Blackadder v McQuinn & Ors (No.2)

Case [2017] NTSC 57


CITATION:Blackadder v McQuinn & Ors (No.2) [2017] NTSC 57

PARTIES:BLACKADDER, Paul Gordon

v

MCQUINN, Justin

and

NTRDS PTY LTD

and

BLAIR PLEASH AND KATHLEEN VOURIS, VOLUNTARY ADMINISTRATOR OF NTRDS PTY LTD (ADMINISTRATORS APPOINTED)

TITLE OF COURT:  SUPREME COURT OF THE NORTHERN TERRITORY

JURISDICTION:  SUPREME COURT OF THE NORTHERN TERRITORY EXERCISING TERRITORY JURISDICTION

FILE NO:61 of 2016 (21632618)

DELIVERED ON:  26 July 2017

DELIVERED AT:  Darwin

HEARING DATE:  22 June 2017

JUDGMENT OF:  HILEY J

CATCHWORDS:

PROCEDURE - COSTS - Proceedings brought to determine the validity of appointment of voluntary administrator of a company – Where the court declared that the appointment was invalid – Duties of purported administrator to question the validity of the appointment - Administrators did not breach any relevant duty - Administrators are entitled to remuneration and costs.

PROCEDURE – COSTS – Remuneration - External administrator invalidly appointed is entitled to make a claim for remuneration on a quantum meruit basis – Administrators put their claim for remuneration on the basis of an implied request

PROCEDURE – COSTS – Costs of interlocutory process in proceedings concerning validity of appointment of voluntary administrators – Voluntary administrators and their lawyers complied with their duties - entitled to costs of interlocutory process.

CORPORATIONS – Administration – Voluntary administrators – Equitable lien – Administrators entitled to lien to secure any reasonable remuneration, costs and disbursements incurred by them in their capacity as purported voluntary administrators.

Coad v Wellness Pursuit Pty Ltd (In Liq) [2009] WASCA 68; (2009) 71 ACSR 250, Applied

Blackadder v McQuinn & Ors [2017] NTSC 29; Conlan v Adams [2008] WASCA 61; (2008) 65 ACSR 521; David Lewis Clout in his capacity as Liquidator of Mainz Developments Pty Ltd (In Liq) [2016] NSWSC 1146; Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 557; (2000) 34 ACSR 422; In the matter of Condor Blanco Mines Ltd (No 2) [2016] NSWSC 1304; In the Matter of Lime Gourmet Pizza Bar (Charlestown) Pty Ltd [2015] NSWSC 244; In the Matter of Warwick Keneally as administrator of Australian Blue Mountain International Cultural & Tourist Group Pty Ltd (admin appointed) [2015] NSWSC 2037; Lumbers v W Cook Builders Pty Ltd (In Liq) (2008) 232 CLR 635; Monks v Poynice (1987) 8 NSWLR 662; Pavey & Matthews Pty Ltd v Paul (1986) 162 CLR 221, Referred to

In the matter of Condor Blanco Mines Ltd [2016] NSWSC 1196; Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 1663; 51 ACSR 404, Distinguished

Corporations Act 2001 (Cth) s 439A(6), s 447A

REPRESENTATION:

Counsel:

Plaintiff:M Crawley

First Defendant:  P Cozens

Second Defendant:  No appearance

Third Defendant:  A Smith

Solicitors:

Plaintiff:Paul Maher

First Defendant:  Cozens Johansen

Second Defendant:  Self-represented

Third Defendant:  HWL Ebsworth

Judgment category classification:  B

Judgment ID Number:  Hil1711

Number of pages:  26

IN THE SUPREME COURT
OF THE NORTHERN TERRITORY
OF AUSTRALIA
AT DARWIN

Blackadder v McQuinn & Ors (No. 2) [2017] NTSC…

Continue reading Blackadder v McQuinn & Ors (No.2)

Sign in free to access the full text

Details
AGLC
Blackadder v McQuinn & Ors (No.2) [2017] NTSC 57
Case
[2017] NTSC 57
Decision Date

CaseChat Overview and Summary

The case of Blackadder v McQuinn & Ors (No.2) involved the dispute over the validity of the appointment of voluntary administrators of a company. The court was tasked with determining whether the administrators breached any relevant duty and if they were entitled to remuneration and costs. The primary issue was whether the administrators, who were invalidly appointed, could claim remuneration and costs on a quantum meruit basis. Another issue was whether the administrators complied with their duties and were entitled to the costs of the interlocutory process. The case also examined the extent to which the administrators were entitled to an equitable lien to secure any reasonable remuneration, costs, and disbursements incurred.

The court found that the administrators did not breach any relevant duty in accepting their appointments. The administrators were entitled to make a claim for remuneration on a quantum meruit basis, as they were invalidly appointed. The court rejected the argument that the administrators were not entitled to recover any remuneration or costs because they were incurred in breach of a duty owed at the time of and following their appointment. Instead, the court held that the administrators should be entitled to recover reasonable costs and fees in respect of work that was of incontrovertible benefit to the company. The court also held that the administrators complied with their duties and were entitled to the costs of the interlocutory process. Finally, the court found that the administrators were entitled to an equitable lien to secure any reasonable remuneration, costs, and disbursements incurred by them in their capacity as purported voluntary administrators.

The court declined to assess the remuneration and costs claimed by the administrators during the hearing, partly because NTRDS should have the opportunity to participate in that process, and partly because such assessment would be more conveniently carried out by the Master. The court held that the administrators were entitled to remuneration, costs, and disbursements, and that an equitable lien should be granted to secure those amounts. The court also held that the administrators were entitled to the costs of the interlocutory process. The final orders of the court were that the administrators were entitled to remuneration, costs, and disbursements, and that an equitable lien should be granted to secure those amounts. The administrators were also entitled to the costs of the interlocutory process.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

During the hearing counsel for the administrators submitted that in addition to the relief sought I should embark upon the process of assessing the remuneration and costs claimed by the administrators. I declined to undertake this task, partly because NTRDS should have the opportunity to participate in that process, and partly because such assessment would be more conveniently carried out by the Master. Even if NTRDS did not wish to be heard on the question of its liability to pay the administrators’ remuneration and costs it may well wish to be heard in relation to quantum.Entitlement to remuneration, costs and disbursements An external administrator invalidly appointed is entitled to make a claim for remuneration on a quantum meruit basis.[2]Acceptance of the appointment In his written submissions the plaintiff contended that the administrators are not entitled to recover any remuneration or costs incurred by them because they were incurred in breach of a duty owed at the time of and following their appointment. Alternatively, at least no costs should be recoverable in proceedings which were entirely necessary as a result of such breach.[3] The plaintiff’s position softened during the hearing. Counsel accepted that the administrator should be entitled to recover reasonable costs and fees in respect of work that was of incontrovertible benefit to the company.Duty and breach of duty Counsel for the plaintiff did not clearly describe the duty which he says was breached by the administrators. It seems that it was a duty not to accept the appointment and / or to make further enquiries before they did. Counsel contended that it should have been obvious to Mr Pleash before he accepted the appointment that NTRDS was not insolvent, nor likely to become so. This is because of some of the positive things Mr Bell told him about the financial situation of the company and because Mr Bell had provided him with the valuations of Bizval and Mark Bruce that suggested a healthy financial position. These communications occurred over the weekend following Mr Bell’s initial email to Mr Pleash at 4 pm on the Saturday. Counsel also contended:Further, that should have caused Mr Pleash to query the motives of the director. Moreover, Pleash was informed the current proceedings involved a dispute between the shareholders on the share value; that the company would be put in administration if a settlement offer between the shareholders was not accepted. In those circumstances, Pleash could not have been satisfied that the proposed appointment was regular. Simply asking the director whether he considered the company was insolvent was insufficient to address that.[4] The main authority relied on by counsel for the plaintiff was the decision of Barrett AJA in In the matter of Condor Blanco Mines Ltd[5] where his Honour discussed the obligations upon an administrator to assess the validity of his or her appointment. However the part of the case, and its sequel, In the matter of Condor Blanco Mines Ltd (No 2)[6], that related to the administrator’s costs, concerned the payment of costs in the proceedings brought by the company against the administrator. Those proceedings were brought by the company for the purpose of obtaining a declaration that the appointment of the administrator was invalid. The administrator had refused to bring an action concerning the validity of his appointment notwithstanding a number of requests on behalf the company for him to do so.