An application for special administration ad colligenda bona defuncti, is made to protect the estate, or particular estate assets, where the delay in obtaining a normal grant will endanger them. A grant of administration ad colligenda bona defuncti may be necessary for estates involving businesses, or professional practices conducted by sole practitioners, which may be adversely affected by a delay in administration.
A Statutory Demand is a creditor’s request requiring a company to pay a debt within 21 Days (the statutory period) provided by s459E of the Corporations Act (“the Act”). If a debtor company is served with a Statutory Demand, it has the statutory period following service of the demand to either:
(a) comply with the demand, or
(b) apply to the Court under s459G of the Act for an order that the demand be set aside.
Any application under s459G of the Act to set aside a Statutory Demand must be filed with the Court and served on the creditor within the statutory period following service of the demand. The compliance period has been strictly applied by the courts and no extensions of time, or dispensation with these requirements, can be given.
If a company has applied to set aside a Statutory Demand, the time for compliance with the demand will be extended pending determination of the application: s459F(2). If the Court sets the Statutory Demand aside, it will be of no force or effect and no presumption of insolvency will arise as a result of non-compliance. However, if the application to set aside the demand is dismissed (unless otherwise specified) the time to comply with the demand will be extended until 7 days after the date of the dismissal s459F.
Challenging a Statutory Demand is a complex area of the law. It is important for a company that has been served with a Statutory Demand to obtain legal advice to understand its rights and obligations.
Background
In Re the estate of Loo (Deceased) [2023] NSWSC 519 Lean Foo Loo (the Deceased) who died on 3 March 2023, owned all of the shares in and was the sole director of, a company, that had received a creditor’s statutory demand for $195,463.87 under s 459E of the Act. The statutory period for a company to apply to a court of jurisdiction to set aside the demand will expire on 22 May 2023.
The Deceased’s will could not be found. As there was no named executor; there is no legal personal representative of the estate that may appoint a new director to manage the company and protect the estate’s interests under s201F of the Act.
The deceased’s estate did not include any property in New South Wales. However, the plaintiff speaks very little English and it was not possible to find a Chinese-speaking practitioner with experience in this type of matter in Western Australia before the expiry of the statutory period to make an application in connection with the statutory demand. The plaintiff instructed a Sydney solicitor and friend who speaks Mandarin and Cantonese to act for her on this application.
The Supreme Court of Western Australia may make the orders sought under s18 of the Supreme Court Act 1935 (WA) and s 4 of the Administration Act 1903 (WA). The Supreme Court of New South Wales may grant urgent relief exercising jurisdiction conferred by the combined effect of s 9(a) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW) and s 4(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 (WA).
The overarching objective of the cross-vesting laws is to allow courts to determine the disputes before them without any necessary consideration of whether their jurisdiction to do so was derived from Federal, State or Territory laws. The legislation also established a simplified procedure for the transfer of proceedings from one scheme court to another.
The matter
On 17 May 2023, the deceased’s widow (the plaintiff) applied for a grant of special administration ad colligenda bona defuncti concerning the estate of the Deceased – limited to doing those things necessary to protect the Company’s interests concerning the statutory demand. The plaintiff is a resident of, and the Company’s registered office is in Western Australia.
The plaintiff made an undertaking to apply for an ordinary grant of administration in the Western Australian Supreme Court as soon as reasonably practicable after having obtained a grant of administration ad colligenda bona defuncti.
The Orders
The court granted the plaintiff administration of the estate limited to
- gaining control of the company;
- acting as trustee concerning the shares in the Company;
- appointing the Plaintiff or any suitable person as director of the Company;
- defending any claims against the Company, including institution of proceedings to set aside any statutory demand(s) issued against the Company; and,
- anything incidental or reasonably necessary, including but not limited to executing all instruments, for any of the above;
Until a grant of further administration is made or until further orders of the Court or any other Court within Australia.
Costs of the proceedings are to be paid out of the estate on an indemnity basis.