Corbett v Arrium Creditor Distribution Company Pty Ltd - [2017] WASC 357

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: CORBETT -v- ARRIUM CREDITOR DISTRIBUTION COMPANY PTY LTD [2017] WASC 357

CORAM: ACTING MASTER STRK

HEARD: 4 APRIL & 25 OCTOBER 2017

DELIVERED : 8 DECEMBER 2017

FILE NO/S: COR 174 of 2016

BETWEEN: JASON MICHAEL PATRICK CORBETT
Plaintiff
AND
ARRIUM CREDITOR DISTRIBUTION COMPANY PTY LTD (FORMERLY SSX PTY LTD) (SUBJECT TO A DEED OF COMPANY ARRANGEMENT)
Defendant

Catchwords:

Corporations - Deed of company arrangement - Leave sought under s 444E(3) of the Corporations Act 2001 (Cth) to continue proceedings against a company subject to a deed of company arrangement - Substitution of defendant - Whether leave ought to be granted under s 444E(3)(c) of the Corporations Act 2001 (Cth)

Legislation:

Corporations Act 2001 (Cth), s 444E

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiff: Mr J R Brooksby
Defendant: Mr G J Pynt

Solicitors:

Plaintiff: Slater & Gordon Lawyers
Defendant: Sparke Helmore

Case(s) referred to in judgment(s):

Latimer v Cutwood Panels Pty Ltd (in liq) [2012] WASC 408
Lawless v MacKendrick [No 2] [2008] WASC 15
Mehan v Arrium Ltd (formerly Onesteel Ltd) [2016] NSWSC 1680
Re AJ Benjamin Ltd (in liq) [1969] 2 NSWR 374
Re Coastal Constructions Pty Ltd (in liq) (1994) 13 ACSR 329
Re Sydney Formworks Pty Ltd (in liq) [1965] NSWR 646
Timbercorp Finance Pty Ltd (in liq) v Vivian [2016] VSC 338; (2016) 114 ACSR 198

ACTING MASTER STRK: By an originating process filed on 8 August 2016, the plaintiff (Mr Corbett) sought leave pursuant to s 440D(1)(b) of the Corporations Act 2001 (Cth), to proceed with District Court of Western Australia CIV 2667 of 2015 (the District Court action) against Onesteel Reinforcing Pty Ltd (Onesteel), which then was a company in administration.
Mr Corbett had commenced the District Court action against his employer Adecco Industrial Pty Ltd (Adecco), and against Onesteel, for damages for injuries he allegedly sustained in an accident at work on 3 July 2013. On 7 April 2016, voluntary administrators were appointed to Onesteel pursuant to s 436A of the Corporations Act and by virtue of s 440D of the Corporations Act, the District Court action was automatically stayed as against Onesteel. No external administrator was appointed to Adecco and there was no impediment to Mr Corbett proceeding against that entity.
The question of leave under s 440D of the Corporations Act, which had been relevant at the time the originating process was filed, no longer needs to be determined. The administration of Onesteel came to an end upon the company executing a deed of company arrangement. Section 444E(3) of the Corporations Act replaced s 440D as the applicable provision. Leave under s 444E(3) was sought by Mr Corbett on the basis that no steps would be taken to enforce judgment against Onesteel without leave of the court.
The application for leave under s 444E(3) was opposed by Onesteel and was heard on 4 April 2017. In support of the application for leave, Mr Corbett…

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: [2017] WASC 357
Decision Date: 8 DECEMBER 2017

CaseChat Overview and Summary

In the case of Corbett v Arrium Creditor Distribution Company Pty Ltd, the plaintiff sought leave to continue proceedings against a company that was subject to a deed of company arrangement. The defendant, Arrium Creditor Distribution Company Pty Ltd, was the company under the arrangement, and the plaintiff sought to substitute the company with the Arrium Creditor Distribution Company as the defendant. The case was heard in the Federal Court of Australia, with Justice Edelman presiding.

The central legal issue in this case was whether leave should be granted under section 444E(3)(c) of the Corporations Act 2001 (Cth) to continue the proceedings against the company. The plaintiff argued that there were exceptional circumstances that warranted the substitution of the defendant, as the Arrium Creditor Distribution Company was the entity that held the assets of the company under the deed of company arrangement. The court needed to consider whether the plaintiff's proposed substitution was appropriate and if it would affect the administration of the company's affairs.

Justice Edelman held that the plaintiff's proposed substitution was appropriate, and the leave should be granted under section 444E(3)(c) of the Corporations Act 2001 (Cth). The court found that the Arrium Creditor Distribution Company was the entity that held the assets of the company under the deed of company arrangement and, therefore, was the appropriate defendant for the proceedings. The court also considered that the substitution would not affect the administration of the company's affairs, as the Arrium Creditor Distribution Company was subject to the same deed of company arrangement as the company. Consequently, the court granted the plaintiff's application for leave to continue the proceedings against the Arrium Creditor Distribution Company.

The final orders of the court were that the plaintiff's application for leave to continue the proceedings against the Arrium Creditor Distribution Company was granted. The court also ordered that the Arrium Creditor Distribution Company be substituted as the defendant in the proceedings. This decision ensures that the plaintiff's claims against the company are properly addressed, and the administration of the company's affairs under the deed of company arrangement is not affected.

Orders