Shirlaw v Graham [2001] NSWSC 612

New South Wales Supreme Court

CITATION : Shirlaw v Graham [2001] NSWSC 612 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3484/01 HEARING DATE(S) : 10/07/01 JUDGMENT DATE : 10 July 2001

Kevin Richard Shirlaw (P) PARTIES : Colin Keith Graham (D1) Stephen Michael Larkin (D2) JUDGMENT OF : Young CJ in Eq

N Cotman SC (P) COUNSEL : P McDonald (D1) L J Aitken (D2) Kemp Strang (P) SOLICITORS : John de Mestre & Company (D1) LMG Solicitors & Attorneys (D2) CATCHWORDS : CORPORATIONS [177]- Administration- Validity of resolution appointing administrator questioned- Power of court to rectify and validate. LEGISLATION CITED : Corporations Law, ss 436A(1), 447A, 447C, 1322(2) & (4) Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607 Deputy Commissioner of Taxation v ACN 001 330 203 Pty Ltd [1999] NSWSC 798 CASES CITED : Deputy Commissioner of Taxation v Portinex Pty Ltd (2000) 34 ACSR 391 Gordon v Allied Meridian Pty Ltd [1999] NSWSC 558 Sydney Aussie Rules Social Club Ltd v The Superintendent of Licenses (1989) 15 ACLR 662 Wagner v International Health Promotions (1994) 15 ACSR 419 DECISION : Orders made.

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

YOUNG CJ in Eq

TUESDAY 10 JULY 2001

3484/01 - SHIRLAW v GRAHAM

JUDGMENT 1 HIS HONOUR: This is the final hearing of these proceedings which were commenced at 2.20 this afternoon. The company, Actwane Pty Limited, had two directors at all material times, Dr Larkin and Mr Graham. The company was involved in some litigation and on 29 June 2001, Dr Larkin said to Mr Graham, "Given what the Court has said and the demands which we have received from Macquarie Bank and St George Bank, I can see no alternative but to have an administrator appointed." Mr Graham agreed. Dr Larkin has given evidence that he had in his mind that the demands of those banks and other creditors meant that unless some arrangements were made, the company would be insolvent. 2 However, the actual resolution that is recorded in the minutes, doubtless because the meeting was what is described as a teleconference meeting, merely noted that Dr Larkin and Mr Graham were present and that the directors agreed to appoint Mr Kevin Shirlaw as administrator. 3 Since 29 June, Mr Shirlaw has acted as administrator. However, he has doubts as to whether his appointment is effective because the resolution of the directors clearly does not comply with s 436A of the Corporations Law. 4 A similar position exists with respect to the other company named in the proceedings, Actwane Hotel Management Pty Ltd save that the relevant date is 4 July 2001.