In the matter of Supervac Australia Pty Ltd ACN 050 097 222 Supervac Australia Pty Ltd & Anor v Australasian Memory Pty Ltd In the matter of Australian Gold Pty Ltd ACN 066 196 272 Australian Gold Pty Ltd & Anor v...

[1997] FCA 534

IN THE FEDERAL COURT OF AUSTRALIA )                 
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 3111 of 1997
GENERAL DIVISION                 )

IN THE MATTER OF SUPERVAC AUSTRALIA PTY LIMITED
ACN 050 097 222

SUPERVAC AUSTRALIA PTY LIMITED
  First Applicant

BARRY CHARLES AMOR
  Second Applicant

AUSTRALASIAN MEMORY PTY LIMITED
  Respondent

IN THE FEDERAL COURT OF AUSTRALIA )                 
NEW SOUTH WALES DISTRICT REGISTRY )    No. NG 3115 of 1997
GENERAL DIVISION                 )

IN THE MATTER OF AUSTRALIAN GOLD PTY LIMITED
ACN 066 196 272

AUSTRALIAN GOLD PTY LIMITED
  First Applicant

BARRY CHARLES AMOR
  Second Applicant

AUSTRALASIAN MEMORY PTY LIMITED
  Respondent

CORAM:       WHITLAM J
PLACE:       SYDNEY
DATED:       6 JUNE 1997

REASONS FOR JUDGMENT

WHITLAM J:

Both these applications concern statutory demands served by the same respondent, which was a company under administration. The parties have requested the Court to make an order under O 29 r 2 of the Federal Court Rules for the decision of a common issue in both proceedings. The nature of the question appears from the following declarations sought in paragraphs 2-6 of the application in NG 3111 of 1997.

"2.A declaration that the purported meeting of creditors of the Respondent held on 3 March 1997 and subsequently adjourned to 24 March 1997 ("the Meeting") was invalid and of no effect.

1. A declaration that all resolutions creditors of the Respondent purportedly made at the Meeting are invalid and of no effect.

1. A declaration that the joint liquidators of the Respondent, Steven Nicols and Richard Campbell Brien had no power to give instructions on behalf of the Respondent to issue the Creditor's Statutory Demand for payment of debt dated 5 May 1997 on the grounds that the voluntary administration of the Respondent pursuant to Part 5.3A of the Corporations Law ended pursuant to Section 435C(3)(b) of the Corporations Law on 10 March 1997.

1. A declaration that Mark Addison was not authorised or otherwise empowered to sign or issue the Creditor's Statutory Demand for payment of debt dated 5 May 1997 served on the First Applicant by the Respondent.

1. A declaration that Steven Nicols was not authorised or otherwise empowered to swear the Affidavit under Section 459E of the Corporations Law which accompanied the Creditor's Statutory Demand for payment of debt dated 5 May 1997 served on the First Applicant by the Respondent."

(The declarations sought in NG 3115 of 1997 are identical save for the date of the relevant statutory demand.)

The discrete point of statutory construction in issue may be considered against an undisputed chronology of events which can be briefly outlined. On 18 February 1997 Richard Brien and Steven Nichols were appointed administrators of the respondent under s 436A of the Corporations Law ("the Law"). The first meeting of the respondent's creditors under s 436E of the Law was held on 21 February 1997. By a notice dated 24 February 1997 the administrators of the respondent then purported to convene a meeting of creditors under s 439A of the Law to be held on 3 March 1997. On that day a meeting of creditors was held and was adjourned to 24 March 1997, on which date the creditors purported to resolve under par 439C(c) of the Law that the respondent be wound up.

Section 439A of the Law provides:

"439A(1)The administrator of a company under administration must convene a meeting of the company's creditors within the convening period as fixed by subsection (5) or extended under subsection (6).

(2)The meeting must be held within 5 business days after the end of the convening period.

(3)The administrator must convene the meeting by:

(a)giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and

(b)causing notice of the meeting to be published:

(i)in a national newspaper; or

(ii)in each jurisdiction in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that jurisdiction;

at least 5 business days before the meeting.

(4)The notice given to a creditor under paragraph (3)(a) must be accompanied by a copy of:

(a)a report by the administrator about the company's business, property, affairs and financial circumstances; and

(b)a statement setting out the administrator's opinion about each of the following matters:

(i)whether it would be in the creditors' interests for the company to execute a deed of company arrangement;

(ii)whether it would be in the creditors' interests for the administration to end;

(iii) whether it would be in the creditors'

interests for the company to be wound up;

and his or her reasons for those opinions; and

(c)if a deed of company arrangement is proposed -  a statement setting out details of the proposed deed.

(5)The convening period is:

(a)if the administration begins on a day that is in December, or is less than 28 days before Good Friday - the period of 28 days beginning on that day; or

(b)otherwise - the period of 21 days beginning on the day when the administration begins.

(6)The court may extend the convening period on an application made within the period referred to in paragraph (5)(a) or (b), as the case requires."

It is common ground that the convening period ended on 10 March 1997. The applicants submit that the meeting held on 3 March 1997 was not convened in accordance with subs 439A(2).

The applicants rely on the plain English meaning of the words used. The preposition "within" followed by the specification "5 business days" fixes a period of time, and the phrase "after the end of the convening period" prescribes the day after which such period is to be calculated. On the other hand, the respondent says that subs 439A(2) only fixes an outside limit by which the meeting must be held and that it does not prohibit the meeting being held within the convening period.

I cannot accept the construction contended for by the respondent. It places an impossible strain on the ordinary meaning of the words used. Further, as the applicants submit, such an interpretation would not be consistent with the discharge of an administrator's duties under subs 439A(4). For example, the directors have 7 days to give their report as to affairs under subs 438B(2), and a chargee may have at least 10 business days to enforce a charge under s 441A. It cannot have been intended that a meeting to decide the company's future would be held before such matters had been investigated by an administrator. Yet such could be the case if the only constraint on the holding of the meeting in the convening period was the notice requirement in subs 439A(3).

In each case it seems appropriate to make an order for the separate decision of the question: Was the meeting of the creditors of the respondent held on 3 March 1997 convened in accordance with subs 439A(2) of the Corporations Law? The answer to that question, in my opinion, is: No.

It would seem to follow that the statutory demands must be set aside. The administration of the respondent will have ended on 10 March 1997 by virtue of par 435C(3)(b), and Mr Nicols will not have had authority to make the affidavit referred to in s 459E(3) of the Law.

I certify that this and
the preceding five (5)
pages are a true copy of the
Reasons for Judgment herein of
Justice Whitlam.

Associate:

Date:  6 June 1997

Counsel for Applicants:               B W Rayment QC and M B Duncan

Solicitors for Applicants:            Gillis Delany Brown

Counsel for Respondent:               T J Hancock

Solicitors for Respondent:            Barker Gosling

Date of Hearing:  30 May 1997

Date Judgment Delivered:              6 June 1997