In the Matter of Deeral Aboriginal & Torres Strait Islanders Corporation (Subject to a Deed of Company Arrangement) and Ian David Jessup Deeral Aboriginal & Torres Strait Islanders Corporation v Jessup, Ian David
[1996] FCA 934
•24 OCTOBER 1996
CATCHWORDS
CORPORATIONS LAW - declaration sought under Corporations Law that an Administrator of a corporation subject to a Deed of Company Agreement is not to dispose of certain property - prejudice to Corporation and creditors considered - forthcoming creditors’ meeting also considered
Corporations Law ss 447(A), 447(E)
In the Matter of Deeral Aboriginal and Torres Strait Islanders Corporation (Subject to a Deed of Company Arrangement) and Ian David Jessup
No QG 3023 of 1996
Kiefel J Brisbane 24 October 1996
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
No QG 3023 of 1996
IN THE MATTER OF DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
BETWEEN:
DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Applicant
AND:
IAN DAVID JESSUP
Respondent
JUDGE MAKING ORDER: Kiefel J
DATE OF ORDER: 24 October 1996
WHERE MADE: Brisbane
MINUTES OF ORDERS
THE COURT ORDERS THAT:
The Administrator, Ian David Jessup, is directed not to sell the three residential properties at Stager Road, Clyde Street and Nelson Road, Babinda, until after the meeting of creditors to be held on 30 October 1996, and subject to the creditors’ direction by resolution.
The applicant, Deeral Aboriginal and Torres Strait Islanders Corporation, pay the Administrator’s costs of and incidental to this hearing to be taxed in the event of disagreement.
Note:Settlement and Entry of Orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
No QG 3023 of 1996
IN THE MATTER OF DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
BETWEEN:
DEERAL ABORIGINAL AND TORRES STRAIT ISLANDERS CORPORATION (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
Applicant
AND:
IAN DAVID JESSUP
Respondent
CORAM:Kiefel J
DATE:24 October 1996
PLACE:Brisbane
REASONS FOR JUDGMENT
The Deeral Aboriginal and Torres Strait Islanders Corporation (“the Corporation”) by its Board of Management seeks orders under ss 447(A) or (E) of the Corporations Law, directing the administrator not to sell three house properties until a meeting of creditors is called next Wednesday, 30 October.
Although it was submitted that the arguably wide general powers given to the Court under s 447(A) would suffice, it seems to me that the grounds for any such application would involve the prejudice, if any, to be suffered by the Corporation or its members, and that is a matter to be addressed under sub-section (E).
The Deed of Company Arrangement entered into in May 1996, proposed the payment of a dividend of 60 cents in the dollar by 30 September 1996. At that time, as clause 10.3 shows, the Corporation acknowledged it would pursue a program of asset sales. In fact two houses had apparently already been sold by it, and not all of the properties to be auctioned tomorrow are sought to be retained until next Wednesday. It is recognised, for instance, that the commercial property owned by the Corporation, where previously the Corporation's manufacturing was conducted, should still be sold. It is said, however, that it was, at that time, also thought that substantial funding would be made available by ATSIC and thus reduce the need for asset realisation, but this has not eventuated. The limited funds which have been made available from ATSIC are earmarked for housing and not for repayment of debts.
The administrator was required, by the Deed, to call a meeting of creditors if he came to the view that the dividend payment was not likely to be achieved. He did so on about 3 October, calling the meeting for 30 October. At about the same time however he pursued the asset realisation of the three properties in question. It is not suggested that he is acting or proposes to act in any way unlawfully.
As to the question of prejudice to the Corporation or its members, there was some material from the administrator rebutting the suggestion of prejudice to those members who are tenants of the houses in question, on the basis that they knew of the impending sales when they took up tenancy. I put this to one side for the moment. There has not been opportunity to meet it. The interests of the Corporation itself are
said to be in the retention of its houses, given that its principal object is the provision of housing to the Aboriginal community in the Babinda area.
I accept for the moment that there may be some such prejudice in the loss of housing or at least the cost of replacement of it, although it may be that this is not the real motivation for this application.
What this application and the making of any orders really comes down to is the utility of holding up any sale until the creditors' meeting, when it is likely that a decision will be made upon an appropriate course of action. It is hoped that the creditors will agree to postpone further sales until some representations, which have recently been made to relevant Ministers at State and Federal level, are considered and determined. It can, on the material, be said to be but a hope that something will eventuate. On the other hand there is no apparent prejudice to anyone else. There is no suggestion of creditors demanding immediate payment. If they decide that is what they want at the meeting, they can resolve to force further sales. The expenses which will be lost, if that part of the auction tomorrow relating to the three properties does not proceed, can be met by the Corporation and will not result in any shortfall to creditors. It is accepted by both sides that the Corporation will have a surplus of assets over liabilities, even in the event of all assets being sold; and it remains the most likely case that the Corporation will, in some form continue. There is likely to be a need to sell further assets at some time in the future, in any event, to meet creditors, and any sales of these particular three properties can be joined with those sales in the event that no external funding is forthcoming. Whilst I have considerable doubt about the reality of any such funding being provided, it seems to me, in light of
the effects upon the Corporation but no one else, that it should be left to the meeting of creditors to decide what course is appropriate.
I will therefore order that the administrator be directed not to sell the three residential properties at Stager Road, Clyde Street, and Nelson Road, Babinda, until after the meeting of creditors to be held on 30 October 1996, and subject to the creditors' direction by resolution. The administrator ought, however, to be protected in his costs of this application, and I will therefore order that the applicant Corporation pay the administrator's costs of and incidental to this hearing to be taxed in the event of disagreement.
I certify that this and the preceding three pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel.
Associate
Date:24 October 1996
Counsel for the applicant: Mr P R Dutney
Solicitors for the applicant: Morrow & Associates
Counsel for the respondent: Mr G W O’Grady
Solicitors for the respondent: McCullough Robertson
Date of Hearing: 24 October 1996
Place of Hearing: Brisbane
Place of Judgment: Brisbane
Date of Judgment: 24 October 1996
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