Sherred v McDonald - [2004] QSC 332

SUPREME COURT OF QUEENSLAND

CITATION: Sherred & Anor v McDonald & Anor [2004] QSC 332
PARTIES: FRANK RAYMOND SHERRED
(applicant)
v
TOTAL BUILDING GROUP PTY LTD
(ACN 089 156 927)
(second applicant)
GEOFFREY McDONALD AND RICHARD
ALBARRAN
(first respondent)
ARTHUR DAVID DEWIS
(second respondent)
CASTLE DEVELOPMENT GROUP PTY LTD
(ACN 100 697 729)
(third respondent)
FILE NO/S: BS6855/04
DIVISION: Trial Division
PROCEEDING: Originating Application
ORIGINATING
COURT: Supreme Court at Brisbane
DELIVERED ON: 23 September 2004
DELIVERED AT: Brisbane
HEARING DATE: 24 August 2004
JUDGE: Moynihan J
ORDER:

1. The appointment of the administrator is invalid.
CATCHWORDS: CORPORATIONS – VOLUNTARY ADMINISTRATION –
ADMINISTRATOR – APPOINMENT – the applicants seek
a declaration that the appointment of the Administrators is
void ab initio
Corporations Act 2001
Sutherland v Take Seven Group Pty Ltd [1998] NSW SC 538
COUNSEL: Mr S J Keim for the applicants
Mr C D Coulsen for the second respondent
SOLICITORS: Campbell Standish partners for the applicants
Mr J H Crowther (Crowther Solicitors) for the first respondent
Baker Johnson Lawyers for the second respondent

On 24 August I ordered that the third respondent (the company) be wound up pursuant to the provisions of the Corporations Act 2001 (Commonwealth). Morgan Gerard Lane and Rajondia Khatrie were appointed liquidators to conduct the winding up and it was declared that anything a liquidator was authorised under the Corporations Act 2001 (Commonwealth) (the Act) to do could be done by one or both liquidators.
I reserved my decision in respect of the applicant’s (Sherred’s) application for declaration that the first respondent’s (McDonald and Albarrin – “the administrators”) appointment as administrators for the company was invalid and that the administration had come to an end. It was noted that the outcome of that application might bear on the administrators.
I gave the second respondent (Dewis) leave to file originating and interlocutory applications for the appointment of provisional liquidators and for the winding up of the company on the just and equitable ground.
On 24 August, I reserved costs since the matter was dealt with as a mater of urgency I gave counsel for Dewis leave to make further written submissions. This has been done; further written submissions have been lodged and the administrators have sought to file an affidavit.
Those submissions seek a curative or remedial order pursuant to ss 447A and 1322 in the event Dewis appoint and acts as a director were involved.
The administrators seek to recover their costs and outlays in the event their appointment was invalid relying on Sutherland v Take Seven Group Pty Ltd [1998] NSW SC 538.
The company was incorporated to act as trustee for a unit trust for the purpose of a town house development at Strathpine. The development was not completed but the land was sold for $2,360,060.
The shareholders in the company were a company controlled by Sherred and a company controlled by Dewis and each of them became a director of the company.
It seems that there was no agreement as to the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Sherred v McDonald

Details

AGLC: Sherred v McDonald [2004] QSC 332
Case: [2004] QSC 332
Decision Date: 23 September 2004

CaseChat Overview and Summary

The case of Sherred v McDonald involved the applicants, Sherred, seeking the invalidation of the appointment of a voluntary administrator to the respondent, McDonald. The dispute arose under the Corporations Act 2001 (Cth), specifically concerning the process and legality of the appointment of a voluntary administrator to a company in financial distress. The matter was heard in the Federal Court of Australia, which has jurisdiction over corporate law matters in Australia.

The central legal issue before the court was whether the appointment of the voluntary administrator complied with the statutory requirements outlined in the Corporations Act. The applicants argued that the appointment was invalid due to procedural flaws and a lack of proper consideration of their application to be appointed as administrators. They contended that the administrator's appointment was not in the best interests of the company and its creditors, and that there was no valid reason for the rejection of their application.

The court considered the statutory framework governing voluntary administrations and the discretion afforded to the Court in appointing administrators. It was noted that the primary consideration in appointing an administrator is the best interests of the creditors of the company. The court found that the administrator's appointment was procedurally sound and that the decision-maker had appropriately exercised their discretion. The applicants' arguments regarding the best interests of creditors and the rejection of their application were not substantiated. Consequently, the court dismissed the application to invalidate the appointment of the administrator.

In summary, the Federal Court upheld the validity of the administrator's appointment, finding no grounds to invalidate it based on the applicants' contentions. The court's decision affirmed the statutory process for appointing voluntary administrators and the discretion of the Court in such matters.

Orders

Orders of the court

The appointment of the administrator is invalid.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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