In the matter of Baseline Constructions Pty Ltd (subject to a deed of company arrangement)

Baseline Constructions Pty Ltd was a company that had entered into a deed of company arrangement with its creditors, including its landlord. The landlord later terminated the lease due to a breach by the company. The deed of company arrangement had included a requirement for the company to continue paying rent, and there was a moratorium preventing creditors from taking action against the company. The landlord sought to challenge the moratorium and seek damages for the breach of the lease. The primary issue before the court was whether the landlord could commence proceedings against the company despite the terms of the deed of company arrangement.

The court found that the landlord was not permitted to commence proceedings against the company due to the terms of the deed of company arrangement, which had been upheld by the decision of Campbell JA in BE Australia WD Pty Ltd v Sutton. The court held that the moratorium in the deed of company arrangement was effective and binding on all creditors, including the landlord, and that the landlord's termination of the lease was in breach of the deed. The court emphasised that the protection provided by the deed of company arrangement was intended to allow the company to restructure its affairs and resolve its financial difficulties without the threat of legal action from its creditors. The court also noted that the landlord had been a party to the deed of company arrangement and had agreed to its terms, including the requirement to continue to accept rent payments from the company.

As a result of the court's decision, the landlord was not permitted to commence proceedings against the company for damages arising from the breach of the lease. The court's decision reinforced the importance of the terms of a deed of company arrangement and the need for all parties to abide by them. The court also highlighted the potential consequences for a creditor who seeks to ignore the terms of a deed of company arrangement and take action against a company in voluntary administration.

The final orders of the court were that the landlord was not permitted to commence proceedings against the company for damages arising from the breach of the lease. The court also noted that the company remained subject to the terms of the deed of company arrangement, and that any further breaches of the lease by the company could result in further legal action being taken by the landlord.