Ample Skill Limited v Geoffrey Reidy, Andrew Barnden & Paula Smith in their capacities as the joint & several liquidators of Balamara Resources Limited (in liquidation) (ACN 061 219 985)

2025/00267011

CORPORATIONS – the applicants seek leave to appeal from a judicial direction that liquidators were justified in refusing to convene a meeting on the basis that the direction was not reasonable. Under s 75-15 of the Insolvency Practice Schedule (IPS) in Schedule 2 of the Corporations Act 2001 (Cth), the creditors of a company have the power to direct a liquidator to call a meeting of the creditors, and the liquidator must convene the meeting unless the direction was not reasonable. Rule 75-250 of the Insolvency Practice Rules (Corporations) 2016 (Cth) define when a direction to convene a meeting will be "unreasonable". In this case, the liquidators refused to convene the meeting and applied to the Court under s 90-15 of the IPS for a judicial direction that they were justified in having so refused, which was given. His Honour found that: (i) the determination of whether a direction to call a meeting is unreasonable turns on what the meeting was intended to do; (ii) the good faith requirement in r 75-250 does not require that the liquidator had a reasonable basis to form an opinion, but rather that they genuinely held the opinion; (iii) it was artificial to require liquidators to draw a distinction between whether the resolutions might be vexatious or prejudicial (as opposed to calling the meeting itself); and (iv) identifying prejudice resulting from the passing of the resolutions is enough for a liquidator to discharge their obligation under r 75-250. The applicants raise three issues on appeal: (i) whether the liquidator ought to have asked whether the direction is unreasonable, not whether the removal would be unreasonable; (ii) what the liquidator must do to fulfil his obligation to perform the balancing exercise in r 75-250(2)(a); and (iii) whether an opinion formed in good faith under r 75-250 requires the opinion to have a reasonable basis. In respect of principle, the applicant contends that this is "the first case to squarely raise the interpretation of r 75-250". In respect of public importance, the applicant argues that the primary judge's construction undermines the functioning of the powers that the legislature chose to confer on creditors as part of the 2017 reforms to the conduct of external administrations.

In the matter of Balamara Resources Limited (in liquidation) [2025] NSWSC 618