Merryweather, in the matter of HMG Westhill Pty Ltd (Administrators Appointed)
[2009] FCA 1068
•18 SEPTEMBER 2009
FEDERAL COURT OF AUSTRALIA
Merryweather, in the matter of HMG Westhill Pty Ltd (Administrators Appointed) [2009] FCA 1068
IN THE MATTER OF HMG WESTHILL PTY LTD (ADMINISTRATORS APPOINTED) (ACN 126 9898 802), DAVID PAUL MERRYWEATHER and RICHARD WILLIAM BUCKBY IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF HMG WESTHILL PTY LTD (ADMINISTRATORS APPOINTED)
NSD 1028 of 2009
STONE J
18 SEPTEMBER 2009
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1028 of 2009
IN THE MATTER OF HMG WESTHILL PTY LTD (ADMINISTRATORS APPOINTED) (ACN 126 989 802)
DAVID PAUL MERRYWEATHER AND RICHARD WILLIAM BUCKBY IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF HMG WESTHILL PTY LTD (ADMINISTRATORS APPOINTED)
Plaintiffs
JUDGE:
STONE J
DATE OF ORDER:
18 SEPTEMBER 2009
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The Originating Process be made returnable instanter.
2.Confidential Exhibit DPM-2 to the affidavit of David Paul Merryweather sworn on 17 September 2009 and filed in this proceeding be confidential, and no person is to have access to the documents therein without an order of the Court.
3.With respect to HMG Westhill Pty Ltd (Administrators Appointed) (Company), pursuant to section 447A(1) of the Corporations Act 2001(Cth) (Act), Part 5.3A of the Act is to operate so that:
(a)the number "45" in section 439B(2) of the Act was omitted and replaced with the number "75"; and
(b)the number "45" in regulation 5.6.18(2) of the Corporations Regulation 2001 (Cth) was omitted and replaced with the number "75";
(c)the requirements in section 439A(4) of the Act be dispensed with for the adjourned meeting of the Company to be held on 30 September 2009 provided that the notice convening the meeting is accompanied by a statement from the administrators setting out the reasons for and against the further adjournment of the meeting for a period consistent with the orders set out in paragraph 3(a) and 3(b) above.
4.The Plaintiffs' costs of the proceedings be paid as a cost of the administration of the Company.
5. The Plaintiffs have liberty to apply.
6. These Orders be entered forthwith.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1028 of 2009
IN THE MATTER OF HMG WESTHILL PTY LTD (ADMINISTRATORS APPOINTED) (ACN 126 989 802)
DAVID PAUL MERRYWEATHER AND RICHARD WILLIAM BUCKBY IN THEIR CAPACITIES AS JOINT AND SEVERAL ADMINISTRATORS OF HMG WESTHILL PTY LTD (ADMINISTRATORS APPOINTED)
Plaintiffs
JUDGE:
STONE J
DATE:
18 SEPTEMBER 2009
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The plaintiffs, David Paul Merryweather and Richard William Buckby are joint and several voluntary administrators of HMG Westhill Pty Ltd (Administrators Appointed) (the Company). Pursuant to a resolution of the Company’s directors they were appointed on 24 June 2009. The first meeting of creditors was held on 6 July 2009. The second meeting of creditors was convened on 29 July 2009 and adjourned on that day for 45 business days, the maximum period permitted under the legislation.
By an originating process filed on 17 September 2009, the plaintiffs seek an extension to the period of adjournment for the second meeting of creditors in the Company’s voluntary administration. The period of extension sought is 30 days.
The application has been supported by an affidavit sworn on 17 September 2009 by Mr Merryweather. Mr Merryweather summarised the work done to date by the administrators. In relation to the business and assets of the Company he said:
(i)the Company operates a heavy engineering and maintenance business, specialising particularly in the mining services sector;
(ii)the Company is part of the Heavy Maintenance Group, of which the parent company [is] Heavy Maintenance Group Pty Ltd ACN 126 463 376 (Group) …
(iii)the business operates from three main workshop[s] in the Mackay region, Queensland, being from properties at Paget, Mackay Harbour and Slade Point. Paget is where the main workshop is located and is the largest of the premises comprising over 10,000 square metres. The Slade Point premises houses the Company’s site services division and its drill rod and rig refurbishment activities. The Mackay Harbour premises is where dragline buckets are repaired by the Company;
(iv)the Company had annual revenue of more than $30 million prior to our appointment as administrators, and has strong brand recognition in the Bowen basin and Central Queensland regions;
(v)as at our appointment, the Company had approximately 150 full time staff and 80 casual employees. It currently has approximately 110 full time staff and 60 casual employees;
(vi)the Company owes unsecured debts totalling approximately $28.4 million;
(vii)the Group owes approximately $43 million in secured debts, which debts are cross collateralised against the assets of the Company; and
(viii)other information about the Company is as outlined in the Administrators’ section 439A report to creditors dated 20 July 2009 …
Mr Merryweather deposed that the Administrators had been trading the Company and were attempting to sell it as a going concern. At present there are two serious potential purchasers of the Company. Offers from these potential purchasers have only recently been received and consequently negotiations with them and any sale to them cannot be completed prior to 30 September 2009. It is for this reason that the Administrators are requesting an extension of the adjournment period.
Mr Jackman SC who appeared for the plaintiffs, has directed my attention to numerous authorities which indicate that the Court has power to make such an order. Chief among them is the decision of Barrett J in Dean-Willcocks v Powerline GES Pty Limited (2002) 40 ACSR 516, in which his Honour not only considered in detail other authorities which have considered this matter, but also referred to comments made by the High Court in Australasian Memory Pty Limited v Brien (2000) 200 CLR 270. In their joint judgment in Australasian Memory Pty Limited Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ said at 281–282:
Section 447A is an integral part of the legislative scheme provided for by Pt 5.3A. In its terms, it enables the making of orders which alter the way in which “this Part is to operate in relation to a particular company”. That is, it permits the making of orders which would alter how s 439A is to apply. It is not right to seek to characterise s 447A as some general source of power to which resort cannot be had because to do so would “circumvent” the statutory limitations upon the exercise of the power that is given by s 439A(6) to extend the convening period. So to characterise s 447A is to give to all of the other provisions of Pt 5.3A a fixed and unchanging operation in relation to all companies. Yet the evident legislative intention of s 447A is to permit alterations to the way in which Pt 5.3A is to operate.
The facts in Dean-Willcocks v Powerline GES Pty Limited have much in common with the present in that the administrators in that case sought an extension of the adjournment period in order “to pursue further certain potentially beneficial initiatives they [had] in train”. Those initiatives included a possible sale of the assets of the company. His Honour said at [11] of his reasons:
If the administration were to come to an end tomorrow, liquidation or receivership would follow virtually as a matter of course and it would become necessary for a liquidator or a receiver to tread the same kind of path as the administrators have already taken. There are thus good commercial grounds, Mr Bellamy submits, for allowing the administrators further time in which to fully formulate the proposal for sale so that it can be placed before the meeting of creditors for consideration, without losing the benefit of all the work that has been done to date. That, to my mind, is an entirely sensible approach and justifies an extension of the s 439B(2) time limit, provided that the extension is of reasonable length, bearing in mind the moratorium that administration involves and the consequent need for rights not to be left in limbo for longer than is sensibly necessary.
The considerations which influenced Barrett J in extending the period of administration apply mutatis mutandis to the circumstances which I am considering.
The evidence in documents exhibited to Mr Merryweather’s affidavit satisfies me that no creditor of the company will be prejudiced in the sense of being worse off by either the extension of time or the proposed sale, should they come to fruition. Moreover it is highly likely that two classes of creditors, being employees and secured creditors, would be in a significantly better position if a sale could be completed.
The landlords of the Paget, Mackay Harbour and Slade Point premises have been consulted and make no objection to the proposed extension of time. Two of the four members of the committee of creditors appointed on 6 July 2009 have consented to the application. The other two members are apparently on leave and have not responded to the circular advising them of the application. Mr Merryweather also deposed that the Company’s secured creditor, Tasovac Pty Limited has consented to the extension that the Administrators seek.
In the circumstances outlined above I am satisfied that the extension should be allowed and therefore will make orders in the form requested by the plaintiffs.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone. Associate:
Dated: 18 September 2009
Counsel for the Plaintiffs I Jackman SC Solicitor for the Plaintiffs: Baker and McKenzie
Date of Hearing: 18 September 2009 Date of Judgment: 18 September 2009
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