Federal Court sides with ASIC: Walton liquidator must go

THE Australian Federal Court has upheld an appeal by the Australian financial regulator, forcing the removal of the liquidator of failed construction company Walton.

Walton went broke in October last year leaving debts of $69 million including $2.9m owed to Sunshine Coast sub contractors who worked on the Nambour Coles project.

The unanimous decision by three appeal court judges over turns the previous rejection of an Australian Securities and Investments Commission (ASIC) bid in December to have liquidators Stirling Horne, Glenn Franklin and Jason Stone of the firm Lawler, Draper, Dillon removed for perceived lack of independence because of past dealings with the Mawson Group, business advisors to Walton principal and sole director Craig Walton.

Mawson referred Walton to Lawler Draper Dillon.

ASIC Commissioner John Price told the Daily yesterday that the judgment reflected what the law held.

"Liquidators must, and be seen to be, free of influence,'' he said.

"It is important for insolvency professionals to be very alive to the issue of actual and perceived conflict and that disclosure doesn't resolve that conflict. If in doubt they should contact ASIC or refuse the job."

Mr Price said ASIC had been consistent in its messages that liquidators needed not only to be independent but be seen to be independent.

Mawson Group directors set up and controlled the companies Peleton and Tantallon which took over key Walton projects.

Both companies have since collapsed.

ASIC had argued that in carrying out their functions and duties the liquidators would be required to investigate prior transactions involving entities connected to the Mawson Group.

It contended that those transactions and the referral relationship were not sufficiently disclosed to creditors at the appropriate time and that a perceived lack of independence existed.

The position was rejected in the original judgment on the basis that such referrals were common in the industry.

Mr Price said yesterday that regardless of what they see going on around them, liquidators needed to be certain of their own actions.

ASIC's appeal was heard on May 5.

Walton Sub Contractors Alliance spokesman Les Williams of Coolum, whose company WK Civil lost nearly

$700,000 for work done on the Nambour Coles project, said the decision to remove the liquidator was a big win for the little guy.

It throws into question the fate of a public examination of the Walton collapse, partly funded by the Queensland Government through the Queensland Building and Construction Commission.

The public examination of people connected with the Walton collapse was being conducted by Mr Franklin.

Mr Williams said he had held real concern that a number of entities and individuals who may have shed light on what led to the collapse had not been called to give evidence.

He said Queensland sub contractors who lost around $29m in the Walton collapse appreciated ASIC's efforts and persistence.

Mr Williams said he hoped that the public examination of the matter would now result in a more comprehensive list of witnesses being developed to ensure all issues were fully explored.

The decision requires Lawler Draper Dillon and ASIC to meet before July 22 to determine a new liquidator which would then require ratification by the court.



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