Re Bell Group Finance Pty Ltd (in Liq); [No 2]
[2020] WASC 323
•7 SEPTEMBER 2020
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: RE BELL GROUP FINANCE PTY LTD (IN LIQ); EX PARTE BELL GROUP FINANCE PTY LTD (IN LIQ) [No 2] [2020] WASC 323
CORAM: HILL J
HEARD: 20 AUGUST 2020; WRITTEN SUBMISSIONS 21 AUGUST 2020
DELIVERED : 7 SEPTEMBER 2020
FILE NO/S: COR 85 of 2020
EX PARTE
BELL GROUP FINANCE PTY LTD (IN LIQUIDATION) AND OTHER COMPANIES LISTED IN SCHEDULE A TO THE ORIGINATING PROCESS
First Plaintiff
ANTONY LESLIE JOHN WOODINGS
Second Plaintiff
ACN 008 675 625 PTY LTD AND THE OTHER COMPANIES LISTED IN SCHEDULE D TO THE ORIGINATING PROCESS
Third Plaintiff
Catchwords:
Corporations law - Scheme of arrangement - Application for orders approving scheme under s 411(b) of the Corporations Act 2001 (Cth) - Orders made approving scheme
Corporations law - Application for directions - Entry into amended deed - Directions given
Corporations law - Application for abridgement of time to declare dividend - Application granted
Corporations law - Application for relief under s 1322(4)(a) of the Act - Publication of notice of intention to declare dividend - Publication required under Corporations Regulations as at 15 July 2001 no longer exists - Application granted
Legislation:
Corporations Act 2001 (Cth), s 411, s 1318, Sch 2 s 90-15(1)
Corporations Law, s 479(3), s 1322
Result:
Schemes of arrangement approved, applications granted, directions given
Category: B
Representation:
Counsel:
| First Plaintiff | : | Mr J R J Lockhart SC and Mr P A Walker |
| Second Plaintiff | : | Mr J R J Lockhart SC and Mr P A Walker |
| Third Plaintiff | : | Mr J R J Lockhart SC and Mr P A Walker |
Solicitors:
| First Plaintiff | : | Ashurst Australia |
| Second Plaintiff | : | Ashurst Australia |
| Third Plaintiff | : | Ashurst Australia |
Case(s) referred to in decision(s):
Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488
Re Atlas Iron (No 2) [2016] FCA 481
Re Bell Group Finance Pty Ltd (in liq); Ex parte Bell Group Finance Pty Ltd (in liq) [2020] WASC 287
Re Bell Group Ltd (in liq); ex parte Woodings (2015) 293 FLR 215
Re Bell Group Ltd (in liq); ex parte Woodings [2020] WASC 121
Re David Jones Ltd (No 3) [2014] FCA 753
Re HIH Insurance Limited (in liq) [2020] NSWSC 803
Re HIH Insurance Ltd [2004] NSWSC 5
Re International Goldfields Ltd [2004] WASC 112
Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390
Re McDermott and Potts [2019] VSCA 23
Re McGrath [2010] NSWSC 404
Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583
Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83
Re United Medical Protection Ltd [2003] NSWSC 237; (2001) 46 ACSR 98
Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357
Snowside Pty Ltd as trustee for Snowside Trust v Boart Longyear Ltd [2017] NSWCA 215
HILL J:
The plaintiffs apply for orders approving proposed schemes of arrangement (Schemes) as well as directions in respect of several matters that are ancillary to the Schemes. The background to the matter is set out in the judgment that I gave following the first court hearing.[1] At the first court hearing, I made orders for the convening of Scheme meetings in respect of each of the first plaintiffs.
[1] Re Bell Group Finance Pty Ltd (in liq); Ex parte Bell Group Finance Pty Ltd (in liq) [2020] WASC 287.
All Scheme meetings were convened and, with the exception of the meeting for Ambassador Nominees Pty Ltd (Ambassador), held on 12 August 2020.[2] At each of these meetings, the creditors unanimously approved the Scheme.[3] In respect of the Scheme meeting of Ambassador, the only proof of debt that had been lodged was withdrawn prior to the Scheme Meeting.[4] For this reason, no quorum was achieved at this meeting or the adjourned meeting and the notice lapsed.
[2] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [38] - [74].
[3] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [71].
[4] Affidavit of Robert Sarsfield Trainor filed 18 August 2020 [38] - [47], 'RST-22' and 'RST-23'.
The matters came back before me for the second court hearing on 20 August 2020. At the conclusion of the hearing, I delivered brief reasons for making the orders sought by the plaintiffs. At the time, I said that I would subsequently publish detailed reasons for my decision. These are those reasons.
Scheme Meetings
Apart from the Scheme meeting for Ambassador, all other Scheme meetings were attended by sufficient creditors to constitute a quorum for the meeting.[5] In respect of BGF, in accordance with the directions I made on 17 July 2020, two Scheme meetings were convened and held: one meeting for the funding creditors and the other for all other creditors.[6]
[5] Second affidavit of Antony Leslie John Woodings filed 19 August 2020, 'ALJW 35'.
[6] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 'ALJW35' p 857 - 923.
At each of the meetings, the resolution to agree to the Scheme was presented to creditors followed by a resolution to approve a proposed amended scheme (Amending Resolution).[7]
[7] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [64].
At each of the Scheme Meetings, both resolutions were passed unanimously.[8]
[8] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [71].
Approval of Scheme
This matter came back before me for the second court hearing on 20 August 2020.
In addition to the affidavits that were relied upon at the first hearing, the plaintiffs relied on the following additional affidavits:
(a)the fourth affidavit of Adrian Chin Shien Chai filed 18 August 2020, in relation to the finalisation of the Schemes booklet, its dispatch to the creditors referred to in [7(a)] of my orders of 17 July 2020, the registration of the Scheme booklet with the Australian Securities and Investments Commission (ASIC), the provision of notice to certain creditors regarding the proposed amendment to the Schemes and the alternate resolution; and the satisfaction of the condition precedent concerning the negative direction from the English High Court;
(b)the affidavit of Robert Sarsfield Trainor filed 18 August 2020 in relation to the preparation of an initial list of creditors for each of the first plaintiffs, and dispatch of the Schemes booklet to creditors on 17 and 20 July 2020. He annexes correspondence in relation to Bell Bros (HK) Ltd and with the only known creditor of Ambassador;
(c)the second affidavit of Antony Leslie John Woodings filed 19 August 2020, the chairperson of each of the Scheme meetings, providing a report on the Scheme meetings and the minutes of the meetings. He also gives evidence that there are a number of creditors of TBGL, who originally lodged proofs of debt with the then liquidator in 1991, who have never submitted proofs of debt despite various calls for such proofs of debt to be lodged since that time. He annexed a copy of a proposed amended deed, the subject of the application for approval under s 477(2B) of the Act, and further correspondence that he had received in respect of Bell Bros (HK) Ltd;
(d)the third affidavit of Antony Leslie John Woodings filed 19 August 2020 in relation to the Scheme meetings of Ambassador on 12 and 19 August 2020, confirming that all conditions precedent (apart from the orders sought at the second court hearing) had been satisfied, he had not received any notice of appeals against a decision made by him as chairperson of any of the Scheme Meetings and that neither he nor the plaintiffs' solicitors had received any notice of objection from any creditor or notice that any creditor intended to appear at the hearing;
(e)the fifth affidavit of Adrian Chin Shien Chai filed 19 August 2020 annexing correspondence with ASIC serving copies of the affidavits and submissions relied upon by the plaintiffs at the second court hearing;
(f)the fourth affidavit of Antony Leslie John Woodings filed 20 August 2020 annexing an email from ASIC confirming that ASIC did not have any comments on these documents and did not intend to appear at the second court hearing.
These additional affidavits address the matters the plaintiffs were required to establish at the second court hearing.
Accordingly, I was and am satisfied that all statutory pre‑-conditions have been met. I now turn to consider the discretionary considerations.
Legal Principles in respect of the Scheme Approval
The approval of the proposed Scheme pursuant to s 411(4)(b) of the Corporations Act 2001 (Cth) (Act), or the second court hearing, is the third stage of approval for a scheme of arrangement. The second stage is the approval of the Scheme by the requisite statutory majorities, which occurred at the Scheme meetings.
At the second court hearing, the court has two tasks:[9]
(a)to ensure that all statutory and procedural requirements have been satisfied. This includes confirming that:[10]
i.the scheme meetings were convened and held in accordance with the court's earlier orders,
ii.the resolutions were passed with the requisite statutory majorities; and
iii.the plaintiffs otherwise complied with the court's earlier orders;
(b)to determine, in the exercise of the court's discretion, whether to approve the proposed arrangement.
[9] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [2018] WASC 357 [12].
[10] Re International Goldfields Ltd [2004] WASC 112 [7].
The court has a discretion to approve a scheme under s 411(4)(b) and is not bound to approve a scheme just because the court previously made orders for the convening of a meeting or because the statutory majorities have been achieved.[11] That said, the court will usually approach the task on the basis that creditors are better judges of what is in their commercial interests than the court.[12]
[11] Re Atlas Iron (No 2) [2016] FCA 481 [5]; Re Seven Network Ltd [No 3] [2010] FCA 400; (2010) 267 ALR 583 [31].
[12] Re Wesfarmers Ltd; Ex parte Wesfarmers Ltd [No 2] [13]; Re Seven Network Ltd [No 3] [32] - [33].
The factors that inform the court's discretion whether or not to approve the scheme are:[13]
(a)whether all conditions to which the Scheme is subject (other than court approval and lodgements of the court’s orders with ASIC) have been met or waived;
(b)whether the proposal is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it;
(c)whether the plaintiff has brought to the attention of the court all matters that could be considered relevant to the exercise of the court's discretion;
(d)whether there has been full and frank disclosure of all information material to the creditors' decision;
(e)whether the court is satisfied that the scheme has not been proposed to avoid ch 6 of the Act..
[13] Re Atlas Iron Ltd (No 2) [6]; Re David Jones Ltd (No 3) [2014] FCA 753 [3].
Disposition
Compliance with statutory and procedural requirements
I am and was satisfied, on the basis of the additional affidavits that were filed by the plaintiffs that:
(a)a copy of the court's orders made on 17 July 2020 were lodged with ASIC that day;[14]
[14] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [9], 'ALJW29'.
(b)a copy of the Scheme booklet that was approved for distribution by the court was lodged with ASIC on 17 July 2020;[15]
[15] Fourth affidavit of Adrian Chin Shien Chai filed 18 August 2020 'ACSC70'.
(c)the Scheme booklet was dispatched to creditors in accordance with my orders of 17 July 2020;[16]
[16] Affidavit of Robert Sarsfield Trainor filed August 2020 [14] - [22]; 'RST5' – 'RST12'.
(d)the Scheme meetings were convened and held on 12 August 2020 in accordance with my orders of 17 July 2020. Specifically, the Scheme Meetings for each of the first plaintiffs (other than BGF and Ambassador) were held concurrently to deal with agenda items 2(a) to 2(c) of the Notice of Meeting and separately to deal with agenda item 2(d) of the Notice of Meeting. In respect of BGF, two meetings were convened being one meeting for the funding creditors and one meeting for all other creditors;[17]
(e)at each of the meetings, two resolutions were put to creditors being:
(1)Pursuant to and in accordance with s 411 of the Corporations Act 2001 (Cth), the scheme of arrangement between [company] and its Scheme Creditors, as contained and described in the Explanatory Statement, is agreed (Resolution One).
(2)If the requisite majority of creditors of Ambassador Nominees fail to pass a resolution agreeing to the Schemes at the adjourned Scheme Meeting for that company, then pursuant to and in accordance with s 411 of the Corporations Act 2001 (Cth), the scheme of arrangement between [company] and its Scheme Creditors, as contained and described in the amended form of instrument tabled by the Chairperson at the Scheme Meeting and marked 'Annexure C', is agreed (Resolution Two).
(f)both resolutions were passed by the requisite statutory majorities of each of the first plaintiffs (other than Ambassador);[18]
(g)notice of the second court hearing was given by way of advertisement in The West Australian and The Australian newspapers on August 2020.[19]
Satisfaction of conditions precedent
[17] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [31] - [73].
[18] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [71] - [73].
[19]Affidavit of Robert Sarsfield Trainor filed 18 August 2020 [48], 'RST26'.
On the evidence before the court, I am satisfied that the conditions precedent of the Schemes have been satisfied (apart from those relating to the Court’s approval of the Schemes or other directions sought from the court).[20]
Fairness and reasonableness
[20] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [71] - [72]; third affidavit of Antony Leslie John Woodings filed 19 August 2020 [15], [17], [18], [20], 'ALJW-39' pages 15 - 98; fourth affidavit of Antony Leslie John Woodings filed 20 August 2020 [6] - [7]; fourth affidavit of Adrian Chin Shien Chai filed 18 August 2020 [21], 'ACSC-74'.
At the first hearing, based on the evidence before the court, I was satisfied that the proposed Schemes were of such a nature that there was no apparent reason that it should not receive approval if the requisite voting majorities were achieved at the Scheme meetings.
Nothing has occurred since the date of the first hearing to change this view. The creditors who voted at each of the meetings unanimously supported the proposed Schemes, including WIT, whose votes were tagged at the BGF meeting as proposed by ASIC in exchanges with the solicitors for the plaintiffs prior to the first court hearing. No creditor appeared to oppose the orders sought at the second court hearing. I was and am satisfied that the proposed Schemes are fair and reasonable and are Schemes that sensible business people might consider to be of benefit to creditors.
Full and fair disclosure
At the first court hearing, based on the evidence before the court, I was satisfied that the draft Scheme booklet would provide full and fair disclosure to creditors.
The additional affidavit evidence filed by the plaintiffs establishes that the Scheme booklet dispatched to creditors was in the form approved for distribution by the court. Nothing has arisen to suggest that there has not been full and fair disclosure of all information that was material to the decision of creditors prior to them voting on the Schemes.
Satisfaction of s 411(17) and ASIC's view
Given that the proposed Schemes are creditors' schemes, to which the provisions of ch 6 of the Act are not relevant, to the extent required, I accept that the requirements of s 411(17) have been satisfied.
ASIC provided a letter prior to the first court hearing and confirmed prior to the second court hearing that it did not propose to attend to make any submissions.[21]
Exemption from s 411(11) of Act
[21] Third affidavit of Adrian Chin Shien Chai filed 16 July 2020, 'ACSC 59'; Fourth affidavit of Antony Leslie John Woodings filed 20 August 2020 'ALJW40'.
The plaintiffs sought an exemption from s 411(11) of the Act. In my view, there is no utility in requiring the court’s orders approving the Schemes to be annexed to each of the Scheme Company’s constitution as the orders do not effect any change to the constitution. I considered it was and is appropriate in the circumstances of this case to make the orders sought under s 411(12) of the Act.
Amendment of schemes
The plaintiffs have sought an amendment to the schemes to address the position of Ambassador. The evidence before me is that the only known creditor of Ambassador withdrew its proof of debt prior to the Scheme meeting,[22] which was accepted by the second plaintiff.[23] As a consequence, while the scheme meeting of the company was opened, a quorum was not achieved within 30 minutes of the scheduled commencement of the Scheme meeting.[24] As a result, the second plaintiff, as chairperson of the meeting, adjourned the Scheme meeting to 19 August 2020 at the same time and place stated in the Notice of Meeting.[25] On 19 August 2020, the adjourned Scheme meeting of Ambassador resumed and, once again, did not achieve a quorum within 30 minutes. As a consequence, the adjourned Scheme meeting lapsed.[26]
[22] Affidavit of Robert Sarsfield Trainor filed 18 August 2020 [45], 'RST23'.
[23] Affidavit of Robert Sarsfield Trainor filed 18 August 2020 [46], 'RST24'.
[24] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [48].
[25] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [48].
[26] Third affidavit of Antony Leslie John Woodings filed 19 August 2020 [5] - [9].
To address the possible implication of this, a resolution was put at each of the other scheme meetings for the approval of an amended form of the Scheme.[27] This resolution was also passed unanimously at each of the Scheme meetings.[28]
[27] See [14(e)] above; Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [64(j)].
[28] Second affidavit of Antony Leslie John Woodings filed 19 August 2020 [71] - [73].
Under s 411(6) of the Act, the court has power to grant its approval to a compromise or arrangement subject to such alterations or conditions as it thinks just. This is a broad power which is not limited to alterations which are technical or minor in nature.[29] In determining what is just, the court looks at the whole of the circumstances surrounding the matter.
[29] Snowside Pty Ltd as trustee for Snowside Trust v Boart Longyear Ltd [2017] NSWCA 215 [22] - [26].
In this case, I consider that the relevant circumstances are the following matters. First, the proposed amendment to the Schemes and the additional resolution were notified to creditors at least two days prior to the Scheme meetings. Second, resolutions were unanimously passed at each of the Scheme meetings approving the amended Scheme. Third, the exclusion of this company as a Scheme company has minimal effect on the overall Schemes and does not alter the outcomes for any Scheme participant. In this regard, I note that the assets of Ambassador are only $9,004.[30] Fourth, ASIC does not object to the proposed amendment, and if the amendments are not approved, the Schemes will fail which would lead to the failure of the entirety of the settlement of the Distribution Proceedings. It could not be said that this would be a just resolution.
[30] Affidavit of Antony Leslie John Woodings filed 10 July 2020, 'ALJW-8'.
For these reasons, in this case, I am satisfied that it is appropriate to grant approval to the proposed amendment to remove Ambassador as a Scheme company.
Transfer of undertakings, property and liabilities
The plaintiffs sought orders pursuant to s 413(1) of the Act for each of the Scheme companies other than BGF to transfer the whole of their undertaking, property and liabilities to BGF.
Section 413(1) provides for these orders to be made in the context of a scheme for reconstruction or amalgamation of a pt 5.1 body or bodies.
In the circumstances of this case, for the reasons set out above approving the Schemes, I consider that it is appropriate for me to exercise my discretion to make the orders sought by the plaintiffs.
Ancillary orders
The plaintiffs sought a number of ancillary orders in respect of the second plaintiff to facilitate the finalisation of the liquidations and completion of the Schemes. First, for approval to be given to the second plaintiff to administer the scheme under s 411(7) of the Act, second to authorise Mr Woodings to maintain and operate a bank account for the Scheme Fund and third, to the extent required, to grant leave to the second plaintiff to continue to act as liquidator or provisional liquidator of the Scheme Companies in accordance with s 532(2) of the Corporations Law and the same provision of the Act.
In the circumstances of this case, I consider that it is appropriate to make the orders sought. Both s 411(7) and s 532(2) of the Act require leave to be obtained from the court. This is so that any concerns regarding conflicting allegiances can be considered and the Court is satisfied that the person will bring independent judgment to their role.[31]
[31] Re HIH Insurance Limited (in liq) [2020] NSWSC 803 [52]; Re McGrath [2010] NSWSC 404 [50].
In this case, there is no suggestion that Mr Woodings will be compromised in his ability to act as liquidator of the Scheme companies by reason of the fact that he will also be the Scheme administrator. In my view, granting leave to Mr Woodings to act in both roles will result in the liquidations, provisional liquidation and Schemes being completed at the least practicable cost to creditors of the Scheme companies.
Approval for entry into deed
The plaintiffs sought approval to permit the second plaintiff to cause each of the third plaintiffs and Ambassador to enter into a deed to facilitate the implementation of the Schemes. These companies do not have any creditors and, as a result, cannot be Scheme companies.[32] The deed is required by cl 8.2 of the Scheme Implementation Deed and provides that all of the assets of these companies will be transferred to BGF to be dealt with in accordance with the Schemes.
[32] Affidavit of Antony John Leslie Woodings filed 10 July 2020 [269] - [275].
Mr Woodings considers that the obligations under the deed may be performed more than three months after it is entered into.[33] As such, approval is required under s 477(2B) of the Act.
[33] Plaintiff's submissions [72] - [73].
Although ss 477(2A) and 477(2B) deal with different aspects of a liquidator's power, similar considerations apply under each provision.[34] The statutory provisions ensure that there is oversight of the liquidator’s actions.[35] In considering an application under s 477(2B), particular focus must be made to ensuring the winding-up proceeds as expeditiously as circumstances allow.[36]
[34] Re United Medical Protection Ltd [2003] NSWSC 237; (2001) 46 ACSR 98 [6].
[35] Re HIH Insurance Ltd [2004] NSWSC 5 [15].
[36] Re HIH Insurance Ltd [15].
In considering whether to grant the approval sought by the liquidator, the usual approach taken by the court is that:[37]
[T]the court pays regard to the commercial judgment of the liquidator. That is not to say that it rubber stamps whatever is put forward by the liquidator but the court is necessarily confined in attempting to second guess the liquidator in the exercise of his powers, and generally will not interfere unless there can be seen to be some lack of good faith, some error in law or principle, or real and substantial grounds for doubting the prudence of the liquidator’s conduct. (citations omitted)
[37] Re Spedley Securities Ltd(in liq) (1992) 9 ACSR 83, 85 (Giles J); cited with approval in numerous authorities including recently in Re McDermott and Potts [2019] VSCA 23 [72].
In this case, for the following reasons, I consider that it is appropriate to grant the approval sought.
First, the deed is required to enable the third plaintiffs and Ambassador to carry out obligations which are a necessary part of implementing and finalising the settlement of the Distribution Proceedings. The settlement of these proceedings and entry into the various instruments has previously been approved by the court.[38]
[38] Re Bell Group Ltd (in liq); ex parte Woodings [2020] WASC 121.
Second, there is no evidence that there is a lack of good faith or any other matters that would call into question the appropriateness of the second plaintiff's conduct in connection with the proposed entry into the deed. In fact, all the evidence before me is to the contrary. I accept that the implementation of the settlement and the Schemes is in the interests of the contributories of the third plaintiffs and Ambassador and will assist the windings up of each of them.
Orders to permit earlier payment of dividend
The plaintiffs have sought an abridgement of the time required for TBGL to give notice of its intention to declare a dividend under reg 5.6.65(2) of the Corporations Regulations. An abridgement of 21 days to 10 days is sought to enable completion to occur as soon as is practicable.
Power under Corporations Act s 1322 to grant the relief sought
Section 1322 relevantly provides:
(4)Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:
(a)an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;
(b)an order directing the rectification of any register kept by ASIC under this Act;
(c)an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);
(d)an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;
and may make such consequential or ancillary orders as the Court thinks fit.
...
(6) The Court must not make an order under this section unless it is satisfied:
(a)in the case of an order referred to in paragraph (4)(a):
(i) that the act, matter or thing, or the proceeding, referred to in that paragraph is essentially of a procedural nature;
(ii)that the person or persons concerned in or party to the contravention or failure acted honestly; or
(iii)that it is just and equitable that the order be made; and
(b)in the case of an order referred to in paragraph (4)(c)—that the person subject to the civil liability concerned acted honestly; and
(c)in every case - that no substantial injustice has been or is likely to be caused to any person.
The power under s 1322(4)(d) must be exercised having regard to the general objects and purposes of the relevant statutory provision within the Act - here the statutory purpose evinced by reg 5.6.65(2). The court's order must not undermine the reasons for the requirements of the Act. The power must be exercised having regard to the interests of all parties affected and the public interest in ensuring compliance with the Act.[39]
Disposition
[39] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [2018] WASC 390 [41] - [43]
In this case, for the following reasons, I was satisfied in the circumstances of this case that it was appropriate to grant the abridgement of time sought.
First, the abridgement of time sought is, in my view, in the interests of creditors of the Australian Bell group and in the interests of the expeditious winding up of TBGL. I consider that it is in the interests of all creditors and in accordance with the purpose and objects of the Act for the settlement of this extremely long-running matter to be concluded as soon as is practicable.
Second, as has been previously noted by Vaughan J in Re Jaxsta Ltd, the making of the orders sought is consistent with the conduct of commerce generally.[40] Section 1322(4)(d) should be exercised in a way which does not unnecessarily stifle corporate and financial activity on technical grounds.[41] The purpose of the regulation is to ensure that reasonable notice of an imminent distribution is given to those who claim to be creditors but have not lodged a proof of debt and to unknown creditors who are yet to submit a proof of debt. In this case, I am satisfied that it is extremely unlikely that there are any creditors who fall into either category. The liquidations of these companies have been the subject of not only extensive litigation but also significantly publicity over more than 25 years.
[40] Re Jaxsta Ltd; Ex parte Jaxsta Ltd [50].
[41] Blaze Asset Pty Ltd v Target Energy Ltd [2009] FCA 698; (2009) 177 FCR 488 [33].
Third, there is no reason to consider that making the order sought could cause substantial injustice to any person.
Fourth, ASIC had notice of the application and did not oppose the application, nor do any creditors of the plaintiffs.
Order validating notice of intention to declare a dividend
At the conclusion of the hearing on 20 August 2020, on the request of the plaintiffs, I adjourned the plaintiffs' application for orders validating the notice of intention to declare a dividend to enable the plaintiffs to file a supplementary affidavit and submissions in support of the order sought.
A further affidavit of Mr Woodings was filed on 21 August 2020 together with short supplementary submissions. Having had an opportunity to consider these, I made orders on 21 August 2020 in the terms sought by the plaintiffs.
Factual background to application
On 20 August 2020, TBGL published its notice of intention to declare a dividend by publishing the notice on ASIC's Insolvency Notices website (Website).[42] This is the form in which insolvency-related notifications are routinely given. This has been the practice since about 1 July 2012[43] and is required under the current version of the Corporations Regulations.[44]
[42] Fifth affidavit of Antony Leslie John Woodings filed 21 August 2020 'ALJW46'.
[43] Fifth affidavit of Antony Leslie John Woodings filed 21 August 2020 [8].
[44] Corporations Regulations, reg 5.6.65(1) and reg 5.6.75.
However, this manner of giving notice does not strictly comply with the terms of reg 5.6.65(1) which was in force immediately before the Act took effect on 15 July 2001. This is the version that applies to the winding up of TBGL.[45] This version required the notice to be published in 'the Gazette', being ASIC's Business Gazette.[46]
[45] By reason of Corporations Act, s 1380
[46] Corporations Regulations 1990 (Cth), reg 5.6.65(1)(a).
The plaintiffs seek an order under s 1322(4)(a) of the Act to ensure that the notice, which has been published on the Website, is not taken to be invalid.
Legal principles
The provisions of s 1322(4) and (6) are set out at [43] above. The power under s 1322(4)(a) should be broadly construed and applied pragmatically.[47] In considering whether to exercise the power, the order must not undermine the object of the relevant provision and must be exercised with regard to the interests of all the parties affected by the order as well as the public interest.[48]
[47] Re Bell Group Ltd (in liq); ex parte Woodings (2015) 293 FLR 215 [57].
[48] Re Jaxsta Ltd [42] - [43].
Senior counsel for the plaintiffs submitted, which I accept that the object of reg 5.6.65(1) is to ensure that people who may want to submit a proof of debt in a liquidation of a company have notice of the liquidator’s intention to declare a dividend.
Disposition
In this case, for the following reasons, I was satisfied that the order sought by the plaintiffs should be made.
First, I accept that the publication of the notice on the Website rather than in the Business Gazette is of a procedural nature. Second, in publishing the notice in this form, the second plaintiff has adopted the practice that has been in place for more than eight years. In my view, this is more likely to bring the notice to the attention of any potential creditors who have not already lodged a proof of debt, if there are any. Third, I am satisfied that the plaintiffs have acted honestly in publishing the notice in this form and that no substantial injustice could be caused to any person. Fourth, I consider that making the order would be consistent with the object of the relevant provision as summarised above at [55].
Conclusion
For these reasons, I considered that it was appropriate to make the orders and directions sought by the plaintiffs and made orders at the conclusion of the hearing on 20 August 2020 in terms of Annexure 'A' to this judgment. On 21 August 2020, after considering the application by the plaintiffs for orders under s 1322(4)(a) of the Act, I made orders in terms of Annexure 'B' to this judgment.
ANNEXURE A
ANNEXURE B
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MG
Research Orderly to the Honourable Justice Hill
7 SEPTEMBER 2020
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