Henaford Pty Ltd v Strathfield Group Ltd

[2009] NSWSC 539

Reported Decision: 72 ACSR 240

New South Wales

Supreme Court

CITATION:	Henaford v Strathfield Group [2009] NSWSC 539
HEARING DATE(S):	21/05/09
JUDGMENT DATE :	21 May 2009
JURISDICTION:	Equity
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	21 May 2009
DECISION:	1. Order that the originating process be dismissed; 2. Order that the plaintiff pay the defendant’s costs; 3. Exhibits may be returned after 28 days.
CATCHWORDS:	CORPORATIONS - voluntary administration - deeds of company arrangement - whether landlord's claim to future instalments of rent extinguished by lessee entering into deed of company arrangement
LEGISLATION CITED:	Corporations Act 2001 (Cth)
CASES CITED:	Brash Holdings Ltd v Katile Pty Ltd [1996] 1 VR 24 Lam Soon Australia Pty Ltd (administrator appointed) v Molit (No. 55) Pty Ltd (1996) 70 FCR 34 Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; (2008) 234 CLR 237 J & B Records Ltd v Brashs Pty Ltd (1995) 36 NSWLR 172 Molit (No. 55) Pty Ltd v Lam Soon Australia Pty Ltd (1996) 63 FCR 391
PARTIES:	Henaford Pty Ltd ACN 075 647 326 v Strathfield Group Ltd ACN 053 687 728
FILE NUMBER(S):	SC 2553/09
COUNSEL:	Plaintiff: S Golledge Defendant: V R Gray
SOLICITORS:	Plaintiff: Thomson Playford Cutlers Defendant: Somerset Ryckmans

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Thursday, 21 May 2009

2553/09 Henaford Pty Ltd ACN 075 647 326 v Strathfield Group Ltd ACN 053 687 728

JUDGMENT

1 HIS HONOUR: The issue in this case is whether a landlord's claim to future instalments of rent has been extinguished by a deed of company arrangement entered into by the lessee. The plaintiff is the owner of premises in Church Street, Parramatta. The defendant is in possession of those premises under a lease. It took an assignment of the lease on or about 23 September 2002. The defendant has granted a sublease.

2 On 27 January 2009 the defendant was placed in voluntary administration pursuant to s 436A of the Corporations Act 2001 (Cth). On 5 March 2009 the second meeting of creditors resolved that the defendant execute a deed of company arrangement (“DOCA”).

3 The plaintiff did not attend or vote in favour of the proposed DOCA. The DOCA provides in clause 16.3 that it will terminate if the creditors resolve that a trust deed be executed to establish a creditors’ trust. On 23 March 2009 the defendant’s creditors so resolved.

4 No notice was given by the administrators under s 443B (3) of the Act stating that the defendant did not propose to exercise rights in relation to the property. The administrators paid rent and land tax for which they were liable from 3 February to 5 March 2009. The defendant has not paid rent or land tax after 5 March 2009. The defendant says that its liability for rent and land tax has been extinguished by the DOCA, although it remains in possession of the property.

5 The plaintiff has not terminated the lease. The plaintiff contends that the defendant remains liable for instalments of rent as they fall due after 27 January 2009. It seeks the following declarations:

“ 2. A declaration that a claim by the Plaintiff for payment of rent becoming due after 27 January 2009 under a Lease between the Plaintiff and the Defendant dated 8 June 2000 (‘Lease’) is not a Claim within the meaning of the Deed of Company Arrangement entered into by the Defendant on 12 March 2009.
3. A declaration that the Plaintiff is not bound by clause 4 of that Deed of Company Arrangement in respect of any claim for rent falling due from the Defendant pursuant to the Lease after 27 January 2009. ”

6 It also seeks an order that the defendant pay amounts for rent and land tax.

7 The relevant provisions of the Corporations Act are ss 444A (1), (4) and (5); 444D(1), (2) and (3); 444E; 444F (1) and (5) and 444H. They provide:

“ 444A Effect of creditors’ resolution
(1) This section applies where, at a meeting convened under section 439A, a company’s creditors resolve that the company execute a deed of company arrangement.
...
(4) The instrument must also specify the following:
(a) the administrator of the deed;
(b) the property of the company (whether or not already owned by the company when it executes the deed) that is to be available to pay creditors’ claims;
(c) the nature and duration of any moratorium period for which the deed provides;
(d) to what extent the company is to be released from its debts;
(e) the conditions (if any) for the deed to come into operation;
(f) the conditions (if any) for the deed to continue in operation;
(g) the circumstances in which the deed terminates;
(h) the order in which proceeds of realising the property referred to in paragraph (b) are to be distributed among creditors bound by the deed;
(i) the day (not later than the day when the administration began) on or before which claims must have arisen if they are to be admissible under the deed.
(5) The instrument is taken to include the prescribed provisions, except so far as it provides otherwise.
444D Effect of deed on creditors
(1) A deed of company arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the deed under paragraph 444A(4)(i).
(2) Subsection (1) does not prevent a secured creditor from realising or otherwise dealing with the security, except so far as:
(a) the deed so provides in relation to a secured creditor who voted in favour of the resolution of creditors because of which the company executed the deed; or
(b) the Court orders under subsection 444F(2).

(3) Subsection (1) does not affect a right that an owner or lessor of property has in relation to that property, except so far as:
(a) the deed so provides in relation to an owner or lessor of property who voted in favour of the resolution of creditors because of which the company executed the deed; or
(b) the Court orders under subsection 444F(4).
444E Protection of company’s property from persons bound by deed
(1) Until a deed of company arrangement terminates, this section applies to a person bound by the deed.
(2) The person cannot:
(a) make an application for an order to wind up the company; or
(b) proceed with such an application made before the deed became binding on the person.
(3) The person cannot:
(a) begin or proceed with a proceeding against the company or in relation to any of its property; or
(b) begin or proceed with enforcement process in relation to property of the company;
except:
(c) with the leave of the Court; and
(d) in accordance with such terms (if any) as the Court imposes.
(4) In subsection (3):
property, in relation to the company, includes property used or occupied by, or in the possession of, the company.
444F Court may limit rights of secured creditor or owner or lessor
(1) This section applies where:
(a) at a meeting convened under section 439A, a company’s creditors have resolved that the company execute a deed of company arrangement; or
(b) a company has executed such a deed.
...
(5) The Court may only make an order under subsection (4) if satisfied that:
(a) for the owner or lessor to take possession of the property or otherwise recover it would have a material adverse effect on achieving the purposes of the deed; and
(b) having regard to:
(i) the terms of the deed; and
(ii) the terms of the order; and
(iii) any other relevant matter;
the interests of the owner or lessor will be adequately protected.
444H Extent of release of company’s debts
A deed of company arrangement releases the company from a debt only in so far as:
(a) the deed provides for the release; and
(b) the creditor concerned is bound by the deed. ”

8 The DOCA specified 27 January 2009, that is, the day when the administration began, as the relevant date for the purposes of s 444A(4)(i).

9 The DOCA is binding on the plaintiff only to the extent the Corporations Act so provides.

10 Mr Golledge of counsel, who appeared for the plaintiff, submitted that the deed did not bar the plaintiff's claim for instalments of rent or land tax falling due after 27 January 2009 partly on the ground that such claims did not arise on or before 27 January 2009 and that the deed was not binding on the plaintiff in respect of such claims. He also submitted that the right to rent was a right which the plaintiff had in relation to the property of which it is the lessor within the meaning of s 444D(3). He submitted that its right to sue for rent was therefore unaffected by the deed. He acknowledged that there is contrary authority in relation to both propositions.

11 In Brash Holdings Ltd v Katile Pty Ltd [1996] 1 VR 24, the appeal division of the Supreme Court of Victoria held that the "claims" to which s 444D(1) refers are debts or claims which would be admissible to proof for the purposes of s 553 if the company were being wound up, and the dates referred to in s 444D(1) were the "relevant dates" for the purposes of s 553.

12 It follows that the deed binds all creditors, not only so far as concerns debts which had become due and payable as at 27 January 2009, but also as concerns future or contingent claims, the circumstances giving rise to which occurred before that date.

13 In Lam Soon Australia Pty Ltd (administrator appointed) v Molit (No. 55) Pty Ltd (1996) 70 FCR 34, the Full Court of the Federal Court held (at 42-44) that the right to future instalments of rent under an existing lease is an existing right, and hence is a claim arising on or before the commencement of the administration. I should not depart from that decision unless convinced that it is plainly wrong (Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 492). In my respectful view the decision is correct.

14 The plaintiff's right to future instalments of rent arises from the lease entered into by the defendant prior to 27 January 2009. Its claim to future instalments of rent is a claim arising on or before that date within the meaning of subs 444D(1).

15 It was submitted for the plaintiff that the present case can be distinguished from Lam Soon Australia Pty Ltd v Molit (No. 55) Pty Ltd because the plaintiff has remained in possession of the premises. I do not regard that as a relevant point of distinction.

16 The plaintiff would be entitled to rent whilst the lease remains on foot whether the defendant remained in physical possession of the premises or not, and whether it had granted a sublease of the premises or not. Its right to rent arises under the lease and that is the material fact in determining whether its claim arises on or before the commencement of the administration.

17 It follows that I reject the plaintiff's first submission concerning the construction of s 444D(1).

18 In support of the plaintiff's second submission concerning the proper construction of s 444D(3), Mr Golledge stressed that the nature of rent is that it touches and concerns the land:

" Rent, in the language of the old books, issues out of the land and is incident to the reversion. "

( Gumland Property Holdings Pty Ltd v Duffy Bros Fruit Market (Campbelltown) Pty Ltd [2008] HCA 10; (2008) 234 CLR 237 at 264 [74] footnote 90.)

19 He submitted that this showed that in suing for rent a lessor was enforcing a right which it had in relation to the leased property. However, the authorities show that s 444D(3) is concerned to preserve an owner’s or lessor's right to take extra-curial action in relation to the property, such as by re-entering possession for non-payment of rent. This construction of the subsection gives it an harmonious relationship with s 444D(2), which preserves a secured creditor’s right to deal with secured property.

20 In J & B Records Ltd v Brashs Pty Ltd (1995) 36 NSWLR 172, Hodgson J (as his Honour then was) held (at 181) that s 444D(3) does not have the effect of removing the requirement for owners or lessors to obtain the leave of the Court under s 444E(3) in respect of court proceedings to enforce their rights as owners or lessors where those persons were creditors with claims arising on or before the day specified in the deed, and where those claims were associated with the property. In other words, a lessor's claim for rent is not unaffected by the DOCA by reason of s 444D(3). His Honour's reasoning was referred to with apparent approval by the Full Federal Court in Lam Soon Australia Pty Ltd v Molit (No. 55) Pty Ltd (at 41).

21 In the first instance decision in that case, (Molit (No. 55) Pty Ltd v Lam Soon Australia Pty Ltd (1996) 63 FCR 391) Branson J said (at 397):

“ It is contended on behalf of the applicant that a right to future rent is a right in relation to the leased property, and that as a consequence s444D(3) of the Corporations Law limits the generality of s444D(1). Section 444D(3) provides:-


‘Subs(1) does not affect a right that an owner or lessor of property has in relation to that property, except so far as:

(a) the deed so provides in relation to an owner or lessor of property who voted in favour of the resolution of creditors because of which the company executed the deed; or

(b) the Court orders under subs444F(4).’


It is common ground that the applicant did not vote in favour of the resolution of creditors because of which the Company executed the deed and that no relevant order has been made by the Court under subs444F(4).

In my view the construction of s444D(3) for which the applicant contends is too wide. Although s9 of the Corporations Law defines ‘property’ to include a ‘thing in action’ the context in which the term is used in s444D(3) suggests a narrower meaning. In my view a right in relation to leasehold property within the meaning of s444D(3) is a right touching on the property itself such as the right of re-entry. It may be that it would also extend to the right to distrain for rent. I accept the submission made on behalf of the respondent that the rights in relation to property referred to in s444D(3) are the same rights as those referred to in s444F(4) and (5). This narrow use of the term ‘property of the company’ is, in my view, also reflected in s440F and s440G of the Corporations Law. ”

22 Although the point does not seem to have been specifically addressed on appeal, the reasoning of the Full Court (70 FCR at 41-42) is consistent with this reasoning.

23 I agree with this construction of s 444D(3). It follows that if, on its proper construction, the DOCA has extinguished the plaintiff's claim for future rent, the deed is binding on the plaintiff.

24 The following are the relevant provisions of the DOCA:

“ 1.1. In this Deed unless the context otherwise requires:

Admitted Claim means the Claim of a Participating Creditor but does not include any Excluded Claim;

Appointment Date means the date of commencement of the voluntary administration of the Company, being 27 January 2009;

Arrangement Period means the period commencing on the Commencement Date and ending on the Termination Date;

Available Property means the CCE Contribution, the Share Issue, the Cavastowe Claim, the Cash at Bank and, if required, the Top Up Sum;

Claim means a debt payable by, or a claim against, the Company (whether present or future, certain or contingent, ascertained or sounding only in damages) being a debt or claim the circumstances giving rise to which occurred on or before the Appointment Date;

Commencement Date means the date on which this Deed is executed by the Company and the Deed Administrators;

Creditor means any person with a Claim;

Excluded Creditors means each of the following Creditors but only to the extend of their Excluded Claims:

(a) CCE and any entity which is a related entity to the Company or to its directors;

(aa) Hakim;

(b) the Directors;

(c) any entity which is a related entity to the Company or to the Directors;

(d) Subject to clause 12.5, Optus;

(e) the Continuing Employees;

(f) the ROT Creditors;

(g) the Secured Creditors, including GE; and

(h) any other Creditor to the extent the Claim of that Creditor has been paid during the Administration Period.

Landlord Creditor means a person who is the legal or beneficial owner of real property that was used or occupied by, or in the possession of the Company as at the Appointment Date;

Participating Creditors means all Creditors other than Excluded Creditors in respect of their Excluded Claims;

2.1 Effective Date

This Deed commences on the Commencement Date.

...

4.1 Deed binds all persons

Subject to the rights of any Secured Creditor, Optus or any owner or lessor, this Deed binds all persons having a Claim to the extent of such Claim. For the avoidance of doubt GE is not bound by any provisions of this Deed.

4.2 Secured Creditors

Nothing in this Deed shall in any way restrict the right of a Secured Creditor who did not vote in favour of the Resolution from lawfully realising or otherwise dealing with its security. For the avoidance of doubt this clause shall not apply to GE.

4.3 Owners and Lessors

Nothing in this Deed shall in any way restrict a right that an owner or lessor who did not vote in favour of the Resolution has in relation to the relevant property of that owner or lessor in the possession of the Company as at the Commencement Date.

4.4 Bar to Claims

Subject to section 444D of the Act, and subject to clauses 4.1 and 4.2 this Deed may be pleaded by the Company against any Creditor in bar of any Claim and a Creditor (whether the Creditor’s Claim is or is not admitted or established under this Deed) must not during the Arrangement Period:
(a) proceed with an application in connection with the winding up of the Company made before this Deed became binding on that person;
(b) begin or continue any proceeding against the Company or in relation to any of its property;
(c) exercise any right of set-off or cross claim against the Company except any right of set-off against the Company to which the Creditor would have been entitled pursuant to section 553C of the Act had the Company been wound up with the Appointment Date being the day on which the winding up was taken to have begun; or
(d) begin or continue with any Enforcement Process in relation to the Company’s property,
except in the case only of paragraphs (b) and (d) with the leave of the Court and in accordance with such terms (if any) as a Court imposes. For the purposes of this clause property includes property used or occupied by, or in the possession of, the Company.

4.5 Effect of Deed on Claims

Participating Creditors must accept their Entitlements under this Deed or the Trust (as the case may be) in full satisfaction and complete discharge of their Admitted Claims.

4.6 Release and extinguishment

On termination of this Deed in accordance with clause 16.3, all Claims of Creditors (other than Claims of a Secured Creditor, CCE in respect the CCE Debt Claim and Optus in respect of the Optus Claim) are released in full and extinguished and this Deed may be pleaded by the Company against any person in barring a Claim by that person. Each Creditor (other than a Secured Creditor, CCE in respect of the CCE Debt Claim and Optus in respect of the Optus Claim) will, if called upon to do so, properly execute and deliver to the Company may require. This provision operates subject to clauses 4.2, 4.3, 12.1, 12.2 and 12.3.

...

7.1 Making Claims

Subdivisions A, B, C and E of Division 6 of Part 5.6 of the Act apply to Claims made under this Deed or the Trust (as the case may be) (unless expressly stated to the contrary or modified by this Deed or the Trust) as if the references to the liquidator were references to the Deed Administrators and the Trustees.

7.2 Call for Proofs

Regulations 5.6.39 to 5.6.72 (inclusive) of the Regulations apply to Claims made under this Deed or the Trust (as the case may be) (unless expressly stated to the contrary or modified by this Deed or the Trust) as if the references to the liquidator were references to the Deed Administrators and the Trustees.


...

10.1 Application of this Part

The provisions of this clause 10 apply in relation to this Deed if the Creditors resolve that the Trust Deed be executed.

10.2 Trust

(a) Immediately after the Creditors pass any resolution that the Trust be executed the Deed Administrators must, subject to clause 3.2, execute the Trust.
(b) The Trustees will hold and administer the Trust Fund constituted in accordance with the terms of the Trust Deed.

10.3 Trust Fund

The assets of the Trust Fund shall comprise the Available Property.

10.4 Payment of the Trust Fund

As soon as practicable after execution of the Trust Deed the following sequence of events shall occur:
(a) The Deed Administrators shall transfer the CCE Initial Contribution and any other moneys comprising the Available Property to the Trustees;
(b) The Deed Administrators shall transfer the ROT Sale Proceeds to the Trustees, to the extent those moneys have not been paid to ROT Creditors;
(c) all Claims of Participating Creditors and Excluded Creditors (other than GE, CCE in respect of the CCE Debt Claim and Optus in respect of the Optus Claim) will be novated to and assumed by the Trust;
(d) all Claims against the Company (other than the Claims of GE, CCE in respect of the CCE Debt Claim and Optus in respect of the Optus Claim) will be released and extinguished; and
(e) Participating Creditors are only entitled to make a claim in respect of Claims formerly made against the Company, against the Trust Fund in accordance with the Trust Deed.

10.5 Participating Creditors

All Participating Creditors must accept their right to prove under the Trust Deed in full satisfaction and complete discharge of all Claims which they have or claim to have against the Company as at the Appointment Date and each of them will, if called upon to do so, execute and deliver to the Company such forms of release of any such Claim as the Deed Administrators may require.


...

12.1 Nothing in this Deed will affect in any way the liabilities of the Company to any Secured Creditor or the contractual relations between them in respect of any Security or prevent or preclude any Secured Creditor from taking any action for the purpose of realising or otherwise dealing with its Securities.

...

14.1 Landlord Creditors will be entitled to prove as Participating Creditors in the Deed Fund or the Trust Fund (as the case may be) if:

(a) the relevant lease is terminated prior to their proving (whether by surrender, forfeiture or otherwise); or
(b) the Company vacates, ceases to use, occupy or possess any premises leased by the Company.


14.2 If a Landlord Creditor is entitled to prove in accordance with clause 14.1, it will be entitled to prove for a sum equal to the compensation payment in relation to the relevant lease, determined in accordance with this clause 14.

14.3 The compensation payment entitled to be claimed by a Landlord Creditor is any make good costs provided for under the relevant lease plus the lesser of the rent due for the balance of the lease term or 12 months.

...

14.5 If a Landlord Creditor has the benefit of a guarantee of any of the Company’s debts from a Secured Creditor, the Landlord Creditor must, before proving in the Deed Fund or the Trust Fund (as the case may be), either claim against the Secured Creditor under the guarantee or surrender the guarantee.

14.6 The amount for which the Landlord Creditor is entitled to prove in the Deed Fund or the Trust Fund (as the case may be) will be reduced (or extinguished) by the amount (if any) received by the Landlord Creditor from the Secured Creditor under any guarantee given to the Landlord Creditor by the Secured Creditor.

14.7 Nothing in this Deed will restrict a right a Landlord Creditor who does not vote in favour of the Resolution has in relation to the relevant property of that Landlord except to the extent set out in the Act.

14.8 A Landlord Creditor who continues to lease premises to the Company after the Commencement Date, agrees to waive any default or breach by the Company under any lease which occurred prior to the Commencement Date.

14.9 A Landlord Creditor, who continues to lease premises to the Company after the Commencement Date shall be entitled to prove as a Participating Creditor in the Deed Fund or the Trust Fund (as the case may be) but only in respect of any unpaid rent and outgoings arising under the lease prior to the Appointment Date.

...

16.3 Termination where Deed achieves Purpose

If the terms of the Deed have been satisfied and the Deed Fund fully distributed, or if clause 10 applies, the provisions of clause 10.4 have been satisfied then the Deed will terminate and the Deed Administrators must certify to that effect in writing and must within 28 days lodge with ASIC a notice of termination of the Deed in the approved form. ”

25 It was common ground that the plaintiff is a Landlord Creditor who continues to lease premises to the company after the Commencement Date. It is common ground that the plaintiff cannot prove as a Participating Creditor for rent falling due after 27 January 2009, although it was submitted for the defendant that if the plaintiff forfeited the lease, or if the defendant ceased to possess the premises, the plaintiff could prove for compensation payments in accordance with clauses 14.1-14.3.

26 The plaintiff's primary submission is that a claim or demand which is not admissible to proof is not affected by the other provisions of the deed. Hence, the plaintiff submits that because the plaintiff cannot prove for the value of the future instalments of rent, the deed on its proper construction does not release the defendant from its obligations to pay such rent.

27 The key provision is clause 4.6, because the deed has terminated in accordance with clause 16.3. It is the Claims, as defined, of Creditors, which are released or extinguished. A Claim is defined consistently with s 553 of the Corporations Act. For the same reasons as in Lam Soon Australia Pty Ltd v Molit (No. 55) Pty Ltd, the plaintiff's claim for future instalments of rent is a Claim within the meaning of the deed.

28 In my view the deed does not contain any symmetry between the claims which can be admitted to proof and the Claims which are released and extinguished under clause 4.6 or which, during the Arrangement Period, will be subject to the moratorium under clause 4.4. Thus, it is only some of the Claims of Excluded Creditors which are excepted from the release and extinguishment affected by clause 4.6, although they are not entitled to be proved as claims of Participating Creditors.

29 Clause 14 is concerned to limit the quantum of claims which the particular class of Participating Creditors can make. I do not consider that the limitation on the quantum and nature of claims which that class of Participating Creditors can make warrants reading the word "Claim" in clause 4.6 in any way other than in accordance with its literal terms.

30 Mr Golledge pointed out that the moratorium in clause 4.4 is expressly made subject to clause 4.1 of the deed. Clause 4.1 provides that the deed binds all persons having a claim to the extent of such Claim, but that this is “subject to the rights of any owner or lessors." Those opening words of clause 4.1 have to be read as referring to the rights of an owner or lessor referred to or preserved by the deed.

31 Clause 4.3 reflects the language of s 444D(3). In my view, it is to be construed in the same way, and refers to there being no restriction on the right of an owner or lessor to take extra-curial action in relation to the property such as by re-entry for non payment of rent.

32 Mr Golledge submitted that the proviso in the last sentence of clause 4.6 points to clause 4.3 not being confined to the exercise of non-curial rights, but as demonstrating that clause 4.3 means that the lessor is not restricted in enforcing its right to rent, being a right which it has in relation to a relevant property, provided of course that the lessor did not vote in favour of the resolution. He submitted that if clause 4.3 did not refer to monetary claims, then the inclusion of the reference to that clause in the proviso to clause 4.6, (which is concerned with the discharge of monetary liabilities), would be otiose.

33 I do not agree. In my view the last sentence of clause 4.6 has a sensible operation consistent with the received construction of s 444D(3). Were it not for that proviso, it would be at least seriously arguable that on the release and extinguishment of the lessor's right to future rent a lessor would be precluded from terminating a lease and re-entering premises because no debt would be owed for such rent.

34 It was also submitted that it is anomalous and - as I understand the submission - unfair, to deprive a lessor, whose property continues to be used or occupied by the company after the DOCA commenced, from being entitled to claim a dividend under the deed in respect of accruing rent, but nonetheless to make such a claim for accruing rent subject to the moratorium and discharge provisions of the deed.

35 I do not consider that these matters relevantly affect the construction of the deed. In Lam Soon Australia Pty Ltd v Molit (No. 55) Pty Ltd, the full Federal Court said (at 42) that:

“ The Law clearly contemplates that the holder of a bill of sale and a lessor are to be treated similarly, and we can see no particular unfairness in that. Mortgagee and lessor are both protected by their ability to exercise their extra curial rights and remedies in relation to the property. Mortgage and lease documents can, and no doubt usually do, empower the mortgagee or lessor to terminate the arrangement and take possession following the appointment of an administrator; certainly they are likely to do so where there is a failure to pay an instalment of principal, interest or rent. ”

36 Moreover, if the deed were unfairly prejudicial to or unfairly discriminatory against a particular creditor, or class of creditors, then a remedy might be available by way of an application to the court for an order to terminate the deed pursuant to s 445D.

37 It was also submitted that there was nothing in the surrounding circumstances, in particular in the administrators' report to creditors, which indicated that the deed was intended to operate in the way for which the defendant contends. However, it appears to me from the supplementary report to creditors made pursuant to s 439A, that what was outlined as the proposal for the deed was that which, in my view, the deed achieved.

38 The outline provided that the deed should bind creditors excluding Secured Creditors. But it also provided for a separate class of Excluded Creditors who were not to be Participating Creditors but were to include "Landlord Creditors under a Continuing Lease excluding any Claims of the Landlord Creditors which relate to unpaid rent or outgoings prior to any period of the Appointment Date." It seems to me that what was there proposed was given effect to by clause 14.9.

39 For these reasons I conclude that the plaintiff's claim for instalments for future rent is a "Claim" within the meaning of the deed from which the defendant is released by virtue of clause 4.6, to which effect is given by ss 444D(1) and 444H.

40 In its originating process the plaintiff sought leave pursuant to s 444E to bring these proceedings to the extent necessary. Because the DOCA has terminated that leave is not necessary. For these reasons I order that the originating process be dismissed.

[Counsel addressed on costs.]

41 I think the careful arguments advanced on behalf of the plaintiff, although unsuccessful, and although admittedly in some respects contrary to authority, were not so unreasonable as to warrant an order for indemnity costs. In particular, the question of s 444D(3), and also the questions of construction of the deed, could not be said to be so wholly without merit as to warrant such an order. I order that the plaintiff pay the defendant’s costs.

42 The exhibits may be returned after 28 days.

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