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BH Apartments v Sutherland Nominees

BH Apartments v Sutherland Nominees

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Case Copied 13 August 2015 51 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
JUDICIAL REVIEW AND APPEALS LIST

S CI 2014 04027

BH APARTMENTS PTY LTD (ACN 087 288 882)	Appellant
v
SUTHERLAND NOMINEES PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) (ACN 009 559 684)	First respondent
- and –
PAUL ANDREW BURNESS	Second respondent
- and -
MATTHEW JAMES JESS	Third respondent

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JUDGE:	Bell J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 April 2015
DATE OF JUDGMENT:	13 August 2015
CASE MAY BE CITED AS:	BH Apartments v Sutherland Nominees
MEDIUM NEUTRAL CITATION:	[2015] VSC 381

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CORPORATIONS LAW – company under deed of company arrangement – meeting of creditors called at request of high-value creditor – regulation made requesting person liable for costs of ‘convening’ meeting – appeal from order of Magistrates’ Court of Victoria that requesting person liable for full costs of calling and holding meeting – whether error of law – whether requesting person liable only for costs of calling meeting – ‘convene’, ‘convening’, ‘summon’, ‘summoning’ – Corporations Act 2001 (Cth) pts 5.3A and 5.4B, ss 445F and 479(2), Corporations Regulations 2001 (Cth) reg 5.6.15.

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APPEARANCES:	Counsel	Solicitors
For the appellant	Ms P Thiagarajan	Norton Rose Fulbright
For the respondents	Mr P Agardy	Charles Fice Solicitors

HIS HONOUR:

Introduction

Sutherland Nominees Pty Ltd was being administered by Paul Andrew Burness and Matthew James Jess as administrators pursuant to a deed of company arrangement under pt 5.3A of the Corporations Act 2001 (Cth). Exercising its statutory right under s 445F(1)(b) as a high-value creditor of the company, BH Apartments Pty Ltd requested that the administrators convene a meeting of creditors, which they did.

Regulation 5.6.15(1)(a) of the Corporations Regulations 2001 (Cth) required BH Apartments, as the requestor of the meeting, to lodge a security for the payment of the costs of convening the meeting, if so requested by the administrators. Before the meeting was held, the administrators nominated a security of $5,000, which BH Apartments lodged.

Regulation 5.6.15(1)(b) required BH Apartments to pay the costs of ‘convening the meeting’. Interpreting that expression to include the costs of both calling and holding a meeting, after the meeting was held the administrators required BH Apartments to pay the further sum of $42,725.48. Contending that the expression ‘convening the meeting’ covered the costs of calling but not holding a meeting, it refused to pay.

In debt recovery proceedings in the Magistrates’ Court of Victoria, the magistrate upheld the administrators’ interpretation of reg 5.6.15(1)(b). His Honour ordered BH Apartments to pay $42,725.48 plus interest and costs to the administrators. From those orders the company now appeals on a question of law under s 109 of the Magistrates’ Court Act 1989 (Vic). At issue is the interpretation of the regulation.

Deed of company arrangement and meeting of creditors

The administrators were appointed to Sutherland Nominees under s 436A(1) of the Corporations Act 2001 after the directors resolved that it was, or was likely to become, insolvent. A meeting of the creditors…

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: [2015] VSC 381
Decision Date: 13 August 2015

CaseChat Overview and Summary

BH Apartments has appealed against a decision of the Magistrates’ Court of Victoria that it was liable for all costs of calling and holding a meeting of creditors of a company under a deed of company arrangement. Sutherland Nominees, a high-value creditor, had requested that a meeting of creditors be called, and in response, BH Apartments was held liable for all costs of convening and holding the meeting, including the time of employees involved in arranging the meeting. The appeal is based on whether the Magistrates’ Court erred in law by holding that the requesting creditor was entitled to all costs, including those incurred after the meeting had been convened, and whether the correct interpretation of the relevant statutory provisions required that the requesting creditor only be liable for the costs of convening the meeting.

The court considered whether the relevant statutory provisions, sections 445F and 479(2) of the Corporations Act 2001, and regulation 5.6.15 of the Corporations Regulations 2001, imposed liability for all costs of calling and holding a creditors’ meeting, or only for the costs of calling the meeting. The court examined the language of the relevant provisions and found that the terms ‘convene’, ‘convening’, ‘summon’ and ‘summoning’ did not clearly impose liability for all costs, but rather only for the costs of calling the meeting. The court held that the decision of the Magistrates’ Court was an error of law, and that the requesting creditor was only liable for the costs of calling the meeting.

The appeal was allowed, and the decision of the Magistrates’ Court was set aside. The court found that the requesting creditor was only liable for the costs of calling the meeting, and not for all costs associated with holding the meeting. The matter was remitted to the Magistrates’ Court of Victoria for further proceedings in accordance with the court’s decision.

Orders