Watson v Uniframes Ltd

[1994] FCA 1085

ALLAN JOHN WATSON v. UNIFRAMES LTD and TIMOTHY TRUMBULL
No. G3011 of 1994
FED No. 1085/94
Number of pages - 6
Corporations
(1994) 13 ACLC 609

(1994) 55 FCR 556

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
DAVIES J

CATCHWORDS

Corporations - period for convening meetings of creditors - meaning of "beginning on that day" - whether date of administration to be counted as a day - whether failure to give notice within period may be rectified.

Corporations Law - ss. 439A, 1322

HEARING

SYDNEY, 25 January 1994
#DATE 27:1:1994
#ADD 23:5:1995

Counsel for the applicant: Mr Thomas F. Bathurst QC

with Mr Howard Insall

Solicitors for the applicant: Sly and Weigall

Counsel for the respondent: Mr D.E.J. Ryan

with Mr P.R. Whitford

Solicitors for the respondent: Gye Perkes and Stone

ORDER

THE COURT ANSWERS THE QUESTIONS AS FOLLOWS:

Question 1. Was the meeting convened by the Applicant on 14 January 1994 convened within the convening period in accordance with Section 439A of the Law? Answer: "No."

Question 2. If the answer to question 1 is no, did the administration end on 13 January 1994 pursuant to the provisions of Section 435C(1)(b) and Section 435C(3)(b)? Answer: "Each administration ended at the conclusion of 13 January 1994".

Question 3. If the answer to question 2 above is yes, in circumstances here the Applicant convened the meeting on 14 January 1994 in the mistaken belief that the convening period had not ended, does the Court have power under Section 1322 of the Law to make an order extending the time for convening the meeting? Answer: "No."

Question 4. If the answer to question 3 is yes, is the Applicant a "person interested" within the meaning of Section 1322(4) of the Law?"

Answer: "Unnecessary to answer."

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

DAVIES J On 17 December 1993, Mr A.J. Watson, a chartered accountant and registered liquidator, was appointed administrator of Uniframes Holdings Pty Limited and of Uniframes Australia Pty Limited following resolutions of the respective boards of the companies pursuant to s.436A(1) of the Corporations Law ("the Law"). On 24 December 1993, meetings of the creditors of each of the companies confirmed these appointments. On 14 January 1994, Mr Watson caused to be forwarded to the creditors of the two companies notices convening meetings of the creditors of those companies for the purposes of s.439A of the Law and he caused advertisements for the purposes of s.439A(3)(b) of the Law to be placed in the Australian newspaper of that day. The meetings were called for 21 January 1994 but were not then concluded because of the issue now being considered. The meetings have been adjourned to Friday next, 29 January.

1. On 19 January 1994, Messrs Gye Perkes and Stone, solicitors acting on behalf of Uniframes Limited, a shareholder of Uniframes Holdings Pty Limited, and on behalf of Mr Timothy Trumbull, a director of Uniframes Holdings Pty Limited and of Uniframes Australia Pty Limited, wrote to Mr Watson alleging that the notices given on 14 January 1994 were out of time and that, as a consequence, Mr Watson's administration of the companies had come to an end pursuant to s.435C(3)(b) of the Law. Mr Watson then instituted this application which seeks a declaration that his administration of the two companies has not ended pursuant to s.435C of the Law or, alternatively, seeks orders pursuant to s.447A(1) or s.1322 of the Law extending the period within which Mr Watson may convene meetings of creditors of the two companies and deeming the administration to have continued notwithstanding any failure to convene the meetings on or before 13 January 1994.

2. At the request of Mr T. Bathurst QC, with whom Mr H. Insall of counsel appeared for Mr Watson, and of Mr D.E.J. Ryan of counsel, with whom Mr P.R. Whitford of counsel appeared for Uniframes Limited and for Mr Trumbull, I have set aside for separate determination apart from any other issues arising in the application the following four questions:
   

"1. Was the meeting convened by the Applicant on 14 January 1994 convened within the convening period in accordance with Section 439A of the Law?

2. If the answer to question 1 is no, did the administration end on 13 January 1994 pursuant to the provisions of Section 435C(1)(b) and Section 435C(3)(b)?

3. If the answer to question 2 above is yes, in circumstances where the Applicant convened the meeting on 14 January 1994 in the mistaken belief that the convening period had not ended, does the Court have power under Section 1322 of the Law to make an order extending the time for convening the meeting?

4. If the answer to question 3 is yes, is the Applicant a "person interested" within the meaning of Section 1322(4) of the Law?"

1. The following provisions of the Law have particular relevance:-
   

"105(1) Where, for any purpose, this Law:

(a) prohibits, permits or requires the doing of an act or thing within, or by or before the end of; or

(b) otherwise prescribes, allows or provides for; a period or time before or after a particular day, act or event, the period shall be calculated without counting that day, or the day of that act or event, as the case may be." "105(2) Without limiting the generality of subsection (1), in calculating how many days a particular day, act or event is before or after another day, act or event, the first- mentioned day, or the day of the first-mentioned act or event, shall be counted but not the other day, or the day of the other act or event."

"435C(1) The administration of a company:

(a) begins when an administrator of the company is appointed under section 436A, 436B or 436C; and

(b) ends on the happening of whichever event of a kind referred to in subsection (2) or (3) happens first after the administration begins. ...

435C(3) However, the administration of a company may also end because:

...

(b) the convening period, as fixed by subsection 439A(5), for a meeting of the company's creditors ends:

(i) without the meeting being convened in accordance with section 439A; and

(ii) without an application being made for the Court to extend under subsection 439A(6) the convening period for the meeting;" "439A(1) The administrator of a company under administration must convene a meeting of the company's creditors within the convening period as fixed by subsection

(5) or extended under subsection (6). 439A(2) The meeting must be held within 5 business days after the end of the convening period. 439A(3) The administrator must convene the meeting by:

(a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and

(b) causing notice of the meeting to be published:

(i) in a national newspaper; or

(ii) in each jurisdiction in which the company has its registered office or carries on business, in a daily newspaper that circulates generally in that jurisdiction;

at least 5 business days before the meeting.

...

439A(5) The convening period is:

(a) if the administration begins on a day that is in December, or is less than 28 days before Good Friday - the period of 28 days beginning on that day; or

(b) otherwise - the period of 21 days beginning on the day when the administration begins. 439A(6) The Court may extend the convening period on an application made within the period referred to in paragraph

(5)(a) or (b), as the case requires." "1322(2) A proceeding under this Law is not invalidated because of any procedural irregularity unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice that cannot be remedied by any order of the Court and by order declares the proceeding to be invalid.

1322(3) A meeting held for the purposes of this Law, or a meeting notice of which is required to be given in accordance with the provisions of this Law, or any proceeding at such a meeting, is not invalidated only because of the accidental omission to give notice of the meeting or the non-receipt by any person of notice of the meeting, unless the Court, on the application of the person concerned, a person entitled to attend the meeting or the Commission, declares proceedings at the meeting to be void. 1322(4) Subject to the following provisions of this section but without limiting the generality of any other provision of this Law, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Law or in relation to a corporation is not invalid by reason of any contravention of a provision of this Law or a provision of the constitution of a corporation;

...

(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Law or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding; as may make such consequential or ancillary orders as the Court thinks fit."

(the emphasis is mine)

1. The issue has arisen because 14 January was the 28th day after 17 December 1993, the day on which the administration of the two companies began. The primary issue is whether the convening period, as specified in ss.439A(5), concluded on 13 January 1994 or on 14 January 1994. A second issue is whether, if the notices were out of time, an order may be made validating the meetings and the administration because the error came about from a misunderstanding on Mr Watson's part as to the allowable period.

2. Issues of this type are always difficult. It is sufficient to refer to Trow v. Ind Coope (West Midlands) Ltd (1967) 2 QB 899 in which Lord Denning MR expressed his view that expressions such as "beginning with", "beginning from" and "beginning on" were equivalent expressions and that the distinction between them, while being nice distinctions in which lawyers delight, were too subtle for his liking. His Lordship referred to the general rule that where a particular time is given from a certain date, the day of the date should be excluded from the computation, and in the case before him applied that rule. See pp.915-7. However, Harman LJ and Salmon LJ took the contrary view and held that any period of time to be calculated as commencing or beginning witha certain day must include that day. I refer to this case as illustrative of the problems that arise.

3. It is not in dispute that it would not be proper to split the day on which the administrations commenced and to divide the time according to the hour when each of the companies appointed Mr Watson administrator. Cases such as Gordon v. Sanctuary (1832) 4 B and Ad 255 are not currently applied in the absence of a clear intention in the legislation. There is no such expression of intention in s.439A(5). Therefore, if 17 December 1993 is to be counted in the computation of the 28 day period, it will be counted as one day and there would be available for the giving of the notice only 27 days thereafter, with the result that the period would have expired on 13 January 1994. If however, in the computation, 17 December 1993 is not counted as a day, then the period expired on 14 January 1994 and the notices were given in time.

4. I am unaware of any reason why the Legislature would have intended to give to the administrator less than a full period of 28 days or 21 days, whichever be the appropriate period, especially as the full period would accord with the manner in which other provisions as to time in the law are ordinarily calculated. It is surprising that the Legislature would have used the expressions "28 days" and "21 days" intending that an administrator would have something less than the full period in which to send out notices convening a meeting. Moreover, s. 105 establishes the pattern for most time limits prescribed by the Law. By the use of the words "from", "after" or "before", the full period of the number of days specified is allowed. For example, the period of "5 business days after" and "5 business days before" appearing in s.439A(2) and (3) obviously pick up s.105. So also does the reference in s.439A(5)(a) to "28 days before Good Friday".

5. Nevertheless, I am unable to read s.439A(5) as referring to a period of 28 days from or after the day on which the administration began. This would treat the expression "beginning on that day", as expressing shortly the meaning "the period beginning on that day and ending 28 days after that day" as expressed for instance in s.459F(2) of the Law, or in the sense of "commencing at midnight on that day" referred to by Gibbs J in Forster v. Jododex Aust Pty Ltd (1972) 127 CLR 421 at 441. However, s.439A(5) uses the simple words "beginning on that day". The word "on" is here used as indicating the day on which the period begins. Thus, as "on Monday" means in, or within or during Monday. See Webster's International Dictionary 1913 Ed. Thus, s.439A(5) requires that the counting of the period begin on, that is to say within the confines, of the day on which the administration commenced. Section 439A(5) does not, in this respect, use terminology which attracts the operation of s.105, namely "after" or "from" but adopts the distinctive terminology of "beginning on". These words are not ambiguous, though their use seems to me to be unfortunate. There is no ambiguity in the words "if the administration begins on a day". The words "beginning on that day" have the same effect.

6. It follows in my opinion that question 1 should be answered "No".

7. Question 2 should be answered: "Each administration ended at the conclusion of 13 January 1994".

8. I am of the view that s.1322 does empower the Court to correct irregularities which may arise under s.439A. I do not regard the provisions with respect to administration as constituting an entire code which excludes other provisions such as s.105 and 1322. And I would apply to s.1322 the views expressed as to s.539 of the Companies Code 1981 (NSW) by Young J in Sydney Aussie Rules Social Club Ltd v. Superintendent of Licences 1989 15 ACLR 662 and by Hodgson J in Abalcheck Pty Ltd and Anor v. Pullen & Ors (1990) 3 ACSR. However, by s.439A(6) and s.435C(3)(b), the Legislature has expressed its intention that time shall not be expended for the purposes of s.439A unless application for extension was made within the period. It follows that, as no application was made within the period, no extension of time may be granted. This is not a case where there was an irregularity in compliance within the period. Mr Watson did not give any notice of the meetings until after the period had expired. The legislative intent as expressed in s.439A(6) and s.435C(3)(b) must be given effect.

9. Accordingly, question 3 will be answered: "No."

10. It is unnecessary to answer question 4, but I may say that, as presently advised, it appears to me that Mr Watson was a "person interested" within the meaning of s.1322(4) of the Law, and indeed, was the appropriate person to make application for relief.

11. Counsel may address me as to costs and as to any further orders proposed.