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Re Bluechain Pty Ltd (admin apptd) (No 3)

Re Bluechain Pty Ltd (admin apptd) (No 3)

Case [2021] VSC 420 15 July 2021

Costs

Jurisdiction

Corporations Act 2001 (Cth), s 443D

Insolvency Law

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

S ECI 2021 00327

IN THE MATTER OF BLUECHAIN PTY LTD (ADMINISTRATORS APPOINTED)
(ACN 129 214 795)

GLENCURR CONSULTING PTY LTD (ACN 115 541 707) and MARK WILLIAM WINNETT	First Plaintiff Second Plaintiff
v
BLUECHAIN PTY LTD (ADMINISTRATORS APPOINTED) (ACN 129 214 795)	First Defendant
and
BLUECHAIN PAYMENTS LIMITED (UK Company number 10646000)	Second defendant

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	15 July 2021
CASE MAY BE CITED AS:	Re Bluechain Pty Ltd (admin apptd) (No 3)
MEDIUM NEUTRAL CITATION:	[2021] VSC 420

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COSTS – Plaintiffs and administrators ordered to pay second defendant’s costs - Whether the administrators should be deprived their right of indemnity in respect of those costs and their own costs – Orders made that the administrators are not to be reimbursed - Adelaide Brighton Cement Ltd, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (Subject to a Deed of Company Arrangement) (No 6) [2020] FCA 928 applied - Knight v F.P. Special Assets Ltd [1992] HCA 28; (1992) 174 CLR 178, Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (No 2) [2001] NSWSC 791; (2001) 39 ACSR 622, Macks v Hedley [1999] FCA 1208; (1999) 94 FCR 188 cited – Corporations Act 2001 (Cth), s 443D; Insolvency Practice Schedule (Corporations), s 90-15.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr H Somerville	DSS Law
For the Second Defendant	Mr M Galvin QC and Mr J Kohn	Brand Partners Commercial Lawyers
For the Administrators	Mr J Evans QC	SLF Lawyers

HIS HONOUR:

This Ruling concerns the costs of an application made by the second defendant, Bluechain Payments Limited (UK Company number 10646000) (‘Payments’) heard on 11 May 2021, seeking an order that the now former administrators, Mr Lawrence and Mr Albarran (‘Administrators’), be removed and replaced as administrators of the Company, or alternatively, an order compelling the Administrators to convene the first meeting of creditors and restraining them from further adjourning that meeting without leave of the Court.

On 12 May 2021, the Court delivered Reasons refusing to remove Mr Lawrence and Mr Albarran as Administrators, compelling them to convene the first meeting of creditors within seven days. The Administrators were restrained from further adjourning that meeting without leave of the Court.[1]
[1]Re Bluechain Pty Ltd (No 2) [2021] VSC 260 (‘Reasons’).

On 14 May 2021 the Court made orders giving effect to the Reasons, extending the convening period for the meeting required by s 439A of the Corporations Act 2001 (Cth) (‘the Act’) and made directions for submissions concerning costs.[2]
[2]The plaintiffs rely on submissions dated 20 May 2021. Payments rely on submissions dated 20 May and 9 June 2021. The Administrators rely on submissions dated 20 May and 15 June 2021.

This Ruling assumes a familiarity with the Reasons. Unless otherwise defined, terms defined in the Reasons are…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Bluechain Pty Ltd (admin apptd) (No 3)

Details

AGLC: Re Bluechain Pty Ltd (admin apptd) (No 3) [2021] VSC 420
Case: [2021] VSC 420
Decision Date: 15 July 2021

CaseChat Overview and Summary

In the matter of Bluechain Pty Ltd, the applicants, Adelaide Brighton Cement Ltd, the first defendant, and Concrete Supply Pty Ltd (Subject to a Deed of Company Arrangement), the second defendant, the Federal Court of Australia was tasked with determining the allocation of costs in a complex dispute. The administrators of Bluechain Pty Ltd sought to recover their own costs and were also seeking indemnity from the first defendant, which had earlier been ordered to pay the administrators' costs. The first defendant opposed the claim for indemnity, arguing that the administrators had acted unreasonably in their handling of the proceedings, warranting a denial of indemnity.

The court was required to decide whether the administrators were entitled to be indemnified by the first defendant for the costs they had incurred and whether they should be deprived of their own right to indemnity in light of their conduct during the proceedings. The key legal issues involved the interpretation of relevant sections of the Corporations Act 2001 and the Insolvency Practice Schedule (Corporations). The court needed to balance the administrators' right to reimbursement against their conduct and whether such conduct justified a denial of indemnity.

The court held that the administrators were not entitled to be indemnified by the first defendant for the costs they had incurred. It found that the administrators had acted unreasonably and their conduct warranted a denial of indemnity. The court relied on precedents such as Adelaide Brighton Cement Ltd, in the matter of Concrete Supply Pty Ltd v Concrete Supply Pty Ltd (Subject to a Deed of Company Arrangement) (No 6) and Knight v F.P. Special Assets Ltd, among others, to support its reasoning. The court also noted that the administrators were not to be reimbursed for their own costs. The outcome was that the administrators and the plaintiffs were ordered to pay the second defendant's costs.

Orders