Re Pindan Group Pty Ltd (Administrators Appointed) [No 2] - [2021] WASC 358

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   RE PINDAN GROUP PTY LTD (ADMINISTRATORS APPOINTED) AND ORS [No 2] [2021] WASC 358
CORAM:   STRK J
HEARD:   4 OCTOBER 2021 AND UPON THE ADDITIONAL PAPERS FILED ON 7 OCTOBER 2021
DETERMINED       :   8 OCTOBER 2021
PUBLISHED           :   22 OCTOBER 2021
FILE NO/S:   COR 102 of 2021
MATTER:   IN THE MATTER OF PINDAN GROUP PTY LTD (ADMINISTRATORS APPOINTED) AND OTHERS

EX PARTE
VINCENT ANTHONY SMITH, COLBY RHYS O'BRIEN and SAMUEL JOHN FREEMAN, as joint and several administrators of PINDAN GROUP PTY LTD (ADMINISTRATORS APPOINTED) ACN 611 922 386, PINDAN ASSET MANAGEMENT PTY LTD (ADMINISTRATORS APPOINTED) ACN 086 747 944, and PINDAN CONTRACTING PTY LTD (ADMINISTRATORS APPOINTED) ACN 120 076 360, and as joint and several liquidators of PINDAN PROJECTS WA PTY LTD (IN LIQUIDATION) ACN 611 922 475, PINDAN REALTY PTY LTD (IN LIQUIDATION) ACN 009 372 847 and MOSELLE HOLDINGS PTY LTD (IN LIQUIDATION) ACN 009 338 318
Plaintiff

Catchwords:

Corporations law - Application for directions pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) that the plaintiffs as administrators and liquidators would be justified and acting reasonably in entering into and implementing updated transaction documents - Application for variation of orders as to the plaintiffs' liabilities as administrators under the updated transaction documents pursuant to s 447A(1) of the Corporations Act 2001 (Cth) - Application for approval for the plaintiffs as liquidators to enter into the updated transaction documents pursuant to s 477(2B) of the Corporations Act 2001 (Cth)

Legislation:

Corporations Act 2001 (Cth), s 435A, s 443(D), s 447A(1), s 477(2B), and Sch 2 (Insolvency Practice Schedule (Corporations)) s 90-15
Rules of the Supreme Court 1971 (WA), O 4A r 1

Result:

Applications granted

Category: B

Representation:

Counsel:

Plaintiff

A J Papamatheos and L Pham

Solicitors:

Plaintiff

Squire Patton Boggs

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

Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524
Ex parte Frigger [2020] WASC 365
Kelly, Re Halifax Investment Services Pty Ltd (in liq) (No 8) [2020] FCA 533; 144 ACSR 292
Krejci (liquidator), in the matter of Community Work Pty Ltd (in liq) [2018] FCA 425
Krejci, in the matter of Union Standard International Group Pty Ltd (Admins Apptd) (No 2) [2020] FCA 1111
Moondancer Holdings Pty Ltd v Navarac Pty Ltd [2011] WASC 250
Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) [2021] FCA 644
Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409
Re AWA Limited (admin apptd)) (recs and mgrs apptd) [2014] NSWSC 249
Re Broens Pty Limited (in liq) [2018] NSWSC 1747
Re GGA Lifestyle Pty Ltd (Administrators Appointed); Ex Parte Woodhouse [2019] WASC 167
Re Nexus Energy Ltd [2014] NSWSC 1041
Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [2021] WASC 347
Re RCR Tomlinson Ltd (Admins Apptd) [2018] NSWSC 1859
Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4
Walley, in the matter of Poles & Underground Pty Ltd (Admin Apptd) [2017] FCA 486

STRK J:

Introduction

Samuel John Freeman, Colby Rhys O’Brien and Vincent Anthony Smith (together the plaintiffs) are the joint and several administrators of Pindan Group Pty Ltd (Pindan Group) and Pindan Contracting Pty Ltd (Pindan Contracting); and the joint and several liquidators of Pindan Projects WA Pty Ltd (Pindan Projects), Pindan Realty Pty Ltd (Pindan Realty) and Moselle Holdings Pty Ltd (Moselle).
By an interlocutory process filed on 10 September 2021, the plaintiffs sought orders on an ex parte and urgent basis. After hearing counsel for the plaintiffs on 13 September 2021 and for the reasons given extemporaneously at the conclusion of the hearing,[1] orders were made which included orders authorising the plaintiffs in their capacity as joint and several liquidators of Pindan Projects, Pindan Realty and Moselle to enter into certain transaction agreements pursuant to s 477(2B) of the Corporations Act 2001 (Cth). The transaction agreements were intended to facilitate a refinance by Oxley Holdings Limited (Oxley) of moneys owed by various Pindan companies to BankWest, a division of Commonwealth Bank of Australia (CBA).
[1] ts 1 - 8 (13 September 2021), now published in Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [2021] WASC 347.
An order was also made pursuant to s 447A(1) of the Corporations Act limiting the plaintiffs' liabilities in their capacity as joint and several administrators of Pindan Group and Pindan Contracting under the proposed transaction agreements to the extent that those liabilities could be satisfied out of the assets of Pindan Group and/or Pindan Contracting pursuant to the administrators' indemnity under s 443(D) of the Corporations Act.
The orders made on 13 September 2021 are reproduced at sch A to these reasons.
Not all of the orders promoted in the interlocutory process filed on 10 September 2021 were pressed at the hearing on 13 September 2021. I had understood that some had fallen away, while others had been deferred to another day.[2]
[2] The interlocutory process filed on 10 September 2021 is reproduced in the reasons for decision delivered extemporaneously on 13 September 2021 and now published: see Re Pindan Group Pty Ltd (Administrators Appointed) and Ors, sch A.
At the hearing on 13 September 2021, the court's attention was drawn to the issue of the plaintiffs' independence that had been raised by ARITA (the Australian Restructuring Insolvency and Turnaround Association). Counsel foreshadowed that an application would be made to the court on the issue of independence within 14 days of that hearing, and informed the court that another law firm would be briefed to bring that application on behalf of the plaintiffs.[3]
[3] ts 62, 72, 79, 80 (13 September 2021); Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [75] - [77].
For the purpose of the hearing on 13 September 2021, I made no findings of fact, nor did I make any observation as to the merits or otherwise of that proposed application concerning the plaintiffs' independence, nor the concerns raised by ARITA. I noted that I was aware of the issue, and that with careful consideration, I was satisfied that the issue did not warrant delaying the determination of the application that was then before me.[4] I also made ancillary orders which provided for service of the orders made on 13 September 2021 on affected parties, who would have liberty to apply.
[4] Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [75] - [77].
The interlocutory process filed on 10 September 2021 in COR 102 of 2021 was relisted before me on 24 September 2021 for further directions. I heard from counsel for the plaintiffs in COR 102 of 2021 and also from counsel who had been briefed to appear in the foreshadowed application concerning independence. I was informed that in COR 102 of 2021, the plaintiffs wished to seek orders which reflected the substance of orders 9, 10 and 11 of the interlocutory process filed on 10 September 2021, but that counsel for the plaintiffs' in COR 102 of 2021 would only move for such orders after the hearing and determination of the foreshadowed application concerning independence.
On 28 September 2021, the foreshadowed application was made by an originating process in a proceeding known as COR 172 of 2021 (the Independence Application). The Independence Application was made on behalf of the plaintiffs in their capacity as:
(a)joint and several administrators of Pindan Group and Pindan Contracting;
(b)joint and several liquidators of Pindan Projects, Pindan Realty, Moselle, Pindan Capital Pty Ltd ACN 139 599 652, Pindan Capital Investments Pty Ltd ACN 615 672 225, Pindan Constructions Pty Ltd ACN 159 837 500, Pindan Homes Pty Ltd ACN 612 210 643, Pindan Constructions (NSW) Pty Ltd ACN 612 479 115 and Pindan Developments Pty Ltd ACN 611 922 555 (together the Liquidation Companies); and
(c)trustees of a creditors' trust settled pursuant to a trust deed entered by Pindan Asset Management Pty Ltd ACN 086 747 944 (PAM) and others on 5 August 2021 (the Creditors' Trust).
By the Independence Application, the plaintiffs sought (among other things):
(a)a direction pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) that they were justified and acting properly in continuing to act as administrators of Pindan Group and Pindan Contracting, and as liquidators of the Liquidation Companies;
(b)a direction pursuant to s 92 of the Trustees Act 1962 (WA), that they were justified and acting properly in continuing to act as trustees of the Creditors' Trust.
On 30 September 2021, the plaintiffs filed a minute of proposed orders in COR 102 of 2021, and the interlocutory process filed on 10 September 2021 was relisted for hearing on 4 October 2021 with the Independence Application.
On 4 October 2021, I heard the Independence Application and determined it appropriate to make a direction that the plaintiffs were justified and acting properly in continuing to act.
After determining the Independence Application, I heard counsel for the plaintiffs in COR 102 of 2021. Unfortunately, the plaintiffs were not in a position to move for the orders in terms of the minute filed on 30 September 2021. The court was informed that the amount of the funding to be provided by Oxley under the proposed refinance was still being finalised (to take into account, among other things, interest and fees); and the final amount could be substantially higher than the previously indicated amount of $15.2 million.[5] The relisted application was adjourned part heard, so that the plaintiffs could file further evidence about the increase in the funding amount and any impact that such increase might have on the benefits of the proposed transaction.
[5] ts 123, 125 - 126 (4 October 2021); and the plaintiffs' written outline of submissions filed on 7 October 2021 par 6.
At the hearing on 4 October 2021, counsel for the plaintiffs also indicated that, given the increase in the funding amount, it may be necessary to seek modifications to the orders made on 13 September 2021.[6]
[6] ts 126, 129 (4 October 2021); and the plaintiffs' written outline of submissions filed on 7 October 2021 par 8.
On behalf of the plaintiffs, additional papers were filed on 7 October 2021. Subject to the court wishing to further hear from the plaintiffs' counsel in person, the plaintiffs requested the application be considered urgently and determined on the papers.

The relief sought

On 7 October 2021, an updated minute of proposed orders was filed on behalf of the plaintiffs. In summary, the plaintiffs sought:
(a)directions, pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), that the plaintiffs would be justified and acting reasonably in entering into and implementing updated transaction documents; and
(b)variation to the orders made on 13 September 2021 which concerned:
(i)the plaintiffs' liabilities in their capacity as joint and several administrators of Pindan Group and Pindan Contracting under the updated transaction documents; and
(ii)approval pursuant to s 477(2B) of the Corporations Act for the plaintiffs in their capacity as joint and several liquidators of Pindan Projects, Pindan Realty and Moselle, to enter into the updated transaction documents.
The plaintiffs' minute of proposed orders filed on 7 October 2021 is reproduced at sch B to these reasons.

Evidence

Mr Freeman had filed a number of affidavits in the proceeding known as COR 102 of 2021. Most recently and for the purpose of this application, on 30 September 2021 Mr Freeman made what he described as his fourth affidavit with attachments SJF27 to SJF30. No restriction orders were sought in relation to that affidavit and it was filed on 30 September 2021.
On 7 October 2021, Mr O'Brien made what he described as his second affidavit with attachments COB2 to COB6. Mr O'Brien's affidavit was filed on 7 October 2021 and no restriction orders were sought in relation to the same. Both affidavits were read and relied upon for the purpose of the relisted application. The plaintiffs also relied upon all other affidavits filed in COR 102 of 2021.[7]
[7] ts 122 (4 October 2021).
At the hearing on 4 October 2021, counsel also indicated that the plaintiffs relied upon the evidence and submissions filed on their behalf in the Independence Application.[8] Satisfied that it was within power, just and efficient, I determined that pursuant to the Rules of the Supreme Court of Western Australia 1971 (WA) O 4A r 1, it was appropriate to allow the evidence in proceeding COR 172 of 2021 and in this proceeding to stand as evidence in each of those proceedings.[9]
[8] ts 122 (4 October 2020).
[9] ts 96 - 97 (4 October 2021), now reflected in order 1 of the orders made on 8 October 2021, in this proceeding, following Moondancer Holdings Pty Ltd v Navarac Pty Ltd [2011] WASC 250 [4] (Allanson J) and Sheraz Pty Ltd v Vegas Enterprises Pty Ltd [2015] WASCA 4 [142] (Murphy JA, Buss P and Chaney J agreeing).
The plaintiffs also relied on the written outline of submissions filed on 7 October 2021, which was to be read with the plaintiffs' written outline of submissions filed on 30 September 2021 and 13 September 2021.

Urgency

Additional papers were filed on the afternoon of Thursday, 7 October 2021 and the plaintiffs requested that the relisted application be determined urgently. The circumstances giving rise to urgency were deposed to by Mr Freeman in his unrestricted affidavit sworn on 30 September 2021 at pars 14 to 16 and 27. In short, the plaintiffs sought urgent consideration of the application as, subject to the outcome of the application, the proposed refinance transaction documents were to be executed on Monday, 11 October 2021.
After hearing counsel for the plaintiffs on 4 October 2021, and upon reading the papers relied upon in support of the application which included the additional papers filed in this proceeding after the hearing on 4 October 2021, and having been satisfied that there was urgency, on Friday, 8 October 2021 I made orders in the terms proposed on behalf of the plaintiffs in the minute of proposed orders filed on 7 October 2021. These are my reasons for decision.

Further context in which the application was relisted and recent developments

A comprehensive statement of the background to this application is set out in Re Pindan Group Pty Ltd (Administrators Appointed) and Ors.[10]
[10] Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [11] - [24], [44] - [52], [62] - [65], [68] ‑ [71], [75] - [77].
For present purposes, the context in which the interlocutory process of 10 September 2021 was relisted was conveniently summarised in the written outline of submissions filed on behalf of the plaintiffs on 30 September 2021, which summary is substantively reproduced below.
The plaintiffs and Oxley have been pursuing a refinancing proposal that will see the primary secured creditor, CBA, being swapped out for Oxley. The plaintiffs' commercial judgment is that the refinancing proposal is in the best interests of all creditors. The reasons for the plaintiffs having formed this judgment are set out in the unrestricted affidavit of Mr Freeman sworn on 10 September 2021 at pars 92 to 102. Those reasons include the following.
(a)The refinance will result in CBA being repaid in full. This will avoid the appointment of receivers and managers by CBA and the associated additional costs to the external administrations.
(b)Plant and equipment the subject of CBA's existing personal property security interests will be released and no longer subject to a security interest.
(c)Oxley will not enforce its loan for six months, subject to Pindan Group taking reasonable steps to sell the Properties (being properties owned by Moselle, Pindan Realty, Pindan Group and Pindan Projects presently secured by first registered mortgages in favour of CBA, described in the unrestricted affidavit of Mr Freeman sworn on 10 September 2021 at par 75).
(d)During this period, the plaintiffs will be able to undertake an orderly sale process to realise the Properties that are to be the subject of mortgages to be given as security for Oxley's loan. (This may be contrasted with the sale process that would be carried out if receivers were to be appointed.) Oxley will fund the plaintiffs' reasonable costs of realising the Properties.
(e)During the six month period, Oxley's loan will be interest free.
(f)Oxley's rights of recourse will be limited to (in essence) the proceeds realised from the sale of the Properties.
(g)In the plaintiffs' view, the terms of the proposed refinancing proposal are reasonable and commercial.[11]
[11] The unrestricted affidavit of SJ Freeman sworn on 10 September 2021 par 95(a).
As at 30 September 2021, the transaction documents had been substantially agreed but had not yet been executed.[12]
[12] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 par 14.
As noted above, on 13 September 2021, the court had given approval under s 477(2B) of the Corporations Act for the plaintiffs, in their capacity as the joint and several liquidators of Pindan Projects, Pindan Realty and Moselle, to enter into certain transaction documents. However, as at 30 September 2021, the plaintiffs were waiting to receive final execution versions from Oxley's legal representatives.[13] Due to the delay in executing the transaction documents, Oxley had agreed to extend the sunset date under the proposed facility agreement until 31 December 2021.[14] The plaintiffs considered that the delay would also necessitate other amendments to the transaction documents to reflect:
(a)the increase in the amount of the debt owed to CBA; and
(b)the removal of a memorial and caveat over land held by Pindan Group (this having been originally included as a condition precedent to Pindan Group drawing down on the facility to be provided by Oxley).[15]
[13] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 par 14.
[14] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 par 16.
[15] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 par 17.
Subject to the outcome of this application, it was anticipated that the transaction documents would be executed on or around 11 October 2021, with CBA to be paid out in full shortly afterwards.[16]

Recent developments

[16] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 pars 15 - 16, 27.

On 4 October 2021, the Independence Application was heard and, as noted above, a direction was made that the plaintiffs were justified and acting properly in continuing to act.[17]
[17] ts 119 - 120 (4 October 2021).
At the hearing on 4 October 2021, counsel for the plaintiffs in COR 102 of 2021 explained that the plaintiffs could not move for the orders in terms of the minute filed on 30 September 2021. The relisted application was adjourned part heard, so that the plaintiffs could file further evidence about the increase in the proposed funding amount and any impact that such increase might have on the benefit of the transaction to creditors.
By 7 October 2021, the plaintiffs had been informed by Oxley's legal representatives that the amount required to pay out CBA would be approximately $16,755,957.94. Further, the plaintiffs understood that the final funding amount required to complete the refinance would be in the range of $16.8 - $17.8 million.[18]
[18] The unrestricted affidavit of Mr O'Brien sworn on 7 October 2021 COB2, pars 8 - 10 and 15.
By 7 October 2021, the sunset date under the proposed facility agreement had been changed to 31 December 2021;[19] and updated versions of the transaction documents had been prepared. Mr O'Brien attached a copy of the updated documents to his affidavit of 7 October 2021 as a bundle at attachment COB3.
[19] The unrestricted affidavit of Mr O'Brien sworn on 7 October 2021 par 15(a).

Directions pursuant to s 90-15(1) of the Insolvency Practice Schedule (Corporations)

Applicable principles

Division 90 of the Insolvency Practice Schedule (Corporations) concerns the review of an external administration of a company, which may be undertaken by the court (div 90 subdiv B), or by another registered liquidator (div 90 subdiv C).
The court is afforded wide powers to inquire into the external administration of a company and s 90-15(1) of the Insolvency Practice Schedule (Corporations) provides a source of power for the court to make orders. An administrator and a liquidator of a company have, among others, standing to apply for orders pursuant to s 90-15.[20]
[20] Section 90-20(1)(d) of the Insolvency Practice Schedule (Corporations), read with s 9 of the Corporations Act (par (d) of the definition of 'officer').
The court's power under s 90-15(1) of the Insolvency Practice Schedule (Corporations) is 'very broad'.[21] The court may make 'such orders as it thinks fit' in relation to the external administration of a company,[22] and s 90-15(3) gives examples of the types of orders that the court may make under s 90-15(1). This includes an order determining any question arising in the external administration of the company.[23]
[21] Kelly, Re Halifax Investment Services Pty Ltd (in liq) (No 8) [2020] FCA 533; 144 ACSR 292 [51] (Gleeson J), cited by Stewart J in Krejci, in the matter of Union Standard International Group Pty Ltd (Admins Apptd) (No 2) [2020] FCA 1111[7].
[22] Section 90-15(1) of the Insolvency Practice Schedule (Corporations).
[23] Section 90-15(3)(a) of the Insolvency Practice Schedule (Corporations), see Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth (2019) 268 CLR 524 [166] (Gordon J).
While the power is very broad, when orders under s 90-15 are sought in the context of an administration, such orders must be made in pursuit of the objects of Part 5.3A as set out in s 435A of the Corporations Act:[24]
435AObject of Part
The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a)maximises the chances of the company, or as much as possible of its business, continuing in existence; or
(b)if it is not possible for the company or its business to continue in existence - results in a better return for the company's creditors and members than would result from an immediate winding up of the company.
[24] Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) [2021] FCA 644 [23] (Banks-Smith J).
When orders under s 90-15 are sought, regard should also be had to the objects of the Insolvency Practice Schedule (Corporations) set out at s 1-1, reproduced below:[25]
[25] Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) [24].
1-1OBJECT OF THIS SCHEDULE
1-1(1)The object of this Schedule is to ensure that any person registered as a liquidator:
(a)has an appropriate level of expertise; and
(b)behaves ethically; and
(c)maintains sufficient insurance to cover his or her liabilities in practising as a registered liquidator.
1-1(2)The object of this Schedule is also:
(a)to regulate the external administration of companies consistently, unless there is a clear reason to treat a matter that arises in relation to a particular kind of external administration differently; and
(b)to regulate the external administration of companies to give greater control to creditors.
As observed by Banks-Smith J in Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) at [37]:
Where judicial advice is sought in the context of an administration, the only statutory constraint on the exercise of that power is the need to consider whether or not the provision of that advice advances the objects of Part 5.3A set out in s 435A of the Corporations Act and is not inconsistent with the objects of the IPS. Section 90-15(3)(a) accommodates the determination of substantive rights, provided appropriate notice has been afforded to potentially affected parties: Hill, in the matter of Autocare Services at [44].
The matters which the court may take into account when making orders under s 90-15 are set out, without limitation, in s 90-15(4).
Section 90-15 confers power on the court to give directions to administrators that was previously conferred by the now repealed s 477D(1) of the Corporations Act, and to liquidators that was previously conferred by the now repealed s 479(3) of the Corporations Act. As observed by Stewart J in Krejci, in the matter of Union Standard International Group Pty Ltd (Administrators Appointed) (No 2) at [8]:
The court's power under s 90-15(1) includes a power to give directions about a matter arising in connection with the performance or exercise of an administrator’s functions or powers: Reidy, in the matter of eChoice Ltd (Administrators Appointed) [2017] FCA 1582 at [26] - [27] (Yates J). In this respect, s 90-15(1) confers a power to give directions that was previously conferred by ss 447D(1) and 479(3) of the Act concerning administrators and liquidators, respectively: see Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20; 93 ALJR 807 at [166] (Gordon J); Reidy at [27] (Yates J); and Kelly (liquidator), in the matter of Australian Institute of Professional Education Pty Ltd (in liq [2018] FCA 780 at [30] (Gleeson J). The principles governing directions to administrators and those governing directions to liquidators are relevantly analogous: Re Ansett Australia Ltd (No 3) [2002] FCA 90; 115 FCR 409 at [43] (Goldberg J).
As to the function of and scope of s 90-15 of the Insolvency Practice Schedule (Corporations), I adopt the observation made by Stewart J in Krejci, in the matter of Union Standard International Group Pty Ltd (Administrators Appointed) (No 2) at [9], which follows the decision of Goldberg J in Re Ansett Australia Ltd (No 3):[26]
The function of a judicial direction of this kind is not to determine rights and liabilities arising out of a particular transaction, but to confer a level of protection on the administrator. An administrator who acts in accordance with a judicial direction, having made full and fair disclosure to the court of the material facts, has 'protection against claims that they have acted unreasonably or inappropriately or in breach of their duty in making the decision or undertaking the conduct' proposed.
[26] Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409 [44] (Goldberg J).
The ambit of s 90-15 has not yet been fully considered by the authorities.[27] However, I accept that the court's power under s 90-15(1) to make orders extends, in appropriate circumstances, to giving directions of the kind sought by the plaintiffs by this application, that is, that an administrator or liquidator would be justified in entering into and giving effect to a suite of documents that refinance debt and replace security.[28]
[27] Re Broens Pty Limited (in liq) [2018] NSWSC 1747 [39] (Gleeson J); see also Re Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; (2018) 125 ACSR 335 [7] - [8] (Gleeson JA), cited in Ex parte Frigger [2020] WASC 365 [12] (Allanson J).
[28] Re AWA Limited (admin apptd) (recs and mgrs apptd) [2014] NSWSC 249 (Brereton J); Re Nexus Energy Ltd [2014] NSWSC 1041 (Black J); Re RCR Tomlinson Ltd (Admins Apptd) [2018] NSWSC 1859 [14] (Black J); Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 4) [36] - [42].
Whether to exercise the power under s 90-15 will often be informed by the principles that applied on such an application to the court for directions.[29] The approach of the court on an application for directions by an external administrator are well-established. The court will not give an administrator or a liquidator a direction if the direction relates to the making of a business or commercial decision. There must be something more before the court will give a direction. The 'something more' may be a legal issue of substance or procedure or an issue of power, propriety or reasonableness. Put differently, there must exist some issue calling for the exercise of legal judgment.[30]
[29] Re GGA Lifestyle Pty Ltd (Administrators Appointed); Ex Parte Woodhouse [2019] WASC 167 [18] (Vaughan J), citing Re Broens Pty Limited (in liq) [39]. See also Walley, in the matter of Poles & Underground Pty Ltd (Admin Apptd) [2017] FCA 486 [42] (Gleeson J); and Krejci (liquidator), in the matter of Community Work Pty Ltd (in liq) [2018] FCA 425 [45] - [47] (Gleeson J).
[30] Re Ansett Australia Ltd (No 3) [65]; adopted in Re Nexus Energy Ltd [12] - [13]; Nipps (Admin) v Remagen Lend ADA Pty Ltd, Adaman Resources Pty Ltd (Admin Apptd) (No 4) [38]; and in Re GAA Lifestyle Pty Ltd (Administrators Appointed); Ex parte Woodhouse [19] ‑ [20].
In Krejci, in the matter of Union Standard International Group Pty Ltd (Administrators Appointed) (No 2), Stewart J at [10] - [11] further noted:
… As Black J observed in In the matter of RCR Tomlinson Ltd (administrators appointed) [2018] NSWSC 1859, a decision may have a 'commercial character' but nonetheless be amendable to judicial direction. His Honour said (at [41]) of the application before him (which sought a direction as to whether a company should borrow loan funds):
The Court has been prepared to give directions of this kind, where the decision is a complex one, and where it has to be made, as here, under circumstances of time pressure, in respect of a very large corporate group, and by balancing different interests. The Court's preparedness to grant such a direction in those circumstances reflects the intrinsic unfairness of leaving a voluntary administrator to be at risk of liability, in respect of a complex decision of that kind, where any decision that is made, including making no decision, will have inevitable risks for some or all of the affected constituencies.
Because the effect of a direction under s 90-15 is to exonerate the liquidator or administrator if full disclosure is made, it will usually necessitate consideration by the court of the liquidator's or administrator's reasons and decision making process: see Re ONE.TEL Ltd [2014] NSWSC 457; 99 ACSR 247 at [36] per Brereton J (referring to former s 511 of the Act).
The value of a direction is to protect the administrator from liability for breach of duty or unreasonable behaviour provided full disclosure has been made to the court.[31]

Disposition

[31] Re Ansett Australia Ltd (No 3) [65]; Re Nexus Energy Ltd [12]-[13]; Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 4) [38]; and Re GAA Lifestyle Pty Ltd (Administrators Appointed); Ex parte Woodhouse [21], citing Re GB Nathan & Co Pty Ltd (In Liq) (1991) 24 NSWLR 674, 679 - 680 (McLelland J).

The plaintiffs had formed a commercial judgment that the proposed refinancing transaction was in the best interests of all creditors, and that their judgment had not changed when the matters which informed the necessary revision of the transaction documents were weighed in the balance.[32] It was in this context that counsel submitted that it was appropriate that directions be given pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), to the effect that the plaintiffs would be justified and acting reasonably in entering into and implementing updated transaction documents.
[32] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 pars 22 - 23, referring to the unrestricted affidavit of SJ Freeman sworn on 10 September 2021 pars 92 - 103; see also the unrestricted affidavit of Mr O'Brien sworn on 7 October 2021 pars 18 - 20.
Counsel submitted that the plaintiffs did not seek directions from the court about their commercial judgment, but rather, they sought directions from the court that they would be justified and acting reasonably in entering into and implementing the updated transaction documents. Mr Freeman at par 23 of his unrestricted affidavit sworn on 30 September 2021 deposed that the plaintiffs considered it prudent and necessary to seek directions from the court consistent with orders 9 to 12 of the interlocutory process of 10 September 2021 because, in the plaintiffs' view, there was an issue about the propriety or reasonableness of their entering into and implementing the updated transaction documents having regard to (without limitation) the following.
First, the nature of the proposed facility agreement and associated transactions which primarily involve Oxley.
Secondly, the various interests of Oxley in the external administration of Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle.
Thirdly, the matters raised in the Independence Application in respect of Ernst & Young's engagement with Oxley in Singapore.
Fourthly, when this application was sought be relisted, the likelihood that no creditors or interested parties would seek to be heard in relation to this application or the Independence Application, despite the plaintiffs providing them with notice and details of the applications.
Fifthly, the general interest of creditors and other stakeholders in the external administration and ongoing affairs of Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle, particularly in Western Australia.
I accepted that while the course the plaintiffs had resolved was in the best interests of all creditors had a 'commercial character', the directions sought did not relate only to the making of a business or commercial decision. I accepted that the circumstances deposed to gave rise to issues of propriety and reasonableness. That is, I accepted there were issues of both propriety and reasonableness raised by the plaintiffs' decision to enter into the updated transaction documents, and thus the court had the power to give the directions sought. Weighing the matters that gave rise to issues of propriety and reasonableness carefully in the balance, I resolved it appropriate to give the directions sought, that is, to direct that the plaintiffs would be justified in entering into and giving effect to the updated transaction documents.
As to the issue of propriety that arose by the matters raised in the Independence Application in respect of Ernst & Young's engagement with Oxley in Singapore (and engagement otherwise for various Pindan entities prior to appointments of the plaintiffs), a direction has now been made that the plaintiffs are justified and acting properly in continuing to act as administrators and liquidators of (among others) Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle. While the independence issue has been ventilated and addressed in the Independence Application, I accepted that it remained appropriate for the plaintiffs to have sought the protection of directions in circumstances where the independence issue was first raised by the Australian Securities and Investments Commission and pressed by ARITA.
Further, I accepted that an issue of propriety also arose by the involvement of Oxley in the proposed refinance arrangements, particularly in light of and the various interests of Oxley in the external administration of Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle.
Oxley is the ultimate parent company of each entity which is part of the broader Pindan group of companies, including Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle.[33] Having had regard to the nature of the proposed facility agreement and associated transactions which primarily involve Oxley, and the various interests of Oxley in the external administration of Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle, I concluded that it was appropriate that the plaintiffs receive the benefit of the directions sought.
[33] The unrestricted affidavit of SJ Freeman sworn 10 September 2021 pars 6 - 7.
When considering the various interests of Oxley and propriety, I weighed in the balance that Oxley has been independently advised by legal practitioners Allens Linklaters, and insolvency advisors Ankura Consultants.[34] I also had regard to the fact that it was not intended that Oxley would provide funding over and above what is required by CBA to be paid out and to release its existing securities. Further, none of the funding was to be used to meet the plaintiffs' fees or expenses.[35]
[34] The unrestricted affidavit of SJ Freeman sworn on 10 September 2021 par 78.
[35] The unrestricted affidavit of CR O'Brien sworn on 7 October 2021 par 12; the plaintiffs' written outline of submissions filed 7 October 2021 par 14.
I accepted and proceeded on the basis that the proposed refinance of CBA by Oxley was not tied to any work performed by Ernst & Young for Oxley before the appointment of the plaintiffs, and was not tied to any analysis or recommendation that the plaintiffs might present at the second meeting of creditors of Pindan Group and/or Pindan Contracting. I also accepted and had regard to the fact that the proposed transaction was not conditional upon the plaintiffs recommending or accepting any proposal by Oxley.[36]
[36] The plaintiffs' written outline of submissions filed 30 September 2021 par 23.
In determining it appropriate to give the directions sought, I had regard to the matters deposed to by Mr Freeman in his confidential affidavit sworn on 10 September 2021 at pars 8 to 16, and had particular regard to the matters raised in attachment 'SJF-6' of that affidavit at pages 16 ‑ 17, discussed in the plaintiffs' restricted written outline of submissions filed on 13 September 2021 at par 66.
I accepted the submission made on behalf of the plaintiffs that outside of the independence concerns (which have now been resolved), there was no reason to think that the plaintiffs would not be justified or acting reasonably in entering into and implementing the transaction documents. The documents were intended to give effect to a transaction which was, on its face and in the plaintiffs' commercial judgment, in the best interests of all creditors. I considered the reasonableness of the proposed transaction in light of the increase in the amount of funding under the proposed facility agreement (that is, the revised 'Commitment' as defined in the proposed facility agreement of 'up to $17,800,000'). I found the increase to have been adequately explained and not without justification.[37]
[37] The unrestricted affidavit of CR O'Brien sworn on 7 October 2021 pars 7 - 10.
In considering the reasonableness of the proposed transaction, I gave careful consideration to the plaintiffs' decision-making process. I gave weight to the plaintiffs' reasons, deposed to by Mr Freeman at par 101 and par 102 of his unrestricted affidavit of 10 September 2021, and to the other potential benefits of the proposed transaction identified by Mr Freeman in his confidential affidavit of 10 September 2021.
This application was relisted at relatively short notice and ex parte. However, I accepted that notice of the application to seek approval of the updated transaction documents was given to the Committees of Inspection on 10 September 2021. Further, notice of the orders made on 13 September 2021 was given to the creditors of Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle in accordance with order 7 of those orders. Notice of the relisting of the application was given to the creditors of Pindan Group, Pindan Contracting, Pindan Projects, Pindan Realty and Moselle for whom the plaintiffs had an email address, and, further, steps were taken to give notice of the application to those creditors for whom the plaintiffs had a postal address but not an email address.

No creditor foreshadowed opposition to this application,[38] and no creditor sought to be heard when the application was before me for directions on 24 September 2021 or at the hearing on 4 October 2021. I considered that there had been full and frank disclosure by the plaintiffs, and that having regard to the urgency of the application, there had been adequate notice.
[38] The unrestricted affidavit of SJ Freeman sworn 10 September 2021 par 33.
I had regard to the fact that the directions sought did not affect the rights of any third parties. Rather, the directions sought to protect the plaintiffs from liability for breach of duty or unreasonable conduct in entering into and implementing the proposed transaction. Similar directions had been sought and made on an ex parte basis in past cases.[39]
[39] Re Nexus Energy Ltd (Black J); Re RCR Tomlinson Ltd (Admins Apptd) (Black J), cited in the plaintiffs' written outline of submissions filed on 30 September 2021 par 24.
The circumstances deposed by Mr Freeman and Mr O'Brien revealed that a decision was required to be made by the plaintiffs which was complex, which had to be made under some time pressure, in respect of a very large corporate group, and balancing different interests. Having given careful consideration to all of the evidence before me, and the submissions made on behalf of the plaintiffs, I considered the proposed actions of the plaintiffs in entering into, and giving effect to the updated transaction documents was both reasonable and justified in all of the circumstances. Further, I determined that the making of the orders sought was not inconsistent with the objectives of the Insolvency Practice Schedule (Corporations), and, in the context of the ongoing administration of Pindan Group and Pindan Contracting, consistent with and in furtherance of the objects of pt 5.3A as set out in s 435A of the Corporations Act. For these reasons, I resolved to make the directions sought by the plaintiffs pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations).

Variation to the orders made on 13 September 2021

Given the changes to the transaction documents since 13 September 2021, including, most relevantly, the increase to the amount of funding under the proposed facility agreement, the plaintiffs sought that the orders made on 13 September 2021 be varied as set out in the plaintiffs' minute of proposed orders filed on 7 October 2021.

Proposed variation to order 3 - administrators' liability

The plaintiffs sought a variation to order 3 of the orders made on 13 September 2021, regarding their liability as administrators under the transaction documents. Counsel submitted that a variation to the order was necessary given the transaction documents had been updated.
For the reasons expressed in Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [41] - [55], I was satisfied that the proposal was in the interests of the creditors of Pindan Group and Pindan Contracting, and consistent with the objects of pt 5.3A of the Corporations Act. Further, I accepted that it could not be expected that the administrators would accept personal liability for the significant borrowing contemplated under the proposed refinance agreements.
In light of the changes made to the proposed transaction documents, I considered afresh whether it was appropriate for relief to be granted to the administrators under s 447A(1) of the Corporations Act, applying the principles summarised at Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [43].
In so doing, I had regard to the changes made to the proposed transaction documents. I also had regard to the evidence before me that the commercial judgment formed by the plaintiffs that the transaction was in the best interests of creditors had not changed by reason of the changes to the transaction documents.[40]
[40] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 par 22; the unrestricted affidavit of CR O'Brien sworn on 7 October 2021 pars 18 - 20.
On all of the evidence before me, I remained satisfied that the proposed transaction (as now documented in updated transaction agreements), was in the interests of creditors. On balance, I determined it appropriate that order 3 of the orders made by the court on 13 September 2021 be varied as proposed on behalf of the plaintiffs.

Proposed variation to orders 4, 5 and 6 - liquidators' authority to enter into the proposed refinance agreements

The plaintiffs also seek a variation to orders 4, 5 and 6 of the orders made on 13 September 2021, regarding their authority as liquidators of Pindan Projects, Pindan Realty and Moselle to enter into the proposed refinance agreements.
In light of the changes made to the transaction documents, I considered afresh whether it was appropriate for relief to be granted to the administrators under s 477(2B) of the Corporations Act, applying the principles summarised at Re Pindan Group Pty Ltd (Administrators Appointed) and Ors [59] - [61].
Again, I accept that it is not necessary for liquidators to give notice of applications under s 477(2B). However, I was cognisant that notice of the orders made on 13 September 2021 had been given to the creditors of Pindan Projects, Pindan Realty and Moselle, as had notice of the adjournment of the hearing on 4 October 2021.[41] No creditor sought to be heard.
[41] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 pars 31 - 32, SJF-30; the unrestricted affidavit of CR O'Brien sworn on 7 October 2021 pars 21 - 22, COB4.
In considering the matter afresh, I had regard to the proposed transaction documents and to the changes that had been made. I also had regard to the evidence before me that the commercial judgment formed by the plaintiffs that the transaction was in the best interests of all creditors had not changed by reason of the changes now reflected in the updated documents.[42] I again gave weight to the liquidators' reasons, deposed to by Mr Freeman at par 101 and par 102 of his unrestricted affidavit of 10 September 2021, and to the other potential benefits of the proposed transactions deposed to by Mr Freeman in his confidential affidavit of 10 September 2021. I also weighed in the balance the matters referred to at [62] - [74] of Re Pindan Group Pty Ltd (Administrators Appointed) and Ors.
[42] The unrestricted affidavit of SJ Freeman sworn on 30 September 2021 par 22; the unrestricted affidavit of CR O'Brien sworn on 7 October 2021 pars 18 - 20.
On balance, for these reasons I found it appropriate to vary orders 4, 5 and 6 as proposed by the plaintiffs, permitting the plaintiffs, in their capacity as liquidators, to exercise their own commercial judgment.

Conclusion and orders

For the reasons set out above, on 8 October 2021 I made orders in the terms proposed on behalf of the plaintiffs in the minute of proposed orders filed on 7 October 2021. The orders included an order that affected parties and the Australian Securities and Investments Commission would have liberty to apply to modify or discharge the orders.

Schedule A - Orders of the Hon Justice Strk made on 13 September 2021

Schedule B - Plaintiffs' minute of proposed orders filed 7 October 2021

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MH
Associate to Justice Strk
22 OCTOBER 2021