Bovis Lend Lease Pty Ltd v Wily

Judgment (ex tempore) 1HIS HONOUR: By originating process filed on 29 October 2013 in proceedings 2013/325744 the plaintiff 1st Fleet Pty Limited (in liquidation) sought an order that the defendant company Evcorp Grains Pty Limited be wound up and a liquidator appointed. That originating process was first returnable before the Court on 10 December 2013, on which date it was adjourned to 18 December 2013 with a direction made that a voluntary administrator who had been appointed in the interim file and serve an affidavit in respect of any further adjournment on the next occasion. Such an affidavit of Michael Andrew Hogan was sworn and filed on 18 December 2013. From it, it appeared that Alan Hayes, an official liquidator, was appointed voluntary administrator of Evcorp on 2 December 2013 - that is to say at the eleventh hour, in the face of an originating process that had been filed on 28 October 2013 and in anticipation of its hearing on 10 December 2013. However, on 18 December 2013, the plaintiff in the winding up proceedings consented to a further adjournment of those proceedings until today. 2In Mr Hogan's affidavit reference was made to the second meeting of creditors being due to be held on 15 January 2014, when the creditors would vote as to whether the company would execute a deed of company arrangement, go into liquidation or whether the administration should end. The affidavit mentioned that the company's director had advised that he wished to put forward a deed of company arrangement, but was yet to make a formal proposal. It attached a letter from the director of 17 December 2013 which, after listing a number of outstanding matters, said "I am currently considering a proposed deed of company arrangement". It can hardly be said that there was any representation that there would be a deed of company arrangement, or anything more than that there was a faint prospect that there might be one. 3When the time came for the second creditors' meeting to be held on 15 January 2014 at 1pm, the administrator, due to an oversight, was unable to attend and appointed a delegate to chair the meeting when it commenced. The delegate convened the meeting for the purposes only of adjourning it to 3pm, by which time the administrator was present. Following 3pm, the creditors present at the meeting resolved that the company be wound up, with the consequence that (if that resolution was valid), pursuant to (Cth) Corporations Act 2001, s 446A(1)(a), the administration transitioned to a creditors' voluntarily winding up. 4However, as the authorities - in particular Bovis Lend Lease Pty Ltd v Wily [2003] NSWSC 467 at [247] - establish, in order to comply with s 439B the administrator must be physically present at the meeting as chair. That did not happen at 1pm and, accordingly, unless that be considered a procedural irregularity, it would seem that the administration has come to an end in the absence of any valid s 439C resolution. 5In order to remediate that situation, the administrator has filed an originating process in proceedings 2014/23864 on 24 January 2014, seeking relief pursuant to Corporations Act s 447A(1) and/or s 1322(4)(a) validating the appointment of a delegate to chair the meeting, its adjournment until 3pm and the subsequent resolution of the second meeting of the creditors, the effect of which would be to validate the creditors' voluntary winding up to which the administration would transition under s 446A. 6This is opposed by 1st Fleet, who wishes to have the liquidator it sought in its winding up summons appointed as liquidator pursuant to a winding up in insolvency; and to facilitate that course wishes that the defect not be rectified, so that the administration is at an end. 1st Fleet also submits that with the benefit of hindsight it can be seen that there ought not to have been an adjournment on 18 December, as no deed of company arrangement was ever forthcoming. Against that, the administrator proposes that he remain in office as liquidator, a consequence of which would be to save some duplication, because the administrator has already carried out a substantial amount of work including a report to creditors. 7First, it is relevant to bear in mind s 467B, which provides that the Court may make an order winding up a company under s 233, s 459A, s 459B or s 461 even if the company is already being wound up voluntarily. Accordingly, the circumstance that the company has gone into liquidation as a result of the creditors' resolution would not preclude the Court, in due course, from making a winding up order on the petition of 1st Fleet. This means that validating the second creditors' meeting and its consequences would not preclude 1st Fleet from proceeding, if it wishes, on its application for a Court ordered winding up, although presumably it would have to show some reason why that course ought be adopted over the outcome resulting from the creditors' meeting. If the plaintiff wishes to pursue that course, however, it is one that would remain available to it. 8Secondly, in a sense the die was cast on 18 December when there was consent to an adjournment, pending the conduct of the creditors' meeting. It is ordinarily inappropriate to revisit with the benefit of hindsight decisions of that kind, and the procedures and status quos that they in due course establish. In effect, from 18 December the parties proceeded on the basis that the company was in administration and that the creditors' meeting would determine its fate, while preserving the plaintiff's ability to pursue a winding up order if it chose to do so, even in the face of an administration. The issue only arises because of a minor procedural irregularity, which all involved accept was innocent and accidental but which has the potential, if not remeditated, significantly to change the course and outcome of the administration. 9The matter, act or thing referred to for present purposes in s 1322(4)(a) - being the appointment of a delegate to chair the initial phase of the meeting pending the arrival of the administrator - is essentially of a procedural nature. It is not in doubt that the administrator acted honesty. It seems to me there has been no adverse impact on any person from the defect and that no substantial injustice would be caused to any person by remediating it. There may well be some saving to the administration as a result of avoiding duplication. There is no prejudice to 1st Fleet or the supporting creditor involved in validating the resolutions concerned, especially as if they wish they can still pursue their application for a winding up by the Court in insolvency. 10In proceedings 2014/23864 I make orders pursuant to s 1322(4)(a) of the Corporations Act in accordance with paragraphs 1, 2, 3 and 4 of the originating process. Accordingly, the Court orders that: (1)The appointment of Christopher Sprowles by delegation to chair the second meeting of creditors, pursuant to regulation 5.16.17(1) and regulation 5.6(34) of the Corporations Regulations 2001, was valid. (2)The resolution to adjourn the second creditors' meeting under regulation 5.6.18(1) was valid. (3)The second meeting of creditors was not invalid by reason of contravention of the Corporations Act s 439D(1). (4)The resolution passed by the creditors of Evcorp Grains Pty Limited at the second meeting of creditors to wind up Evcorp Grains Pty Limited (Administrator appointed) was valid. 11The administrator does not seek an order for costs and, accordingly, no such order will be made. 12In proceedings 2013/325744, the Court orders that the proceedings be adjourned to 24 February 2014 at 9 o'clock before the Registrar.