McIntosh & Anor v CMX Technologies Pty Ltd (Administrators Appointed) [2005] NSWSC 1282

McIntosh & Anor v CMX Technologies Pty Ltd (Administrators Appointed) [2005] NSWSC 1282

The resolution appointing the plaintiffs as administrators was invalid because notice of the relevant directors' meeting was not given to all duly appointed directors. The failure to notify was not accidental, but a result of the minority directors’ refusal to acknowledge new directors. Validation under s.447A or s.1322 was refused because validation would cause substantial injustice to majority shareholders by frustrating rights under the shareholders’ agreement and the company’s structure.

Jurisdiction
Australia
Judgment Date
05 December 2005
Procedural Posture
Equity Proceeding / Ex Tempore Judgment on Appointment and Administration Validity
Outcome
Declarations of invalidity made. Defendant to pay costs of Administrators. Originating Process dismissed.
Legal Topics
["directors' Appointment Validity" "administrators' Appointment" "shareholders' Rights" 'company Meetings' 'costs in Corporate Administration']
['corporations Law'] ["directors' Appointment Validity" "administrators' Appointment" "shareholders' Rights" 'company Meetings' 'costs in Corporate Administration']

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Procedural Posture

Equity Proceeding / Ex Tempore Judgment on Appointment and Administration Validity

Legal Issues

  1. 1 ['Whether the appointment of administrators was valid under the Corporations Act 2001 (Cth)' "Whether exclusion of directors from directors' meeting invalidated the appointment" 'Whether the Court should validate the appointment of administrators under s.447A or s.1322 of the Corporations Act 2001 (Cth)' 'Whether the company should pay the costs of invalidly appointed administrators']

Ratio Decidendi

The resolution appointing the plaintiffs as administrators was invalid because notice of the relevant directors' meeting was not given to all duly appointed directors. The failure to notify was not accidental, but a result of the minority directors’ refusal to acknowledge new directors. Validation under s.447A or s.1322 was refused because validation would cause substantial injustice to majority shareholders by frustrating rights under the shareholders’ agreement and the company’s structure.

Court Disposition

Declarations of invalidity made. Defendant to pay costs of Administrators. Originating Process dismissed.

Orders

  • ['Declaration: the appointment of the Plaintiffs as administrators of the Defendant on 1 July 2005 was not valid.' 'Declaration: the execution of the Deed of Company Arrangement by Ginette Muller on behalf of the Plaintiffs on 19 September 2005 was not valid.' 'Administrators’ costs, expenses and remuneration to be...