MEDIA RELEASE Tuesday 21 November 2006 LAWFUEL – Law News Network -…

MEDIA RELEASE
Tuesday 21 November 2006 LAWFUEL – Law News Network – The registration of Sydney liquidator, Mr Ronald Dean-Wilcocks, has been suspended for 12 months, resulting from his failure to abide by professional standards relating to independence. The decision of the Companies Auditors and Liquidators Disciplinary Board (CALDB), made on application by the Australian Securities and Investments Commission, has been upheld after a Federal Court action by Mr Dean-Wilcocks, challenging the decision of the CALDB, was dismissed.

Mr Dean-Wilcocks’ application to the Federal Court followed a finding by the CALDB on 22 December 2005 and orders made by the CALDB on 12 April 2006, that he had failed to carry out or perform adequately and properly the duties or functions legally required of a registered liquidator. ‘This outcome is important for two reasons. Firstly, it highlights the significant consequences for liquidators who fail to maintain independence and avoid conflicts in the administration of companies over which they are appointed.

Secondly, Justice Tamberlin’s decision confirms that it is permissible to have regard to professional standards in deciding whether the office of registered liquidator had been ‘adequately and properly’ carried out or performed’, Ms Jan Redfern, Executive Director of Enforcement said. The CALDB’s findings in December 2005 and orders in April 2006 against Mr Dean-Wilcocks related to: • his conduct concerning the creation of a commercial relationship that enabled him to accept appointments as administrator of Freedom Pools (NSW) Pty Ltd, Holilop Pty Ltd and W & C Callen Electrical Pty Ltd where there existed a prior continuing professional relationship of a related practice with the appointee company during the two years prior to Mr Dean-Willcocks’ appointment, displaying a lack of professional independence; • his failure to adequately to disclose to creditors the extent of his firm’s relationship with related accounting practices in respect to those three appointments; • the creation of a conflict of interest in accepting appointment as administrator to one company where there was an existing relationship with a creditor of the appointee company; and • his failure to adequately disclose to creditors the extent of his and/or his firm’s professional relationship with the shareholders of a company. Following the CALDB’s orders in April 2006, Mr Dean-Wilcocks applied to the Federal Court for the CALDB order to be reviewed, at which time he successfully obtained a stay of the CALDB order from the Court, preventing publication of the CALDB order, pending the outcome of the review application.

In his application to the Federal Court, Mr Dean-Wilcocks contended, amongst other things, that the CALDB had erred in law in exercising its power to suspend his registration as a liquidator. He claimed that the CALDB wrongly construed section 1292(2)(d)(ii) of the Corporations Act by concluding that it is permissible to have regard to professional standards in deciding whether the office of registered liquidator had been ‘adequately and properly’ carried out or performed. He therefore submitted that the CALDB had no jurisdiction to suspend his registration as a liquidator. In a judgment delivered on 8 November 2006, Justice Tamberlin comprehensively dismissed the additional grounds advanced by Mr Dean-Wilcocks, including claims that the CALDB had: • applied the wrong test to determine whether the applicant was in a position of conflict when he accepted appointments as administrator of Freedom Pools (NSW) Pty Ltd, Holilop Pty Ltd, W & C Callen Electrical Pty Ltd and MailTV Pty Ltd; • applied the wrong test to determine whether sufficient disclosure of Mr Dean-Wilcocks’ previous involvement with the shareholders and secured lenders of MailTV had been made; • applied the wrong test to interpret the relevant professional standards; and • did not take into account the evidence of an expert in concluding that Mr Dean-Wilcocks was in a position of conflict or relevant factors when making its decision, including considerations of comparable penalties handed down by the CALDB in other matters.

‘Independence is fundamental to ethical standards of professional conduct. Businesses and members of the public must be able to rely on auditors and liquidators to meet their responsibilities as required by the law and their profession. ASIC regards any breaches of those responsibilities as extremely serious and will take appropriate disciplinary action against liquidators and support the orders of the CALDB when challenged’, Ms Redfern said.

Following the dismissal of Mr Dean-Wilcocks’ application, his registration as a liquidator has been suspended for a period of twelve months, commencing 60 days from the day that the CALDB order takes effect. This will enable Mr Dean-Wilcocks to take effective steps to transfer all of his current appointments to other registered liquidators. This will involve application to the Court in some cases, as Mr Dean-Wilcocks an official liquidator. The Federal Court has also ordered that Mr Dean-Wilcocks pay ASIC’s costs for the Court proceedings, which is in addition to the CALDB ordering that he pay 50 per cent of ASIC’s costs in those proceedings.

The judgment of Justice Tamberlin was published on Thursday 16 November 2006 following the withdrawal of a suppression application by Mr Dean-Wilcocks and orders of Justice Tamberlin, which had previously prohibited publication of the decision. The original decision of the CALDB takes effect from today. Mr Dean-Wilcocks is the second liquidator from specialist insolvency firm Star Dean-Wilcocks to be disciplined by the CALDB, following action against Mr John Edward Star in May 2002. For further information contact: Jan Redfern Executive Director, Enforcement Directorate Telephone: 02 9911 2191 Mobile: 0411 119 210 Angela Friend ASIC Media Unit Telephone: 03 9280 3338 Mobile: 0412 058 800

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