Special purpose liquidators have properly been appointed by the Federal Court to some aspects of the Queensland Nickel companies of Clive Palmer but it would have been useful to know, from the Court, why. In any event, the High Court has dismissed Mr Palmer’s constitutional challenge to examination summonses issued at the request of those liquidators.
The High Court has dismissed Mr Clive Palmer’s constitutional challenge to section 579A of the Corporations Act, issued at the request of the “special purpose liquidators” appointed to aspects of his companies.
At the end of the day’s hearing, on 10 November, the High Court said it would give its reasons later.
Reasons for a court’s decision
Reasons for a court’s decision are important aspects of our system of justice, for many obvious reasons which need not be explained here.
What is odd about this case is that there were no reasons given by Justice Dowsett of the Federal Court for the appointment of the special purpose liquidators (SPLs) in May 2016. The orders made are themselves recorded in a later decision, by Greenwood J, but no reasons: Palmer, in the matter of Queensland Nickel Pty Ltd (In Liq) v Parbery  FCA 1048. What Justice Greenwood explained in that judgment is that on 18 May 2016, the Commonwealth and the Commissioner of Taxation together with the three SPLs themselves applied to the Federal Court for an order appointed SPLs pursuant to ss 472(1) and 511 of the Corporations Act for particular purposes. Orders were made that day, and these are set out in Greenwood J’s judgment.
Appointment of a special purpose liquidators or trustees
An appointment of a special purpose liquidator, or bankruptcy trustee, is becoming more common, extending beyond the early bases of resolving a potential conflict of the appointee by having the area of conflict separated out and administered by another appointee for that “special purpose”.
It has now become used more often by a large creditor or one with funding available, who wants to appoint its own person as liquidator for the purpose of investigating its own claim and how it arose. This was the case in State of Victoria v Goulburn Administration Services (in liq) & Ors  VSC 654 about which I have made come comment. In that case, the Judge relied upon prior authorities to support his decision.
Whatever decision a court comes to, including to refuse such an appointment, reasons should be given and published. Appointment of an SPL is not a rubber stamp or consent exercise given, for one thing, the additional cost to the estate often arising.
The orders of Dowsett J were no doubt properly made and the SPLs are appointed. If the High Court were to need to know why, reasons are not available. The Court referred only once to the status of the special purpose liquidators, Justice Kiefel merely saying, during submissions, that the Court had to “exercise its mind” in relation to the appointment of liquidators of that kind: Palmer and Ferguson v Ayres & Ors in their Capacities as Liquidators of Queensland Nickel Pty Ltd (In Liq) & Anor  HCATrans 265 (10 November 2016).
I will write again when the High Court gives its reasons for decision.