Cadwallader v Bajco [2001] NSWSC 1193

Cadwallader v Bajco [2001] NSWSC 1193

Directors resolved to appoint administrators not because Bajco was insolvent or likely to be insolvent, but to avoid their removal and continue litigation, which was an improper purpose rendering the appointment voidable. The deed of company arrangement was terminated due to material deficiencies and misleading disclosures in the administrators' report, and procedural defects not cured by s 1322. Appropriate statutory remedies were ordered under ss 445D, 445G, 447A.

Parties
Plaintiff: Alan Norman Cadwallader; First Defendant: Bajco Pty Ltd; Second Defendant (administrator): Keith William Skinner; Second Defendant (administrator): David John Frank Lombe; Third Defendant: David Ewart Cadwallader; Third Defendant: Marilyn Alice Wintzloff
Jurisdiction
Australia
Judgment Date
24 December 2001
Procedural Posture
Equity / Final Judgment
Outcome
Deed of company arrangement terminated; company moves into voluntary liquidation.
Legal Topics
Voluntary Administration, Directors' Duties, Corporations Act, Deed of Company Arrangement, Improper Purpose, Standing, Solvency, Procedural Irregularity, Injunctions, Remedies
Corporations Equity Voluntary Administration Directors' Duties Corporations Act Deed of Company Arrangement Improper Purpose Standing +4 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 7 Authorities cited 30 Party arguments 2 Amounts and remedies 9
Sign in to unlock

Parties

Alan Norman Cadwallader

Plaintiff

Bajco Pty Ltd

First Defendant

Keith William Skinner

Second Defendant (administrator)

David John Frank Lombe

Second Defendant (administrator)

David Ewart Cadwallader

Third Defendant

Marilyn Alice Wintzloff

Third Defendant

Procedural Posture

Equity / Final Judgment

Legal Issues

  1. 1 Was Bajco insolvent or likely to become insolvent at the relevant time?
  2. 2 Did directors appoint administrators for improper purpose?
  3. 3 Was appointment of administrators valid?

Ratio Decidendi

Directors resolved to appoint administrators not because Bajco was insolvent or likely to be insolvent, but to avoid their removal and continue litigation, which was an improper purpose rendering the appointment voidable. The deed of company arrangement was terminated due to material deficiencies and misleading disclosures in the administrators' report, and procedural defects not cured by s 1322. Appropriate statutory remedies were ordered under ss 445D, 445G, 447A.

Court Disposition

Deed of company arrangement terminated; company moves into voluntary liquidation.

Orders

  • Order under Corporations Act ss 445D, 445G, 447A terminating deed of company arrangement.
  • Administrators to be treated as liquidators.