In the matter of Daisytek Australia Pty Limited [2003] FCA 575
CORPORATIONS – application by administrators of two companies in voluntary administration for extension of time fixed by s 439A of the Corporations Act 2001 (Cth) for convening meetings of creditors – application by administrators also under s 447A of the Act for an order permitting the two meetings to be held earlier than the period of five business days following expiry of the extended convening period – whether s 447A empowers court to make latter order – discretionary considerations relating to both kinds of order.
IN THE MATTER OF DAISYTEK AUSTRALIA PTY LTD AND DAISYTEK AUSTRALIA (QUEENSLAND) PTY LTD
N 3031 OF 2003
LINDGREN J 4 JUNE 2003 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 3031 OF 2003
IN THE MATTER OF DAISYTEK AUSTRALIA PTY LIMITED (ACN 075 675 795) (ADMINISTRATORS APPOINTED)
AND DAISYTEK AUSTRALIA (QUEENSLAND) PTY LIMITED (ACN 097 222 163) (ADMINISTRATORS APPOINTED)
MARTIN RUSSELL BROWN AND GREGORY WINFIELD HALL IN THEIR CAPACITY AS THE JOINT ADMINISTRATORS OF DAISYTEK AUSTRALIA PTY LIMITED (ACN 075 675 795) (ADMINISTRATORS APPOINTED) AND DAISYTEK AUSTRALIA (QUEENSLAND) PTY LIMITED (ACN 097 222 163) (ADMINISTRATORS APPOINTED) PLAINTIFFS
JUDGE:
LINDGREN J
DATE OF ORDER:
4 JUNE 2003
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Pursuant to s 439A(6) of the Corporations Act 2001 (Cth), the convening period for the meetings of creditors of Daisytek Australia Pty Limited and Daisytek Australia (Queensland) Pty Limited be extended up to and including Friday 4 July 2003.
2.Pursuant to s 447A(1) of the Corporations Act 2001 (Cth), the meetings of creditors of Daisytek Australia Pty Limited (Administrators Appointed) and of Daisytek Australia (Queensland) Pty Limited (Administrators Appointed) required by s 439A of that Act may be held at any time during the period composed of the convening period as extended by Order 1 above and the period of five business days thereafter, notwithstanding the provisions of s 439A(2) of the Corporations Act.
3.The costs and expenses of this application be costs and expenses of the administrators of Daisytek Australia Pty Limited (Administrators Appointed) and of Daisytek Australia (Queensland) Pty Limited (Administrators Appointed).
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 3031 OF 2003
IN THE MATTER OF DAISYTEK AUSTRALIA PTY LIMITED (ACN 075 675 795) (ADMINISTRATORS APPOINTED)
AND DAISYTEK AUSTRALIA (QUEENSLAND) PTY LIMITED (ACN 097 222 163) (ADMINISTRATORS APPOINTED)
MARTIN RUSSELL BROWN AND GREGORY WINFIELD HALL IN THEIR CAPACITY AS THE JOINT ADMINISTRATORS OF DAISYTEK AUSTRALIA PTY LIMITED (ACN 075 675 795) (ADMINISTRATORS APPOINTED) AND DAISYTEK AUSTRALIA (QUEENSLAND) PTY LIMITED (ACN 097 222 163) (ADMINISTRATORS APPOINTED) PLAINTIFFS
JUDGE:
LINDGREN J
DATE:
4 JUNE 2003
PLACE:
SYDNEY
REASONS FOR JUDGMENT
INTRODUCTION
The plaintiffs (“the Administrators”) are joint administrators of Daisytek Australia…
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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AGLC
Re Daisytek Australia Pty Ltd [2003] FCA 575
Case
[2003] FCA 575
Decision Date
CaseChat Overview and Summary
The Administrators of Daisytek Australia Pty Ltd and Daisytek Australia (Queensland) Pty Ltd applied ex parte for an extension of the convening periods for meetings of creditors until 4 July 2003. The application was made under section 439A(6) of the Corporations Act 2001 (Cth) and sought a further extension under section 447A(1). The primary legal issue was whether the Administrators had demonstrated sufficient grounds to warrant an extension of the convening periods. The secondary issue was whether the meetings could be held before the end of the extended convening period, contrary to the usual five business day waiting period stipulated in section 439A(2) of the Act. The court was required to assess the necessity of the extension based on the circumstances presented, including the potential impact of a charge by GE Capital Finance Pty Ltd, the validity of reservation of title claims by certain creditors, and the possible sale of Daisytek Australia’s business.
The court found that the Administrators had provided adequate grounds for an extension of the convening periods. The potential voidness of the charge by GE Capital Finance Pty Ltd, the uncertainty over reservation of title claims, and the ongoing negotiations for the sale of the business all justified the need for additional time. The court accepted that the Administrators needed to report on these matters to the creditors and that resolving them promptly was in the best interest of the creditors and potential purchasers. The court also considered that it was appropriate, in the exercise of discretion, to allow the meetings to be held before the mandatory waiting period of five business days if deemed convenient by the Administrators. This decision was made to ensure that the Administrators could act efficiently and in the best interests of the creditors and potential buyers.
The court granted the application, extending the convening periods to 4 July 2003 and allowing the meetings to be held within the extended period and the subsequent five business days. The costs of the application were to be borne by the Administrators. The court’s decision balanced the need for expeditious resolution of the creditors’ concerns with the statutory requirements set out in the Corporations Act. This ruling provided the Administrators with the necessary flexibility to manage the complexities of the situation effectively.
Orders
Orders of the court
1. Pursuant to s 439A(6) of the Corporations Act 2001 (Cth), the convening period for the meetings of creditors of Daisytek Australia Pty Limited and Daisytek Australia (Queensland) Pty Limited be extended up to and including Friday 4 July 2003.
2. Pursuant to s 447A(1) of the Corporations Act 2001 (Cth), the meetings of creditors of Daisytek Australia Pty Limited (Administrators Appointed) and of Daisytek Australia (Queensland) Pty Limited (Administrators Appointed) required by s 439A of that Act may be held at any time during the period composed of the convening period as extended by Order 1 above and the period of five business days thereafter, notwithstanding the provisions of s 439A(2) of the Corporations Act.
3. The costs and expenses of this application be costs and expenses of the administrators of Daisytek Australia Pty Limited (Administrators Appointed) and of Daisytek Australia (Queensland) Pty Limited (Administrators Appointed).
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
Background
Background to the litigation
The Administrators apply ex parte for an extension of the convening periods until 4 July 2003.FACTS AND REASONINGApplication under subs 439A(6) The Administrators rely on three grounds in support of their application for the extension. The first ground relates to a fixed and floating charge executed by each company on or about 21 November 2002 in favour of GE Capital Finance Pty Ltd (“GE”). The debt owed to GE is owed by Daisytek Australia and is guaranteed by Daisytek Queensland. Notice of the charge given by Daisytek Queensland was lodged with the Australian and Securities Investments Commission (“ASIC”) on 12 December 2002, but notice of the charge given Daisytek Australia was not lodged with ASIC until 14 March 2003. Accordingly, the charge given by Daisytek Australia is prima facie void as security as against the Administrators by reason the operation of subs 266(1) of the Act. GE has applied to this Court under subs 266(4) of the Act seeking an order extending the time for lodgement of notice of the charge given by it to Daisytek Australia. That application is to be heard by Gyles J this coming Friday 6 June 2003. Obviously, it will be important that the Administrators be in a position to report to the meetings of creditors the result of that application. The more so, since, as between the two companies, virtually all assets are the property of Daisytek Australia rather than Daisytek Queensland. The second ground relied on relates to the fact that a number of creditors of Daisytek Australia are suppliers which claim to have the benefit of “reservation of title” clauses, but the Administrators are not yet in a position to express a view as to the validity of those claims. The Administrators have attempted to negotiate continued supply from the major supplier to Daisytek Australia, Hewlett-Packard Limited (“H-P”). H-P has claimed to have the benefit of a retention of title clause. It will be important that the Administrators be able to report to the meetings of creditors as to the results of their negotiations with H-P, as well as, more generally, as to the validity of the asserted clauses. The third ground relied upon concerns the possible sale of the business of Daisytek Australia. There is evidence that in the past two weeks some 14 parties have expressed interest in purchasing or investing in that business. The Administrators are advertising the business for sale in the Australian Financial Review this week and intend to do so again in the week commencing 9 June 2003. In their opinion it will or may take a further four weeks to finalise any negotiations regarding the possible sale of, or investment in, the business. They say they need until 4 July in which to resolve the position. There is evidence that both GE and H-P either consent, or do not object, to the extension of time sought. In my opinion a case is made out for the extension of time.Application under subs 447A(1) On the basis that the extension is granted, subs 439A(2) of the Act has the effect, relevantly, that the meetings of the creditors of the two companies must be “held” (as distinct from “convened”) within five business days after the end of the extended convening period – within five business days after 4 July 2003. The meetings may not be held prior to the end of the extended convening period, even if the Administrators are in a position early in the extended convening period to convene the meetings and if it would be convenient and desirable that they be held without waiting until after 4 July 2003. The Administrators believe that the three matters referred to earlier as the grounds for the extension may be resolved sooner rather than later. They do not know, and ask that I make an order under s 447A of the Act having the effect of enabling the meetings to be held during the period embracing the extended convening period and the period of five business days thereafter.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
LINDGREN J
As a matter of discretion, I think it appropriate that the Administrators be enabled to convene the meetings to be held on a date prior to expiry of the extended convening period if this is thought desirable, rather than being compelled to await the arrival, following that expiry, of the period of five business days referred to in subs 439A(2).CONCLUSION For the above reasons, I make orders under subs 439A(6) and subs 447A(1) of the Act.