Re Vouris; EPromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (in liq) - [2003] NSWSC 702

No judgment structure available for this case.

Reported Decision:
47 ACSR 155
(2004) 22 ACLC 822

Supreme Court

CITATION: John Vouris Re; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (In Liq) [2003] NSWSC 702

HEARING DATE(S): 21-22 July 2003

JUDGMENT DATE:
1 September 2003

JURISDICTION:
Equity

JUDGMENT OF: Campbell J

DECISION: Late convening of second creditors' meeting validated under section 1322(4) and section 447A. Plaintiff relieved from civil liability in respect of late convening of meeting, on proviso that that order did not prevent Companies Auditors and Liquidators Disciplinary Board from taking such action, if any, as it thought fit concerning that contravention. Declaration that plaintiff not in breach of section 439A(4) Corporations Law by not expressing an opinion concerning Deed of Company Arrangement which he was informed about only after convening second creditors' meeting

CATCHWORDS: CORPORATIONS - voluntary administration - procedure for convening of second creditors' meeting - curing late convening of second creditors' meeting under section 1322(4) Corporations Act - curing late convening of second creditors' meeting under section 447A Corporations Law and Corporations Act - ability of order under section 447A to cure past defects - powers of chairperson of second creditors' meeting to adjourn - inappropriateness of Court making declarations concerning matter involving judgment or discretion which has been entrusted to Companies Auditors and Liquidators Disciplinary Board - excusing breaches under section 1318 Corporations Act 2001 - what types of breaches can be excused - relieving from civil liability under section 1322(4)(c) Corporations Act 2001 - what counts as "civil liability" - whether declaration should be made about admissibility or relevance of evidence in proceedings in Companies Auditors and Liquidators Disciplinary Board

LEGISLATION CITED: Administrative Appeals Tribunal Act 1975
Administrative Decisions (Judicial Review) Act 1977 (Cth)
Australian Securites and Investments Commission Act 2001 (Cth)
Conveyancing Act 1919 (NSW)
Corporations Act 2001 (Cth)
Corporations Law
Corporations Regulations
Fair Trading Act 1987
Judicial Trustees Act 1896
Service and Execution Process Act 1901 (Cth)
Trade Practices Act 1974 (Cth)

CASES CITED: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564
Alliance Petroleum Australia (NL) v Australian Gaslight Co Ltd (1983) 48 CLR 69
ACS v Anderson [1974] 2 NSWLR 482
Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270
AWA Ltd v Daniels (1992) 7 ACSR 759
Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429
Bourke v Hamilton [1977] 1 NSWLR 470
Re Brashs Pty Ltd (1994) 15 ACSR 477
Byng v London Life Association Ltd [1989] BCLC 400
Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607
Re Caysand No 64 Pty Ltd (1993) 12 ACSR 291
Cheney v Spooner (1929) 41 CLR 532
In Re Chillington Iron Company (1885) 29 ChD 159
Colorado Constructions Pty Ltd v Platus [1966] 2 NSWR 598
Dean-Willcocks (Administrators of Powerline GES Pty Ltd) v Powerline GES Pty Limited (Joint Admins Appointed) [2002] NSWSC 40; (2002) 40 ACSR 516
Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99; (2000) 34 ACSR 391; (2000) 156 FLR 453
Doran Constructions Pty Ltd (in liq) v Beresfield Aluminium Pty Ltd (2002) 54 NSWLR 416
Re Double V Marketing Pty Ltd (in admin) (1995) 16 ACSR 498
Flynn v The University of Sydney [1971] 1 NSWLR 857
Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421
Hehir v Smith [2002] QSC 136
Ibeneweka v Egbuna [1964] 1 WLR 219
John v Rees [1970] 1 Ch 345
Lawson v Mitchell [1975] VR 579
Re LOCM Pty Ltd (1997) 15 ACLC 1576
McPherson v Mansell (1994) 16 ACSR 261
Re Macquarie Medical Holdings Pty Ltd [2003] NSWSC 277
Re Nardell Coal Corporation (In Liq) v Hunter Valley Coal Processing [2003] NSWSC 642
National Dwelling Society v Sykes [1894] 3 Ch 159
Re Old Papa's Holdings Ltd (under administration); ex parte Wallman (plaintiff) [2001] WASC 188; (2001) 24 WAR 229
Panasystems Pty Ltd v Voodoo Tech Pty Ltd [2003] FCA 428
Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 26 ALR 247
R v D'Oyly (1840) 12 Ad & El 139; 113 ER 763
Reynolds v Australian Stock Exchange Ltd [2003] NSWSC 33; (2003) 44 ACSR 612
Re Ricon Constructions Pty Ltd (in liq); ex parte McDonald (1997) 43 NSWLR 174; (1997) 26 ACSR 655
Rodriguez v Telstra Corp Ltd [2002] FCA 30
Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438
Shirlaw v Graham [2001] NSWSC 612
Smith Paringa Mines Ltd (1906) 2 Ch 193
Re Supreme Imports Pty Ltd (In liquidation); Re DeVries [2001] NSWSC 1209
TNT Bulkships Ltd v Interstate Construction Pty Ltd (1985) 35 NTR 15
Re Vanfox Pty Ltd (1994) 13 ACSR 209
Re Vassal Pty Ltd (1983) 8 ACLR 683
Re Williams Bros Ltd (1928) 46 WN (NSW) 39
Wishart v Henneberry (1962) 3 FLR 171
Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; (2002) 43 ACSR 257

PARTIES :
John Vouris - Plaintiff

FILE NUMBER(S): SC 3177/03

COUNSEL: B Coles QC; K Eassie - Plaintiff
G McNally - ASIC
Ms N Wood, solicitor - Rickland P/L, Cryson P/L, Kosinar

SOLICITORS: Coudert Brothers - Plaintiff
M Burnett - ASIC
Nash O'Neill Tomko Lawyers - Rickland P/L, Cryson P/L, Kosinar

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EQUITY LIST

CAMPBELL J

1 SEPTEMBER 2003

3177/03 JOHN VOURIS RE: EPROMOTIONS AUSTRALIA PTY LIMITED AND RELECTRONIC-REMECH PTY LIMITED (IN LIQUIDATION)

JUDGMENT

HIS HONOUR:

Nature of the Application

1 This application is brought by Mr Vouris, a registered liquidator, who was appointed as administrator of Epromotions Australia Pty Limited (“the Company”). He was a day late in sending to creditors notice of the second meeting of creditors. He seeks to have that breach cured.

2 As well, at the second meeting of creditors there was a resolution for the Company to execute a Deed of Company Arrangement. The proposal for such a Deed had only emerged with any specificity, so far as Mr Vouris was aware, after creditors were given notice of the meeting. ASIC contends that Mr Vouris should have taken steps aimed at having the meeting of creditors adjourned; Mr Vouris seeks declarations the broad thrust of which is that he had no such obligation. He also seeks to be excused for any liability he has for breaches or failures relating to the administration of the Company. He seeks these declarations in circumstances where ASIC has brought disciplinary proceedings against him concerning how he conducted the administration of the Company. A final declaration he seeks relates to the admissibility and relevance of certain evidence in those disciplinary proceedings.

Background to the Administration

3 The Company at all relevant times had only one director, Mr Ronald Shulkin. It had four shareholders – Meron Australia Pty Limited (“Meron”) (a company associated with Mr Shulkin) as to 42.5% of the shares which could receive a dividend, Rikland Pty Ltd (“Rikland”) (a company associated with Ms Veronica Kosinar and Mr Fred Sarkis) as to 42.5% of the shares which could receive a dividend, Mr Craig Katz or a company connected with him, as to 10% of the shares which could receive a dividend, and Mr Sevag Chalabian or a company associated with him as to 5% of the shares which could receive a dividend. The shares which gave a say in management were held as to 50% by Meron, and as to the other 50% by Rikland.

4 The Company had acted as the promoter of an art union which was intended to raise money for a charity, the AIDS Trust of Australia. By the beginning of July 2000 it was clear that nothing like as much money as the Company had hoped had been raised by that art union. The Company had spent large sums of money, much of it in advertising the art union. Ms Kosinar, though not a director of the company, had carried out various activities, of a kind which a company executive carries out, on behalf of the Company.

5 In early July 2000 Mr Michael O’Neil, solicitor, of Nash O’Neill Tomko (“NOT”), received instructions from Ms Kosinar to advise her, Mr Sarkis, Rikland, and another company in which she and Mr Sarkis were associated called Cryson Pty Limited (“Cryson”), concerning the affairs of the Company. To enable a potential investor in the company to consider whether to make an investment, Mr O’Neill instructed Mr Murray Godfrey, an accountant employed by Vouris & Bell, accountants, to prepare management accounts for the Company. Those accounts were prepared, showing that the Company was quite clearly insolvent. By late July 2000 the potential investor had lost interest. Mr Godfrey recommended to Mr Shulkin and Ms Kosinar that an administrator should be appointed. At that time, a consent was prepared and signed by Mr Vouris, together with a Deed of Appointment which provided that Ms Kosinar would indemnify the administrator for his fees up to a limit of $10,000.

6 On 29 September 2000 Mr Shulkin appointed Mr Manfred Holzman as administrator of the Company, and also as administrator of Meron. The first meeting of creditors of the Company was called for 6 October 2000. On 4 October 2000 Mr O’Neill telephoned Mr Godfrey, told him about the first meeting of creditors of the Company being held on 6 October, and said that his client wanted to nominate Mr Vouris as administrator.

7 At the first meeting of creditors of the Company the creditors resolved to remove Mr Holzman as administrator, and to appoint Mr Vouris. This vote was one which passed by a very narrow majority, and following a poll. The resolution to remove Mr Holzman as administrator, and replace him with Mr Vouris, was one moved by Ms Kosinar and seconded by Mr O’Neill.

8 At that first meeting of creditors mention was made that the Company and Meron had sought funding, from a litigation funder, for the purpose of taking proceedings against Ms Kosinar, Mr Sarkis and Rikland arising out of an undated, and incompletely executed, Shareholders Agreement. That Shareholders Agreement contained a Clause 2.6.1, which on its face obliged Rikland to loan to the Company “the amount determined from time to time by the Board for the proper management of the Company”.

9 Mr Vouris was absent from his office on vacation on 19 and 20 October 2000 (a Thursday and Friday). At the time he left the office on 18 October 2000 his understanding was that interests associated with Ms Kosinar intended proposing a Deed of Company Arrangement, and that information concerning the proposed proceedings to be brought by the Company and Meron against Ms Kosinar, Mr Sarkis and Rikland would be made available to him, together with confirmation from Litigation Lending Services that litigation lending in respect of those proceedings had been approved. He also understood that information concerning both those matters would be made available in time for the report and recommendation which section 439A of the Corporations Law required to be sent to creditors with a Notice of Meeting, and that that information would be available within the convening period.

10 The last day of the convening period was 19 October 2000 (why is explained in para [42]-[43] below). In fact, the Notice of Meeting and Recommendation was not posted to creditors until Friday, 20 October 2000. At the time those documents were sent out, detail concerning any proposed Deed of Company Arrangement had still not been received from Ms Kosinar, nor had information concerning the proposed proceedings which the Company and Meron might take, been received at Mr Vouris’ office.

The Notice of Meeting and Report

11 The Notice of Meeting which was sent to creditors identified the time and place of the meeting of creditors, and said:

“2. The purpose of the meeting is for creditors to resolve: …

(b) that the meeting of creditors be adjourned to Thursday 17 November 2000, or

(c) that the Company execute a Deed of Company Arrangement; or

(d) that the Administration should end; or

(e) that the Company be wound up …”

Corporations Law

12 The Administrator’s Report contained the following:

“Although I am aware the shareholders have considered a proposal for a Deed of Company Arrangement (“DOCA”) I am yet to receive one. Should a proposal be received it may be in the interests of creditors to adjourn the decision meeting until such time as a DOCA can be fully evaluated”

“A term of the shareholders agreement was that Rikland Pty Ltd must provide loans to the Company for the amount determined from time to time by the Board for the proper management of the Company. …

In July 2000 Vouris & Bell were requested to prepare financial accounts for the Company as none had previously been prepared. These accounts recorded a loss of $532,356 as at 30 June 2000. In addition the Company nor the shareholders appeared to have the necessary resources to fund a further marketing campaign. As a result it was recommended that the director appoint an Administrator to the Company …

Creditors will be aware that the former Administrator advised that he had received a draft funding agreement from Litigation Funding. In order to obtain details of this funding I wrote to Mr Holzman, Mr Peter Alter of Morgan Lewis Alter, Mr Ronny Shulkin and Michelle Silvers of Litigation Funding. Mr Alter has verbally advised that funding has been approved in principle and has advised that details of same will be forwarded to me before the decision meeting of creditors.

I have however written to Mrs Veronica Kosinar concerning the action and attach a copy of my letter dated 19 October 2000 and the reply from her solicitor dated 20 October 2000 as annexure “C”. Clearly more investigation of this matter is required.”

13 The section of the Report which gave a summary of the Company’s financial position, showed unsecured creditors as $659,625 and assets available to them as “Nil”. It also recorded contingent assets as “unknown”. Concerning that entry, the Report stated:

“The director, Mr Ronny Shulkin, has stated that the Company has a claim against Rikland Pty Ltd for breach of contract and opportunity loss. This matter is discussed in more detail in section 1 of this report.”

14 Under the heading “Investigation” the Report gave some consideration to whether an action might lie against directors for insolvent trading. It included the following passage:

“It appears that the Company was operated on the premise that the lottery would be a success and the commission from the sale of tickets would be available within the time period allowed by creditors for payment of their accounts. On this basis the only funding the Company would require is for office set up and administration costs.

Given the very small success of the marketing campaign and the tight timeframe for the lottery, the director would have suspected in at least May 2000 that the lottery would fail. Continuing to trade after say 1 May 2000 may therefore give rise to an action against the director for trading whilst insolvent.

In addition, Mr Shulkin has claimed that Mrs Veronica Kosinar acted as a director from about May 2000. An action against Mrs Kosinar as a deemed director may also be available to a liquidator or creditors should the Company go into liquidation.”

15 Concerning the possibility of there being voidable transactions which could be recovered by a liquidator, the Report said:

“I have reviewed payments in the previous six (6) months and am of the opinion that there exist possible preference payments. Due to the short period of trading of the Company and the uncertainty as to when the Company became insolvent, the amount of preference payments is uncertain.

It is my intention, should I be appointed Liquidator, to investigate more closely the possibility of proving the Company’s insolvency and then initiate recover proceedings to collect these monies.”

16 Concerning the interests of creditors and dividend likelihood, the Report said:

“As detailed above, I have not received a formal proposal for a Deed of Company Arrangement (“DOCA”) from the directors. Consequently, as the Company is hopelessly insolvent, creditors should resolve that the Company be wound up.

As the Company has no assets the only prospect for a return to creditors will arise from the proposed funding of actions against Rikland Pty Ltd and Mrs Kosinar. At this time I have no basis to predict the likely success of any such action or the possible outcome for creditors.”

17 The Report concluded with the administrator’s statement of opinions about the matters required by section 439A(4)(b) of the Corporations Law.

“Section 439A(4) of the Corporations Law requires me to make available to creditors my opinion as to the following possible outcomes of the administration process:

i. Execution of a Deed of Company Arrangement.

As stated, a proposal for a DOCA has not been received. As such I am unable to recommend this option.

ii. Whether the Administration should end.

The Company is clearly insolvent and as such I am unable to recommend that the control and stewardship of the Company be returned to the directors.

iii. Whether the Company should be wound up

Due to the fact that the directors have not proposed a DOCA, I am of the opinion that the Company should be wound up at this time.

As stated above, I am of the opinion that the creditors should resolve to wind up the Company. However, should a DOCA be proposed it may be in creditors interest to adjourn the decision meeting for a period in order to fully consider the proposal.”

18 Annexed to the report was a letter which Mr Vouris wrote to Ms Kosinar on 19 October 2000. That letter stated his understanding of the basis for a claim against Rikland and her personally, as arising from Clause 2.6.1 of the Shareholders Agreement, a claim against her personally concerning representations she had made about providing support for the Company when it was applying to extend the closing date of the lottery from 29 May 2000 to 30 September 2000, and her action as a quasi director of the Company. Those bases of action had been outlined in a letter which Phillips Fox, former solicitors for the Company, had written to her on 21 June 2000. A copy of Phillips Fox’s letter dated 21 June 2000 was sent to Ms Kosinar enclosed with the letter of 19 October 2000. Mr Vouris sought her response to the allegations. Also annexed to the Administrator’s Report was a reply, dated 20 October 2000, from Ms Kosinar’s solicitors NOT. That reply stated that Rikland had no assets, and in any event had no liability. While that letter was fairly vague about Ms Kosinar’s defences, it made clear that she would vigorously defend any claim brought against her. It denied that she had ever been appointed a director, or acted in the position of a director, and said that Mr Shulkin (the sole director of the Company) was not accustomed to act in accordance with the wishes of Ms Kosinar.

Between the Administrator’s Report and the Second Creditors’ Meeting

19 On 19 October 2000 Mr O’Neill sent to Mr Alter, the solicitor for Mr Shulkin, a “Without Prejudice” letter saying that Ms Kosinar was thinking of proposing a Deed of Company Arrangement. In broad terms, it involved Ms Kosinar making available $30,000, to constitute a Deed Fund, which would be used first to pay the expenses of the administration and deed administration, then distributed among creditors. It provided for the claims of Rikland, Cryson and Ms Kosinar being deferred, claims of Mr Shulkin and Mr Katz and certain other of their associates being forever discharged, the Deed Fund being distributed amongst other creditors, and the Company then reverting to the ownership and control of Ms Kosinar. As well, the Company, Mr Shulkin and all his associated entities, and all other shareholders were to release Rikland, Ms Kosinar and their associates from claims under the Shareholders Agreement.

20 On either 20 or 23 October, Mr O’Neill heard from Mr Alter that Mr Shulkin would not agree to the Company reverting to Ms Kosinar’s control, or to the release of rights under the Shareholders Agreement. Late in the evening of 23 October Mr O’Neill received instructions from Ms Kosinar to reformulate the proposal for a Deed. On 24 October NOT sent to Mr Vouris a proposal for a Deed of Company Arrangement which provided for Ms Kosinar to pay $30,000, but differed from the earlier proposal (which Mr Vouris had not seen) by providing for releases of claims under the Shareholders Agreement, or for insolvent trading, to be given only by the Company, the administrator, and all creditors.

21 Someone in Mr Vouris’ office provided a list of creditors of the Company to Mr O’Neill. On 25 October 2000 Mr O’Neill sent a circular letter, by facsimile, to some but not all of the creditors. It stated that Ms Kosinar had proposed a Deed of Company Arrangement, and enclosed a copy of Mr O’Neill’s letter to Mr Vouris making that proposal. It said that, if the Deed proposal went ahead, creditors could receive about eight cents in the dollar, and receive it within six months. It urged the recipients to vote in favour of the Deed. It also referred to the intention of Ms Kosinar and Rikland to defend any action brought against them, said that such action would be likely to drag on for years, and that NOT’s clients had taken “the commercial view” in relation to the litigation, and had decided to offer the amount which they would need to spend in defending the litigation as the Deed Fund.

22 On 25 October 2000 NOT wrote to Mr Vouris putting a new proposal for a Deed of Company Arrangement. The substantial difference from the immediately previous proposal was that the amount paid to constitute the Deed Fund was now $40,000.

23 On 23 October 2003 Morgan Lewis Alter wrote to Mr Vouris a letter consisting of four and one half pages of close typing, which presented in considerable detail what they said was the basis of the proposed actions against Rikland and Ms Kosinar. The causes of action were for breach of the Shareholders Agreement, misrepresentation under the Trade Practices Act 1974 (Cth) or Fair Trading Act 1987, misrepresentation at common law, and possibly for breach of fiduciary duty. The letter asserted that the damages would include substantial consequential damages, for loss of the prospect of the Company becoming a successful marketer of art unions on the Internet.

24 On 19 October 2000 Ms Michelle Silvers, of Litigation Lending Management Pty Limited, wrote a letter to Mr Vouris which confirmed that counsel’s advice had supported an offer for funding of proceedings against the potential defendants by both the Company, and Meron. A draft agreement for funding was enclosed. It related to funding in the sum of $150,000, and proceeded on the basis that Mr Holzman was the liquidator of Meron, and Mr Vouris was the liquidator of the Company. While the agreement was clear about the amounts which the funder would receive (ranging from 18% of the gross amount received by way of settlement, order or judgment in the proceedings, to 30% of that amount, depending upon whether the proceedings were concluded within four months of the date of the agreement, or after 12 months) it did not deal with how any remaining proceeds might be divided between Meron and the Company, or how any disputes or conflicts of interest between Meron and the Company concerning the running of the litigation might be resolved. Notwithstanding the date of the letter from Litigation Lending Services, it was not received at Mr Vouris’ office until late in the afternoon of 23 October 2000.

The Second Creditors’ Meeting

25 Nine creditors attended the meeting on 26 October 2000. Mr Shulkin and Ms Kosinar were amongst them. There were various proxies, some general, some specific. The minutes of the meeting record the following:

“The Chairman advised that the decision meeting of creditors had several options available for creditors being:

The Chairman suggested that the Company was hopelessly insolvent and it was therefore not appropriate that the Company be returned to its directors.

The Chairman advised that voting at the meeting would be by those creditors allowed to vote as per the Chairman’s determination. Should any creditor object to the Chairman’s determination on the ability of creditors to vote then they have 14 days within which to raise that objection with the Supreme Court of New South Wales.

The Chairman circulated a letter of advice dated 23 October 2000 received from Morgan Lewis Alter with respect to the background of a claim by the Company against its shareholders and Veronica Kossinar.

Murray Godfrey provided an outline of the action in accordance with the advice of Morgan Lewis Alter.

Mr Godfrey stated that the action related to:

1. Obligations on Rickland Pty Limited, a shareholder of Epromotions controlled by Veronica Kossinar and Fred Sarkis.

2. Action under the trade practices act relating to alleged misleading and deceptive conduct by Rickland Pty Limited and the directors of Rickland Pty Limited personally being, Veronica Kossinar and Fred Sarkis.

The benefit to creditors of these actions would be in obtaining orders that Veronica Kossinar, Fred Sarkis and Rickland Pty Limited:

1. Make good their obligation under the shareholders agreement.

2. Account to the shareholders for loss of future profits of the business.

The Chairman asked Mr Shulkin what was the financial position of Meron Pty Limited.

Ronnie Shulkin advised that Meron had a deficiency of approximately $20,000. In this regard Meron had no assets.

Mr Terry Trethowan of the Aids Trust advised after reading the Morgan Lewis Alter advice that he would express a different view to what was stated in the advice.

Mr Trethowan suggested that the arguments put in the advice would not stand up to cross examination. He was also concerned that he was unaware that Sevag Chalabian was a shareholder as well as being the solicitor for the Company. He was also concerned that Ernst & Young and Phillips Fox logos were represented on the initial website.

Ronnie Shulkin advised that he had documented evidence of every point raised in the Morgan Lewis Alter advice. He also advised that Ernst & Young’s logo was on the test site and this was changed to Grant Thornton later.

The Chairman asked Mr Shulkin to clarify the position with Sevag Chalabian.

Ronnie Shulkin advised that pursuant to the agreement if approval was given for the lottery then Sevag would become a shareholder in respect of legal services provided.

Glen Horton of the Aids Trust expressed that further evidence would need to be obtained to substantiate the allegations in the Morgan Lewis Alter Advice.

Michael O’Neill asked the Chairman whether he had received a further letter from Nash O’Neill Tomko (“NOT”) Lawyers.

The Chairman advised that he would be availing all available information on hand to creditors for their consideration. The Chairman distributed to the creditors copies of the letter from NOT Lawyers dated 25 October 2000. The Chairman also tabled for creditors inspection accounts prepared for Rickland Pty Limited as at 30 June 1999 which confirmed that it was a $2 Company.

Michael O’Neill advised that the only changes since the date of those accounts was to represent the loans made by shareholders to Rickland which were then onlent by Rickland to Epromotions. …

The Chairman referred to the Report to Creditors and the fact that he was only appointed on 6 October 2000.

The Chairman advised that a full and thorough investigation had not been completed yet due to time constraints.

The Chairman circulated a proposed Deed of Company Arrangement and advised that his report recommended the meeting be adjourned, however it was up to creditors to decide on the proposed Deed of Company Arrangement, adjourn the meeting or to appoint a Liquidator. If creditors accept the proposed Deed of Company Arrangement then the Company must execute the Deed within 21 days.

The Chairman advised that if creditors do resolve to accept the Deed of Company Arrangement and the director does not execute the Deed then he will demand the director sign the Deed or remove the director from office.

Michael O’Neill explained the terms of the proposed Deed in that Rickland were to deposit to the Deed fund $40,000 from which it was expected $25,000 would be distributed to participating creditors.

In this regard Veronica Kossinar and associated interests would be excluded from the Deed of Company Arrangement as would Craig Katz.

Mr O’Neill estimated the dividend at approximately 8 cents in the dollar. Mr O’Neill advised that the amount of $40,000 had been estimated with reference to the estimated costs of defending an action that could be brought by a Liquidator. He confirmed however that the litigation is the subject of disputed facts as evidenced by the unsolicited comments of Terry Trethowan of the Aids Trust and his client believed they would prevail in any action.

The Chairman advised that the Deed sum needed to be increased, as fees were already in excess of $15,000.

The Chairman asked Mr Shulkin if he would sign a Deed if resolved by creditors, subject to his own legal advice.

Ronnie Shulkin advised that he would sign a Deed of Company Arrangement if accepted by creditors subject to his own legal advice.

The Chairman advised that he would follow with the wishes of creditors. In this regard if the creditors resolve to wind up the Company he would pursue the litigation funding and if this was withdrawn he would call a meeting of creditors to discuss creditor funding. In this regard if the litigation is successful then it is estimated that the return to creditors would be between 100 cents in the dollar and nothing.

Ronnie Shulkin confirmed that the shares in Epromotions were held 10% to Katz; 5% Sevag Chalabian; 42.5% Ronnie Shulkin and 42.5% Rickland.

Mr Shulkin made the comment that the shareholding of Rickland was out of proportion with the shareholding for Katz and Chalabian should it be determined that the only contribution to be made by Rickland was approximately $150,000 for office set up. He also stated that he disputed the letter from Michael O’Neill which disputed the facts.

Mr Shulkin advised that if creditors want a Deed of Company Arrangement then he would sign it as he was not simply here to make money. The purpose of the litigation funding is to get as much money back to creditors as possible.

Mr Shulkin advised that with respect to his personal position AMEX will probably bankrupt him. However he did advise that if Epromotions does not pursue the litigation then Meron would.

The Chairman confirmed that the Deed of Company Arrangement would not release personal guarantees given by the director to certain creditors.

Glen Rush of Inhouse asked why a litigation funder would advance money if it did not perceive the action to be a good case.

Terry Trethowan asked for clarification with respect to any release of Ronnie Shulkin on signing of a Deed of Company Arrangement.

The Chairman confirmed that litigation funders took on actions that they believed would be successful however it was always a gamble and they are by nature punters. He also advised that Mr Shulkin would not be released in relation to personal actions against him by creditors.

Mr Shulkin advised that he had informed the Department of Gaming and Racing of the action and that they were happy with the case.

Shane Murray requested clarification of the percentage commission that would be earnt by the litigation funder.

Murray Godfrey referred to the summary of the commission charges circulated to creditors. Commission increased with time.

Michael O’Neill also referred to the litigation funding and advised that in his opinion $150,000 would not be enough should it go to appeal. It was his experience that should further funds be required the litigation funder would require an increased percentage of any successful action.

Ronnie Shulkin advised that it had taken him 2 months to convince the litigation funder to take on the action. The proposed funding was therefore not entered into lightly.

The Chairman confirmed that the litigation funder has a product similar to many other companies supporting Liquidator’s with funding. Liquidators think its great and although he had never used this litigation funder he had no issue using them. In other liquidations he has used other funders and had been very successful in several actions.

Trevor Trethowan asked to confirm what amount of the proposed Deed fund would be paid to creditors.

The Chairman advised that with respect to his fees that he would be prepared to conduct the Deed of Company Arrangement for $10,000.

At 11.15am Veronica Kossinar, Michael O’Neill and Fred Sarkis left the room to consider the Deed proposal.

Paul Trevor asked about the likelihood of recovery of preferences.

The Chairman advised that he would need funding to chase any preferences and at this stage had not made a final determination with respect to same.

Ronnie Shulkin advised that up until June 2000 the Company was seeking bank funding and therefore in his opinion could not be deemed to be insolvent.

The Chairman stated that the opinion of a Liquidator would be different. In this regard the Company had no assets and incurred liabilities from startup. A determination of insolvency could therefore be made prior to June 2000.

Michael O’Neill, Veronica Kossinar and Fred Sarkis returned to the room.

Michael O’Neill advised that the proposed Deed would be increased by $5,000 to $45,000 in order to cover additional fees. The Deed would therefore provide $25,000 for creditors and $20,000 for fees.

Mr O’Neill said that he had not provided to pay Mr Holzman’s fees as these had been paid by Mr Shulkin.

Ronnie Shulkin confirmed that he had made a payment to Mr Holzman with respect to fees on the Meron administration.

The Chairman read out the bill from Manfred Holzman with respect to the first week of the administration.

The Chairman advised that with respect to the monies payable under the Deed he would require personal guarantees for $45,000 from Veronica Kossinar and Frank Sarkis. This payment would have to be received within 6 months and NOT Lawyers should prepare the Deed of Company Arrangement at no cost to the Administrator. …

The terms for the Deed of Company Arrangement were clarified as being per the letter dated 25 October 2000 with the following alterations.

1. The amount to be paid to be $45,000.

2. The amount to be paid within 6 months of execution of the Deed of Company Arrangement.

3. The administration fees to be increased from $15,000 to $20,000.

4. 5(d) to be deleted, new sub-paragraph 5(d) to read “in the event that Ronnie Shulkin after taking legal advice seeks to become a participating creditor then his claim shall be that of a participating creditor”.

5. Delete the current clause 10. The new clause 10 to read “Veronica Kossinar and Fred Sarkis personally guarantee the payment of $45,000 referred to in paragraph 1”.

The Chairman advised that if a creditor is not happy with any resolution at today’s meeting then they can apply to court within 14 days to overturn the resolution. He also confirmed that it was up to Ronnie Shulkin whether to pursue a claim or not.

It was resolved that

Moved by Veronica Kossinar.

Seconded by Keith Mackenzie of BMC Media.

In Favour
Creditor	Amount	Proxy
$
Courier Newspapers	28,700.00	Specific
Australian Posters	39,000.00	Specific
Nash O’Neill Tomko	10,000.00	In Person
BMC Media	92,000.00	In Person
Mark Byrne Management	3,580.00	General
M & M Style Pty Limited	3,200.00	General
Grant Thornton Services	917.48	General
Majigo Pty Limited	675.20	Specific
Management & Media P/L	5,000.00	General
Kwikroll Pty Limited	593.00	General
Australian Chinese Publications	4,118.26	General
David Ratner	788.00	Specific
Cryson Pty Limited	2,400.00	General
Rickland Pty Limited	130,000.00	General
Aids Trust of Australia	18,843.78	In Person
TOTAL IN FAVOUR	339,815.72	15
Against
Creditor	Amount	Proxy
$
Ronnie Shulkin	40,000	In Person
Joy Melbourne Inc.	2,895.00	Specific
Inhouse Support Mgt	25,140.00	In Person
John Fairfax	56,746.00	General
The Age	16,000.00	General
TOTAL AGAINST	140,781.00	5

Not Voted general proxies in favour of the Chairman

Creditor	Amount	Proxy
$
The Connoisseurs Gallery	2,800.00	General
Datcom Computers	212.50	General
NLD Australia	40,860.00	General
TOTAL NOT VOTED	43,872.50	3

The Chairman asked if any creditor required a poll to be taken.

No poll was demanded.

The Chairman declared the motion carried on the voices.

It

was resolved that

Complaint about the Second Creditors’ Meeting

26 On 30 October 2000 Morgan Lewis Alter wrote to Mr Vouris, setting out some of the history of the matter which I have referred to above. The letter also set out a file note of Mr Alter’s telephone discussion with Mr Godfrey on 26 October 2000, as follows:

· “Discussed the Notice of Meeting issued by his office.

· Godfrey confirmed that the only issues on the agenda for the meeting were those referred to in paragraph 2a. to h.

· I refer to the Deed of Company Arrangement which, I understand, had already been proposed on 19 October 2000.

· Godfrey advises that the proposal had been “withdrawn”, as Shulkin had already rejected it.

· I specifically referred to, amongst other items, paragraph 9 of the Deed, which I noted would clearly be unacceptable to Shulkin.

· Godfrey advises that there may be a further Deed of Company Arrangement to be proposed.

· I advised that I have not seen any such further Deed – to which Godfrey makes no further comment (obviously, with the benefit of hindsight, Godfrey well knew of the Deed to be tabled, but refrained from commenting).

· We nevertheless discussed whether, if such a deed is presented at the meeting, the creditors would have enough time to consider?

· Godfrey agrees that if the Deed is proposed, creditors ought to have time to consider (still silent however, as to whether or not such a Deed had in fact been presented).

· Godfrey then enquires into the threatened action against Kosinar etc, noting that the Shareholders Agreement referred to the company, Rickland Pty Limited.

· I spend considerable time explaining that both by virtue of the terms of the contract entered into and/or under the Trade Practices Act, there may well be merit in proceeding against Kosinar personally.

· I mention also that this issue was specifically considered by Counsel, Mr Stephen Rushton, as well as the litigation funder, Michelle Silvers (who is herself, a solicitor ex Phillips Fox).

· I also mentioned to Godfrey that I would be happy to discuss the matter further with creditors and answer questions on the proposed cause of action, provided this was not done in the presence of Kosinar. Godfrey specifically agrees that it would be inappropriate to discuss a proposed claim in Kosinar’s presence, but queries if she can be excluded from any such meeting. Godfrey however, is once again silent as to the fact that a proposal had been received, thereby leading me to believe that I will be afforded an opportunity, if and when necessary, to address creditors.

· Godfrey states that the best way to proceed at this point, is to adjourn the meeting.

· I specifically state that as the only items before the meeting will be either the liquidation of the Company or an adjournment of the meeting, I would not therefore attend today’s meeting.

· Godfrey makes no further comment and the conversation ends.”

27 The letter went on to make charges that the introduction and acceptance of the Deed of Company Arrangement at the second creditors’ meeting was, in the circumstances, a breach of the Corporations Law and a violation of the duties which Mr Vouris owed to the creditors and members of the Company. It also charged that Mr Vouris was biased in favour of Ms Kosinar. A copy of that letter was sent to ASIC.

28 By another letter of 11½ closely typed pages dated 31 October 2000, Morgan Lewis Alter urged Mr Vouris to resign as administrator, and threatened to take court proceedings to remove him if he did not resign as administrator by 5.00pm on the next day. That deadline was later extended to 5.00pm 3 November 2000. On 3 November 2000 Mr Vouris’ solicitor wrote to Morgan Lewis Alter, denying the various allegations which had been made against him, and saying he would proceed with the administration of the Company. On 16 November 2000 a Deed of Company Arrangement, of the type approved by the creditors at the second creditors’ meeting, was entered into. Ms Kosinar has paid the money she was required to pay under that Deed, and it has been distributed in accordance with the Deed.

The Disciplinary Proceedings

29 ASIC has brought disciplinary proceedings against Mr Vouris in the Companies Auditors and Liquidators Disciplinary Board (“CALDB”), concerning his handling of the administration of the Company.

30 Section 1279 Corporations Law permitted a natural person to make application to ASIC for registration as a liquidator. Section 1282 set out the circumstances in which ASIC must grant such an application, and the circumstances in which ASIC must refuse such an application. Section 448B Corporations Law had the effect that only a registered liquidator can consent to be appointed, or to act, as administrator of a company or of a deed of company arrangement. Mr Vouris has at all material times been a registered liquidator.

31 Section 203 of the Australian Securities and Investments Commission Act 2001 (Cth) establishes a Companies Auditors and Liquidators Disciplinary Board, consisting of a Chairperson (who must, broadly, be a lawyer of at least five years standing), one person selected by the Minister from a list of five nominated by the Institute of Chartered Accountants, and another person selected by the Minister from a list of five nominated by the Australian Society of Certified Practicing Accountants.

32 Section 1292(2) of the Corporations Act 2001 (Cth) says:

“(2) The Board may, if it is satisfied on an application by ASIC for a person who is registered as a liquidator to be dealt with under this section that, before at or after the commencement of this section: …

(d) that the person has failed, whether in or outside this jurisdiction, to carry out or perform adequately and properly: …

(ii) any duties or functions required by an Australian law to be carried out or performed by a registered liquidator;

or is otherwise not a fit and proper person to remain registered as a liquidator;

by order, cancel, or suspend for a specified period, the registration of the person as a liquidator.

(9) Where, on an application by ASIC … for a person who is registered … as a liquidator … to be dealt with under this section, the Board is satisfied that the person has failed to carry out or perform adequately or properly any of the duties or functions mentioned in paragraph … (2)(d) … or is otherwise not a fit and proper person to remain registered as [a] … liquidator … the Board may deal with the person in one or more of the following ways:

(a) by admonishing or reprimanding the person;

(b) by requiring the person to give an undertaking to engage in, or to refrain from engaging in, specified conduct;

(c) by requiring the person to give an undertaking to refrain from engaging in specified conduct except on specified conditions;

and, if a person fails to give an undertaking when required to do so under paragraph (b) or (c), or contravenes an undertaking given pursuant to a requirement under that paragraph, the Board may, by order, cancel, or suspend for a specified period, the registration of the person … as a liquidator … .

(11) The Board may exercise any of its powers under this Division in relation to a person as a result of conduct engaged in by the person whether or not that conduct constitutes or might have constituted an offence, and whether or not any proceedings have been brought or are to be brought in relation to that conduct.

(12) This section has effect subject to section 1294.

(1) The Board must not:

(a) cancel or suspend the registration of a person as an auditor, as a liquidator or as a liquidator of a specified body corporate; or

(b) deal with a person in any of the ways mentioned in subsection 1292(9);

unless the Board has given the person an opportunity to appear at a hearing held by the Board and to make submissions to, and adduce evidence before, the Board in relation to the matter.

(2) Where subsection (1) requires the Board to give a person an opportunity to appear at a hearing and to make submissions to, and bring evidence before, the Board in relation to a matter, the Board must give ASIC and APRA an opportunity to appear at the hearing and to make submissions to, and bring evidence before, the Board in relation to the matter.”

33 Additional provisions governing the conduct of hearings by CALDB are found in section 215 to 223 inclusive of the ASICAct. Section 218(1) provides:

“At a hearing:

(a) the proceedings must be conducted with as little formality and technicality, and with as much expedition, as the requirements of the corporations legislation (other than the excluded provisions) and a proper consideration of the matters before the Disciplinary Board permit; and

(b) the Disciplinary Board is not bound by the rules of evidence; and

(c) the Disciplinary Board may, on such conditions as it thinks fit, permit a person to intervene in the proceedings.”

34 A decision of CALDB can be reviewed by the Administrative Appeals Tribunal: section 1317B Corporations Act 2001 (Cth). As well, a decision of CALDB about whether to impose any penalty on Mr Vouris, and if so of what kind, would be a decision of an administrative character, made under an enactment of the Commonwealth, and not a decision within any of the classes set out in Schedule 1 to the Administrative Decisions (Judicial Review) Act 1977 (Cth). Thus, any decision of CALDB would be open to judicial review on any of the grounds laid down in section 5(1) Administrative Decisions (Judicial Review) Act 1977 (Cth). Those grounds include that the decision involved an error of law.

35 On 20 December 2002 ASIC applied to CALDB pursuant to paragraph 1292(2)(d)(ii) of the Corporations Act 2001 (Cth) to have Mr Vouris dealt with under section 1292 of the Act. While the conduct about which ASIC makes complaint occurred prior to the coming into effect of the ASICAct 2001, that Act has extensive transitional provisions designed to effect a smooth transition from the regime of company administration which existed before it was enacted (section 253 to 285 inclusive). It is not submitted that the application is not within the jurisdiction of CALDB (cf Reynolds v Australian Stock ExchangeLtd [2003] NSWSC 33; (2003) 44 ACSR 612).

The Charge

36 The allegations which ASIC makes against Mr Vouris in the disciplinary proceedings are set out in a Statement of Facts and Contentions (“SOFAC”). The SOFAC has undergone various amendments, and in the course of the hearing before me it became apparent that further amendments are proposed. The latest manifestation of the SOFAC, dated 24 June 2003, makes the following allegation so far as Mr Vouris’ activities as administrator of the Company are concerned:

“ASIC contends that Mr Vouris failed within the meaning of section 1292(2)(d)(ii) of the Law, to carry out or perform adequately and properly the duties or functions required by an Australian law to be carried out or performed by a registered liquidator in relation to the administration of Epromotions in that he:

(1) failed pursuant to regulation 5.6.18 of the Corporations Regulations, to seek the consent of the meeting to adjourn the meeting in circumstances that warranted him seeking the consent of the meeting to so adjourn the meeting;

(2) acted and continued to act as Administrator when the administration of the company had ended;

(3) (i) failed to adequately and properly investigate and report to creditors on an allegation that Ms Kosinar was a “shadow” director and the possibility of her being liable under section 588G(3) of the Law for insolvent trading in the event that Epromotions proceeds to liquidation;

(ii) and further and in the alternative, failed to exercise due care and diligence as required by section 232(4) of the Law by his failure to so adequately and properly investigate and report;

(4) (i) failed to adequately and properly reflect in his files that s439A(3)(b) of the Law requiring publication of the Notice to Creditors had been complied with;

(ii) and further and in the alternative, failed to exercise due care and diligence as required by section 232(4) of the Law by his failure to adequately and properly reflect in his files that he so complied;

(5) did not disclose the fact that his appointment as Administrator was the result of an approach by Ms Kosinar and that his appointment was on the basis that his costs would be indemnified to a limit of $10,000 by her;

(6) (i) failed to adequately and properly reflect in his files that he complied with the requirements of regulation 5.6.13;

(ii) and further and in the alternative, failed to exercise due care and diligence as required by section 232(4) of the Law by his failure to adequately and properly reflect in his files that he so complied;

(7) (i) failed to inform the creditors’ meeting held on 26 October 2000 of possible rights of set off in respect of the claim of Rikland Pty Limited (Rikland) as a creditor for $130,000;

(ii) failed to consider the requirements of regulation 5.6.26 of the Corporations Regulations in the adjudication of the proof of debt of Rikland.

(iii) and further and in the alternative he failed to exercise due care and diligence as required by section 232(4) of the Law in so failing to inform the creditors’ meeting and considering the requirements of regulation 5.6.26; and

(8) (i) acted in a manner which favour the interests of Mrs Kosinar and/or compromised his professional independence in breach of APS 7 Statement of Insolvency Standards;

(ii) and further and in the alternative he failed to exercise due care and diligence as required by section 232(4) of the Law by so acting.”

37 In 2000, the definition, in section 9 of the Corporations Law, of “Officer” of a corporation, included an administrator of the corporation. Before amendments made by the 1999 amendments to the Corporations Law came into effect, section 232(4) Corporations Law provided:

“In the exercise of his or her powers and the discharge of his or her duties, an officer of a corporation must exercise the degree of care and diligence that a reasonable person in a like position in a corporation would exercise in the corporation’s circumstances.”

38 Of the eight different respects in which ASIC alleges Mr Vouris breached section 1292(2)(d)(ii) of the Law, it is the first which is of particular importance in this litigation. Concerning that first respect, the SOFAC identifies what are said to be the “circumstances that warranted him seeking the consent of the meeting to so adjourn the meeting”, and gives particulars of each of those circumstances. The SOFAC identifies the circumstances as being,

“that Mr Vouris had:

(i) breached s439A(1) of the Law in relation to the convening period for the creditors’ meeting held on 26 October 2000;

(ii) been informed on 24 October 2000 of the details of Ms Kosinar’s proposed DCA;

(iii) in the absence of taking the opportunity to adjourn the meeting, Mr Vouris was unable to circularise Epromotions’ 45 creditors with a further Report to Creditors;

(iv) in the absence of taking the opportunity to adjourn the meeting, Mr Vouris was unable to issue a statement in compliance with the requirements of section 439A(4)(b)(i), (ii) and (iii) of the Law;

(v) in the absence of taking the opportunity to adjourn the meeting, Mr Vouris was unable to provide a statement setting out details of the proposed deed as required by section 439A(4)(c) of the Law;

(vi) as a result of the matters referred to in paragraph (iii), (iv) and (v) above, creditors were not sufficiently informed to enable them to make an informed decision as to how to vote;

(vii) made a suggestion in the creditors’ report that it may be in the creditors’ best interests to adjourn the meeting should a DCA proposal be received;

(viii) denied creditors the opportunity to adjourn the meeting by putting forward the motion in support of a DCA (which was carried) prior to allowing them to consider a motion to adjourn the meeting; and

(ix) denied certain creditors the opportunity of knowing a DCA was to be discussed and therefore disenfranchised them.”

These Proceedings

39 The Originating Process in these proceedings was filed on 5 June 2003. At that time, the hearing before CALDB was set down for 28, 29 and 30 July 2003. That hearing date has since been vacated.

40 The orders and declarations which Mr Vouris seeks and which are now matters of live contention, are contained in an Amended Originating Process. They are as follows:

“1. AN ORDER pursuant to S.1322 of the Corporations Act 2001 (“The Act”) declaring that the meeting of creditors of Epromotions Australia Pty Ltd (“the Company”) held on 26th October 2000 (“the Meeting”), was not invalid by reason of any defect in the giving of notice in respect of it;

2. AN ORDER that Part 5.3A of the Act is to operate, and has at all relevant times operated, in relation to the Company as though the Meeting was not invalid by reason of any such defect; …

4. A DECLARATION that:

(a) unless directed to do so by the creditors at the Meeting, the Plaintiff was not entitled, by force of the operation of S.439B(2) or S.442A(d) of the Law, to adjourn the Meeting, alternatively

(b) there were no circumstances warranting such adjournment; alternatively

(c) there were no circumstances warranting the Plaintiff seeking the consent of the creditors to adjourn the Meeting.

(d) in performing his duties or functions while presiding at meetings of creditors convened pursuant to Part 5.3A of the Act the administrator is not obliged to seek pursuant to Regulation 5.6.18, the consent of the meeting to adjourn that meeting or was not in the circumstances of the present case so obliged.

(e) in any determination under Section 1292 of the Act as to whether a registered liquidator has adequately and properly carried out his duties and functions, the Companies Auditors Liquidators Disciplinary Board is required by law to consider, and give full force and effect to, issues raised by a registered liquidator under Section 180(2) as a defence to any allegation by ASIC of breach of Section 180(1) of the Act.

5. A DECLARATION that the Plaintiff was not in breach of S.439A(4) of the Law by not expressing an opinion about the matters set forth in that section in relation to the proposed deed of company arrangement presented at the Meeting.

6. A DECLARATION that the Plaintiff was justified in proceeding with the Meeting, and in executing the Deed of Company Arrangement dated 16th November 2000; …

7. A DECLARATION pursuant to s.1318 of the Act that the plaintiff acted honestly, and ought fairly to be excused, for any breaches, failures or omissions, relating to the administration of the Company, referred to in paragraphs (1) to (6) inclusive.

EXHIBIT NH3

41 Paragraph 3 of the Originating Process sought a declaration “that the plaintiff was not in breach of Regulation 5.6.13 by failing to prepare a Notice in, or substantially in, the form of Form 530 in relation to the convening of the Meeting.” Regulation 5.6.13 provided, at the relevant time:

“A statement in writing in accordance with Form 530 by:

(a) the person convening the meeting; or

(b) a person acting on his or her behalf;

that notice of the meeting was sent by prepaid post is, in the absence of evidence to the contrary, sufficient proof of the notice having been sent to a person at the address specified for that person in that notice.”

The Obligation to Convene the Second Creditors’ Meeting

42 Section 439A of the Corporations Law provided:

“(1) The administrator of a company under administration must convene a meeting of the company’s creditors within the convening period as fixed by subsection (5) or extended under subsection (6).

(2) The meeting must be held within 5 business days after the end of the convening period.

(5) The convening period is:

(a) if the administration begins on a day that is in December, or is less than 28 days before Good Friday – the period of 28 days beginning on that day; or

(b) otherwise – the period of 21 days beginning on the day when the administration begins.

(6) the Court may extend the convening period on an application made within the period referred to in paragraph (5)(a) or (b), as the case requires.”

43 Pursuant to section 435C(1) the administration of a company begins when an administrator is appointed. In the present case, the administration began when Mr Holzman was appointed administrator on 29 September 2000. The period of 21 days beginning on 29 September 2000 ends on 19 October 2000. Thus, pursuant to section 439A(5)(b), the convening period ended on 19 October 2000.

44 What counts as convening the meeting is defined by section 439A(3):

“The administrator must convene the meeting by:

(a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and

(b) causing notice of the meeting to be published:

(i) in a national newspaper; or

(ii) in each jurisdiction in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that jurisdiction;

at least 5 business days before the meeting.”

45 Part 5.6.12 of the Corporations Regulations, as in effect in October 2000 provided:

(1) The convenor of a meeting must give notice in writing of the meeting to every person appearing on the company’s books or otherwise to be:

(a) in the case of a [meeting of members, creditors or contributory of a company] – a member, creditor or contributory of the company …

(1A) The notice must be given to a person

(a) by delivering it personally; or

(b) by sending it to the person by prepaid post; or

(c) if the person has a facsimile transmission number to which notices may be sent to the person — by faxing it to the person at that number; or

(d) if the person has a document exchange number to which notices may be sent to the person — by lodging it with the exchange at, or for delivery to, the person's receiving facilities identified by that number. …

(2) The notice referred to in sub-regulation (1) must be: …

(b) in any other case – in accordance with Form 529. …

(4) A notice to a creditor must be sent by the person convening the meeting:

(a) to the address given by the creditor in his or her proof of debt or claim; or

(b) if the creditor has not lodged a proof, to the address given in the report on the affairs of the company; or

(c) to any other address known to the person.

(5) A notice of a meeting must be sent by the convenor of the meeting:

(a) to the address given in the company’s books as the address of that person; or

(b) to any other address known to the person convening the meeting.”

46 There is no provision in any of these regulations, of a kind commonly found in statutes or contractual provisions designed to facilitate service, which deems service to have been effected a certain number of days after the document has been put in the post, or at the time the document would be received in the ordinary course of post. That omission is no oversight – such a provision, while often appropriate in a situation where there is a single person, or fixed group of people required to be served, would not be appropriate under section 439A. The correct construction of section 439A(3)(a) and Regulation 5.6.12(1A)(b) is that written notice of the meeting is given at the time it is put in the post, for the purpose of sending it to the person by prepaid post. When section 439A sets out a strictly limited set of times, any construction which required the time of convening of the meeting to depend upon when some individual creditor received notice, or the last of the creditors had received notice, would make it very difficult to administer. Further, section 439A(3)(a) requires written notice to be given only to “as many of the company’s creditors as reasonably practicable”, and an administrator is often someone who has had no connection with the company before being appointed, and so does not necessarily have experience of communicating with the particular creditors that the company has – it is a more achievable task for the administrator to decide concerning which of the company’s creditors it is reasonably practicable to put a notice into the post, than to decide concerning which of the company’s creditors it is reasonably practicable to actually have a notice put into the post reach them. This construction of Regulation 5.6.12(1A)(b) is also consistent with the words of Regulation 5.6.12(1A)(c) and (d), each of which proceeds on the basis that a notice has been given when the administrator has done what lies in his power to achieve, to communicate with the creditor by fax, or through the document exchange.

47 Hence, the second meeting of creditors’ in the present case was convened on 20 October 2000, when the notices were put into the post. And hence the convening was one day late.

Orders 1 and 2 in the Amended Originating Process – Curing the Late Convening of the Meeting

Section 1322 as a Basis for a Curing Order

48 The Amended Originating Process in this case sought an order under section 1322 Corporations Act 2001. Though that section repeatedly makes reference to “this Act”, section 1405 Corporations Act 2001 extends the reference to “this Act” to include a reference to the Corporations Law. Thus, even though the event concerning which the applicant seeks a validating order occurred at a time when it was the Corporations Law which was in force, it is possible to make an order under section 1322 Corporations Act 2001 in relation to that event. There was no argument before me which disputed the correctness of looking to section 1322 Corporations Act 2001, rather than section 1322 Corporations Law, for the source of power of the Court to validate irregularities. I shall act in accordance with the position both parties adopted, and treat section 1322 Corporations Act 2001 as the relevant source of power to validate any irregularities which occurred in October 2000.

49 Section 1322 Corporations Act 2001 provides:

(1) In this section, unless the contrary intention appears:

(a) a reference to a proceeding under this Act is a reference to any proceeding whether a legal proceeding or not; and

(b) a reference to a procedural irregularity includes a reference to :

(i) the absence of a quorum at a meeting of a corporation, at a meeting of directors or creditors of a corporation, at a joint meeting of creditors and members of a corporation or at a meeting of members of a registered scheme; and

(ii) a defect, irregularity or deficiency of notice or time.

(2) A proceeding under this Act is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid. …

(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

(b) an order directing the rectification of any register kept by ASIC under this Act;

(c) an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);

(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;

and may make such consequential or ancillary orders as the Court thinks fit.

(5) An order may be made under paragraph (4)(a) or (c) notwithstanding that the contravention or failure referred to in the paragraph concerned resulted in the commission of an offence.

(6) The Court shall not make an order under this section unless it is satisfied:

(a) in the case of an order referred to in paragraph (4)(a):

(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;

(ii) that the person or persons concerned in or party to the contravention or failure acted honestly; or

(iii) that it is just and equitable that the order be made;

(b) in the case of an order referred to in paragraph (4)(c) — that the person subject to the civil liability concerned acted honestly; and

(c) in every case — that no substantial injustice has been or is likely to be caused to any person.”

50 In Re Caysand No 64 Pty Ltd (1993) 12 ACSR 291 Thomas J explained the operation of section 1322 of the Corporations Law (which was in terms not materially different to section 1322 of the Corporations Act), at 296-297:

“It seems to me that s.1322 has two streams, the first essentially under subs (1), (2) and (3), and the second essentially under subs (4), (5) and (6). They are not entirely separate, but they envisage two different types of application. The first three subsections postulate the prima facie validity of any “proceeding under this Law” despite procedural irregularity. Any such proceeding “is not invalidated unless the court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the court” (s.1322(2)). The following three sections (subs (4), (5) and (6)) provide a wider base for remedial action, in that they give the Court power to cure “any act, matter or thing purporting to have been done … under this Law or in relation to a corporation” (s.1322(4)(a)). …

Broadway Motors Holdings Pty Ltd (in liq)

Re Pembury Pty Ltd

Mamouney v Soliman

Elderslie Finance Corp Ltd v ASC

51 In Re Vanfox Pty Ltd (1994) 13 ACSR 209, at 216 Thomas J dealt with an application to validate, under section 1322, various deficiencies in an administrator’s calling of a first meeting of creditors. His Honour said, at 216:

Caysand No 64 Pty Ltd

52 Consistently with that decision, Mr Vouris invokes section 1322(4) as a source of power which can validate the late calling of the creditors’ meeting.

53 Mr Vouris is clearly a person who counts as “any interested person”, and therefore has the standing to make an application under section 1322(4). His interest arises from his having occupied the position of administrator, and also from his conduct in that position now being the subject of question.

54 I now turn to whether the requirements of section 1322(6), for the making of an order under section 1322(4) are met.

55 In Re Vanfox Pty Ltd (1994) 13 ACSR 209 at 216-127 Thomas J said:

Australian Hydrocarbons NL v Green

Re Broadway Motors Holdings Pty Ltd (in liq)

Re Testro Brothers Consolidated; Ex parte Attorney-General

Bell Resources v Turnbridge Pty Ltd (No 2)

Mamouney v Solimon

Broadway Motors

Re Compaction Systems Pty Ltd

Re The Twenty-First Century Sign Company Pty Ltd

Broadway Motors Holdings

In my view the substantial requirements for the creation of a deed of company arrangement have been satisfied in the present case notwithstanding that a number of defective steps were taken along the way. The steps in question are principally the giving of notices within a prescribed time, the extent of their publication, and whether an ambiguity may have misled creditors or caused them not to attend. These may all be characterised as matters essentially of a procedural nature.”

56 In Re Ricon Constructions Pty Ltd (In liq) (1997) 26 ACSR 655, at 661 (a case where, like the present one, an administrator was one day late in convening the second meeting of creditors) Santow J said, at 661:

Re Vanfox Pty Ltd

Re Broadway Motors Holdings Pty Ltd (in liq)

57 The lateness in sending out the notice of meeting was partly the product of Mr Vouris’ absence from the office, and partly the product of hoped for information, relevant to the administrator’s report, not arriving. Mr Vouris has given evidence, on which he was not cross-examined, that upon discovering, on 23 October 2000, that the notice had not been sent to creditors in time, he decided to go ahead with the meeting which was to take place on 26 October 2000 in the belief that:

“(a) it was in the best interests of creditors for the meeting to be held;

(b) the time had expired for an immediate application to extend the convening period and it was therefore no longer possible to make such an application;

(c) an application could be made in the Court for such other orders as may be necessary to “validate” the meeting and either a winding up or a deed of company arrangement as the case may be. In addition it was my view at the time that if such an application became necessary it would involve a procedural matter and would be most likely to succeed;

(d) such an application could be made before or after the meeting was held;

(e) there was authority for the proposition that failing to convene a meeting within the convening period could be cured as a procedural irregularity;

(f) my general obligation as administrator was to proceed as speedily as I could with the administration and I could see no prejudice to any party should the meeting be held; and

(g) I had a general power as administrator to do whatever was necessary to execute and carry out my duties and functions as administrator if, when the meeting was held, a problem arose or if I though it was otherwise necessary to do so as a result of any development at the meeting. In addition I had a casting vote which I could exercise if no result was reached at the meeting as between the creditors.”

58 Mr Godfrey, the person to whom Mr Vouris had delegated the task of finalising and sending out the notice and report, gave evidence, on which he was not cross-examined, that he had drafted a report to creditors on the basis that a proposal for a Deed of Company Arrangement would be forthcoming on 19 October 2000, which would involve the payment of a lump sum to a deed administrator. He had drafted that report in the expectation that such a proposal would be received, but it was not received. As well, he was expecting information concerning the litigation lending proposal. He says that, despite assurances to the contrary, neither class of information was provided until it became too late in the afternoon of 19 October 2000 to amend the report and have it posted.

59 In all these circumstances, I am satisfied that each of the persons who were concerned in or party to the contravention, acted honestly. As each of subparagraphs (i), (ii), and (iii) of section 1322(6)(a) is an alternative basis for the making of an order, it is not necessary for me to consider whether it is in the public interest that the order be made.

60 It is, however, necessary to be satisfied, pursuant to section 1322(6)(c) that no substantial injustice has been, or is likely to be caused to any person. I am so satisfied. There was nothing critical in the timing, which made one day’s lateness in the date on which the creditors received the notice of particular importance. The meeting was still held within five business days after the end of the convening period, as required by section 439A(2). A total of 23 creditors, owed debts totalling $524,469.22, were represented at the creditors’ meeting, either personally or by proxy. Out of total creditors of $659,625, this is 79.5% by value – a high proportion.

109 Insofar as paragraph 6 of the Amended Originating Process seeks a declaration that the plaintiff was justified in executing the Deed of Company Arrangement dated 16 November 2000, it goes well beyond any controversy raised by that paragraph of the SOFAC.

Amended Originating Process – Paragraph 4(e) – Availability of Defences Under Section 180(2)

110 This paragraph was added to the Amended Originating Process in the course of the hearing. It arose from the realisation that the version of section 232 of the Corporations Law which the SOFAC invoked had been repealed by the time of the actions of Mr Vouris which are the subject of the charge, and replaced by a new section 180 of the Corporations Law. The new section 180 provided:

“(1) A director or other officer of a corporation must exercise their powers and discharge their duties with the degree of care and diligence that a reasonable person would exercise if they:

(a) were a director or officer of a corporation in the corporation's circumstances; and

(b) occupied the office held by, and had the same responsibilities within the corporation as, the director or officer.

(2) A director or other officer of a corporation who makes a business judgment is taken to meet the requirements of subsection (1), and their equivalent duties at common law and in equity, in respect of the judgment if they:

(a) make the judgment in good faith for a proper purpose; and

(b) do not have a material personal interest in the subject matter of the judgment; and

(c) inform themselves about the subject matter of the judgment to the extent they reasonably believe to be appropriate; and

(d) rationally believe that the judgment is in the best interests of the corporation.

The director's or officer's belief that the judgment is in the best interests of the corporation is a rational one unless the belief is one that no reasonable person in their position would hold.

(3) In this section:

“business judgment”

111 ASIC has stated that it will amend the SOFAC to replace the references to section 232(4) with references to section 180(1), and make any consequential amendments. I will leave to one side whether that circumstance means that Declaration 4(e) should not be made on the basis that it is premature.

112 I decline to make the Declaration on the ground that there is no real dispute about it. ASIC says (in a written submission delivered, with leave, after the conclusion of the oral hearing, the leave being granted so that ASIC had time properly to consider the amendments to the Originating Process made in the course of the hearing) that:

“It is clear on a reading of section 180 that if a person is charged with a failure to exercise care and diligence pursuant to section 180(1) then the defence afforded pursuant to section 180(2) is available.”

Amended Originating Process – Paragraph 7 – Excusing Breaches Under Section 1318

113 Section 1318 of the Corporations Act 2001 (Cth) provides:

“(1) If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit.

(2) Where a person to whom this section applies has reason to apprehend that any claim will or might be made against the person in respect of any negligence, default, breach of trust or breach of duty in a capacity as such a person, the person may apply to the Court for relief, and the Court has the same power to relieve the person as it would have had under subsection (1) if it had been a court before which proceedings against the person for negligence, default, breach of trust or breach of duty had been brought. …

(4) This section applies to a person who is:

(a) an officer of a corporation; or …

“officer”

(c) an administrator of the corporation …”

114 It is to be observed that section 1318(1) uses the word “court” with a small “c”, while section 1318(2) refers to “the Court”, with a capital “C”. The difference is explained by section 58AA of the Corporations Act 2001 (Cth):

(1) Subject to subsection (2), in this Act:

"court"

"Court"

(a) the Federal Court;

(b) the Supreme Court of a State or Territory;

(c) the Family Court of Australia;

Family Law Act 1975

(2) Except where there is a clear expression of a contrary intention (for example, by use of the expression "the Court"), proceedings in relation to a matter under this Act may, subject to Part 9.7, be brought in any court.”

115 It is a precondition for the operation of section 1318(1) that there be a civil proceeding, in a court, against a person who occupies one of the roles identified in section 1318(4) in a corporation, and that those proceedings be “for negligence, default, breach of trust or breach of duty in a capacity as such a person”. There are no proceedings of that kind against Mr Vouris. Further, the power to relieve which is conferred by section 1318(1) is one which can only be exercised by “the court before which the proceedings are taken”. Thus, section 1318(1) cannot be availed of by Mr Vouris in the present case.

116 Section 1318(2) enables any of the specific courts which count as a “Court” to grant relief. The person to whom relief is granted must be someone who has one of the types of connection to a corporation identified in section 1318(4). The requirement that that person “has reason to apprehend” that a claim will or might be made against him or her means that there must be an objective basis for believing that the claim will or might be made against that person. Further, the claim must be one “in respect of any negligence, default, breach of trust or breach of duty in a capacity as such a person”.

117 The way the argument was put is that it was the proceedings before CALDB which were the relevant proceedings in which the claim of negligence, default, breach of trust or breach of duty was made against Mr Vouris. I will assume (without deciding) in his favour that the fact that those proceedings have already been brought does not put him outside the scope of section 1318(2), on the ground that 1318(2) applies only in a situation where there is “reason to apprehend” that the claim “will or might be made”, and hence does not apply to claims already made.

118 Even making that assumption, section 1318 does not enable this Court to grant that relief to Mr Vouris. The power which the Court has to grant relief, is the same as the power that a small-c court would have had under section 1318(1) if it had been a court before which proceedings against that person for negligence, default, breach of trust or breach of duty had been brought. The power of a small-c court under section 1318(1) is one which can be exercised only in a “civil proceeding”, “for negligence, default breach of trust or breach of duty”. It follows that the capacity of a Court under section 1318(2) to grant relief is limited to relief against the type of claim which can be brought, in a court, in a “civil proceeding”, “for negligence, default breach of trust or breach of duty”.

119 Thus, even if it were the case that the disciplinary proceedings against Mr Vouris amounted to “any claim … in respect of any negligence, default, breach of trust or breach of duty”, within the meaning of section 1318(2), section 1318(2) does not confer on this Court the power to relieve him from liability. This Court has no power to relieve against it, because those professional disciplinary proceedings are not the type of proceedings which could be brought in a court, and hence are not the type of proceedings to which section 1318(1) could possibly apply.

120 This conclusion, derived from analysis of the text of section 1318, is consistent with its legislative history. Section 1318 has a lineage which starts with section 3 of the Judicial Trustees Act 1896 of England, and can be traced through section 32 of the Companies Act 1907 of England, section 279 of the Companies (Consolidation) Act 1908 of England, section 288 of the Companies Act 1910 (Vic) section 288 Companies Act 1915 (Vic), section 288 Companies Act 1928 (Vic), and section 365 Companies Act 1961 (Vic): Lawson v Mitchell [1975] VR 579 at 585. After tracing the history of the provision, Young CJ and Newton J said, in Lawson v Mitchell at 586:

English Companies Act 1907

namely the principal proceedings then available in which a director could be held civilly liable to his company for loss which he had caused to it.

Hirsche v Simms

Re Faure Electric Accumulator Co

Young v Naval and Military Co-operative Society

Cullerne v London & Suburban General Permanent Building Society

English Companies Act 1907

121 In AWA Ltd v Daniels (1992) 7 ACSR 759 at 855 Rogers CJ Com Div referred to the English committee whose report led to the enactment of the 1907 provision. Rogers CJ Com Div quotes that report’s recommendation that power to relieve from breach of duty be granted to the Court,

in an action for negligence or breach of trust

122 There is another, though less powerful, reason for concluding that section 1318 cannot be used to relieve Mr Vouris from any liability which CALDB might impose on him. In Lawson v Mitchell Young CJ and Newton J said, at 595:

Companies Act

nolle prosequi

123 While those difficulties of applying section 1318 to criminal proceedings do not all apply to administrative proceedings seeking a disciplinary sanction, there is still considerable awkwardness in describing a process of saying that no such sanction shall be applied as one of “relieving … from liability”.

Additional Claim to Relief Under Section 1322(4)(c) – Relief from Liability for Late Convening of Meeting

124 I should mention here a claim which was dealt with in argument, although not within the scope of the Amended Originating Process. It concerns the admitted breach of the Act involved in convening the second creditors’ meeting one day late. One of the orders which is possible under section 1322(4)(c) is “an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a).” In Re Ricon Constructions Pty Ltd (in liq); ex parte McDonald, Santow J not only made an order under section 447A(1) and section 1322 validating a second creditors’ meeting which had been convened one day late, but also made an order under section 1322(4)(c). Pursuant to section 1322(6)(b) and (c), an order under section 1322(4)(c) cannot be made unless the Court is satisfied that the person subject to the civil liability concerned acted honestly, and that no substantial injustice has been or is likely to be caused to any person. I have already held that those factual elements are satisfied, so far as the meeting being convened one day late is concerned.

125 Though section 1322(6) sets out necessary preconditions for the making of an order under 1322(4), the making of the order is still discretionary. To decide whether it should be granted, one needs to consider what is the extent of relief which would result from the making of an order. That depends on turn as what counts as “any civil liability”, within the meaning of section 1322(4)(c).

126 The Corporations Act 2001 (Cth) contains no definition of the expression “civil liability”. Section 9 contains a definition that “civil matter” means “a matter other than a criminal matter”. Clearly a “civil liability” would include any liability which could be enforced in the courts by a non-criminal procedure. An arbitration has been held to be a “civil proceedings” within the meaning of the provision which prohibited the commencing or proceeding with a “action or other civil proceeding” against a company in liquidation except by leave of the court (Re Vassal Pty Ltd (1983) 8 ACLR 683; Doran Constructions Pty Ltd (in liq) v Beresfield Aluminium Pty Ltd (2002) 54 NSWLR 416 at 418), and within the meaning of section 16 of the Service and Execution of Process Act 1901 (Cth) (Alliance Petroleum Australia (NL) v Australian Gaslight Co Ltd (1983) 48 CLR 69; TNT Bulkships Ltd v Interstate Construction Pty Ltd (1985) 35 NTR 15.) A “civil proceeding” includes an examination in a company liquidation: Cheney v Spooner (1929) 41 CLR 532; Re Williams Bros Ltd (1928) 46 WN (NSW) 39).

127 Whether or not the proceedings before CALDB count as a “civil proceeding”, I have some doubt whether any penalty which CALDB could impose would count as “any civil liability” within the meaning of section 1322(4)(c). The range of remedies open to CALDB are cancellation or suspension of registration, admonishing or reprimanding, and requiring undertakings. There is the same awkwardness in treating those sanctions as “any civil liability” for the purpose of section 1322(4)(c), as there is in treating them as a liability which can be relieved against under section 1318.

128 However, I shall not decide this point on that basis. Even if the liability which CALDB could impose counted as a “civil liability” within the meaning of section 1322, I would not as a matter of discretion relieve Mr Vouris from any such liability. That view is not based on any opinion about whether Mr Vouris does, or does not, deserve to have any punishment imposed on him – it is based solely on the view that, when the jurisdiction of CALDB has been validly attracted, and the decision of CALDB is influenced by questions of proper professional practice, this Court ought not make an order which has the effect of preventing CALDB from performing the task Parliament intended it to perform. Even if making such an order were within the words of section 1322(4), and in that sense within power, it is not, it seems to me, within the proper scope for the exercise of discretion under section 1322. Hence, while it seems to me that it would be appropriate to make an order under section 1322(4)(c) concerning the late convening of the meeting, I would except from that order any penalty which CALDB might think fit to impose. That exception is one I make for the sake of clarity about the scope of the order, and even though I have doubts about whether there would be power under section 1322(4)(c) for this Court to relieve Mr Vouris from the type of penalties which CALDB can impose.

Declaration 10 – Admissibility or Relevance of Evidence before CALDB

129 Exhibit NH3 is a collection of minutes of the second meeting of creditors, of various companies which were in administration. They were all minutes where a proposal for a deed of company arrangement, or an amendment of a proposal for a deed of company arrangement, was received after the notice of meeting and its accompanying report were sent. There were seven sets of minutes in total. By written submission filed, with leave, after conclusion of the oral hearing, ASIC acknowledged that two of them were no longer relevant, and would not be used before CALDB.

130 I have set out in para [33] above the provisions of section 218(1) of the ASIC Act. Concerning a similar provision in section 33(1) Administrative Appeals Tribunal Act 1975, which freed that Tribunal from the rules of evidence, Brennan J said in Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 26 ALR 247 at 256-7,

R v War Pensions Entitlement Appeals Tribunal; Ex parte Bott

Bott’s

case,

Rodriguez v Telstra Corp Ltd

Hehir v Smith

131 Whether the particular documents in exhibit NH3 which ASIC continues to intend to tender at the hearing are rationally probative of anything will depend upon, amongst other things, the purposes for which they are sought to be tendered, and whether there is other evidence to which those sets of minutes can be linked. It is not, in my view, possible to decide, without knowing the forensic and evidentiary contexts in which they will be deployed, whether those documents will be rationally probative of anything.

132 As well, the same principles as lead a court to be reluctant to make a declaration that a Magistrate has erred in rejecting evidence in a committal proceedings, (ACS v Anderson [1974] 2 NSWLR 482; Bourke v Hamilton [1977] 1 NSWLR 470) also apply here. I decline to make declaration number 10

1. Declare that the meeting of creditors of Epromotions Australia Pty Ltd (“the Company”) held on 26 October 2000 (“the Meeting”) was not invalid by reason of any defect in the giving of notice in respect of it.

2. Order that Part 5.3A of the Corporations Law and Part 5.3A of the Corporations Act 2001 are each to operate in relation to the Company as if the Meeting was not invalid by reason of any such defect.

3. Order that the plaintiff is relieved in whole from any civil liability in respect of a contravention of the Corporations Law arising from the Meeting being convened on 20 October 2000, rather than on or before 19 October 2000, PROVIDED THAT this Order does not prevent the Companies Auditors and Liquidators Disciplinary Board from taking such action, if any, as it thinks fit concerning that contravention.

4. Declare that the plaintiff was not in breach of s.439A(4) of the Corporations Law by not expressing an opinion about the matters set forth in that section in relation to the Proposed Deed of Company Arrangement presented at the Meeting.

5. Direct the parties, that if either party wishes to apply for any other order, that party make, within 28 days of the delivery of these reasons, an appointment with my Associate for the argument of the application for such order.

**********

Last Modified: 09/05/2003

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Citations

John Vouris Re; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (In Liq) [2003] NSWSC 702

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CITATION:	John Vouris Re; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (In Liq) [2003] NSWSC 702
HEARING DATE(S):	21-22 July 2003
JUDGMENT DATE:	1 September 2003
JURISDICTION:	Equity
JUDGMENT OF:	Campbell J
DECISION:	Late convening of second creditors' meeting validated under section 1322(4) and section 447A. Plaintiff relieved from civil liability in respect of late convening of meeting, on proviso that that order did not prevent Companies Auditors and Liquidators Disciplinary Board from taking such action, if any, as it thought fit concerning that contravention. Declaration that plaintiff not in breach of section 439A(4) Corporations Law by not expressing an opinion concerning Deed of Company Arrangement which he was informed about only after convening second creditors' meeting
CATCHWORDS:	CORPORATIONS - voluntary administration - procedure for convening of second creditors' meeting - curing late convening of second creditors' meeting under section 1322(4) Corporations Act - curing late convening of second creditors' meeting under section 447A Corporations Law and Corporations Act - ability of order under section 447A to cure past defects - powers of chairperson of second creditors' meeting to adjourn - inappropriateness of Court making declarations concerning matter involving judgment or discretion which has been entrusted to Companies Auditors and Liquidators Disciplinary Board - excusing breaches under section 1318 Corporations Act 2001 - what types of breaches can be excused - relieving from civil liability under section 1322(4)(c) Corporations Act 2001 - what counts as "civil liability" - whether declaration should be made about admissibility or relevance of evidence in proceedings in Companies Auditors and Liquidators Disciplinary Board
LEGISLATION CITED:	Administrative Appeals Tribunal Act 1975 Administrative Decisions (Judicial Review) Act 1977 (Cth) Australian Securites and Investments Commission Act 2001 (Cth) Conveyancing Act 1919 (NSW) Corporations Act 2001 (Cth) Corporations Law Corporations Regulations Fair Trading Act 1987 Judicial Trustees Act 1896 Service and Execution Process Act 1901 (Cth) Trade Practices Act 1974 (Cth)
CASES CITED:	Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 Alliance Petroleum Australia (NL) v Australian Gaslight Co Ltd (1983) 48 CLR 69 ACS v Anderson [1974] 2 NSWLR 482 Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 AWA Ltd v Daniels (1992) 7 ACSR 759 Bell Resources Ltd v Turnbridge Pty Ltd (1988) 13 ACLR 429 Bourke v Hamilton [1977] 1 NSWLR 470 Re Brashs Pty Ltd (1994) 15 ACSR 477 Byng v London Life Association Ltd [1989] BCLC 400 Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 Re Caysand No 64 Pty Ltd (1993) 12 ACSR 291 Cheney v Spooner (1929) 41 CLR 532 In Re Chillington Iron Company (1885) 29 ChD 159 Colorado Constructions Pty Ltd v Platus [1966] 2 NSWR 598 Dean-Willcocks (Administrators of Powerline GES Pty Ltd) v Powerline GES Pty Limited (Joint Admins Appointed) [2002] NSWSC 40; (2002) 40 ACSR 516 Deputy Commissioner of Taxation v Portinex Pty Ltd [2000] NSWSC 99; (2000) 34 ACSR 391; (2000) 156 FLR 453 Doran Constructions Pty Ltd (in liq) v Beresfield Aluminium Pty Ltd (2002) 54 NSWLR 416 Re Double V Marketing Pty Ltd (in admin) (1995) 16 ACSR 498 Flynn v The University of Sydney [1971] 1 NSWLR 857 Forster v Jododex Australia Pty Ltd (1972) 127 CLR 421 Hehir v Smith [2002] QSC 136 Ibeneweka v Egbuna [1964] 1 WLR 219 John v Rees [1970] 1 Ch 345 Lawson v Mitchell [1975] VR 579 Re LOCM Pty Ltd (1997) 15 ACLC 1576 McPherson v Mansell (1994) 16 ACSR 261 Re Macquarie Medical Holdings Pty Ltd [2003] NSWSC 277 Re Nardell Coal Corporation (In Liq) v Hunter Valley Coal Processing [2003] NSWSC 642 National Dwelling Society v Sykes [1894] 3 Ch 159 Re Old Papa's Holdings Ltd (under administration); ex parte Wallman (plaintiff) [2001] WASC 188; (2001) 24 WAR 229 Panasystems Pty Ltd v Voodoo Tech Pty Ltd [2003] FCA 428 Re Pochi and Minister for Immigration and Ethnic Affairs (1979) 26 ALR 247 R v D'Oyly (1840) 12 Ad & El 139; 113 ER 763 Reynolds v Australian Stock Exchange Ltd [2003] NSWSC 33; (2003) 44 ACSR 612 Re Ricon Constructions Pty Ltd (in liq); ex parte McDonald (1997) 43 NSWLR 174; (1997) 26 ACSR 655 Rodriguez v Telstra Corp Ltd [2002] FCA 30 Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 Shirlaw v Graham [2001] NSWSC 612 Smith Paringa Mines Ltd (1906) 2 Ch 193 Re Supreme Imports Pty Ltd (In liquidation); Re DeVries [2001] NSWSC 1209 TNT Bulkships Ltd v Interstate Construction Pty Ltd (1985) 35 NTR 15 Re Vanfox Pty Ltd (1994) 13 ACSR 209 Re Vassal Pty Ltd (1983) 8 ACLR 683 Re Williams Bros Ltd (1928) 46 WN (NSW) 39 Wishart v Henneberry (1962) 3 FLR 171 Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; (2002) 43 ACSR 257
PARTIES :	John Vouris - Plaintiff
FILE NUMBER(S):	SC 3177/03
COUNSEL:	B Coles QC; K Eassie - Plaintiff G McNally - ASIC Ms N Wood, solicitor - Rickland P/L, Cryson P/L, Kosinar
SOLICITORS:	Coudert Brothers - Plaintiff M Burnett - ASIC Nash O'Neill Tomko Lawyers - Rickland P/L, Cryson P/L, Kosinar