In The Matter of St. George Builders Hardware Pty Limited and In The Matter of The Corporations Law Ronald John Dean-Willcocks (Plaintiff) Corporations Law [1995] NSWSC 170 (18 December 1995)

COURT
IN THE SUPREME COURT OF NEW SOUTH WALES
EQUITY DIVISION
SANTOW J
HRNG
SYDNEY, 13 November 1995
#DATE 13:11:1995
#ADD 18:12:1995


  Counsel for the Plaintiff          Mr D Fordyce


  Solicitors for the Plaintiff       P A Somerset and Co
ORDER
  Leave granted
JUDGE1
SANTOW J  This matter is an application for leave pursuant to s448C(1) of the
Corporations Law that Ronald John Dean-Willcocks
as the administrator of a
Deed of Company Arrangement executed by Driftpush ("Driftpush") which has a
fixed and floating charge over
the assets of St. George Builders Hardware Pty
Limited ("St. George") seek or consent to be appointed as, or act as,
Administrator
of St. George and, if the creditors think fit, a Deed of Company
Arrangement for St. George.


2.  The matter arises because the
effect of s82A(1)(ea) of the Corporations
Law includes in the definition of "officer" an administrator of a deed of
company arrangement
executed by a body corporate. Thus, s448C(1)(d) applies
because Mr Dean-Willcocks is an officer of a body corporate namely Driftpush,
that is a mortgagee of property of the company, namely St. George. Such an
officer may not be appointed administrator without leave
of the Court to the
company subject of the relevant mortgage, namely St. George.


3.  In giving leave in applications of this kind,
the Court should have regard
to analogous principles to the removal of a liquidator on the ground of actual
or perceived conflict
of interest. In Advance Housing Pty Limited (in liq) v
Newcastle Classic Developments Pty Limited  1994 14 ACSR 230, the relevant
principles are set out and may be summarised as follows: 
  1. The cases show that there must be a real and not merely
theoretical
possibility of conflict and that the guiding principle in the appointment by
the court of a liquidator is that he must
be independent and must be seen to
be independent. 
  2. Those who assert that a liquidator should be removed are under a duty to
establish at least a prima facie case that this is for the general advantage
of the persons interested in the winding up and the
onus of proof will not be
easy to discharge if the liquidator has become well acquainted with the
business and affairs of the company.

  3. A liquidator may act as a liquidator of a company even if there is a
prior involvement with the company in liquidation provided
that involvement is
not likely to impede or inhibit the liquidator from acting impartially in the
interests of all creditors or give
rise to a reasonable apprehension that the
liquidator might be so inhibited or impeded.


4.  There are several factors present here
which in the end allow me to
conclude that there is not a real possibility of conflict at the present time.
This is as distinct from
the theoretical or inherent in the fact that if I
accede to the application for leave, Mr Dean-Willcocks will represent both the
interests of creditors of St. George as a class and, the interests of one
particular creditor, namely Driftpush, under a fixed and
floating charge. If
the test were the mere possibility of conflict, then not only would this force
the courts to disregard advantages
of cost saving often in circumstances where
money is short. It would also require the Court to act with prophylactic zeal
to anticipate
what may never happen where, as here, there is no objection from
any party.


5.  There is in fact no one here to assert that the
Administrator should be
removed. In contrast to a liquidator, here the application is made with the
onus upon the party seeking the
court's leave. Nonetheless I am satisfied that
that onus is discharged, having regard also to the following matters:- 
  1. As is
clear from the ancillary deed to the Deed of Company Arrangement,
in clause 3 thereof, the secured debt to Driftpush is not in dispute.

  2. Not only is there no opposition but apart from the inherent potential
conflict of representing one creditor and then representing
the whole group of
creditors of which that one creditor is a member, there are no areas of
potential conflict presently known. That
the Corporations Law permits that
degree of potential conflict is clear enough from s448C(1)(b) and (c). There
it is contemplated
by the exception for common administrators and liquidators
that the same person may act as the administrator of more than one company
or
indeed liquidator of more than one company, even though that the creditors may
differ.


6.  I have however in the framing of
my orders made sure that this matter will
be drawn to the attention of creditors at the creditors' meeting required by
s436E. There
within the statutory time period for the calling of a meeting of
creditors, creditors have opportunity by resolution to remove the
administrator from office and appoint somebody else. I have also made sure
that in any voting upon that matter Driftpush will not
vote.


7.  In all the circumstances I believe that this provides a sufficient basis
for leave to be given.


8.  Though it will
also be on the undertaking that in the event that any
conflict arises that may impede or inhibit the administrator from acting
impartially
in the interest of all creditors or give rise to a reasonable
apprehension that the administer may be so impeded or inhibited, the
administrator will approach the Court forthwith with a view to submitting to
the administrator's removal and substitution by another
administrator.


9.  I make the following orders: 
  1. I give leave pursuant to s448C(1) of the Corporations Law that Ronald
John
Dean-Willcocks may seek or consent to be appointed as, or act as,
administrator of St. George Builders Hardware Pty Limited ACN 001
378 847
("St. George") notwithstanding that the said Mr Dean- Willcocks is deemed by
s82A(1)(ea) of the Corporations Law to be an
officer of Driftpush Pty Limited
that is a mortgagee of property of St. George. 
  2. I direct that for the purpose of the statutory
meeting under s436E of the
Corporations Law that the administrator so appointed give notice to creditors
    (i) that Mr Dean-Willcocks
required leave in the circumstances
    above described, and
    (ii) Driftpush will not vote on any resolution pursuant to
    s436E(4)
for the removal of Mr Dean-Willcocks as administrator
    from office or the appointment of someone else as administrator
    of
St. George

  3. The foregoing leave is given on the basis of the undertaking previously
referred to in my earlier observations.