Berjaya Group (Aust) Pty Ltd v Ariff - [2007] NSWSC 1049

CITATION: Berjaya Group (Aust) Pty Ltd v Ariff [2007] NSWSC 1049
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 13/09/07

JUDGMENT DATE :
19 September 2007

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

DECISION: Note that s.445C(c) has not operated to terminate deeds of company arrangement. List for directions before me at 10am on 24 September 2007. Costs of the hearing on 13 September 2007 reserved.

CATCHWORDS: CORPORATIONS - voluntary administration - deed of company arrangement - whether deed terminated by force of s.445C(c) - whether "circumstances" specified in deed "exist" - where "circumstances" are "payment to all Admitted Creditors of the Dividend"

LEGISLATION CITED: Corporations Act 2001 (Cth), ss.447A, 445D

CASES CITED: Federal Commissioner of Taxation v All Suburbs Car Repairs Pty Ltd (1994) 14 ACSR 753
Lombe v Wagga Leagues Club Ltd (2006) 56 ACSR 387
Lo Pilato v Eden Construction Pty Ltd (2002) 20 ACLC 1744
Re Carlovers Carwash Ltd (2005) 194 FLR 84
Re Purchas; Estore Pty Ltd (2006) 154 FCR 246; Purchas; Worldwide Workers Pty Ltd [2006] FCA 1223

PARTIES: Berjaya Group (Aust) Pty Limited - First Plaintiff/First Respondent
Berjaya Group (Cayman) Limited - Second Plaintiff/Second Respondent
Berjaya Group Berhad - Third Plaintiff/Third Respondent
Stuart Karim Ariff - Defendant/Applicant

FILE NUMBER(S): SC 6450/06

COUNSEL: Mr B.A.J. Coles QC/Mr J.P. Redmond - Plaintiffs/Respondents
Mr S.R. Donaldson SC/Ms R. Francois - Defendant/Applicant

SOLICITORS: PMF Legal - Plaintiffs
Deacons - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BARRETT J

WEDNESDAY 19 SEPTEMBER 2007

6450/06 BERJAYA GROUP (AUST) PTY LIMITED & 2 ORS v STUART KARIM ARIFF

JUDGMENT

1 These proceedings concern deeds of company arrangement executed by Carlovers Carwash Ltd (“CCL”), Carlovers Carwash (Aust) Pty Ltd (“CCA”), The Carwash Kings Pty Ltd (“CK”) and Carlovers (Maroochydore) Pty Ltd (“CM”). The present defendant, Mr Ariff, is the administrator under each deed of company arrangement.

2 The present plaintiffs – Berjaya Group (Aust) Pty Ltd, Berjaya Group (Cayman) Ltd and Berjaya Group Berhad – occupy in relation to CCL, CCA, CK and CM positions sufficiently described, for present purposes, by quoting from my judgment in Re Carlovers Carwash Ltd (2005) 194 FLR 84:

“[19] … Each of CCA, CK and CM is a wholly-owned subsidiary of CCL, in that CCL owns all shares in each of CCA and CM, while CCA owns all shares in CK. The shares in CCL are owned as to 57.75% by Berjaya (Aust) Pty Ltd and as to 39.11% by Berjaya (Cayman) Ltd. The report as to affairs relating to CCL shows total debts of some $8,106,000, of which about $7,258,000 is owed to the Berjaya companies. In the case of CCA, total debts are shown as $2,033,000 of which $2,031,000 is owed to CCL. In the case of CK, debts total $1,634,000 and CCL accounts for $1,595,000. In the case of CM there are debts of $180,000 of which $178,000 is owed…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NSWSC 1049
Decision Date: 19 September 2007

CaseChat Overview and Summary

Berjaya Group (Aust) Pty Ltd sought to have the court declare that the voluntary administration of its subsidiary, Berjaya Group (Aust) Pty Ltd, was terminated by the terms of the deed of company arrangement. The respondents, including Ariff, were creditors of the company. The dispute centred on the interpretation of the deed of company arrangement, specifically the terms related to the termination of the administration and the payment to all admitted creditors of the dividend. The case was heard in the Federal Court of Australia.

The court was required to determine whether the voluntary administration was terminated by force of .445C(c) of the Corporations Act 2001. This involved interpreting the terms of the deed of company arrangement, particularly the phrase "circumstances specified in the deed 'exist'" and what constituted the "circumstances" of "payment to all Admitted Creditors of the Dividend". The court had to assess whether the specified circumstances had been met, and thus whether the voluntary administration had been terminated.

The court held that the voluntary administration was not terminated by the deed of company arrangement. The court found that the phrase "circumstances specified in the deed 'exist'" referred to the payment to all admitted creditors of the dividend, and that this had not occurred. The court concluded that the circumstances specified in the deed had not been met, and thus the voluntary administration remained in effect. The court's reasoning was based on a literal interpretation of the terms of the deed, and the court found that the deed did not explicitly terminate the administration.

The court's decision was that the voluntary administration of Berjaya Group (Aust) Pty Ltd was not terminated by the deed of company arrangement. The court found that the specified circumstances had not been met, and thus the voluntary administration remained in effect. The court did not grant the declaration sought by Berjaya Group (Aust) Pty Ltd. The case highlights the importance of clear and explicit language in legal documents, and the potential consequences of ambiguous or unclear terms.

Orders