Bovis Lend Lease Pty Ltd v Wily [2016] NSWSC 753 | Case summary

Bovis Lend Lease Pty Ltd v Wily [2016] NSWSC 753 | Case summary | Zoe

By Originating Process filed today by leave, Mr Ronald Dean-Willcocks in his capacity as voluntary administrator of Newcastle Mining Solutions Pty Ltd (Administrator Appointed) ("Company") applies, under ss 447A and 1322(4)(a) of the Corporations Act 2001 (NSW) and regs 5.6.17 and 5.6.18 of the Corporations Regulations for certain declarations and orders. The declarations that Mr Dean-Willcocks seeks are to the effect that a second meeting of creditors of the Company held on 4 May 2016 was not invalid by reason that Mr Dean-Willcocks was not physically present at it and that the resolution of creditors to adjourn that meeting under reg 5.6.18 of the Corporations Regulations was not invalid by reason of Mr Dean-Willcocks not being present at the meeting.
The application relates to the conduct of a second meeting of creditors of the Company, at which creditors determined to adjourn the second meeting to allow certain further steps, to which I will refer below, to be taken. It seems to me that, as the Originating Process recognised, the application could have been brought under either s 447A of the Corporations Act, as a nunc pro tunc application to seek to vary applicable provisions of the Corporations Act or under s 1322(4)(a) of the Corporations Act to seek an order declaring that an act purporting to have been done, but involving a contravention of a provision of the Corporations Act, was not invalid in the particular circumstances. Mr Scruby, who appears for Mr Dean-Willcocks, has pressed the application on the second basis, and it seems to me that that basis is properly available to Mr Dean-Willcocks.
I should first refer briefly to the relevant statutory provisions, before turning to the factual circumstances and the matters which are relevant to determining the application. Section 439A of the Corporations Act provides for the administrator to convene a meeting of the company's ordinary creditors within a specified period. Section 439B of the Corporations Act in turns provides for the conduct of the meeting and s 439B(1) provides that the administrator is to preside at that meeting. Section 439B(2) permits a meeting to be adjourned from time to time, provided that the period of adjournment does not exceed 45 business days, and that was the course which was adopted here. Regulations 5.6.17 and 5.6.18 of the Corporations Regulations 2001 (Cth) in turn provide that if a meeting is convened, relevantly, by an administrator of a company under administration, the administrator must chair the meeting and provide for the chairperson to adjourn the meeting in specified circumstances. Section 1322(4)(a) of the Corporations Act, on which Mr Scruby relies, in turn permits the Court, on application by an interested person, relevantly Mr Dean-Willcocks, to make all or any of specified orders, including an order declaring that any act purporting to have been done under the Corporations Act or in relation to a corporation is not invalid by reason of a contravention of a provision in the Corporations Act. The Court may not make an order under that section unless the requirements of s 1322(6) are satisfied, namely that the act, matter or thing is essentially of a procedural nature; that the person concerned in the contravention acted honestly, or that it is just and equitable that the order be made. As will emerge below, it is likely that each of these requirements is satisfied in the present case, although it would be sufficient for the Court to have jurisdiction under s 1322(4)(a) of the Corporations Act that any one of those provisions have been satisfied.
Turning now to the evidence, Mr Dean-Willcocks refers to the circumstances of his appointment as voluntary administrator and to his having issued a circular to creditors of the Company advising of the first meeting of creditors to be held on 5 April 2016 and, subsequently, issuing a report to creditors under s 439A of the Corporations Act and convening a second meeting of creditors to be held on 4 May 2016 in Newcastle. Mr Dean-Willcocks' report to creditors, prior to that second meeting, included a recommendation that creditors adjourn the second meeting for a period of 45 business days at his discretion to allow for a deed of company arrangement proposal by the Company's directors and lodgement of outstanding tax returns, in circumstances that the Australian Taxation Office had indicated the possibility that penalties may be applied against the Company due to overdue tax returns. Mr Dean-Willcocks' evidence is that, consistent with the requirements of s 439B of the Corporations Act, Mr Dean-Willcocks had intended to be personally present and to chair the meeting, as voluntary administrator of the Company.
In circumstances which are referred to in Mr Dean-Willcocks' affidavit, which I need not record in detail, Mr Dean-Willcocks' elderly mother needed to be admitted to hospital on the morning of 4 May 2016 and, after Mr Dean-Willcocks recognised that position, he had driven her to hospital and waited for at least some time at the emergency department with her. Mr Dean-Willcocks made arrangements for a senior manager in his employ to attend the second meeting of creditors of the Company in Newcastle and for another member of his staff to be present by telephone, and he also attended and chaired that meeting by telephone. Mr Dean-Willcocks had not then realised the possibility that a difficulty might arise by reason of his lack of personal attendance at the meeting although, it might be noted, the course he took may well be characterised as a responsible one even if he had then recognised such a difficulty. In the circumstances, the creditors voted at that meeting, with Mr Dean-Willcocks present by telephone as I have noted, for the adjournment of the meeting in accordance with the recommendation contained in the report to creditors. Mr Dean-Willcocks subsequently recognised the possibility that there may have been noncompliance with at least s 439B of the Corporations Act, took legal advice and brought this application.
It seems to me that Mr Dean-Willcocks is correct in recognising that it is likely that there was a noncompliance with s 439B of the Corporations Act that arose in respect of the conduct of the meeting. The case law establishes that the requirement under s 439B of the Corporations Act that the administrator is to preside requires that he be present personally, and there is case law indicating that, for example, attendance by an audio-visual facility is not sufficient: Bovis Lend Lease Pty Ltd v Wily [2003] NSWSC 467; (2003) 45 ACSR 612; Holzman v New Horizons Learning Centre (Canberra) Pty Ltd [2004] NSWSC 90; (2004) 180 FLR 246; Re Evcorp Grains Pty Ltd [2014] NSWSC 72 at [4]. Accordingly, it appears that s 439B of the Corporations Act was breached, which may or may not affect the validity of the meeting, so far as Mr Dean-Willcocks was not physically present at the meeting.
However, s 1322 of the Corporations Act performs an important role in the Corporations Act, in avoiding the invalidation of acts performed in respect of companies and under the Corporations Act by reason of irregularities, both procedural and substantive in character: see, for example, the numerous cases as to the application of that section, in respect of a range of irregularities, cited in Austin & Black's Annotations to the Corporations Act [9.1322]. The Court here has power to declare that the relevant act, which is properly characterised as the conduct of the relevant meeting and the passage of the associated resolutions, was not invalid by reason of the relevant contravention of s 439B of the Corporations Act provided the matters in s 1322(6) of the Corporations Act are satisfied. It seems to me strongly arguable that the requirement for Mr Dean-Willcocks to be present was of a procedural nature and, even if that is not the case, it is plainly the case that Mr Dean-Willcocks' conduct in the relevant matter was honest, and it seems to me that it would also be just and equitable that the order be made where it would validate a meeting of creditors, which was regularly undertaken, but for the physical absence of Mr Dean-Willcocks, and where that would give effect to the wishes of creditors expressed at the meeting. The result which I would reach, as a matter of principle and having regard to the statutory provisions, is consistent with the result which was reached by Brereton J in similar circumstances in Re Evcorp Grains Pty Ltd above where his Honour made an order under s 1322 of the Corporations Act in similar circumstances.
Mr Scruby fairly noted that Mr Dean-Willcocks had not given advance notice to creditors of this application. In the circumstances, it seems unlikely that creditors would seek to oppose the application, where it would give effect to the resolution passed at the relevant meeting. However, for good order's sake, I propose to make an order, which was not opposed by Mr Dean-Willcocks, directing him to notify creditors of the orders made today, and reserving liberty to any person who wishes to apply to seek to vary or vacate those orders to do so within seven days.
Accordingly, I make the following orders:
Pursuant to s 1322(4) of the Corporations Act declare that: (a) The second meeting of creditors of Newcastle Mining Solutions Pty Ltd (Administrator Appointed) ACN 115 532 011 on 4 May 2016 ("the Meeting") was not invalid by reason of the Plaintiff not being physically present at the Meeting; and (b) The resolution of creditors on 4 May 2016 to adjourn the Meeting pursuant to regulation 5.6.18(1) of the Regulations was not invalid by reason of the Plaintiff not being physically present at the Meeting.
Direct the Plaintiff to notify creditors of these orders by close of business on 13 May 2016 and reserve liberty for any interested person who wishes to seek to vary or set aside these orders to apply within seven days.
These orders may be entered forthwith.

Bovis Lend Lease Pty Ltd v Wily

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