Supreme Court New South Wales Medium Neutral Citation: In the matter of NGI Software Pty Limited [2014] NSWSC 1885 Hearing dates: 25 August 2014 Date of orders: 25 August 2014 Decision date: 25 August 2014 Jurisdiction: Equity Division - Corporations List Before: Brereton J Decision: Declare pursuant to s1322(4) that resolution for winding up is not invalid by reason of disqualification of sole director and vesting of his shares in trustee in bankruptcy. Convening meeting of creditors extended Catchwords: CORPORATIONS – winding up – appointment of liquidators – where sole director and shareholder become bankrupt on own petition shortly before adoption of resolution that company be wound up – whether defect in appointment procedural – extension of time to convene creditors' meeting Category: Procedural and other rulings Parties: Christopher Darin and Nicholas Malanos (plaintiff) NGI Software Pty Ltd (defendant) Representation: Counsel: G D McDonald (plaintiff) Solicitors: Worrells, Solvency and Forensic Accoutnants (Liquidators) File Number(s): 2014/249028 Judgment (ex tempore) 1. HIS HONOUR: On 31 July 2014 Paul Walter James Duke, who was formerly a director of the company NGI Software Pty Limited, signed in that capacity a statement of resolutions by directors of that company to the effect that the directors call a meeting of the company's members to resolve that the company be wound up and that the present plaintiffs, Christopher Darren and Nicholas Malanos, be appointed its joint and several liquidators. Also on 31 July 2014, Mr Duke signed a statement of resolutions by members of that date, to the effect that the plaintiffs be appointed joint and several liquidators of the company. 2. It transpired, however, that on 29 July 2014 Mr Duke had become bankrupt on his own petition. In those circumstances, he was disqualified as a director and his shares, which were the only shares in the company, had vested in his trustee in bankruptcy at the time that he signed the statements of resolutions in question. The liquidators apply, pursuant to (Cth) Corporations Act 2001, s 1322(4), for a declaration that their appointment is not invalid by reason of those matters, and for an extension of time to convene a creditors' meeting. 3. Notice of the liquidator's application was given to Mr Duke's trustee in bankruptcy on 8 August 2014, and on 18 August the Official Trustee indicated that it had no objections to their appointment as liquidators. 4. While I must confess to some reservations as to whether the purported adoption of corporate resolutions by a disqualified person acting alone falls within the definition of "essentially procedural", that probably depends upon the particular facts of the case; and in this case, had the resolution been passed a day or two earlier, or the debtor's petition filed a day or two later, there would have been no doubt as to the validity of what transpired, as to the validity of the appointment of the liquidators. Moreover, the circumstance that the only person with an apparent adverse interest, being the trustee in bankruptcy, consents, assists in concluding that there would have been no difference in the outcome had the matter proceeded regularly as opposed to irregularly, and thus the defect may be seen as procedural. 5. I am satisfied that the persons concerned in such contraventions as were involved appear to have acted honestly, in the sense that Mr Duke did not know at the time that he had already become a bankrupt, he being surprised by the expedition with which the debtor's petition was processed. 6. I am also satisfied that no substantial injustice has been or is likely to be caused to any person by making the orders sought. 7. Upon the undertaking of the plaintiffs, Christopher Darren and Nicholas Malanos, by their counsel to pay the appropriate filing fees, I grant leave to the plaintiffs to file an originating process in the form initialled by me, dated this day and placed with the papers. I direct that the originating process be returnable instanter, and dispense with service of the originating process. 8. The Court orders that: 1. Pursuant to Corporations Act, s 1322(4)(a), the resolutions of the defendant at the meeting of shareholders on 31 July 2014 that the company be wound up and that the plaintiffs be appointed liquidators are not invalid by reason of the circumstances that the purported director upon whose resolution the shareholder's meeting was convened was disqualified from acting as a director, and the shares in respect of which votes were cast at the meeting were vested in the shareholder's trustee in bankruptcy who did not have notice of and did not participate in the meeting. 2. Pursuant to Corporations Act, s 1322(4)(d), the time for the plaintiffs to convene the meeting referred to in Corporations Act, s 497(1), be extended to 1 September 2014. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 20 January 2015