Yates, in the matter of G Retail Ltd (Administrator Appointed)
[2006] FCA 370
•23 MARCH 2006
FEDERAL COURT OF AUSTRALIA
Yates, in the matter of G Retail Ltd (Administrator Appointed) [2006] FCA 370
IN THE MATTER OF G RETAIL LTD (ADMINISTRATOR APPOINTED) ACN 098 238 585, GOWINGS PTY LTD (ADMINISTRATOR APPOINTED) ACN 059 863 937, GOWINGS WHOLESALE PTY LTD (ADMINISTRATORS APPOINTED) ACN 049 863 937, GOWINGS HARDWARE PTY LTD (ADMINISTRATORS APPOINTED) ACN 092 758 604; MR PETER GEORGE YATES AND DAVID JOHN FRANK LOMBE
NSD2330 OF 2005
EMMETT J
23 MARCH 2006
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD2330 OF 2005
IN THE MATTER OF:
G RETAIL LTD (ADMINISTRATOR APPOINTED)
ACN 098 238 585GOWINGS PTY LTD (ADMINISTRATOR APPOINTED)
ACN 059 863 937GOWINGS WHOLESALE PTY LTD (ADMINISTRATORS APPOINTED) ACN 049 863 937
GOWINGS HARDWARE PTY LTD (ADMINISTRATORS APPOINTED) ACN 092 758 604
MR PETER GEORGE YATES AND DAVID JOHN FRANK LOMBE
PLAINTIFFSJUDGE:
EMMETT J
DATE OF ORDER:
23 MARCH 2006
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.An order be made under s 1322(4) of the Corporations Act 2001 (Cth) (‘the Act’), to the effect that the meeting of creditors of each of the companies held on 6 March 2006 was not invalid by reason of any defect in the giving of notice in respect of the meetings in accordance with s 439A(3) of the Act.
2.An order be made under s 447A of the Act that s 439A(3)(b) is to operate in relation to the convening of the second meeting of the creditors of the companies as though it required the meetings to be convened by causing notice of the meetings to be published at least two business days before the meeting.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD2330 OF 2005
IN THE MATTER OF:
G RETAIL LTD (ADMINISTRATOR APPOINTED)
ACN 098 238 585GOWINGS PTY LTD (ADMINISTRATOR APPOINTED)
ACN 059 863 937GOWINGS WHOLESALE PTY LTD (ADMINISTRATORS APPOINTED) ACN 049 863 937
GOWINGS HARDWARE PTY LTD (ADMINISTRATORS APPOINTED) ACN 092 758 604
MR PETER GEORGE YATES AND DAVID JOHN FRANK LOMBE
PLAINTIFFSJUDGE:
EMMETT J
DATE:
23 MARCH 2006
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This is an application by the administrators of several companies for orders under s 1322(4) of the Corporations Act 2001 (Cth) (‘the Act’) and s 447A(1) of that Act. The application is made to cure what may be a defect in the convening of the second meeting of creditors of the companies pursuant to s 439A(1) of the Act. By that provision, the administrator of a company under administration must convene a meeting of a company’s creditors within the convening period as fixed by s 439A(5) or extended under s 439A(6).
Under s 439A(3) of the Act, the administrator, relevantly, must convene the meeting by giving written notice of the meeting to as many of the company’s creditors as reasonably practicable, at least five business days before the meeting, and by causing a notice of the meeting to be published in a national newspaper at least five business days before the meeting. The meeting was in fact convened and held on 6 March 2006. That was within the convening period as extended. However, questions arise as to whether the meeting was convened in accordance with s 439A(3).
Two questions have been raised by the administrators. The first is that notice of the meeting was dispatched by post to some 200 of 565 creditors on 24 February 2006. Notice was dispatched to the balance of 365 creditors on 27 February 2006. Section 105 of the Act provides that, 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 date of the first mentioned act or event is to be counted but not the other day, the day of the other act or event. In the present circumstances, that would mean that the day on which notice is given would be counted, but not the day of the meeting. Notice was sent to all creditors no later than 27 February 2006. That was five business days before the meeting convened for 6 March 2006.
The doubt arises concerning the use of the phrase ‘giving written notice’ in s 439A(3)(a). The question is whether that requires that notice actually be received by a creditor, or whether the mere sending of the notice constitutes the giving of the notice.
By Regulation 5.6.11, Regulation 5.6.12 applies to the convening of a meeting of creditors. By Regulation 5.6.12(2)(b), the notice must be given to a person by sending it to the person by prepaid post. That regulation assumes that, by sending, one is giving, notice. However, r 5.6.12(2)(b) is not decisive. The question is what is the true construction of s 439A(3)(a). That true construction cannot be affected by the regulation unless there is some express regulation making power.
Section 1364(2)(f) of the Act relevantly provides that regulations may be made by the Governor-General making provision for, or in relation to, the convening of, meetings of creditors and the sending of notices of meetings to persons entitled to attend at meetings. The regulation making power does not expressly authorise the making of regulations concerning the giving of notice.
This question has been considered by the Supreme Court of New South Wales in Re Vouris; Epromotions Australia Pty Limited v Relectronic-Remech Pty Limited(in liquidation) 47 ACSR 155. Campbell J observed that there is no provision in any of the regulations of a kind commonly found in statutes or contractual provisions designed to facilitate service that deems service to have been effected a certain number of days after the document has been put in the post, or at the time the document would be received in the ordinary course of post. His Honour observed that that omission is no oversight. His Honour suggests that the correct construction of s 439A(3)(a) is that written notice of a meeting is given at the time it is put in the post for the purpose of sending it to the person by prepaid post as required by Regulation 5.6.12(2)(b). When s 439A sets out a strictly limited set of times, any construction that required the time of convening of a meeting to depend upon when some individual creditor received notice or the last of the creditors had received notice, would make it very difficult to administer.
I agree with the approach taken by his Honour and in any event, unless I was of the firm view that his Honour was wrong, it would be appropriate to follow his Honour’s decisions (see Australian Securities and Investment Commission v Marlborough Gold Mines Ltd (1993) 112 ALR 627). I consider, therefore, that the requirement of s 439A(3) that the meeting be convened by giving written notice at least five business days before the meeting, was satisfied.
However, as I have said, there is also a requirement that the meeting be convened by causing a notice of meeting to be published in a national newspaper at least five business days before the meeting. That did not happen. Notice of the meeting was in fact published in The Australian Newspaper on 28 February 2006. Had it been published on 27 February 2006, the provision would have been complied with.
Mr Anthony Wright is a senior analyst with Deloitte Touche Tohmatsu, who assists the administrators of the companies in connection with the administration. Shortly prior to 1 pm on 24 February 2006, Mr Wright sent an email to Adcorp instructing them to arrange for a notice of the meeting of creditors to be published in The Australian Newspaper. Shortly after 1 pm on that day, Mr Wright received a response informing him that an advertisement would appear in The Australian Newspaper on 28 February 2006. However, because he was out of his office at the time of receipt of the email he did not check his email inbox until the morning of 27 February 2006, by which time he became aware that the advertisement had not appeared in the newspaper on 27 February 2006 as he had intended. Arrangements were then confirmed for the advertisement to appear on 28 February 2006.
A secondary concern has been raised in relation to the advertisement. The notice that was actually sent to creditors had seven items on the agenda. Through inadvertence the last two items were omitted from the notice that was published on 28 February 2006. A further notice was published on 2 March 2006, containing the whole of the notice that was sent to creditors.
The meeting of creditors was attended by some 44 creditors whose debts represented about 43 per cent in value of the total value of creditors of the companies. No complaint was received by the administrators before or after the meeting concerning the want of notice. However, at the meeting, a representative of one of the creditors, being Gowing Brothers Limited (‘Gowing Brothers’), raised the question of inadequacy of notice.
Gowing Brothers were represented by an insolvency practitioner of some experience, who suggested that the meeting should be adjourned because of the deficiency in notice. That proposal was not supported by any of the other creditors. It was not suggested on behalf of Gowing Brothers that it had not been given ample opportunity to consider the matters on the agenda of the meeting and, indeed, Gowing Brothers sent a letter to the administrators expressing concerns about their report to creditors, thus indicating that they had in fact received adequate notification of the meeting.
Section 447A(1) of the Act provides that the Court may make such order as it thinks appropriate about how Part 5.3A, which contains section 439A, is to operate in relation to a particular company. The section has been given a broad interpretation on the basis that it is remedial. Section 1322(4) relevantly provides that the Court may, on application by any interested person, make orders of the following kinds:
(a)an order declaring that any act, matter or thing purporting to have been done or any proceeding purported to have been taken under the Act or in relation to a corporation is not invalid by reason of any contravention of a provision of the Act; and
(b)an order extending the period for doing any act, matter, thing or instituting or taking any proceeding under the Act or in relation to a corporation or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding.
Under s 1322(6), however, the Court must not make an order under section 1322(4), relevantly, unless it is satisfied that the act, matter or thing is of a procedural nature or that the person acted honestly or that it is just and equitable that the order be made. Further, the Court must not make an order under section 1322(4)(b) unless the court is satisfied that no substantial injustice has been or is likely to be caused to any person.’
I am informed, and expect to see evidence to the effect, that Gowing Brothers was informed of the intention to make this application and was given a copy of the material proposed to be relied upon by the administrators in making the application. There has been no appearance from Gowing Brothers and no indication that it wished to be heard in relation to the application.
I am satisfied as to all of the matters referred to in s 1322(6)(a), that is, that the matter involved is essentially of a procedural nature, that the administrators acted honestly and that it is just and equitable that an order be made under s 1322(4). Only one of those provisions needs to be satisfied.
Further, I am satisfied that no substantial injustice has been or is likely to be caused to any person by reason of the failure to comply strictly with s 439A(3). Accordingly, I would be disposed to make an order under s 1322(4), to the effect that the meeting of creditors of each of the companies held on 6 March 2006 was not invalid by reason of any defect in the giving of notice in respect of the meetings in accordance with s 439A(3) of the Act.
Further, I would also be disposed to make an order under s 447A that s 439A(3)(b) is to operate in relation to the convening of the second meeting of the creditors of the companies as though it required the meetings to be convened by causing notice of the meetings to be published at least two business days before the meeting.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 5 April 2006
Counsel for the Plaintiffs: T F Bathurst QC Solicitor for the Plaintiffs: Blake Dawson Waldron Date of Hearing: 23 March 2006 Date of Judgment: 23 March 2006
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