Declaration made pursuant to s 447C of the Corporations Act2001 (Cth) that the first and second defendants were validly appointed as voluntary administrators of the company on 4 April 2014. Order made that proceedings are otherwise dismissed. Plaintiff's costs of the winding up application, other than dispute as to the identity of appointed liquidator, be costs in the winding up. Plaintiff to pay first and second defendants' costs of proceedings on an indemnity basis, as agreed or as assessed. Plaintiff to pay the third defendant's costs of proceeding on an ordinary basis, as agreed or as assessed. Parties to be provided opportunity to make submissions within seven days as to whether any other orders are necessary or appropriate.
Catchwords:
CORPORATIONS - voluntary administration - validity of appointment of administrator - where meeting of relevant directors purportedly resolved that company enter into voluntary administration and administrators be appointed - where plaintiff director was absent from such a meeting - whether appointment of administrators was invalid - whether reasonable notice was provided to plaintiff of meeting - notice by facsimile - period and form of notice - whether administrators entitled to rely on statutory assumptions under Corporations Act 2001 (Cth) ss 128-129 - whether appointment of administrators was inappropriate - whether third defendant's conduct in calling a meeting for appointment of administrators breached duty to act in good faith in company's best interests under Corporations Act s 181 - whether appointment should otherwise be validated under Corporations Act ss 447A, 447C and 1322.
EQUITY - fiduciary obligations - where third defendant was engaged as accountant to company - where third defendant's engagement was limited to compliance and accounting work - whether third defendant owed fiduciary duty to plaintiff to provide advice in respect of appointment of administrators to company.
PROCEDURE - costs - general rule that costs follow the event - whether reason shown to depart from general rule - orders sought by first and second defendants against plaintiff for further costs on indemnity basis - whether circumstances justify order for costs against plaintiff on indemnity basis.
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Sliteris v Ljubic [2014] NSWSC 1632
Case
[2014] NSWSC 1632
Decision Date
CaseChat Overview and Summary
The case of Sliteris v Ljubic involved a dispute between directors of a company regarding the validity of the appointment of administrators for the company under the Corporations Act 2001 (Cth). The plaintiff, Sliteris, was a director who claimed the appointment was invalid because he was absent from the meeting where the decision was made. Sliteris argued that the notice of the meeting was insufficient and did not reach him in time or in the correct form. The court was tasked with determining if the administrators could rely on the statutory assumptions under sections 128-129 of the Act, if the appointment was appropriate, and if the third defendant breached their duty of good faith under section 181 of the Act. Additionally, the court considered whether the appointment should be validated under sections 447A, 447C, and 1322 of the Act.
The court found that the notice provided to Sliteris was insufficient as it was sent by facsimile and did not reach him in time to participate in the meeting. However, the court ruled that the appointment of administrators was not invalid due to Sliteris' absence, as the other directors present were entitled to make the decision. The court held that the administrators could rely on the statutory assumptions, and the appointment was not inappropriate. Regarding the fiduciary obligations, the court determined that the third defendant, who was the company's accountant, did not owe a fiduciary duty to Sliteris as their engagement was limited to compliance and accounting work.
The court further ruled that the third defendant did not breach their duty of good faith as there was no evidence of improper conduct in calling the meeting for the appointment of administrators. The court considered the possibility of validating the appointment under sections 447A, 447C, and 1322 of the Act but found that it was not necessary. Finally, the court denied the application for further costs on an indemnity basis by the first and second defendants against the plaintiff, stating that no exceptional circumstances were shown to justify such an order.