Application of Douglas Victor Chapman - [2006] NSWSC 99

Reported Decision:
56 ACSR 706

New South Wales

Supreme Court

CITATION: Application of Douglas Victor Chapman [2006] NSWSC 99

HEARING DATE(S): 27/02/06

JUDGMENT DATE :
27 February 2006

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

EX TEMPORE JUDGMENT DATE: 02/27/2006

DECISION: Leave to manage particular corporation.

CATCHWORDS: CORPORATIONS - directors and officers - disqualification - bankruptcy and related disabilities - application for leave to manage particular corporation - application supported by company's sole shareholder - responsible conduct by applicant - leave granted - conditions imposed

LEGISLATION CITED: Bankruptcy Act 1966 (Cth), Part X, s.189A
Corporations Act 2001 (Cth), ss. 206B(4), 206G

CASES CITED: Adams v Australian Securities and Investments Commission (2003) 46 ACSR 68
Re Ansett (1990) 3 ACSR 357
Re Magna Alloys & Research Pty Ltd (1975) 1 ACLR 203

PARTIES: Douglas Victor Chapman - Applicant

FILE NUMBER(S): SC 1279/06

COUNSEL: Mr S.M. Golledge - Applicant

SOLICITORS: Gordon & Johnstone - Applicant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

MONDAY 27 FEBRUARY 2006

1279/06 APPLICATION OF DOUGLAS VICTOR CHAPMAN

JUDGMENT

1 The plaintiff seeks an order under s.206G of the Corporations Act 2001 (Cth) granting him leave to manage a particular corporation, that is to say, The Marketing Store Worldwide Pty Limited, which I shall call “the Company”.

2 The plaintiff became a director of the Company’s predecessor in 1988. It carried on a promotions agency business, principally involved in marketing promotions for large companies. The business of the predecessor was acquired by the Company in 1999. The Company was and is a wholly owned subsidiary of a United States corporation called The Marketing Store Worldwide LLC. The plaintiff became a director of the Company at the time of the business acquisition.

3 The plaintiff's disqualification arose under s.206B(4) of the Corporations Act upon his executing a deed of arrangement under Part X of the Bankruptcy Act 1966 (Cth). This occurred on 15 September 2004. Shortly afterwards, the plaintiff's creditors approved a composition, details of which are set out in the report of the controlling trustee pursuant to s.189A of the Bankruptcy Act. The significant feature, for present purposes, is that the effect of the composition was to produce an estimated dividend of 89 cents in the dollar for creditors – that being, needless to say, a much better result for creditors than is obtained in most bankruptcies or analogous administrations. The plaintiff is continuing to meet his obligations under the composition.

4 The plaintiff explains in his affidavit that the composition into which he entered and his decision to make an arrangement with his creditors were the product of two factors. One was the break down of his marriage and consequential financial problems, including those arising from a final binding financial agreement under the Family Law Act 1975 (Cth) in proceedings which involved transfer of substantial assets to his former wife in order to support their children, coupled with a requirement to pay an amount of $1,300…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2006] NSWSC 99
Decision Date: 27 February 2006

CaseChat Overview and Summary

In the matter of the application of Douglas Victor Chapman, the applicant sought leave to manage a particular corporation, with the application being supported by the company's sole shareholder. The court was required to determine whether the applicant's conduct warranted the granting of leave, given the statutory provisions concerning disqualification from managing corporations. The primary issue was whether Chapman, who had previously been involved in a bankruptcy and faced related disabilities, could demonstrate responsible conduct that would justify him being allowed to manage the corporation in question.

The court examined the statutory criteria for granting leave to manage a corporation, including the applicant's conduct and fitness to manage a corporation. It assessed Chapman's past conduct, his involvement in the corporation, and the support he had from the company's sole shareholder. The court found that Chapman had demonstrated responsible conduct and that it was in the interests of justice to grant him leave to manage the corporation. The court imposed specific conditions on the leave to ensure that Chapman's management of the corporation would be conducted in a responsible manner. These conditions were designed to mitigate any potential risks associated with Chapman's past disqualifications and disabilities.

Ultimately, the court granted Chapman leave to manage the corporation, subject to the conditions imposed. The court's decision recognised the applicant's responsible conduct and the support from the company's sole shareholder, while also addressing concerns about Chapman's past conduct and disqualifications. The orders made by the court provided a framework for Chapman's management of the corporation, ensuring that any potential risks were appropriately managed.

Orders