Assessment
41The function of the court under s 600B is not simply to come to a decision of its own as to how the casting vote should have been exercised and, if that decision differs from that made by the chairperson, to set aside the resolution and make orders implementing the decision that it thinks should have been made.
42The function of the court is, rather, to evaluate the decision-making process in which the chairperson engaged with a view to determining whether the decision was conscientiously made by reference to all relevant considerations appropriately identified and weighed by him or her.
43The casting vote, of its nature, comes to prominence when a difference of opinion has already manifested itself among the voting constituency. It is true that creditors' own decision-making may be motivated by considerations of self interest peculiar to individuals' circumstances and that the chairperson, by contrast, is not permitted to prefer the personal interest of any particular creditor or creditors, as distinct from the interests of the creditors as a body. I mention the fact that difference of opinion has already manifested itself only to make the point that there may not, in a particular case, be one obviously and unarguably correct view so far as concerns the shared interests of the body of creditors. There may be questions of degree and possibility on which minds may differ and which conservative decision-makers and adventurous decision-makers may view differently.
44When regard is had to the considerations identified in the cases as those relevant to a case of this kind, the following picture emerges:
(1) There is no basis for any suggestion (nor is it alleged) that the administrator acted otherwise than conscientiously and in good faith.
(2) There is no basis for any suggestion (nor is it alleged) that the administrator did not hold a subjective belief that the decision he made was not in the best interests of those affected by the vote.
(3) The report presented by the administrator to creditors was a comprehensive report. It is not alleged that it was in any respect inadequate or superficial.
(4) It is not alleged that any aspect of the report (or what the administrator said at the meeting) was apt to misled creditors deciding how to cast their votes.
(5) The considerations that the administrator identified in his report and at the meeting as those to which he had regard in reaching his decision were not irrelevant considerations; nor, in my opinion, did he fail to take into account any considerations that were relevant.
45The administrator formed, on rational grounds, an opinion that the company was insolvent. His consequential opinion that it should be subjected to winding up was both rational and responsible. To proceed on the basis that the administration should end (and control of the company be returned to its sole director) would have been to countenance the unacceptable proposition that an insolvent company should be allowed to operate in the mainstream of commercial life. The response that the administrator should have recognised that the plaintiff's winding up application was pending and very likely to produce a winding up order overlooks the point that it is not for an administrator to hazard guesses.
46It was suggested on behalf of the plaintiff that the risk involved in returning the company to the mainstream of commercial life pending the hearing of the plaintiff's winding up application could be dealt with by ancillary orders on the present application restricting what the company could do in the meantime - including, no doubt, an order that no new Part 5.3A administration be put in place by the company itself. It is by no means clear on what basis the court could or would impose such a restriction; or, as regards the particular matter of Part 5.3A administration, how it would justify a prohibition at odds with the scheme of legislation under which resort to administration is a desirable and responsible reaction by directors to awareness that their company is insolvent.
47The administrator could have no confidence as to when the plaintiff would press its winding up application. That was something beyond his control and about which he could not responsibly speculate. It would not have been appropriate for him to recommend a course that not only left the sole director in charge of the company again but also left the winding up question in the hands of the plaintiff alone. There was also the powerful point that the administrator was on notice that the winding up proceedings would be defended, so that there was uncertainty as to when a winding up by the court may eventuate, assuming that it eventuated at all.
48As to potential liquidator recoveries and the two possible relation-back days, it is clear that the administrator fully appreciated the significance, as far as potential returns for creditors went, of the two different outcomes. He knew and recognised that, in one narrow sense, an assured zero return is less favourable to creditors that a chance of some small return. In addition, however, two particular factual considerations presented themselves. First, there would be insufficient funds for a liquidator to pursue recovery claims unless external funding were forthcoming, possibly form one or more funding creditors. Second, Old Bawn had professed itself prepared to fight any such claim; added to which there was no certainty that it would be able to meet any judgment.
49Success in achieving the earlier relation-back day rather than the later would, in any event, have depended on making good the proposition that, "immediately before" the making of the winding up order by the court on the plaintiff's application (assuming that it was made), the company was not under voluntary administration, so that s 513A(b) did not operate. That is a matter that would have brought to the fore potentially difficult considerations referred to by McMurdo J in Re Octaviar Ltd (formerly MFS Ltd) [2008] QSC 216 at [33]:
"[T]here is authority suggesting that the term "immediately before" could permit an interval between administration and liquidation. In Chief Commissioner of State Revenue v Rafferty's Resort Management , Austin J applied the obiter dicta of Emmett J in Commissioner of Taxation v Macquarie Health Ltd (1999) 17 ACLC 171, that the expression "immediately before" within s 513A(b) "would permit of there being some interval between administration ending and a winding-up order being made", although as Austin J noted, it was unnecessary for Emmett J to decide how long an interval would be sufficient to preclude the operation of s 513A(b). In St Leonards Property Pty Ltd v Ambridge Investments Pty Ltd (Admins Apptd) (2004) 210 ALR 265; (2004) 50 ACSR 443; [2004] NSWSC 851, Barrett J thought that the passage of a day between administration and liquidation would be sufficient. Having found that the administration was commenced for the improper purpose of affecting the relation-back day, he ordered that the administration be terminated, and stood over the winding-up application to the following day, restraining in the interim the initiation of any further administration. In Andreotti v Ausforest Ltd [2004] NSWSC 1229, Palmer J left open the question of whether the orders in St Leonards Property would be effective to avoid s 513A(b), but said that there was no point in making them in the case before him because there was no demonstrated need on the facts to do so."
50I am satisfied, on the evidence, that the administrator made adequate and relevant investigations, prepared a comprehensive report disclosing the potential for uncertain litigation with respect to liquidator recovery claims should there be a winding up, referred to the potential for substantial costs to be incurred in relation to pursuing such claims, provided reasons for the conclusion that the company was insolvent and should be wound up and explained the reasons for exercising the casting vote in favour of a resolution for winding up.
51The administrator's decision to take the course he in fact took in relation to the casting vote was conscientiously made by reference to all relevant considerations appropriately identified and weighed by him and in the context of all relevant disclosure by him.
52Judged in terms of the propriety versus wisdom dichotomy referred to in the extract from Global Realty Development Corporation v Dominion Wines Ltd quoted at paragraph 34 above, this case falls within the category of non-justiciable assessment of wisdom.