Liquidator fabricated key document – High Court

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A High Court finding this month that a liquidator fabricated a key document and failed to account for receipts of over half a million dollars highlights the need for regulation of the insolvency profession.

The case The liquidator, Geoff Martin Smith, claimed to have sent a notice under section 305 of the Companies Act to the bank holding security over the company in liquidation. The notice required the bank's election, in default of which its security would be deemed surrendered. The bank said it never received the notice.

The Court was satisfied that the document had been fabricated:

expert forensic evidence, after examining the relevant computer, was that it had been created only recently it was addressed to an officer of the bank whose first contact with Mr Smith was not until about four months after the date of the alleged notice the photo allegedly proving service depicted a stamp which had not been published until 22 months after the event, and Mr Smith had a history of dishonesty, including convictions for tax evasion, theft, fraud and falsifying documents. The Court ordered him to pay $540,402.82 plus interest, being funds he had received which were subject to the bank's security.

View the case here.1

The current regime Previous case law has confirmed that liquidators are officers of the Court and as such are:2

"obliged to act in a manner consistent with the highest principles", and "not permitted to take advantage of the strict legal rights available to them if to do so would mean that they were acting unjustly, inequitably, or unfairly". In 2012 the High Court held that the Court's oversight applies whether the liquidator is appointed by the court or by...