Nagler v Volski (No 2)

The matter before the Federal Court of Australia was an appeal by Volski from a decision made by Nagler, the liquidator of a company. The liquidator sought to recover from Volski, a director of the shareholder company, a sum of money that had been transferred to the company in question. The primary issue was whether the shareholder company had the necessary authority to transfer the funds, given that a resolution of the shareholder company had not been passed at a general meeting to authorise such action. Additionally, the court considered whether a curative order could be made to validate the irregularity.

The court found that the absence of a resolution at the general meeting did not necessarily invalidate the transfer of funds, as all the directors of the shareholder company had approved the action of the representative. The court held that the approval of all directors could be considered equivalent to a resolution passed at a general meeting. Furthermore, the court was satisfied that the irregularity could be remedied by making a curative order, as the transfer of funds was in the best interests of the company and its creditors. The court emphasised the importance of considering the overall circumstances and the practical consequences of the irregularity in determining whether to make a curative order.

Accordingly, the court allowed the appeal by Volski and ordered that a curative order be made to validate the transfer of funds by the shareholder company. The court noted that the curative order was not intended to condone the procedural irregularity but rather to ensure that the company and its creditors were not prejudiced by the irregularity. The court also noted that the liquidator's action was not barred by any limitation period, as the irregularity could be remedied by a curative order.