Case: Re Coaleen Pty Ltd (Administrator Appointed) (1999) 30 ACSR 200
Outcome: referred to
question of the considerations that are relevant to a company administrator's exercise of a casting vote under reg 5.6.21 and of applications under s 600B to set aside a resolution passed on the casting vote has been considered in Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707 ( Bartlett ), Re Coaleen Pty Ltd (Administrator Appointed) (1999) 30 ACSR 200 ( Coaleen ), Re Martco Engineering Pty Ltd (Administrator Appointed); Deputy Commissioner of Taxation v Martco Engineering Pty Ltd (1999) 32 ACSR 487 , Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 37 ACSR 394 ( Cresvale ), Young v Sherman [2002] NSWCA 281 ; (2002) 170 FLR 86 , and Blue Ring Pty Ltd v Landshore Pty Ltd (Subject to a Deed of Company Arrangement) [2006] WASC 245 ( Blue Ring ). These authorities show that: (1) Good faith alone will not necessarily shield the resolution from a setting aside (or variation) under s 600B ( Cresvale 37 ACSR 394 at [111]); (2) A factor that may justify setting aside the resolution is a statement in or omission from the administrator's report under s 439A that is apt to have misled creditors when they cast their deliberative vote ( Blue Ring [2006] WASC 245) ; (3) Inadequacy and superficiality of an administrator's investigation of the company's business, property, affairs and financial circumstances, at least as disclosed by the evidence before the Court, may warrant a setting aside of the resolution ( Bartlett 12 ACSR 707 ; Cresvale 37 ACSR 394 at [113]); (4) There is no presumption in favour of the majority in value, although any large disproportion between the values of the debts of the numerical minority and the numerical majority will be a factor to be taken into account ( Coaleen 30 ACSR 200 ; Cresvale 37 ACSR 394 at [115]); and (5) Payment of a premium to the creditors who supported the DOCA but not to a dissident creditor will justify a setting aside by the court ( Young v Sherman [2002] NSWCA 281 ; 170 FLR 86). In Coaleen 30 ACSR 200 , the plaintiff accounted for 96.3 percent of the company's indebtedness. In the present case the DCT represented 55.84 percent of the total amount for which creditors were admitted to vote. If the amount truly owing to the DCT was only $681,990 as admitted by Ms Soong in the RATA, the percentage would be far below 50 percent. However, if the amounts truly owing to Mr Soong and the Soong companies were less than the amounts for which those claims were admitted for voting purposes, the DCT's debt could account for far more than 55.84 percent. I can only consider the position on the basis that the amount owing to the DCT was just over 50 percent a position vastly different from that in Coaleen 30 ACSR 200. Mr Hamilton has given affidavit evidence in considerable detail of his course of reasoning and of the materials that led him to exercise the casting vote in the way in which he did. He treated all creditors equally; carried out a thorough investigation; indicated lines of inquiry that could be pursued by a liquidator; formed the view that recovery proceedings by a liquidator would face hurdles and might well be fruitless, even if nominally successful; and exercised his casting vote in favour of the marginally better return that the DOCA offered. It is difficult to understand the basis on which his vote can be impugned unless it should be on the ground that Mr Hamilton did not properly inform himself with respect to (a) the Parkwind/Wyreach transaction, or (b) Wellnora's failure to pay GST to the DCT. I will now turn to these two matters. 8. The Parkwind/Wyreach transaction