Re Cocos Islands Co-operative Society Limited (Administrators Appointed); [No 2] - [2025] WASC 161

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE COCOS ISLANDS CO-OPERATIVE SOCIETY LIMITED (ADMINISTRATORS APPOINTED); EX PARTE JEREMY NIPPS AND THOMAS BIRCH IN THEIR CAPACITIES as joint and several administrators of COCOS ISLANDS CO-OPERATIVE SOCIETY LIMITED (ADMINISTRATORS APPOINTED) [No 2] [2025] WASC 161
CORAM:   HILL J
HEARD:   15 APRIL 2025
DELIVERED          :   15 APRIL 2025
PUBLISHED           :   6 MAY 2025
FILE NO/S:   COR 160 of 2024
MATTER:   IN THE MATTER OF COCOS ISLANDS CO-OPERATIVE SOCIETY LIMITED (ADMINISTRATORS APPOINTED)
EX PARTE

JEREMY NIPPS AND THOMAS BIRCH IN THEIR CAPACITIES as joint and several administrators of COCOS ISLANDS CO-OPERATIVE SOCIETY LIMITED (ADMINISTRATORS APPOINTED)
First Plaintiff

COCOS ISLANDS CO-OPERATIVE SOCIETY LIMITED (ADMINISTRATORS APPOINTED)
Second Plaintiff

Catchwords:

Corporations - External administration - Application by administrators for further extension to convening period for second creditors' meeting - Whether modification in the interests of creditors as a whole - Turns on own facts

Legislation:

Corporations Act 2001 (Cth) s 435A, s 447A, pt 5.3A

Result:

Application granted

Category: B

Representation:

Counsel:

First Plaintiff	:	T J Langdon
Second Plaintiff	:	T J Langdon

Solicitors:

First Plaintiff	:	Ashurst
Second Plaintiff	:	Ashurst

Cases referred to in decision:

Diamond Press Australia Limited [2001] NSWSC 313
Mighty River International Limited v Hughes [2018] HCA 38
Re Cocos Islands Co-operative Society Limited (Administrators Appointed); Ex parte Jeremy Nipps and Thomas Birch in their capacities as joint and several administrators of Cocos Islands Co-operative Society Limited (Administrators Appointed)[2024] WASC 407
Re Daisytek Australia Pty Ltd (Administrators Appointed) [2003] FCA 768
Re Lombe; Australian Discount Retail Pty Ltd [2009] NSWSC 110
Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274
Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46

HILL J:

(This judgment was delivered extemporaneously and has been edited from the transcript to include references, headings and to correct matters of grammar and expression.)

By interlocutory process filed 8 April 2025, the plaintiffs seek orders pursuant to s 447A of the Corporations Act 2001 (Cth) (Act) to further extend the convening period of the second creditors' meeting of the second plaintiff until 23 October 2025. Unless an extension is granted by the court, the meeting is required to be convened by 23 April 2025, with the meeting to be held by no later than 30 April 2025.
At the hearing before me today, the plaintiffs relied on two affidavits of Jeremy Joseph Nipps, the first named first plaintiff, filed on 8 April 2025, one open and one confidential. In addition, the outline of submissions filed on 10 April 2025 also refers to Mr Nipps' original affidavit, which was filed on 21 October 2024 in support of the plaintiffs' first application for an extension.
In considering the application, I have had the significant benefit of a written outline of submissions, as well as brief oral submissions from counsel who appeared before me today.
Much of the factual background to the application was canvassed in my previous decision granting the plaintiffs an extension of the second creditors' meeting until 23 April 2025.[1] I do not intend to repeat that summary and in these reasons that I give for my decision, have adopted the definitions that were used in those original reasons.
[1] Re Cocos Islands Co-operative Society Limited (Administrators Appointed); Ex parte Jeremy Nipps and Thomas Birch in their capacities as joint and several administrators of Cocos Islands Co-operative Society Limited (Administrators Appointed) [2024] WASC 407 (Re Cocos Islands).

Should a further extension of time to convene the second creditors' meeting be granted?

The plaintiffs' current application is brought pursuant to s 447A of the Act. This is because it is presently unclear as to whether the court has power to grant a further extension of a convening period under s 439A(6),[2] although it is widely accepted that a further extension can be granted under s 447A of the Act.[3]
[2] Re Lombe; Australian Discount Retail Pty Ltd [2009] NSWSC 110 [29] ‑ [31].
[3] Re Lombe; Australian Discount Retail Pty Ltd [2009] NSWSC 110 [32].
In considering whether or not to grant a further extension to the convening period of the second creditors' meeting, the court is required to consider and take into account the objects and scheme of pt 5.3A of the Act, as set out in s 435A.
In reaching its decision, the court is required to maintain the appropriate balance between an expectation that an external administration will be undertaken in a relatively speedy and summary manner, with a need to ensure that an administration is not concluded without consideration of sensible and constructive options that are directed towards maximising returns for creditors and any possible return for shareholders.[4] In reaching its decision, the court is also required to take into account any possible detriment to third parties, including the suspension of rights and remedies of secured creditors, lessors, and others.[5]
[4] Tucker (Administrator) v Bolten (Trustee), in the matter of Quintis Leasing Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 46 [54], citing Diamond Press Australia Limited [2001] NSWSC 313 [10].
[5] Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 [18].
The court will generally exercise its discretion to extend the convening period where one or more of the established categories are satisfied, where there is no evidence of material prejudice to those affected by the extension, and the court is satisfied that the estimate of time required has a reasonable basis.[6]
[6] Mighty River International Limited v Hughes [2018] HCA 38 [73].
Mr Nipps' has explained in his affidavits what the Administrators have done during the administration to date.[7] This work has included:
(a)stabilising the business operations of the Co-operative and implementing more efficient systems;
(b)improving work health and safety practices;
(c)attending to a number of insurance issues associated with the Co‑operative's business and assets;
(d)reviewing contracts with suppliers, clients and employees, negotiating relevant variations and renewals, and formalising contracts with all the Co-operative employees;
(e)conducting repairs and maintenance to the Islands' resort; and
(f)implementing tighter spending controls, budgeting, and forecasting activities.
[7] Open affidavit of Jeremy Joseph Nipps filed 8 April 2025 [16].
Mr Nipps' evidence is that while the Administrators have significantly improved and stabilised the operations of the Co‑operative since the first extension was granted, the Administrators are not yet in a position to prepare a report to creditors and convene a second meeting of creditors. In his view, the prospects of securing the sale of the Co‑operative's business, or a recapitalisation or restructure of the Co‑operative, will be improved if further work is done to stabilise the trading operations of the Co-operative before any recapitalisation or sale process is pursued.[8]
[8] Plaintiff's submissions filed 10 April 2025 [15], Open affidavit of Jeremy Joseph Nipps filed 8 April 2025 [23] ‑ [24], [56] ‑ [57].
Mr Nipps also gave evidence of the work that the Administrators plan to undertake prior to convening the second meeting of creditors, if an extension is granted.[9] This work includes:
(a)reviewing existing employee contracts to ensure that they comply with current awards, standardising and modernising the employment arrangements, and arranging for updated employment contracts to be provided to all employees;
(b)quantifying the amount that is owed to employees for unpaid entitlements;
(c)continuing to investigate the financial affairs of the Co‑operative prior to their appointment, and considering what claims, if any, may be available against related parties;
(d)engaging with key stakeholders to discuss potential options for the restructuring of the Co-operative; and
(e)conducting a program for the restructure and/or sale of the Co‑operative and its businesses.
[9] Open affidavit of Jeremy Joseph Nipps filed 8 April 2025 [52].
Mr Nipps' evidence, which I accept, is that the Administrators believe these tasks will take approximately six months.[10]
[10] Open affidavit of Jeremy Joseph Nipps filed 8 April 2025 [63].
The evidence before me is that the Administrators have given notice of their intention to bring this application to the Indian Ocean Territories' administrators, as well as to the Committee of Inspection.[11] I note that no one has objected to the proposed extension or appeared at the hearing today to oppose the application.
[11] Open affidavit of Jeremy Joseph Nipps filed 8 April 2025 [46], 'JJN-13'.
For the following reasons, I am satisfied that it is appropriate to grant the requested application for an extension of the convening period until 23 October 2025, and for the proposed Daisytek order to be made.[12]
[12] Re Daisytek Australia Pty Ltd (Administrators Appointed) [2003] FCA 768.
First, Mr Nipps' evidence, which I accept, is that further time is required to prepare a satisfactory report to creditors. I accept on the evidence before me that without a further extension, the Administrators will not be in a position to make an informed recommendation to creditors given that the proposed sale or restructure process has not yet started, and the investigations being undertaken by the Administrators have not been completed.
Second, I accept that the administration is significantly complex for a number of reasons. These include its structure as a co‑operative, the essential role that the Co-operative plays in providing services to the Islands, and the relative isolation of the Islands.
Third, a further extension to the convening period is required to enable the sale or restructure of the Co‑operative or its assets, or to enable a deed of company arrangement to be proposed and negotiated. In my view, both of these matters are consistent with the purposes and objects of pt 5.3A of the Act, as set out in s 435A.
Fourth, the Administrators' opinion is that a further extension of time is required for a period of approximately six months. On the evidence before me, I am satisfied there is a reasonable basis for this estimate.
Finally, and importantly, no creditor (or any other relevant party) has raised any opposition to the proposed extension. I am satisfied on all the evidence before me that the return to creditors is likely to be significantly enhanced if a further extension is granted. In my view, the potential benefit of the extension outweighs any possible prejudice to creditors and is in the best interests of creditors as a whole.

Costs and other orders

The plaintiffs also seek orders for notice to be given to creditors of these orders, with liberty to apply to set aside the orders, as well as for the costs of the originating process to be costs in the voluntary administration of the Co-operative. In my view, these are the appropriate orders to be made in the circumstances of this case.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KC
Associate to the Honourable Justice Hill
6 MAY 2025