Australia: The fair minded observer - test of impartiality and independence of liquidators

This week's TGIF considers Ziziphus Pty Ltd v Pluton Resources Ltd (Receivers and Managers Appointed) (in liq) [2017] WASCA 193, where the Court considered the impartiality and independence of liquidators.


A company (Pluton) which was engaged in iron ore mining had been struggling for a number of years. In mid-2013, Pluton completed a US$24 million debt funding package with General Nice Recursos Comercial Offshore De Macau Limitada (GNR), and granted security for the performance of its financial obligations to GNR. Pluton became insolvent in April 2014.

On or about 3 November 2014, GNR appointed receivers and managers to Pluton. From mid-2015 Pluton failed to discharge its royalty obligations to the State of Western Australia. Following numerous attempts to raise funds, the company finally received funding from GNR on 8 September 2015 on the condition that it enter into administration and execute a deed of company arrangement (DOCA).

Mr Marsden and Mr Vickers (who were the appointed receivers) were appointed as administrators of the company.


Ziziphus Pty Ltd (Ziziphus) and Celtic Capital Pty Ltd (Celtic), both shareholders and creditors of Pluton, alleged that Mr Marsden and Mr Vickers failed to provide Pluton's creditors with adequate information, and sought an order to the effect that the DOCA be terminated and Pluton wound up.

They further argued that, for some nine months, Mr Marsden and Mr Vickers recommended a DOCA and variations to that deed to Pluton's creditors even though the effect of the deed was, in large part, to fund the liability to GNR companies.

It was then argued that this course of conduct could lead to an apprehension that they were, if not doing the bidding of GNR companies, at least promoting their interests.

The Court was asked to consider:

  • whether Mr Marsden and Mr Vickers had too close an association with the principal secured creditor; and
  • whether Mr Marsden and Mr Vickers were, and could be seen to be, independent and impartial.

During these proceedings, the Court held that nothing had been produced that suggests that the liquidators would in any way be compromised. Rather, Mr Marsden and Mr Vickers had gained knowledge of the activities of the company and, in the Court's view were better placed than anyone else to liquidate the company. The Court therefore appointed Mr Marsden and Mr Vickers as the liquidators.


Ziziphus and Celtic allege that the Master erred in law in appointing Mr Marsden and Mr Vickers as liquidators of Pluton. They further submitted that had the Master applied the correct test, he would have found that a fair minded observer might reasonably apprehend that Mr Marsden and Mr Vickers might not discharge their duties as liquidators of Pluton with independence and impartiality because of their:

  1. appointment by Pluton's directors as voluntary administrators of Pluton;
  2. conduct as voluntary administrators of Pluton;
  3. appointment as deed administrators of Pluton's DOCA; and / or
  4. conduct as deed administrators of Pluton's DOCA.

Ziziphus and Celtic also contended that Mr Marsden and Mr Vickers opposed the successful application for orders terminating the DOCA with "unusual and unseemly determination and vigour", which they believed would lead the reasonable observer to "apprehend that there might be something amiss."

It was argued that the Mr Marsden and Mr Vickers should not have been appointed for the following reasons:

  1. liquidators must not only be independent, but must be seen to be independent;
  2. Mr Marsden and Mr Vickers were appointed as voluntary administrators by Pluton's board at a time when the board was controlled by GNR companies;
  3. Mr Marsden and Mr Vickers recommended the DOCA and variations to it when:
    1. its effect was, in large part, to fund the liabilities of GNR companies;
    2. it did not provide for anything like sufficient working capital to return Pluton to viability; and
    3. the promoter of the DOCA was unable to carry it out in accordance with its original terms and failed to meet promises to pay money under the DOCA and its variations;
  4. whilst not suggesting that Mr Marsden and Mr Vickers were doing the bidding of GNR companies, they were at least promoting their interest by recommending the DOCA to creditors; and
  5. in the above circumstances, Mr Marsden and Mr Vickers conducted the administration in a manner that raises an apprehension about a lack of impartiality, and which indicates that they can no longer be seen to be independent.


The Court found that the above listed matters do not singly, or collectively, establish that a fair minded observer might reasonably apprehend that the liquidators might not discharge their duties as liquidators with independence and impartiality.

The Court held that Mr Marsden and Mr Vickers opposition to the application to terminate the DOCA, in circumstances whereby the overwhelming majority of creditors voted in favour for it, is not conduct by reason of which a fair minded observer might reasonably apprehend that they might not discharge their duties as liquidators with independence and impartiality.


The decision provides comfort that prior conduct of liquidators, whether in their capacity as receivers or administrators, will not necessarily impugn their independence or create a perception that they are not independent.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Chambers Asia Pacific Awards 2016 Winner – Australia
Client Service Award
Employer of Choice for Gender Equality (WGEA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions