Accredited Aged Care Facilities Pty Ltd v Banyan Tree (No 2)
[2002] VSC 303
•29 July 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 7575 of 2000
| ACCREDITED AGED CARE FACILITIES PTY LTD | Plaintiff |
| v | |
| BANYAN TREE (AUST) PTY LTD | Firstnamed Defendants |
| FRANCESCO MANCUSO | Secondnamed Defendant |
| COOPER NEWMAN PTY LTD and JOHN NEWMAN | First, Second and Third Parties |
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JUDGE: | McDonald J | |
WHERE HELD: | Melbourne | |
DATE OF JUDGMENT: | 29 July 2002 | |
CASE MAY BE CITED AS: | Accredited Aged Care Facilities Pty Ltd v Banyan Tree and ors (No 2) | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 303 | |
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Practice and procedure, order made on judgment securing property of defendant: voluntary administration of defendant appointed after judgment, order set aside on application of administrator to enable him to contract property of defendant during administration.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr P. Riordan | Dandanis & Associates |
| For the First Defendant | Mr J. Evans | Madgwicks |
HIS HONOUR:
During the period from 30 May to 14 June 2002, I conducted the trial in these proceedings. During the course of the trial, it became apparent that the first defendant had sold its business and that settlement was soon to occur. The plaintiff sought an order pursuant to a summons which it had filed on 14 May 2002 restraining the defendant from disposing of the proceeds of that sale. On 14 June 2002, the first defendant by its counsel gave the following undertakings to the court:
“That after:
(a)settlement of the sale pursuant to the sale agreement dated 30 November 2001 between Banyan Tree (Aust.) Pty Ltd and Australian Retirement Communities Pty Ltd and Ian Edwards Ball, Graham James Knowles, Russell Leslie Knowles and John Warner Knowles; and
(b) Payment of the following from the sale proceedings:
(1) the secured creditor, being the ANZ Bank;
(2)employee entitlements including long service leave, sick leave and annual leave entitlements;
(3)the selling agent's commission and Middletons legal costs and disbursements incurred with respect to the sale;
(4) trade creditors;
(5)adjustments to be made on settlement including Commonwealth funding adjustments and residents fees adjustments;
(6) rental and other adjustments under the lease,
the balance of the sale proceeds will be invested and remain invested in an interest bearing account in the name of its solicitors, Middletons, until termination of this proceeding or further order.”
On 28 June 2002, I delivered my judgment in this proceeding. On that day, I ordered, inter alia;
“(i)that there be judgment for the plaintiff against the defendants and each of them in the sum of $550,000, and that it be ordered that the defendants and each of them pay to the plaintiff, $550,000;
(ii)the defendants pay the plaintiff's costs of the proceedings;
(v)that there be reserved to the plaintiff to move for judgment against the defendants for damages in the nature of interests; and
(vi)that the balance of sale proceeds invested and remaining invested in an interest-bearing account in the name of the first defendant, Banyan Tree (Australia) Pty Ltd, Middletons, pursuant to the undertaking given to the court on behalf of the first defendant on 14 June 2002, remain held and invested in that account until further order reserving liberty to the plaintiff and the first defendant to apply on written notice.”
This day, an order has been made pursuant to the leave reserved under paragraph (5) of those orders and judgment has been entered for the plaintiff against the first defendant by way of damages in the nature of interest in the sum of $104,717.74.
On 12 June 2002, an appeal against my judgment and the orders made by me, was lodged.
Order (6) made on 28 June 2002, to that which I have referred, is not the subject of the appeal.
Application has been made to the court this day on behalf of the first defendant, to have the first defendant released from its undertaking as previously referred to, and to have the court order that Order (6) made on 28 June 2002 be vacated.
That application has been made by Anthony D’Aloia, a chartered accountant who, on 8 July 2002, was appointed Voluntary Administrator of the first defendant pursuant to s.436A of the Corporations Act 2001 (C'th).
From the material before the court on this application, it appears that the first meeting of creditors of the first defendant has been held on 15 July 2002.
By an order made by Merkel J. in the Federal Court of Australia on 23 July 2002, the time for the second meeting of creditors has been extended to 19 August 2002.
On behalf of the plaintiff, the orders as sought by the Administrator as agent for the first defendant are resisted.
On behalf of the plaintiff, it has been submitted to the court that it should not make the orders sought, but rather, that the court should order that the sum held by Middletons in the interest-bearing account, be paid into an account in the name of the plaintiff's solicitors and the Administrator until dealt with by any resolution of creditors at the second meeting of creditors, or further order of the court.
From that stated to the court from the Bar table, and not in dispute, it appears that at some time shortly after the Administrator was appointed, Middletons paid to him the sum held pursuant to Order (6) of the orders made on 28 June 2002. However, after that, it was realised by the Administrator that there existed order, numbered (6) made on 28 June 2002 and the effect of it. In consequence, the money paid by Middletons to the Administrator was returned by the Administrator to Middletons.
Pursuant to s.437A(1)(a) of the Corporations Act it is provided that while a company is under administration the Administrator has control of the company's business, property and affairs. The monies held by Middletons, are the property of the first defendant. It is not contended otherwise.
Section 437B to F of the Corporations Act effectively removes any person, other than the Administrator from having control over the property of the first defendant during the period of administration.
Section 437A(1)(c) provides that while a company is under administration, the Administrator may inter alia, dispose of all or part of its business and dispose of any of the property of the company. From the submissions made on behalf of the plaintiff it seems to be, that the plaintiff has concern that the Administrator may wrongfully dispose of this property if it was handed or paid to him. The plaintiff is in no better position than any other unsecured creditor of the first defendant.
The Administrator is under an obligation to the court as Administrator of the first defendant, to administer the property of the first defendant and control that property and has obligations as an officer of the court pursuant to the Corporations Act.
I have concluded that the property held by Middletons pursuant to the order previously referred to, being the property of the first defendant, should pass to the Administrator, to be under his effective and actual control in the administration of the first defendant.
I have further concluded that such control of the property by the Administrator should not be encumbered either by the continuance of the undertaking given on behalf of the first defendant, to which I have referred, or the order of the court made on 28 June.
Accordingly, I accede to the application made on behalf of the first defendant by its agent, the Administrator.
It is ordered as follows:
That the undertaking given on behalf of the first defendant by its counsel on 14 June 2002 be discharged, and further, that the order made by paragraph (6) of my orders made on 28 June 2002, be vacated.
It has been further submitted on behalf of the Administrator, perhaps out of an abundance of caution, that an order should be made that the costs of this application be costs in the administration.
In my view, it is appropriate that I make an order dealing with the first defendant's costs of and incidental to this application and, accordingly, I further order, that the first defendant's costs, of and incidental to the application of the first defendant be costs and expenses of the voluntary administration of the first defendant.
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HIS HONOUR: Mr Dandanis, I have received during the time I stood down while a writer was obtained, a facsimile transmission from the solicitors for the second defendant, indicating that they consent to an order as to damages in the nature of interest in the amount of $104,717.74. I think that the best way that this may be dealt with, is if you and he, the solicitor, Jonathan Otis, execute a minute of an order, signed by you both, send it to my Associate, and without requiring appearances before the court, then on receipt of that minute of order, I would make that order by consent, or make that order on the papers. Are you content to follow that course?
MR DANDANIS: Yes, if Your Honour pleases. Yes, I'm content with that, Your Honour.
HIS HONOUR: Yes, very well. I will adopt that course and I won't make any further orders in these proceedings this day. No other matter then, gentlemen?
MR DANDANIS: No, Your Honour.
HIS HONOUR: Very well.
ADJOURNED TO A DATE TO BE FIXED
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