Project Sea Dragon Pty Ltd (Subject to a Deed of Company Arrangement) v Canstruct Pty Ltd

The respondents, Project Sea Dragon Pty Ltd (PSD) and Sea Dragon Group Pty Ltd (SFG), appealed against the decision of the primary judge to terminate the deed of company arrangement (DOCA) and voluntary administration. The appellant, Canstruct Pty Ltd, had brought an application to terminate the DOCA and administration, which was ultimately successful. The respondents argued that the primary judge’s decision was incorrect and sought to appeal it. The court had to decide whether the primary judge's satisfaction that a ground for termination of the DOCA was established was governed by the correctness standard or the standard applicable to discretionary decisions. The court had to determine whether the primary judge was correct in finding that the use of the voluntary administration process and the DOCA was an abuse of the provisions of Pt 5.3A of the Corporations Act 2001 (Cth). The court also had to consider whether the DOCA was unfairly prejudicial, unfairly discriminatory, and whether it could be given effect without injustice. Additionally, the court had to assess whether misleading information was provided to creditors voting on the DOCA and whether there were material omissions from the information given to those creditors. Finally, the court had to determine whether the primary judge erred in concluding that the company was solvent at all times up until 13 February 2023.

The court found that the primary judge was correct in applying the correctness standard to the decision to terminate the DOCA. The court found that the primary judge did not err in concluding that the use of the voluntary administration process and the DOCA was an abuse of the provisions of Pt 5.3A of the Corporations Act 2001 (Cth). The court found that the primary judge was correct in finding that the DOCA was unfairly prejudicial, unfairly discriminatory, and that it could not be given effect without injustice. The court found that there was no evidence of misleading information being provided to creditors voting on the DOCA or material omissions from the information given to those creditors. Finally, the court found that the primary judge was correct in concluding that the company was solvent at all times up until 13 February 2023. The appeal was dismissed.

The orders of the court were that leave be granted to the appellants to amend the Notice of Appeal in the form provided to the Court on 13 August 2024, that the appeal be dismissed, and that the appellants pay the respondent's costs of the appeal, and of their interlocutory applications in QUD 124 of 2023 filed on 19 March 2024 and 12 April 2024.