Case: Re JAY-O-BEES Pty Ltd (in liq) (2004) 50 ACSR 565
Outcome: cited
In Re JAY-O-BEES Pty Ltd (in liq) (2004) 50 ACSR 565 Campbell J said (at [46]): 'The appeal to the court from a liquidator's rejection of a proof of debt arises under s 1321 Corporations Act 2001 (Cth). That section is one which enables appeals to the court to be made in relation to manner of acts, omissions or decisions of a liquidator. The role which the court takes on the appeal is affected significantly by the nature of the act, omission or decision which is being appealed against. Where the appeal is against a discretionary decision by a liquidator, or against a decision involving matters of business judgment, the court will reverse the liquidator's decision only when it is satisfied that he was acting unreasonably or in bad faith.' His Honour went on at [47] to distinguish the approach taken on an appeal from a liquidator's rejection of a proof of debt, a distinction which I respectfully accept. 45 I would not set the threshold required under s 1321 in respect of the discretionary decisions of private receivers and managers so high that it is necessary to show that there has been something akin to unreasonableness in the sense necessary to vitiate the exercise of a statutory power under administrative law. It is sufficient to say that at the very least the person bringing an appeal under s 1321 in these circumstances must demonstrate that the decision is informed by some error of law or significant factual error or is otherwise so unreasonable, in the circumstances, that it should not be allowed to stand. The content of those somewhat ambulatory considerations will be informed by the significance of the decision to the affairs of the company. 46 In the present case, having regard to the obligations of the receivers and managers under the Charge, the limited cash, in their judgment, available to the company, its liability to the mortgagee and the potential claims of other creditors, I see no basis upon which the receivers and managers' refusal to make available funding for the purpose of defending winding up proceedings should be interfered with. The company has charged all of its assets in favour of the mortgagee. In so doing it has disabled itself, following the appointment of the receivers and managers, from having access to those assets for other purposes. Mr Carey's arguments about the financial position of the company do not establish a basis for gainsaying the judgment of the receivers and managers. 47 Whether or not after protracted proceedings it might be shown that the receivers and managers' evaluation was erroneous and that of Mr Carey correct, is not a possibility that can form a basis for interfering with the decision. 48 The amount required is small. It may be that if Mr Carey wishes to defend the proceedings in the name of the company it can be obtained from some other source. I decline to interfere with the decision of the receivers and managers in this case. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 15 November 2006 Counsel for the Applicant: Mr C Slater Solicitor for the Applicant: Australian Securities and Investments Commission Counsel for the First Respondent: Ms ML Coulson Solicitor for the First Respondent: Hammond Worthington Date of Hearing: 30 October 2006 Date of Judgment: 15 November 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/1530.html