Granger v A.C.N. 165 098 617 Pty Ltd [2016] FCA 474

Granger v A.C.N. 165 098 617 Pty Ltd [2016] FCA 474

The Court validated the administrators' appointment because both directors did not oppose the order, there was no practical alternative before the proposed creditors' meeting, and no winding up was sought. However, the administrators were not entitled to have the costs of the validation application paid from company assets because they knew or must be taken to have known that the appointment by one director was invalid, could have obtained the constitution before accepting the appointment, could have contacted Mr Seaman before the appointment, and the application was necessary only because they failed to take those steps.

Jurisdiction
Australia
Judgment Date
06 May 2016
Procedural Posture
Application Under Pt 5.3 a of the Corporations Act 2001 (cth) to Treat the Plaintiffs' Appointment as Administrators as Valid / Judgment and Orders on Further Amended Originating Process
Outcome
Application partly granted; appointment treated as valid, costs from company assets refused, and further amended originating process otherwise dismissed.
Legal Topics
['voluntary Administration' 'validity of Appointment of Administrators' 'company Constitution and Board Quorum' 'costs of Administration Application']
['corporations' 'corporate Insolvency'] ['voluntary Administration' 'validity of Appointment of Administrators' 'company Constitution and Board Quorum' 'costs of Administration Application']

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Procedural Posture

Application Under Pt 5.3 a of the Corporations Act 2001 (cth) to Treat the Plaintiffs' Appointment as Administrators as Valid / Judgment and Orders on Further Amended Originating Process

Legal Issues

  1. 1 ['Whether Pt 5.3A of the Corporations Act 2001 (Cth) should operate in relation to A.C.N. 165 098 617 Pty Ltd as if the resolution passed by one director on 30 March 2016 appointing Geoffrey Granger and Brian Silvia as joint and several administrators was a valid board resolution for the purposes of s 436A notwithstanding lack of the requisite quorum.' 'Whether the costs of and incidental to the validation application should be costs and expenses of the administration paid out of the assets of the first defendant.']

Ratio Decidendi

The Court validated the administrators' appointment because both directors did not oppose the order, there was no practical alternative before the proposed creditors' meeting, and no winding up was sought. However, the administrators were not entitled to have the costs of the validation application paid from company assets because they knew or must be taken to have known that the appointment by one director was invalid, could have obtained the constitution before accepting the appointment, could have contacted Mr Seaman before the appointment, and the application was necessary only because they failed to take those steps.

Court Disposition

Application partly granted; appointment treated as valid, costs from company assets refused, and further amended originating process otherwise dismissed.

Orders

  • ['Part 5.3A of the Corporations Act 2001 (Cth) (the Act) is to operate in relation to A.C.N. 165 098 617 Pty Ltd as if the resolution made by Leanne Taratoris passed on 30 March 2016 to appoint Geoffrey Granger and Brian Silvia as joint and several administrators was a valid resolution of the board of directors for...