Glenmorton Holdings Pty Ltd v D'Aloia

REASONS FOR JUDGMENT 1 Anthony D'Aloia ("the administrator"), in his capacity as administrator of Glenmorton Holdings Pty Ltd ("the company"), has applied to the Court under s 447C of the Corporations Act 2001 (Cth) for an order declaring that his appointment as administrator of the company by an instrument in writing dated 2 August 2001 was valid. 2 The administrator was appointed pursuant to a deed dated 9 August 2000 ("the Deed"), between the company and the Bank of Melbourne as a division of Westpac Banking Corporation ("the bank"). In cl 2.1 of the Deed, the company for "value" (which was stated as including the bank "giving or continuing credit or agreeing to do so (even conditionally)"), charged to the bank all of the company's present and future assets and undertaking on the terms of the Deed and the Memorandum of Common Provisions. The Deed was agreed to be executed pursuant to a Business Finance Agreement made between the company and the bank. 3 The solicitors for the bank arranged for execution of the Deed and other relevant documents, which included guarantees by the directors of the company, on 18 July 2000. At that time the directors of the company were James Paterson, Helen Richardson (who is also known as Helen Paterson) and Fiona Burns. 4 The charge was executed as a Deed by the company on 18 July 2000, by the common seal of the company being affixed to the Deed and two of the company's directors, James Paterson and Helen Paterson, signing the deed in their capacity as directors. The Deed was delivered into the custody of the solicitor for the bank on that day. 5 In the course of arranging for execution of the Deed and the other documents that were required by the bank to be executed, a problem arose concerning the execution of a guarantee by Helen Richardson. The detail of the problem is not relevant for present purposes. It suffices to say that the problem was resolved by Helen Richardson stating that she proposed to resign as a director of the company and that the remaining two directors, being James Paterson and Fiona Burns, would execute the documents that were required to be executed by the bank, including guarantees of the company's debt to it. 6 On 28 July 2000 Helen Richardson resigned as a director. On 3 August 2000 the bank's revised documents, including guarantees, were executed by the company and by Fiona Burns and James Paterson. 7 The deed was subsequently dated "9 August 2000" by the bank and it appears that it made advances to the company of $505,000 on that date and a further $125,000 on 3 April 2001. 8 On 14 August 2000 the Deed was lodged with the Australian Securities and Investment Commission pursuant to s 272(3) of the Corporations Law. 9 On 2 August 2001 the administrator was appointed by the bank. The administrator's appointment was confirmed by creditors at a meeting on 9 August 2001. James Paterson and Helen Richardson raised questions as to the validity of the administrator's appointment. As a result, the administrator commenced this proceeding. 10 Although there seems to have been some confusion about the basis for the challenge in the course of the hearing today, at which Mr Paterson and Mrs Richardson were unrepresented, it became fairly clear that the primary basis on which Mr Paterson was questioning the validity of the administrator's appointment was that he claimed the Deed executed on 18 July 2000 was superseded and replaced by a further Deed of Charge which he said was among the documents executed by himself and Fiona Burns on 3 August 2000. Mrs Richardson raised doubts about the validity of the Deed on the basis that it was her understanding of the events that had occurred on 18 July 2000 that, as she was not to be a guarantor and was to resign as a director, the Deed was not to be operative but was to be replaced by subsequent documents to be prepared by the bank. She contended that she had assumed, as a result of conversations with the solicitor for the bank, that the bank was not intending to rely on the Deed but rather, would be relying on a subsequent deed to be executed as one of the documents the bank was requiring the directors to execute at a later date. 11 It is unnecessary for me to set out my findings in detail. I am satisfied the company duly executed and delivered the Deed to the bank on 18 July 2000. It is well established that a deed takes effect on the date of its delivery rather than on the day on which it is dated or stated to have been executed: see Xenos v Wickham (1867) LR 2 HL 296. When the Deed was executed and delivered by the company to the bank the bank required a set of revised loan documents, including the guarantees by Mr Paterson and Ms Burns, to be executed. Accordingly, at that date (18 July 2000) the "value" given by the bank for the purposes of the cl 2.1 was its conditional agreement to give credit, which credit was to be secured by the Deed pursuant to the Business Finance Agreement, but only when the revised documents were executed. 12 Mr Paterson and Mrs Richardson relied upon certain notations in documents and alleged discrepancies between certain documents to contend that it was intended that the Deed was to be replaced, or was replaced, by a subsequent deed. I am not satisfied that the notations or discrepancies relied upon justify any such conclusion. 13 The evidence does not establish, and I am not satisfied, that the revised documents were intended by the bank or the company to include a new, or revised, deed of charge. Rather the Deed, as executed, was sufficient for the purposes of the bank and the company, but the other documents were to be revised and re-executed as a result of the bank's decision to no longer require that Mrs Richardson be a guarantor. I am also not satisfied that when the revised documents were executed on 3 August 2000 they included a replacement deed of charge or any other document that varied the Deed as executed on 18 July 2000. The bank's obligation to give credit was secured under the Deed. When revised documents were executed on 3 August 2000, the condition upon which the bank's obligation to provide credit rested had already been satisfied, with the consequence that loans subsequently made by the bank to the company, pursuant to the Business Finance arrangement, were secured by the Deed. 14 It follows that there is no substance in the doubts raised as to the validity of the administrator's appointment under the Deed. Accordingly, the administrator is entitled to a declaration that his appointment is valid. 15 I declare, pursuant to s 447C of the Corporations Act 2001 (Cth), that the appointment by the bank of Anthony D'Aloia as Administrator of Glenmorton Holdings Pty Ltd on 2 August 2001 is valid. I order that the Administrator's costs of and incidental to this application be costs in the administration.