Melbourne Aircraft Leasing (UK) Ltd v Algeri and Ors in their capacity as joint and several Trustees of the Project Volar Creditors’ Trust (and other proceedings heard together)

The case involved Melbourne Aircraft Leasing (UK) Ltd as the plaintiff and Algeri and others, who were acting as joint and several trustees of the Project Volar Creditors’ Trust, as the defendants. The dispute arose in the Federal Court of Australia and centred around issues related to voluntary administration, a deed of company arrangement, and the priority of claims for rent due under pre-administration leases. The plaintiff sought to have its claims for rent recognised on a priority basis, arguing either that the Lundy Granite principle applied or that the claims were entitled to priority under section 443B(2) of the Corporations Act 2001.

The primary legal issues that the court had to address were whether the Lundy Granite principle applied to the situation and, if not, whether the claims for rent due under the pre-administration leases were entitled to priority under section 443B(2) of the Corporations Act. The court needed to determine whether the plaintiff's claims for rent could be prioritised over other creditors of the insolvent company, Project Volar Pty Ltd.

In its decision, the court held that the Lundy Granite principle did not apply to the facts of the case. The court found that the principle, which typically applies to claims for services provided to a company in the period immediately before it enters into voluntary administration, was not relevant because the plaintiff had already entered into leases with Project Volar prior to the voluntary administration. The court further considered whether the claims for rent were entitled to priority under section 443B(2) of the Corporations Act, which provides for priority to be given to certain claims for rent where the lessor has taken possession of the leased property and continues to use it for the purposes of the lease. However, the court found that the lessors had not taken possession of the aircraft and equipment and, therefore, the claims did not qualify for priority under that provision.

As a result, the court rejected the plaintiff's claims for priority and ordered that the claims for rent due under the pre-administration leases be treated as unsecured claims, ranking equally with other unsecured creditors of the insolvent company. The court did not grant the plaintiff the priority it sought for its claims.