Being a liquidator can be a risky business. Liquidators (and their legal advisers) have a long tradition of putting their bodies on the line for the sake of their work, selflessly risking personal harm through exposure to such dangers as high cholesterol, liver failure and other prandiogenous ailments.

Injury by gunshot is, thankfully, less commonly encountered. For this we must thank Justice Young. Twenty years ago, sitting as a judge of the New South Wales Supreme Court, he delivered a judgment in which the issue of shooting liquidators was condemned in the harshest possible terms.

In ERS Engines Pty Limited v Wilson (1994) 35 NSWLR 193, the relationship between the liquidator and the director of the company had deteriorated to the point where it involved “decided hate from both parties towards the other”.

The judgment records a sorry tale, highlights of which included:

1. an allegation that the liquidator quoted $20K for the VA but charged $40K;
2. threats by the liquidator to sue the director and his lawyers for defamation;
3. harassment of the directors by the liquidators’ staff;
4. deliberate misleading of the court by the liquidator and his lawyers in order to obtain injunctions preventing the directors from leaving Australia and requiring them to surrender their passports; and
5. of most concern, a rumour that the director had a gun and was planning to shoot the liquidator’s employee.

Justice Young regarded the liquidator and his staff as at least partly to blame for the parties’ bad relationship, noting that “it takes two to tango”. Referring to section 530A (which requires directors to assist liquidators on demand), he observed that “liquidators are not to consider that they can use this section to hound and oppress company directors for whom they have formed a dislike by making all sorts of inconvenient demands”, adding:

Liquidators must be careful, no matter how annoying or provocative they may consider the directors’ conduct, to use whatever public relations skills are available to them to solve “people problems” diplomatically.

That said, he was not impressed by the directors’ behaviour either. Addressing the suggestion that the director proposed to shoot the liquidator’s staff member, his Honour was appalled:

…There was no denial anywhere by the male director that he had a gun and had made murmurings about employing that gun towards the liquidator’s assistant… There was no excuse at all for Mr Wilson to take this un-Australian attitude towards the liquidator’s assistant.

There you have it. Seldom has such strong language been used in the pronouncement of a senior judge. His Honour clearly felt that the deliberate shooting of liquidators was so wrong that it justified unambiguous, vehement condemnation.

On a final note, not content with lambasting both parties, Justice Young then turned his attention to solicitors – none in particular, just solicitors generally – observing:

In earlier days the Court was perhaps more lenient on solicitors who appeared in court who did not live up to the standards of advocacy which are expected… Of course, the same thing applies to barristers, but I particularly mention solicitors in this warning because the Court, for far too long, has tolerated less than fair average quality of argument from many solicitors.

Having given everyone a good serve, his Honour then dismissed the liquidator’s application, ordered him to pay the directors’ costs, and returned to his Chambers, no doubt satisfied with a good day’s work.

How does this affect me?

It probably doesn’t, but it serves as a good reminder about the duties of liquidators when dealing with difficult parties, and the overriding duty of frankness with the court.