In the Matter of the Pindan Group [No 7] - [2024] WASC 371

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   IN THE MATTER OF THE PINDAN GROUP [No 7] [2024] WASC 371
CORAM:   STRK J
HEARD:   30 NOVEMBER 2022 & ON THE PAPERS FILED
DELIVERED          :   10 OCTOBER 2024
FILE NO/S:   COR 102 of 2021
BETWEEN:   VINCENT ANTHONY SMITH, COLBY RHYS O'BRIEN and SAMUEL JOHN FREEMAN, as joint and several deed administrators of PINDAN GROUP PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT), PINDAN CONTRACTING PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT), and as joint and several liquidators of PINDAN CAPITAL PTY LTD (IN LIQUIDATION), PINDAN CAPITAL INVESTMENTS PTY LTD (IN LIQUIDATION), PINDAN DEVELOPMENTS PTY LTD (IN LIQUIDATION), PINDAN CONSTRUCTIONS PTY LTD (IN LIQUIDATION), PINDAN PROJECTS (WA) PTY LTD (IN LIQUIDATION), PINDAN REALTY PTY LTD (IN LIQUIDATION), PINDAN HOMES PTY LTD (IN LIQUIDATION), PINDAN CONSTRUCTIONS (NSW) PTY LTD (IN LIQUIDATION) AND MOSELLE HOLDINGS PTY LTD (IN LIQUIDATION)
Plaintiffs
AND
ANTHONY CHARLES GERBER
First Defendant
SCOTT DAVISON
Second Defendant
OXLEY HOLDINGS LIMITED
Third Defendant
OXLEY SPARKLE PTE LTD
Fourth Defendant

Catchwords:

Corporations - External administration - Application by joint and several deed administrators and liquidators for an order pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) - Orders in relation to the external administration of a company - Determination of a question arising in the external administration of a company - Deed of release entered into for the purpose of giving effect to the deeds of company arrangement - Condition precedent of the deeds of company arrangement - Whether the deed of release recorded the common intention of the parties - Whether the evidence established that negotiations had resulted in an agreed common intention - Application to rectify a deed of release entered into by the external administrators (among others) - Counterparties to deed of release joined as defendants - Determination of substantive rights - Defendants on notice but did not seek to be heard on the application - Exercise of discretion - Whether exercise of power was just and whether sufficient utility to the external administration had been demonstrated

Legislation:

Corporations Act 2001 (Cth) sch 2 (Insolvency Practice Schedule (Corporations)) s 90-15

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiffs	:	J Hynes
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance

Solicitors:

Plaintiffs	:	Squire Patton Boggs
First Defendant	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance

Cases referred to in decision:

Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd [1994] FCA 1031; (1994) 49 FCR 334
Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219
CPG01 Pty Ltd v Kourinos [2010] WASC 92
Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209
Ex parte Frigger [2020] WASC 365
Frigger v Mervyn Jonathan Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347
GDK Projects Pty Ltd, Re Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq) [2018] FCA 541
Glenfyne International Holdings Ltd v Glenfyne Farms International AU Pty Ltd [2019] NSWCA 304; (2019) 101 NSWLR 358
Hill, in the matter of Autocare Services Pty Ltd (administrators appointed) [2021] FCA 167
Hobart International Airport Pty Ltd v Clarence City Council Australia Pacific Airports (Launceston) Pty Ltd v Northern Midlands Council [2022] HCA 5; (2022) 276 CLR 519
In the matter of Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; (2018) 125 ACSR 335
In the matter of HIH Insurance Limited (in liquidation) ACN 008 636 575; In the matter of FAI General Insurance Company Ltd (in liquidation and subject to a scheme of arrangement) ACN 000 327 855; In the matter of HIH Casualty and General Insurance Limited (in liquidation and subject to schemes of arrangement) ACN 008 482 291 [2018] NSWSC 1886
In the Matter of ICS Real Estate Pty Ltd (in liq) [2014] NSWSC 479
In the matter of the Pindan Group [No 6] [2023] WASC 408
Litigation Capital Partners LLP Pte Ltd (Registration No 200922518M) v ACN 117 641 004 Pty Ltd (in liquidation) (formerly known as Vale Cash Management Fund Pty Ltd [2021] WASC 161
Macks v Viscariello [2017] SASCFC 172; (2017) 130 SASR 1
Meadow Springs Fairway Resort Ltd (in liq) v Balance Securities Ltd [2007] FCA 1443
Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) [2021] FCA 644
Oswal v Yara Australia Pty Ltd (No 3) (2011) 86 ACSR 1
Perpetual Trustee Co Ltd v Burniston [No 2] [2012] WASC 383
Re Australian Property Custodian Holdings Ltd (in liq) [2021] VSC 51
Re Broens Pty Ltd (in liq) [2018] NSWSC 1747
Re Halifax Investment Services Pty Ltd (in liq) (No 7) [2020] FCA 248
Re Halifax Investment Services Pty Ltd (in liq) (No 8) [2020] FCA 533; (2020) 144 ACSR 292
Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556
Re Pindan Group Pty Ltd (administrators appointed) [2021] WASC 347
Re Pindan Group Pty Ltd (administrators appointed) [No 2] [2021] WASC 358
Re Pindan Group Pty Ltd (administrators appointed) [No 3] [2021] WASC 480
Re Pindan Group Pty Ltd (administrators appointed) [No 4] [2022] WASC 143
Re Pindan Group Pty Ltd (administrators appointed) [No 5] [2022] WASC 469
Re Union Standard International Group Pty Ltd (No 2) [2020] FCA 1111
Re Willmott Forests Ltd (No 2) [2012] VSC 125; (2012) 88 ACSR 18
Red Hill Iron v API Management Pty Ltd [2012] WASC 323
Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603
Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85
Strawbridge (administrator), in the matter of CBCH Group Pty Ltd (administrators appointed) (No 2) [2020] FCA 472
Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd (2014) 48 WAR 264
Wavemaster International Pty Ltd (in liq) v JR Marine Systems Pte Ltd [2009] WASC 203

STRK J:

Introduction

Samuel John Freeman, Colby Rhys O'Brien and Vincent Anthony Smith are the joint and several deed administrators of Pindan Group Pty Ltd (subject to deed of company arrangement), and Pindan Contracting Pty Ltd (subject to deed of company arrangement). Messrs Freeman, O'Brien and Smith are also the joint and several liquidators of the nine entities listed in sch A to these reasons (together, the Pindan liquidation entities). In these reasons, I refer to Messrs Freeman, O'Brien and Smith as the external administrators.
Pindan Group, Pindan Contracting and the Pindan liquidation entities are a part of the Pindan corporate group, a primarily Western Australian property and construction group. Oxley Sparkle Pte Ltd is the holding entity of various Pindan entities, and Oxley Holdings Ltd holds all of the shares in Oxley Sparkle and is the ultimate parent company of each entity comprising the Pindan corporate group.
On 9 June 2021 the external administrators caused an application pursuant to the Corporations Act 2001 (Cth) to be made to this court by the filing of an originating process. Messrs Freeman, O'Brien and Smith were named as plaintiffs to the proceeding known as COR 102 of 2021 in their capacity as the joint and several administrators of three companies, which included Pindan Group and Pindan Contracting. By the originating process, they sought that the time to convene a second meeting of the creditors of each of the companies be extended.[1]
[1] See Re Pindan Group Pty Ltd (administrators appointed) [2021] WASC 347.
Since July 2021 the external administrators have sought various forms of relief and directions from the court concerning the external administration of the Pindan corporate group by applications made in the proceeding known as COR 102 of 2021 by interlocutory processes (whether or not final or interlocutory relief was claimed).[2] From time to time, pursuant to the Rules of the Supreme Court 1971 (WA) O 18 r 4, various Pindan group companies have been joined as plaintiffs to the proceeding and persons and companies against whom final or interlocutory relief was claimed were joined as defendants.
[2] As permitted by the Supreme Court (Corporations) (WA) Rules 2004 (WA) r 2.2. For example, see the orders made for the reasons published Re Pindan Group Pty Ltd (administrators appointed) [No 2] [2021] WASC 358; Re Pindan Group Pty Ltd (administrators appointed) [No 3] [2021] WASC 480; Re Pindan Group Pty Ltd (administrators appointed) [No 4] [2022] WASC 143; Re Pindan Group Pty Ltd (administrators appointed) [No 5] [2022] WASC 469; and In the matter of the Pindan Group [No 6] [2023] WASC 408.
These reasons concern the application made by the external administrators in their capacity as the deed administrators of Pindan Group and Pindan Contracting, and as the joint and several liquidators of the Pindan liquidation entities by an interlocutory process filed in the proceeding known as COR 102 of 2021. In summary, by the application the external administrators sought the rectification of a deed of release dated 27 April 2022 that was entered into by Oxley Holdings Limited; Oxley Sparkle Pte Ltd; Anthony Charles Gerber; Scott Davison; Pindan Group; Pindan Contracting; Messrs Freeman, O'Brien and Smith in their capacity as the joint and several deed administrators of Pindan Group and Pindan Contracting and as the joint and several liquidators of the Pindan liquidation entities; and each of the Pindan liquidation entities (Deed of Release).
After hearing counsel for the applicants on 30 November 2022, a number of the ancillary orders pressed in the interlocutory process were made.
First, it was ordered that Mr Gerber be joined to the proceeding as the first defendant; Mr Davison be joined to the proceeding as the second defendant; Oxley Holdings be joined to the proceeding as the third defendant; and Oxley Sparkle be joined to the proceeding as the fourth defendant.
Secondly, by the interlocutory process an order restricting access to certain documents and information pursuant to the Rules of the Supreme Court O 67B r 5(1)(b) was sought on the basis that the documents contained commercially sensitive and confidential information. After hearing counsel, I was satisfied that the documents the subject of the restriction application contained commercially sensitive confidential information, and that it was appropriate pursuant to the Rules of the Supreme Court O 67B r 5 to restrict access to:
(a)the affidavit titled 'Confidential Affidavit of Samuel John Freeman' sworn 7 November 2022, together with its confidential annexures;
(b) the affidavit titled 'Confidential Affidavit of Masiullah Zaki' sworn 18 November 2022, together with its confidential annexures;
(c) the amounts recorded in proposed order 3 and proposed order 4 of the interlocutory process; and
(d) the submissions filed in support of the application.
Thirdly, it was ordered that any person who could demonstrate sufficient interest to modify or discharge the orders had liberty to apply to modify or discharge the orders upon notice of two business days to the external administrators' solicitors and to the court. Finally, the application was otherwise be adjourned to a date to be fixed.
The substantive part of the application was in the end not relisted, but determined on the papers filed, including the applicants' supplementary outline. Set out below are my reasons for granting the application.

Evidence

Four affidavits were filed and relied upon in support of the application.
The first was the affidavit sworn by Mr Freeman on 7 November 2022, to which he attached documents marked SJF1 to SJF20.
The second was the affidavit titled 'Confidential Affidavit of Samuel John Freeman', which was also sworn by Mr Freeman on 7 November 2022 and to which Mr Freeman attached documents marked Confidential SJF1 to Confidential SJF26.
The third was the affidavit titled 'Confidential Affidavit of Masiullah Zaki', which was sworn by Mr Zaki on 18 November 2022 and to which Mr Zaki attached documents marked Confidential MZ1 to Confidential MZ4. Mr Zaki is a partner of Squire Patton Boggs, which firm acts for the external administrators in this application.
The fourth was the affidavit of Mr Zaki sworn on 29 November 2022, to which Mr Zaki attached documents marked MZ5 to MZ8.
In support of the application a written outline of submissions and supplementary submissions were also relied upon.

Context in which the application was made

Messrs Freeman, O'Brien and Smith were appointed the joint and several administrators of Pindan Group and Pindan Contracting on 18 May 2021, and the joint and several liquidators of the Pindan liquidation entities on the same day.
As at the date of their appointment as joint and several administrators to Pindan Group, the directors of Pindan Group were Chiat Kwong Ching, See Ching Low, Scott Davison and Anthony Gerber; and the shareholder of Pindan Group was Oxley Sparkle. As at the date of their appointment as joint and several administrators to Pindan Contracting, the directors of Pindan Contracting were Scott Davison, Anthony Gerber and Jacobus Van Staden; and the shareholders of Pindan Contracting were Pindan Build Pty Ltd and Anthony Gerber.[3]
[3] Affidavit of SJ Freeman sworn 7 November 2022, SJF11 (page 801), SJF12 (page 936). This information is repeated in various attachments to Mr Freeman's affidavit, including SJF2 to SJF10 (inclusive).
In the context of the administration of Pindan Group and Pindan Contracting, the external administrators issued a second report to the creditors of each of Pindan Group and Pindan Contracting on 27 October 2021. Each report contained a proposal for a deed of company arrangement (DOCA) in respect of each of Pindan Group and Pindan Contracting. The proponent of each DOCA proposal was Oxley Sparkle.[4]
[4] Affidavit of SJ Freeman sworn 7 November 2022 pars 12 - 13, SJF11 (page 858), SJF12 (page 996).
A second meeting of Pindan Group and Pindan Contracting creditors was scheduled to take place on 4 November 2021. The day prior to the scheduled second meeting, a revised DOCA proposal was received from Oxley Sparkle. Given the timing of receipt, the material changes proposed, and the complexities and interconnectedness of the various external administrations, the external administrators formed the view that it was necessary to adjourn the second meetings. At the second meeting convened on 4 November 2021, it was resolved to adjourn each for a maximum period of 45 business days pursuant to r 75‑140(3) of the Insolvency Practice Rules (Corporations) 2016.[5]

Further revised DOCA proposals

[5] Affidavit of SJ Freeman sworn 7 November 2022 par 14.

On 22 November 2021 Oxley Sparkle put forward a further revised DOCA proposal for each of Pindan Group and Pindan Contracting.[6]
[6] Affidavit of SJ Freeman sworn 7 November 2022, SJF13 (page 1063), SJF14 (page 1116).
The second meeting of the creditors of Pindan Group and Pindan Contracting were scheduled to resume on 3 December 2021, and the notices of resumed meeting were issued on about 26 November 2021. On 25 November 2021, in anticipation for the resumed meeting, supplementary reports were issued to creditors pursuant to r 75‑225(3) of the Insolvency Practice Rules (Corporations) 2016, which provided creditors with details of the further revised DOCA proposals.[7]
[7] Affidavit of SJ Freeman sworn 7 November 2022 pars 15 - 16, SJF13, SJF14.
In broad terms, the further revised DOCA proposals contemplated the Pindan liquidation entities providing releases to Oxley Holdings, Oxley Sparkle and its directors and shareholders in respect of all claims the liquidation entities may have had against those parties. Those claims were to include any claim arising out of a letter of support issued by Oxley Holdings dated 22 October 2020, insolvent trading and/or breach of directors' duties (together, the Releases).[8]
[8] Affidavit of SJ Freeman sworn 7 November 2022 par 20, SJF13 (page 1060), SJF14 (page 1128), SJF15 (page 1160).
Further, the further revised DOCA proposals contained a condition precedent that required Messrs Freeman, O'Brien and Smith in their capacity as the joint and several administrators of Pindan Group and Pindan Contracting and as liquidators of the Pindan liquidation entities to compromise any claims for employee entitlements of Mr Gerber and Mr Davison (the Directors) against Pindan Group, Pindan Contracting, or the Pindan liquidation entities on terms acceptable to Oxley Sparkle (the Director Compromise).[9]
[9] Affidavit of SJ Freeman sworn 7 November 2022 par 21.
Under the terms of the further revised DOCA proposal for Pindan Group,[10] in return for the Releases, Oxley Sparkle agreed to contribute $1.5 million to the Pindan liquidation entities, to be allocated as follows: $25,000 to each of the liquidation entities; and the remaining balance allocated on a proportionate basis with reference to total priority (employee) claims. Additionally, the Pindan Group DOCA proposal included:
(a) payment of $150,000 to the external administrators to assist with meeting their costs incurred in their capacity as liquidators of the liquidation entities;
(b) an indemnity of up to $350,000 for further reasonable costs of the liquidators to be incurred in drafting and implementing the DOCAs, seeking court approval for provision of the Releases and the satisfaction of the conditions precedent under the DOCAs. The indemnity was also to be available to the external administrator in their capacity as the deed administrators of Pindan Group and Pindan Contracting; and
(c) a loan pursuant to s 560 of the Corporations Act capped at $1.2 million to pay any priority entitlements of employees of the liquidation entities that had not been paid by the Attorney‑General's Department under the Fair Entitlements Guarantee Scheme (FEG). In the event completion under the DOCAs occurred and the releases were provided, it was contemplated that the proponent of the DOCAs (that is, Oxley Sparkle) would waive repayment of the loan.
[10] Affidavit of SJ Freeman sworn 7 November 2022 par 20, SJF13 (pages 1063, 1069), SJF14 (pages 1116, 1122).
Although the further revised DOCA proposals were not supported by the external administrators in their capacity as the administrators of Pindan Group and Pindan Contracting, at the reconvened second meetings, creditors of Pindan Group and Pindan Contracting each voted to accept the further revised DOCA proposals.[11]

Execution of the DOCAs

[11] Affidavit of SJ Freeman sworn 7 November 2022 par 17, SJF14 (pages 1141 - 1142).

By an interlocutory process filed on 16 December 2021 in the proceeding known as COR 102 of 2021, the external administrators sought orders on an urgent basis. The purpose of that application was to give practical effect to a creditors' resolution for Pindan Group to execute a DOCA giving effect to the further revised proposal, and to remedy an error made by them. That relief was granted on 16 December 2021: Re Pindan Group Pty Ltd (Administrators Appointed) [No 3].
On 23 December 2021 Messrs Freeman, O'Brien and Smith entered into the further revised DOCAs for each of Pindan Group and Pindan Contracting, and became the joint and several deed administrators of Pindan Group and Pindan Contracting.[12]

Analysis of the consideration offered to the liquidation entities

[12] Affidavit of SJ Freeman sworn 7 November 2022 pars 18 - 19.

As noted above, the DOCAs contemplated that the Pindan liquidation entities would provide releases to Oxley Holdings, Oxley Sparkle and its directors and shareholders in respect of all claims the liquidation entities may have had against those parties (described above as the Releases); and that there would be a compromise of any claims for employee entitlements of Mr Gerber and Mr Davison against Pindan Group, Pindan Contracting, or the Pindan liquidation entities on terms acceptable to Oxley Sparkle (described above as the Director Compromise).

On 8 February 2022 the external administrators wrote to Mr Gerber and to Mr Davison. In each letter it was noted that the DOCAs had been entered into and that a condition precedent to the completion of the DOCAs was the that Director Compromise would be agreed. In the letter addressed to Mr Gerber, the calculation of his total priority entitlement was disclosed, and he was invited to raise any objection or concern in relation to the calculated amounts. Similarly, in the letter addressed to Mr Davison, the calculation of his total priority entitlement was disclosed, and he was invited to raise any objection or concern to the calculated amounts. The letters record that at that time the external administrators were working with Oxley Sparkle (as proponent) towards satisfaction of the conditions precedent (which included a compromise of the amounts owed to the Directors and the Releases from the 'Pindan Group subsidiaries').
On 9 February 2022 the external administrators again wrote to Mr Davison and disclosed the calculation of a corrected total priority entitlement sum.
While the DOCAs required the grant of the Releases, including releases by the Pindan liquidation entities, neither the Pindan liquidation entities nor their creditors were bound by the terms of the DOCAs.
The analysis and modelling undertaken of the terms of the DOCAs that had been approved by the creditors of Pindan Group and Pindan Contracting indicated that the terms fell short of an outcome that would be sufficient to satisfy the creditors' interests as a whole and across the Pindan entities. As the external administrators later reported to the creditors of Pindan Group and Pindan Contracting on 29 March 2022, their preliminary analysis of the consideration offered to the Pindan liquidation entities in exchange for the Releases indicated that priority (employee) creditors would likely receive the material return on their outstanding claims, subject to the final adjudication of priority claims, and ordinary unsecured creditors would not receive a return.[13]
[13] Affidavit of SJ Freeman sworn 7 November 2022, SJF15 (page 1160).
As Oxley Sparkle's proposal (recorded in the DOCAs) was not expected to provide a return to any ordinary unsecured creditors of the Pindan liquidation entities, the external administrators in their capacity as the joint and several liquidators of the Pindan liquidation entities formed the view that the provision of the Releases was not in the best interests of all creditors.[14]

Further improved terms, negotiations and the April 2022 application

[14] Affidavit of SJ Freeman sworn 7 November 2022, SJF15 (page 1161).

In circumstances where the Releases required by the DOCAs were not forthcoming from the Pindan liquidation entities, further negotiations took place as between all stakeholders. A further improved proposal was received from Oxley Sparkle on about 23 February 2022, and then, following further negotiations intended to further enhance the return to creditors of the Pindan liquidation entities, the terms of the DOCAs were again improved.[15]
[15] Affidavit of SJ Freeman sworn 7 November 2022, SJF15 (page 1161). The further improved terms were summarised in Re Pindan Group Pty Ltd (administrators appointed) [No 4] [33] - [36], and the estimated outcome was there summarised at [37] - [41].
The negotiations with all stakeholders included Messrs Gerber and Davison. By a communication emailed from the external administrators' legal representatives to Mr Gerber and Mr Davison on 2 March 2022, the following information was relayed:
As discussed with Scott, Oxley has offered to contribute some further monies in order to try and secure the release of claims required from the Pindan Subsidiaries. That offer is conditional on various things occurring including your irrevocable agreement, in writing, that in respect of your employee entitlements:
1. your priority claims against [Pindan Contracting], [Pindan Group] and the Pindan Subsidiaries will be limited to 25% of the aggregate amount that would otherwise have had priority; and
2. the balance of your claims will be treated as unsecured against the relevant entities.
I understand that you are both in principle agreeable to the above subject to receiving the equal benefit of a release of any claims against you from the Pindan or Oxley entities.
Subject to an agreement being reached, the intention is that a release will be documented by way of document which we will share with you in due course. Also, the administrators are open minded about considering the above compromise being directed to particular elements of your claims (i.e. annual leave and wages first then balance to redundancies).
We have to revert to Oxley's lawyers by Friday. As such, could you please consider the above and confirm your position by return email tomorrow (03/04).
If the conditions to Oxley's proposed further funding are not met and Oxley does not waive the requirement to provide releases from the Pindan Subsidiaries, the DoCAs will fail and the entities currently in administration will go into liquidation.
On 3 March 2022 Messrs Gerber and Davison separately responded to the email communication of 2 March 2022. Mr Gerber's response included the following:
I herewith confirm my formal acceptance of the proposal below. … PS: I would prefer all funds payable to me to be paid in the order of redundancy first and then if any balance to PILN, then AL and lastly wages.
Mr Davison responded as follows:
I herewith confirm my formal acceptance to the proposal and that the funds are to be paid as redundancy.
Following in-principle agreement being reached with respect to a further improved proposal, the external administrators in their capacity as the joint and several liquidators of the Pindan liquidation entities formed the view that it was in the interests of creditors (as a whole) to provide the Releases sought by Oxley Sparkle.[16]
[16] Affidavit of SJ Freeman sworn 7 November 2022, SJF15 (page 1161). The further improved terms were summarised in Re Pindan Group Pty Ltd (administrators appointed) [No 4] [33] - [36], and the estimated outcome was there summarised at [37] - [41].
In the update report issued to creditors of the Pindan liquidation entities on 29 March 2022, creditors were informed that in order to further enhance the return to them, additional discussions had been held with Oxley Sparkle and its representatives, as well as third parties, which successfully culminated in the following positive developments (which formed part of an in-principle agreement reached in relation to the provision of the Releases): [17]
(a)Oxley Sparkle and Oxley Holdings conditionally agreed that they would not prove in respect to any claim they may have against any of the Pindan liquidation entities. It was noted that this would reduce the admissible claims in the liquidations of Pindan Constructions Pty Ltd, Pindan Projects WA Pty Ltd, Pindan Homes Pty Ltd, Pindan Constructions (NSW) Pty Ltd and Moselle Holdings Pty Ltd (all Pindan liquidation entities), and would thereby improve the return to creditors of these entities;
(b)if the Releases were provided, Oxley Sparkle would waive the right to repayment of funds advanced to employees under the loan made pursuant to s 560 of the Corporations Act, which loan would otherwise rank ahead of the claims of unsecured creditors;
(c)the directors (Mr Gerber and Mr Davison) had agreed to compromise their priority claims, with their priority claims to be limited to 25% of their respective aggregate priority amount. It was also noted that these claims resided in Pindan Group only, and this compromise would enhance the return to unsecured creditors of Pindan Group;
(d)a further contribution of $500,000 would be made, $300,000 of which would be directed to Pindan Capital Pty Ltd, and $200,000 to Pindan Projects WA Pty Ltd (both Pindan liquidation entities); and
(e)negotiations with various insurers which, subject to the execution of documentation, would reduce the admissible claims of those insurers by about $14.5 million across various Pindan liquidation entities.
[17] Re Pindan Group Pty Ltd (administrators appointed) [No 4] [36].
By an update report issued to creditors of Pindan Group and Pindan Contracting on 29 March 2022, creditors were informed of the improvements made to the terms of the offer by Oxley Sparkle, and that an in‑principle agreement had been reached regarding the provision of the Releases, subject to court approval.[18]
[18] Affidavit of SJ Freeman sworn 7 November 2022, SJF15 (page 1161), as was also recorded in Re Pindan Group Pty Ltd (administrators appointed) [No 4] [45].
As to the Director Compromise referred to at [24] and [40(c)] above, in his confidential affidavit, Mr Freeman gave an account on oath of the communications that had passed from February 2022 in relation to the satisfaction of the condition precedent to the DOCAs which required the compromise of Mr Gerber and Mr Davison's employee entitlements on terms acceptable to Oxley Sparkle, including those that passed between the joint and several deed administrators of Pindan Group and Pindan Contracting and Mr Gerber and Mr Davison. I note that Mr Gerber and Mr Davison in writing on 3 March 2022 confirmed that they agreed to a proposal by which their priority claims against Pindan Group, Pindan Contracting and the Pindan liquidation entities would be limited to 25% of the aggregate amount with respect to which each would otherwise have a priority claim; and the balance of their claims would be treated as unsecured as against the relevant entities (see [36] ‑ [38] above).
By an interlocutory process filed on 8 April 2022, the external administrators sought relief in the form of an order pursuant to s 90‑15 of the Insolvency Practice Schedule (Corporations) concerning their decision to provide releases in respect of potential claims that may be available to Pindan Group, Pindan Contracting and the Pindan liquidation entities in consideration for receiving payments under the DOCAs.[19]
[19] Affidavit of SJ Freeman sworn 7 November 2022 par 23.
By that interlocutory process, among other things, the external administrators sought an order that they would be justified in entering into and effectuating a deed in the same or substantially the same form as set out in the proposed Conditions Precedent Compliance Deed, a copy of which was before the court for the purposes of that application. The proposed Conditions Precedent Compliance Deed contemplated that the Deed of Release would be reproduced at sch 2 to that deed. A copy of the proposed Deed of Release was also before the court for the purposes of that application.
After considering all of the evidence and upon hearing counsel, I was satisfied that there was a proper basis to conclude that the external administrators would be justified in providing releases substantially in the form documented in the Deed of Release and the Deed Poll of Release, and entering into and effectuating a deed in substantially the same terms as the proposed Conditions Precedent Compliance Deed, and that the grant of relief in the form sought was appropriate: Re Pindan Group Pty Ltd (administrators appointed) [No 4]. The orders made on 13 April 2022 were reproduced at sch B to the published reasons for decision.
By order 3 of the orders made on 13 April 2022, the external administrators as joint and several deed administrators of Pindan Group and Pindan Contracting and as joint and several liquidators of the Pindan liquidation entities were not to enter into, or give effect to, any of the deeds the subject of the order (referred to at [45] above), before 22 April 2022. It was also ordered that the external administrators were to provide notice of the orders made to creditors of Pindan Group, Pindan Contracting and the Pindan liquidation entities, and liberty to apply to modify or discharge the orders was granted.
Creditors of Pindan Group, Pindan Contracting and the Pindan liquidation entities were advised of the outcome of the application by notice dated 14 April 2022, and were given notice of the orders made. A review of the court's records reveal that no application was made to modify or discharge the orders made on 13 April 2022.
While Mr Gerber and Mr Davison were creditors of Pindan Group (and were to be given notice of the orders made), they were not parties to the application made to the court in April 2022. While the Deed of Release had been before the court in April 2022, the issue which gave rise to the need to bring this application was not then identified by the external administrators.

The amounts recorded in the Deed of Release

The Director Compromise referred to at [24] and [40(c)] above was documented in the Deed of Release made on 27 April 2022. In the Deed of Release, the clause dealing with the Director Compromise was in the following terms:[20]
[20] In accordance with the restriction orders that were made (referred to at [8] above), the amounts recorded in cl 3(b)(i)(A) and (ii)(A) have been redacted.
3 Compromise of Priority Claims
(a) The compromise under this clause 3 shall become effective on the Effective Date.
(b) The Pindan Directors agree that their Priority Claims shall be limited to the following amounts, and, that for the purposes of distributions to be made under sections 556, 560 or 561 of the Act only, they waive the balance of their claims:
(i) Mr Anthony Gerber:
(A) $ [Redacted], on account of and in the order of payment of first redundancy, then payment in lieu of notice, then leave entitlements and lastly wages as compromised; and
(ii) Mr Scott Davison:
(A) $ [Redacted], on account of and in the order of payment of first redundancy, then payment in lieu of notice, then leave entitlements and lastly wages as compromised.
(c) The Administrators agree to admit the Pindan Directors' Priority Claims in the amounts specified at (b) above.
(d) Notwithstanding any other provision of this Deed, the Pindan Directors shall be entitled to prove for the balance of their claims for employee entitlements against [Pindan Group], [Pindan Contracting] or the Pindan Subsidiaries as unsecured creditors, and acknowledge that the balance of those claims shall prove without priority and shall rank equally with unsecured debts.
In the Deed of Release, the term 'Priority Claims' was defined to mean 'a Claim against [Pindan Group], [Pindan Capital] or the Pindan Subsidiaries that in the winding up of that entity would be required to be paid in priority to all other unsecured debts or Claims in accordance with sections 556, 560 or 561 of the Act, with the winding up taken to have begun on the Appointment Date.'
As a matter of arithmetic, the amounts recorded in cl 3(b)(i)(A) and (ii)(A) of the Deed of Release were equal to 75% of Mr Gerber and Mr Davison's respective aggregate priority entitlements as had been communicated to them on 8 and 9 February 2022 (referred to at [30] and [31] above).
On or about 6 May 2022 payment of amounts which reflected 25% of the aggregate priority amounts payable to each of Mr Gerber and Mr Davison were paid to each of them.
Mr Freeman deposed that shortly after the payments were made, Mr Gerber and Mr Davison separately queried the amounts that they had received, and it was by those queries that it came to Mr Freeman's attention that cl 3(b)(i)(A) and (ii)(A) of the Deed of Release recorded incorrect amounts. The communications received from Mr Gerber and Mr Davison were in substantively identical terms. Both confirmed receipt of an amount and stated as follows:
… the amount received is incorrect and does not reflect the final settlement amount as agreed in the Deed of Release as executed by all parties on 27 April 2022 (copy of Deed of Release hereto attached for your reference),
The correct settlement amount payable to myself, as agreed in clause 3 of the Deed of Release, is $ [Redacted]. …
Please immediately rectify the above underpayment ($ [Redacted]) to ensure compliance with the Deed of Release. …
Mr Freeman also deposed to the circumstances in which the Deed of Release was drafted; and to the basis for his belief that the recording of the incorrect amounts in cl 3(b)(i)(A) and (ii)(A) was an honest mistake made by a member of Mr Freeman's team who worked under Mr Freeman's supervision and reported to Mr Freeman. He further deposed that he was advised by his team member and believed that the error was made in part due to a misinterpretation of the wording made in time critical circumstances.
After receiving the communications from Mr Gerber and Mr Davison referred to above, the external administrators sought to engage with them in relation to this issue. Mr Gerber and Mr Davison were invited to execute a deed of variation to the Deed of Release. They declined to do so, and Mr Freeman deposed to his understanding of the basis upon which Mr Gerber and Mr Davison had asserted that they were entitled to recover the higher amounts that were recorded in the Deed of Release.
In this regard, Mr Freeman deposed that it had been suggested that the increased entitlement amounts were on account of the further assurances provided for under cl 6 of the Deed of Release, which clause is here reproduced:
6Further Assurances
At the request of Oxley Holdings or the Administrators, the Pindan Directors agree to:
(a) cooperate with Oxley Holdings and the Administrators, including by providing all requested documents to Oxley Holdings and the Administrators; and
(b) execute any document that Oxley Holdings and the Administrators may require from time to time to give effect to the releases in clause 4.1,
with respect to any matters in relation to [Pindan Group], [Pindan Contracting] or the Pindan Subsidiaries, including but not limited to the Mount Bruce Mining Claim, Rio Tinto Claim and Pindan Pty Ltd Claim.
By a notice dated 7 November 2022, the creditors of Pindan Group and Pindan Contracting were informed that:
(a)an issue had arisen as a result of the amounts recorded in the Deed of Release, relating to the Director Compromise;
(b)the amounts that were to be compromised had been inadvertently recorded in the Deed of Release on an inverse basis (that is, Deed of Release had recorded that Mr Gerber and Mr Davison's priority claims would be compromised and limited to an amount which was 75% of their respective aggregate priority amounts, rather than 25% of their aggregate priority amounts);
(c)the issue had resulted in the need to make this application to the court to rectify the Deed of Release so as to correctly record the compromise amount; and
(d)there had been conferral with the Directors and attempts had been made to resolve the issue.[21]
[21] Affidavit of SJ Freeman sworn 7 November 2022 par 30, SJF20.

The form of relief sought

In summary, the external administrators contend that:
(a)in February and March 2022 the external administrators engaged in negotiations with Mr Gerber and Mr Davison in relation to the Director Compromise;
(b)those negotiations resulted in an agreed common intention as to the Director Compromise - namely that the claims of each of Mr Gerber and Mr Davison would be limited to 25% of the aggregate amount that would otherwise have had priority;
(c)the Deed of Release as drafted and executed did not reflect the common intention of the external administrators, Oxley Holdings, Oxley Sparkle, Mr Gerber or Mr Davison in relation to the Director Compromise; and
(d)by an inadvertent mistake, the compromised amounts appearing in the Deed of Release for each director were calculated as 75% of the aggregate amount that would otherwise have had priority, instead of 25%.
Reproduced below is the form of orders sought to rectify the Deed of Release. In accordance with the restriction orders that were made (referred to at [8] above), the amounts recorded in proposed order 3 and proposed order 4 of the interlocutory process filed 7 November 2022 have below been redacted:
3.An order that the Deed of Release dated 27 April 2022 appearing at page 157 of the confidential affidavit of Samuel John Freeman sworn 7 November 2022 (Deed), be rectified such that clause 3(b)(i) be amended as follows:
'(i) Mr Anthony Gerber:
(A) $ [Redacted] ~~$ [Redacted]~~, on account of and in the order of payment of first redundancy, then payment in lieu of notice, then leave entitlements and lastly wages as compromised; and'.
4.An order that the Deed be rectified such that clause 3(b)(ii) be amended as follows:
'(ii) Mr Scott Davison:
(B) $ [Redacted] ~~$ [Redacted]~~, on account of and in the order of payment of first redundancy, then payment in lieu of notice, then leave entitlements and lastly wages as compromised'.
5.A declaration that the amounts payable to Mr. Anthony Charles Geber and Mr. Scott Davison on account of the 'Pindan Director Priority Claims' under the Deed of Release have been satisfied.

Position of interested parties

All of the parties to the Deed of Release were put on notice of the application. No person or entity sought to be heard in opposition to the orders sought.

Oxley Holdings and Oxley Sparkle

Through their legal representatives, Oxley Holdings and Oxley Sparkle were provided with a copy of the interlocutory process by which this application was made and were informed that as they are parties to the Deed of Release, an order had been included in the interlocutory process that they be bound by the relief sought (referring to the proposed order seeking joinder of Oxley Holdings and Oxley Sparkle as defendants to the proceeding).[22]
[22] Affidavit of M Zaki sworn 29 November 2022, MZ5.
Oxley Holdings and Oxley Sparkle indicated through their legal representatives that they did not object to the making of orders in the form proposed (which included the rectification of the Deed of Release).[23]
[23] Affidavit of M Zaki sworn 29 November 2022 pars 5 - 6, MZ5, MZ6.
As noted at [7] above, on 30 November 2022 it was ordered that Oxley Holdings be joined to the proceeding as the third defendant; and that Oxley Sparkle be joined to the proceeding as the fourth defendant. No appearance was filed on behalf of Oxley Holdings or Oxley Sparkle, and they have not sought to be heard.

Mr Gerber and Mr Davison

Through their legal representatives, Mr Gerber and Mr Davison were served with a copy of the interlocutory process by which this application was made. Mr Freeman also deposed on 7 November 2022 to his intention to provide a redacted version of his confidential affidavit to Mr Gerber and Mr Davison (that is, having redacted the information and documents not relevant to their interests under the Deed of Release) for the limited purpose of this application.
On 22 November 2022, through their legal representatives, Mr Gerber and Mr Davison were provided with a copy of the minute of proposed orders intended to be sought from the court. It was noted in that communication that, in accordance with the position previously confirmed, no cost order was sought as against Mr Gerber and Mr Davison. Confirmation was sought as to whether Mr Gerber and Mr Davison's position remained that they did not oppose the relief sought.[24] In response to that communication, Mr Gerber and Mr Davison indicated through their legal representatives that their position was unchanged.[25]
[24] Affidavit of M Zaki sworn 29 November 2022 par 7, MZ7.
[25] Affidavit of M Zaki sworn 29 November 2022 par 8, MZ8.
As noted at [7] above, it was ordered that Mr Gerber be joined to the proceeding as first defendant; and that Mr Davison be joined to the proceeding as the second defendant. No appearance was filed on behalf of Mr Gerber or Mr Davison, and they have not sought to be heard.

Creditors of Pindan Group and Pindan Contracting

As noted at [57] above, by a notice dated 7 November 2022, the creditors of Pindan Group and Pindan Contracting were informed, among other things, that an issue had arisen as a result of the amounts recorded in the Deed of Release relating to the Director Compromise.[26] They were also informed that any creditor who wished to be heard in respect of the application, or who wanted to receive further materials regarding the application, was to advise Mr Freeman's office of the same in writing. No creditor of Pindan Group or Pindan Contracting filed an appearance or has sought to be heard on the application.
[26] Affidavit of SJ Freeman sworn 7 November 2022 par 30, SJF20.
I also note that by the interlocutory process, the external administrators move for a direction that they, in their capacity as the joint and several deed administrators of Pindan Group and Pindan Contracting, must provide notice of the orders obtained to creditors of those companies, and for a further direction that any person who can demonstrate sufficient interest to modify or discharge the orders be granted liberty to apply to modify or discharge the orders upon notice of two business days to the external administrators' solicitors and to the court.

Disposition

The external administrators moved for rectification under s 90‑15 of the Insolvency Practice Schedule (Corporations), sch 2 of the Corporations Act, which provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. A declaration was also sought that the amounts payable to Mr Gerber and Mr Davison on account of the 'Pindan Director Priority Claims' under the Deed of Release had been satisfied.

Standing

By operation of s 90-20 of the Insolvency Practice Schedule (Corporations), the external administrators had standing to apply for relief pursuant to s 90-15 by virtue of being persons with a financial interest in the external administration of Pindan Group, Pindan Contracting and the Pindan liquidation entities, and by being officers of them.[27]

Power

Overview - the nature of the court's power to make orders pursuant to s 90‑15(1)

[27] Section 90-20(1)(d) of the Insolvency Practice Schedule (Corporations), read with s 5-30 of the Insolvency Practice Schedule (Corporations), and s 9 of the Corporations Act (pars (e) and (f) of the definition of 'officer').

Division 90 of the Insolvency Practice Schedule (Corporations) concerns the review of an external administration of a company, which may be undertaken by the court (div 90 subdiv B), or by another registered liquidator (div 90 subdiv C).
By s 90-15(1) the court is afforded a plenary power by which it may make such orders as it thinks fit in relation to the external administration of a company,[28] and without limiting subsection (1), examples of the types of orders that the court may make are listed in s 90‑15(3).
[28] Section 90-15(1) of the Insolvency Practice Schedule (Corporations).
While s 90-15(3) does not limit subsection (1), it provides context for the proper construction of what will be orders in relation to the external administration of a company.[29] Relevantly, included by way of example is an order determining any question arising in the external administration of the company.[30] Section 90-15(4) contains a non‑exhaustive list of matters that the court may take into account in exercising the discretion under s 90‑15.
[29] Frigger v Mervyn Jonathan Kitay as liquidator of Computer Accounting & Tax Pty Ltd [2022] WASC 347 [23].
[30] Section s 90-15(3)(a) of the Insolvency Practice Schedule (Corporations).
The court's power under s 90-15(1) of the Insolvency Practice Schedule (Corporations) is 'very broad',[31] and the ambit of s 90‑15 has not yet been fully considered by the authorities.[32] That said, it is well settled that the power in s 90‑15(1) to make such orders as the court thinks fit in relation to the external administration of a company, which includes the power to make an order determining any question arising in the external administration of a company, is wider than the power previously contained in s 479(3) and s 511 of the Corporations Act,[33] and accommodates the determination of substantive rights. Of course, such power cannot be exercised without affording potentially affected parties an opportunity to be heard.[34]
[31] Re Halifax Investment Services Pty Ltd (in liq) (No 8) [2020] FCA 533; (2020) 144 ACSR 292 [51], cited in Re Union Standard International Group Pty Ltd (No 2) [2020] FCA 1111 [7].
[32] Re Broens Pty Ltd (in liq) [2018] NSWSC 1747 [39]; see also In the matter of Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; (2018) 125 ACSR 335 [7] ‑ [8], cited in Ex parte Frigger [2020] WASC 365 [12].
[33] In the matter of HIH Insurance Limited (in liquidation) ACN 008 636 575; In the matter of FAI General Insurance Company Ltd (in liquidation and subject to a scheme of arrangement) ACN 000 327 855; In the matter of HIH Casualty and General Insurance Limited (in liquidation and subject to schemes of arrangement) ACN 008 482 291 [2018] NSWSC 1886 [4] - [5].
[34] In the matter of Hawden Property Group Pty Ltd (in liq) [8], citing Meadow Springs Fairway Resort Ltd (in liq) v Balance Securities Ltd [2007] FCA 1443 [49] - [51] referring to Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd[1994] FCA 1031; (1994) 49 FCR 334, 352; Re Willmott Forests Ltd (No 2)[2012] VSC 125; (2012) 88 ACSR 18 [45] ‑ [46]; In the Matter of ICS Real Estate Pty Ltd (in liq)[2014] NSWSC 479 [25]. See also Re Australian Property Custodian Holdings Ltd (in liq) [2021] VSC 51 [35]; and Hill, in the matter of Autocare Services Pty Ltd (administrators appointed) [2021] FCA 167[44].
As was observed by Farrell J in Hill, in the matter of Autocare Services Pty Ltd (administrators appointed), some care should be taken with the application of principles derived from the statutory predecessors of s 90‑15(1) and s 90‑15(3)(a) to ensure that the power conferred by those provisions is not constrained by limitations imposed by no longer enacted requirements.[35] In Glenfyne International Holdings Ltd v Glenfyne Farms International AU Pty Ltd, Bell P observed that it would be inappropriate to read into s 90‑15 limitations which are not found in the express words.[36]
[35] Hill, in the matter of Autocare Services Pty Ltd (administrators appointed) [44].
[36] Glenfyne International Holdings Ltd v Glenfyne Farms International AU Pty Ltd [2019] NSWCA 304; (2019) 101 NSWLR 358 [59] - [61].
In GDK Projects Pty Ltd, Re Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq), Farrell J recognised the power in s 90‑15(1) to be 'in its terms, unconstrained', but also noted that 'despite the breadth of the power … it is difficult to envisage circumstances where the power could be exercised if the court could not be satisfied that it would be just and unless the applicant had demonstrated sufficient utility to the external administration'.[37]
[37] GDK Projects Pty Ltd, Re Umberto Pty Ltd (in liq) v Umberto Pty Ltd (in liq) [2018] FCA 541 [33].
I proceeded on the basis that when orders under s 90‑15 are sought, regard should also be had to the objects of the Insolvency Practice Schedule (Corporations), reproduced below:[38]
[38] Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) [2021] FCA 644 [24].
1-1 Objects of this Schedule
(1)The object of this Schedule is to ensure that any person registered as a liquidator:
(a) has an appropriate level of expertise; and
(b) behaves ethically; and
(c) maintains sufficient insurance to cover his or her liabilities in practising as a registered liquidator.
(2) The object of this Schedule is also:
(a)to regulate the external administration of companies consistently, unless there is a clear reason to treat a matter that arises in relation to a particular kind of external administration differently; and
(b) to regulate the external administration of companies to give greater control to creditors.

Does the court have the power under s 90-15(1) to grant the form of relief sought?

Cognisant of the nature of the court's power (described above), I was satisfied that the court had the requisite power to grant the relief sought by the external administrators in this application pursuant to s 90‑15(1) of the Insolvency Practice Schedule (Corporations). In so concluding, I had regard to the following.
First, pursuant to s 90‑15(1) the court may make such orders as it thinks fit in relation to the external administration of a company,[39] and I was satisfied that the orders sought by the external administrators were in relation to the external administration of Pindan Group, Pindan Contracting and the Pindan liquidation entities.
[39] Section 90-15(1) of the Insolvency Practice Schedule (Corporations).
For the purposes of s 90‑15(1), a company is taken to be under external administration if (among other things) a deed of company arrangement has been entered into in relation to the company; or if a liquidator has been appointed in relation to the company.[40] These reasons concern an application made by the external administrators in their capacity as the joint and several deed administrators of Pindan Group and Pindan Contracting, and the joint and several liquidators of the Pindan liquidation entities.
[40] Section 5-15 of the Insolvency Practice Schedule (Corporations).
Further, the words 'in relation to' have consistently been construed as of wide and indefinite import.[41]
[41] Frigger v Mervyn Jonathan Kitay as liquidator of Computer Accounting & Tax Pty Ltd [38].
Counsel's submission that the Deed of Release was entered into by Pindan Group and Pindan Contracting, and each of the Pindan liquidation entities (among others), for the purpose of giving effect to the DOCAs is supported by the evidence. As noted above, the DOCA proposals contained a condition precedent that required the external administrators in their capacity as the joint and several administrators of Pindan Group and Pindan Contracting and as liquidators of the Pindan liquidation entities to compromise any claims for employee entitlements of Mr Davison and Mr Gerber against Pindan Group, Pindan Contracting, or the Pindan liquidation entities on terms acceptable to Oxley Sparkle.[42] The Director Compromise requirement remained a condition precedent of the DOCAs.
[42] Affidavit of SJ Freeman sworn 7 November 2022 par 21.
Given the wide meaning afforded to the words in relation to, I was satisfied that the orders sought by the external administrators in the context summarised at [82] above were orders in relation to the external administration of Pindan Group, Pindan Contracting and the Pindan liquidation entities. That is, I accepted that the evidence established that the Deed of Release was entered into for the purpose of giving effect to the DOCAs, and that therefore, the rectification of the Deed of Release was:
(a)a matter in relation to the external administration of Pindan Group, Pindan Contracting and the Pindan liquidation entities; and
(b)was a matter in relation to which orders might be made determining a question that had arisen in the external administration of those companies.
Secondly, there appeared to be no proper basis to construe s 90‑15(1) and s 90‑15(3)(a) in a manner that would take beyond the court's power the determination (on the application of external administrators) of whether a document recorded the agreed common intention of the parties, where the question arose in relation to a document that had been entered into for the purpose of giving effect to deeds of company arrangement in the external administration of the companies to which the external administrators had been appointed.
In the context of an application made by a liquidator for directions under s 479(3) or s 511 of the Corporations Law, Young J in Dean‑Willcocks v Soluble Solution Hydroponics Pty Ltd had observed that:[43]
There are many questions where the only order that the court should make is that the liquidator or the claimant proceed in the ordinary courts in the ordinary way for the determination of a dispute. However, there are many other situations where the court can summarily solve the difficulty that has arisen in the liquidation by an order under the section in a cheap and efficient manner. Where this can be done it is 'just and beneficial' to exercise the power.
[43] Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209, 212.
While counsel for the external administrators was not able to refer me to an example where relief pursuant to s 90‑15(1) had been sought where the question arising in the external administration was whether a document recorded the agreed common intention of the parties, and acknowledged that relief might also have been sought by the external administrators in the equitable jurisdiction of this court,[44] there appeared to be no basis grounded in principle to conclude that the only order the court should make in this case was that the external administrators proceed in the ordinary courts in the ordinary way for the determination of this dispute.
[44] Submissions filed 23 November 2022 par 12.
Thirdly, while Mr Gerber and Mr Davison had chosen not to defend or otherwise be heard on the application, they had also refused to acknowledge the existence of any mistake, and there remained to be determined by the court a question arising in the external administration of Pindan Group, Pindan Contracting and the Pindan liquidation entities. The question to be determined was whether the evidence established that negotiations had resulted in an agreed common intention as to the Director Compromise - namely that:
(a)the claims of each of Mr Gerber and Mr Davison would be limited to 25% of the aggregate amount that would otherwise have had priority;
(b)the Deed of Release as drafted and executed did not reflect the common intention of the external administrators, Oxley Holdings, Oxley Sparkle, Mr Gerber or Mr Davison in relation to the Director Compromise; and
(c)by an inadvertent mistake, the compromised amounts appearing in the Deed of Release for each director were calculated as 75% of the aggregate amount that they each would otherwise have had priority, instead of 25%.
Fourthly, for the reasons set out below, I was satisfied that the external administrators had demonstrated that the exercise of the power would be just in all of the circumstances; and that the exercise of the power had sufficient utility to the external administration.
Fifthly, I considered the relief sought to not be in any way inconsistent with the objects of the Insolvency Practice Schedule (Corporations).
There will no doubt be some questions where the appropriate course is for the court to decline to make the order sought, instead requiring the external administrators to proceed in the ordinary courts in the ordinary way for the determination of the dispute. Weighing the various considerations summarised above, I was satisfied that this was not such a case. In my view, having regard to the breadth of the power conferred by s 90-15(1), I was satisfied that it was an available vehicle for the court to consider and determine the question that had arisen in the external administrations.

Discretion

As to whether discretion ought be exercised in favour of the external administrators, it was submitted on their behalf that s 90‑15(1) was in this case an appropriate vehicle by which the question of rectification could be determined, instead of requiring the external administrators to commence a separate action; that such a course would be consistent with the overarching purpose of the provision, which is to facilitate the performance of the functions of an external administrator where it is advantageous to do so; that the exercise of discretion to determine the application pursuant to s 90‑15(1) would facilitate the performance of the external administrators' functions in a manner that would be cheaper and more efficient than a separate proceeding, and would thereby be advantageous to the external administration; and that such a course was all the more appropriate given that there was no opposition to the application.[45]
[45] Submissions filed 23 November 2022 pars 20 ‑ 22.
The submission was a persuasive one, having regard to all of the circumstances. I was also satisfied of the following.
First, while I was cognisant that the relief pressed could have been sought in the equitable jurisdiction of this court 'in the ordinary way', the existence of the more traditional route was not a factor that so heavily weighed against the exercise of discretion as to be determinative in this case.
Secondly, I was satisfied that the proposed course was consistent with the overarching purpose of s 90‑15 of the Insolvency Practice Schedule (Corporations), which is to facilitate the performance of the external administrator's functions where it is advantageous to the external administration to do so.[46] There was no doubt that the external administrators had in this case demonstrated that the application (and the determination of the question that had arisen) had sufficient utility to the external administration of Pindan Group, Pindan Contracting, and the Pindan liquidation entities.
[46] Submissions filed 23 November 2022 par 21, citing Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (212); Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556[9]; Hill, in the matter of Autocare Services Pty Ltd (administrators appointed) [43]; cited in Strawbridge (administrator), in the matter of CBCH Group Pty Ltd (administrators appointed) (No 2) [2020] FCA 472 [41]; and in Re Halifax Investment Services Pty Ltd (in liq) (No 7) [2020] FCA 248 [18].

Thirdly, it was acknowledged that the consideration and grant of the rectification relief sought in proposed order 3 and proposed order 4 of the interlocutory process (reproduced at [59] above) would determine substantive rights as between Mr Gerber, Mr Davison and the other parties to the Deed of Release. That said, Oxley Holdings, Oxley Sparkle, Mr Gerber and Mr Davison were all on notice of the relief sought by the external administrators; all had with notice been made defendants to the proceeding; and none had sought to be heard on the application.
Fourthly, on balance, the attitude of the defendants, particularly Mr Gerber and Mr Davison, was a factor which weighed in favour of the exercise of discretion to allow the relief by an interlocutory process in the form pressed, facilitating the performance of the external administrators' functions in a manner that would be cheaper and more efficient than a separate proceeding. I accepted the submission made on behalf of the external administrators that proceeding under s 90‑15 was all the more appropriate given that there was no opposition to the application.
Fifthly, the evidence filed in support of the external administrators was sufficient to ground an order of rectification for common mistake in the equitable jurisdiction of the court, had the applicants commenced a proceeding 'in the ordinary way'.
As was observed on behalf of the external administrators, the principles underlying the doctrine of rectification for common mistake are settled. Counsel referred particularly to the following passage from Simic v New South Wales Land and Housing Corporation:[47]
Rectification is an equitable remedy, the purpose of which is to make a written instrument 'conform to the true agreement of the parties where the writing by common mistake fails to express that agreement accurately'. For relief by rectification, it must be demonstrated that, at the time of the execution of the written instrument sought to be rectified, there was an 'agreement' between the parties in the sense that the parties had a 'common intention', and that the written instrument was to conform to that agreement. Critically, it must also be demonstrated that the written instrument does not reflect the 'agreement' because of a common mistake. Unless those elements are established, the 'hypothesis arising from execution of the written instrument, namely, that it is the true agreement of the parties' cannot be displaced.
The issue may be approached by asking - what was the actual or true common intention of the parties? There is no requirement for communication of that common intention by express statement, but it must at least be the parties' actual intentions, viewed objectively from their words or actions, and must be correspondingly held by each party. [Footnotes omitted]
[47] Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85 [103] ‑ [104]. Reference was also made to the detailed analysis in Ryledar Pty Ltd v Euphoric Pty Ltd (2007) 69 NSWLR 603, which has been followed, including in Wavemaster International Pty Ltd (in liq) v JR Marine Systems Pte Ltd [2009] WASC 203; Oswal v Yara Australia Pty Ltd (No 3) (2011) 86 ACSR 1 [171], [172]; CPG01 Pty Ltd v Kourinos [2010] WASC 92[174] ; Red Hill Iron v API Management Pty Ltd [2012] WASC 323[121]; Perpetual Trustee Co Ltd v Burniston [No 2] [2012] WASC 383 [381]; Technomin Australia Pty Ltd v Xstrata Nickel Australasia Operations Pty Ltd (2014) 48 WAR 264; Black Box Control Pty Ltd v Terravision Pty Ltd [2016] WASCA 219 [42].
On behalf of the external administrators it was submitted that in this case:[48]
(a) At the time of execution of the instrument, the parties had a common intention in relation to the position that is propounded by the applicant for the relief sought.
(b) The intention was the subjective actual or true intention held by each party, assessed objectively from the party's words and actions, and from any evidence of subjective intent.
(c) The intention was a common one from each party having knowledge of the other's intention derived from express or implied communications or disclosures.
(d) The instrument was to conform to the common intention.
(e) The instrument as executed did not reflect the common intention because of a common mistake.
[48] Submissions filed 23 November 2022 par 26.
Having given careful consideration to the evidence before the court, I was ultimately satisfied of the same on the balance of probabilities.
I was satisfied that the communications which passed between the external administrators and Mr Gerber and Mr Davison on 2 and 3 March 2022 (reproduced above at [36] - [38]), when considered in light of all of the evidence adduced, established that it was more probable that:
(a)the express, actual intention of the external administrators was that:
(i)Mr Gerber's compromised priority entitlement would be 25% of his aggregate priority entitlement, and Mr Davison's compromised priority entitlement would be 25% of his aggregate priority entitlement;
(ii)the compromises would be documented in the Deed of Release; and
(iii)the intention was communicated by the external administrators (through the external administrators' legal representatives) to Mr Gerber and Mr Davison;
(b)this was also the express, actual intention of Mr Gerber and Mr Davison, as evidenced by their written acceptance of the above terms in their respective communications of 3 March 2022;
(c) the exchange of correspondence as between the external administrators and Mr Gerber and Mr Davison gave rise to a common intention - each party became aware of the other's intention and the concordance between the parties' intentions; and
(d) the Deed of Release was to conform to the common intention.
The update report issued to creditors of the Pindan liquidation entities on 29 March 2022 was consistent in its terms with what the external administrators contend was the common intention of the parties, and was further evidence of the subjective intent of the external administrators. As was the fact that after the Deed of Release was executed, amounts were paid to Mr Gerber and Mr Davison which were equal to 25% of Mr Gerber and Mr Davison's respective aggregate priority entitlements as had been communicated to them on 8 and 9 February 2022 (referred to at [30] and [31] above). I accepted that this subsequent conduct was further strong evidence of the external administrators' intention at the time to execute the instrument in the form now advanced by them.
For the following reasons I was also satisfied that the Deed of Release as executed did not reflect the common intention of the parties because of a common mistake.
First, I had regard to the evidence of Mr Freeman as to the circumstances in which the Deed of Release was drafted, particularly his evidence as to the basis for his belief that the recording of the incorrect amounts in cl 3(b)(i)(A) and (ii)(A) of the Deed of Release was an honest mistake made by a member of Mr Freeman's team who worked under Mr Freeman's supervision and reported to Mr Freeman. As recorded above, Mr Freeman further deposed that he was advised by his team member and believed that the error was made in part due to a misinterpretation of the wording made in time critical circumstances. I gave weight to this evidence.
Secondly, it was submitted that even without Mr Freeman's evidence, it would be plain that 'something must have gone wrong' with the Deed of Release. The external administrators maintained that this was apparent from the inversion of the relevant ratio (75% versus 25%); the inconsistency with the prior correspondence as to the terms of the Director Compromise; and from the disadvantage that such inconsistency would create for all parties to the Deed of Release (except for Mr Gerber and Mr Davison). I found this to be persuasive.
Thirdly, it was submitted that the commonality of the mistake may be readily inferred from the perspective of Mr Gerber and Mr Davison. As to this point, it was submitted that there were two possible scenarios. One was that, like the other parties, neither they nor their solicitors noticed the error in the Deed of Release prior to execution. If that is what occurred, there was plainly a common mistake. The other possibility was that the error was noticed prior to execution, but they elected to remain silent about it. If that is what occurred, it was submitted that that was precisely the sort of 'unconscientiousness' that the doctrine of rectification was designed to prevent.
Finally, the external administrators addressed the assertion made by Mr Gerber and Mr Davison that the higher amounts in the Deed of Release as executed were the correct amounts to which they are entitled on the basis that the higher amounts took account of the further assurances to be provided by them under cl 6 of the Deed of Release, and that Oxley Sparkle (as proponent of the DOCAs) had agreed to pay the Directors significant additional moneys on the basis of a need for Mr Gerber and Mr Davison to provide future assistance.
It was submitted on behalf of the external administrators that the assertion described at [107] above did not stand up to scrutiny for a number of reasons.[49] I found the submissions made on behalf of the external administrators to be persuasive.
[49] Submissions filed 23 November 2022 par 53.
I was particularly cognisant that there was an absence of any contemporaneous documents proffered to support the assertion that agreement had been reached to pay Mr Gerber and Mr Davison an amount equal to 75% of their respective aggregate priority entitlements as had been communicated to them on 8 and 9 February 2022 (referred to at [30] and [31] above). The only evidence before the court that supported the assertion made was the assertions made by Mr Gerber and Mr Davison after the Deed of Release was signed and moneys paid. There was no documentary evidence of further negotiations with Oxley Sparkle leading to an agreement for a more advantageous compromise of the priority entitlements of Mr Gerber and Mr Davison. In the absence of any other evidence, this subsequent conduct alone was not compelling evidence of the parties' intention at the time the Deed of Release was executed.
Having given careful consideration to all of the evidence before the court, I was satisfied that the Deed of Release as executed did not reflect the common intention of the parties because of a common mistake. Having so found, for these reasons, I was satisfied that the discretion to grant relief ought be exercised so as to answer a question arising in the external administrations. Further, I was satisfied that it would be just to exercise the court's power in the manner promoted on behalf of the external administrators, and that the external administrators had demonstrated sufficient utility to the external administrations.
As to the declaration sought, in Macks v Viscariello the Full Court of the South Australian Supreme Court discussed in detail the power of a state Supreme Court to grant declaratory relief when exercising federal jurisdiction under the Corporations Act.[50] As Hill J did in Litigation Capital Partners LLP Pte Ltd (Registration No 200922518M) v ACN 117 641 004 Pty Ltd (in liquidation) (formerly known as Vale Cash Management Fund Pty Ltd, I respectfully adopt the reasons of the Court of Appeal and agree that, as a general proposition, this court has power to grant declaratory relief pursuant to s 25(6) of the Supreme Court Act 1935 (WA) (which is in materially the same terms to the South Australian provision) in relation to matters arising under the Corporations Act.[51]
[50] Macks v Viscariello [2017] SASCFC 172; (2017) 130 SASR 1.
[51] Litigation Capital Partners LLP Pte Ltd (Registration No 200922518M) v ACN 117 641 004 Pty Ltd (in liquidation) (formerly known as Vale Cash Management Fund Pty Ltd [2021] WASC 161 [211].
In this case, the court was called upon by the external administrators to make a declaration - that is, to pronounce upon the existence of a legal state of affairs, in circumstances where there was a matter before the court. The question before the court was real and not theoretical. In this case, there was a real and present dispute between the parties as to the existence or extent of a legal right or obligation. The external administrators had standing to seek a declaration, with a 'sufficient' or 'real' interest in obtaining relief, and proper contradictors had been joined as defendants to the proceeding, Mr Gerber and Mr Davison both having a true interest to oppose the declaration sought.[52]
[52] Applying the principles in Hobart International Airport Pty Ltd v Clarence City Council Australia Pacific Airports (Launceston) Pty Ltd v Northern Midlands Council [2022] HCA 5; (2022) 276 CLR 519 [31] - [32].
Further, there was utility in the making of a declaration. While Mr Gerber and Mr Davison did not appear to defend the application, they had refused to sign a deed of variation of the Deed of Release and had not withdrawn the demand for payment and assertions previously made. I considered that in all of the circumstances, discretion ought be exercised so as to grant a declaration, affording all parties including the external administrators and creditors, certainty as to the legal state of affairs under the Deed of Release. It is appropriate that it be declared that the amounts payable to Mr Gerber and Mr Davison on account of the 'Priority Claims' under the Deed of Release have been satisfied.

Conclusion and orders

As to the form of orders promoted by the interlocutory process, proposed order 1 provided for the joinder of Mr Gerber and Mr Davison as defendants, which orders were made on the first return of the application. Oxley Holdings and Oxley Sparkle were also joined as defendants. All of the defendants were appropriately and necessarily joined as they are parties to the Deed of Release and accordingly must be subject to any orders giving effect to a rectification of the instrument.
Proposed orders 3 and 4 of the interlocutory process concern the rectification of the Deed of Release. The form of orders (with the relevant amounts redacted) are reproduced at [59] above. For these reasons, I was satisfied such orders ought be made.
Proposed order 5 of the interlocutory process is also reproduced at [59] above, and concerns the amounts paid to Mr Gerber and Mr Davison on account of their aggregate priority entitlements. For the avoidance of any doubt, the external administrations sought a declaration that the amounts payable to each of them on account of their respective aggregate priority entitlements pursuant to the Deed of Release had been satisfied. For the reasons set out above, I was satisfied such an order ought be made.
Proposed order 6 concerns restriction of certain confidential information. As noted above, a restriction order was made on the first return of the application.
Proposed order 7 provided for notice of the orders to both the joined defendants and creditors, and proposed order 8 provides liberty for such persons to apply to discharge or modify the orders.
As to proposed order 7, the court was informed that as proposed order 3 and proposed order 4 contained information concerning the entitlements of Mr Gerber and Mr Davison, it was intended that the orders would be provided to creditors partially redacted to ensure that Mr Gerber and Mr Davison's confidential information was not disclosed. I was satisfied that proposed order 7 and the intended approach were appropriate in all of the circumstances.
As to the costs of the application, I note that consistent with the external administrators' representations to Mr Gerber and Mr Davison in conferral, the external administrators did not move for any cost orders in the application. I have made no order as to costs.
Finally, I note that the amounts recorded in proposed order 3 and proposed order 4 of the interlocutory process have not been disclosed in these reasons. However, it has been necessary to refer to information and correspondence sourced from the confidential affidavits, and to the restricted written outlines of submissions filed on behalf of the applicants in relation to the same. Before these reasons are published, the applicants will have the opportunity to make submissions as to whether they ought be further redacted or suppressed.

Sch A - the Pindan liquidation entities

Pindan Capital Pty Ltd (in liquidation) (ACN 139 599 652)

Pindan Capital Investments Pty Ltd (in liquidation) (ACN 615 672 225)

Pindan Constructions Pty Ltd (in liquidation) (ACN 159 837 500)

Pindan Projects WA Pty Ltd (in liquidation) (ACN 611 922 475)

Pindan Homes Pty Ltd (in liquidation) (ACN 612 210 643)

Pindan Constructions (NSW) Pty Ltd (in liquidation) (ACN 612 479 115)

Pindan Developments Pty Ltd (in liquidation) (ACN 611 922 555)

Pindan Realty Pty Ltd (in liquidation) (ACN 009 372 847)

Moselle Holdings Pty Ltd (in liquidation) (ACN 009 338 318)

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
SE
Associate to the Honourable Justice Strk
24 OCTOBER 2024