FEISST -v- SALAN PTY LTD (UNDER ADMINISTRATION) [2001] WASC 270

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 270
Published:	04/10/2001
Case No:	COR:206/2001	Heard:	12 SEPTEMBER 2001
Coram:	MASTER BREDMEYER	Delivered:	28/09/01
No of pages:	10	Judgment Part:	1 of 1
Result:	Deed of company arrangement varied
Category:	B
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Parties:	GRAHAM FRASER FEISST SALAN PTY LTD (UNDER ADMINISTRATION) (ACN 052 291 791)
Catchwords:	Corporations Deed of company arrangement Application to set aside deed
Legislation:	Corporations Law, s 445D, s 445G and s 447A
Case References:	Lam Soon Australia Pty Ltd (Administrator Appointed) v Molit (No 55) Pty Ltd (1996) 14 ACLC 1737 Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707 Deputy Commissioner of Taxation v Comcorp Australia Ltd (1969) 14 ACLC 1,616 Deputy Commissioner of Taxation v Woodings (1995) 13 ACLC 469 JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691 Sydney Land Corp v Kalon Pty Ltd (No 2) (1998) 16 ACLC 93

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : FEISST -v- SALAN PTY LTD (UNDER ADMINISTRATION) [2001] WASC 270 CORAM : MASTER BREDMEYER HEARD : 12 SEPTEMBER 2001 DELIVERED : 28 SEPTEMBER 2001 PUBLISHED : 4 OCTOBER 2001 FILE NO/S : COR 206 of 2001 MATTER : The Corporations Law s 444E and s 459P

and

SALAN PTY LTD (UNDER ADMINISTRATION) ACN 052 291 791

BETWEEN : GRAHAM FRASER FEISST

Plaintiff

AND

SALAN PTY LTD (UNDER ADMINISTRATION) (ACN 052 291 791)

Defendant

Catchwords:

Corporations - Deed of company arrangement - Application to set aside deed

(Page 2)

Legislation:

Corporations Law, s 445D, s 445G and s 447A

Result:

Deed of company arrangement varied

Category: B

Representation:

Counsel:

Plaintiff : Mr K M Penkin

Defendant : Mr F Carles

Solicitors:

Plaintiff : Kevin Penkin & Associates

Defendant : Carles Solicitors

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

Lam Soon Australia Pty Ltd (Administrator Appointed) v Molit (No 55) Pty Ltd (1996) 14 ACLC 1737
Re Bartlett Researched Securities Pty Ltd (Administrator Appointed) (1994) 12 ACSR 707

Case(s) also cited:

Deputy Commissioner of Taxation v Comcorp Australia Ltd (1969) 14 ACLC 1,616
Deputy Commissioner of Taxation v Woodings (1995) 13 ACLC 469
JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691
Sydney Land Corp v Kalon Pty Ltd (No 2) (1998) 16 ACLC 93

(Page 3)

1 MASTER BREDMEYER: This is an application by the plaintiff, Mr Feisst, which, as amended, is to have a deed of company arrangement dated 27 June 2001 set aside and the defendant company placed into liquidation. The application is made under s 445D, s 445G and s 447A of the Corporations Law. Mr Feisst is a shareholder and creditor of the company and is eligible to bring this application.

2 I relate some of the facts to set the scene for this dispute. In October 1995 Mr Feisst loaned $80,000 to the company. He was one of a number of lenders who did that.…

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: [2001] WASC 270
Decision Date

CaseChat Overview and Summary

In this case, the plaintiff, Mr Feisst, applied to the Supreme Court of Western Australia to set aside a deed of company arrangement entered into by the defendant company, Salan Pty Ltd, and place the company into liquidation. The application was made under sections 445D, 445G, and 447A of the Corporations Law. The key issues the court had to decide were whether the deed of company arrangement was unfairly prejudicial to the plaintiff and whether it was misleading or deficient to the extent that it should be set aside.

The court examined several arguments made by the plaintiff. Firstly, the plaintiff argued that the administrators failed to report on any voidable transactions. The court found that the administrators had considered the debt-for-equity swap between the company and Mrs Verolme in their report and that the issue had been raised and discussed at the creditors' meeting. However, the court considered the failure to obtain an independent valuation of the hotel to be a problem, although it noted that the creditors had not been willing to adjourn the meeting to obtain a valuation or to fund the administrators to get one.

Secondly, the plaintiff argued that the administrators failed in their duties to assess the options for the creditors before recommending the Verolme proposal. The court found that while a valuation would have been a normal step, it was not easy to obtain one given the circumstances. The plaintiff's criticism of the administrators' failure to investigate Mrs Verolme's ability and competence to manage the hotel was also dismissed by the court, as the creditors were familiar with Mrs Verolme and her forecast had not been achieved.

The court concluded that the deed of company arrangement was not unfairly prejudicial to the plaintiff, nor was it misleading or deficient to the point of being set aside. However, the court found that the deed was unfairly prejudicial in that it required the creditors to wait until 31 December 2003 before getting paid. The court varied the deed, allowing the hotel to be marketed for sale within a three-month period following 30 June 2002, provided a good price was offered to pay out the creditors. If no good price was offered, Mrs Verolme could continue running the hotel until 31 December 2003 when the deed terminates unless extended.

Orders