Re Newman Rivergums Village Operations Pty Ltd - [2015] WASC 443

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RE NEWMAN RIVERGUMS VILLAGE OPERATIONS PTY LTD; EX PARTE McVEIGH [2015] WASC 443

CORAM: ACTING MASTER GETHING

HEARD: 4 NOVEMBER 2015

DELIVERED : 4 NOVEMBER 2015

PUBLISHED : 19 NOVEMBER 2015

FILE NO/S: COR 262 of 2015

MATTER :NEWMAN RIVERGUMS VILLAGE OPERATIONS PTY LTD

EX PARTE
DERMOTT JOSEPH McVEIGH as Administrator of NEWMAN RIVERGUMS VILLAGE OPERATIONS PTY LTD
Plaintiff

Catchwords:

Corporations - Voluntary administration - Whether administrator validly appointed

Legislation:

Corporations Act 2001 (Cth), s 447A, s 447C

Result:

Declaration of validity made

Category: B

Representation:

Counsel:

Plaintiff: Ms C A Petersen

Solicitors:

Plaintiff: Lavan Legal

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

Correa v Whittingham [2013] NSWCA 263
National Australia Bank Ltd v Horne [2011] VSCA 280
ACTING MASTER GETHING:
(This judgment was delivered extemporaneously on 4 November 2015 and has been edited from the transcript.)

The application before me for determination is an originating process filed pursuant to Corporations Act 2001 (Cth) (CA) s 447A and s 447C dated 3 November 2015, brought by Newman Rivergums Village Operations Pty Ltd (NRVO).
On 30 October 2015 Dermott Joseph McVeigh was appointed as the voluntary administrator of NRVO pursuant to CA s 436C. This appointment was made by the secured creditor of NRVO, Zorro The X Factor Pty Ltd (Zorro). In the course of taking his appointment, Mr McVeigh was provided with copies of the relevant documents relating to the lending arrangements between Zorro, being the principal debtor, and NRVO. This included documentation pursuant to which the original lender, Secura Funds Pty Ltd (Secura), assigned its interests to Zorro. In reviewing these documents, Mr McVeigh obtained legal advice on the documents. The legal advice identified certain errors in one of the key documents pursuant to which he was appointed. This is a general security deed executed by Secura, the principal debtor, and a company by the name of Pilbara Accommodation Holdings Pty Ltd (PAH). The grantor of the security, I am informed, was intended to be NRVO. However, it is not described as such.
There are three errors in the general security deed. The first is that the grantor of the security is described as 'Newman Rivergum Operations Pty Ltd' in the body of the agreement (and not Newman Rivergums Village Operations Pty Ltd). The second is that the execution clause refers to PAH. The third is that the Australian Company Number (ACN) in the execution clause is not the ACN of NRVO. The only linkage on the face of the documents to NRVO is that the ACN of the grantor of the security is that of NRVO. Consequently, Mr McVeigh has concerns as to whether or not his appointment in reliance of the general security deed is valid.
Mr McVeigh seeks to address his concerns by seeking orders under two sections of the CA validating his appointment as administrator of NRVO. The first is CA s 447C, which provides as follows:
Court may declare whether administrator validly appointed
(1)If there is doubt, on a specific ground, about whether a purported appointment of a person as administrator of a company, or of a deed of company arrangement, is valid, the person, the company or any of the company's creditors may apply to the Court for an order under subsection (2).
(2)On an application, the Court may make an order declaring whether or not the purported appointment was valid on the ground specified in the application or on some other ground.
Section 447C is not curative, that is, it can only be relied on to declare what the position is, as opposed to correct the position.
By contrast, s 447A is curative. By s 447A(1) the 'Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company'.
The administrator has the standing to apply for an order under both sections.[1]
[1] CA s 447A(4)(c), s 447C(1).
The essential issue for determination in relation to the application is whether or not the deficiencies in the general security deed create sufficient uncertainty as to the identity of the company entering into the obligations to make it inappropriate for an order to be made under s 447C or s 447A. Put slightly differently, the onus is on NRVO to satisfy the court that the misdescriptions in the general security deed are just that, and that in substance it is an obligation entered into by NRVO.
I am satisfied that in substance NRVO is bound by the terms of the security deed. This is for eight reasons. The first is that the ACN referred to in the identification of the parties in the general security deed is the ACN of NRVO. This is confirmed from the ASIC company search in evidence before me.
The second reason is that it is evident that the general security deed was part of a tranche of documents executed by Secura, PAH, NRVO, and others, on 27 May 2013. One of those documents was a loan agreement. The loan agreement was executed by NRVO. The directors who executed it on behalf of NRVO were Mark Keene and Robert Geoffrey Stowe. The identities of these directors and their signatures are the same as that for the execution of the general security deed. Counsel for Mr McVeigh did point out that the ACN for NRVO in the loan agreement is also an error, however I do not consider that to be significant.
The third reason is that there was a further document signed at the same time as the general security deed and the loan agreement, being a guarantee and indemnity. The guarantee and indemnity is between Secura, NRVO, and Pilbara Accommodation Management Services Pty Ltd (PAMS). It was also executed on 27 May 2013 and is signed by Mr Keene and Mr Stowe. It refers to NRVO in the execution clause, and correctly describes its ACN.
The fourth reason is that Secura registered the security interest which it obtained pursuant to the general security deed from NRVO shortly after the general security deed was executed. The relevant extract from the Personal Properties Securities Register is in evidence before me. The organisation identifier on this document refers to the ACN of NRVO.
The fifth reason is that the solicitor who drafted the documents, Marcus Leon Easthope, has provided evidence that the errors were inadvertent oversights in the nature of transcription errors. Mr Easthope swore an affidavit on 3 November 2015, which is before me. At par 16 Mr Easthope refers to the error which I have identified in the loan agreement and in the execution clause of the general security deed. He does not identify the error in the description of the parties in the general securities deed, however I am satisfied that the explanation carries across.
The sixth reason is that I have before me a series of minutes of meetings of the directors of NRVO in which they resolve to enter into the guarantee. These minutes also refer to the loan agreement. The relevant documents are annexure ME12 to Mr Easthope's affidavit. There is also a statutory declaration by Mr Keene in relation to the minutes of the meeting dated 27 May 2013. Unfortunately these minutes also contain a misdescription of the identity of the company in question, referring to Newman Rivergum Operations Pty Ltd. However, the ACN is correct, so I take these documents to give weight to the view that there is a misdescription in the identity of the party.
The seventh reason is that there were subsequently deeds of variation executed by NRVO. The first is a deed of extension and variation of loan agreement executed 14 October 2014. It is annexure ME10 to the affidavit of Mr Easthope. The parties to this document are PAH, NRVO, PAMS, and Secura. The schedule for the document refers to the general security deed granted by NRVO. The execution clause refers to NRVO with the correct ACN, it is again signed by Mr Keene and Mr Stowe. To the extent that there is any legal doubt as to whether or not NRVO entered into the general security deed, in my view this document comprehensively resolves that doubt. It is properly construed as incorporating the general security deed by reference. There is a second deed of extension and variation loan agreement which is in evidence before me as annexure ME11 to Mr Easthope's affidavit. This is again between Secura, PAH, NRVO and PAMS. Again it refers to the 'General security deed granted by NRVO'. It is correctly executed by NRVO in the sense that the execution clause correctly refers to NRVO with the correct ACN.
The final reason is that there is a statutory declaration executed by Mr Stowe on 19 September 2014, which is annexure ME13 to Mr Easthope's affidavit. It does confirm the arrangements; in particular it contains a statement:
The Company has not created any charge, mortgage, lien or other encumbrance over its undertaking or any of its assets other than as notified in writing to Secura Funds Pty Ltd.
For those reasons I am of the view that the reference to Pilbara Accommodation Holdings Pty Ltd and ACN 160237909 in the general security deed and to Newman Rivergum Operations Pty Ltd in that document are typographical errors. Properly construed, the party contracting with Secura is NRVO. Put slightly differently, in view of the evidence which I have outlined, it would not be open to NRVO to assert to Secura that it was not a party to the general security deed, if for no other reason than the evidence which I have outlined creates a very compelling estoppel.
It follows from these conclusions that Mr McVeigh's appointment, which relies on the terms of the general security deed, is valid. He is therefore entitled to a declaration to this effect under CA s 447C.
In the alternative I would also have been prepared to make an order under s 447A that CA pt 5.3A is to operate in relation to NRVO in such a way as to treat the appointment of Mr McVeigh as the administrator of NRVO by Zorro on 30 October 2015 pursuant to CA s 436C as a valid appointment.
The decision of the Court of Appeal, Victorian Court of Appeal, in National Australia Bank Ltd v Horne,[2] makes it clear that the power in s 447A is a wide power, allowing the court to make orders that pt 5.3A operate as though the purported appointment of the administrators was valid.[3] The factors relevant to the exercise of the court's curative powers under s 447A were described by the New South Wales Court of Appeal in Correa v Whittingham as varying from case to case:[4]
Relevant considerations include the stage that the administration has reached, the financial position of the company, whether the business could continue if returned to the control of the directors, whether the continued administration would be in the interest of creditors, the purpose of Pt 5.3A and whether that purpose will be served by the making of orders sought, and whether there are any better options available to deal with the company's future ...
[2] National Australia Bank Ltd v Horne [2011] VSCA 280.
[3] See in particular NAB v Horne [33] (Almond AJA, Buchanan & Mandie JJA agreeing).
[4] Correa v Whittingham [2013] NSWCA 263 [210] (Gleeson JA, Barrett & Tobias JJA agreeing).
It seems to me that the appointment of Mr McVeigh in relation to NRVO is a subset of his wider appointment in relation to the liabilities of this group of companies to Zorro. I am satisfied that, consistent with the underlying purposes of CA pt 5.3A, it is in the interests of all creditors that he be appointed the administrator over the entirety of the group. I am not able to identify any party that would suffer prejudice as a result of this outcome, nor any accrued rights that will be adversely affected, these being factors identified in NAB v Horne.[5]
[5] NAB v Horne [44].
So for these reasons I am prepared to grant an order pursuant to CA s 447A declaring the appointment of Dermott Joseph McVeigh as the administrator of NRVO by Zorro by deed dated 30 October 2015 to be a valid appointment.