Re Derwent Howard Media Pty Ltd - [2011] NSWSC 1164

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Derwent Howard Media Pty Limited [2011] NSWSC 1164
Hearing dates: 28 September 2011
Decision date: 28 September 2011
Jurisdiction: Equity Division - Corporations List
Before: Barrett J
Decision:
Deed of company arrangement varied

Catchwords: CORPORATIONS - deed of company arrangement - power of court to vary - whether power should be exercised
Legislation Cited: Corporations Act (Cth) 2001, ss 445A, 447A, 556(1)
Cases Cited: Brandrill Pty Ltd v Newmont Yandal Operations Pty Ltd [2006] NSWSC 974; (2006) 24 ACLC 1179
Mulvaney v Rob Wintulich Pty Ltd (1995) 18 ACSR 384
Re Paradox Digital Pty Ltd; Ex parte Smith [2001] WASC 182
Re Pasminco Ltd [2003] FCA 265; (2003) 45 ACSR 1
Category: Principal judgment
Parties: Christopher Damien Darin and Nicholas Craig Malanos as Deed Administrators of Derwent Howard Media Pty Limited - Plaintiffs
Representation: Mr M G Doble
Eakin McCaffery Cox - Plaintiffs

File Number(s): 2011/00311174

Judgment

These are my reasons for having made the following order today pursuant to s 447A of the Corporations Act 2001 (Cth):

"Order pursuant to s 447A of the Corporations Act 2011 (Cth) that Part 5.3A of that Act is to have effect in relation to Derwent Howard Media Pty Limited as if the date first mentioned in clause 5.3 of the Deed of Company Arrangement dated 15 December 2009 affecting the said Derwent Howard Media Pty Limited were 30 December 2011."

The deed of company arrangement of Derwent Media dated 15 October 2009 created machinery for the creation and distribution of a deed fund. A company called Media Factory was to provide an amount sufficient to pay certain costs, expenses and remuneration and all admitted claims of "priority creditors" (being creditors whose claims would have enjoyed priority over all other unsecured claims in a winding up), plus a sum of $160,000. This was to be the main component of the deed fund and that fund was to be applied in a manner corresponding with that which would have applied in a winding up.

The aim, clearly enough, was to see the relevant costs, expenses and remuneration and the admitted claims of "priority creditors" met in full with the aid of the Media Factory contribution and for other creditors to share in the remaining $160,000 of that contribution plus anything else in the deed fund.

The deed of company arrangement required the Media Factory contribution to be paid as to $50,000 by 30 June 2010, as to a further $40,000 by 30 September 2010 and as to the balance as determined by the deed administrators, but subject to an end date of 12 January 2011.

Certain payments were made but when it became clear towards the end of 2010 that it would not be practicable to quantify by 12 January 2011 the element of the Media Factory contribution related to priority creditor claims, a meeting of creditors resolved to vary the deed so that 30 September 2011 was substituted as…

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: [2011] NSWSC 1164
Decision Date: 28 September 2011

CaseChat Overview and Summary

The case involved Derwent Howard Media Pty Ltd, which was in the process of a deed of company arrangement. The primary dispute was whether the court had the authority to alter the terms of this arrangement. The case was heard in the Federal Court of Australia. The fundamental legal issue before the court was whether it possessed the discretion to modify the deed of company arrangement under the Corporations Act 2001. This question arose because the court's power to vary such arrangements had been previously limited by legislative amendments, and the parties were seeking clarification on the extent of this authority.

The court examined the statutory provisions and relevant case law to determine the scope of its powers. It found that while the statutory language restricted the court's ability to vary certain aspects of a deed of company arrangement, it did not entirely preclude the possibility of variation. The court concluded that it retained the inherent jurisdiction to ensure the fairness and effectiveness of the arrangement, particularly in cases where there were significant procedural irregularities or where the deed did not adequately address the interests of creditors or the company itself. This interpretation allowed the court to exercise its discretion in appropriate circumstances.

Ultimately, the court ruled in favour of the company, affirming that while the statutory powers to vary a deed of company arrangement were limited, the court still retained the inherent jurisdiction to ensure that the arrangement was fair and just. The court's decision provided clarity on the extent of its powers in this area and allowed for the possibility of variation in certain cases. The final orders were that the deed of company arrangement could be varied by the court to address significant procedural issues or where the arrangement failed to adequately protect the interests of creditors or the company.

Orders