Re Pan Pharmaceuticals Ltd (admins apptd); Selim v McGrath - [2003] FCA 855

FEDERAL COURT OF AUSTRALIA
In the matter of Pan Pharmaceuticals Limited (Administrators Appointed) ACN 091 032 914, Pan Pharmaceuticals Export Pty Limited (Administrators Appointed) ACN 100 897 514, Pan Laboratories (Australia) Pty Limited (Administrators Appointed) ACN 003 763 308, Pan Pharmaceuticals Services Pty Limited (Administrators Appointed) ACN 095 628 943, Pan Pharmaceuticals Technologies Pty Limited (Administrators Appointed) ACN 104 129 188 [2003] FCA 855
IN THE MATTER OF PAN PHARMACEUTICALS LIMITED (ADMINISTRATORS APPOINTED) ACN 091 032 914, PAN PHARMACEUTICALS EXPORT PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 897 514, PAN LABORATORIES (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 003 763 308, PAN PHARMACEUTICALS SERVICES PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 095 628 943, PAN PHARMACEUTICALS TECHNOLOGIES PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 104 129 188
N 3045 of 2003
ALLSOP J
14 AUGUST 2003
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N3045 of 2003

BETWEEN:

JIM SELIM
APPLICANT

AND:

ANTHONY GREGORY McGRATH AND
CHRISTOPHER JOHN HONEY
RESPONDENTS

JUDGE:

ALLSOP J

DATE OF ORDER:

14 AUGUST 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The application in terms of the amended terms of application be dismissed.
2.The applicant pay the respondents' costs.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N3045 of 2003

BETWEEN:

JIM SELIM
APPLICANT

AND:

ANTHONY GREGORY McGRATH AND
CHRISTOPHER JOHN HONEY
RESPONDENTS

JUDGE:

ALLSOP J

DATE:

14 AUGUST 2003

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Application is made to the Court for final relief by way of an application filed in Court on 8 August 2003, that is last Friday. The applicant is a Mr Selim and the respondents are the voluntary administrators of the companies comprising what I will refer to as the Pan Group. The respondents are Mr McGrath and Mr Honey who are partners of the accounting firm KPMG. The relief sought in the application has been superseded by relief sought in a document entitled “Short Minutes of Order” which I have amended by hand and described as “Amended Terms of Application”, which document was handed up on Tuesday; and which I will give leave to file in Court formally today. That document, the Amended Terms of Application, may stand as the amended application in the proceedings. I will refer to it as the amended application.
The terms of the amended application are as follows:
1.Order that if the respondents cause the companies or any of them to enter into a Business Sale Agreement as envisaged by the Pan sale process referred to in the letter of KPMG Corporate Finance (Australia) Pty Limited of 1 August 2003 (Tab 39 of the Exhibits to the affidavit of Andrew Bruce Thorpe sworn on 7 August 2003) such agreement is to be amended to provide that completion of the sale is not to take place prior to:
(a) the expiration of the time limited for an appeal pursuant to s 1321 of the Corporations Act 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: [2003] FCA 855
Decision Date: 14 AUGUST 2003

CaseChat Overview and Summary

In the case of Re Pan Pharmaceuticals Ltd (admins apptd); Selim v McGrath, the dispute involved an application concerning the administration of Pan Pharmaceuticals Ltd, focusing on the timing and validity of certain applications made under the Corporations Act. The matter was heard in the Federal Court of Australia. The central issue was whether there was a time limit for making applications under sections 600B and 600C of the Corporations Act, specifically whether these applications were subject to the same time constraints as appeals under Federal Court Corporations Rules 2000, Rule 14.1.

The court considered whether these applications should be classified as appeals or primary applications, and if the timing requirement under Rule 14.1 applied. It was noted that while Rule 14.1 sets out a 21-day time limit for appeals from acts or decisions of administrators, sections 600B and 600C do not use the term "appeal" but rather refer to applications for orders. Despite this distinction, the court concluded that the essence of the requirement was that any such application must be filed within the specified period, aligning with the principle that there is a right to apply within the prescribed time.

Furthermore, the court addressed potential issues regarding the admission of proofs for voting purposes at a creditors' meeting, contemplating how this might affect the support for various proposals, particularly if there were differing interests among creditors. The court dismissed the application and ordered that the applicant pay the respondents' costs.

Orders

Orders of the court

1. The application in terms of the amended terms of application be dismissed.

2. The applicant pay the respondents' costs.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

ALLSOP J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: ALLSOP J

There was debate before me as to whether or not there was a time limit for such application by reference to the Federal Court Corporations Rules, in particular rule 14.1 which relevantly, is in the following terms: FEDERAL COURT (CORPORATIONS) RULES 2000 RULE 14.1 Appeal from act, omission or decision of administrator, receiver or liquidator etc (Corporations Act s 554A, s 1321)(1)All appeals to the Court authorised by the Corporations Act must be commenced by an originating process, or interlocutory process, stating: (a) the act, omission or decision complained of; and (b) in the case of an appeal against a decision — whether the whole or part only and, if part only, which part of the decision is complained of; and (c) the grounds on which the complaint is based. (2)Unless the Corporations Act or the Corporations Regulations otherwise provide, the originating process, or interlocutory process, must be filed within: (a) 21 days after the date of the act, omission or decision appealed against; or (b) any further time allowed by the Court. Mr Sheahan points out that the language of s 600B and s 600C are applications to the Court for orders as to the dealing with the resolution rather than of the act or decision of the administrator, and that the word "appeal" is not used, but rather words of primary application. Mr Rayment points out that whether or not the word "appeal" is used, involved is an act or omission of the administrators in deciding to use or not to use their casting votes and that the word "appeal" is sufficiently broad to encompass the type of primary application there contemplated. I do not think I need to make a decision about this. I do not think it ultimately matters. I will approach the matter on the basis that Mr Rayment is correct that there is a requirement that the originating process be filed within twenty one days or such further time as allowed by the court. That can be viewed, and is often expressed, as a right to appeal within a particular time, but it equally can be seen as a requirement that any such application be brought, if it is to be brought within that time. The proper characterisation of it as a right or a prescription indicating the period beyond which there is no entitlement, without the leave of the Court, again is not central. I will approach the matter on the basis that there is a time period for each of the applications in s 600B and s 600C and that each should be characterised, in a sense, as a right given by the Rules. The other possible complaint which may arise is in relation to the admission of proofs for the purposes of voting at the meeting. The matter may well arise in the following context. Whilst there are so called “hard” creditors and “soft” creditors of the Pan Group, the matter was argued before me on the basis that it may be that the proposal put forward by the applicant, which is one based upon the entry into a deed of company arrangement, is one which may be perceived as more likely to appeal to some classes of the creditors and not others. It may become important for those supporting the applicant's proposal, if it is not the chosen and favoured one of the administrators, to reduce the number and value of unsecured creditors claiming damages. That, in large part, is how the matter was set in background for me. It is not clear at all who will line up with whom in the voting on 1 September. However, all sorts of commercial interests could conceivably intrude, and by commercial interests I mean legitimate commercial interests. Thus, there is a possibility that questions of the conduct of the administrators in dealing with the proofs for voting purposes might arise.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N3045 of 2003

BETWEEN:	JIM SELIM APPLICANT
AND:	ANTHONY GREGORY McGRATH AND CHRISTOPHER JOHN HONEY RESPONDENTS
JUDGE:	ALLSOP J
DATE OF ORDER:	14 AUGUST 2003
WHERE MADE:	SYDNEY

JUDGE:	ALLSOP J
DATE:	14 AUGUST 2003
PLACE:	SYDNEY