Expile Pty Ltd v Jabb's Excavations Pty Ltd

Supreme Court of NSW|2003-07-24|Before: Campbell J, Barrett J

CITATION : Expile Pty Ltd v Jabb's Excavations Pty Ltd [2003] NSWSC 699 HEARING DATE(S) : 18 & 24 July 2003 JUDGMENT DATE : 24 July 2003 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Winding up application adjourned

CATCHWORDS : CORPORATIONS - voluntary administration - adjournment of winding up application - how order for costs on winding up application treated when administration begins after argument of winding up application and before decision on winding up application - need for administrator to consider both what transactions would be preferences or otherwise voidable if company entered a creditors' voluntary winding up, and if company were wound up by the Court - requirements for entitlement to vote at creditors' meeting - manner of voting at creditors' meeting - how section 440A Corporations Act 2001 affects entitlement of creditor to a winding up order ex debito justitiae LEGISLATION CITED : Corporations Act 2001 (Cth) Corporations Regulations Garcia v National Australia Bank (1998) 194 CLR 395 CASES CITED : IOC Australia Pty Limited v Mobil Oil (Australia) Limited (1975) 11 ALR 417 Unifor Office Systems Aust Pty Ltd v Brewer Partnership Pty Ltd (1999) 17 ACLC 642 PARTIES : Expile Pty Limited - Plaintiff Jabb's Excavations Pty Limited - Defendant FILE NUMBER(S) : SC 1887/02 COUNSEL : S Epstein SC - Plaintiff B Coles QC; D Allen - Defendant SOLICITORS : Baron and Associates - Plaintiff Cadmus Lawyers - Defendant

1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

1887/02 EXPILE PTY LTD v JABB'S EXCAVATIONS PTY LTD JUDGMENT - Ex Tempore 1 HIS HONOUR: This is an application for the adjournment of a winding up application. It comes before the Court in fairly unusual circumstances. On 14 February 2002 the plaintiff, Expile Pty Limited, filed a winding up application against Jabb's Excavations Pty Limited. That winding up application was one which was founded on failure to comply with a statutory demand. On the hearing of the winding up application the company undertook the task of proving solvency. 2 On 27 February 2003 Barrett J dismissed the winding up application. Expile appealed against that decision and the hearing of that appeal took place on 29 May 2003. As a result of the hearing, the company formed the view that the appeal may well be successful. On 7 June 2003 an administrator was appointed. This was Mr Ngan, a person who had not had any previous connection with the company. 3 A first creditors meeting was held on 13 June 2003. It was explained to the creditors that the judgment of the Court of Appeal was likely to be in favour of Expile, that the judgment of the Court of Appeal was expected prior to the end of June 2003 and that an administrator had been appointed to ensure maximisation of any return to the company's creditors. 4 On 23 June 2003 the administrator prepared what he described as a preliminary report. It disclosed that the company had total realisable assets of a little over $914,000 and liabilities of a little over $1.86 million. Its assets consisted of Strata Title offices valued at about $300,000, trade debtors estimated at $100,000, various items of plant and equipment with a realisable value of a little over $240,000, an amount of nearly $150,000 which was owed by the directors, and work in progress of the order of $121,000. 5 The liabilities of the company included about $430,000 owed to the Arab Bank, which was secured. As well, the company had given security to the Arab Bank for an amount of around $150,000, which the Arab Bank had lent to the directors. It is that security which gave rise to the asset of the company consisting of the amount owed by the directors. 6 There were various amounts owed to finance companies, who were described as "lessors" and, who were also described in the report as having a charge over the assets. There was an amount of nearly $473,000 owing to ESANDA, concerning equipment which had an estimated realisable value of $367,000. Thus, ESANDA was likely to sustain a shortfall of about $105,000, if that equipment needed to be sold. 7 Amounts had also been raised from CBFC and AGC, but the value of the equipment financed by those entities was equal, or very nearly equal, to the amount owed on the equipment. There were some priority employee entitlements of a little over $26,000. 8 The external trade creditors were put at $865,000 and to that needed to be added a debt of the order of $107,000 owed to Expile Pty Limited, which had been the foundation of the winding up application. That debt was said by the directors of the company to be disputed. 9 On 24 June 2003 the Court of Appeal gave its judgment. It found that the company had not established its solvency. An important factor in the Court of Appeal's so deciding was that the evidence which had been accepted by Barrett J was very much dependent on accepting the word of Mr Kairouz, an active director in the company. When there was not adequate documentary backing for his word, the Court of Appeal held that solvency had not been established. 10 It came to the Court of Appeal's attention, before the judgment was delivered, that an administrator had been appointed. Thus, the Court of Appeal did not make an order appointing a liquidator, but rather allowed the opportunity for an application under s 440A of the Corporations Act to be made. The actual orders which the Court of Appeal made on 24 June 2003 were: "(1) Appeal allowed. (2) Orders below set aside. (3) Appellant's costs, both at trial and on appeal, be paid out of the assets of the respondent. (4) Listed for mention before Santow JA on 27 June 2003 at 9.30am." 11 The matter, when listed before Justice Santow on 27 June, was referred to me as corporations judge. I heard, on 27 June, an application for an adjournment of the winding up proceedings. I gave judgment on that day and granted the adjournment. I will return later to the basis for that decision. 12 The adjournment was granted until 14 July 2003. That date was chosen because the second meeting of creditors in the administration was due to be held on 4 July 2003. It was with a view to the court considering the matter again, after the result of that second meeting of creditors was known, that the matter was adjourned to 14 July. 13 On 24 June 2003 the administrator swore an affidavit in support of the application for adjournment of the second creditors meeting in which he estimated that if there were to be a winding up the creditors would receive thirteen cents in the dollar, but that if a deed of company arrangement were entered into, then creditors may well be able to receive twenty six cents in the dollar. He recommended that the creditors meeting called for 4 July should be adjourned to enable him to complete his investigations. 14 On 25 June 2003 the administrator issued his report under s 439A(4)(a) of the Corporations Act 2001. That report made clear that he had still not received all of the information which he would have liked to have had. Part of the reason why he had not received it was because the company's books were in an unsatisfactory state. He was not in the position to make any final reports concerning voidable transactions or uncommercial transactions. It was only on 7 July 2003 that Mr Kairouz provided a report as to affairs. This is a month after the commencement of the administration. That time stands in stark contrast with the seven days which the statute provides in s 438B(2) for the provision of such a report. The report as to affairs listed the company's creditors by annexing a list of creditors which the administrator had compiled. It is not the way that the legislation contemplates administrations will operate, that company directors will provide reports as to affairs on the basis of inquiries which administrators have carried out - rather, the plan in the statute is that it will be the directors of the company who inform the administrator about the affairs of the company. 15 The second meeting of creditors was held on 4 July 2003. I will deal later with some of the events which happened at it, but it resolved that the meeting should adjourn to 8 August. There was only one dissentient to that resolution, namely Expile. 16 The matter came before the Court on 14 July 2003 and was stood over to 18 July. I heard most of the application on that day and concluded hearing of addresses today. 17 On 14 July 2003 the administrator swore another affidavit, which reduced the estimate which he had made of the return to creditors in the winding up to 3.7 cents in the dollar. He explained that this difference in prospects, a reduction of 9.3 cents in the dollar, arose principally because of the possible non collection of a trade debt which he had previously regarded as collectable. 18 That affidavit was also the occasion on which it was revealed that the proposal for the deed of company arrangement had also changed to result in a smaller return to creditors. The proposal by that time was for the deed of company arrangement to result in the creditors receiving twenty cents in the dollar. 19 The application today is one which is made under s 440A which provides: "The court is to adjourn the hearing of an application for an order to wind up a company if the company is under administration and if the court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up." 20 The onus is on the company, in any such application, to satisfy the court that the continuation of the administration is in the interests of the creditors (Unifor Office Systems Aust Pty Ltd v Brewer Partnership Pty Ltd (1999) 17 ACLC 642 at 643.) 21 Usually the way in which a company goes about discharging that onus of proof, when an administration has been on foot for more than a few days is to show that it is likely that the creditors will receive more under administration than they would on a winding up, or that there will be other benefits to them in an administration, such as the certainty of recovery or speed of recovery. 22 The solicitor for the petitioning creditor was cross-examined. He put forward five reasons why it could be in the interests of the creditors for the company to be wound up rather than continue in administration. One of them was a matter which related to the costs of the litigation before Barrett J and in the Court of Appeal. The litigation before Barrett J and in the Court of Appeal had resulted in Expile incurring costs of a little short of $82,000. If the Court were to place the company into liquidation, s 556(1)(b) of the Corporations Act would result in Expile having a high priority for the amount of those costs which was agreed or assessed as being recoverable under the order for costs. Section 556 says: "(1) Subject to this Division, in the winding up of a company the following debts and claims must be paid in priority to all other unsecured debts and claims: (a) first, expenses (except deferred expenses) property incurred by a relevant authority is preserving, realising or getting in property of the company, or in carrying on the company's business; (b) if the Court ordered the winding up - next, the costs in respect of the application for the order (including the applicant's taxed costs payable under section 466)." 23 The present proposal which is being put to the creditors is one which does not give Expile any priority for its costs of the litigation. There is provision in regulation 5.38.06 for there to be various prescribed provisions in a deed of company arrangement. Those provisions are listed in Schedule 8A to the Corporations Regulations, clause 4 of which reads: "The administrator must apply the property of the company coming under his or her control under this deed in the order of priority specified in s 556 of the Act". 24 There is provision, however, in s 444A(5) for a deed to "provide otherwise". The present proposal is for the deed to "provide otherwise". 25 There is room for argument, which it would not be appropriate for me to seek to decide today, about the way in which clause 4 of Schedule 8A would operate if there were to be a deed of company arrangement which included a clause in the terms of S 556. One argument which is open is that s 556(1)(b) only applies if the court ordered a winding up, and therefore would have nothing to say to the situation where the Court of Appeal had held that there were grounds for a winding up, but no winding up order was actually made because of there being a supervening administration. 26 Another argument which is open is that clause 4 should not be interpreted so literally, but rather that it should be interpreted so as to enable Expile to preserve the priority for its costs which it would have had had the court ordered the winding up. 27 There is provision whereby the court can terminate a deed of company arrangement if it is oppressive or unfairly prejudicial to or unfairly discriminatory against one or more creditors, or if the deed should be terminated for some other reason. (Section 445D(1)(f) and (g)). It may be that there would be grounds for terminating a deed which did not retain for Expile the priority it would have had if there had been a winding up by the Court. When I say "may be", I am not intending to express a view, merely to recognise a possible argument. 28 At present the creditors are in a situation where there would be the uncertainty posed by the existence of this argument, if there were to be a deed of company arrangement which did not give Expile the priority it would have had under s 556(1)(b) had the company been wound up. In this way the situation concerning the costs of the litigation is something which, while it clearly most directly concerns Expile, also has an effect on the other creditors. At present the creditors have not received any recommendations from the administrator about the appropriate way of dealing with this source of possible uncertainty. 29 The second matter which the solicitor for the petitioning creditor identified as one which was relevant to a winding up concerned the existence of a charge given to ESANDA. The evidence now before the court is not as full as it might be on this topic. However, it is clear that on 25 April 2003 the company granted a charge to ESANDA which was registered on 19 May 2003. It is not completely clear what that charge secures, although I would infer that it secures the amounts which are owing under the various contracts which the company has entered with ESANDA for the provision (on terms which are not completely clear) of chattels to the company. 30 It is not clear over which assets of the company that charge exists, what the value of those assets is or what the extra equity which would be available for distribution amongst the creditors of the company might be if that charge were to be set aside. 31 There is evidence, to which I have already referred, that ESANDA will have a shortfall of the order of $105,000 if one compares its debt with the value of the specific chattels that were financed by ESANDA. 32 At present the court simply does not know whether that $105,000, or any part of it, has been secured by the charge over assets, other than the specific chattels which ESANDA financed. The uncertainty about this matter is compounded by the fact that some evidence from the administrator refers to the arrangements between the company and ESANDA as leases, while a letter to the administrator from ESANDA, dated 17 July 2003, refers to them as "offer to hire and chattel mortgage contracts". Thus, the Court is not able to decide whether any setting aside of the ESANDA charge would actually benefit the unsecured creditors. Nor is there any firm basis for a view about whether the charge could actually be set aside - it was granted after Barrett J dismissed the winding up application, and before the hearing in the Court of Appeal. 33 A third matter which the solicitor for the petitioning creditor identified as one which favoured a winding up is that there is, he says, doubt as to the identity of the creditors of the company. It is clear that in the winding up litigation the company was claiming that its trade creditors were of the order of $94,000, while the information given to the administrator puts the amount of those creditors as more like $865,000. 34 I should say, however that while the question of the identity of the creditors of the company is a matter which would need to be taken into account in any deed of company arrangement or in any liquidation, the procedure for proof of debts in those regimes will be able to deal with any doubts which now exist on that score. It might possibly be the case that some people who currently appear to be creditors are not indeed creditors; if that is so, all that will mean is that there will be more money available to those who are really creditors, whoever they might be. 35 Another matter identified by the solicitor for the petitioning creditor was that a liquidator is in a position to examine directors but an administrator cannot. That contention is incorrect. An administrator is someone who can be an "eligible applicant" within s 9 of the Corporations Act, and hence, someone who can conduct examinations under s 596A or 596B with ASIC's approval. Given the comparatively modest circumstances of this company, I would regard the prospect of there being examinations as something which was fairly theoretical in any event. 36 A final matter identified by the solicitor for the petitioning creditor was that he was not confident that the administrator had identified all of the jobs which the company was performing and, hence, all of its assets. There was evidence of an inquiry being made by a supervisor employed by Expile, to WorkCover for particulars of all the demolition work which the company had notified WorkCover about. There were a total of six sites notified to WorkCover on 4 April, 2003, 28 April 2003, 1 May 2003, 5 May 2003, 26 May 2003 and 28 May 2003. There was a further site notified on 7 June 2003 and another on 17 June 2003. 37 There was evidence at one of those sites of a person saying that he was doing the demolition on that site as "a joint venture with Jabb's". Of course, if there is a deed of company arrangement it would be necessary for the administrator of that deed of company arrangement to identify all the assets of the company, just as it would be necessary for a liquidator to identify all the assets of the company. 38 These five matters are not ones which lead to a conclusion that a winding up would actually be better for the unsecured creditors than a Deed. In saying that, I recognise that the onus is not on the petitioning creditor to so demonstrate.

There is one aspect in which the reporting by the administrator to the creditors is less than that which the statute requires at present. It concerns the preferences and any unavoidable transactions. In his statutory report the administrator said: "My initial investigation of the company's records, based on the limited advice and records available, did not reveal any unfair preference transactions. Further investigation into possible voidable transactions will continue once all the books and records are received".

A similar statement was made about voidable transactions. 39 There is a statutory obligation on an administrator under regulation 5.3A.02 to specify: "Whether there are any transactions that appear to the administrator to be voidable transactions in respect of which money, property or other benefits may be recoverable by a liquidator under Part 5.7B of the Act." 40 That obligation has not been performed. Cross examination of the administrator revealed another problem concerning the way in which he had been approaching this question. He had been approaching it by reviewing payments which were made by the company during the six months immediately before he was appointed. The reason for him taking this course is that he was assuming that the alternative to a deed of company arrangement was a creditor's voluntary winding up, and the relation back period for a creditor's voluntary winding up is six months. (This arises pursuant to the definition of "relation back day" in s 9 of the Act, which leads one to section 513A to 513D, which sets out when winding up is taken to begin.). 41 At the time of giving evidence the administrator had not considered the possibility that, rather than the company going into a creditor's voluntary winding up, it might go into a winding up by the court, in which case the longer relation back period under s 513A would apply. 42 I have mentioned that there is a proposal for a deed of company arrangement. The evidence about that, in its latest form, consists of a letter which Mr Kairouz wrote to the administrator on 10 July 2003. It said: "I propose a deed of company arrangement whereby unsecured creditors will be paid twenty cents in the dollar as soon as practicable. After the deed of company arrangement is signed and the funds to pay the twenty cents in the dollar will be obtained from an external source. (sic). I will execute a personal guarantee to pay the twenty cents in the dollar and provide security in the form of a mortgage over my family home to support the guarantee. In addition, the director's loan of $150,000 will be paid to the Arab Bank under the deed of arrangement. Will you please put the above proposal to the creditors of the company." 43 There is no evidence before the court that this proposal is anything more than a piece of paper. There is no evidence of Mr Kairouz' ability to raise money, or of the willingness of any "external source" to lend it to him. There is evidence from the administrator from which I would infer that Mr Kairouz and his wife own a home together. There is evidence from the administrator that "the directors" (and Mrs Kairouz is the other director of the company) have put a proposal for a deed of company arrangement to him, and have informed him that they will provide as security a registered mortgage over their family home. 44 Mrs Kairouz has not put pen to paper on this topic, and there is no evidence of any independent advice to her on the topic. By granting a mortgage to secure the payment proposed to be made under the deed, she would be in effect a third party guarantor, and the creditors would need confidence that her mortgage was not voidable: Garcia v National Australia Bank (1998) 194 CLR 395. The administrator has said, in his latest affidavit, that he will obtain a valuation of the house and approval for a mortgage prior to the next creditors meeting. This statement of his was not cross examined on. 45 It is appropriate at this stage to deal with the events of the creditors meeting of 4 July and some submissions which have been made concerning it. That meeting is one which was attended by the administrator and about twenty five creditors. One of the people attending for a creditor was Mr Baron, a solicitor representing Expile. He attempted to read to the meeting a lengthy letter which he had written to the Administrator which sought certain details of the financial position of the company. The administrator described the meeting as "quite a vocal meeting. They were trying to shout Mr Baron down". It is apparent that every person attending the meeting, other than Expile, was firmly of the view that they preferred the administrator to be given the opportunity to put together a proposal for a deed of company arrangement. 46 The way in which this meeting came to be called was that administrator sent out a notice of meeting, together with a document which purported to be a report under s 439A(4). In at least the respect I have already identified about voidable transactions, the document did not comply with all of the statutory requirements, but it may well be that it did as much as could have been done on the basis of the information available. I say "may well be" because that is something which was not explored in the evidence before me, and I should, in fairness to the administrator, say that that is a possibility which is well open on the evidence. 47 The report was accompanied by a form 535, the prescribed form for a formal proof of debt or claim for voting on resolutions at a meeting of creditors. It was also accompanied by a proxy form. While some formal proof of debt forms were returned to the administrator, by no means all of the people who attended as creditors had filled out such a form. 48 The regulations spell out the requirements for a meeting of creditors. Under regulation 5.6.11(2)a, regulations 5.6.12 to 5.6.36A apply to the convening and conduct of, and voting at, a meeting of creditors. The notice of meeting is required, under regulation 5.6.12(1) to be given "to every person appearing on the company's books or otherwise to be...a creditor...". Regulation 5.6.23 says: "(1) A person is not entitled to vote as a creditor at a meeting of creditors unless (a) his or her debt or claim has been admitted wholly or in part by the liquidator or administrator of a company under administration or of a deed of company arrangement or (b) he or she has lodged, with the chairperson of the meeting or with the person named in the notice convening the meeting as the person who may receive particulars of the debt or claim: (i) those particulars: or (ii) if required - a formal proof of the debt or claim. 49 Mr Ngan says that before the meeting he had drawn up a list of people who, it appeared to him on the basis of the books of the company and his other enquiries, were creditors, and the amount for which each was a creditor. As well, before the meeting, or at least before the vote, he had admitted all of the creditors who were there for voting purposes. He did not announce to the meeting that any particular creditors were admitted. Rather, he decided in his own mind that all the debts should be admitted for voting purposes. 50 There are two alternative ways, under regulation 5.6.23 in which a person can be entitled to vote at a meeting like this. If paragraph (b) is invoked, then it is necessary for the creditor to have actually lodged a claim which gives particulars of the debt. If the administrator requires it, that claim must be in the form of a formal proof of debt. 51 However, paragraph (a) provides a different alternative. If a debt has been admitted by a liquidator, that suffices. Given that the purpose of an administration is, so far as creditors are concerned, to give them a process for being informed, being consulted and having the opportunity to vote, it is not surprising that less formality can be required to entitle a person to vote at a meeting of creditors than would be required before a person was, for instance, admitted to proof in the liquidation, in a way which entitled that person to a dividend. 52 In company administrations, there is a need for speedy decision making. In many, though by no means all, company administrations there will be no real doubt about who are the creditors of the company, and for what amount - in those cases it could be a waste of time and money to require creditors to lodge a written claim before being entitled to vote, though even in those cases an administrator might decide it is prudent to require a written claim before a creditor is allowed to vote. It is necessary that a company administrator be a registered liquidator, and therefore a person who has both practical experience in business matters and personal probity. The pattern of the legislation is, under paragraph (a) to confer on the administrator the power to decide who can vote. For these reasons, it seems to me that the meeting was a meeting which counts as a meeting of creditors for the purpose of the Act, even though many of the creditors there had not submitted any written claim to be a creditor. 53 The voting at the meeting is recorded in the minutes as follows: "The Chairman reviewed the statutory options facing creditors and recommended that the meeting of creditors be adjourned until 8 August 2003 as the administrator requires further time to conclude his investigations. The Chairman asked those present to consider moving a motion to adjourn the meeting until 8 August 2003. Motion moved Mr M Martin representing Pheonix Civil Pty Limited; seconded Mr A Hiatt representing ESANDA Finance Corporation Limited. It was resolved that the company's creditors adjourn the meeting of creditors until 8 August 2003. The Chairman declared the motion carried by majority. Expile Pty Limited voted against the motion." 54 Regulation 5.6.19 provides: "(1) A resolution put to the vote of a meeting must be decided on the voices unless subject to subregulation (5), a poll is demanded, before or on the declaration of the result of the voices. (a) by the chairperson; or (b) by at least 2 persons present in person, by proxy or by attorney and entitled to vote at the meeting; or (c) by a person present in person, by proxy or by attorney and representing not less than 10% of the total voting rights of all the persons entitled to vote at the meeting, or (d) in the case of a meeting of members - by a member or members holding shares in the company conferring a right to vote at a meeting, being shares on which the total sum paid up is not less than 10% of the total sum paid up on all the shares conferring that right. (2) Unless a poll is demanded, the chairperson must declare that a resolution has been (a) carried; or (b) carried unanimously; or (c) carried by a particular majority; or (d) lost; on the voices. (3) A declaration is conclusive of the result to which it refers, without proof of the number or proportion of the votes recorded in favour of or against the resolution, unless a poll is demanded." 55 In the present case, there was no demand for a poll. The various alternatives which are contained in sub rule (2) are ones which derive, to some extent, from the fact that the rules in Part 5.6 are ones which are designed to cover not only company administrations, but also a variety of other types of corporate meetings. In the present case, the manner of voting, on the voices, was sufficient to pass the resolution. 56 I stated earlier the provisions of s 440A(2). Mr Epstein SC for Expile submits that, as the Court of Appeal has decided that the grounds for a winding up order have been made out, his client is entitled to an order for winding up. 57 It is well established that a finding of insolvency can result in there being an entitlement to a winding up order ex debito justitiae (IOC Australia Pty Limited v Mobil Oil (Australia) Limited (1975) 11 ALR 417). There always has been, however, a residual discretion in the court. That discretion is one which is now found in s 467 of the Corporations Law which provides: "(1) [ Powers on hearing ] Subject to subsection (2) and section 467A, on hearing a winding up application the Court may; (a) dismiss the application with or without costs, even if a ground has been proved on which the Court may order the company to be wound up on the application, or (b) adjourn the hearing conditionally or unconditionally, or (c) make any interim or other order that it thinks fit." 58 It has long been recognised that: "The order which the petitioner seeks is not an order for his benefit but an order for the benefit of a class of which he is a member. The right ex debito justitiae is not his individual right but his representative right." (re Crigglestone Coal Company [1906] 2 Ch 327 at 331-332.). 59 It follows that, even under the general law, since all creditors of the same class as the petitioning creditor will be equally affected by the winding up, the interests of all of them can be taken into account when deciding on the desirability of winding up. (See generally McPherson "The Law of Company Liquidation" fourth edition, pages 106 to 113). 60 Section 440 is part of a complex of provisions which aim to provide a moratorium from usual processes of enforcement of obligations during the period of an administration. It needs to be seen in its context with the other provisions of Division 6 of Part 5.3A which prevent enforcement of a charge, recovery of leased property, commencement or continuation of litigation and a stay of enforcement processes during administration. 61 The statutory command in s 440A(2) is a further exception to the right of a creditor to have a winding up order ex debito justitiae if the grounds for that order are established. It is a recognition that the administration process has the prospect of being more beneficial to the creditors as a whole than winding up, and requires that that administration process be given the opportunity to run its course, provided that the court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. 62 There are numerous matters which I have outlined in these reasons for judgment concerning which the creditors are not at present adequately informed. If they were to make an informed decision for the company to enter a deed of company arrangement, they would need either to be informed about those matters, or else understand the extent of their ignorance on the topics, and take a business risk that they would make a decision notwithstanding that they lacked certain information. 63 If this application were one which was coming before me before there had been a meeting of creditors, and with its evidence in its present state, apart from the events at that meeting, I would refuse it. That view is one which is significantly contributed to by the basis on which I adjourned the matter on 27 June 2003. On that occasion I said that it was not at this stage possible to be satisfied that the creditors would actually receive more by the administration continuing than they would by the company being wound up. 64 I said that there was enough of a prospect to justify a short adjournment. I mentioned, at paragraph [16], that the proposal for a deed of company arrangements was no more substantial than that Mr Kairouz had written a letter making the proposition to the administrator. I recorded that the administrator wished to investigate whether it is a proposition which has commercial substance. 65 The administration commenced on 27 June 2003 - that is now about six and a half weeks ago. Today is just short of four weeks since I gave the judgment on 27 June. The evidence which suggests that the creditors will actually receive more under a deed of company arrangement than a winding up, has not improved much during those nearly four weeks. 66 The factor which causes me to decide that I am satisfied that the test in s 440A(2) is made out is the events at the meeting, and particularly the near unanimous vote of the creditors. The creditors are business people who the court is entitled to assume can make judgments about what is in their interests.At the second creditors' meeting mention was made of one factor relevant to their interest, which is not taken into account by a simple comparison of dividends on a winding up and under a Deed. One of the creditors said it looked to Jabbs for ongoing business, and did not want to lose that source of business. The minutes record that the majority of creditors agreed. When there has been the sort of near unanimous vote that there has been here, and when the administrator's investigations are not complete, I am prepared to adjourn the winding up summons until a time shortly after the adjourned creditor's meeting. 67 The creditor's meeting is stood over to 8 August 2003. That day is a Friday. It would not be practical to put on evidence about the proceedings at the creditor's meeting in time for the Corporation's List on Monday 11 August 2003. In those circumstances, I adjourn the proceedings to the Corporation's List on Friday 15 August 2003. 68 The company applies for costs of the present application and of the hearing on 27 June 2003. I reserve the costs of the application on 27 June 2003. The basis on which the company makes its application is that each of the contested adjournment applications was one where Expile sought to stop the administrator from continuing his investigations, and that it has been unsuccessful on each occasion from stopping him. 69 While that is correct, there is still an extant winding up application before the court. The court does not know whether an order will ultimately be made on that winding up application or not. It seems to me that whether an order is ultimately made on the winding up application could effect the appropriate order for costs to be made. As well, it will be apparent from my reasons for judgment, that, in some respects, the predominant reason for the application failing was not because of material put before the court by the administrator concerning the affairs of the company, but rather because of the sheer force of numbers and near unanimity of the creditor's meeting. In these circumstances I reserve the costs of the hearing of 18 July and today. 70 Pursuant to s 459R I extend the period within which the application for winding up must be determined to 5pm Friday 22 August 2003. **********

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