the reference to leverage points in the 17 May 2011 email (written after the first round of examinations) were construed as a reference to leverage in negotiations to compromise a claim by Hyperion, then this would be an improper purpose, I said at :
It seems to me (as I indicated in the course of submissions) that this email is the high point of the case raised by APH of improper purpose. It requires enormous weight to be placed on the choice of language in that short expression for a conclusion to be drawn that the predominant purpose of the liquidator in later seeking the issue of the second set of examination summonses and orders was an improper purpose. The wording of the communications in general does not suggest a carefully considered choice of words in this regard. After considerable thought, I am unable to conclude that this email, read in the context of what had by then become increasingly contentious correspondence between the parties (and where it is clear that there is suspicion and distrust on both sides and references to ‘hectoring emails’ which suggest that emotions were running high even between the legal representatives), can bear such weight. Infelicitous as the language of the email seems to me to be, I do not consider that it warrants the inference that the liquidator is acting for the predominant and improper purpose of seeking to put pressure on APH to resolve a dispute with Hyperion or of seeking information to assist Hyperion in the conduct of a separate claim it may have against APP.
- I remain of that view. Further, I am of the view that a reasonable and fair-minded lay observer, when faced with the fact that APH’s representative at the second creditors meeting on 9 December 2010 must be taken to have been aware that Mr Gleeson was assisting or advising Hyperion’s representatives (presumably in a professional capacity) at least on that occasion in relation to the administration and hence that there was at least some association between the two and if aware that Declarations of Independence of the kind that both Mr Gleeson and Mr Krejci have signed ordinarily are in brief or summary terms, would not have formed the view as at the time of the appointment of Mr Gleeson as liquidator that he would be affected by bias. This may be tested by the fact that Mr McDonald was at least aware of the former and saw no difficulty at the time with Mr Gleeson’s appointment as liquidator (notwithstanding that he must have been aware that Mr Gleeson had raised the issue of liquidators’ examinations as directors as far back as the 9 December meeting since that was recorded in the minutes).
- Even though the issues being determined by me in July were as to actual improper purpose, a reasonable fair-minded and disinterested observer would surely not conclude that the liquidator was unlikely to be able to bring an impartial mind to decisions in relation to the liquidation when a judge had reviewed the relevant material and had come to the considered opinion that the conduct relied upon did not evidence an actual improper purpose in the investigations.
- What then of the correspondence since then? To my mind it does no more than confirm the position that emerged fairly clearly when the matter was last before me – that there is a great level of distrust on both sides in this matter. However, the degree of suspicion harboured by APH and its representatives is not the measure by which a disinterested observer’s reaction to the events is to be tested. It is difficult not to conclude that whatever the liquidator were to do, a sinister motivation would be ascribed thereto by APH. That does not make such a view reasonable.
- It seems to me that the high point of the present apprehended bias claim is in the liquidator’s response of 31 May 2011, which on one view might (I accept) be seen as presenting only part of the history of the association between Mr Gleeson and the individuals associated with both Hyperion and R&G Consulting and as perhaps glossing over the initial consultation with Hyperion on the basis that there was no formal appointment. That said, Mr Gleeson is not a lawyer and the letter seems to have been drafted not directly in response to particular questions but to issues. The fact that Mr Gleeson had had some previous role or association with Hyperion was already obvious from the fact that he attended the second creditors’ meeting with Mr Greenwood. Further, the letter itself did not refer to R&G Consulting but to appointments by Hyperion representatives.
- I accept that if a reasonable and fair-minded lay observer were to form the view that a less than a complete response was given on behalf of the liquidator in this correspondence then that could affect the reliance on which such an observer might feel he or she could place on the liquidator’s impartiality on other matters, and so I do not suggest that there could not be room for a finding of apprehended bias at that point. However, it is by no means clear that the letter was misleading in that regard.
- What was said by the solicitors for the liquidator in their subsequent 6 July 2011 letter was that Mr Gleeson had “received a small number of referrals over the years from the accounting firm” (ie R&G Consulting). It is by no means clear that what Mr McDonald was requesting back in May 2011 extended to such appointments. Reference was made in the 6 July letter to one small company insolvency matter referred to Mr Gleeson by a senior employee of that accounting practice throughout the previous 12 months.
- In any event, even if it could be said that a reasonable and fair-minded observer (knowing that Mr Gleeson had attended the second creditors’ meeting with Mr Greenwood and had spoken at that meeting apparently in relation to Hyperion’s interests) would form the view that the letter of 31 May 2011 was a less than complete response to an issue on which Mr Gleeson purported to offer a response (as it seems to me there is room for doubt), what in my view removes any reasonable apprehension of bias at the present time is the offer made by Mr Gleeson to retire after the conclusion of the examinations on 6 September and to leave the ultimate decision as to whether any claim should be pursued against APH to an incoming liquidator. I do not accept the proposition that he would reasonably be seen as so tainted (by the response given in the 31 May letter) as to be incapable, from the point of view of the proper administration of justice, in giving instructions to Mr Hayter in relation to the conduct of the examinations themselves. Indeed, I think it safe to assume that the bulk of the preparation for those examinations would be already done (although I was informed that Mr Hayter was proposing to work over the coming weekend on that matter – hence the need for the urgent delivery of my judgment on the application before me). It is not Mr Gleeson personally who will be conducting the examinations and, however biased APH may think he is, the result of the offer is that one way or the other he will shortly be retiring as liquidator.
- I have concluded that there is not a reasonable apprehension of bias. Insofar as Mr Aldridge submits that the test is a light one, I do not accept that findings of that kind can be lightly made. However, even if I had found that there was a reasonable apprehension of bias, in the exercise of my discretion I would not have ordered the removal of Mr Gleeson as liquidator until after completion of the 6 September examinations and a decision was made as to whether there was any claim that might properly be pursued for the benefit of the company. (Even if a decision of Mr Gleeson to that effect might be said to be tainted by bias, it would lead to his retirement as liquidator in accordance with his offer so little seems to be lost as a result.). This is because I do not believe it is in the interests of the company not to proceed with the examinations for which preparation has already been undertaken and which I have already determined have been sought to be conducted for a proper purpose.
- Further, notwithstanding Mr Aldridge’s protestations, I am concerned that a reasonable inference to draw from the timing of the present application, the week delay in service of the originating process with no application for expedition, the request initially made for vacation or adjournment of the examinations in light of this application and the refusal to consider what seems to me to be a reasonable suggestion to resolve the issue (albeit one made not until after the proceedings were instituted) is that APH and some or more of its directors are seeking to thwart the examination process. I make no formal finding to that effect as it is not necessary in light of the finding I have made. However, as a matter of discretion had I found otherwise on the apprehended bias case, I would have considered that the removal of the liquidator should be deferred until after the examinations. Further, with no disrespect to Mr Krejci, in light of the contentious conduct of the liquidation to date and the diametrically opposed positions and views of the two creditors, I would have required that any incoming liquidator be one with no connection with either of the creditors (and no or as little association as possible with the firms of solicitors on both sides) so as to minimise the scope for ongoing disputes of this kind.
- It is noted that, in the exercise of the discretion to remove a liquidator, reference must be had to the stage at which the liquidation has reached and the effect that his or her removal may have both on the accumulated knowledge of the company in liquidation and matters relating to its financial affairs and its failure and on the investment in the costs of the liquidation represented by the work done to date.
- There is also authority to support the proposition that the Court should be mindful of the possibility that (whether or not this be the purpose of the application) the removal of the liquidator will avoid or delay the investigation of any potential claim which might be available to the liquidator or the company. As I noted in my earlier judgment and above, it has been said that the possibility of recoveries for insolvent trading or otherwise in a winding up should not be lightly overlooked ( Young (as representative for the Australian partnership known as Accenture) v Sherman  NSWCA 281;(2002) 170 FLR 86 at ).
(ii) Anshun estoppel/abuse of process
- Strictly speaking, in light of the above finding it is not necessary to consider this issue, but for completeness I do so.
- The principle articulated by Sir James Wigram VC in Henderson v Henderson  EngR 917; (1843) 3 Hare 100 at  was as follows:
[W]here a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case.
- In Port of Melbourne Authority v Anshun Pty Ltd at  –  Gibbs CJ, Mason and Aickin JJ said:
… there will be no estoppel unless it appears that the matter relied upon … was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking it would be unreasonable not plead a [matter] if, having regard to the nature of the plaintiff’s claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why any party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of a particular issue, motives extraneous to the actual litigation, to mention but a few.
- In Anshun (at ) it was further said that:
It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment … The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as the foundation for a cause of action in a second proceeding. By “conflicting” judgments, we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.
- Allsop P i n Champerslife Pty Ltd v Manojlovski & anor  NSWCA 33; (2010) 75 NSWLRR 245 at  emphasised that the mere fact that the matter could have been raised does not mean it should have been raised (for the operation of the Anshun principle), repeating the statement in Anshunitself that the matter ” has to be so relevant as to make it unreasonable not to raise it ” (my emphasis). Substantial similarity in the factual basis for the claims is said to be a necessary but not sufficient condition for application of the principle ( Gibbs v Kinna  VSCA 52;  2 VR 19 per Kenny JA).
- In Charben Haulage Pty Ltd (in liq) V Beilby (t/as Costello)  NSWSC 510, it was noted that there are a variety of circumstances in which a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings (such as expense, the importance of the particular issues, and motives extraneous to the actual litigation). The test remains one of reasonableness having regard to the circumstances.
- In Champerslife at  – , Handley JA, having considered the test for issue estoppel, went on to consider the broadening of the enquiry to be undertaken where the question was one of Anshun estoppel and made it clear that the enquiry in such a case is not restricted to the pleadings and reasons for judgment (such that reference to submissions would be permissible). His Honour said:
The principle in Henderson v Henderson  EngR 917; (1843) 3 Hare 100 [67 ER 313] at p 115 [p 319] widens the scope of both forms of res judicata estoppel without introducing subjective factors. The test is whether the new point “properly belonged to the subject of litigation” in the earlier proceedings. The relevant evidence is restricted to the pleadings in both proceedings and the reasons for judgment in the earlier.
Where the extended form of res judicata in Anshun or Johnson i s in issue the enquiry is extended to include the reasonableness of the litigant’s conduct in the earlier proceedings, or the existence of an abuse of process in the later.
- Where a party seeks to re-agitate issues that were fundamental matters in earlier proceedings then such an estoppel will lie (see Blair v Curran  HCA 23; (1939) 62 CLR 464 and Murphy & Ors v Abi-Saab & Ors (1995) 37 NSWLR 280 per Gleeson CJ at  -). To do so would ordinarily be said to be against the administration of justice and would risk inconsistent findings from the same Court in respect of the same issues. Thus, in the absence of any or any proper explanation as to the fact that the issues were not raised in the earlier proceedings, a close connection between the facts in separate sets of proceedings may make it unreasonable not to have agitated the issue in the earlier proceedings (see Ling v Commonwealth of Australia  FCA 1646; (1996) 68 FCR 180 at ; Zavodnyik & Ors v Alex Constructions Pty Ltd  NSWCA 438; (2005) 67 NSWLR 457 at – ) and hence raise the estoppel.
- In the proceedings before me, the improper purpose suggested by Mr Aldridge for the issue of the examination summonses and orders for production was said to be that the procedure has been invoked in order to provide Hyperion with an advantage – either by placing pressure on APH to reach a commercial settlement with Hyperion (the latter wishing to be made good by APH for its losses of entering into the lease transaction) or to obtain information to assist in a claim by Hyperion against APP in relation to entry into the sale transaction or against the directors of APL (or APH) in relation to insolvent trading and voidable transactions (as set out in  of my reasons).
- This is clear from the outline of submissions served on behalf of APH on that occasion (a copy of which was tendered in evidence on this application) which included the following:
 The plaintiff seeks to have the examination summonses and orders for production of documents directed to itself and the third to twelfth defendants set aside as an abuse of process in that they were not sought for the benefit of the first defendant but for the apparent benefit of an entity with a potential claim against the plaintiff or its officers (as opposed to the company in liquidation) and put commercial pressure upon the plaintiff for the benefit of that entity. Whilst the second defendant has asserted that the examinations are for the purpose of examining a possible insolvent trading claim against the directors even a cursory examination of the facts demonstrates, that, in the circumstances of this case, there is no reasonable basis for such an enquiry.
 An analysis of the evidence and the terms of the orders for production and the identity of the examiners clearly point to the examinations being for the benefit of Hyperion and not for the benefit of the first defendant.
1iven these conversations, the absence of any genuine question of insolvent trading, the absence of an identified issue of any kind relating to the affairs of the first defendant that requires investigation, the wide and oppressive nature of the orders for production, the obvious benefit to Hyperion and its stated aims it is easy to find that the summonses and orders for production are not for the benefit of the first defendant, are for the benefit of a third party and should be set aside as an abuse of process.
- In my earlier judgment, I summarised the complaints then made as follows (at ) that:
Reliance is placed by Mr Aldridge in this regard on the fact that there has been a second round of Orders for Production seeking a broad range of documents (some of which are said to have no relevance to the examinable affairs of APL or which have already been the subject of an order for production); on the breadth of the requests so made; on what is said to be the weakness of any claim of insolvent trading of the kind now said to be the subject of investigation; on the flavour of what has emerged from the private correspondence between the liquidator, his solicitors and the Hyperion interests; and on what is alleged to have been said (and not denied) by Mr Greenwood at the time of the initial examination of Mr McDonalds to the effect that Hyperion would pursue the matter while funded or refer it to ASIC unless Hyperion was made good.
- The complaint, as then put to me, was that this was an attempt by the liquidator to procure information to support a claim that the creditor may seek to make against a third party (APP) related to the company in liquidation or to put commercial pressure on APH to settle Hyperion’s claim(s). As will be apparent from my reasons for judgment on that application, I was taken in considerable detail through the correspondence between the parties with the view to determining whether there was an improper purpose on the part of the liquidator. There was an unmistakable feeling of deja vu on the present application when I was taken through much (and by reference to the submissions almost all) of the same material again.
- The submission made by Mr Aldridge on the abuse of process application was that the examination summonses were being used for the commercial benefit of Hyperion and were not for the benefit of the company in liquidation. Much the same submission is made in the present application as the basis for the apprehended bias application. And on the present application the same arguments were advanced as to why the correspondence in question disclosed that the liquidator was favouring the interests of Hyperion. All that differed was the conclusion (and relief) sought to be drawn therefrom.
- Mr Golledge notes that the bulk of the evidence served by APH on the present application is material that not only was available at the time of the earlier hearing but was actually led in evidence in that trial. It is submitted that a complaint that the examinations should be halted because they were being conducted not for the benefit of the company as they should be, but for the benefit of Hyperion, is no different in substance from a complaint that the liquidator should be removed because he appears to be favouring Hyperion in the conduct of the winding up-particularly when the only step of substance taken by the liquidator in the winding up has been to prosecute the examination hearings.
- It is further by Mr Golledge that the solicitors for APH, having reviewed the material at the time of the earlier hearing, were (or ought to have been) satisfied that it constituted a basis for seeking the present relief given the substantial similarity in the factual basis for the claims. It is submitted that the determination of this application will require the Court (as it has indeed) to analyse the conduct of the liquidator to date and in particular the degree and extent of fraternisation between himself, and his solicitor, with Hyperion so as to form a view whether this would give rise, in the mind of a fair minded observer, to a reasonable apprehension that the liquidator is acting impartially and for proper purposes and that given that this is effectively the same task undertaken in the earlier proceeding it was unreasonable for APH not to seek the present relief in that earlier action. Hence, in the absence of a reasonable explanation for failing to do so, it is submitted that APH’s conduct should attract the operation of an “Anshun estoppel”.
- Mr Aldridge submits that there is no overlap between the two applications because the first application was to set aside the various examinations summonses and orders for production (on a finding of actual improper purpose) and the present application before the Court is to remove Mr Gleeson on the basis of apprehended or perceived bias and to replace him with Mr Krejci. He draws a distinction between a claim based on actual improper purpose and one based on apprehended bias. I cannot accept that there is no such overlap. As Mr Golledge submits, the same or almost the same factual material (and hence the same broad enquiry) must be made on both applications.
- Given that overlap, was it reasonable for the present application not to be pursued at that stage?
- It is conceded that by 22 June 2011, APH’s solicitors had the relevant documents on which they now contend there is apprehended bias (other than the 24 June and 6 July letters). Those documents were tendered and rend (in close detail) on the application before me. Mr Harkin was sufficiently appraised of the basis on which his client had a claim of apprehended bias to be able to write to the liquidator’s solicitors on 22 June 2011 citing case law as to independence of liquidators and to assert that there had been a deliberate misstatement in the liquidator’s Declaration of Independence (and noted that the correspondence would be tendered in Court the following day).
- Although not conceded by Mr Harkin, who was not in Court on 23 June 2011, no evidence was given for the liquidator that changed the evidentiary basis on which the assertions contained in the 22 June letter had been made, so that when Mr Harkin wrote on 24 June 2011 to assert that the liquidator was not independent and ask that he voluntarily agree to be removed as liquidator, he can only have been basing this on the material produced to the Court on 23 June (which he said he had sifted and which had by then developed in his mind a concern as to the liquidator’s independence). In that letter he put the defendant clearly on notice of an intention to move the Court for the liquidator to be replaced or alternatively (and seemingly by way of a threat to Hyperion since this was conceded to have no logic on the basis of the case as APH put it) to appoint a special purpose liquidator to investigate claims against Hyperion. Neither step was taken.
- Mr AIdridge submitted that by the time that most (not all) of the evidence of the relationship between Mr Gleeson and Hyperion and R&G Consulting had emerged “the dye had been cast and the nature of the application for hearing on 23 June 2011 had been fixed”, that being to set aside the examinations summonses and production orders.
- It is submitted that had an application at that stage been made in order to amend and to include the removal of Mr Gleeson, there would have been objection thereto and APH would have been accused of attempting to delay the examinations (though Mr Aldridge readily concedes this is speculation). It is also submitted by Mr Aldridge that to have made the very serious application to remove Mr Gleeson on the eve of the hearing could itself have amounted to abuse of process. (It seems, however, that Mr Harkin was sufficiently of the view that there was an apprehended bias case that he wrote making the allegations contained in his 22 and 24 June correspondence and threatened an application to remove Mr Gleeson. This is now characterised by Mr Harkin as giving Mr Gleeson an opportunity to consider his position and retire as liquidator (and I accept that such an opportunity was not inappropriate to be given). However, the instructions to make an application had been received (over a coffee meeting according to Mr Harkin) and were conveyed on 24 June 2011.
- At that time the hearing had been adjourned to 27 June and there would have been time to seek an amendment which, at the very least, would have brought to the fore the question whether the claims should have been heard together at a time before judgment had been handed down on only part of the perceived claims.
- I accept that Mr Harkin was concerned not lightly to engage in the course of action in which APH has now engaged in order to seek the removal of the liquidator. However, the effect of that forensic decision in the course of the earlier proceedings has been to result in a second hearing covering almost completely the same material as the first hearing (inevitably involving duplication of cost and Court time being devoted to a matter that would (having regard to its subject matter and the evidentiary material) more conveniently have been heard as part of the earlier hearing, at the expense of other litigants’ matters). The very fact that it has been necessary in submissions and in preparing this judgment to go through in detail the same volume of correspondence (with minor additions) and to address the same submissions as to that correspondence (albeit going to different issues) highlights this.
- Mr Aldridge characterises the Anshun estoppel defence as an attempt by Mr Gleeson “having refused to provide information about the nature of his relationship with the Hyperion and R&G interests both before and after his appointment to office until the very last” to preclude APH from relying on this evidence to remove him from office. It is submitted that “In essence, Mr Gleeson is contending that he ought to be able to avoid scrutiny as a result of being less than full and frank with the Accord interests from the very beginning”. Mr Aldridge notes that APH made efforts to ascertain the nature of the relationship well before the application of 16 June 2011, but that Mr Gleeson had declined to disclose that relationship (referring to Mr McDonald’s letter of 27 May 2011 to which I have earlier referred). With respect, the fact that Mr Gleeson may not fully have disclosed matters at an earlier time does not make reasonable a failure to raise those matters in the course of a hearing in which they would most appropriately have been raised.
- It is submitted that the full nature of the relationship with R&G Consulting only emerged from Mr Hayter’s letter of 6 July 2011 (by which time I had completed the hearing – on 27 June – and reserved my decision). However, what was known as at 6 July 2011 was simply that there had been some referrals from time to time from the accounting time (not, as Mr Harkin chose to describe it, that a significant portion of work had been derived from that source) and one small matter to which reference was made. That does not seem to me to amount to startling new evidence to suggest that the application could not reasonably have been made at an earlier time – particularly given the trenchant criticism by then already made of the liquidator (with, Mr Harkin would maintain, a legitimate basis).
- As to the question whether it was reasonable or not in all the circumstances to press the application (that being the question posed in Rippon v Chilcotin Pty Ltd & Ors  NSWCA 142; (2001) 53 NSWLR 198), Mr Aldridge characterises the position as being that, by the time of the hearing the nature of the application had been set (though it is by no means uncommon for amendment applications to be made during the course of and indeed sometimes even after the hearing as evidence or new evidence emerges or the significance of it is newly perceived) and that evidence of the relationship with Hyperion had emerged on the eve of the hearing, but the nature of the relationship with R&G Consulting (contained in the 6 July letter) had not. It is thus submitted that it was reasonable not to bring the application at that stage and there is no abuse of process in the bringing of this fresh application.
- In Rippon , Handley JA held as follows from - and :
The accountants were not parties to the action in the Supreme Court, nor were they privies of the vendor, and they cannot claim the benefit of any cause of action estoppel or issue estoppel. See James Hardie & Co Pty Ltd v Barry  NSWCA 353; (2000) 50 NSWLR 357, 362 per Spigelman CJ. However in Reichel v Magrath (1889) 14 App Cas 665 the House of Lords held that a defence which was not barred by res judicata estoppel may nevertheless be struck out as an abuse of process. Lord Halsbury said at 668:
“… it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again … There must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure …”.
Mr Jucovic QC, who appeared for the respondents, said that that case could have been decided on the ground that the defence of the former rector was res judicata because the new rector claimed under the Patrons and the Bishop, who were parties to the former action, or because the first decision related to the status of the former rector and was a decision in rem. See Spencer Bower & Ors “Res Judicata”, 3rd Ed 1996, p121, and Arthur J S Hall & Co v Simons UKHL 38;  3 WLR 543, 572 per Lord Hoffmann. However the availability of a narrow ground for decision does not displace the actual ratio if the court decides the case on a wider basis, and in any event Reichel v Magrath has been followed by the High Court. See Walton v Gardiner  HCA 77;(1993) 177 CLR 378, 393 and Rogers v The Queen (1994) 181 CLR 251, 287-288.
The issue of reliance or causation was an essential constituent of the purchasers’ cause of action for misleading and deceptive conduct. See Wardley Australia Ltd v Western Australia  HCA 55; (1992) 175 CLR 514, 525. The finding by Brownie J that the purchasers had not relied upon the vendor’s representations in the 1991 figures in annexure D related to an ultimate fact, fundamental to the decision, which formed part of the right in issue. See Blair v Curran  HCA 23; (1939) 62 CLR 464, 532 per Dixon J.
In those circumstances it could fairly have been said, in the language of the joint judgment in Anshun (602), that the claims against the accountants were so relevant to the subject matter of the first action that it was unreasonable for the purchasers not to rely upon them in that action. Compare Morris v Wentworth-Stanley  QB 1004 (CA), 1011, 1017.
- As to the Anshun estoppel claim, Mr Aldridge rightly notes that there is not a mechanical approach to the question (citing Champerslife at pp 3-4). Rather, there must be a value judgment having regard to all the circumstances surrounding the first hearing and the current hearing in order to assess whether it was reasonable not to run the present application in those proceedings (citing Rippon at ). Mr Aldridge submits that for the reasons set out above it was reasonable to defer the commencement of these proceedings and points to correspondence from the liquidator’s solicitors on 7 July 2011 in which they asserted that such an application was premature and might be affected by my judgment (handed down as it transpired on 8 July) in the earlier proceedings.
- In that regard, there is a difference in my view between making such an application during the course of the hearing and one after decision has been reserved, at least where the opposing party has raised issues as to the appropriateness of so doing. I accept that it is not open to the defendant to rely on a failure to bring the application in the period at least from 7 July until judgment was delivered the next day (having regard to the letter from his solicitors asserting that it would be inappropriate so to do), and perhaps (having regard to the views expressed in that letter) from the time judgment was reserved on 27 June 2011. That does not explain the fact that no steps were taken to raise the issue between 22 or even 24 June and 27 June 2011. All the material was then available on which APH asserts apprehended bias (with the exception of the July correspondence and the letter of offer, and those at best go to the strength of the application not its basis).
- Having taken into consideration the matters raised by Mr Aldridge as to timing and the concerns Mr Harkin expressed as to the commencement of an application of the kind such as this (and his preference to see if the matter could be amicably resolved without the need for litigation), I am nevertheless firmly of the view that it was not reasonable of the plaintiff to defer making the application to remove Mr Gleeson until after the outcome of a hearing in which the very same factual ground (and the same conclusions sought to be drawn therefrom – such as the alleged unfair preferential treatment said to have been shown to Hyperion) had been determined (when all the material that Mr Harkin considered necessary in order responsibly to call for Mr Gleeson’s removal were at hand and, by 24 June, had been explored in great detail). On the necessary value judgment contemplated by Champerslife , I am not persuaded by the submissions that an Anshun estoppel would not lie.
- Mr Aldridge raises a further consideration, which it is submitted should be taken into account, that being the interests of the administration of justice. He places reliance on what was said by Young J in Re Bipso in relation to the Court’s scrutiny of the officers of the Court and the exercise of the powers of liquidators. (As noted earlier, strictly speaking Mr Gleeson is not an officer of the Court.)
- Mr Aldridge submits that if the evidence warrants a finding of reasonable apprehension of bias (which, as it turns out I have not made) then even if the application should have been made at an earlier stage in the interests of justice it should still be permitted to be made since otherwise the message conveyed to the reasonable observer would be that the Court is prepared to countenance behaviour which otherwise amounts to apprehended bias.
- I think there is some force in the submission that if I had found a case of apprehended bias then as a matter of public policy I should not hold that APH was estopped from now raising it. That would raise competing public policy interests (such as whether in the interests of justice parties should be permitted to occupy Court time and resources on factual matters that have already been determined in substantially the same context and whether, though that was not ultimately the case here, the spectre of conflicting first instance decisions should be permitted in that regard). (In that regard, in Anshun itself, the Court indicated that an important factor to be taken into account was whether the conduct in question could contribute to the existence of conflicting judgments, such as those which may appear to declare rights which are inconsistent in respect of the same transaction.) In the time available to me I have not found an answer as to how those particular competing public interests each relating to the administration of justice should be balanced. It could not surely be the case that APH could defer, until whenever it chose, an application to remove the liquidator and then raise the public policy ground that there must be seen to be independence in the administration of justice (after further steps had been allowed to proceed in the liquidation. However, it may be that the length of the delay in this case would not be sufficient to preclude such an application now being made even though the failure to make it earlier raises the Anshunprinciples.
- It is not necessary for me to determine that issue. However, had it arisen and had I been of the view that the application should now be permitted to be raised notwithstanding the availability of an Anshun estoppel, I would nevertheless in those circumstances have found that the delay in raising it could have cost implications and would be relevant in the exercise of discretion as to determining whether to remove, and the time of removal, of Mr Gleeson from office.
- As to a finding of Anshun estoppel I am therefore of the view that in all the circumstances the principle would have applied. Serious as the allegations were (and are) and notwithstanding that there may have been complaint at the time they were raised, the allegations are so wholly bound up in the material required to be reviewed by the Court on the last occasion that I consider it was not reasonable not to raise them at that time. (Of course, had an amendment application been made and successfully resisted, then it might have been difficult for an Anshun claim now to be raised.)
- As a matter of discretion, I am inclined to think that at this stage the delay was not such that an Anshun estoppel should preclude a decision that Mr Gleeson should be removed for apprehended bias at all (assuming that such a finding been made). I would (instead) have taken that delay into account in the timing of his removal from office.
- Finally, as to whether there is an abuse of process in the present application even absent an Anshun estoppel , Mr Aldridge places weight on the fact that there is no application before the Court (although such was adverted to, I note, in correspondence between the solicitors prior to this application) to halt the examinations scheduled for 6 September 2011.
- Mr Aldridge submits that (under the direction of the Court) the parties have co-operated to ensure that Mr Hayter receives the documents he requires to conduct the examinations next week. (That said, Mr Aldridge in his submissions in reply adverted to the possibility that if Mr Gleeson is to be removed the 6 September 2011 examinations might need to be rescheduled to allow the new liquidator time to become familiar with the administration and the subject-matter to be covered by the examinations scheduled on 6 September 2011.) It is submitted that the examinations will proceed, albeit on a new date, and have not been halted. (Pausing there, these are examinations that were adjourned from June in light of the then application for the examination summonses to be set aside. It seems undesirable to me for there to be yet further adjournments when there is a solicitor already prepared to conduct the examinations and they have been scheduled for quite some time.)
- As to the chronology on this aspect of the matter, Mr Aldridge notes that the application before me in June this year was commenced on 16 June 2011, with 4 affidavits in support served on 17 June 2011 and that the documents produced by Mr Gleeson (on which the present application is largely based) were not produced until the eve of the hearing in answer to a Notice to Produce dated 17 June 2011. It is therefore accepted that APH’s solicitors had the documents which ground the present apprehended bias application from no later than 22 June 2011. Mr Harkin said in the witness box that he may not have reviewed them all by the first day of the hearing on 23 June 2011 but nevertheless their purported significance must have been apparent because they were tendered and I was taken through the folder of documents almost one by one on that occasion.
- The timing of the matter (it seems to me) strongly supports an inference that this is yet another attempt to avoid the examinations proceeding. However, it is not necessary for me to make any findings as to abuse of process and I do not do so.
- For the reasons set out above, I dismiss the application for orders for the removal of Mr Gleeson from office. I order the plaintiff to pay the defendant’s costs of the application.
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