In the matter of Wingaway Air Pty Limited (Administrator Appointed) ACN 003 200 128 and Heron Airlines Travel Pty Limited (Administrator Appointed) ACN 052 408 170
[2012] NSWSC 246
•14 March 2012
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Wingaway Air Pty Limited (Administrator Appointed) ACN 003 200 128 and Heron Airlines Travel Pty Limited (Administrator Appointed) ACN 052 408 170 [2012] NSWSC 246 Hearing dates: 14 March 2012 Decision date: 14 March 2012 Jurisdiction: Equity Division - Corporations List Before: Hammerschlag J Decision: Orders as to how Part 5.3A of the Corporations Act 2001 (Cth) is to operate
Catchwords: CORPORATIONS - Part 5.3A Corporations Act 2001 (Cth) - section 447A Corporations Act 2001 (Cth) - where administrator appointed and a party related to the company foreshadows challenge to his appointment but does not carry through with the challenge - uncertainty of administrator's position where administrator has accepted the appointment and has acted in good faith - appropriate to make orders ensuring certainty of position Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Sims; Re Huon Corporation Pty Limited (Administrators Appointed) (2006) 58 ACSR 620
Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270
Re Inventive Marketing Pty Ltd (In Liquidation) [2000] VSC 432Category: Principal judgment Parties: Michael Gregory Jones in his capacity as administrator of Wingaway Air Pty Limited (Administrator Appointed) and Heron Airlines Travel Pty Limited (Administrator Appointed) - Plaintiff
Wingaway Air Pty Limited (Administrator Appointed) ACN 003 200 128 - First Defendant
Heron Airlines Travel Pty Limited (Administrator Appointed) ACN 052 408 170 - Second DefendantRepresentation: Counsel:
T.C. Russell - Plaintiff
E.S. Yamine - AT Air Group and Ross Seller (Interested Parties)
B. DeBuse - The Siewerts (Interested Parties)
Solicitors:
ERA Legal - Plaintiffs
Bartier Perry - AT Air Group and Ross Seller (Interested Parties)
Marsdens - The Siewerts (Interested Parties)
File Number(s): 2012/77869
ex tempore Judgment
HIS HONOUR: On 9 February 2012 Mr Dieter Siewert, purporting to act as the sole director of each of the first defendant company (Wingaway) and the second defendant company (Heron), appointed the plaintiff, Michael Gregory Jones, to be administrator of each under s 436A of the Corporations Act 2001 (Cth) (the Act).
The appointments came about as follows.
On 22 July 2011, pursuant to a written Share Sale Agreement, Mr Siewert and his wife, Lieselotte Siewert (together the Siewerts) sold the entire issued share capital in both Wingaway and Heron to AT Air Group Pty Ltd (AT Air), a company associated with Mr Ross Seller, for $2.3M. Completion was deferred. However, AT Air became owner of the shares and Mr Seller was appointed sole director of Wingaway and Heron.
As at 13 October 2011 a significant portion of the purchase price remained outstanding. As a consequence, on or about that date, the Siewerts, AT Air, Wingaway and Heron entered into a series of transactions including a Security Agreement and a Share Mortgage. Under the Share Mortgage, AT Air mortgaged its shares in Wingaway and Heron to the Siewerts to secure performance by it of its outstanding obligations to them. In addition, the share certificates and a transfer left in blank were deposited with the Siewerts. The Share Mortgage provided that in the event of a default the Siewerts could have the shares registered in their name or the name of their nominee, and AT Air appointed them its attorney to give effect to this.
On 15 December 2011 the Siewerts gave notice of breach to AT Air. Shortly thereafter they effected transfer of the shares to themselves. Notice of the transfer was given to the Australian Securities and Investments Commission.
On 16 December 2011 solicitors for AT Air wrote to solicitors for the Siewerts challenging these actions on the basis that there was no breach and "no encumbrance".
On 7 February 2011 resolutions were passed removing Mr Seller and appointing Mr Siewert as sole director of both Wingaway and Heron. In that capacity Mr Siewert appointed the plaintiff, as earlier mentioned.
On 11 February 2012 solicitors for AT Air wrote to solicitors for the Siewerts challenging the validity of the appointment of Mr Siewert as director. On 27 February 2012 new solicitors for AT Air wrote to the administrator challenging the validity of his appointment. He disputed the assertion on 28 February 2012. From 28 February 2012 further exchange of contentious correspondence took place.
On 1 March 2012 the administrator foreshadowed an urgent application pursuant to s 447A of the Act to regularise the position. On 2 March 2012 solicitors for AT Air foreshadowed commencing proceedings for orders challenging the validity of the administrator's appointment. AT Air did not, however, initiate such proceedings.
On 9 March 2012 the administrator commenced these proceedings for orders under s 447A of the Act, having the effect of validating the administrator's appointments. I made the proceedings returnable, in the first instance, at 10.00am on 12 March 2012. The Siewerts, AT Air and Mr Seller were represented on the first return date. The proceedings were stood over until today, when the administrator sought orders in specific terms that Pt 5.3A of the Act operate in relation to both Wingaway and Heron as if Michael Gregory Jones was validly appointed administrator of both companies pursuant to s 436A of the Act on 9 February 2012. The Siewerts, AT Air and Mr Seller were again represented.
Part 5.3A of the Act is entitled "Administration of a company's affairs with a view to executing a deed of company arrangement". Section 447A(1) of the Act, which is within Part 5.3A, provides
The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.
Under s 447A(4)(c) of the Act, an order may be made on the application of an administrator.
Section 447A grants a most unusual power requiring careful consideration before exercise. The section permits substantive alteration as to how Pt 5.3A operates. It does not only apply to procedural requirements; Sims; Re Huon Corporation Pty Limited (Administrators Appointed) (2006) 58 ACSR 620 at 624 and Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270. The section can be used to validate the appointment of an administrator or to cure uncertainty as to the validity of an appointment; see Re Inventive Marketing Pty Ltd (In Liquidation) [2000] VSC 432.
For the reasons which follow, I consider that the Court should exercise its discretion to make the orders sought.
The material before the Court establishes to my satisfaction that Wingaway and Heron are both insolvent, and have been since 9 February 2012.
Neither AT Air nor Mr Seller have brought the foreshadowed proceedings to challenge the administrator's appointments. However, and whilst AT Air and Mr Seller now do not contest the making of the orders sought (indeed they consent to them), their uncompleted challenge has brought about uncertainty or apprehended uncertainty with respect to the operative efficacy of the administrator's appointments. It is appropriate to dispel this uncertainty.
There is no suggestion that the administrator has acted other than in good faith in accepting the appointments and acting in those offices.
First meetings of creditors in each company were held on 21 February 2012. AT Air and other interests associated with Mr Seller attended. They lodged proofs of debt and sought to negotiate contractual relationships with Wingaway and Heron relating to the servicing of aircraft by AT Air through the administrator and his staff. They proposed resolutions for the appointment of different administrators and to appoint a committee of creditors. The resolutions were not carried. Second meetings of creditors are scheduled to take place on 15 March 2012.
In the meantime, the administrator and his employed staff have undertaken significant work in the administration of both Wingaway and Heron. He has advertised for sale the businesses of both companies. A number of parties have executed confidentiality agreements and sale packages have been forwarded to some parties with a view to the sale of those businesses as an ongoing concern.
I am satisfied that the orders sought are in the interests of creditors.
I make the following orders:
Part 5.3A of the Act is to operate in relation to Wingaway Air Pty Limited (Administrator Appointed) ACN 003 200 128 as if Michael Gregory Jones were validly appointed as administrator of Wingaway Air Pty Limited (Administrator Appointed) ACN 003 200 128 pursuant to s 436A of the Act on 9 February 2012.
Part 5.3A of the Act is to operate in relation to Heron Airlines Travel Pty Limited (Administrator Appointed) ACN 052 408 170 as if Michael Gregory Jones were validly appointed as administrator of Heron Airlines Travel Pty Limited (Administrator Appointed) ACN 052 408 170 pursuant to s 436A of the Act on 9 February 2012.
These orders to be entered forthwith.
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Decision last updated: 20 March 2012
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