The recent case of Gadsden v MacKinnon (Liquidator), in the matter of Allibi Pty Ltd (in liq) [2023] FCA 647 is an unequivocal endorsement of the proposition that serious allegations and claims by a liquidator with no proper foundation, or evidence to justify the claims, may be seen as an abuse of process.
Liquidators are often hamstrung in their investigations, being strangers to the company’s affairs and working with incomplete and unreliable information, coupled with unwilling and unco-operative directors. Yet they are charged with identifying recovery actions, for the benefit of creditors, in a timely manner.
Balanced against this imperative to act, and to act with due speed, liquidators, as officers of the court, are not “excused from compliance with rules applicable to all officers of the court, including rules and standards that govern the threat, initiation and conduct of legal proceedings. And it does not mean… that they can act oppressively or harshly, by seeking to exert pressure, with the spectre of legal costs, or causing undue embarrassment and the like…..”
In recognition of the unenviable position liquidators often find themselves in, they have been conferred with special powers, including the ability to summons directors to give evidence.
The making of serious but purely speculative allegations or ambit claims in the hope of getting to the bargaining table is not justifiable or appropriate for a liquidator. In this recent case, such action was seen as sufficient cause for the removal, and replacement, of the liquidators concerned.
August 2023