Federal Court of Australia

Otway v Evans, in the matter of Chris Evans Transport Pty Ltd [2026] FCA 721

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 447A of the Corporations Act 2001 (Cth), Pt 5.3A of the Act is to operate in relation to the second plaintiff, Chris Evans Transport Pty Ltd (Administrators Appointed), as if the first plaintiff, Thomas Stuart Otway and Matthew Ormsby, are and were on 21 May 2026, duly and validly appointed the joint and several voluntary administrators of the Company pursuant to s 436A of the Act.

2.    The first plaintiff must cause notice of these orders to be given to each known creditor of the second plaintiff and the Australian Securities and Investments Commission within three days after the making of these orders, by:

(a)    sending an email to the last known email address of each known creditor stating that these orders have been made and providing a link to a website at which the creditor may download the orders;

(b)    where an email address is not known, sending a letter to the last known postal address of each relevant known creditor stating that these orders have been made and providing the website address at which the creditor may download the orders;

(c)    placing a copy of the sealed orders on the website maintained by the first plaintiff; and

(d)    sending a copy of the sealed orders to ASIC at its email address.

3.    Any person who can demonstrate sufficient interest may apply to vary or set aside paragraph 1 of these orders within 10 days from the date of these orders.

4.    The originating process otherwise be dismissed.

5.    The plaintiffs’ costs of and incidental to the proceeding be costs in the administration of the company.

6.    There be no order as to the defendant’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FEUTRILL J:

1    This proceeding concerns a dispute regarding the appointment of the first plaintiff as administrators (Administrators) of the second plaintiff (Chris Evans Transport Pty Ltd or the Company) following the tragic death of Ms Jane Evans who was the Company’s sole director and shareholder. Ms Evans was also the wife of the defendant (Mr Christopher Evans) who asserts that the administrators’ appointment under s 436A of the Corporations Act 2001 (Cth) was not valid.

2    Ms Evans made a Will by which she appointed Mr Timothy O’Brien of O’Briens Solicitors as the executor of her estate. Ms Evans and Mr Evans were clients of Mr O’Brien’s firm and he was engaged to draft and settle the Will. Mr Evans has not obtained probate. The estate of Ms Evans includes her shares in the Company.

3    Section 201F(2) of the Act provides that if a person who is the only director and shareholder of a proprietary company dies and a personal representative is appointed to administer the person’s estate or property, the personal representative may appoint a person as the director of the company. In accordance with that provision, Mr O’Brien purported to appoint Mr Nathaniel Nguyen, a legal practitioner in the employ of O’Briens Solicitors, as the director of the Company on 20 May 2026. On 21 May 2026 Mr Nguyen resolved to appoint the Administrators as voluntary administrators to the Company under s 436A of the Act. The resolution of Mr Nguyen was recorded and signed in accordance with s 248B of the Act and dated 21 May 2026. Mr Nguyen also signed an instrument of appointment dated 21 May 2026.

4    The plaintiffs filed an originating process, affidavits of Thomas Stuart Otway affirmed 3 June 2026 and James Francis Devonish sworn 4 June 2026, and a written outline of submissions and supplementary submissions in support of the originating process. The defendant filed affidavits of Andrew Langshaw and Christopher Robin Evans each sworn 4 June 2026 and an outline of submissions in opposition.

5    While the specific grounds upon which the defendant asserts that the Administrators’ appointment was invalid were not made entirely clear before the proceeding was commenced, it emerged through the defendant’s affidavit material and written and oral submissions that he alleges that the Administrators were not validly appointed under s 436A of the Act on the following grounds.

(1)    In circumstances in which probate was not obtained, Mr O’Brien was not Ms Evans’ ‘personal representative’ for the purposes of s 201F(2) of the Act and, therefore, Mr O’Brien was not authorised under that section to appoint Mr Nguyen as a director of the Company. Consequently, no properly appointed director of the Company resolved to appoint the Administrators as required under s 436A of the Act.

(2)    In any event, in circumstances in which the Company’s accounts had not been prepared, the relationship between the Company and a partnership of which Mr Evans and Ms Evans were partners, and the short time during which he was a director, it is to be inferred that either Mr Nguyen did not form or did not genuinely form the opinion that the Company was insolvent or likely to become insolvent at some future time as required under s 436A of the Act.

6    In the originating application the plaintiffs claim a declaration under s 447C of the Act to the effect that the Administrators’ appointment was valid. The plaintiffs contend that on the proper construction of s 201F(2) and in the context of the law of succession in the State of South Australia, Mr O’Brien was authorised to appoint Mr Nguyen as a director of the Company. Further, on the affidavit material the defendant has filed, he has not demonstrated that Mr Nguyen failed to form the opinion or genuinely form the opinion required for a valid appointment under s 436A of the Act. Alternatively, the plaintiffs contend that in all the circumstances, including evidence of the insolvency of the Company, if the Administrators’ appointment were invalid the Court should exercise power under s 1322 and (or) s 447A of the Act to validate the appointment.

7    The originating application was listed for an urgent hearing as a duty matter because the second meeting of creditors is required to be convened and held by 23 June 2026 in accordance with s 439A of the Act. After the matter was called and the issues regarding the asserted invalidity of the appointment clarified, the hearing was adjourned to permit the parties to confer about appropriate orders to be made to prepare the matter for an expedited substantive hearing and to preserve the Administrators’ position pending final resolution. Upon resuming the hearing, the Court was informed that the parties had reached agreement and proposed orders, by consent, for validation of the Administrators’ appointment under s 447A of the Act.

8    The Court need not make an order merely because the parties have agreed that an order should be made: James Hardie & Co Pty Ltd v Seltsam Pty Ltd [1998] HCA 78; 196 CLR 53 at [17] (Gaudron and Gummow JJ). In particular, the Court must be satisfied that it has jurisdiction or power and that it is otherwise appropriate to make the order particularly where the interests of non-parties or the public may be affected: Kovalev v Minister for Immigration and Multicultural Affairs [1999] FCA 557; 100 FCR 323 at [7]-[8], [11]-[12], [14]-[15] (French J). As French J observed in Australian Competition and Consumer Commission v Real Estate Institute of Western Australia Inc [1999] FCA 18; 161 ALR 79 at [17]-[18], in making consent orders the Court must not exceed its power, but the question of whether a consent order should be made is not concluded by finding that it is within power. In the exercise of power the Court is not merely giving effect to the wishes of the parties, but is exercising a public function and must have regard to the public interest. The Court has a responsibility to be satisfied that what is proposed is not contrary to the public interest and is at least consistent with it. These principles apply a fortiori with respect to proceedings brought by the Crown or public or statutory authorities to enforce the law in the public interest. The validity of the appointment of the Administrators and the performance of the Administrators’ functions under Pt 5.3A of the Act are manifestly also matters that affect the interests of non-parties and the public to which these principles apply with even stronger reason.

9    Section 447C of the Act provides that if there is doubt, on a specific ground, about whether a purported appointment of a person as administrator of a company is valid, the person, the company or any of its creditors may apply to the Court for an order declaring whether or not the purported appointment was valid on the ground specified in the application or on some other ground. Section 447C is declaratory, it does not confer power on the Court to validate an otherwise invalid appointment if the Court is satisfied that the appointment was not valid: Smolarek v McMaster (as administrator of Eznut Pty Ltd) [2006] WASCA 216 at [25] (Buss JA); Re HPI Australia Pty Ltd [2008] NSWSC 1106 at [8] (Barrett J).

10    Section 447A(1) confers power on the Court to make such orders as it thinks appropriate as to how Pt 5.3A is to operate in relation to a particular company. The Court’s discretion under s 447A(1) is wide and there is nothing on the face of the subsection that suggests the power should be read down: Australasian Memory Pty Ltd v Brien [2000] HCA 30; 200 CLR 270 at [17], [20] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ). Courts have regularly utilised s 447A(1) to cure a defective or invalid appointment of an administrator: see, e.g., Re Cyprus Community of NSW Ltd [2024] NSWSC 1629 at [116]-[128] (Black J). However, in general, the power under s 447A should only be exercised where it would be consistent with the objectives of Pt 5.3A: Re Keneally [2015] NSWSC 937; 107 ACSR 172 at [115] (Black J).

11    The proposed consent order is not based on any statement of agreed facts, or concession or admission on the part of the plaintiffs from which a conclusion could be reached to the effect that the Administrators’ appointment was not valid under s 436A of the Act. At most, it may be regarded as a concession that the defendant has raised doubt about whether the appointment of the Administrators is valid. However, in substance, the parties agree that it is unnecessary for the Court to determine the issue of the validity of the Administrators’ appointment because, even if the appointment were invalid, it is appropriate for the Court, in the circumstances of this case, to exercise power under s 447A of the Act to validate that appointment.

12    The object of Pt 5.3A of the Act is to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company, or as much as possible of its business, continuing in existence or, if that is not possible, result in a better return for the company’s creditors and members than would result from an immediate winding up of the company: s 435A. Mr Otway (one of the Administrators) opines that the Company is insolvent, but he is unable to express an opinion of the date from which the Company was insolvent. The Company employs 26 staff and operates a transport business from premises in Renmark in South Australia. The Company’s sole director and shareholder is deceased. Her executor is a solicitor. There is no evidence that either Mr O’Brien or Mr Nguyen have any experience or qualifications to manage or conduct the day-to-day affairs of the Company. Otherwise, upon the appointment of the Administrators, the authority and function of any director of the Company was suspended: s 198G. Therefore, as matters stand, management of the Company is in the hands of experienced liquidators and administrators who can be expected to have the qualifications and skills to carry on the business of the Company for the period of any administration and give effect to the object of Pt 5.3A of the Act.

13    As already mentioned, insofar as the defendant asserts that the Administrators’ appointment was invalid it is founded on the construction of s 201F(2) of the Act and the executor’s authority to appoint a director and (or) a question of fact as to whether Mr Nguyen formed or genuinely formed an opinion that the Company was or would likely become insolvent. Neither of these grounds assert any absence of good faith or proper purpose. Further, there is nothing in the evidence the parties have filed to suggest that Mr O’Brien or Mr Nguyen acted other than in what they thought to be the best interests of the Company as a whole in purporting to appoint a director on the one hand and purporting to appoint administrators on the other.

14    It has been accepted that the Court should hesitate to exercise the power under s 447A to overcome a failure to comply with a statutory requirement for a valid appointment of an administrator: Panasystems Pty Ltd v Voodoo Tech Pty Ltd [2003] FCA 428 at [19] (Merkel J). Therefore, where the company is solvent or likely solvent and administration will not otherwise increase the return to creditors compared to liquidation the Court may refuse to exercise the power: Re Keneally at [114]-[116]. Otherwise, the absence of a lack of good faith or improper purposes may be relevant in the exercise of the power to cure an ineffective resolution to appoint an administrator: Darin Re Palamedia Limited [2010] NSWSC 451 at [20] (Barrett J). Thus, where the appointment of an administrator is invalid due to a lack of good faith or an improper purpose, there may well be grounds for the Court to refuse to exercise power under s 447A: see Re Cyprus Community of NSW Ltd at [129]-[131]. On the other hand, where the appointment is invalid because the resolution was not passed by a properly appointed director or by a meeting with a proper quorum or because one or more directors failed to properly form an opinion about the insolvency of a company, but the company is nonetheless insolvent, Courts have regularly exercised the curative power under s 447A with respect to such a company to give effect to the object of Pt 5.3A: e.g., Deputy Commissioner of Taxation (Cth) v Portinex Pty Ltd [2000] NSWSC 99; 156 FLR 453 (Austin J); Re Wood Parsons Pty Ltd (in liq) [2002] NSWSC 1058; 43 ACSR 257 (Austin J); McDonald, Re Pasdonnay Pty Ltd (Administrators Appointed) [2005] FCA 335; 53 ACSR 717 (Gyles J); Sule Arnautovic and John Kukulovski [2009] NSWSC 1444 (Hammerschlag J); Calabretta v Redpen Developments Pty Ltd (in liq) [2010] FCA 81; 183 FCR 47 (Yates J); Re HPI Australia Pty Ltd; Darin; Re Cyprus Community of NSW Ltd.

15    Having regard to the object of Pt 5.3A and the overarching purpose of the civil practice and procedure provisions described in s 37M of the Federal Court of Australia Act 1976 (Cth), if it is evident that even if the appointment of an administrator was invalid on some specified ground it would be appropriate to validate the appointment under s 447A of the Act, the Court may exercise power under s 447A to remove any doubt about the validity of the administrator’s appointment without determining and making a declaration concerning validity under s 447C of the Act. In such circumstances, it may not be in the public interest to prolong resolution of the proceeding and the period of uncertainty regarding the validity of the administrator’s appointment by determining the issue of validity before exercising power under s 447A.

16    For the preceding reasons, the Court has power to make the requested orders by consent and it is appropriate and in the public interest that orders be made substantially in the terms the parties have agreed. However, as the matter was heard urgently and the orders may affect non-parties, orders will also be made requiring the Administrators to provide notice of these orders to potentially interested persons and permitting any person with sufficient interest to apply to set aside or vary the orders within seven days from the date of the orders.

Associate:

Dated:    9 June 2026