McGill v Karren Holdings Pty Ltd [2000] NSWSC 879

New South Wales Supreme Court

CITATION : McGill v Karren Holdings Pty Ltd [2000] NSWSC 879 CURRENT JURISDICTION: Equity Division Corporations List FILE NUMBER(S) : SC 3224/2000 HEARING DATE(S) : 21/08/2000 JUDGMENT DATE : 21 August 2000

PARTIES : Ian McGill (P) John Melluish (Administrator) JUDGMENT OF : Young J

COUNSEL : S Nash (Solicitor)(P) L J Aitken (Administrator) SOLICITORS : Sally Nash & Co (P) Sanfilippo Associates (Administrator) CATCHWORDS : CORPORATIONS [182]- Administration- Recent appointment of administrator- Short adjournment may be granted to enable administrator to make out case to oppose winding up. LEGISLATION CITED : Corporations Law, s 440A CASES CITED : Deputy Commissioner of Taxation v Choice Design Homes Pty Ltd [1999] NSWSC 589 Waste Recycling & Processing Services of NSW v Local Government Recycling Co-operative Ltd (1999) 32 ACSR 194 DECISION : See para 7

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

YOUNG J

MONDAY 21 AUGUST 2000

3224/2000 - McGILL v KARREN HOLDINGS PTY LIMITED

JUDGMENT 1 HIS HONOUR: There is before the Court today an application to wind up the defendant. The application was filed on 17 July 2000, returnable at 11 am today. 2 I am told that at 6pm last Friday, 18 August 2000, Mr Melluish of Ferrier Hodgson was appointed as administrator of the company by resolution of directors. However, the only piece of paper that suggests that that is so is a resolution purportedly signed by one Catherine Gina Burns as Director-Chairman. There was no seal on the document or signature of any other person. 3 When the matter was called before the Registrar and when it was adjourned before me, Miss Nash appeared for the plaintiff and Mr Aitken informed the Court that he appeared for the administrator. No appearance had been filed. Mr Aitken made an application under section 440A of the Corporations Law to adjourn the winding up application. Miss Nash pointed out that there was no material before the Court to show that an administration would be in the interests of the company's creditors as opposed to a winding up. 4 Mr Aitken agreed that that was so but asked for an adjournment until Thursday because, in view of the recent appointment of the administrator, there had not been the time to put that material before the Court. 5 I think it must follow from the fact that the Court has been given power under section 440A to adjourn the hearing of an application to wind up if an administrator is appointed, that the Court has a power to preserve the subject matter of the litigation until it can properly be heard by the Court. This includes the power to adjourn for a short time the winding up partition to enable the administrator to put on the appropriate evidence. Indeed, this is the approach taken by Santow J in Waste Recycling and Processing Services of NSW v Local Government Recycling Co-operative Ltd (1999) 32 ACSR 194. I am a little reluctant to exercise this power in the instant case because the threat to appoint an administrator if the plaintiff sought to wind up the company was made in correspondence last year, yet it was only at 6pm last Friday that an administrator was appointed (if the deed was properly done). Accordingly, it may very well be said that in this case, and in any subsequent case if the same thing happens, that the reason why the administrator did not have time to put on the evidence was because of the company's own deliberate tactics. 6 However, the prime matter of concern in applications under section 440A of the Corporations Law is the interests of the creditors and the interests of the public at large; see for instance, what I said in Deputy Commissioner of Taxation v Choice Design Homes Pty Ltd [1999] NSWSC 589. There is also, I think, in the Corporations Law a slight bias towards giving any possible administration a chance to work. 7 Thus I consider that in this case I should grant a short adjournment on conditions: (a) that the administrator is added as a party to the proceedings; (b) that he will file and serve an appearance; and (c) will make any application to regularise his appointment and serve all affidavits on which he wishes to rely no later than 10am on Wednesday 23 August 2000. 8 I stand the matter over to the Duty Judge's list at 10am on 24 August 2000. Costs of today reserved.