JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
CITATION: GIS ELECTRICAL PTY LTD -v- MELSOM & ORS [2001] WASC 314
CORAM: MASTER BREDMEYER
HEARD: 30 OCTOBER & 9 NOVEMBER 2000
DELIVERED : 16 NOVEMBER 2001
FILE NO/S: COR 228 of 2000
BETWEEN: GIS ELECTRICAL PTY LTD (ACN 009 276 037)
Plaintiff
AND
PETER MICHAEL MELSOM
STANLEY FREDERIC ROBSON
GEORGE AUBREY LOPEZ
Defendants
Catchwords:
Corporations - Administrators and liquidators' costs - Application for review
Legislation:
Corporations Law, s 447E, s 449E, s 536
Result:
Application dismissed
Category: B
Representation:
Counsel:
Plaintiff: Mr T H Brickhill
Defendants: Mr K L Christensen
Solicitors:
Plaintiff: Brickhill Banaszak
Defendants: Tottle Christensen
Case(s) referred to in judgment(s):
Burns Philp Investments Pty Ltd v Dickens [No 2] (1993) 31 NSWLR 280
Re Solfire Pty Ltd (No 2) (1998) 16 ACLC 1,156
Case(s) also cited:
Avery v Worldwide Testing Services Pty ltd (1990) 2 ACSR 834
Burns Philp Investments Pty Ltd v Dickens (1993) 11 ACLS 272
Commissioner for Corporate Affairs v Harvey [1980] VR 669
Hagenvale Pty Ltd v Depala Pty Ltd (1995) 17 ACSR 139
Lens & Ors v Johnson & Anor, unreported judgment of Bredmeyer M; Library No 990011; 22 January 1999
Leon v York-o-Matic Ltd (1966) 1 WLR 1450
Magarditch v ANZ (1999) ACLC 424
Pownall v Conlan Management [1995] 12 WAR 370
Re: Burnells Pty Ltd (1979) 4 ACLR 213
Re: Glenvale Potteries Pty Ltd (in liq) (1977) ACLC 40 - 331
Re: Juson Pty Ltd [1992] 8 WAR 13
Re: Western National Earthmoving Corporation Pty Ltd (in liq); ex parte CONLAN unreported judgment of Sanderson M; Library No 980074; 24 February 1998
Siromath Pty Ltd (No 3) (1991) 9 ACLA 1587
Sydlow Pty Ltd v T G Kofsalas Pty Ltd (1996) 20 ACSR 47
Venetian Nominees v Conlan [1998] 20 WAR 96
Yeomans v Walker (1986) 5 NSWLR 378
MASTER BREDMEYER: This is an application by the plaintiff by way of originating process for an enquiry into and a review of the defendants' fees and disbursements in acting as administrators and the liquidators of Hansley Holdings Pty Ltd ("the company").
The plaintiff is a creditor of the company and brings this application in that capacity. The affidavit in support of the plaintiff's application is sworn by Brett Harley Price on 4 September 2000. Mr Price is a director and the shareholder of the plaintiff. He held five of the six shares of the company and was its managing director at the time it was placed into administration. His then wife was the other director and held the other share. It was the trustee for the GIS Unit Trust. GIS stands for "Goldfields Instrument Services".
He and his then wife appointed the defendants as administrators of the company on 7 January 1998. The administration of the company continued until a meeting of creditors held on 31 July 1998 when the company was placed into liquidation. The defendants, Messrs Melsom, Robson and Lopez, who had…
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- AGLC
- GIS Electrical Pty Ltd v Melsom [2001] WASC 314
- Case
- [2001] WASC 314
- Decision Date
CaseChat Overview and Summary
The court examined the minutes of the meeting and the circular sent to creditors. It found that while the minutes detailed the resolution approving the administrators' remuneration, they did not provide the specific amount of the proposed fees. However, the circular sent to creditors on 16 February 1998 included a statement about the progress of the voluntary administration but did not specify the proposed remuneration. The court considered whether the notice of the meeting sufficiently informed creditors of the matter to be discussed. It held that the notice was deficient as it did not detail the proposed remuneration, which was an essential matter for the creditors to consider. Consequently, the court found that the resolution approving the remuneration was not validly passed as it did not comply with the statutory requirement for adequate notice.
The court's reasoning led to the conclusion that the resolution approving the administrators' remuneration was invalid. As a result, the court determined that the meeting of creditors did not have the legal standing to approve the remuneration. The court's decision underscored the importance of adhering to statutory requirements for notice in meetings of creditors, particularly regarding the approval of administrators' remuneration. The court did not provide final orders regarding the remuneration but established the principles for future meetings of creditors in similar circumstances.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
The minutes of that meeting record what happened to the remuneration and I quote:"Remuneration of administratorsMr Melsom advised those present as to the basis upon which the fees and costs of the administrators were charged and of the intense work that had been carried out by his staff to date.A statement of those costs and description of work was then circulated among those attending the meeting indicating a fee amount in the sum of $43,086.Mr Melsom then stated that fees and charges of that sum required approval by the meeting and tabled a schedule of rates charged by his firm compared with the recommended rates of the Insolvency Practitioners Association of Australia indicating the significant reduction in rates applied by his firm.The following resolution was then carried without dissent:-ResolutionMoved Mr ManfordSeconded Mr JohnsonResolved 'that the administrators remuneration to 2 February, 1998 be approved for payment in the amount of $43,086 together with all out of pocket expenses'." I have not seen the statement of costs and description of work which was circulated at that meeting. A circular dated 16 February 1998 was sent to creditors to inform the creditors of the outcome of the meeting of creditors held on 3 February. That circular includes the following statements on the progress of the voluntary administration:"In the course of gaining control of the company operations and assessing its true financial position, we have been seriously impeded by the total lack of any proper management systems which would normally be in place to control accounting and management operations within a company structure of this size.As reported at the second meeting of creditors, it became apparent that there were no meaningful management information systems, no operational budgets or expenditure control systems, no debtors or creditors control for accurate recording, no payroll reconciliation with prime source data and no computer backup arrangement, no proper training manuals for computer applications to ensure accurate data accumulation and no proper analysis of contract operations let alone accurate trading results overall.Our specialist accounting team was therefore faced with the task of conducting detailed reconciliation of debtors, creditors and payroll which is continually highlighting deficiencies in the company's accounting systems, unfortunately understating creditors, inaccurately reflecting debtors and allowing for regular overpayment in respect to payroll.Rationalisation of the company's overall operations is continuing, in respect to management and other staff, its motor vehicle fleet, which at the date of our appointment exceeded 50 vehicles, and other leased assets to determine surplus equipment to current needs.We are now on line to assist more accurately profitability, but more importantly to determine its future profit potential as a basis for a remedy via a Deed of Company Arrangement." The second meeting of creditors was adjourned to 4 June 1998. Notice of that meeting was given to the creditors and it was in the same form as the previous notice. It set out the purpose of the meeting in a series of points, one of which was:"(c)To set the administrators' remuneration."Details of that remuneration were not given in the notice.