Re Ashton Grove Pty Ltd;
[2015] WASC 152
•13 APRIL 2015
RE ASHTON GROVE PTY LTD; EX PARTE JACK ROBERT JAMES IN HIS CAPACITY AS ADMINISTRATOR OF ASHTON GROVE PTY LTD (IN LIQ) (ADMINISTRATOR APPOINTED) [2015] WASC 152
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2015] WASC 152 | |
| Case No: | COR:79/2015 | 13 APRIL 2015 | |
| Coram: | ALLANSON J | 13/04/15 | |
| 6 | Judgment Part: | 1 of 1 | |
| Result: | Application granted | ||
| B | |||
| PDF Version |
| Parties: | JACK ROBERT JAMES IN HIS CAPACITY AS ADMINISTRATOR OF ASHTON GROVE PTY LTD (IN LIQ) (ADMINISTRATOR APPOINTED) |
Catchwords: | Corporations Administration Extension of time to convene meeting of creditors Benefit to unsecured creditors |
Legislation: | Corporations Act 2001 (Cth), s 439A, s 447A |
Case References: | Austcorp Group Limited (2009) FCA 636 Re Riviera Group Proprietary Limited (Administrators Appointed) (Receivers and Managers Appointed) (2009) 72 ACSR 352 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
Ashton Grove Pty Ltd (In Liquidation) (Administrator Appointed) ACN 069 195 339
JACK ROBERT JAMES IN HIS CAPACITY AS ADMINISTRATOR OF ASHTON GROVE PTY LTD (IN LIQ) (ADMINISTRATOR APPOINTED)
Plaintiff
Catchwords:
Corporations - Administration - Extension of time to convene meeting of creditors - Benefit to unsecured creditors
Legislation:
Corporations Act 2001 (Cth), s 439A, s 447A
Result:
Application granted
Category: B
Representation:
Counsel:
Plaintiff : Mr K L Christensen
Solicitors:
Plaintiff : Gadens
Case(s) referred to in judgment(s):
In the Matter of Riviera Group Pty Ltd (admins apptd) (recrs & mgrs apptd) [2009] NSWSC 585
Silvia, in the Matter of Austcorp Group Limited (Administrators Appointed) [2009] FCA 636
ALLANSON J:
(This judgment was delivered extemporaneously on 13 April 2015 and has been edited from the transcript).
1 The plaintiff, Jack Robert James, is the administrator of Ashton Grove Pty Ltd (in liquidation) (administrator appointed). The company conducts business as a veterinary hospital.
2 On 3 March 2015, by order of the Federal Court, the company was wound up in insolvency, and the plaintiff was appointed as liquidator. The winding up was on the application of the Deputy Commissioner of Taxation in relation to a debt of $425,560.55.
3 On 19 March 2015, on an application to the master, this court gave leave to the plaintiff to appoint himself as administrator of the company and relieved him of the requirement to convene a first meeting of creditors. The plaintiff appointed himself as administrator the same day.
4 The plaintiff now applies for an order that the convening period for the meeting of creditors under s 439A of the Corporations Act 2001 (Cth) be extended 'up to and including midnight on 30 June 2015', and for further orders that:
2. Pursuant to s 447A of the Corporations Act, pt 5.3A have effect such that the meeting of creditors required by s 439A may be held at any time during or within five business days after the end of the convening period as extended by order 1, notwithstanding s 439A(2). In this way, the administrator gives himself flexibility to convene the meeting earlier than five days before the end of the now extended convening period.
3. The plaintiff to give notice of these orders to the company's creditors.
4. Any creditor or any other interested person has liberty to apply to vary these orders upon 48 hours' notice.
5 The plaintiff seeks similar liberty to apply and also seeks incidental orders, including for the costs of this application.
6 The application is supported by a certificate or urgency, the convening period expiring, I am told, on 16 April, and also by an affidavit of Paula Lauren Cowan, a partner of the plaintiff. Ms Cowan asked for leave to refer to an earlier affidavit of the plaintiff dated 18 March 2015, filed in the proceedings before the master, and I have read that affidavit in preparing for the hearing. Shortly before the hearing, the plaintiff provided a further affidavit of Mr James dated 13 April, and I have read that affidavit also.
7 In the plaintiff's affidavit in the earlier proceedings, he states that:
(i) The Veterinary Surgeons Board of Western Australia permits the practice to continue for a period of three months under his control to see if he can realise the sale as a going concern;
(ii) The plaintiff has liaised with a business broker for the sale of veterinary practices regarding the sale of the practice;
(iii) The plaintiff is satisfied that continuing to trade and being sold as a going concern would result in a better outcome for creditors, including employees; and
(iv) The business premises are leased from Barossa Holdings Pty Ltd. Dr Matthews (one of the directors of the company and formerly a registered veterinarian) and his wife are also directors of Barossa Holdings, and Barossa Holdings was in default on its mortgage.
8 In his second affidavit, the plaintiff says that he believes from inquiries with the Veterinary Board that it may grant him further time to conduct the business as long as a registered veterinary surgeon is employed there.
9 Ms Cowan in her affidavit deposes to the following:
(i) Dr Matthews is on leave without pay;
(ii) The directors of the company have not complied with requests to deliver a report as to affairs or to provide accounting records; and
(iii) The most recent taxation returns and accounts are for the financial year ending 2010. The plaintiff is attempting to reconstruct sufficient information for potential buyers and anticipates this taking six to ten weeks.
10 Mr Christensen referred me to the period being sought being a 'bit rubbery', but, in the circumstances, I am satisfied that that is the best that can be done. On a forced sale, the value of plant and equipment is low, approximately $7000, which, compared with the debt to the Commissioner of Taxation alone, shows how a forced sale of plant and equipment will not be to anybody's benefit. Any return to creditors, including employees, depends upon a successful sale.
11 As a result, the plaintiff does not expect to be able to provide a meaningful report to creditors until the financial position of the company can be reconstructed and a proper sales campaign conducted. The plaintiff submits, and I accept, that he has done a considerable amount of work and has acted responsibly and that it is not through his own fault that he would be unable to put a proposal to a meeting should one be required to be held now.
12 Ms Cowan also says that since the appointment of the plaintiff as administrator, the cash flow of the business has stabilised and is positive, and the plaintiff has settled the issues regarding the conduct of the company's business at the premises where the business is carried on. I understand from what Mr Christensen said from the bar table that it is his belief that the mortgagee is now in possession and in receipt of the rent so that, as Ms Cowan said, the situation regarding the business premises is resolved.
13 The information which was put before me in evidence leaves some questions unanswered. In particular, there is little information regarding other creditors, if any. I recognise, however, that in the circumstances, the plaintiff does not have access to all financial records, and it appears he is not receiving co-operation.
14 The function of the court in an application of this kind is to strike an appropriate balance between the legislature's expectation that an administration will be relatively swift and summary, and the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders. I refer to the comments of Lindgren J in Silvia, in the Matter of Austcorp Group Limited (Administrators Appointed) [2009] FCA 636 [18].
15 The plaintiff has referred the court to the very helpful decision of Austin J in In the Matter of Riviera Group Pty Ltd (admins apptd) (recrs & mgrs apptd) [2009] NSWSC 585, where his Honour set out 11 broad categories of case where the court has tended to grant an extension, grouped according to the reasons given for granting it [13].
16 Relevantly, they include:
(i) lack of access to corporate financial records;
(ii) the time needed to execute an orderly process of disposal of assets;
(iii) the time needed for a thorough assessment of a proposal for a deed of company arrangement;
(iv) where the extension will allow the sale of the business as a going concern; and
(v) more generally, that additional time is likely to enhance the return for unsecured creditors.
17 Importantly, Austin J also referred to the grant of an extension for the time sought by the administrator in these cases 'provided that the evidentiary case has been properly prepared, there is no evidence of material prejudice to those affected by the moratorium imposed by the administration and the court is satisfied that the administrator's estimate of time has a reasonable basis' [14].
18 On the material that I have summarised from the evidence put in front of me, the extension of time is sought for a range of reasons, but they, in effect, come down to this: that there has been a lack of access to corporate financial records. As a result, the administrator needs more time to properly dispose of the primary asset, which is the business. It may be that it can be sold as a going concern. Through no fault of his own, the administrator needs more time for a proper analysis of the financial position of the company, and for a proper and orderly marketing of the business. Otherwise, there is unlikely to be any significant return for unsecured creditors, certainly on the figures that I have seen.
19 The principal matter that had concerned me was the continuation of the moratorium which is imposed by the administration. If the situation regarding the mortgagee of the premises has been resolved, then on the material currently available I cannot see any undue prejudice to any other party, and I am satisfied that the orders should be made in the terms which have been sought.
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