Forgery sees Administrator’s appointment ruled invalid

A certain insolvency practitioner may attract some unwanted attention after ignoring forgery claims that a court has now upheld.

In the NSW Supreme Court yesterday, Justice Kate Williams dismissed the practitioner’s application for orders validating his appointment as administrator of Premier Energy Resources Pty Ltd (PER), primarily on the basis that to do so her honour said would “give the imprimatur of the court” to an act of forgery.

The details of this fiasco come courtesy Justice Williams’ judgment In the matter of Premier Energy Resources Pty Ltd [2023] NSWSC 1185 which detail how upon being appointed administrator, the practitioner ignored claims by PER director Richard Clark that a signature on a letter purporting to represent the director’s resignation from PER was a forgery, that he had not in fact resigned and that he did not believe the company was insolvent and needed to be placed into external administration.

“In my opinion, an order validating the appointment of Mr Thorn would give the imprimatur of the Court to the conduct of Mr Connor in forging or procuring the forgery of Mr Clark’s signature on the letter of resignation, and to the unsatisfactory conduct of Mr Thorn in failing to investigate and promptly bring to the Court the doubts raised about the validity of his appointment. Justice Kate Williams.

The judge found that the signature was a forgery that had been procured by the administrator’s appointor, PER director Luke Connor .

In such circumstances PKF partner Simon Thorn probably had a snowball’s chance in hell of convincing the court it should validate his appointment particularly when, as the judgment shows, he’d been in no hurry to do so.

“Mr Thorn persisted in rebuffing Mr Clark’s complaints by asserting that he relied on the documents, and that he considered that his appointment was valid on the basis of those documents,” the judge said.

“In circumstances where Mr Thorn was aware that one of those documents was allegedly forged (and that, if the forgery was established, the other documents did not evidence a valid appointment), this was tantamount to rejecting the forgery allegation without any investigation.

“I reject the submission that Mr Thorn was justified in so acting because he lacked the funding to make an application to the Court.

“Mr Thorn did ultimately commence these proceedings, and I infer from that fact that funding was not an insurmountable obstacle to commencing proceedings earlier.

“It was not appropriate for Mr Thorn, who appears to have been content to accept the appointment without requiring any security for his costs and remuneration, to seek to impose upon Mr Clark the burden of the cost of commencing court proceedings to determine the validity of the appointment, while Mr Thorn continued to purport to deal with the Company’s assets and creditors as administrator in circumstances where he had no proper basis for assuming that his appointment was valid. 

“There is no evidence that Mr Thorn made inquiries of Mr Connor seeking his response to Mr Clark’s allegations that his signature on the letter of resignation dated 20 June 2023 had been forged.”

“Mr Thorn failed to discharge his obligation to investigate the alleged invalidity of his appointment, and to make a prompt application to the Court to determine that issue or to validate his appointment,” the judge concluded.

In dismissing the application the judge ordered that the ASIC register be corrected to show Clark remains as a director of PER and that Thorn’s application for remuneration be heard at another time.

No doubt Thorn will be hoping ASIC doesn’t decide the matter requires the regulator’s imprimatur of intensive scrutiny.