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Re Gunns Plantations Ltd (No 1)

Re Gunns Plantations Ltd (No 1)

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Case Copied 19 December 2012 68 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST

No. S CI 5485 of 2012

IN THE MATTER OF GUNNS PLANTATIONS LIMITED (ADMINISTRATORS APPOINTED) (RECEIVER AND MANAGERS APPOINTED)
DANIEL MATHEW BRYANT, IAN MENZIES CARSON and GREG DAVID CROSBIE (in their capacities as the joint and several administrators of GUNNS PLANTATIONS LIMITED (ADMINISTRATORS APPOINTED) (RECEIVER AND MANAGERS APPOINTED) and GUNNS PLANTATIONS LIMITED (ADMINISTRATORS APPOINTED) (RECEIVER AND MANAGERS APPOINTED in its capacity as responsible entity of the managed investment schemes listed in the schedule hereto	Plaintiffs
v
AUSTRALIAN EXECUTOR TRUSTEES LIMITED as trustee for the AUSTRALIAN FORESTRY PLANTATIONS (RECEIVERS AND MANAGERS APPOINTED) and WESLEY VALE ENGINEERING PTY LTE (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) as trustee for the AUSTRALIAN FORESTRY PLANTATIONS TRUST NO 2 (RECEIVERS AND MANAGERS APPOINTED)	First and second defendants
THE TRUST COMPANY (AUSTRALIA) LIMITED as trustee of the FORESTRY INVESTMENT TRUST	Third defendant
VP PASTORAL PTY LTD, ALISON FAIRLIE NAPIER as trustee of the ESTATE OF ALAN NAPIER and BROCKLANDS PTY LTD	Fourth, fifth and sixth defendants

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JUDGE:	ROBSON J
WHERE HELD:	Melbourne
DATE OF HEARING:	29 November, 10, 11 and 12 December 2012
DATE OF JUDGMENT:	19 December 2012
CASE MAY BE CITED AS:	Re Gunns Plantations Limited (No 1)
MEDIUM NEUTRAL CITATION:	[2012] VSC 655

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CORPORATIONS – Forestry Managed Investment Scheme – Application by administrators for extension of rent-free grace period under s 443B of Corporations Act 2001 (Cth) – Extension opposed by landlords – Balance of convenience favours creditors over landlords – Extension granted – Court’s power to order landlords be given priority by order under s 477A of Corporations Act 2001 (Cth) – Landlords unlikely to rent property during extended grace period and so inappropriate for s 477A order – Directions s 477D of Corporations Act 2001 (Cth) that administrators acting reasonably and properly and within power – Corporations Act 2001 (Cth), s 443B, s 477A, s 477D.

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APPEARANCES:	COUNSEL	SOLICITORS
For the Plaintiffs	Mr JG Santamaria QC with Dr O Bigos	Arnold Bloch Leibler
For the First and Second Defendants	E Woodward SC with MP Costello	Minter Ellison
For the Third Defendant	JAC Potts	Clayton Utz
For the Fourth, Fifth and Sixth Defendants	HNG Austin	Rae and Partners

HIS HONOUR:

Introduction

Mr Bryant, Mr Menzies and Mr Crosbie are the administrators of the Gunns Group of Companies. They were appointed on 25 September 2012. They control Gunns Plantations Limited (GPL), in its capacity as responsible entity of several managed investment schemes. The receivers and managers of the Gunns Group of Companies, who were also appointed on 25 September 2012, control the other companies in the Gunns Group.

By an interlocutory process dated 26 November 2012, the administrators apply for:

(a) an extension of the ‘grace period’ given to administrators under s 443B of the Corporations Act 2001 (Cth) (Corporations Act, or, the Act) before they become personally liable for rent and other amounts owed under leases of property used in…

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: [2012] VSC 655
Decision Date: 19 December 2012

CaseChat Overview and Summary

The case of Re Gunns Plantations Ltd (No 1) involved the administrators of Gunns Plantations Ltd applying to the court for an extension of the rent-free grace period for certain forestry properties. The landlords opposed the application. The dispute was heard in the Federal Court of Australia. The primary legal issue before the court was whether the administrators should be granted an extension of the rent-free grace period under section 443B of the Corporations Act 2001 (Cth). The landlords argued that the balance of convenience did not favour the granting of such an extension, whereas the administrators contended that the creditors would benefit from the extension.

The court considered the balance of convenience and found that it favoured the creditors, as the extension would allow the administrators to manage the company's assets more effectively and potentially increase the return to creditors. The court noted that the landlords were unlikely to rent the property during the extended grace period, which made it inappropriate to order priority for the landlords under section 477A of the Corporations Act 2001 (Cth). Additionally, the court found that the administrators were acting reasonably and within their powers, in accordance with section 477D of the Act. Consequently, the court granted the application for an extension of the rent-free grace period.

The court's decision was based on the balance of convenience favouring the creditors and the impracticality of ordering priority for the landlords. The court also noted that the administrators were acting within their powers and in a reasonable manner, as required by section 477D of the Corporations Act 2001 (Cth). The final orders included granting the application for an extension of the rent-free grace period for the forestry properties, with no order for priority to be given to the landlords under section 477A of the Act. The court further directed that the administrators were acting reasonably and within their powers under section 477D of the Act.

Orders