Pasminco Limited (Subject to Deed of Company Arrangement) (No 2) [2004] FCA 656
CORPORATIONS – deed of company arrangement – administrator’s discretion – directions sought by administrator – whether administrator can surrender discretion to court
PRACTICE AND PROCEDURE – deed of company arrangement – variation by court order – whether creditors need to be joined
Corporations Act 2001 (Cth) ss 447A, 447D Law ofProperty and Trustees Relief Amendment Act 1859 (UK) s 30
[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.
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AGLC
Re Pasminco Ltd (No 2) [2004] FCA 656
Case
[2004] FCA 656
Decision Date
CaseChat Overview and Summary
The case of Pasminco Limited (Subject to Deed of Company Arrangement) v McCluskey [2004] FCA 656 involved the administrators of Pasminco Limited, who were in a quandary as they were required to fix the sale price of an asset while being given an absolute discretion to do so in good faith. The administrators wished to surrender their discretion to the court and have the price fixed by a judge, under s 447D(2) of the Corporations Act 2001 (Cth). The legal issues in this case were whether the administrators could surrender their discretion to the court, and whether creditors needed to be joined in the proceeding. The court held that it was appropriate to apply the practice and procedure applicable in trustee cases to comparable applications by liquidators and administrators. Although courts have been reluctant to accept the surrender of a liquidator's or administrator's discretionary power in relation to a business decision, it is possible in exceptional circumstances. In this case, the court found that the administrators had a conflict of interest and appointed a special purpose administrator to determine the price. The court also found that the administrators' proposed method for determining the proportion of the float proceeds that should be attributed to the Clarksville smelter was flawed and proposed an alternative method. Finally, the court ordered that the costs of the proceeding be paid on an indemnity basis, out of the float proceeds, with the exception of the costs of producing and copying irrelevant exhibits.