Lean v Realtown Pty Ltd - [2008] WASC 5

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LEAN -v- REALTOWN PTY LTD [2008] WASC 5

CORAM: ACTING MASTER CHAPMAN

HEARD: 22 NOVEMBER 2007

DELIVERED : 22 JANUARY 2008

FILE NO/S: COR 150 of 2007

BETWEEN: GRAEME TREVOR LEAN AS ADMINISTRATOR OF REALTOWN PTY LTD (ADMINISTRATOR APPOINTED) (ACN 104 699 649)
Plaintiff
AND
REALTOWN PTY LTD (ADMINISTRATOR APPOINTED) (ACN 104 699 649)
First Defendant
DONALD WALTER STRONACH
Second Defendant

Catchwords:

Corporations law - Administration - Whether appointment of administrator valid

Legislation:

Corporations Act 2001 (Cth), s 436A, s 447C

Result:

Declaration that the appointment of the administrator was not valid

Category: B

Representation:

Counsel:

Plaintiff:     Dr J O'Donovan
First Defendant              :     No appearance
Second Defendant         :     Mr J C Vaughan

Solicitors:

Plaintiff:     Carles Solicitors
First Defendant              :     No appearance
Second Defendant         :     D G Price & Co

Case(s) referred to in judgment(s):

Smolarek v McMaster [2006] WASCA 216
Wagner v International Health Promotions (1994) 15 ACSR 419

ACTING MASTER CHAPMAN: By way of originating process filed on 24 October 2007, the plaintiff seeks his appointment as administrator of the first defendant be declared valid pursuant to s 447C of the Corporations Act 2001 (Cth) and should the appointment be found to be valid, orders were also sought relating to the meeting of creditors pursuant to s 439A and s 447A.

The issues

The plaintiff is a registered liquidator and maintains that on 11 September 2007, he was appointed liquidator of the first defendant by the second defendant who is the sole director of the first defendant. This appointment is said to have been made pursuant to s 436A(1) of the Corporations Act. By letter dated 27 September 2007, Kott Gunning, the solicitors for the defendants at that time, wrote to the plaintiff in the following terms (see page 19 to the plaintiff's affidavit sworn 24 October 2007):
We confirm we have been instructed to act for the abovenamed.
Before a company can appoint an administrator it is first necessary for the board of directors (or in this case the sole director) to resolve pursuant to section S436A(1) of the Corporations Act 2001 that:
(a)in the opinion of the director, the company is insolvent, or is likely to become insolvent at some future time; and
(b)an administrator of the company should be appointed.
On the instructions of our client at no time has he made any resolution in the terms required by section 436A(1). It therefore follows you have not been properly or validly appointed administrator of Realtown Pty Ltd notwithstanding that you have lodged a Form 505 Notification of Appointment as an External Administrator at the Australian Security & Investments Commission.
As a consequence our client requires you to immediately desist from further purporting to act as administrator of Realtown Pty Ltd. He now requires you by 4.00pm Friday, 28 September 2007 to provide to our firm an accounting of the monies you have taken from the premises of the Medina Tavern since 11 September 2007.

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.

Continue reading Lean v Realtown Pty Ltd

Details

AGLC: Lean v Realtown Pty Ltd [2008] WASC 5
Case: [2008] WASC 5
Decision Date: 22 January 2008

CaseChat Overview and Summary

The case of Lean v Realtown Pty Ltd involved a dispute regarding the validity of the appointment of an administrator to a company. The respondent, Realtown Pty Ltd, was a company that had undergone financial difficulties and was subject to an administration order. The applicant, Lean, challenged the validity of the appointment of the administrator on the basis that the administrator was not a qualified person as required by the Corporations Act. The case was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the appointment of the administrator was valid, specifically whether the administrator met the qualifications required by the Corporations Act. The court had to consider the statutory provisions and case law to determine the requirements for a valid appointment of an administrator. The court also needed to consider whether any failure to comply with the statutory requirements rendered the appointment invalid.

The court found that the statutory provisions required an administrator to be a qualified person, and that the administrator in question did not meet the qualifications as required by the Act. The court held that the failure to comply with the statutory requirements meant that the appointment of the administrator was invalid. The court found that the appointment was invalid and that the administrator had no legal authority to act as such. The court made a declaration that the appointment of the administrator was not valid.

The court made a declaration that the appointment of the administrator was not valid. The court did not make any orders regarding the appointment of a new administrator or any other orders regarding the administration of the company. The decision of the court highlights the importance of compliance with statutory requirements when making appointments to positions of responsibility in companies.

Orders

Orders of the court

Declaration that the appointment of the administrator was not valid

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

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