Berjaya Group (Aust) Pty Ltd v Ariff

CATCHWORDS : CORPORATIONS - voluntary administration - deed of company arrangement - remuneration of deed administrator - representations by deed administrator to parties holding 97% of shares and 90% of debts that he would draw remuneration from a particular fund only - whether representation conditional on deed being varied - whether representation gave rise to contractual promise - whether representation gave rise to promissory estoppel - whether order should be made under s 447A to prevent departure from representation

LEGISLATION CITED : Corporations Act 2001 (Cth), Part 5.3A, ss 444G, 447A, 449E Corporations Amendment (Insolvency) Act 2007

Re Carlovers Carwash Ltd [2005] NSWSC 879; (2005) 194 FLR 84 CASES CITED : Re Stockford Ltd; Korda [2004] FCA 1682; (2004) 52 ACSR 279 Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387 Wellnora Pty Ltd v Fiorentino [2008] NSWSC 483; (2008) 66 ACSR 229

Berjaya Group (Aust) Pty Limited - First Plaintiff Berjaya Group (Cayman) Limited - Second Plaintiff Berjaya Group Berhad - Third Pleintiff PARTIES : Carlovers Carwash Limited - Fourth Plaintiff Carlovers Carwash (Aust) Pty Limited - Fifth Plaintiff The Carwash Kings Pty Limited - Sixth Plaintiff Carlovers (Maroochydore) Pty Limited - Seventh Plaintiff Stuart Karim Ariff - Defendant

COUNSEL : Mr S D Epstein SC/Mr J P Redmond - Plaintiffs Ms R Francois - Defendant

SOLICITORS : PMF Legal - Plaintiffs Brown Wright Stein - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

6178/07 BERJAYA GROUP (AUST) PTY LIMITED & 6 ORS v STUART KARIM ARIFF JUDGMENT 1 The defendant, Mr Ariff, was, between 5 December 2003 and 1 November 2007, the administrator of a deed of company arrangement under Part 5.3A of the Corporations Act 2001 (Cth) of each of four companies, Carlovers Carwash Limited, Carlovers Carwash (Aust) Pty Ltd, The Carwash Kings Pty Ltd and Carlovers (Maroochydore) Pty Limited. Each of the second, third and fourth companies is a wholly owned subsidiary of the first. I shall refer to the four companies as "the Carlovers companies". I shall refer to Carlovers Carwash Limited as "CCL" and to Carlovers Carwash (Aust) Pty Ltd as "CCA". 2 The Carlovers companies are four of the seven plaintiffs. The other plaintiffs are Berjaya Group (Aust) Pty Limited, Berjaya Group (Cayman) Limited and Berjaya Group Berhad, the third being the parent company of the other two. I shall refer to these three companies as "the Berjaya companies". The Berjaya Group is based in Malaysia. 3 The Berjaya companies own between them about 97% of the shares in CCL. They were also the principal creditors of the Carlovers companies, accounting for some 90% of total debts. Their financial stake in the Carlovers companies is thus much greater than that of any other creditor - indeed, very much greater than the interests of all creditors combined. 4 The deeds of company arrangement of the Carlovers companies were executed on 5 December 2003 pursuant to resolutions of creditors passed on 3 November 2003. The deeds created a scheme of combined administration of funds for the benefit of the creditors of each company. The CCL deed of company arrangement was the "lead" deed, in that it contained comprehensive provisions and made detailed specifications that were adopted and applied by the deeds of the other Carlovers companies. It will be convenient to refer to the several deeds together as if they were one deed unless, in a particular context, it is necessary to refer specifically to one of them. 5 The present proceedings concern Mr Ariff's remuneration as administrator of the deed of company arrangement. The principal contention of the plaintiffs - that is, the Carlovers companies and the Berjaya companies - is that, as a matter of contract, Mr Ariff's right to remuneration was restricted or qualified in such a way that he was entitled to resort only to a particular fund created under the deeds, being "Deed Fund Number 1". The plaintiffs say, in the alternative, that Mr Ariff is estopped from claiming remuneration for work completed from 1 September 2004 to 1 November 2007 otherwise than from Deed Fund Number 1. Finally, the plaintiffs say that there should be an order under s 447A of the Corporations Act that Part 5.3A is to operate in relation to the Carlovers companies as if it were provided that Deed Fund Number 1 is the only source from which Mr Ariff is entitled to be paid remuneration. 6 Central to the plaintiffs' case is a letter dated 9 September 2004 signed by Mr Ariff and addressed to: "Mr Francis Lee Berjaya Group (Cayman) Limited Berjaya Group (Aust) Pty Limited 7th Floor Menara Berjaya KL Plaza 179 JLN Bukit Bintang 55100 KUALA LUMPUR MALAYSIA" 7 The letter is as follows: "Dear Sir RE: CARLOVERS CARWASH LIMITED ACN 060 151 199 CARLOVERS CARWASH (AUST.) PTY LIMITED ACN 060 059 449 CARLOVERS (MAROOCHYDORE) PTY LIMITED ACN 067 205 627 THE CARWASH KINGS PTY LIMITED ACN 064 292 342 (ALL SUBJECT TO DEEDS OF COMPANY ARRANGEMENT­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­­______________________________ I confirm that all future remuneration of the Deed Administrator shall be subject to the approval of the Committee of Inspection of CCA or CCL, as appropriate, and when so approved, will be paid from the bank account held by the Deed Administrator of CCA known as 'the Deed Fund Number 1 Trust Account' held with the National Australia Bank and no recourse whatsoever shall be had to CCA or CCL for the Deed Administrator's remuneration as approved. Dated this 9th day of September 2004. Yours faithfully Stuart Ariff Insolvency Administrators [signed] Stuart Ariff Principal" 8 It is this letter, viewed in its context, that the plaintiffs say evidences or creates the contract on which they rely, or contains the representations founding the estoppel or warranting the exercise of the s 447A jurisdiction. 9 It is necessary to say something about the circumstances in which the letter of 9 September 2004 came to be created. This makes it necessary to go to some matters of background. 10 The deed of company arrangement established two funds, "Deed Fund Number 1" and "Deed Fund Number 2". The way in which each fund was constituted is not important for present purposes. The manner of application of each fund was stated in the deed. The relevant provision in relation to Deed Fund Number 1 is clause 14: " Priority of application of Deed Fund Number 1 Subject to, and following satisfaction of Clause 34 of this Deed, the Administrator must apply Deed Fund Number 1 in the following manner and order of priority: (a) first, the Voluntary Administrator's and Administrator's trading shortfall and disbursements; (b) secondly, in payment of the Costs and Expenses of the Deed; (c) thirdly, in payment of the Dividend to the Deed Fund Number 1 Creditors; and (d) fourthly, the balance, if any, to be paid into Deed Fund Number 2." 11 The corresponding provision in relation to Deed Fund Number 2 is clause 16. That clause, however, says nothing about the deed administrator's remuneration (the matter with which these proceedings are concerned) and I therefore do not pause to set it out. I must, however, quote clause 34 which is mentioned in the start of clause 14: " Payment of fees Approved All costs and expenses of the Administrator, including fees and disbursements incurred by the Voluntary Administrator which have been the subject of approval by the Committee of Creditors appointed to the Company whilst in Voluntary Administration shall be drawn from the cash deposits held by the Administrator on account of each of the Company and the Group Companies before the application of the priority of distribution contemplated in clause 14 of this Deed." 12 Central to the operation of clause 14 is the following definition of "Costs and Expenses of this Deed" appearing in clause 1.1: "(a) all costs, fees, stamp duty and expenses in connection with the preparation, approval and implementation of this Deed and Arrangement, and of the preparation and implementation of any documents necessary as prerequisites to the approval of this Deed; (b) all liabilities incurred by the Administrator in the course of this Arrangement, including any money borrowed by the Administrator in the course of this Arrangement, any interest on it, and any contracts adopted or otherwise agreed by the Administrator; (c) all actions, suits, proceedings, accounts, claims and demands arising out of the Arrangement which may be commenced, incurred by or made on the Administrator by any person, and all costs, charges and expenses incurred by the Administrator in respect of any of them; (d) the remuneration of the Administrator under clause 6; and (e) those fees and disbursements incurred by the Voluntary Administrator which have not been the subject of approval by the Committee of Creditors appointed to the Company whilst in Voluntary Administration." 13 Having regard to paragraph (d) of the definition, it is necessary to quote clause 6: "The Administrator will be: (a) remunerated by the Company for work performed under this Deed, and the remuneration will be at rates not exceeding the hourly rates usually charged by Stuart Ariff, Insolvency Administrators, for liquidations; and (b) reimbursed by the Company for all other Costs and Expenses of this Deed." 14 If, as the plaintiffs contend, the operation of the deed of company arrangement was effectively modified (or should be modified pursuant to s 447A) so as to accommodate and make paramount the stipulation in the 9 September 2004 letter, the modification will be one affecting only Mr Ariff's remuneration as deed administrator, that is, the remuneration referred to in clause 6(a) and, to that extent, brought within paragraph (d) of the definition of "Costs and Expenses of this Deed" in clause 1.1. I say this because the letter, written at a time when the deed of company arrangement had been in force for some time, referred to "all future remuneration of the Deed Administrator". It was thus made clear that the letter was concerned only with remuneration as such (as distinct from, for example, "fees and disbursements", to quote words used in the deed itself), that the relevant remuneration was "future" remuneration in its entirety and that the subject matter was confined to remuneration of "the Deed Administrator" (as distinct from the former voluntary administrator). 15 The plaintiffs' case is, in essence, that Mr Ariff gave the 9 September 2004 letter in exchange for an undertaking by the Berjaya companies to support Mr Ariff's then current claim for remuneration for past periods; and that, on or about 20 September 2004, the Berjaya companies kept their part of this bargain by means of votes cast by Berjaya personnel as members of committees of inspection of the Carlovers companies (which action was, however, later recognised to be ineffective). 16 Mr Ariff denies that any such agreement was reached. He also says that if there was an agreement, no consideration was given for his promise and, if there was a binding agreement, it was subject to a condition that the deeds of company arrangement be amended to include an obligation for the Berjaya companies to pay an additional substantial amount into the deed fund, which condition was never satisfied. 17 Mr Ariff called meetings of the committees of inspection for 2 August 2004. Certain members assembled on that occasion, but the meetings were adjourned without transacting any business. John Sewerle, a committee member, said that Lee Teck Chuan, who attended by telephone, said (referring to Mr Ariff): "The meeting cannot deal with the approval of your fees without details of how those fees are made up being provided." 18 Robbie Fong gave evidence that such words were spoken but attributed them to himself or Rickey Hiew. According to Ricky Hiew, it was Lee Teck Chuan who spoke. 19 Mr Ariff later prepared a detailed report concerning remuneration. It is dated 13 August 2004. The report set out the basis of a request for approval of remuneration of $441,536 plus GST for the period of 5 December 2003 to 30 June 2004. The report was addressed to the members of the committee of inspection. It is unclear, however, whether it was circulated. At least two Berjaya members of the committee say that they did not receive or see it. 20 On 7 September 2004, Mr Ariff gave notice by fax that the adjourned meeting would continue at 10am on 8 September 2004. Berjaya personnel then flew from Malaysia to Sydney. They included Francis Lee and Derek Chin who were not members of the committee. There is evidence that the possibility of their replacing other Berjaya members had been raised beforehand with Mr Ariff. 21 Derek Chin, Francis Lee, Ricky Hiew and Lee Teck Chuan went to the meeting venue on 8 September 2004. The non-members were not allowed to attend the meeting. The meeting was again adjourned, but after discussion of various matters. According to contemporaneous notes made by Mr Ransom, an employee of Mr Ariff's firm, the adjournment came when the subject of Mr Ariff's remuneration was reached. The notes record: "Everyone wants more time to go over fees. But if they don't approve [sic] Ricky moves to consider fees in the adjourned meeting." 22 It may be inferred from this that there was something that people could "go over" in the interval until an adjourned meeting occurred. 23 On the following day, two meetings took place at Mr Ariff's office. Although there is some doubt about the order of the meetings, it seems much more probable that the meeting referred to by witnesses as a "management meeting" (and attended by, among others, John Sewerle, Lee Teck Chuan, Ricky Hiew, Francis Lee and Derek Chin) took place after an earlier meeting in which the participants were Francis Lee, Derek Chin, Mr Ariff and Mr Ariff's sister, Ms Yanzi Ariff who works with him. It is necessary to refer to the several accounts of events at this second-mentioned meeting which, as I have said, appears to have been the first in time. 24 Derek Chin's account, as given in his affidavit, is as follows: "… Mr Ariff said: 'I will give you back day to day control of CarLovers straight away. I will not take any more money for my fees and expenses other than there is money in Deed Fund 1 for the rest of the job if you approve my fees now. The job is almost over now. Once I have collected the balance of the contributions from CarLovers I can complete the deeds.' Francis Lee said words to the effect: 'As I told you last night I want this in writing. You have made many promises to us before and you haven't kept them. You promised to return day to day control of the CarLovers companies to us in December after the deeds were signed and you required a guarantee for doing that. You returned control to us but then you took it back again in February. You told me that I could sit in on the committee meetings when I spoke to you on the phone and I flew down with Derek Chin to do that. Then you ordered us out of the meetings yesterday. In your telephone conversation with me last night you promised to give me a letter confirming that your fees and expenses were capped if I would approve your fees now.' Mr Ariff said 'As I said last night control of CarLovers will be given back to Robbie Fong and John Sewerle. They will be able to sign cheques for under $10,000. Any cheques over $10,000 will have to be signed by you and me is that agreed?' I said: 'Alright but before Rickey, TC and Robbie will agree to approval of your remuneration I have to have a letter from you agreeing to the cap on your fees and expenses.'" 25 The account given by Francis Lee in his affidavit is: "Mr Ariff said: 'I will cap my fees and expenses to the monies in Deed Fund 1 and I will give you a letter now confirming that. Control of CarLovers will be given back to Robbie Fong and John Sewerle. They will be able to sign cheques for under $10,000. Rent cheques are over $10,000 so they can sign any rent cheques that exceed that amount. Any cheques over $10,000 will have to be signed by you and me. Is that agreed?' I said: 'Alright but I will have to have a letter from you agreeing to this before the committee members that represent Berjaya and its interests will sign any resolution.' This meeting lasted for about half an hour." 26 Mr Ariff's account given on affidavit is: "35. During the course of that meeting Derek Chin said words to the effect: 'Berjaya is concerned if the Deeds are varied and the control of the business reverts back to the directors, that you will be able to draw funds from the company trading account.' 36. I responded with words to the effect: 'We can resolve this … if the variation is approved by creditors I won't be able to draw funds from the trading account, only the Deed Fund 1 account.' 37. Derek Chin then responded with words to the effect: 'When the Deed is varied and the control reverts back to Berjaya, it makes it very hard to operate a business when there are unforeseen expenses being made for abnormal expenses and paid out of the trading account. I want to limit the drawings from Deed Fund 1 account so Berjaya can manage the cashflow of Carlovers from an operations view. The trading account can't be operated if the funds are to used to satisfy the varied Deed.' 38. I then said words to the effect 'Ok then, just do what I just said as it will solve your problem'. 39. At this point, the conversation had become heated and Derek Chin angrily responded with words to the following effect: 'We don't trust you, everything you have said in the past doesn't happen, you say one thing and then you do another.' 40. I replied with words to the following effect: 'That is untrue, the Deed as contemplated back in 2003 has returned you a good viable business, a lot of the discussions we have had during the Deed period at management meetings and telephone conferences are really not a large decision process, therefore thinking about it, after making the decision I have changed my mind. Derek, I am very aware I am responsible for the company and I won't be acting under your instructions but I will be guided by what you say.' 41. Derek Chin then responded with words to the effect 'everything you say is to happen doesn't happen, so I want it in writing'. 42. I then said words to the effect: 'I have no problem putting it in writing, and I will even go further than that, between now and when the creditors approve the variation to the Deed, I will authorize John and Robbie to be signatories on the trading account. I will also authorize Francis Lee to be a signatory on the bank account.' 43. Francis Lee then stated 'Good'. 44. I then said words to the following effect: 'just thinking about it, what is the point of you being a signatory on the trading account given you are based in Malaysia'. 45. Francis Lee then said words to the effect: 'maybe we can do a listing of cheques over $10,000 so I can authorize these before they are sent out'. 46. I replied along the following lines: 'that sounds practical, is there anything else we should do prior to having the Deed's varied during the interim period'. 47. Derek Chin then said words to the effect: 'I just want assurance from you in writing you will not have any recourse against the trading account if Berjaya pay the obligations to the Deed Fund which TC is working on now'. 48. I agreed by replying with words to the following effect, 'I am happy with that, you draft something up." 27 Ms Yazni Ariff took notes at the meeting. These are in evidence. After recording the four persons present ("DC" being Derek Chin, "FL" being Francis Lee and "SA" being Mr Ariff) and the date and place of the meeting, Ms Ariff wrote: "Re: Variation of DOCA's SA: - Concerns reduction & amendment of security position as already proposed in drafts variations. - F Lee approved to date & timetable to vary DOCA's when sale of business or shares occurs. FL: - Berjaya want total secured paid then SAIA fees by purchases plus mkt value of 2 fhold land. DC: - won't approve fees until some mangt control reverts to Directors & limit SAIA drawings w/out reference to CCL.

• Not happy nothing you say happens, you say 1 thing & another happens - Only draw from DF1 - JS & RF to sign cheques less than $10K - Over $10K SA & F Lee to sign fax detailing … - We want the coy back SA: - explained variation of DOCA process again - Subject to sale of business & the DOCA's being varied I will draw from DF1 only. - Subject to the timeline given to you and approval of cr's of variation of DOCA's & franchisee fees. - Should not take long - I still have to deal with Westpoint and DF1 cr dividends. DC: - put in writing then SA: OK you draft the l - I have a secretary ready to type it - this is a viable business but my concern is F Lee is the only director capable of managing it and he is absent F Lee: - I will come over regularly & attend tel mngt meetings with JS and RF. SA: - OK prepare the L/- Derek I'll sign it." 28 Ms Ariff explained that "l-" and L/-" stand for "letter". 29 The heading "Variation of DOCA's" is a reflection of the fact that there had been in progress for some time discussions about the possibility of amending the deeds of company arrangement. Mr Ariff gave evidence about the purpose, as he saw it, of the letter of 9 September 2004: "Q. What did you understand the purpose of the letter that they wanted was? A. It was for the creditors approving the varied deed of company arrangements." 30 And later: "Q. The letter refers to the basis upon which future remuneration would be paid? A. Correct.

Q. What was the purpose of the letter regarding that matter, as you understood? A. It formed part of the proposed varied deed of company arrangement." 31 Mr Ariff later said that the letter conveyed an accurate record of the commitment he was conveying to the Berjaya group, but not a complete record. The cross examination continued: "Q. Did you wish it to contain something more than it does? A. Yes.

Q. What would that be? A. Subject to the creditors approving the varied proposed deed of company arrangement.

Q. Is there any reason that the letter does not contain language of that type? A. No.

Q. Is not the reason the letter contains no such qualification the reason that you did not expect that Berjaya would accept any qualification of the terms of the letter? A. If that is a question, yes I did expect that - I'm just a bit muddled with the question.

Q. Perhaps I will clarify. I am suggesting on 9 September when you provided the letter to them, your state of mind was that if the letter had said anything along the lines: This is subject to the creditors approving a deed of variation, the Berjaya group representatives would say: That is not acceptable to us? A. I believe that is not true.

Q. Is there any reason you did not then and there amend the letter to add words such as 'subject to the deeds of company arrangement being varied'? A. There is no reason." 32 Work on a proposed variation of the deeds had begun in the first half of 2004. In a conference call on 22 June 2004, there was long discussion between Francis Lee and Mr Ariff about bringing the deeds of company arrangement to an end so that Berjaya could resume control of the Carlovers companies. Francis Lee informed Mr Ariff on that occasion that Berjaya had decided to retain Dibbs Barker Gosling "to help us, you know, to see how we can get this deed of company arrangement to a close". 33 On 23 June 2004, Francis Lee wrote to Mr Ariff outlining a proposal that had been formulated by Berjaya. The proposal was, in essence, that the Carlovers companies - no doubt at the instigation of Berjaya - would pay $1,109,000 into Deed Fund Number 1 and Deed Fund Number 2 ($75,000 into the latter and the remainder into the former) and control of the Carlovers companies would be returned to the directors of the companies (effectively, Berjaya). The proposal recognised that it would be necessary for the deed of company arrangement to be amended to bring about the envisaged results. The payments were to be made into the deed funds "within 14 days of the creditors or the court approving an amendment to the DOCA". 34 Mr Ariff's response (by letter dated 29 June 2004) was to ask Berjaya to provide "draft copies of the proposed (varied) Deeds of Company Arrangement with the variation marked up". Barjaya at first resisted this request, saying that the proposal was sufficiently clear in concept to call for Mr Ariff's response without going to the trouble of detailed drafting. By 2 July 2004, however, Berjaya had had its Sydney solicitors write a letter of more than five pages to Mr Ariff's solicitors to "set out some of our client's concerns about the administration and deed administration of the companies" and "propose an amendment to the deeds of company arrangement executed by each of the group companies". 35 Mr Ariff's solicitors replied on 5 July 2004. Their letter concentrated on rejection of various criticisms of Mr Ariff and his administration contained in Berjaya's solicitors' letter. In its closing paragraphs, the letter from Mr Ariff's solicitors dealt with the deed amendment proposal, labelling it "entirely unrealistic and, in fact, misleading to the creditors of the companies". 36 It was in this context that the meetings of the committees of inspection on 2 August 2004 were convened. Mr Ariff gave notice of the meetings on 15 July 2004. The following day, Francis Lee wrote to Mr Ariff asking that certain further items of business be placed on the agenda, including "Proposal by Berjaya for variation of the Deed of Company Arrangement for all of the Carlovers companies." 37 On 22 July 2004, Berjaya's solicitors produced a form of amended deed of company arrangement apparently intended to reflect the Berjaya proposal. Another draft of an amended deed dated 27 July 2004 is also in evidence. 38 In a telephone conversation on 23 July 2004, Mr Ariff and Francis Lee discussed arrangements for placing Berjaya's deed amendment proposal before the committees on 2 August 2004, and the possibility of further discussions on 9 August 2004. In the course of the conversation, it was arranged that Berjaya representatives would meet with Mr Ariff at the latter's Sydney office on 9 August 2004 to "go through some of the points and the issues" and "come to some kind of compromise" to " put forward to the committee of creditors". The possibility of a meeting of creditors being held on 24 August 2004 to consider deed amendments was discussed, but it was recognised that it would be premature to call such a meeting until the matter had been considered by the committee of inspection. The whole of this part of the discussion concerned the draft form of amended deed that had just been produced but which neither Mr Ariff nor Mr Lee had had an opportunity of reviewing. 39 In the course of another telephone conversation on 30 July 2004, Mr Ariff and Mr Lee again referred to the proposal to vary the deed of company arrangement. 40 I have already referred to Mr Ransom's contemporaneous notes of the meeting of the committees of inspection on 8 September 2004. It is clear that there was discussion at that meeting about the procedure for varying a deed of company arrangement. 41 I now turn briefly to events after 9 September 2004. On 28 October 2004, Mr Ariff's solicitors sent to Berjaya's solicitors a letter beginning: "We refer to our recent meeting with you with respect to the Deed of Company Arrangement." 42 There was reference in that letter to Berjaya's apparently revised proposal "to pay Deed Fund 1 the increased amount of $800,000 to satisfy the franchisee claim component in the Deeds of Company Arrangement". Berjaya's solicitors sent a "marked up amended deed of company arrangement to be executed by CarLovers Carwash (Aust) Pty Ltd" under cover of a letter dated 12 November 2004. The letter referred to augmentation of the deed fund. The letter (and the draft deed accompanying it) also referred to a concept of "Further Advance", being "any amount advanced by Berjaya Group (Cayman) Limited, Berjaya Group (Aust) Pty Ltd or any related entity to permit the Company to comply with the obligations under this Deed." 43 The draft deed, in clauses 6(a) and (b), provided for the deed administrator to be remunerated at hourly rates and for reimbursement of "all other Costs and Expenses of this Deed". Clause 6 then said: "Upon approval by the Committee of any amount referred to in paragraphs (a) and (b) the Administrator may draw the amount approved from the Funds in accordance with this Deed." 44 By the time this draft deed was prepared and the letter of 12 November 2004 was written, a proposal had developed of attempting to effect a sale of the Carlovers business. Under the proposal, Berjaya was to arrange the sale. But the proposal entailed further and, to that point, unforeseen work by Mr Ariff, particularly in relation to due diligence to be undertaken by prospective buyers. Mr Ariff pointed this out to Berjaya in a letter dated 4 November 2004. Berjaya's solicitors, in the letter of 12 November 2004, made reference to costs of the deed amendment and due diligence and said: "We understand that Mr Ariff has agreed to restrict his entitlement to draw remuneration to the deed funds. We do not see why any entitlement to remuneration (or payment of that remuneration) in relation to these tasks should be treated any differently to remuneration with respect to any other aspect of the deed administration. However, so that our client may consider the position further we suggest Mr Ariff provide our client with an estimate of his fees in respect of each 'additional' task. In addition, if it is proposed that Mr Ariff enter into a separate retainer with our client in respect of these tasks, we would appreciate receiving copy of any retainer agreement." 45 There was no apparent response to the first sentence of this extract in any later letter from Mr Ariff's solicitors. 46 It is necessary now to go back to 9 September 2004 and to refer to other events on that day. 47 As I have noted, there were two relevant meetings at Mr Ariff's office on that day. The first was the meeting already discussed in some detail at which the letter containing the representation central to this case was signed and delivered by Mr Ariff. The second was the "management meeting" attended by, among others, John Sewerle, Lee Teck Chuan, Ricky Hiew, Francis Lee and Derek Chin. Mr Ariff was, of course, also present. 48 John Sewerle gave evidence that the subsequent management meeting began with the following statement by Francis Lee: "Agreement has been reached that Stuart Ariff's fees will be capped to a fund and limited control of the Carlovers Group will be returned by Mr Ariff to Robbie Fong and John Sewerle of Carlovers, in return for Mr Ariff's fees being approved." 49 Lee Teck Chuan's evidence is that Francis Lee said words to this effect: "Stuart is handing partial control of the Carlovers companies back to us. Robbie and John will sign most cheques. Any cheques over $10,000 will be signed by me and Stuart. Stuart's fees and expenses will be capped to the moneys in the Deed Fund 1. Since his fees are going to be capped to the Deed Fund 1, I don't need to see the details of his fees and will simply vote in favour of them." 50 Ricky Hiew deposed to words to the following effect having been spoken by Francis Lee: "Stuart has agreed to hand partial control of the Carlovers companies to us. Stuart won't be involved in the day to day running of the business. Robbie and John will be signatories on the cheques. Any cheques over $10,000 have to be signed by Francis Lee. Stuart has agreed to cap his fees and expenses to the moneys in the Deed Fund 1. Because we have reached agreement on these matters, you will vote in favour of the approval of Stuart's remuneration." 51 Other events of significance on 9 September 2004 concern documents prepared by Mr Ariff for the purpose of obtaining approval of his remuneration for past services by the committees of inspection. At that time, all relevant persons laboured under the misapprehension that approval by a committee of inspection was sufficient warrant to allow the payment of remuneration. It was only at a later point that it was realised that an order of the court was necessary. 52 Mr Ariff wrote to all the members of the committees of inspection on 9 September 2004 attaching, in each case, three "rotational minute resolutions" marked as annexures "A", "B" and "C". The annexures "A" and "B" were resolutions quantifying the deed administrator's remuneration for the periods 1 July 2004 to 31 August 2004 and 5 December 2003 to 30 June 2004 and stating that the remuneration was to be paid from the "Deed Fund Number 1 Trust Account" of the deed administrator with National Australia Bank. Annexure "C" was a resolution as follows: "That all future remuneration of the Deed Administrator shall be subject to the approval of the Committee of Inspection of CCA or CCL as appropriate, and when so approved, will be paid from the bank account held by the Deed Administrator of CCA known as 'the Deed Fund Number 1 Trust Account' held with the National Australia Bank and no recourse whatsoever shall be had to CCA or CCL for the Deed Administrator's remuneration as approved." 53 This proposed resolution "C" accompanied the proposed resolutions "A" and "B" for the approval and payment of particular amounts of remuneration. None of the resolutions referred to any proposal to vary the deeds of company arrangement. Nor was there any reference to that matter in Mr Ariff's covering letter to the members of the committees of inspection. There was no suggestion in the letter or the proposed resolutions themselves that the future restriction to the effect that remuneration could be drawn from the Deed Fund Number 1 bank account only was in any way linked with or conditional on any deed variation. 54 Mr Ariff was cross examined about the letter of 9 September 2004 to the committee members and its annexures. The cross examination took place also by reference to an affidavit Mr Ariff had sworn in 2005 proceedings in which he had sought and obtained orders of the court as to the fixing of his remuneration following his realisation that the procedure based on resolutions of the committees of inspection was ineffective. The relevant part of the cross examination is the following: "Q. As to the rotational minutes are these documents which you personally prepared? A. My office would have prepared it.

Q. You then approved of them, did you? A. Correct.

Q. Did you have regard to the text, particularly in rotational minute annexure C, the final page? A. Yes.

Q. In sending this draft minute to the committee members is it right that you wished to convey to them that you would have no recourse whatever to CCA or CCL for the deed administrator's remuneration? A. Correct.

Q. Is this correct, the committee members to whom the draft minutes were circulated are the gentleman described in paragraph 24 of the affidavit? A. Yes.

Q. Of those people Mr Seddon and Mr Horton had had no discussions on 9 September at your office at which the Berjaya gentlemen were present? A. Had no involvement, no.

Q. In paragraph 32 you say Mr Horton would respond to the rotational minutes exhibited at tabs 20 and 21. I show you those documents (shown)? A. Yes.

Q. Mr Horton never gave any response to those rotational minutes, so far as you know, is that right? A. I cannot recall but if that is the case, that is the case." 55 The cross examination then moved to Mr Ariff's 2005 affidavit, paragraph 98 of which read: "Exhibited at Tab 75 of the Exhibit 'SKA-3' to this affidavit is a print out of the account balance of Deed Fund Number 1 Trust Account at the National Australia Bank dated 10 June 2005. I note that the current balance is $75,677.11 (although the available balance is $32,761.11 due to cheques awaiting clearance). My unpaid remuneration to date substantially exceeds this amount. I am currently pursuing franchisee recoveries, any returns from which will be deposited into the bank account of Deed Fund Number 1 Trust Account. I only propose to draw down my unpaid remuneration if sufficient funds are recovered." 56 I quote again from the transcript: "Q. In the final paragraph, paragraph 98, you make reference to the current balance in the deed fund No 1 trust account? A. Yes.

Q. And the fact that your unpaid remunerations substantially exceeds that amount? A. Yes.

Q. You were currently pursuing franchisees' recoveries, any returns which would be deposited into the bank account trust account? A. Correct.

Q. Was it right you only proposed to draw down your unpaid remunerations 'if sufficient funds are recovered'? A. Yes.

Q. By that you mean that recovered from the franchisees' recoveries? A. Yes.

Q. At the time you swore this affidavit did you regard yourself as entitled to draw down unpaid remunerations from any source other than the deed fund No 1 trust account? A. Yes.

Q. Why was it that you said in your affidavit, 'I only propose to draw down my unpaid remuneration if sufficient funds are recovered'? A. You are asking why?

Q. Why do you say that in the affidavit? A. I say that in the affidavit because I did not want to affect the working capital of the company during this period of the year.

Q. I suggest to you Mr Ariff you said that because you were conscious of the rotational minute that you had referred to you, having no recourse whatsoever to CCA or CCL for the deed administrator's remuneration? I am suggesting that is why you said what you said in the final paragraph? A. I also knew that I could draw funds from the other assets of the company." 57 Having regard to the whole of the evidence, I am satisfied that the representation made by Mr Ariff in the letter of 9 September 2004 was not some part of a larger arrangement concerning variation of the deed of company arrangement, with the representation to be operative only if and when the deed was varied. There are four particular factors leading to that conclusion. First, the letter itself did not express any such condition. Although the letter was prepared in something of a rush, Mr Ariff would have taken care to see that reference to the condition was included, if in reality the representation was intended by him to be conditional. 58 The second factor is the uncontradicted evidence of several witnesses about words spoken by Francis Lee at the management meeting that took place in Mr Ariff's office immediately after the smaller meeting at which the letter was signed and delivered by Mr Ariff. All of John Sewerle, Lee Teck Chuan and Ricky Hiew gave evidence of hearing Francis Lee say that Mr Ariff had agreed to cap his fees to Deed Fund 1, or words to that effect. The evidence is consistent in placing Mr Ariff among those present at the management meeting. There is no suggestion that he sought to correct what Francis Lee said. 59 The third factor is the content of the resolution "C" circulated with Mr Ariff's letter of 9 September 2004 to the committee members. Resolution "C" was one of three resolutions submitted to members for simultaneous attention. Resolutions "A" and "B" were for the approval of Mr Ariff's remuneration, while resolution "C", dealing with the same topic, purported to make remuneration - or, more precisely, "all future remuneration of the Deed Administrator" - recoverable only out of Deed Fund Number 1, with "no recourse whatsoever" to the companies themselves. 60 The fact that documents "A", "B" and "C" were circulated together by Mr Ariff shows that, in his dealings with the committee members, he invited them to approve particular remuneration amounts together with the proposition that he should in future be confined to Deed Fund Number 1 for remuneration. Nothing was said about any condition regarding variation of the deed of company arrangement. Rather, the committee members were invited to prescribe (probably ineffectively, as a legal matter) a regime of limited recourse for future remuneration while at the same time approving particular remuneration for past services. The limitation as to the future might well have enhanced members' willingness to give approval for the past remuneration. 61 The fourth factor is the statement in the letter of 12 November 2004 from Berjaya's solicitors (see paragraph [44] above). There was there a clear statement to Mr Ariff's solicitors of an established understanding "that Mr Ariff has agreed to restrict his entitlement to draw remuneration to the deed funds". At no time did Mr Ariff's solicitors challenge that understanding. 62 It is, of course, necessary to recognise that Yazni Ariff's notes (see paragraph [27] above) suggest a link between the representation embodied in the 9 September 2004 letter and variation of the deed of company arrangement. That does not mean, however, that the link was maintained when the letter was in due course signed and delivered. The link had clearly been abandoned, at the latest, by the time Mr Ariff embodied the same proposition with respect to future remuneration in resolution "C" circulated to committee members on the same day in company with resolutions "A" and "B". Furthermore, the absence of any such link was confirmed by Mr Ariff in his 2005 affidavit (see paragraph [54] above). 63 Accepting, then, that Mr Ariff made, through his letter of 9 September 2004 set out at paragraph [6] above, an unconditional representation in the terms there set out, what follows? 64 The plaintiffs' pleaded case is as follows: "20. By his letter dated 9 September 2004 addressed to Mr Francis Lee and handed to him that day, the defendant confirmed his agreement to limit any future claim for his remuneration to the money available out of Deed Fund 1. 21. By Rotational Minutes last signed by the duly authorised representative of the plaintiffs on the Committees of Inspection on 20 September 2004, the Committees approved the remuneration which was sought by the defendant for the period 5 December 2003 to 31 August 2004, on the express basis that any future remuneration was to be paid from the moneys available out of Deed Fund 1 and the defendant was to be denied other recourse against CCA and CCL for any such future remuneration. 22. The plaintiffs' support to the defendant's claim to remuneration being determined in accordance with the Rotational Minutes was secured by the defendant's representation that any future claim by him for remuneration would be made in conformity with the agreement described above." 65 This does little to elucidate the basis of the plaintiffs' case. It was explained in submissions, however, that the claim is as outlined at paragraphs [5] and [15] above. 66 The main propositions advanced by the plaintiffs are that a contract was formed or an estoppel arose. Opening submissions of counsel for the plaintiff put the matter thus: "The plaintiff's acceptance of the defendant's claim for remuneration set out in the rotational minutes was given by the defendant's promise that any future claim for remuneration by him was to be made from the money available in Deed Fund 1. A binding contract has been made out: see Australian Woollen Mills Pty Ltd v The Commonwealth (1954) 92 CLR 424 at 458 In the alternative, should it be found that adequate consideration is absent, then the defendant is estopped from claiming remuneration for work completed from 1 September 2004 to 1 November 2007, other than from Deed Fund 1 on the basis that the departure from such an assumption set out above, would place the plaintiffs in a material disadvantage if departure from the assumption is permitted: see Legione v Hateley (1983) 152 CLR 406." 67 The contractual formulation of the case raises immediate questions: who are the parties to the contract and to whom was the relevant representation made? 68 There are seven plaintiffs in these proceedings - the three Berjaya companies and the four Carlovers companies. If any contract was created by Mr Ariff's 9 September 2004 letter, it cannot be a contract between him and all seven plaintiffs. This is because of the way the letter was addressed: see paragraph [6] above. It was addressed to "Mr Francis Lee" and began "Dear Sir". One possibility, therefore, is that Francis Lee, who is not a party to the proceedings, was the person with whom Mr Ariff contracted, if any contract was made. Another possibility is that the relevant communication was between Mr Ariff and the two companies mentioned, Berjaya Group (Cayman) Limited and Berjaya Group (Aust) Pty Limited. That, in my view, is the correct construction. 69 The communication made by Mr Ariff by means of the letter should therefore be accepted as directed to those two Berjaya companies. It was not a communication to any of the Carlovers companies. 70 With the two Berjaya companies identified as the recipients of the message in the letter, it is relevant to consider the source of Mr Ariff's entitlement to remuneration in his capacity as deed administrator. That entitlement was at all times governed by s 449E of the Corporations Act as it stood before amendments made by the Corporations Amendment (Insolvency) Act 2007 came into effect on 31 December 2007. That section dealt with quantification but said nothing about the manner of satisfaction of the entitlement to remuneration. In particular, the section does not say that the company subject to the deed of company arrangement is obliged to pay. Questions about satisfaction of the entitlement and the sources from which it is to be satisfied must be answered by reference to the deed of company arrangement itself: Wellnora Pty Ltd v Fiorentino [2008] NSWSC 483; (2008) 66 ACSR 229. 71 The deed provisions about remuneration are set out at paragraphs [10] to [13] above. Clause 6 says that the deed administrator "will be … remunerated by the Company", that is, the company subject to the particular deed of company arrangement. By virtue of s 444G, a deed of company arrangement binds, among others, the company and the deed administrator. In relation to remuneration, therefore, Mr Ariff, as the deed administrator, had a statutory right of recovery as against each particular Carlovers company and each such company had a statutory obligation to pay Mr Ariff. 72 Because it was addressed to the two Berjaya companies, the letter of 9 September 2004 cannot have formed the basis of any contractual supplement to or qualification upon the stipulations with respect to remuneration that had statutory force as between the Carlovers companies and Mr Ariff through the deeds of company arrangement. The Berjaya companies were not privy to that part of the deed of company arrangement provisions 73 The matter must therefore be approached on the footing that any contract in the formation of which the 9 September 2004 letter played a part was a contract between Mr Ariff and the two Berjaya companies to which the letter was addressed; also, that if any estoppel arises from the making of the statements in the letter, it is an estoppel in favour of the two Berjaya companies. 74 As far as the contractual claim is concerned, Ms Francois of counsel submitted on behalf of Mr Ariff that a number of difficulties attend the concept of a contract by which Mr Ariff bound himself to the two Berjaya companies to act, in the matter of his remuneration, in the way stated in the letter and not otherwise. 75 A particular point made by Ms Francois comes from the terms of the letter itself. The letter begins by referring to future approvals of remuneration by the committee of inspection of CCA or CCL, as appropriate. Once a particular approval of remuneration was given, two things were to happen: first, the approved remuneration was to be paid from the particularly designated bank account; and, second, "no recourse whatsoever" was to be had to CCA or CCL "for the Deed Administrator's remuneration as approved". The last two words are important. The contractually accepted restraint (if that is what it was) upon "recourse" to CCA and CCL for the deed administrator's remuneration applied only to remuneration "as approved" in the manner stated in the letter itself, that is, by the committee of inspection of CCA or CCL. 76 In fact, the committee of inspection did not have, in September 2004, any power or ability to approve the deed administrator's remuneration. To the extent that it was understood, at that time, that such a power existed, the understanding was based on a decision made at the meetings of creditors that had resolved that the deeds of company arrangement be executed. Each such meeting had purported to resolve: "That the Deed Administrator's remuneration be approved in accordance with the Stuart Ariff Insolvency Administrators rates of charge, by the Creditors or a Committee of Inspection, if approved." 77 This resolution was passed on 3 November 2003. When the letter of 9 September 2004 was written, all concerned believed that the resolution enabled the committees of inspection to fix the deed administrator's remuneration. The understanding was, however, exploded on or soon after 21 December 2004 when Finkelstein J published his decision in Re Stockford Ltd; Korda [2004] FCA 1682; (2004) 52 ACSR 279. His Honour held that creditors have no power to delegate to an elected committee the function of fixing a deed administrator's remuneration. 78 Mr Ariff became aware of the Stockford decision some time in early 2005. On 22 June 2005, he filed an application seeking certain orders of the court with respect to his remuneration as deed administrator. The application was heard on 12 August 2005 and determined on 2 September 2005: see Re Carlovers Carwash Ltd [2005] NSWSC 879; (2005) 194 FLR 84. 79 In those proceedings, the court made an order under s 447A which had the effect of fixing certain past remuneration of the deed administrator in a sum equal to that which had purportedly been approved by the committees of inspection by means of the "rotational minute resolutions" referred to at paragraphs [52] and [53] above. It was accepted that those resolutions had been ineffective for the reason elucidated in the Stockford case. 80 In the 2005 proceedings, the court made a second order under s 447A. That order varied the operation of Part 5.3A in relation to the Carlovers companies to enable the committees of inspection to fix the deed administrator's remuneration. There were, however, two particular features of that regime. First, it applied only to the extent that remuneration "in respect of any completed period commencing after 30 June 2004 has not been fixed in accordance with s 449E(1)(a) or (1)(b)" (that is, by a meeting of creditors or by the court). Second, it required that the resolution of the committee of inspection be agreed to by a majority in number of the committee members voting on the resolution accounting for a majority by value of the debts of the creditors who are (or are represented by) the members voting on the resolution. 81 It was thus not until September 2005 that the committees of inspection had any effective power to determine or approve the deed administrator's remuneration. The determinations of the committees by means of the "rotational minute resolutions" of September 2004 were ineffective and meaningless. But, of course, the parties did not know that at the time. They thought that the committees had power to approve Mr Ariff's remuneration and that the determinations had legal effect. 82 It is important to note, however, that, when Mr Ariff made the application determined by the court on 2 September 2005, the Berjaya companies were given leave to be heard and made submissions to the court. They consented to the order under s 447A allowing remuneration for periods after 30 June 2004 to be determined by the committees of inspection. The Berjaya companies did not oppose the making of the order by which the court determined the remuneration for periods up to 30 June 2004 in the amounts that had been the subject of the "rotational minute resolutions". In that way, the Berjaya companies took, with respect to the fixing of the deed administrator's remuneration, actions that were valid and effective; and it may readily be inferred that they did so by reference to the representation made by Mr Ariff in the 9 September 2004 letter. 83 Because the immediately intended quid pro quo for the representation by Mr Ariff contained in the 9 September 2004 letter (that is, the remuneration fixing action of September 2004) was, in reality, ineffective and meaningless, I think that the claim in contract is not sustainable. The consideration, upon analysis, was illusory and non-existent. 84 The Berjaya companies' estoppel claim stands in a different light. Mr Ariff's representation induced in the Berjaya companies to which the 9 September 2004 letter was addressed an expectation that, as and when future remuneration was approved by the committees of inspection, Mr Ariff would draw that remuneration from Deed Fund No 1 and would refrain from resorting to other assets of the Carlovers companies. When the application determined on 25 September 2005 was in the course of preparation and the Berjaya companies were deciding their attitude to it, they must have had the representation of 9 September 2004 in mind. They were entitled to regard the first part of that application (involving what was really validation of the committee determinations that had miscarried) as advanced in fulfilment of the ineffective agreement previously made. More importantly, perhaps, they were entitled to regard the second part of the application (creating a regime under which the committees of inspection could, as to remuneration after 30 June 2004, validly and effectively do what they had purported to do in September 2004) as advanced by Mr Ariff in the knowledge of the representation of 9 September 2004. It must, in my view, be accepted that the Berjaya companies, in consenting to the second part of the application, were motivated by a well-based expectation that future determination of remuneration in accordance with the court-created regime would be subject to the very restraint, as to the method of satisfaction, that Mr Ariff had expressly acknowledged to the two Berjaya companies on 9 September 2004. And it must further be accepted that Mr Ariff knew when the Berjaya companies appeared on the hearing of the 2005 application that they were in that frame of mind as regards the subject matter of the representation made by him on 9 September 2004. 85 There was, on 9 September 2004, a representation by Mr Ariff as to his future conduct with respect to the drawing of remuneration approved by the committees of inspection. He must be taken to have had a reasonable expectation that the Berjaya companies' consent in 2005 to the creation by the court of an effective power for the committees to grant such approvals would be based on and encouraged by his previous representation. And it would be unconscionable for him now to depart from the representation, given the inducing role that it must be accepted as having played. 86 It may safely be inferred that, in the lead-up to the 2005 proceedings, Mr Ariff did nothing to warn the Berjaya companies that he intended to repudiate the 9 September 2004 representation. He allowed them to continue under the impression created by the letter of that date at the time it was given, as explained in the surrounding conversations, that is, that in return for Berjaya's co-operation at committee level in the matter of fixing his remuneration, Mr Ariff would confine himself to Deed Fund No 1 and not have recourse to other assets of the Carlovers companies. 87 The situation is thus one of promissory estoppel of the kind considered in Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387. Equity will not permit Mr Ariff to act inconsistently with the representation in the 9 September 2004 letter. 88 It is significant that the Berjaya companies to which the letter was addressed account for 97% share ownership of the Carlovers companies and some 90% of the debts. An estoppel in their favour should be seen as favouring the shareholders and creditors as a whole, so that the unconscionability of departing from the representation is a matter affecting the general body of persons interested in the implementation of the deed of company arrangement. That being so, the remedial provisions of s 447A, designed to underwrite the integrity of Part 5.3A implementation, should be deployed to prevent any such departure. 89 The court accordingly makes a declaration and orders as follows: 1. Declare that Stuart Karim Ariff is estopped as against Berjaya Group (Cayman) Limited and Berjaya Group (Aust) Pty Ltd from claiming remuneration for work completed from 1 September 2004 to 1 November 2007 as administrator of the deeds of company arrangement of Carlovers Carwash Limited, Carlovers Carwash (Aust) Pty Limited, The Carwash Kings Pty Limited and Carlovers (Maroochydore) Pty Limited, other than from the bank account known as "The Deed Fund Number 1 Trust Account" held with the National Australia Bank and from having recourse to Carlovers Carwash Limited or Carlovers Carwash (Aust) Pty Limited for the payment of such remuneration. 2. Order pursuant to s 447A of the Corporations Act 2001 (Cth) that Pt 5.3A of that Act is to operate in relation to Carlovers Carwash Limited, Carlovers Carwash (Aust) Pty Limited, The Carwash Kings Pty Limited and Carlovers (Maroochydore) Pty Limited as if: (a) any amount duly fixed as remuneration of Stuart Karim Ariff as administrator of the deeds of company arrangement of Carlovers Carwash Limited, Carlovers Carwash (Aust) Pty Limited, The Carwash Kings Pty Limited and Carlovers (Maroochydore) Pty Limited for the period 1 September 2004 to 1 November 2007 is to be paid from the bank account known as "The Deed Fund Number 1 Trust Account" held with the National Australia Bank; and (b) to the extent that any amount duly fixed as remuneration of Stuart Karim Ariff as administrator of the deeds of company arrangement of Carlovers Carwash Limited, Carlovers Carwash (Aust) Pty Limited, The Carwash Kings Pty Limited and Carlovers (Maroochydore) Pty Limited for the period 1 September 2004 to 1 November 2007 exceeds the amount available in the bank account known as "The Deed Fund Number 1 Trust Account" held with the National Australia Bank, the said Stuart Karim Ariff is entitled to no recourse whatsoever to Carlovers Carwash Limited or Carlovers Carwash (Aust) Pty Limited for the payment of such remuneration. 3. Order that the defendant pay the plaintiffs' costs of the proceedings. **********

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