Panasystems Pty Ltd v Voodoo Tech Pty Ltd

Case [2003] FCA 428

FEDERAL COURT OF AUSTRALIA

Panasystems Pty Ltd v Voodoo Tech Pty Ltd [2003] FCA 428

CORPORATIONS – voluntary administration – invalid resolution to appoint administrator - whether curative order should be made – whether administration should continue or a provisional liquidator should be appointed

Corporations Act 2001 (Cth) ss 436A(1)(a), 440A(3), 447A and 447C and Pt 5.3A

Wagner v International Health Promotions (1994) 12 ACLC 986 - applied
Deputy Commissioner of Taxation v Portinex Pty Ltd (2000) 34 ACSR 391 – applied
Australasian Memory Pty Limited v Brien (2000) 200 CLR 270 - cited
Re Brashs Pty Ltd (1994) 15 ACSR 477 - cited
Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 – applied
In the matter of First Netcom Pty Ltd (2001) 19 ACLC 324 - cited
Unifor Office Systems Aust Pty Ltd v Brewer Partnership Pty Ltd (1999) 17 ACLC 642 - cited
In the matter of Inventive Marketing Pty Ltd (2000) 36 ACSR 206 – cited
Shirlaw v Graham [2001] NSWSC 612 – cited
Supreme Imports Pty Ltd (in liquidation); Re De Vries [2001] NSWSC 1209 - cited

IN THE MATTER OF VOODOO TECH PTY LIMITED ACN 088 963 893

PANASYSTEMS PTY LTD v VOODOO TECH PTY LIMITED
V 3079 OF 2003
GREGORY JONES v VOODOO TECH PTY LIMITED
V 3098 OF 2003

MERKEL J
9 MAY 2003
MELBOURNE


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 3079 OF 2003

IN THE MATTER OF VOODOO TECH PTY LIMITED
ACN 088 963 893

BETWEEN:

PANASYSTEMS PTY LTD
ACN 098 179 045
PLAINTIFF

AND:

VOODOO TECH PTY LIMITED
ACN 088 963 893
DEFENDANT

JUDGE:

MERKEL J

DATE OF ORDER:

9 MAY 2003

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.The interlocutory applications dated 15 April 2003 and 29 April for the appointment of a provisional liquidator and for a declaration under s 447C of the Corporations Act 2001 (Cth) (“the Act”) respectively, be dismissed.

2.The costs of all parties in respect of the plaintiff’s interlocutory application dated 15 April 2003 for the appointment of a provisional liquidator be reserved.

3.Gregory Jones pay the costs of the Plaintiff and Peter Ngan of and incidental to the interlocutory application for a declaration under s 447C of the Act.

4.Liberty to apply be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 3098 OF 2003

IN THE MATTER OF VOODOO TECH PTY LIMITED
ACN 088 963 893

BETWEEN:

GREGORY JONES
PLAINTIFF

AND:

VOODOO TECH PTY LIMITED
ACN 088 963 893
DEFENDANT

JUDGE:

MERKEL J

DATE OF ORDER:

9 MAY 2003

WHERE MADE:

MELBOURNE

THE COURT MAKES THE FOLLOWING ORDERS AND DECLARATION:

1.Part 5.3A of the Corporations Act 2001 (Cth) (“the Act”) is to operate in relation to Voodoo Tech Pty Limited ACN 088 963 893 (“the company”) as if the resolution passed at the meeting of directors held on 2 April 2003 to appoint Peter Ngan as administrator of…

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Details
AGLC
Panasystems Pty Ltd v Voodoo Tech Pty Ltd [2003] FCA 428
Case
[2003] FCA 428
Decision Date

CaseChat Overview and Summary

The court considered an application by Panasystems Pty Ltd against Voodoo Tech Pty Ltd, regarding the appointment of a provisional liquidator and a declaration under the Corporations Act 2001. The case arose from Panasystems' concerns about Voodoo Tech's financial stability and the potential misconduct of its directors or officers. The primary legal issues involved whether the court should validate the appointment of an administrator or appoint a provisional liquidator instead, and whether Panasystems' lawyer's oversight in not filing the necessary documents on time warranted costs being awarded against him.

The court concluded that while Panasystems suggested that a provisional liquidator might more vigorously pursue misconduct claims, this was not necessarily the case. The court found that the administrator should focus on securing Voodoo Tech's assets for creditors until a review on 23 May 2003. The court held that the administration was valid and dismissed Panasystems' application for a provisional liquidator. The court also found that the lawyer's oversight led to the need for both applications, and thus ordered the lawyer to pay the costs of both parties involved in the interlocutory applications.

The court made several orders to reflect its findings. The interlocutory applications for the appointment of a provisional liquidator and for a declaration under s 447C of the Corporations Act were dismissed. The costs of the parties regarding the interlocutory application for the provisional liquidator were reserved, while the lawyer was ordered to pay the costs of the plaintiff and another party in relation to the interlocutory application for the declaration. Additionally, the court reserved the right for any party to apply for further orders.

Orders

Orders of the court

1. The interlocutory applications dated 15 April 2003 and 29 April for the appointment of a provisional liquidator and for a declaration under s 447C of the Corporations Act 2001 (Cth) (“the Act”) respectively, be dismissed.

2. The costs of all parties in respect of the plaintiff’s interlocutory application dated 15 April 2003 for the appointment of a provisional liquidator be reserved.

3. Gregory Jones pay the costs of the Plaintiff and Peter Ngan of and incidental to the interlocutory application for a declaration under s 447C of the Act.

4. Liberty to apply be reserved.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

MERKEL J
Fifth, the main reason provisional liquidation was proposed by Panasystems in preference to administration was that the liquidator would be likely to more vigorously pursue misconduct claims against defaulting directors or officers of the company. I am not satisfied that that is necessarily so, but, in any event, I expect that until 23 May 2003, when this issue can be reviewed, the administrator’s main activity will be directed to best securing or realizing Voodoo’s business assets in the interests of creditors.Conclusion Jones is entitled to orders validating the administration under s 447A. It must follow that Panasystem’s interlocutory application under s 447C is to be dismissed. However, that application would have succeeded had the Court not made orders validating the administration. As Jones’ inadvertence and omission led to both applications, he should pay the costs of the parties in respect of those applications. In all the circumstances it is appropriate to reserve the costs of the parties of Panasystem’s application to appoint a provisional liquidator. Liberty to apply is also to be reserved.

Ratio Decidendi

Legal Principle Established

Established by: MERKEL J

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