Case: Re Geneva Finance Ltd [1992] 7 WAR 496
Outcome: cited
Re Geneva Finance Ltd [1992] 7 WAR 496, Owen J accepted that, upon the appointment of a receiver under a charge, there will be limited residual duties that a company's directors can carry out (at 510): are residual duties which the directors must carry out. I do not doubt that they are limited in nature.' Importantly for the present case, his Honour also said (at 510): is difficult to see why a director should be prevented from taking a step which he believes to be in the interests of the company unless that step would, in the reasonable opinion of the receiver, prejudice the proper administration of the receivership.' The practical concern must be whether the exercise by a director of any power in the name of the company would interfere with the legitimate exercise by the receivers of their powers. As Owen J said in Re Geneva Finance (at 511): real question is whether the directors, wishing to exercise a power which they would otherwise have, can do so without prejudicing the legitimate interests of the receiver and the secured creditor in the realisation of the asset.' In the present case the receivers do not oppose the ASIC applications. There is no actual or apparent conflict between that non-opposition and Ms Carey-Hazell's proposed exercise, in the name of the companies, of their rights to oppose the winding up applications. The existence of the power, conferred upon the receivers by s 420 of the Act, to defend the winding up applications, does not give rise to any such conflict. Nor does the assistance provided to ASIC by the receivers in the form of the affidavits sworn by Messrs Fraser and McMaster. Their cooperation with ASIC does not of itself involve any exercise of their powers which would be compromised by Ms Carey-Hazell's defence of the winding up applications in the names of the companies. Absent Ms Carey-Hazell's participation as proposed, there is no contradictor to the winding up application. She asserts that there is a case to be made against the orders sought by ASIC. Quite apart from the question of her entitlement to bring that contention before the Court, it is in the interests of justice that as a director of the company she has an opportunity to make that case if she does so in accordance with the duties imposed upon her by the Act and not, for example, for some collateral purpose. In so doing, it should not be assumed that Ms Carey-Hazell will have any a priori entitlement to resort to the assets of the company for the purpose of funding legal representation in the winding up proceedings. I will, however, allow liberty to apply at the termination of the proceedings in that respect. In my opinion the matter need be taken no further than this. There is no need for an application for leave under s 237 of the Act. Ms Carey-Hazell is at liberty, without the leave of the Court, to defend the winding up application in the name of each of the companies subject to the restrictions I have already mentioned in relation to access to the assets of the companies For the preceding reasons I will permit Ms Carey-Hazell to continue to instruct legal representatives for the purpose of defending the applications in the name of the respondent companies. The costs of the motion in each case will be reserved. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 30 August 2006 Counsel for the Applicant: Mr CM Slater Solicitor for the Applicant: Australian Securities and Investments Commission Counsel for the Respondents: Mr NDC Dillon Solicitor for the Respondents: Clavey Legal Date of Hearing: 16 August 2006 Date of Judgment: 30 August 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1163.html