Skafcorp v Jarol [2002] NSWSC 1183

Skafcorp v Jarol [2002] NSWSC 1183

Assuming contrary to the second plaintiff's submission that he or his firm was a creditor for pre-administration work exceeding $5000, leave under s 448C should be granted because any contravention was inadvertent, no conflict of interest remained after the administrator and his firm undertook not to participate or prove as creditors in respect of that work, ASIC and creditors had been notified, and authority established that s 448C is directory and non-compliance does not invalidate the appointment. Creditors could not approve payment for pre-administration work under s 449E where the company was not otherwise legally bound to pay it.

Jurisdiction
Australia
Judgment Date
17 December 2002
Procedural Posture
Equity Proceeding Concerning Voluntary Administration and Ownership and Possession of Scaffolding / Application by Originating Process for Leave Under S 448 C of the Corporations Act and Declaration of Validity of Administrator's Appointment
Outcome
Leave granted and declaration of validity of appointment made.
Legal Topics
['voluntary Administration' 'administrator Independence' 'pre Administration Remuneration' 'creditor Status' 'leave Under S 448 C' 'validity of Appointment']
['corporations' 'insolvency'] ['voluntary Administration' 'administrator Independence' 'pre Administration Remuneration' 'creditor Status' 'leave Under S 448 C' 'validity of Appointment']

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Procedural Posture

Equity Proceeding Concerning Voluntary Administration and Ownership and Possession of Scaffolding / Application by Originating Process for Leave Under S 448 C of the Corporations Act and Declaration of Validity of Administrator's Appointment

Legal Issues

  1. 1 ['Whether the second plaintiff or his firm was a creditor of the first plaintiff in an amount exceeding $5000 by reason of pre-administration work.' 'Whether creditors could approve payment of remuneration for pre-administration work as a cost of the administration under s 449E.' "Whether any contravention of s 448C invalidated the second plaintiff's appointment as administrator." 'Whether leave under s 448C should be granted after appointment, including nunc pro tunc, and whether a declaration of validity should be made.']

Ratio Decidendi

Assuming contrary to the second plaintiff's submission that he or his firm was a creditor for pre-administration work exceeding $5000, leave under s 448C should be granted because any contravention was inadvertent, no conflict of interest remained after the administrator and his firm undertook not to participate or prove as creditors in respect of that work, ASIC and creditors had been notified, and authority established that s 448C is directory and non-compliance does not invalidate the appointment. Creditors could not approve payment for pre-administration work under s 449E where the company was not otherwise legally bound to pay it.

Court Disposition

Leave granted and declaration of validity of appointment made.

Orders

  • ['Leave granted to the second plaintiff under s 448C of the Corporations Act to consent to be appointed and act as administrator of the first plaintiff and as administrator of any deed of company arrangement that may be approved by creditors.' "Declaration made as to the validity of the second plaintiff's...