In Glenfyne International Holding Limited v Glenfyne Farms International AU Pty Ltd (in liq)  NSWCA 304, the NSW Court of Appeal exercised its discretion to order that a proposed creditors’ resolution to appoint liquidators (which was rejected following the exercise of the chairperson’s casting vote), be taken to have been passed.
The Court of Appeal set out the applicable authorities at -:
65. The principles governing a review of the casting vote of a presiding member have been considered in a large number of cases. Some of these were collected by Gordon J in Brisconnections Management Company Limited, In the matter of Thames Blund Holdings Pty Ltd (In Liquidation)  FCA 626; (2009) 72 ACSR 233 at  in relation to predecessor provisions of s 75-43(4). In that decision, at , her Honour usefully reproduced s 21.7.4 of the IPA Code of Professional Practice for Insolvency Practitioners which sets out a number of relevant matters for consideration when exercising a casting vote. At  of her decision, Gordon J observed that:
“The exercise of the casting vote is most appropriate in circumstances where a creditor with a majority in value (such as the [A]pplicant) has such an overwhelming interest that it is inappropriate to allow a majority in number who do not have the same monetary interest to carry the day. As the case law and the Code makes abundantly clear, there is no presumption in favour of the majority in value. However, where there is large disproportion between the values of the debts of the numerical minority and the numerical majority (as is the position here) it must be a factor to be taken into account.”
66. In an earlier decision, Cresvale Far East Ltd (In Liq) v Cresvale Securities Ltd  NSWSC 89; (2001) 37 ACSR 394 at -, Austin J made the following observations in relation to the review by a Court of the exercise of a insolvency practitioner’s casting vote. His Honour said:
“In my opinion, the Court’s power under s 600B, to set aside or vary a resolution passed because of the exercise of the casting vote, permits it to review the administrator’s reasons for the exercise of the casting vote. The Court need not confine itself to the question whether the administrator has acted honestly as chairman, because it is given a specific statutory power to hear an application to set aside or vary the resolution. As Santow J said in Re Martco Engineering, the Court does not automatically accept the (honest) exercise of the casting vote as an appropriate one. The Court’s attitude will ‘depend on factors such as whether the administrator has properly exercised the casting vote in the interests of creditors as a whole, such as in circumstances where the vote or votes which prevent one of the two conditions being fulfilled [approved by numerical majority and by value of debts] would represent an outcome unfair to the remaining creditors if not reversed by a casting vote’ (at 489).
Re Coaleen Pty Ltd (1999) 30 ACSR 200 shows that it is relevant to take into account, as factors, matters such as:
- opposition to the proposal by the major creditor, especially when there is a large disproportion between the major debt and other debts;
- support of the proposal by the directors where the proposal will deliver some advantage to them;
- misleading information in the administrator’s report; and
- whether creditors who voted in favour of the deed will be prejudiced if the Court sets aside the resolution.
Additionally, the Court may be influenced by whether the administrator has made adequate investigations before deciding on the use of the casting vote. Failure by the administrator to carry out sufficient investigations into taxation and other matters, before exercising the casting vote, led Derrington J to set aside a deed of company arrangement under s 447A, in Re Bartlett Research Securities Pty Ltd (1994) 12 ACSR 707. His Honour did not refer to s 600B, but his decision was applied by Moynihan J, in the context of s 600B, in Re Coaleen Pty Ltd.”
67. It was also submitted and, in my opinion, correctly so, that:
- when ascertaining the interests of creditors, it is their interests as creditors that are to be primarily considered, with the views of those who are voting for foreign purposes unrelated to their desire to maximise recovery of their debts to be given reduced regard: Deputy Commissioner of Taxation v Alternative Business Solutions (Aust) Pty Ltd  FCA 400 at ;
- when it comes to deciding who should be the liquidator of a company, the views of those with a vested interest in minimising investigations, such as those involved in or benefiting from transactions likely to be impugned, should be discounted: Haulotte Australia Pty Ltd v All Area Rentals Pty Ltd  FCA 615; (2012) 90 ACSR 177 at ; and
- a director should not to be permitted, through control of a bloc of related creditors, to override the wishes of other creditors in order to minimise scrutiny of their conduct: In the matter of Sales Express Pty Ltd (Administrators Appointed)  NSWSC 460 at -.
The Court of Appeal held at -:
When a chairperson is exercising a casting vote: