Collective Olive Groves Limited (ACN 079 354 742) (Administrator Appointed)

[2009] FCA 384

FEDERAL COURT OF AUSTRALIA

Collective Olive Groves Limited (ACN 079 354 742) (Administrator Appointed) [2009] FCA 384

Corporations Act 2001 (Cth)

COLLECTIVE OLIVE GROVES LIMITED (ACN 079 354 742) (ADMINISTRATOR APPOINTED) and GEOFFREY PHILIP REIDY

NSD 144 of 2009

EMMETT J

24 MARCH 2009

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 144 of 2009

COLLECTIVE OLIVE GROVES LIMITED (ACN 079 354 742) (ADMINISTRATOR APPOINTED)
First Plaintiff

GEOFFREY PHILIP REIDY
Second Plaintiff

JUDGE:	EMMETT J
DATE OF ORDER:	24 MARCH 2009
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.Service of the Interlocutory Process filed on 24 March 2009 be dispensed with.

2.It be declared, pursuant to s 1322(4) of the Corporations Act 2001 (Cth), that the failure of the second plaintiff to preside, in accordance with s 439B of that Act, at the second meeting of creditors of the first plaintiff held on 20 March 2009 pursuant to s 439A of that Act, does not render invalid that meeting or any resolution passed at that meeting.

3.Any person claiming to be interested, including any creditor of the first plaintiff, may, within 15 business days of 24 March 2009 on at least 48 hours notice to the plaintiffs, make such application to vary these orders as such person may be advised.

4.On or before 31 March 2009 the plaintiffs to cause to be published in a national daily newspaper a copy of these orders.

5.The plaintiffs’ costs of the interlocutory process filed on 24 March 2009 be paid as costs of the administration of the first plaintiff.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 144 of 2009

COLLECTIVE OLIVE GROVES LIMITED (ACN 079 354 742) (ADMINISTRATOR APPOINTED)
First Plaintiff

GEOFFREY PHILIP REIDY
Second Plaintiff

JUDGE:	EMMETT J
DATE:	24 MARCH 2009
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. On 19 November 2008 the second applicant, Mr Geoffrey Reidy (the Administrator), was appointed administrator of the first plaintiff Collective Olive Groves Limited (the Company). Under the provisions of s 439A of the Corporations Act 2001 (Cth) (the Act), Mr Reidy, as administrator, was required to convene a meeting of the Company’s creditors within the convening period, as fixed by s 439A(5), or extended under s 439A(6). On 19 February 2009 the Court made an order pursuant to s 447A permitting the creditors to adjourn the date of the second creditors meetings.

2. Under s 439A(3), an administrator must convene the meeting of creditors by giving written notice of the meeting to as many of the creditors as reasonably practicable. Section 439A(4) provides that the notice given to a creditor must be accompanied by a number of things. The first is a report by the Administrator about the company’s business, property, affairs and financial circumstances. The second is a statement setting out the Administrator’s opinion about whether:

   ·it would be in the creditors’ interests for the company to execute a deed of company arrangement;

   ·it would be in the creditors’ interests for the administration to end; or

   ·it would be in the creditors’ interests for the company to be wound up.

3. The statement must also set out the administrator’s reasons for those opinions and such other information known to the administrator as will enable the creditors to make an informed decision about those matters.  Finally, if a deed of company arrangement is proposed, a statement setting out the details of the proposed deed must accompany the notice. 

4. Following the order of the Court on 19 February 2009, the Administrator sent to all creditors of the company a notice convening a meeting of creditors to be held on 20 March 2009 at 11 am. That notice was accompanied by the things referred to s 439A(4).

5. In his supplementary report of 12 March 2009, the Administrator expressed the opinion that the Company was insolvent.  While there was a proposal for a deed of company arrangement, which may possibly return a better dividend to creditors than from liquidation, the Administrator’s opinion was that, because of the uncertainty surrounding the deed of company arrangement, it is in the interests of creditors for the Company to be wound up. 

6. The proposed meeting was to be held at an address in Kent Street, Sydney.  However, because of personal difficulties involving the illness of his wife, the Administrator was unable to attend the meeting.  In his affidavit of 24 March 2009, he outlined the personal difficulties that made it impracticable for him to attend the meeting at the appointed time.

7. Section 439B of the Act provides that, at a meeting convened under section 439A, the administrator is to preside. Under 439C, the creditors may resolve at such a meeting that the company execute a deed of company arrangement, that the administration should end or that the company be wound up. Having regard to the difficulties in which the Administrator found himself personally, he arranged for Mr Robert Moodie to preside at the meeting of creditors. Mr Moody is a partner of the Administrator and is a chartered accountant. He has been a Certified Practicing Accountant for seven years. On the morning of 20 March 2009, prior to the meeting, the Administrator spoke to an officer of the Australian Securities and Investments Commission and informed the Commission of his inability to preside at the meeting.

8. Mr Moodie presided at the meeting, which was opened at 11:10 am.  A resolution was unanimously passed by the creditors who attended the meeting that, in the circumstances that were explained, consisting of the Administrator’s family emergency, Mr Moodie chair the meeting.  Notes of the proceedings at the meeting were made by Mr Clive Lee, a solicitor employed by solicitors for the Administrator.  A number of resolutions were passed.  Each was passed unanimously.  Notwithstanding the opinion expressed by the Administrator, the creditors resolved that the Company execute a deed of company arrangement. 

9. Having regard to the terms of s 439B, the Administrator is concerned that there may be some question as to the validity of the proceeding on 20 March. Accordingly, he has, by interlocutory process, applied today for an order under s 1322(4) of the Act. That provision relevantly provides that the Court may, on application by any interested person, make an order declaring that any act, matter, or thing, purporting to have been done, or any proceeding purporting to have been instituted or taken, under the Act is not invalid by reason of any contravention of a provision of the Act. However, under s 1322(6), an order may not be made unless the Court is satisfied that, relevantly, the act, matter, thing, or the proceeding, is essentially of a procedural nature and that no substantial injustice has been or is likely to be caused to any person.

10. The object of s 439B in requiring an administrator to preside is to ensure that the creditors have available the person who has been entrusted with the affairs of the company. More particularly, it is to ensure that the person who has provided information to the creditors and stated an opinion as to what the creditors should do is available for questioning and to explain to the extent necessary the reasoning that has led to the opinion that has been provided to the creditors. That is a matter of some substance. That is to say, s 439B is not a mere formality. On the other hand, it is also clear enough that the requirement of s 439B is a matter of a procedural nature.

11. Having regard to the fact that the Administrator’s partner, who was familiar with the affairs of the Company, was available, and that there was no dissent from the creditors, I am satisfied that no substantial injustice has been or is likely to be caused to any person by reason of the Administrator’s inadvertent ability to preside at the meeting. In all of the circumstances I consider that it is appropriate to make an order under s 1322(4) declaring that the meeting of creditors held on 20 March 2009 is not invalid, by reason only of the fact that the Administrator did not preside at the meeting. I will reserve leave to any person claiming to be interested, including any creditor of the Company, to make such application as he, she or it may be advised, to vary such an order. I also propose to direct the Administrator to publish in a national daily newspaper a copy of the orders that the Court makes.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:        22 April 2009

Counsel for the Plaintiffs:	B DeBuse
Solicitor for the Plaintiffs:	Truman Hoyle Lawyers

Date of Hearing:	24 March 2009
Date of Judgment:	24 March 2009