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

Reported Decision : 56 ACSR 283

New South Wales Supreme Court

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

HEARING DATE(S) : 5 December 2005

JUDGMENT DATE : 5 December 2005

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

DECISION : Declarations of invalidity made; Defendant to pay costs of Administrators.

CATCHWORDS : CORPORATIONS – DIRECTORS – ADMINISTRATION – COSTS – A director had not provided a written consent to act prior to appointment – whether validly appointed – minority directors excluded majority directors from meeting voting to place company in administration – whether appointment of administrators should be validated – whether company should pay costs of invalidly appointed administrators.

LEGISLATION CITED : Corporations Act 2001 (Cth) – s.201D, s.201M, s.447A, s.447C, s.463E, s.477, s.477A, s.477C, s.1322

Lachlan McIntosh and Ginette Muller as joint and several Administrators of CMX Technologies Pty Ltd (Administrators Appointed) – Plaintiffs PARTIES : CMX Technologies Pty Ltd (Administrators Appointed) – Defendant

FILE NUMBER(S) : SC 5503/05

M.R. Aldridge SC – Plaintiffs COUNSEL : N. Dunstone (Sol) – Majority Shareholders E.C. Muston – Minority Shareholders

Holman Webb – Plaintiffs SOLICITORS : Henry Davis York – Majority Shareholders Michael Drummond, Lawyer – Minority Shareholders

LOWER COURT JURISDICTION :

Ex tempore

Introduction

1 The Plaintiffs were appointed under s.463E(3)(c) of the Corporations Act 2001 (Cth) as joint and several administrators of the Defendant ("CMX"), by a resolution of directors of CMX on 1 July 2005. 2 On 19 September 2005 the directors of CMX resolved that the company enter into a Deed of Company Arrangement whereby the sole asset of any value to the company, certain intellectual property, would be sold. 3 The majority shareholders of CMX assert that the directors' resolutions of 1 July and 19 September 2005 are invalid because two directors of the company were wrongfully excluded from attending and voting at those meetings. They say that, had the two directors been permitted to attend and vote, neither resolution would have been passed. 4 The Plaintiffs, as administrators of CMX, have commenced these proceedings in order to resolve the uncertainties which attend their position and the status of the proposed Deed of Company Arrangement. They seek an order under CA s.447C declaring valid their appointment and their execution of the proposed Deed of Company Arrangement. Alternatively, the Plaintiffs seek an order under CA s.447A to the effect that, notwithstanding any defect in their appointment as administrators, they should be deemed validly appointed and their execution of the Deed of Company Arrangement should be deemed valid. 5 The Plaintiffs' application is supported by the minority shareholders in CMX and is opposed by the majority shareholders.