Singleton v 24 Hr Cranes Pty Ltd [2003] NSWSC 1156

New South Wales Supreme Court

CITATION : Singleton v 24 Hr Cranes Pty Ltd [2003] NSWSC 1156 HEARING DATE(S) : 26 November 2003 JUDGMENT DATE : 26 November 2003 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Order made validating appointment of voluntary administrator where signature on instrument of appointment forged.

CATCHWORDS : CORPORATIONS [176] - Voluntary administration - Jurisdiction and powers of Court - General power to make orders - Power to make such order as it thinks appropriate - Appointment of voluntary administrator void by reason of forged signature - Whether order should be made validating appointment. LEGISLATION CITED : Corporations Act 2001 (Cth) s 447A Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 CASES CITED : Deputy Commissioner of Taxation v Portinex Pty Ltd (subject to Deed of Company Arrangement) (2000) 34 ACSR 391 Shirlaw v Graham [2001] NSWSC 612 PARTIES : Neil Geoffrey Singleton (P) FILE NUMBER(S) : SC 5943/03 COUNSEL : A P Ryan, Solicitor (P) SOLICITORS : Blake Dawson Waldron (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

WEDNESDAY, 26 NOVEMBER 2003

5943/03 NEIL GEOFFREY SINGLETON re 24 HR CRANES PTY LTD (Administrator Appointed) JUDGMENT 1 HIS HONOUR: This is an application to the Court under s 447A of the Corporations Act 2001 (Cth) ("the CA"). Applications under that section are very varied in their nature. This one is made under quite unusual circumstances. 2 The plaintiff was, on 14 November 2003, substituted as voluntary administrator of the company for a gentleman who had been so appointed on 7 November 2003. That appointment had been effected by an instrument in writing apparently signed by the sole director of the company. However, that person, when approached concerning the matter, has sworn an affidavit to the effect that, although he had been requested to become a director of the company, he had refused to do so and had not done so and that the signature purporting to be his signature on the instrument of appointment was not in fact his signature. If he is telling the truth, and there is absolutely no reason to doubt his word, two consequences flow. One is that the appointment of the plaintiff as a voluntary administrator is invalid and the second is that the company has no director. 3 It appears that the company certainly has traded and may well still be doing so. The plaintiff has ascertained that it has incurred debts, at least to the Australian Taxation Office and to WorkCover, and has formed the view that by reason of those debts it is insolvent. As a result of the "director's" evidence, an air of fraud hangs over the company, and it has no effective controller. 4 In these circumstances the question is whether an order may be made under s 447A in effect validating the administration. Although no case can be drawn to my attention on all four with these, luckily, very unfortunate circumstances, there is clear authority that it is a valid use of s 447A to validate an otherwise invalid voluntary administration: see the decision of the High Court in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270, of Austin J in Deputy Commissioner of Taxation v Portinex Pty Ltd (subject to Deed of Company Arrangement) (2000) 34 ACSR 391; and of Young CJ in Eq in Shirlaw v Graham [2001] NSWSC 612. 5 In the present circumstances, bearing in mind the complete lack of control of the company, its apparent insolvency and the air of fraud which I have mentioned, I am minded to exercise the Court's discretion in favour of making a validating order under s 447A. The only doubt that I have had about the immediate making of such an order is that nobody has been given notice of the application. The question is whether any person may be prejudiced and whether in light of that such notice should be given: see Portinex supra at [12], [30], [35] and [36]. There Austin J found that the persons interested in the company and who might be prejudiced either knew of the proceedings or had not made substantial investment in the company and did not require that notice of the proceedings be given. 6 Material is not available to me in the present proceedings for me to make such findings about the sole shareholder of the company, who is a person who approached but was refused assistance by the "director". He could be prejudiced in the requisite sense if the director's allegations, that he did not hold office and did not sign the appointment of administrator, were untrue. However, bearing in mind the factors that I have already mentioned in [5] above, I think it appropriate in this case to make the order at once without directing notice to the shareholder. In the what seems to me unlikely event that he suffers prejudice because the allegations I have mentioned are untrue, he can apply to the Court to set aside the order as an order made ex parte. But in the meantime it seems to me that the lack of control of the company, the appearance of fraud and the interest of the creditors make it vital that the company be under some responsible control. 7 I therefore propose to make at once an order to the effect that Part 5.3A of the CA is to operate in respect of the company on the basis that the plaintiff holds a valid appointment as its administrator.