Re Regency South Steyne Investments Pty Ltd
[2004] FCA 803
•4 MARCH 2004
FEDERAL COURT OF AUSTRALIA
Re Regency South Steyne Investments Pty Ltd [2004] FCA 803
IN THE MATTER OF REGENCY SOUTH STEYNE INVESTMENTS PTY LTD (ADMINISTRATORS APPOINTED) ACN 100 308 469, FLINDERS HOTEL INVESTMENTS PTY LIMITED (RECEIVER AND MANAGER APPOINTED)(ADMINISTRATORS APPOINTED) ACN 099 499 993, SUGARLOAF CRESCENT PROPERTIES PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 205 178, RFS DEVELOPMENTS PTY GROUP NO 12 PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 135 902, GEOFFREY DAVID McDONALD AND ROBERT WILLIAM JOSEPH ELLIOTT, TAKANZA PTY LTD (ADMINISTRATORS APPOINTED) ACN 086 388 758 AND RFS DEVELOPMENT GROUP NO 8 PTY LTD (ADMINISTRATORS APPOINTED) ACN 089 546 707
N 3075 OF 2003JACOBSON J
4 MARCH 2004
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
N 3075 of 2003
REGENCY SOUTH STEYNE INVESTMENTS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 108 308 469
FIRST PLAINTIFFFLINDERS HOTEL INVESTMENTS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 099 499 993
SECOND PLAINTIFFSUGARLOAF CRESCENT PROPERTIES PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 205 178
THIRD PLAINTIFFRFS DEVELOPMENTS GROUP NO 12 PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 135 902
FOURTH PLAINTIFFGEOFFREY DAVID McDONALD AND ROBERT WILLIAM JOSEPH ELLIOTT
FIFTH PLAINTIFF
TAKANZA PTY LTD (ADMINISTRATORS APPOINTED) ACN 086 388 758
SIXTH PLAINTIFFRFS DEVELOPMENT GROUP No 8 PTY LTD (ADMINISTRATORS APPOINTED) ACN 089 546 707
SEVENTH PLAINTIFF
JUDGE:
JACOBSON J
DATE OF ORDER:
4 MARCH 2004
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.Leave be granted to file a Notice of Motion dated today in Court returnable forthwith.
2.Takanza Pty Ltd (Administrators Appointed) ACN 086 388 758 and RFS Development Group No 8 Pty Ltd (Administrators Appointed) ACN 089 546 707 be joined as the Sixth and Seventh Plaintiffs respectively to these proceedings.
3.Pursuant to s 447A of the Corporations Act2001 (Cth) that in the administration of the First, Second, Third, Fourth, Sixth and Seventh plaintiffs, the time provided for in s 439B(2) of the Corporations Act2001 for the holding of the adjourned meeting of creditors fixed for 15 March 2004, be extended up to 18 May 2004, subject to a resolution of the creditors of each of the First, Second, Third, Fourth, Sixth and Seventh Plaintiffs being passed on 15 March 2004 agreeing to the holding of the adjourned meeting being extended up to 18 May 2004.
4.Leave be reserved to any person claiming to be interested, including the Australian Securities and Investments Commission and any creditor of the First, Second, Third, Fourth, Sixth and Seventh plaintiffs to make such an application as he, she or it may be advised to vary these orders on 48 hours notice to the administrators.
5.The costs of this application be an expense of the administration.
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
N 3075 of 2003
REGENCY SOUTH STEYNE INVESTMENTS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 108 308 469
FIRST PLAINTIFFFLINDERS HOTEL INVESTMENTS PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 099 499 993
SECOND PLAINTIFFSUGARLOAF CRESCENT PROPERTIES PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 205 178
THIRD PLAINTIFFRFS DEVELOPMENTS GROUP NO 12 PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 100 135 902
FOURTH PLAINTIFFGEOFFREY DAVID McDONALD AND ROBERT WILLIAM JOSEPH ELLIOTT
FIFTH PLAINTIFF
TAKANZA PTY LTD (ADMINISTRATORS APPOINTED) ACN 086 388 758
SIXTH PLAINTIFFRFS DEVELOPMENT GROUP No 8 PTY LTD (ADMINISTRATORS APPOINTED) ACN 089 546 707
SEVENTH PLAINTIFF
JUDGE:
JACOBSON J
DATE:
4 MARCH 2004
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application by the fifth plaintiffs who are the voluntary administrators of the first, second, third and fourth plaintiffs for an order further extending the time for the holding of an adjourned meeting of creditors originally fixed for the 19th of December 2003 to the 18th of May 2004. On 18 December 2003, Justice Conti extended time for the holding of the meeting for 90 days, that is to 15 March 2004.
His Honour, in his judgment of 18 December 2003, referred to the relevant provisions of the Corporations Act 2001 (Cth). He said that s 447A conferred power on the Court to make an order that the time provided for in s 439B(2) be extended. His Honour referred to the width of the power conferred on the Court and he set out the relevant authorities at [3] of his judgment.
The orders made by Justice Conti on 18 December 2003 provided the extension of time subject to a resolution of creditors being passed on 19 December 2003. The necessary resolution was passed on that date. His Honour's orders also provided for leave to be reserved to anybody claiming an interest, including the Australian Securities and Investment Commission, and also the creditors of the first, second, third and fourth plaintiffs to make such an application as may be advised to vary the orders. No such application was made.
His Honour was of the view that there was no conceivable prejudice to unsecured creditors and that, on the evidence before him, there was a real possibility of an advantage to creditors if the extension was granted. The purpose for which the extension was sought before Justice Conti was to enable an option to purchase the Radisson Hotel at Manly to be exploited. Further time was needed for the completion of negotiations but the present position is that the negotiations were apparently not successful and there are yet further negotiations for the grant of an option over the hotel.
Different considerations arise in relation to each of the companies and they are set out in some detail in an affidavit sworn by Mr McDonald, who is one of the administrators of the company. The affidavit was sworn on 4 March 2004.
The evidence in relation to the first plaintiff, Regency South Steyne Investments Pty Ltd, is that a draft call option has been negotiated. It is unnecessary to set out the detail but it is sufficient to say that if the option is granted it will enable the administrators to exploit it to the advantage of the company with a possible profit being made by reason of a proposed resale to a prospective purchaser. The draft of the option provides that it expires on the earlier of the 6th of May 2004 or fourteen days after the issue of a development approval to convert the hotel into strata units.
The evidence in relation to the second plaintiff, Flinders Hotel Investments Pty Ltd, indicates that there has been an intermingling of funds provided by investors but that monies may be obtained by the company if a deed of company arrangement is able to be entered into. However, it might not be possible for the directors to formulate the deed of company arrangement until the amount of monies is ascertained and there is a possibility of funds coming from the assignment of rights relating to the sale of the Radisson Hotel.
The third plaintiff, Sugarloaf Crescent Properties Pty Ltd, owns a property at Castlecrag which is the subject of a development application. Mr Newton, of counsel appears on this application for Perpetual Nominees Limited which is a secured creditor of the third plaintiff. The evidence before me indicates that the value of the property without a development approval is approximately $1.8m and the amount outstanding to the secured creditor is $1.2m together with arrears of interest. Interest has not been paid since May 2003. The evidence also discloses that the directors believe that if the development approval is granted the property will be worth in the order of $3.2m to $3.6m.
I do not think it is necessary to record any further detail about the position of the other plaintiffs, or the existing plaintiff, that is RFS Developments No 12 Pty Limited. The position seems to be that there may be benefits arising if a deed of company arrangement can be entered into for that company.
The application provides for the joinder of two further plaintiffs, namely, Takanza and RFS Developments No.8 Pty Limited. These companies have common directors with the first to fourth plaintiffs and Mr McDonald is an administrator of both of those companies. The evidence in his affidavit indicates that there is a possibility of funds coming in to the companies in the event that time is extended for the holding of the meeting. Both of the companies are property developers and the evidence indicates that funds may flow from the exploitation of the assets.
It seems to me that although there has already been a substantial extension of time granted, I ought nonetheless accede to the present application. The reasons I do so are as follows. Firstly, none of the companies are trading. They are all engaged in a multitude of property developments and active steps are being taken to try to realise something from the collapse of the companies all of which are under the control of the administrators. Mr Chippindall, who appeared for the administrators, acknowledged that if an extension of time is granted that this would be, to use his words, "the end of the road and there would be no further application made".
The evidence before me indicates that the proposed extension of time is supported by the unsecured creditors. There was a meeting on 24 February 2004 which, on the evidence, appears to indicate that it is likely that the creditors will approve an extension of time. Of course the Corporations Act lays down strict time limits for the holding of the meeting and ordinarily an extension of this length would not be granted, particularly when an earlier extension has already been given. However, as I have said, there are considerations which I have outlined which favour an extension. In particular the extension is said to give the creditors some prospect of substantially increased dividends out of the collapse of the companies.
As to Sugarloaf Crescent Properties Pty Ltd, the third plaintiff, Mr Newton pointed to the fact that interest has not been paid since at least May of last year. However, he was unable to, and indeed quite fairly, did not say that he could point to any real evidence that there would be a shortfall in the event that the extension of time is granted. Accordingly it seems to me that the considerations which apply to the other companies apply equally to Sugarloaf Crescent Properties Pty Ltd.
For those reasons it seems to me that it would be appropriate to make orders in terms of the draft short minutes of order which I will sign and date.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson Associate:
Dated: 4 March 2004
Counsel for the Plaintiffs: J Chippindall Solicitor for the Plaintiffs: Clinch Neville Long Solicitors Counsel for the secured creditor for the third plaintiff P Newton Date of Hearing: 4 March 2004 Date of Judgment: 4 March 2004
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