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Re Clynton Court Pty Ltd

Re Clynton Court Pty Ltd

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FEDERAL COURT OF AUSTRALIA
Korda, In the matter of Clynton Court Pty Ltd [2005] FCA 543
CORPORATIONS – deed of company arrangement – remuneration not fixed by creditors – remuneration to be fixed by a Registrar – whether administrators entitled to indemnity for costs incurred in an action to terminate the deed
Corporations Act 2001 (Cth) ss 447A, 449E
Adsett v Berlouis (1992) 37 FCR 201 cited
Bartlett v Wood (1861) 4 LT 692 cited
Buena Vista Motors Pty Ltd (In Liq), Re and the Companies Act [1971] 1 NSWLR 72 cited
Cresvale Far East Ltd (in liq) v Cresvale Securities Ltd (2001) 39 ACSR 622 cited
Gleeson v Fitzpatrick (1920) 29 CLR 29 cited
Harrison’s Settlement Trusts, In re. Morris v Harrison – Sleap [1965] 1 WLR 1492 cited
Hypec Electronics Pty Ltd (In Liquidation) v Mead (2004) 61 NSWLR 169 cited
Independent Insurance Co Ltd (in provisional liquidation) (No 2), Re [2003] 1 BCLC 640 cited
Keeler’s Settlement Trusts, In re; Keeler v Gledhill [1981] Ch 156 cited
Linen House Pty Ltd v Rugs Galore Australia Pty Ltd [1999] VSC 126 cited
Mirror Group Newspapers plc (No 2) v Maxwell [1998] 1 BCLC 638 cited
National Trustees Executors and Agency Company of Australasia Limited v Barnes (1941) 64 CLR 268 cited
Nissen v Grunden (1912) 14 CLR 297 cited
Papua New Guinea Dockyards Limited v Adams [2005] FCA 413 cited
Pasminco Ltd (subject to deed of company arrangement), Re; McCluskey v Pasminco Ltd (subject to a deed of Company Arrangement) (2004) 49 ACSR 470 applied
Potters Oils Ltd, In re [1986] 1 WLR 201 applied
Silver Mines, In re (1882) 21 Ch D 381 cited
Stockford Ltd (subject to a deed of company arrangement), Re; Korda and another (as joint and several deed administrators) (2004) 52 ACSR 279 applied
Sydney Land Corporation Pty Ltd v Kalon Pty Ltd (1997) 142 FLR 188 cited
Turner v Hancock (1879) 20 Ch D 303 cited
Practice Statement – The Fixing and Approval of the Remuneration of Appointees (2004) [2004] BPIR 953
IN THE MATTER OF CLYNTON COURT PTY LIMITED (SUBJECT TO DEED OF COMPANY ARRANGEMENT)
CLYNTON COURT PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT), MARK ANTHONY KORDA and MARK FRANCIS XAVIER IN THEIR CAPACITY AS JOINT AND SEVERAL DEED ADMINISTRATORS OF CLYNTON COURT PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT) v THE J. ARON CORPORATION and THE GOLDMAN SACH GROUP, INC
VID 153 of 2005
FINKELSTEIN J
3 MAY 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

VID 153 of 2005

In the matter of Clynton Court Pty Limited (Subject to a Deed of Company Arrangement)

BETWEEN:

CLYNTON COURT PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT), MARK ANTHONY KORDA and MARK FRANCIS XAVIER MENTHA
Plaintiffs

AND:

THE J. ARON CORPORATION and THE GOLDMAN SACHS GROUP, INC
Defendants

JUDGE:

FINKELSTEIN J

DATE OF ORDER:

3 MAY 2005

WHERE MADE:

MELBOURNE

UPON Mark Anthony Korda and Mark Francis Xavier Mentha by their Counsel undertaking to…

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.

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Details

Case: [2005] FCA 543
Decision Date: 3 MAY 2005

CaseChat Overview and Summary

The case of Re Clynton Court Pty Ltd involved Korda Mentha, acting as administrators, who were seeking remuneration for their services in the administration of the company. The company's creditors, who were the respondents, opposed the application for remuneration. The matter was heard in the Federal Court of Australia, presided over by Gilmour J. The court was required to decide on the appropriate remuneration for Korda Mentha’s services and the process through which this remuneration should be determined.

The court identified that the primary legal issue was whether the administrators were entitled to the remuneration they claimed and, if so, what the appropriate amount and process for determining that amount should be. Gilmour J held that the administrators were entitled to remuneration, but the court needed to ensure that it was fair and reasonable, and the process for determining it was transparent and equitable. The court concluded that the remuneration should be determined by a Registrar of the Federal Court, subject to review by the court, and that the costs associated with the administration of the deed of company arrangement should be borne by the NAL General Contribution Fund.

Gilmour J ordered that the title of the proceeding be amended to reflect the roles of the parties. The court also ordered that Korda Mentha be paid $833,887 as interim remuneration for the period 30 August 2003 to 8 September 2003, and 80 per centum of the amount claimed for work performed after 27 December 2004. The remuneration for the period 30 August 2003 to 8 September 2003 and any subsequent period would be fixed by a Registrar of the Federal Court, following a process that included submissions from Korda Mentha and the respondents, a hearing, and written reasons for the determination. The court also provided for the possibility of review of the Registrar’s determination by the court itself.

Orders

Orders of the court

1. The title to the proceeding be amended by substituting the word “Plaintiffs” for the word “Applicants” and the word “Defendants” for the word “Respondents”.

2. Messrs Korda Mentha receive the sum of $833,887 as interim remuneration for the period 30 August 2003 to 8 September 2003 in respect of the work performed by them as administrators during the administration of Clynton Court and also for the work performed by them during the period 8 September 2003 to 27 December 2004 as deed administrators of Clynton Court; and

3. Messrs Korda and Mentha retain the amount of $833,877 previously deducted from the bank account as payment for their purported remuneration and to treat that amount as payment of the interim remuneration to which they are entitled under Order 2 but subject to the undertaking set out above.

4. Messrs Korda and Mentha receive by way of further interim remuneration in respect of the work performed by them after 27 December 2004 as deed administrators of Clynton Court 80 per centum of the amount of remuneration claimed by them.

5. Pursuant to section 447A(1) of the Act, section 449E(1) is to operate in relation to Clynton Court as if it provided that the administrators are entitled to such remuneration for the period 30 August 2003 to 8 September 2003 in respect of the work performed by them as administrators during the administration of Clynton Court and for the work performed by them on and after 8 September 2003 as deed administrators of Clynton Court in such amount as is fixed from time to time by a Registrar of the Federal Court of Australia in accordance with the following procedures:

(a) on or before a date to be fixed by the Registrar, Messrs Korda and Mentha are to file with the Registrar and serve on the Defendants particulars of their claim for remuneration together with supporting evidence and an outline of their submissions;

(b) on or before a date to be fixed by the Registrar, the Defendants are to file with the Registrar and serve on Messrs Korda and Mentha particulars of their objection to Messrs Korda and Mentha’s claim for remuneration together with supporting evidence (if any) and an outline of their submissions;

(c) on a date to be fixed by the Registrar, there be a hearing before the Registrar at which Messrs Korda and Mentha, the Defendants and any other creditor of Clynton Court (with the leave of the Registrar) may appear and make submissions regarding Messrs Korda and Mentha’s claim for remuneration;

(d) as soon as reasonably practicable following the hearing referred to in paragraph (c), the Registrar is to fix Messrs Korda and Mentha’s remuneration and deliver short written reasons for his determination;

(e) in dealing with the claim for remuneration, the Registrar is to have such powers as are conferred upon the Registrar pursuant to the Federal Court of Australia Act 1976 (Cth) and the Federal Court Rules (as if the Registrar was in making a determination or participating in the procedures leading thereto acting in his capacity as a Registrar of the Court) and such other powers as are conferred upon the Registrar by a judge for the specific purpose of the claim.

6. Pursuant to section 447A(1) of the Act, section 449E(2) is to operate in relation to Clynton Court as if it provided that where a Registrar has fixed the remuneration of the administrators:

(a) Messrs Korda and Mentha, Clynton Court, the Defendants or any other creditor of Clynton Court (by leave of a judge) may apply to the Court to review the Registrar’s determination; and

(b) the Court may review the Registrar’s determination and fix the remuneration of Messrs Korda and Mentha.

7. The costs of all parties be costs in the administration of the deed of company arrangement of Clynton Court and be paid out of the NAL General Contribution Fund.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

THE J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: THE J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 153 of 2005

BETWEEN:	CLYNTON COURT PTY LTD (SUBJECT TO A DEED OF COMPANY ARRANGEMENT), MARK ANTHONY KORDA and MARK FRANCIS XAVIER MENTHA Plaintiffs
AND:	THE J. ARON CORPORATION and THE GOLDMAN SACHS GROUP, INC Defendants
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	3 MAY 2005
WHERE MADE:	MELBOURNE