FEG gunning for pre-appointment documents

Henry Carr, the ebullient litigator who’s been bulling about the china shop of circulating asset entitlements since 2019 may have temporarily vacated his position within the Department of Employment and Workplace Relations (DEWR) but as a hearing in the Federal Court yesterday demonstrates, his loathing of legislative lacunae lingers.

As a creditor in the winding up of Mentor Education Pty Ltd (Mentor) Carr and his team in DEWR’s Recovery & Litigation Division have been corresponding fulsomely with Lowe Lippmann partner Gideon Rathner in his capacity as liquidator of Mentor.

“It would not be appropriate for me to comment as to do so will affect my ability to act independently should you require a formal appointment.” Gideon Rathner, Lowe Lippmann.

That correspondence the court heard revolves around documents Carr wants which Rathner isn’t prepared to provide, at least while there’s doubt around the function and extent of Section 486 of the Corporations Act and how it interacts with the corresponding provisions in the Insolvency Practice Schedule (IPS).

Rathner’s counsel said his client was present as a contradictor, which seems fair enough given Carr had already agreed to pay Rathner’s costs of complying with the request and his costs of the application.

The sticking points between the parties relate to the Commonwealth’s request for pre-appointment documents and iNO’s mail is that its one document in particular that’s sought, though the nature of its contents was not revealed.

Rathner’s DIRRI however contains plenty of pre-appointment detail.

For a start this is not the first time he’s been involved with Mentor Eduction.

According to the March 2023 DIRRI he and then colleague David Coyne were appointed administrators and then deed administrators of Mentor in 2012. Coyne left to join BRI Ferrier in 2013 and the deed wholly effectuated in 2015.

The March 2023 DIRRI also refers to pre-appointment discussions with Mark Sinclair beginning in December 2022.

Sinclair is identified as Rathner’s appointor, a former director of Mentor and a secured creditor.

The DIRRI references emails in the weeks prior to his appointment between Sinclair and Rathner in respect of Safe Harbour.

The current director, Ionna McKimmie seemingly took no part in the discussions until Sinclair sent Rathner an email from McKimmie indicating her intention to resign. That wasn’t possible as she was sole director.

Then there is an email from Sinclair to Rathner proposing something Rathner wouldn’t endorse. What that was is not disclosed. But Rathner’s response is.

“It would not be appropriate for me to comment as to do so will affect my ability to act independently should you require a formal appointment,” Rathner tells Sinclair.

Could Sinclair’s undisclosed email be the document Carr seeks? iNO’s not convinced but in a statement the Litigation & Recovery division told iNO that “the department is seeking access to documents regarding transactions prior to the administrator’s appointment”.

Yesterday’s hearing then would seem to be a preliminary matter. Depending on what Justice Penelope Neskovcin delivers we anticipate more robust action from Carr’s replacement Tara Mazulla given the $516,978.00 FEG’s paid out and her undoubted eagerness to make her mark while DEWR’s Disruptor-in Chief is capsizing crockery elsewhere.