The Federal Court has delivered its judgment on an application by ASIC seeking a declaration that the appointment of Mr Christopher Darin and Mr Matthew Jess as administrators of Sino Australia Oil and Gas Limited (SAO) was invalid, void and of no effect.

Justice Davies made a declaration in the Federal Court in Melbourne that the appointment of Mr Darin and Mr Jess as administrators of SAO on 4 May 2015 was valid.  It follows that Mr Darin and Mr Jess are entitled to their remuneration in an amount to be determined by the Court.

In making the declaration, Justice Davies was satisfied on the evidence before the Court the SAO board was able to, and did, form an opinion as to the likely insolvency of the company in the future, notwithstanding that the board did not have up-to-date financial accounts for the company.  Justice Davies found that at the time of the Board resolution, the Board did have up-to-date information about the affairs of SAO and its operating subsidiary, which was neither shown to be wrong or an inadequate basis upon which to form an opinion about lack of solvency.

Justice Davies was also satisfied that the Board gave genuine consideration to the question of solvency and the evidence did not support the inference that the real purpose of the appointment of Mr Darin and Mr Jess as administrators of SAO was to deal with the dysfunction in the management of the company.

Background

On 4 May 2015, the directors of SAO appointed Mr Darin and Mr Jess as administrators of the company. That appointment was terminated on 21 May 2015 upon the appointment by the Court of Mr Peter McCluskey as provisional liquidator to SAO.

ASIC’s legal action against SAO and its former chairman, Mr Tianpeng Shao, is continuing (refer: 14-045MR, 14-121MR, and 14-321MR).