Robert Michael And Robert Conry Kirman And Brauer as joint and several administrators of Marine Produce Australia Pty Ltd (Administrators Appointed) And Ors

[2023] WASC 236

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   ROBERT MICHAEL AND ROBERT CONRY KIRMAN AND BRAUER as joint and several administrators of MARINE PRODUCE AUSTRALIA PTY LTD (ADMINISTRATORS APPOINTED) AND ORS [2023] WASC 236

CORAM:   WHITBY J

HEARD:   ON THE PAPERS

DELIVERED          :   28 JUNE 2023

FILE NO/S:   COR 88 of 2023

BETWEEN:   ROBERT MICHAEL AND ROBERT CONRY KIRMAN AND BRAUER as joint and several administrators of MARINE PRODUCE AUSTRALIA PTY LTD (ADMINISTRATORS APPOINTED) AND ORS

First Plaintiff

MARINE PRODUCE AUSTRALIA PTY LTD (ADMINISTRATORS APPOINTED)

Second Plaintiff

MPA FISH FARMS PTY LTD (ADMINISTRATORS APPOINTED)

Third Plaintiff

M P A MARKETING PTY LTD (ADMINISTRATORS APPOINTED)

Fourth Plaintiff

Catchwords:

Corporations Act 2001 (Cth) - Modification of the operation of s 447A so as to relieve administrators of personal liability for borrowed funds under s 443A(1)(d)-(f) - Turns on own facts

Legislation:

Corporations Act 2001 (Cth)

Result:

Application granted

Representation:

Counsel:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
Third Plaintiff	:	No appearance
Fourth Plaintiff	:	No appearance

Solicitors:

First Plaintiff	:	Clayton Utz
Second Plaintiff	:	Clayton Utz
Third Plaintiff	:	Clayton Utz
Fourth Plaintiff	:	Clayton Utz

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

Re Ansett Australia Ltd (Administrators Appointed) (2002) 115 FCR 376

Re Great Southern Infrastructure Pty Ltd [2009] WASC 161

Re Unlockd Ltd (Administrators Appointed) [2018] VSC 345

WHITBY J:

1. The first plaintiffs are the joint and several administrators (administrators) of the second to fourth plaintiffs (together, the companies).

2. By interlocutory process dated 23 June 2023 (application), the administrators seek an order, pursuant to s 447A of the Corporations Act 2001 (Cth) (Act), limiting their personal liability under the Loan Agreement between the administrators and Tassal Operations Pty Ltd (Tassal) dated 22 June 2023 (Loan Agreement) and associated documents.

3. The application comes before the court as a matter of urgency as the companies have until 3 July 2023 to seek orders limiting their liability pursuant to cl 3.1 of the Loan Agreement.[1]  On 26 June 2023, the administrators filed a certificate of urgency.

   [1] First Kirman Affidavit, [23]; Annexure RMK-1.

4. The administrators rely upon the following affidavits in support of the application:

   (a)affidavit of Robert Conry Brauer sworn on 8 June 2023 (Brauer Affidavit);

   (b)affidavit of Robert Michael Kirman sworn on 23 June 2023 (First Kirman Affidavit); and

   (c)confidential affidavit of Robert Michael Kirman sworn on 23 June 2023 (Confidential Kirman Affidavit).

5. The application is made on the basis that the companies require funding in order to trade through a sales process which the administrators seek to put in place and which the administrators believe will achieve the best possible return to creditors.[2]

   [2] First Kirman Affidavit, [10], [12], [18], [25].

6. For the reasons that follow, I am satisfied that the orders sought by the administrators in the application should be made.

Background

1. The companies' assets include a fully operational and licenced barramundi farm located on Turtle Island in the remote Cone Bay of the Kimberley Region in Western Australia.  The companies produce ocean ground barramundi known as 'Cone Bay Ocean Barramundi'.[3]  The companies supply Cone Bay Barramundi to Coles Supermarkets, retail and wholesale seafood outlets and the food service industry.[4]

   [3] Brauer Affidavit, [17(h)].

   [4] Brauer Affidavit, [9].

2. The National Australia Bank (NAB) is the key secured creditor of the companies.  The companies currently owe $10,397,059 to NAB.[5]

   [5] Brauer Affidavit, [17(c)]; Annexure RCB-7 to RCB-9.

3. On 24 May 2023, the administrators were appointed to each of the companies.[6]

   [6] First Kirman Affidavit, [2]; Annexure RCB1 to RCB3.

4. The administrators estimate that the companies require $500,000 per week to keep operating as a going concern.  These costs relate to payment of wages, operating expenses, legal expenses and the administration.[7]

   [7] First Kirman Affidavit, [16].

5. On 1 June 2023, NAB provided urgent funding to the companies of $350,000.  This funding has been exhausted.[8]

   [8] First Kirman Affidavit, [16]-[17].

6. The administrators have requested further funding from NAB and Barramundi Group Limited (the main unsecured creditor of the companies).[9]

   [9] First Kirman Affidavit, [15].

7. The administrators propose to fund the companies by borrowing funds from Tassal pursuant to the Loan Agreement.

8. In summary, the terms of the Loan Agreement are as follows:

1. The administrators are of the view that the terms of the Loan Agreement are reasonable, commercial and appropriate, and that it is in the best interests of creditors of the companies to borrow the funds from Tassal in order to permit the companies to trade and preserve the value of the companies.[10]

   [10] First Kirman Affidavit, [24]-[25].

Legal Principles

1. Section 447A of the Act provides:

   (1)The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.

2. Although this section confers a very broad power on the court, such power must be exercised consistently with the objects of pt 5.3A of the Act.[11] It is well established that the court has power under s 447A to make orders limiting the administrators' personal liability under s 443A of the Act.[12] 

   [11] Re Ansett Australia Ltd (Administrators Appointed) (2002) 115 FCR 376 [52].

   [12] Re Unlockd Ltd (Administrators Appointed) [2018] VSC 345 (Re Unlockd).

3. In circumstances where an administrator seeks an order under s 447A to modify the operation of s 443A of the Act to exclude personal liability on the part of the administrator and to provide that a loan taken by the company via the administrator is repayable on a limited recourse basis, the following principles apply:

   (a)the administrators are required to be seeking the loan to enable the company to continue to trade for the benefit of the creditors;

   (b)if the administrators are relieved of personal liability for the loan, it will permit them to make commercial decisions in the best interests of the creditors without being influenced by concerns of their personal liability;

   (c)the court must be satisfied that the loan is for the benefit of the company's creditors and that the creditors are not disadvantaged or prejudiced by loan; and

   (d)notice must be given to those who would be affected by the order.[13]

   [13] Re Unlockd at [64]-[65] cited with approval in Re Great Southern Infrastructure Pty Ltd [2009] WASC 161.

Determination

1. I am satisfied that:

   (a)the companies' value is dependent upon them trading as a producer of Cone Bay Ocean Barramundi.  Unless the companies continue to trade, the administrators are unable to maximum the return to the creditors of the companies;

   (b)the companies cannot continue to trade without additional funding;

   (c)Tassal is prepared to fund the companies on the terms and conditions contained in the Loan Agreement;

   (d)the terms of the Loan Agreement are reasonable, commercial and appropriate;

   (e)the funds obtained by entering into the Loan Agreement will allow the companies to continue to operate and therefore, will preserve the value of the companies; and

   (f)notice of the application has been provided to the creditors of the companies.[14]

   [14] Kirman Affidavit, [29] and RKM-4.

2. I find that entry into the Loan Agreement is consistent with the objects of pt 5.3A of the Act, is for the benefit of the companies' creditors and will not disadvantage or prejudice the companies' creditors.

3. I am also satisfied that the application has been appropriately made by the administrators in their role as administrators of the companies and therefore, the costs of the application ought be costs of the administrations of the companies.

Orders

1. I make the following orders:

   1.Pursuant to s 447A of the Act, that pt 5.3A of the Act is to operate as if s 443A(1) of the Act is modified to provide that any debts or liabilities of the first plaintiffs incurred under the Loan Facility Agreement between Tassal Operations and the first plaintiffs dated 22 June 2023 (Loan Agreement) (including but not limited to monies borrowed, interest in respect of monies borrowed and borrowing costs) are in the nature of debts incurred by the first plaintiffs in performance and exercise of their functions and powers as joint and several voluntary administrators of the second to fourth plaintiffs (the Companies), such that any liability arising against the first plaintiffs in relation to the Loan Agreement is limited solely to the assets of the Companies.

   2.Pursuant to s 447A of the Act, that the operation of s 443A(1) of the Act is modified, insofar as it applies to any liability of the first plaintiffs (in their capacities as joint and several administrators of the Companies) pursuant to the Loan Agreement, so that if the indemnity of the first plaintiffs under s 443D of the Act from the Companies is insufficient to meet any amount for which the first plaintiffs might be liable arising out of or in connection with the Loan Agreement, then the first plaintiffs will not be personally liable under s 443A(1)(d)-(f) of the Act or otherwise, for, or in connection with, to repayment of any such amount to the extent of the insufficiency.

   3.Liberty is granted to any person who can demonstrate sufficient interest to modify or discharge the orders made pursuant to this application on not less than 48 hours' notice to the first plaintiffs.

   4.The first plaintiffs take steps to cause notice of these orders to be given, within two (2) business days' of making these orders to:

   (a)the creditors (including persons claiming to be creditors) of the Companies in the following manner;

   (i)where the first plaintiffs have an email address for a creditor, by notifying each such creditor, via email of the making of the orders;

   (ii)where the first plaintiffs do not have an email address, by publishing the orders on the website maintained by the first plaintiffs; and

   (b)the Australian Securities and Investments Commission, by its email address.

   5.The first plaintiffs' costs of the application are costs in the administration of the Companies, and be paid from the assets of the Companies.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CB

Associate to the Hon Justice Whitby

28 JUNE 2023