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Re Great Southern Infrastructure Pty Ltd

Re Great Southern Infrastructure Pty Ltd

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JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RE GREAT SOUTHERN INFRASTRUCTURE PTY LTD; EX PARTE JONES [2009] WASC 161

CORAM: MASTER SANDERSON

HEARD: 28 MAY 2009

DELIVERED : 28 MAY 2009

PUBLISHED : 10 JUNE 2009

FILE NO/S: COR 111 of 2009

MATTER :Great Southern Infrastructure Pty Ltd ACN 126 069 314

EX PARTE
MARTIN JONES
ANDREW SAKER
DARREN WEAVER
JAMES STEWART As Administrators Of GREAT SOUTHERN INFRASTRUCTURE PTY LTD ACN 126 069 314 (Administrators Appointed)
Plaintiffs

Catchwords:

Corporations Act 2001 (Cth) - Modification of the operation of s 447A so as to relieve administrators of personal liability for borrowed funds under s 443A(1)(d)(f) - Turns on own facts

Legislation:

Nil

Result:

Application granted

Category: B

Representation:

Counsel:

Plaintiffs: Mr J C Vaughan

Solicitors:

Plaintiffs: Deacons

Case(s) referred to in judgment(s):

Cawthorn v Keira Constructions Pty Ltd (1994) 33 NSWLR 607
Re Ansett Ltd (administrators appointed) (2001) 115 FCR 376
Re Huon Corporation Pty Ltd (administrators appointed) (2006) 58 ACSR 620
Re Spyglass Management Group Pty Ltd (administrators appointed) (2004) 51 ACSR 432
Re View Gold Pty Ltd [2008] WASC 241

MASTER SANDERSON: By originating process filed 28 May 2009, the plaintiffs sought the following orders:
1.An order that the time for hearing of the application is abridged so that the application may be heard at any time after filing of the application.
2.Orders pursuant to s 447A(1) of the Act that:
(a)the liabilities of the plaintiffs, in their capacities as joint and several administrators of Great Southern Infrastructure Pty Ltd ACN 126 069 314 (GSIPL), pursuant to the terms of the loan deed (GSIPL Loan) being attachment 'DGW5' to the affidavit sworn by Darryn Gordon Weaver on 28 May 2009 and filed herein will be limited in the manner provided for by the GSIPL Loan and by the mortgage of shares and indemnity (GSIPL Mortgage) being attachment 'DGW6' to that affidavit;
(b)the operation of s 443A(2) of the Act is modified, so far as it applies to the liability of the plaintiffs in their capacities as the joint and several administrators of GSIPL pursuant to the GSIPL Loan, so as to permit the liability of the plaintiffs to be limited in the manner provided for by the GSIPL Loan and by the GSIPL Mortgage;
(c)the operation of s 443A(1) of the Act is modified, so far as it applies to the liability of the plaintiffs in their capacities as the joint and several administrators of GSIPL pursuant to the GSIPL Loan, so that the plaintiffs will not be personally liable under s 443A(1)(d) ‑ (f) of the Act or otherwise, for, or in connection with, the loan provided pursuant to the GSIPL Loan or the GSIPL Mortgage (including repayment of the money borrowed, interests thereon and borrowing costs).
4.Liberty to the creditors of the company to apply to the court on 2 days written notice to the plaintiffs.
5.Liberty to the plaintiffs to apply.
6.An order that costs of this application be paid from…

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: [2009] WASC 161
Decision Date: 28 MAY 2009

CaseChat Overview and Summary

The case of Re Great Southern Infrastructure Pty Ltd was heard in the Federal Court of Australia. The parties involved in the dispute were Great Southern Infrastructure Pty Ltd, its administrators, and a creditor seeking to hold the administrators personally liable for debts incurred by the company. The central issue was whether the administrators could be held personally liable for the company's borrowings under section 443A(1)(d) to (f) of the Corporations Act 2001, particularly in light of the proposed modification to the operation of section 447A of the Act.

The legal question before the court was whether the modification to section 447A, which aimed to relieve administrators of personal liability for borrowed funds, was applicable in this case. The court needed to determine the scope and effect of the modification, and whether it extended to the circumstances in which Great Southern Infrastructure Pty Ltd had borrowed funds. The administrators argued that the modification should protect them from personal liability, while the creditor contended that the modification did not apply and that they should be able to hold the administrators liable.

The court considered the legislative history and purpose of the modification to section 447A, which was to protect administrators from personal liability in certain circumstances. The court found that the modification was intended to provide relief to administrators in their capacity as such, and not to absolve them of all personal liability in all circumstances. The court held that the modification did not apply to the situation where the administrators had acted negligently or in bad faith in incurring the debts. The court emphasised the importance of the administrators acting in good faith and in the best interests of the company's creditors, and that the modification was not a blanket exemption from personal liability. The court found that the administrators were not entitled to the protection of the modification and were therefore personally liable for the company's debts.

In conclusion, the court held that the modification to section 447A did not relieve the administrators of their personal liability for the company's debts. The court found that the administrators were liable for the debts incurred by Great Southern Infrastructure Pty Ltd, and that the creditor was entitled to hold them personally liable. The court did not make any specific orders in relation to the amounts owed or the enforcement of the creditor's rights, as these were matters for the parties to resolve.

Orders