Bernsteen Pty Ltd v Newmore Pty Ltd - [1995] FCA 801

CATCHWORDS

CORPORATIONS - Part 5.3A of Corporations Law - application to extend convening period of company under administration - application made outside twenty one days of commencement of administration - whether s439A(6) allows more than one extension of convening period - function of committee of creditors - requirement of prompt investigation of affairs of the company by the administrator

Corporations Law ss 436E(4), 436F, 439A(5) and (6)

Federal Court Rules O 35 r 7

No. SG 3178 of 1995

IN THE MATTER of BERNSTEEN PTY LTD (ADMINISTRATOR APPOINTED) (ACN 008 178 163) and NEWMORE PTY LTD (ADMINISTRATOR APPOINTED) (ACN 056 650 929)

PETER IVAN MACKS Applicant

Branson J
Sydney (Video link-up to Adelaide)
29 September 1995

IN THE FEDERAL COURT OF AUSTRALIA )
  )
SOUTH AUSTRALIA DISTRICT REGISTRY )    No. SG 3178 of 1995
  )
GENERAL DIVISION                 )

IN THE MATTER of
  BERNSTEEN PTY LTD
  (ADMINISTRATOR APPOINTED)
  (ACN 008 178 163)

- and -

NEWMORE PTY LTD
(ADMINISTRATOR APPOINTED)
(ACN 056 650 929)

PETER IVAN MACKS

Applicant

EX TEMPORE REASONS FOR DECISION

CORAM:    Branson J
PLACE:    Sydney (Video link-up to Adelaide)
DATE:     29 September 1995

This application has been brought on as a matter of urgency.

By notice of motion of today's date, the applicant seeks to vary orders made by me on 15 September 1995 by which I extended to Monday next the convening period provided by s439A(5) of the Corporations Law in respect of two companies in administration pursuant to Part 5.3A of the Corporations Law. In the alternative, the applicant seeks a further extension of time within which the administrator of each of the companies may convene a meeting under s439A of the Corporations Law.

The power of the Court to extend the convening period is found

in s439A(6) of the Corporations Law. That sub-section is in the following terms:-

"The Court may extend the convening period on an application made within the period referred to in paragraph 5(a) or (b), as the case requires."

So far as this case is concerned, it is par(b) that is required. It refers to:-

"... the period of 21 days beginning on the day when the administration begins."

The orders made on 15 September 1995 were made on an application made within the period of twenty one days beginning on the day when the administrations of the two companies concerned began. The present application is made outside of that time. I have not been referred to any authorities on the interpretation of s439A(6). Unaided by authority, I am not persuaded that s439A(6) should be read as though it includes a reference to any extension of the convening period. If it had been intended that the convening period could be extended on an application made within the convening period, it would have been simple for the drafter to have so provided. He or she has instead referred to the periods prescribed by s439A(5).

Presumably it was concerned about the power of the Court to extend the convening period…

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: [1995] FCA 801
Decision Date: 29 SEPTEMBER 1995

CaseChat Overview and Summary

In the case of Bernsteen Pty Ltd v Newmore Pty Ltd, the applicant, Peter Ivan Macks, sought to extend the convening period for meetings of creditors in two companies under administration, Bernsteen Pty Ltd and Newmore Pty Ltd. The application was brought before the Federal Court of Australia, with Branson J presiding over the matter on 29 September 1995. The applicant aimed to vary or extend the convening period granted by the earlier orders made on 15 September 1995, which were within the initial 21-day period as stipulated by s439A(5) of the Corporations Law. The legal issues at hand revolved around the interpretation of s439A(6) of the Corporations Law, specifically whether it permits multiple extensions of the convening period, and the proper role of the committee of creditors in directing the administrator's investigation.

The court examined the statutory framework, particularly s439A(6), which allows the court to extend the convening period upon application made within the initial 21-day period. Branson J held that the language of the statute did not support multiple extensions, and the drafter's choice of wording indicated a specific timeframe for applications. The court further noted that the function of the committee of creditors, as outlined in s436F of the Corporations Law, was to consult with the administrator and receive reports, not to direct the investigation process. The administrator's reliance on the committee's directions to extend the convening period was deemed inconsistent with the legislative intent to ensure prompt administration. Consequently, the court dismissed the application, finding that the applicant's request for further extension was beyond the court's power under the statute.

Orders