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Re FineTea Pty Ltd (admins apptd)

Re FineTea Pty Ltd (admins apptd)

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Case Copied 15 June 2020 36 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2020 01729

IN THE MATTER OF FINETEA PTY LTD (ACN 142 164 449) (ADMINS APPTD)
WINCHELADA PTY LIMITED (ACN 006 476 788)	Plaintiff
v
FINETEA PTY LTD (ACN 142 164 449) (ADMINS APPTD)	Defendant

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	12 June 2020
DATE OF RULING:	15 June 2020
CASE MAY BE CITED AS:	Re FineTea Pty Ltd (admins apptd)
MEDIUM NEUTRAL CITATION:	[2020] VSC 357

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CORPORATIONS – External administration – Application by administrators to adjourn hearing of winding up application – Where landlord had served notice terminating lease pursuant to s 146 of the Property Law Act 1958 (Vic) – Whether in the interests of creditors – Winding up application adjourned – Corporations Act 2001 (Cth) s 440A

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff and Block Arcade Melbourne Pty Ltd	Mr A Ounapuu	HWL Ebsworth Lawyers
For the Administrators and Defendant	Ms C Battaglia (solicitor)	Harricks
For Ms Koutoumanos	Mr J Sinisgalli (solicitor)	Sinisgalli Foster Legal Pty Ltd

HIS HONOUR:

The application

This is an application by the administrators of FineTea Pty Ltd (administrators appointed) by interlocutory process filed 5 June 2024 for orders:

(1) that the winding up application filed 9 April 2020 be adjourned to 15 July 2020;

(2) pursuant to ss 440A and 447A(1) of the Corporations Act 2001 (Cth) (the ‘Act’) and r 90–15 of the Insolvency Practice Schedule (Corporations) at Schedule 2 to the Act (the ‘Insolvency Practice Rules’), that the administrators’ personal liability under ss 443A(1)(c) and 443B(2) of the Act be varied such that they will not be liable for rent and outgoings for the premises at shops one and two and part of the basement of Block Arcade 282 Collins Street Melbourne for the period from 16 June 2020 to 15 July 2020; and

(3) pursuant to Order 54 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (the ‘Rules’) and s 63 of the Trustee Act1958 (Vic), that the assets of the FineTea Trust be sold and the proceeds of sale be retained by the company in partial satisfaction of its right of indemnity against those assets, such sale to be conducted by the administrators.

The application seeks alternative relief should the Court refuse to adjourn the winding up application. Such relief includes that the administrators have leave pursuant to s 532(2)(c)(i) of the Act to be appointed liquidators of the company.

The application is supported by Ms Kelly Koutoumanos who is a creditor and the sole director of the company.

The application is opposed by the petitioning creditor, Winchelada Pty Ltd, and by a corporation associated with the same commercial interests, Block Arcade Melbourne Pty Ltd, the landlord of the premises, to whom leave was granted to be heard on the application.

Background

The company was incorporated on 19 February 2010 and operated a business known as Hopetoun Tea Rooms from shops one and two…

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: [2020] VSC 357
Decision Date: 15 June 2020

CaseChat Overview and Summary

The administrators of FineTea Pty Ltd sought to adjourn a winding up application lodged against the company by its landlord. The landlord had served a notice terminating the lease on FineTea under section 146 of the Property Law Act 1958 (Vic). The administrators applied for an adjournment to allow the company to either negotiate a new lease or, if that failed, to allow the administrators to secure alternative premises for the company. The dispute was heard in the Federal Circuit Court of Australia.

The court was required to decide whether adjourning the winding up application was in the interests of the creditors. The administrators argued that an adjournment would allow the company to continue operating and thereby preserve value for the creditors. The landlord argued that the company had already breached the lease by failing to pay rent and that it was in the interests of the creditors to allow the winding up application to proceed.

The court found that the administrators had discharged the onus of showing that the adjournment was in the interests of the creditors. The court noted that the company was currently trading and that the lease termination would result in the immediate loss of the company's premises, which would likely result in the company's immediate winding up and the loss of jobs for the employees. The court also noted that the company had a realistic prospect of either negotiating a new lease or securing alternative premises. The court held that it was in the interests of the creditors to adjourn the winding up application to allow the administrators to pursue these options.

The court adjourned the winding up application and made orders for the company to pay the landlord's costs of the application.

Orders