Written by Padmini Saheb in June, 2008

For an Administrator to exercise his casting vote he is required to take into account a number of factors including whether it is in the best interests of the Creditors. Even though the Court has a wider discretion to consider commercial morality and the public interest, a Deed of Company Arrangement (“DOCA”) will not be set aside merely because the Administrator acted only in the Creditors’ interests. This is reflected in the case Deputy Commissioner of Taxation v Wellnora Pty Limited where the Deputy Commissioner of Taxation (the DCT) sought to set aside a DOCA on the basis that the Administrator who cast the deciding vote did not take into account certain Creditor interests. This case dealt with an attempt to overturn a DOCA by DCT due to a Director’s involvement in several corporate failures, the DCT argued that the Administrator should take issues of public interest and commercial morality into account in determining how to apply a casting vote.

The Chairman cast his vote in accordance with his recommendation in accordance with Section 435A(b) of the Act that the DOCA would yield a better return for Creditors than would result in the Winding Up of Wellnora. The Court found that the Administrator had carried out a thorough investigation, and that the DOCA would provide better value for the Creditors.

The power conferred by Section 600B was seen to be an ample one that could be exercised by the Court considering not only the interests of Creditors, but also the public interest and commercial morality. On consideration of all these issues, Justice Lindgren found that Winding Up would serve no useful purpose in general, and therefore the DOCA should not be set aside.