There is in evidence a letter of 8 July 2003 from the Minister for Mineral Resources to the chairman of Nardell Holdings making it clear that any favourable consideration by the Minister of matters associated with possible sale of the mine will only be forthcoming "following the DOCA being consented to by the unsecured creditors".
8 The application of Mr Turner and Mr Watson for leave to appoint themselves as voluntary administrators (and, in due course, also to be appointed deed administrators) is founded on s.436B(2). It is clear from the case law that the main question to be considered upon such an application is whether the liquidator is an appropriate person to be administrator: Re Depsun Pty Ltd (1994) 13 ACSR 644, Deputy Commissioner of Taxation v Foodcorp Pty Ltd (1994) 13 ACSR 796, Re Cobar Mines Pty Ltd (1998) 30 ACSR 125, John R Turk & Sons (Artarmon) Pty Ltd v Newmont Television Pty Ltd [1999] NSWSC 622. It was suggested by Young J in Re Depsun Pty Ltd that the court should also bear in mind "the general public interest involved in insolvent companies not going out into the market place" but, as Hodgson J observed in Foodcorp, those considerations really come to the fore, in a case such as the present (where a deed of company arrangement is to be propounded on the footing that an application to terminate the winding up will follow), upon the subsequent termination application: cf Sutherland v Rahme Enterprises Pty Ltd (2003) 21 ACLC 1385. On that basis, the suitability of the liquidators to be administrators (and, in due course, deed administrators if the deed proposal is advanced and approved) is really the only matter that need be addressed at this point.
9 Mr Turner says, quite candidly, in his affidavit that he is aware of some initial concern among creditors as to his independence which might have arisen partly from his having been until 1999 an employee of Ferrier Hodgson, the firm of which the receivers appointed by the Macquarie Bank associate are members. Despite this, there was no opposition at the first meeting of creditors under Part 5.3A to his continuing as one of the administrators and no one was put forward to replace him and Mr Watson. Creditors were also made aware that the administrators were being funded by Nardell Holdings which now, of course, is the proponent of the possible deed of company arrangement. Mr Turner also deposes to a belief that he and Mr Watson are not subject to any of the excluding factors referred to in s.448C(1). He further confirms that the administrators are without funds and will look, for their costs, to the funds provided by the revised deed of company arrangement (if it is executed), failing which Nardell Holdings will meet the costs.
10 This last matter concerning funding by Nardell Holdings is the only one requiring any comment. There is nothing else, in my view, that could possibly call in question the independence of Mr Turner and Mr Watson. In particular, I can see no issue as emerging from the fact that Mr Turner is a former employee of the firm of which the company's receivers are partners. That connection ceased some four years ago and there is no sound basis on which it can be seen as a source of lack of independence and impartiality or of any rational perception of such lack.
11 The funding by Nardell Holdings of the new administration up to the point where the new deed proposal is accepted or rejected by creditors will not of itself introduce any element of lack of independence and impartiality. It is sufficient to quote the following passage from the judgment of Austin J in Bovis Lend Lease Pty Ltd v Wily (2003) 45 ACSR 612 in which reference is made to the decision of Street J in Re Allebart Pty Ltd [1971] 1 NSWLR 24:
"It is not impermissible, per se , for a liquidator to make an arrangement with a particular creditor for payment of the liquidator's costs and expenses (although, as I shall point out, it may be material to disclose such an arrangement to creditors). The position was explained by Street J in Re Allebart (at 27-28):
'Not only did the petitioning creditor seek to urge on the liquidator in the process of the windings up, but it agreed to indemnify him against the expenses of carrying out examinations of Mr and Mrs Barton. It had already provided him with a cash sum of over $1,800 to cover the costs of, and related to, the bringing of these examinations. Here again there is no basis for levelling any criticism whatever against the petitioning creditor. Where a company is being wound up and it has no assets, or insufficient assets, to enable the due processes of the liquidation to be carried through, a creditor is to be encouraged, rather than criticised, in making funds available to the liquidator. Nor need a liquidator be diffident in accepting funds or indemnities from creditors so as to enable a winding up to proceed. Moreover, I see no reason to criticise on the grounds of propriety the arrangement under which a creditor provides money or indemnities to cover the expenses of a specific step in the winding up, such as the bringing of named proceedings or the carrying out of named examinations. Arrangements such as these are commonplace, and, if anything, they are to be encouraged, as very frequently some such arrangement enables the liquidator to carry out his duties more thoroughly or comprehensively than would otherwise be the case ....' "
12 It may be accepted that, because of the sale proposal in relation to the mine being advanced by Nardell Holdings and the company's receivers and the role that a deed of company arrangement would play in relation to the obtaining of the necessary consent of the Minister, Nardell Holdings has an interest in seeing the deed of company arrangement progressed. But I do not see that factor as compromising the ability of administrators funded by Nardell Holdings to perform their duties in a proper way in relation to the administration in general and the deed proposal in particular.
13 This assumes, of course, that the funding arrangement entails no more than a simple and unconditional undertaking by Nardell Holdings to pay the administrators' proper remuneration and expenses, with payment assured regardless of the steps they take, so as to enable them to do no more or less than to perform their duties as they see fit. Austin J commented in Bovis Lend Lease v Wily that it may be material for administrators to disclose funding arrangements to creditors That comment appears to me to have relevance to this case and to raise at least a strong expectation that the administrators, in order to ensure that such matters cannot be the source of perceptions of unsuitability, should inform creditors, in connection with any deed proposals, of the precise terms of the unconditional and unconstricting funding arrangements they have with Nardell Holdings.
14 I am satisfied that the relief sought under s.436B(2) should be granted.
15 The other aspect of the application concerns variation of the Part 5.3A regime, as it will apply to any new administration, so as to abolish what would otherwise be the first meeting of creditors under s.436E and to truncate the process for the convening of the s.439A meeting. That relief is sought on the practical footing that creditors have already had quite extensive opportunities to become familiar with the company's position and the issues confronting both it and them - including the reality that no return for ordinary unsecured creditors is expected in any winding up. These matters were covered at both the s.439A meeting of 30 April 2003 and the subsequent meeting of 8 August 2003 held after the company had passed into liquidation.
16 Ancillary orders of the kind now sought in relation to meetings were made by Bryson J in Re Cobar Mines Pty Ltd (above) and by Austin J in John R Turk & Sons (Artarmon) Pty Ltd v Newmont Television Pty Ltd (above). The following basis for making the order was stated in the latter case:
"The first ancillary order is to dispense with the meeting of creditors which would otherwise be required under s436E within five business days of the appointment of the administrator. There are two reasons for making this order. The first is that the company has been the subject of a procedure, namely its liquidation, in which creditors have been given the opportunity to express their views and have appointed a committee of inspection which approves the present course of action. The second is that the orders which I shall make ensure that a meeting of creditors will be convened within a short period to consider the proposal for a deed of company arrangement and at that meeting creditors will have the option of deciding to continue with the liquidation."
17 In the present case, the circumstances are very similar, save that the meeting of creditors in the liquidation expressed approval in principle of the new deed of company arrangement proposal by a majority in number but did not approve it by a majority in value. The important point, however, is not the precise outcome of the meeting but rather that it occurred and enabled the static body of creditors to be informed.
18 The single meeting of creditors proposed in the new administration will have an opportunity to cause winding up to be the company's ultimate fate, should it consider that the deed of company arrangement ought not be adopted. The nature of that winding up (or more precisely, the question whether some form of new winding up is somehow superimposed and, if so, how that position should be rationalised) is not one that arises for consideration at this point.
19 The orders of the court are as follows: