Stewart & Anor v Bulla Tip & Operations Pty Ltd
[2008] VSC 160
•14 April 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
CORPORATIONS LIST
No. 4980 of 2008
IN THE MATTER OF BULLA TIP & QUARRY PTY LTD AND BULLA TIP & QUARRY OPERATIONS PTY LTD
| JAMES STEWART AND ADRIAN LAWRENCE BROWN (IN THEIR CAPACITY AS DEED ADMINISTRATORS OF BULLA TIP & QUARRY PTY LTD) (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 007 097 761) and BULLA TIP & QUARRY OPERATIONS PTY LTD (SUBJECT TO DEED OF COMPANY ARRANGEMENT) (ACN 063 595 335) | Plaintiffs |
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JUDGE: | ROBSON J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 7, 28 March, 11 and 14 April 2008 | |
DATE OF JUDGMENT: | 14 April 2008 | |
CASE MAY BE CITED AS: | Stewart v Bulla Tip & Quarry Pty Ltd | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 160 | |
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CORPORATIONS – Winding up – Termination of a Deed of Company Arrangement – Payment of outstanding creditors - Section 447A Corporations Act 2001 (Cth)
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M L Sifris SC | Corrs Chambers Westgarth |
HIS HONOUR:
I have an application before me dated 4 March 2008, in which the plaintiffs seek orders, in effect, for the winding up of Bulla Tip & Quarry Pty Ltd (subject to deed of company arrangement) and Bulla Tip & Quarry Operations Pty Ltd (subject to deed of company arrangement) and that the deeds of company arrangement under which they presently operate be terminated. The plaintiffs, James Stewart and Adrian Lawrence Brown, are currently deed administrators of the companies.
The terms of the deed of arrangement dated 4 April 2007 is identified as Exhibit JS-54 to the affidavit of Mr Stewart, dated 4 March 2008. The affidavit of Mr Stewart deposed the fact that both companies were originally placed in administration with Mr Stuart Ariff appointed as the administrator. The companies’ assets, which consisted of Macquarie and Macquarie Business shares, were liquidated. In December 2007, however, the Australian Securities and Investments Commission applied for the removal of Mr Ariff as the administrator in an application to the Supreme Court of New South Wales.
Consent orders were made which directed that Mr Ariff retire and/or be removed as administrator and the plaintiffs were appointed as administrators in his place. The liquidators say that the circumstances in which a mortgage was reportedly given over the assets of the companies some days before they went into administration, and the way in which the administration was conducted, were suspicious. I was informed at the first hearing that ASIC supported the application to appoint the plaintiffs as liquidators because the plaintiffs could more readily pursue their enquiries and, in particular, use their powers as liquidators under the Corporations Act2001 to investigate the granting of the security and the administration.
I requested that ASIC appear before me to inform the court of the reasons the judge in the Supreme Court of New South Wales gave for removing Mr Ariff and to inform me of the material they relied on. ASIC appeared before me and informed me that, in fact, the matter had been dealt with by consent. They also informed me that Mr Ariff had been the subject of investigations and questioning by ASIC. They said that the grounds for applying for his removal in this particular administration also applied to many other administrations.
ASIC presented the court with the confidential exhibits they were intending to rely upon in the Supreme Court of New South Wales, but after hearing their explanation of the material the confidential exhibits contained, in particular the results of their questioning of Mr Ariff, I accepted the material as an exhibit and returned it to the safekeeping of ASIC. The plaintiffs indicated that they had no objection to that course.
Mr Phillips appeared on behalf of Engineered Corporate Solutions Pty Ltd as a director of the company. Mr Phillips submitted that his company was owed approximately $40,000 by the administrator Mr Ariff for work that had been done in selling the companies’ properties.
A solicitor appeared claiming that his firm had also done work for the administrator under the terms of the deed of company arrangement and in particular under Clause 6. Clause 6 of the deed of company arrangement provided that the administrator distribute the administration fund in the following order of priority:
(a) The administrator’s trading deficiency plus GST if any;
(b) The administrator’s disbursements plus GST, and subject to Clause 6.2;
(c) The administrator’s costs, limited to approximately $257,000 plus GST.
Mr Stewart’s original affidavit had provided substantial detail on the existing creditors of the administrator. I asked for further information to be provided to the court to establish that the administrators had sought to resolve those claims as best they could before the administration was terminated.
In an affidavit dated 11 April 2008, Mr Stewart reported on the steps taken by him and his fellow administrator to resolve the outstanding claims. Those outstanding claims are as follows:
(a) The Australian Taxation Office for $43,090;
(b) Engineered Corporate Solutions Pty Ltd for $44,231;
(c) Deacons Lawyers for $4,640 and;
(d) State Securities Pty Ltd for $8,792.
Mr Stewart, in his affidavit, proposed that the deed administrators set aside the full amounts of those claims. He said that once he receives certain information, he “…will pay that portion of the claim which relates to the work performed during the period of administration and release the remaining portion.” I should add that when ASIC appeared before me, they again reiterated that they supported the termination of the administration and the liquidation of the companies.
The only steps left to be completed under the deed of company arrangement are the payment of the outstanding creditors, which I have referred to, and then the distribution of the monies which would have been distributed as if the companies were in liquidation. Otherwise, all work under the deed had been finished. Further, affidavit materials were put before the court to indicate that the companies were insolvent.
For all those reasons, I am prepared to exercise the powers that I have under s 447A which provides that the court may make such orders it thinks appropriate about how Part 5.3A of the Corporations Act 2001 is to operate in relation to a particular company.
Section 447A(2) provides,
For example, if the court is satisfied that the administration of a company should end:
(a) because the company is solvent; or
(b) because provisions of this Part are being abused; or
(c) for some other reason;
the court may order under subsection (1) that the administration is to end.
I am prepared to make the orders sought by the plaintiffs that:
(1) Each of the two companies be wound up pursuant to s 461(1)(k) of the Corporations Act; and
(2) James Stewart and Adrian Lawrence Brown be appointed joint and several liquidators of the companies for the purposes of the winding up.
Under s 447A of the Corporations Act 2001, I am also prepared to order that in relation to the deed of company arrangement (“DOCA”) entered into by Bulla Tip & Quarry Pty Ltd (“BTQ”), Bulla Tip & Quarry Operations Pty Ltd (“BTQO”) and Stewart Kareem Ariff on 4 April, that the DOCA be terminated and the administration of BTQ and BTQO respectively is to end forthwith, subject to the following conditions:[1]
(a)The termination does not affect any right (whether vested or not) to any indemnity or remuneration (whether approved or to be approved) which Mr Ariff, the former administrator of BTQ and BTQO, may be entitled to under clause 6 of the DOCA.
(b)The liquidators of BTQ and BTQO pay the sum of $100,753 into a separate bank account to be used for the purpose of discharging (whether by agreement, court order or resolution of creditors) the amounts claimed to be owing by Mr Ariff, as the former deed administrator, and the amounts claimed to be owed to the Australian Taxation Office ($43,090), Engineered Corporate Solutions Pty Ltd ($44,231), State Securities Pty Ltd ($8,792), and Deacons Lawyers ($4,640).
(c)Within 28 days of this day, the liquidators inform Engineered Corporate Solutions Pty Ltd whether they intend to pay its claim of $44,231 or any part of it.
(d)The termination does not affect any rights accrued by Mr Ariff and the current administrators under clause 6 of the DOCA or any rights accrued by any creditors of Mr Ariff and/or the current administrators.
(e) Any further remuneration claimed by Mr Ariff as the former deed administrator be subject to approval of a meeting of creditors of BTQ and BTQO and, if approved, such remuneration is to be accorded the same priority for payment by the liquidators as the fees and expenses of the liquidators of BTQ and BTQO.
1 [1] The conditions that I have inserted are to protect the rights of creditors of the former and current administrators and to protect the rights of the former administrator.
I further order that the cost of this application, including reserved costs, be costs in the winding up of BTQ and BTQO and the costs of MJ Defrutos Nominees Pty Ltd of this application (including costs reserved on 7 March 2008 and 28 March 2008) be costs in the winding up of BTQ. Liberty to apply is reserved.
I confirm permission was given for Mr Phillips, a director of Engineered Corporate Solutions Pty Ltd, to address the court, despite having no right of audience before the court.
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