Spiteri v Georges - [2002] VSC 473

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 6903 of 2002

IN THE MATTER of WALERI NOMINEES PTY LTD (ADMINISTRATORS APPOINTED)
MARIO MICHAEL SPITERI & ANOR	Plaintiffs
V
GEORGE GEORGES & ORS	Defendants

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JUDGE:	Hansen J
WHERE HELD:	Melbourne
DATE OF HEARING:	3 & 4 September 2002
DATE OF JUDGMENT:	7 November 2002
CASE MAY BE CITED AS:	Spiteri v Georges
MEDIUM NEUTRAL CITATION:	[2002] VSC 473

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Administration – Administrators appointed by bank as debenture holder – First meeting of creditors – Proof of debt by bank – Administrator permits bank to vote at value claimed –Appeal against decision – Challenge as to existence of debt – Whether court should determine issue of debt – Whether administrators impartial – Removal of administrators – Corporations Act Part 5.3A.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr P Bingham	Kennedy Guy
For the First, Second and Fourth Defendants	Mr E W Woodward	Mallesons Stephen Jaques
For the Third Defendant	Mr G J McEwen	Russell Kennedy

HIS HONOUR:

On 2 August 2002 the National Australia Bank Ltd ("NAB") appointed George Georges and John Ross Lindholm as joint and several administrators of Waleri Nominees Pty Ltd ("Waleri"). The NAB made the appointment pursuant to a debenture granted by Waleri on 16 February 2000 as part security in support of financial accommodation. The first meeting of creditors was held on 8 August 2002, chaired by the administrator, Lindholm. The second meeting of creditors was convened for 29 August 2002 but has been deferred. It is held up by the present application, filed on 21 August 2002, which attacks decisions made by Lindholm at the first meeting, and seeks the removal of the administrators.

The applicants are Mario Michael Spiteri and Econ Industries Pty Ltd ("Econ"). Spiteri is a director of Econ. In his affidavit in support of the application sworn 21 August 2002, Spiteri said that he and Econ were creditors of Waleri.

The defendants to the application are the administrators, the NAB and Waleri.

The application seeks orders:

(a)that each decision of Lindholm as chairman of the first meeting be set aside,
(b)that Ray Dimech, Peter Guy and Michael Louros be appointed as a committee of creditors,
(c)as to the amount for which the NAB's proof of debt ought be admitted by the administrators,
(d)that the administrators be removed from office and Richard Herbert Judson be appointed in lieu, and
(e)extending the time for convening the second meeting of creditors.

Background

Waleri was registered in 1997. It conducted business under the name Econo-Mix Building and Garden Supplies. Spiteri was a founding director, and since 1998 has been the sole director of Waleri. He is also the secretary and sole shareholder of Waleri.

Spiteri was involved in a number of companies in addition to Waleri and Econ. One such company is Ecto Pty Ltd ("Ecto"), of which he and Joseph Paul De Fazio were the directors and sole shareholders (as to 50 per cent each).

According…

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 Spiteri v Georges

Details

AGLC: Spiteri v Georges [2002] VSC 473
Case: [2002] VSC 473
Decision Date: 7 November 2002

CaseChat Overview and Summary

In the case of Spiteri v Georges, the issue before the court was whether the administrators appointed by the bank, as the debenture holder, had acted impartially and lawfully in allowing the bank to vote on its claimed debt at the first meeting of creditors. The case involved a challenge to the existence of the debt, and the appellant argued that the court should have determined the issue of the debt before allowing the bank to vote. Additionally, the appellant sought the removal of the administrators on the grounds that they were not impartial.

The court examined the statutory framework provided by the Corporations Act Part 5.3A, which governs the administration of companies in financial distress. The court considered the role and responsibilities of the administrators, particularly in relation to the conduct of meetings of creditors and the determination of whether a debt exists and is payable. The court also addressed the appellant's concerns regarding the impartiality of the administrators and the appropriate circumstances for their removal.

The court found that the administrators had acted within their powers and had not breached any statutory requirements. The court held that the administrators were not required to determine the existence of the debt before allowing the bank to vote, as this was not a function they were mandated to perform. Furthermore, the court found no evidence to support the claim that the administrators were not impartial. Consequently, the appeal was dismissed, and the administrators were not removed.

The court's final orders affirmed the decisions made by the administrators and rejected the appellant's claims. The administrators were upheld in their actions, and the bank was permitted to vote on its claimed debt at the first meeting of creditors.

Orders