Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors

In the case of Stimpson v Allied Rural Pty Ltd (subject to deed of company arrangement) & Ors, the dispute centred on the validity of the administrator's appointment and the associated remuneration. The applicants, Stimpson and others, challenged the appointment of Mr. Doolan as the administrator of Allied Rural Pty Ltd, alleging improper motives and lack of good faith in the director's decision to appoint him. The applicants also opposed the remuneration sought by Mr. Doolan, arguing it was excessive and not in line with the agreed "ad valorem" basis.

The court was tasked with determining whether the administrator had a duty to inquire into the circumstances of his appointment and if the respondents were precluded from contesting the validity of the appointment after having approved the administration process. Additionally, the court had to assess whether it should review and potentially vary the remuneration determination made by the creditors. The central issue was whether the resolution by the creditors to fix remuneration on an "ad valorem" basis was legally effective and whether the court should intervene to adjust the remuneration.

In its reasoning, the court found that the resolution by the creditors to fix remuneration on an "ad valorem" basis was not effective in law to terminate the administration. The court noted that the creditors did not have the power to terminate the administration at the first creditors meeting, a fact that was acknowledged by the applicant. The court concluded that Mr. Doolan's actions were objectively viewed as another strategy to pressure the applicant to remove a director, thereby achieving an ultimate purpose in his ongoing litigation. Consequently, the court varied the remuneration determination to the amount of $228,891.00 plus GST and ordered the parties to submit written costs submissions within 14 days.

The final orders of the court were that the remuneration determination made by the creditors at the second meeting on 10 May 2021 was varied to $228,891.00 plus GST. Additionally, the parties were instructed to make written submissions on costs within 14 days.