Worboyes v The Queen - [2021] VSC 169

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 00984

IN THE MATTER of ZETO 6 MALCOLM PTY LTD (ADMINISTRATORS APPOINTED) IN ITS OWN CAPACITY AND AS TRUSTEE OF THE ZETO 6 MALCOLM UNIT TRUST (ACN 619 256 969) & ORS (in accordance with the attached Schedule)

ZETO 6 MALCOLM PTY LTD (ADMINISTRATORS APPOINTED) IN ITS OWN CAPACITY AND AS TRUSTEE OF THE ZETO 6 MALCOLM UNIT TRUST (ACN 619 256 969) & ORS (according to the attached Schedule)	First to Fifth Plaintiffs
- and -
SAM KASO AND BARRY WIGHT IN THEIR CAPACITY AS THE JOINT AND SEVERAL ADMINISTRATORS OF THE FIRST TO FIFTH PLAINTIFFS (according to the attached Schedule)	Sixth and Seventh Plaintiffs

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JUDGE:	Matthews AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	8 April 2021
DATE OF JUDGMENT:	8 April 2021
DATE OF REASONS:	13 April 2021
CASE MAY BE CITED AS:	Re Zeto 6 Malcolm Pty Ltd (Admins Apptd) & Ors
MEDIUM NEUTRAL CITATION:	[2021] VSC 169

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CORPORATIONS – Application by administrators appointed to corporate group for extension of convening period for second meetings of creditors pursuant to s 439A(6) of the Corporations Act 2001 (Cth) – Five companies in administration – Time needed for thorough assessment of financial position of the companies – Complex administration involving several property developments affected by restraining orders – Time needed for sale process to be conducted with maximum flexibility as afforded by the voluntary administration process – Extension of some 90 days sought and granted – Re Riviera Group Limited (2009) 72 ACSR 352.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr J Kohn	Frenkel Partners

HER HONOUR:

Introduction

On 2 March 2021, the sixth and seventh plaintiffs, Sam Kaso and Barry Wight (‘Administrators’), were appointed as joint and several voluntary administrators to the second to fifth plaintiffs, pursuant to s 436A of the Corporations Act 2001 (Cth) (‘Act’). On the following day, the Administrators were also appointed as joint and several voluntary administrators to the first plaintiff.

The companies in administration are:

(a) the first plaintiff, Zeto 6 Malcolm Pty Ltd (Administrators Appointed) in its own capacity and as trustee of the Zeto 6 Malcolm Unit Trust (ACN 619 256 969) (Zeto Malcolm);

(b) the second plaintiff, 79–81 KNG Templestowe Pty Ltd (Administrators Appointed) in its own capacity and as trustee of the 79–81 KNG Templestowe Unit Trust (ACN 625 870 984) (KNG Templestowe);

(c) the third plaintiff, Twenty Seven Box Hill Pty Ltd (Administrators Appointed) in its own capacity and as trustee of the Twenty Seven Box Hill Unit Trust (ACN 607 790 894) (Twenty Seven);

(d) the fourth plaintiff, 7–8 Blanche Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) in its own capacity and as trustee of the 7‑8 Blanche Unit Trust (ACN 623 132 990) (7–8 Blanche); and

(e) the fifth plaintiff, Zeto 8–10 Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] VSC 169
Decision Date: 8 April 2021

CaseChat Overview and Summary

The administrators of five companies sought an extension of the convening period for the second meetings of creditors under section 439A(6) of the Corporations Act 2001 (Cth). The companies were in administration, and the administrators needed more time to assess the financial position of the companies. The administration was complicated by restraining orders affecting several property developments. The administrators sought an extension of about 90 days to allow for a thorough assessment and to conduct the sale process with maximum flexibility. The High Court considered the application and granted the extension.

The court had to determine whether the administrators' reasons for seeking an extension were sufficient and whether the extension was in the interests of the creditors. The administrators argued that a thorough assessment of the companies' financial position was necessary for the best possible outcome for creditors. The complexity of the administration, the restraining orders, and the need for flexibility in the sale process supported the request. The court also had to consider whether the extension was reasonable and proportionate to the circumstances.

The court found that the administrators had provided sufficient reasons for the extension, including the need for a thorough assessment and the complexity of the administration. The court agreed that the extension was in the best interests of the creditors and granted the requested extension. The court emphasised that the extension should be as short as possible to balance the interests of the administrators and creditors. The court also noted that the extension should not unduly delay the resolution of the administration.

The court granted the administrators' application for an extension of the convening period for the second meetings of creditors. The extension was set at about 90 days to allow for a thorough assessment of the companies' financial position and to conduct the sale process with maximum flexibility. The court ordered that the second meetings of creditors be convened within the extended period.

Orders