J & E Vanjak Pty Ltd v Palmer Street Developments Pty Ltd - [2018] QSC 293

SUPREME COURT OF QUEENSLAND

CITATION:

J & E Vanjak Pty Ltd v Palmer Street Developments Pty Ltd & Anor [2018] QSC 293

PARTIES:

J & E Vanjak Pty Ltd ACN 158 539 943

(applicant)

v
Palmer Street Developments Pty Ltd ACN 003 146 174

(first respondent)

and

Mitchell Herrett and Frank Lopilato (as the administrators of the Deed of Company Arrangement)

(second respondents)

FILE NO/S:

TS No 605 of 2018

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Townsville

DELIVERED ON:

7 December 2018

DELIVERED AT:

Brisbane

HEARING DATE:

11 and 19 September 2018

JUDGE:

Brown J

ORDER:

The application is dismissed.

CATCHWORDS:

Corporations Act 2001 (Cth), ss 435, 445D, 447A, 600A

Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (2005) 226 ALR 510
Deputy Commissioner of Taxation (Cth) v Pddam Pty Ltd (1996) 19 ACSR 498
Emanuele v The Australia Securities Commission (1995) 63 FCR 54 at 69
Mediterranean Olives Financial Pty Ltd & Ors v Loaders Traders Pty Ltd (2011) 82 ACSR 300
Promoseven Pty Ltd v Prime Project Development (Cairns) Pty Ltd (Subject to a Deed of Company Arrangement) & Ors [2013] QCA 405

Vero Insurance Ltd v Kassem (2011) 86 ACSR 607

CORPORATIONS – VOLUNTARY ADMINISTRATION – DEEDS OF COMPANY ARRANGEMENT – TERMINATION OR AVOIDANCE – where the applicant seeks orders that the Deed of Company Arrangement (“the Deed”) executed between the first respondent and second respondents be set aside, and that the first respondent be wound up and liquidators appointed – where the applicant contends that: the Deed is not in the interest of the creditors as a whole; the creditors’ report contained false and misleading information; and the Deed allowed the first respondent to continue to trade while insolvent – where the Deed is ready to be effectuated and there are no funds which remain for distribution – whether there exists a ground for termination under s 445D of the Act – whether the Court should exercise its discretion to terminate the Deed.

COUNSEL:

Ms Huang (by leave, self-represented) for the applicant
Mr Parton (by leave, self-represented) for the first respondent

D Forbes for the second respondents

SOLICITORS:

Ms Huang (by leave, self-represented) for the applicant
Mr Parton (by leave, self-represented) for the first respondent

Thomson Geer for the second respondents

Issues that must be determined

Since 2000, Palmer St Developments Pty Ltd (Palmer St) has operated a property investment business which owned five serviced apartments in the Grande Apartments complex currently leased to Quest and a commercial property operating as a licensed restaurant and bar.
On 21 December 2017, the applicant, J & E Vanjak Pty Ltd (Vanjak), obtained judgment against Palmer St in an amount of $408,314.40 together with interest.[1] That decision was upheld on appeal.[2] On 5 February 2018, Vanjak issued a statutory demand for payment of the judgment debt. On 26 February 2018, the company appointed Mr Mitchell Herrett and Mr Frank Lopilato as the administrators of the company. At a creditors’…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] QSC 293
Decision Date: 7 December 2018

CaseChat Overview and Summary

The applicants, J & E Vanjak Pty Ltd, sought orders to set aside a Deed of Company Arrangement executed between the first respondent, Palmer Street Developments Pty Ltd, and the second respondents. The applicants argued that the Deed was not in the interest of the creditors as a whole, that the creditors' report contained false and misleading information, and that the Deed allowed the first respondent to continue trading while insolvent. The applicants sought the termination of the Deed, winding up of the first respondent, and the appointment of liquidators. The court was required to determine whether there existed a ground for termination under section 445D of the Corporations Act 2001 (Cth) and whether the court should exercise its discretion to terminate the Deed.

The court considered the statutory provisions and relevant case law to determine whether there existed a ground for termination. It noted that the Deed was ready to be effectuated and that there were no funds remaining for distribution. The court found that the applicants had not demonstrated that the Deed was not in the interest of the creditors as a whole, and that there was no evidence of misleading information in the creditors' report. The court also noted that the first respondent had been trading while insolvent for some time, and that the Deed provided a better outcome for the creditors than liquidation. The court held that there was no ground for termination and that it should not exercise its discretion to terminate the Deed.

The court dismissed the application and held that the Deed should be implemented as proposed. The court found that the applicants had not established any grounds for termination or that the court should exercise its discretion to terminate the Deed. The court held that the Deed provided the best outcome for the creditors and that it should be allowed to proceed as planned. The court also noted that the first respondent had been trading while insolvent for some time, and that the Deed provided a better outcome for the creditors than liquidation. The applicants' application was dismissed, and the Deed was allowed to proceed as planned.

Orders

Orders of the court

The application is dismissed.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

CITATION:	J & E Vanjak Pty Ltd v Palmer Street Developments Pty Ltd & Anor [2018] QSC 293
PARTIES:	J & E Vanjak Pty Ltd ACN 158 539 943 (applicant) v Palmer Street Developments Pty Ltd ACN 003 146 174 (first respondent) and Mitchell Herrett and Frank Lopilato (as the administrators of the Deed of Company Arrangement) (second respondents)
FILE NO/S:	TS No 605 of 2018
DIVISION:	Trial Division
PROCEEDING:	Application
ORIGINATING COURT:	Supreme Court at Townsville
DELIVERED ON:	7 December 2018
DELIVERED AT:	Brisbane
HEARING DATE:	11 and 19 September 2018
JUDGE:	Brown J
ORDER:	The application is dismissed.
CATCHWORDS:	Corporations Act 2001 (Cth), ss 435, 445D, 447A, 600A Bidald Consulting Pty Ltd v Miles Special Builders Pty Ltd (2005) 226 ALR 510 Deputy Commissioner of Taxation (Cth) v Pddam Pty Ltd (1996) 19 ACSR 498 Emanuele v The Australia Securities Commission (1995) 63 FCR 54 at 69 Mediterranean Olives Financial Pty Ltd & Ors v Loaders Traders Pty Ltd (2011) 82 ACSR 300 Promoseven Pty Ltd v Prime Project Development (Cairns) Pty Ltd (Subject to a Deed of Company Arrangement) & Ors [2013] QCA 405 Vero Insurance Ltd v Kassem (2011) 86 ACSR 607 CORPORATIONS – VOLUNTARY ADMINISTRATION – DEEDS OF COMPANY ARRANGEMENT – TERMINATION OR AVOIDANCE – where the applicant seeks orders that the Deed of Company Arrangement (“the Deed”) executed between the first respondent and second respondents be set aside, and that the first respondent be wound up and liquidators appointed – where the applicant contends that: the Deed is not in the interest of the creditors as a whole; the creditors’ report contained false and misleading information; and the Deed allowed the first respondent to continue to trade while insolvent – where the Deed is ready to be effectuated and there are no funds which remain for distribution – whether there exists a ground for termination under s 445D of the Act – whether the Court should exercise its discretion to terminate the Deed.
COUNSEL:	Ms Huang (by leave, self-represented) for the applicant Mr Parton (by leave, self-represented) for the first respondent D Forbes for the second respondents
SOLICITORS:	Ms Huang (by leave, self-represented) for the applicant Mr Parton (by leave, self-represented) for the first respondent Thomson Geer for the second respondents