Last in liquidator can’t convince court to extend

Hall Chadwick’s Ginette Muller.
Marcus Watters of Hall Chadwick.

Persuading a court to extend the deadline by which time you must commence proceedings can be a hard slog, particularly when your unfunded predecessors found nothing to see.

Such however have been the travails recently endured by Jirsch Sutherland Brisbane partner Chris Baskerville and thoughtfully catalogued by Queensland Supreme Court judge Glen Martin in Baskerville v Baskerville & Ors [2021] QSC 292.

The judgment records the refusal last week by his honour of Baskerville’s application to extend the time to commence unreasonable director-related and uncommercial transaction proceedings against David Orth, former director of Professional Representatives Pty Ltd.

There were several impediments to the application succeeding, including Baskerville’s filing of the application only two days before the time limit for commencing such proceedings expired on 11 July 2021.

Another factor inhibiting success was the admission into evidence of an email exchange between Orth and Baskerville’s lawyer Ben Warren of Ellem Warren Lawyers.

No doubt frustrated by what he and his client saw as non-compliance with a Section 530B Notice Warren told Orth in May this year that “we already have a good barrister briefed to prepare the claim and that claim should be ready to file against you and Rachel (Mr Orth’s wife) well before 30 June 2021.”

Predictably, Orth and the other respondents pounced on this, arguing that “The statement “… we already have a good barrister briefed to prepare the claim and that claim should be ready to file against you and Rachel well before 30 June 2021” is at odds with the suggestion that the applicant could not have commenced a proceeding within time”.

The circumstances that led to the 11th hour extension application however are unusual because whilst Professional Representatives was placed into liquidation back on July 11, 2018 Baskerville wasn’t either of the original appointees.

Those roles were filled by then Jirsch operatives Ginette Muller and Marcus Watters, each of whom has since defected to Hall Chadwick.

The pair were appointed liquidators by a resolution of the sole member and director, one Jennifer Kaye Dobbie, 55 of Amity Point in Queensland.

Muller subsequently resigned from the appointment in July 2019 and the court heard that due to a lack of funding only “limited work” was undertaken between February 2019 and April 2020.

In a chronology of events based on affidavits provided by Orth and Baskerville there is reference to a meeting between Watters and Orth that took place in February 2020.

According to Justice Martin: “Mr Orth says that he met with Mr Watters with respect to another matter and, at that meeting, Mr Watters told him that there were no outstanding issues in the liquidation and that he did not need any further information.”

When we contacted Watters to verify the court record his recollection was different.

“I have read the Brief History section or the Order and confirm Orth’s statement is incorrect, I have never met Mr Orth. There has been no meeting between us,” Watters said.

“I do recall he did call me on the phone around June 2020, which was a surprise, as I had already resigned from Jirsh Sutherland and the appointment. I advised him at the time to call Jirsch Sutherland.”

While somebody’s clearly misremembering the events we’re dismembering we also asked Watters if he and Muller had made efforts to secure funding during their time as liquidator.

In reply Watters referred iNO to Baskerville on the basis the the current liquidator was in possession of the books and records.

Watters did not reply after iNO suggested that it wouldn’t be necessary for him to have the books and records to recall if he and Muller ever investigated the possibility of securing funding to assist with their investigations.

Meanwhile Baskerville’s job of persuading the court that he had reasonable grounds for making further inquiries and it was therefore reasonable to grant him an extension was also hindered by the findings of Muller and Watters.

In a report to creditors in June 2018 Muller advised that “she had not identified any unfair preferences, that she had not identified any uncommercial transactions, that she had identified payments totalling approximately $8.3 million which appear to have been paid to related entities and that she would review whether those transactions were unreasonable and commercially recoverable and that the liquidators expected the liquidation to take between six and 12 months from that time”.

Obviously Baskerville would have been aware of his predecessor’s conclusions but he must have thought the potential for a substantial recovery justified the risk but after the judge’s refusal he’s nownreduced to arguing the toss on costs.

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