Judge chides ABL and MO over BBY emails

BBY liquidator Stephen Vaughan
BBY liquidator Stephen Vaughan.

The brain-contorting complexity of the BBY Limited liquidation is back on display after liquidators Stephen Vaughan and Ian Hall sought to retreat to a simpler regime for the recovery of costs.

The simpler regime was first put in place in 2015 by Justice Paul Brereton, who has since fled to the Court of Appeal.

At the time the regime was seen an interim one that could and would be amended.

But In the matter of BBY Limited (receivers and managers appointed) (in liquidation) [2019] NSWSC 998 Justice Kelly Rees outlines how issues like “tracing claims” available to some BBY creditors have complicated the cost recovery process to the point where the liquidators have been forced to seek to return to the original process.

And in doing do she also sends a few shots across the bows of Arnold Bloch Leibler and Mills Oakley which may not have been entirely deserved.

“A potential difficulty has presented itself as the legal representatives for the second and fifth defendants apparently consider themselves to have ceased to act for their clients but have not filed a notice of ceasing to act,” Justice Rees said.

“Their non-appearance appears to have occurred in the following circumstances.

“On 2 May 2019, the solicitors for the fifth defendant sent an email to the liquidators:

“Dear Colleagues

We would be grateful if you could please remove Jonathan Milner (of ABL) and me from this email chain and any further correspondence relating to the BBY liquidation.

Our client, Mr Nadin, was added as a representative defendant to the proceedings for the purposes of representing IB clients in respect of the directions and other relief sought by the liquidators.

“Those proceedings have been determined. The Court has made final orders, including in relation to costs, and our client’s final costs approval application has been heard and determined.

“Our retainer to act for Mr Nadin has been completed. We do not hold instructions to act for Mr Nadin, or any other IB client, in relation to any ongoing matters concerning the winding up of BBY,” Justice Rees said.

According to the judge Mills Oakley, which is representing the second defendant in the proceedings, sent a similar email to the liquidators on 1 July 2019.

The judge pointed out that neither Arnold Bloch Leibler nor Mills Oakley had filed a notice of ceasing to act under rule 7.29 of the Uniform Civil Procedure Rules 2005 (NSW) and a reader might infer her honour was not entirely satisfied.

iNO however has learned that those criticisms may have been founded on a misinterpretation of the emails’ intentions, and that both ABL and MO remain solicitors of record for their respective defendant/clients.

It might not be outlandish to speculate that fresh emails may have already been dispatched to Justice Rees’ associate providing the requisite clarity.

Meanwhile, Vaughan and Hall are continuing to seek to recover almost $6 million in potentially voidable transactions from BBY directors Glenn Rosewall and his father, tennis great Ken Rosewall.

To that end in August this year they had Grant Thornton’s John McInerney and Phil Campbell-Wilson appointed liquidators of G.A.R.F. Pty Ltd, the trustee of of Glenn Rosewall’s superannuation fund.

While Glenn Roswall declared himself bankrupt in March 2019 the liquidators also continue to press claims against Ken Rosewall through pursuit of a claim for $3.5 million paid to the elder Rosewall’s company FICEMA Pty Ltd. Please take a moment to support INO’s continued chronicling of the insolvency sector.

About the Author

Peter Gosnell
Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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