Strazdins, in the matter of DNPW Pty Ltd (subject to DOCA) ACN 107 484 711 v Birch Carroll and Coyle Limited (No 2)
[2009] FCA 755
•10 July 2009
FEDERAL COURT OF AUSTRALIA
Strazdins, in the matter of DNPW Pty Ltd (subject to DOCA) ACN 107 484 711 v Birch Carroll & Coyle Limited (No 2) [2009] FCA 755
CORPORATIONS – voluntary administration – company subject to a Deed of Company Arrangement seeking order that the lessor not take possession of licensed premises leased by the company – Corporations Act s 444F – material adverse effect on achieving the purposes of the Deed – order subject to conditions
Corporations Act 2001 (Cth) s 444F
Federal Court Rules O 35 r 7(1)Re Java 452 Pty Ltd (admin apptd); Permanent Trustee Australia Ltd (as trustee of Advance Property Fund) v Stout (1999) 32 ACSR 507 cited
Re Java452 Pty Ltd (Administrators Appted) (No 2); Stout & Scales (in their capacity as joint administrators of Java 452 Pty Ltd (administrators appted) v Permanent Trustee Australia Ltd [1999] VSC 273 distinguishedANDREJS JANIS STRAZDINS & NICHOLAS DAVID COOPER IN THEIR CAPACITY AS JOINT AND SEVERAL DEED ADMINISTRATORS OF DNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711 and DNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711 v BIRCH CARROLL & COYLE LIMITED ACN 990 659 643
SAD 170 of 2008
LANDER J
10 JULY 2009
ADELAIDE
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 170 of 2008
IN THE MATTER OF DNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711
BETWEEN: ANDREJS JANIS STRAZDINS & NICHOLAS DAVID COOPER IN THEIR CAPACITY AS JOINT AND SEVERAL DEED ADMINISTRATORS OF DNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711
First ApplicantDNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711
Second Applicant
AND: BIRCH CARROLL & COYLE LIMITED ACN 990 659 643
Respondent
JUDGE:
LANDER J
DATE OF ORDER:
10 JULY 2009
WHERE MADE:
ADELAIDE
THE COURT ORDERS THAT:
1.So long as the second applicant complies with all of the terms and conditions of the Memorandum of Lease Registered Number 516196, a copy of which is annexure AJS2 to the affidavit of Andrejs Janis Strazdins sworn on 16 October 2008 (the Lease), as if the Lease had not been terminated including giving the respondent within 28 days an unconditional and irrevocable undertaking in favour of the respondent by ANZ Bank Limited to pay the sum of $79,980 upon demand, the respondent be restrained from taking possession or otherwise recovering the whole of the land comprised and described in Certificate of Title Register Book Volume 634 Folio 348 (the property) until such time as the respondent would have been entitled to recover possession or otherwise recover the property if the Lease had not been terminated.
2.The question of costs be reserved.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
SAD 170 of 2008
IN THE MATTER OF DNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711
BETWEEN: ANDREJS JANIS STRAZDINS & NICHOLAS DAVID COOPER IN THEIR CAPACITY AS JOINT AND SEVERAL DEED ADMINISTRATORS OF DNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711
First ApplicantDNPW PTY LTD (SUBJECT TO DOCA) ACN 107 484 711
Second Applicant
AND: BIRCH CARROLL & COYLE LIMITED ACN 990 659 643
Respondent
JUDGE:
LANDER J
DATE:
10 JULY 2009
PLACE:
ADELAIDE
REASONS FOR JUDGMENT
Yesterday I delivered reasons in this matter concluding that an order should be made under s 444F of the Corporations Act 2001 (Cth) restraining the respondent from recovering possession of property occupied by the applicant, DNPW Pty Ltd (subject to DOCA) ACN 107 484 711 (DNPW).
In my reasons at [136] I said that the respondent relied upon a decision Re Java 452 Pty Ltd (admin apptd); Permanent Trustee Australia Ltd (as trustee of Advance Property Fund) v Stout (1999) 32 ACSR 507 (incorrectly cited as Re Java 452 Pty Ltd (administrator appointed) (No 2) (1999) 32 ACSR 507). I then discussed that decision concluding that the decision was not contrary to the construction which I put upon s 444F.
Last night counsel for the respondent advised my chambers that I had referred to the first decision in Re Java rather than the second which was relied upon by the respondent.
This morning, junior counsel for the respondent advised me that they relied upon both decisions in Re Java. I was told that whilst the respondent had referred to the second decision, the respondent had inadvertently given me a reference to the first decision, which is the decision to which my reasons refer.
Today an application has been made under O 35 r 7(1) of the Federal Court Rules to vary or set aside the order.
I do not think that such an application need be made because no order has yet been made under s 444F that needs to be recalled or revoked.
However, I should give further reasons in relation to the second decision in Re Java452 Pty Ltd (Administrators Appted) (No 2); Stout & Scales (in their capacity as joint administrators of Java 452 Pty Ltd (administrators appted) v Permanent Trustee Australia Ltd [1999] VSC 273. In that decision, the company occupied premises owned by the respondent. The respondent had terminated the lease by notice given on 6 April 1999. The company entered into a Deed of Company Arrangement to sell the company’s assets to a third party. The assets included the company’s interest in the lease agreement which had been made between the predecessors of the company and the respondent.
Byrne J said (at [6]):
For the reasons set out at length in my judgment of 9 July I have concluded that the lease was terminated on 6 April 1999. This conclusion has a number of consequences for present purposes. First, the Company cannot assign the lease to a purchaser of the business because the lease no longer exists. This means that the purpose of the Deed, namely the sale of the assets, is defeated. Second, the Company will, upon the execution of the Deed, lose its statutory right to possession unless an order is made under s444F(4). Such an order does not re-instate the lease or create a fresh lease which is capable of assignment to a purchaser of the business. I was told by counsel for the Company that his client would be prepared to enter into a fresh lease with Permanent Trustee in terms of the old lease. This may be so, but Permanent Trustee says its (sic) does not want to grant such a term. It was not suggested that I have the power to compel it to do so. Moroever, the power conferred by s444F(6) to impose conditions upon the making of an order does not seem appropriate in a case where it is the respondent and not the applicant upon which the conditions might be imposed.
With respect, I agree entirely with his Honour’s observations. If a lease is terminated under an order under s 444F it does not reinstate the lease or create a fresh lease. Indeed, I said as much in my reasons at [131] and [142]. That being the case, a company which has obtained the benefit of an order under s 444F cannot assign the lease because the lease has been terminated.
The point of distinction in Re Java 452 Pty Ltd (Administrators Appted) (No 2); Stout & Scales (in their capacity as joint administrators of Java 452 Pty Ltd (administrators appted) v Permanent Trustee Australia Ltd [1999] VSC 273 is that the applicant in that case was purporting to enter into an agreement to sell a lease. However, because the lease had been terminated it was no longer an asset of the company.
That is not the case in this proceeding. DNPW does not wish to sell or assign the Lease. It wishes to continue to occupy the premises which were the subject of the Lease so that it can continue trading.
I do not think that either of the decisions in Re Java are inconsistent with my construction of s 444F.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander. Associate:
Dated: 21 July 2009
Counsel for the First Applicant: Mr P McNamara QC with Mr G Dart Solicitor for the First Applicant: Cowell Clarke Counsel for the Second Applicant: Mr P McNamara QC with Mr G Dart Solicitor for the Second Applicant: Cowell Clarke Counsel for the Respondent: Mr M Livesey QC with Mr B Roberts Solicitor for the Respondent: Minter Ellison
Date of Hearing: 10 July 2009 Date of Judgment: 10 July 2009
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