In The Matter Of Commonwealth Steel Company Pty Limited ACN 000 007 698 [2013] NSWSC 1983

Judgment (EX TEMPORE) 1HIS HONOUR: Australian National Industries Limited (ANI), of which the plaintiff Commonwealth Steel Company Pty Limited (CSC) is the successor, was the insured under an excess employers' liability reinsurance policy issued by CIC Insurance Limited (in liquidation and subject to Scheme of Arrangement) for the period 30 June 1995 to 30 June 1996. The defendants are the liquidators and scheme administrators of CIC. 2In September 1995, ANI made a claim under the policy in respect of its liability to an injured employee Mr Watson, and before CIC went into provisional liquidation on 15 March 2001 it had made two payments to Commonwealth Steel on account of that claim. 3Under the scheme there is a run-off period, during which a scheme creditor's claim may be determined to be an acknowledged creditor claim. The scheme administrators' practice was that the scheme creditor would be notified by letter, and the scheme creditor would thereafter periodically receive interim distributions in respect of the acknowledged creditor claim. The run-off period of the scheme commenced on 30 May 2006. The scheme administrators from time to time issued acknowledgements of creditor's claims to Smorgen Steel Manufacturing, a division of the plaintiff, in respect of the payments it had made in respect of the claim. The run-off period for the scheme ended seven years after commencement of the scheme, that is to say on 31 May 2013. 4On 15 February 2013, the scheme administrators sent to all known and potential scheme creditors a notice of estimation date, a final claim form for estimation, instructions for completion of that form, and a circular. The notice stated that scheme creditors must submit their final estimation of claims against the scheme companies by midnight 2 September 2013 British Summer Time, being three months after the estimation date, and that final claim forms for estimation received after that date would not be considered. Midnight 2 September 2013 British Summer Time was 9am 3 September 2013 Australian Eastern Standard Time. 5On 12 July 2013, Mr Jason Glynn of the plaintiff sent an email to Ms Barbara Byers, a senior claims officer employed by the group of companies of which CIC was a member, listing payments made to and on behalf of Mr Watson. Ms Byers replied on the same day that the payments could not be processed in the way they had been to that point, because HIH Group was no longer in its run-off period and the estimation period had commenced on 31 May 2013. Ms Byers pointed out that CSC should have received documents relating to the end of the run-off period and commencement of the estimation period in February and June of 2013, and needed to submit a final claim form by no later than midnight 2 September 2013 British Summer Time. 6Mr Glynn was unable to locate the documents that had been forwarded on 15 February 2013, and on 16 July 2013 requested that a copy be provided. They were provided by return email the same day. Mr Glynn says that when he checked the outgoing mail tray at 5.30pm on 29 August 2013 there was no mail present. 7On 28 or 29 August 2013, Mr Glynn telephoned Ms Byers and advised her that he would be posting the completed final claim forms to ensure they arrived by the prescribed date. He placed the completed forms in the plaintiff's outgoing mail tray on Thursday 29 August 2013. 8The evidence of Kylie Stibbard, an administration officer for Mail Plus Newcastle, which is contracted to provide mail pick up and collection services by One Steel, of which CSC is a division, establishes that under that contract a Mail Plus driver attends at CSC's office each business day after 3pm and collects mail from a centralised outgoing mail tray, and that once it has been collected it is delivered by the driver at about 5.30pm to Australia Post's Hunter regional mail centre at Warabrook, New South Wales. She has no reason to believe that that process did not occur on 29 August 2013. 9It is common ground and accords with the evidence that in the ordinary course of post an article delivered to Australia Post in the Newcastle region by 29 August 2013 would have been received by CIC on Monday 2 September 2013, being two business days after posting. However, in fact the forms were not received by CIC until 7.10am on 4 September 2013, when they were received in CIC's post office box in Australia Post's Hunter Street mail centre in Sydney. 10By letter dated 4 September 2013, the scheme administrators notified CSC that the form had been received late and could not be considered. 11By letter dated 17 September 2013, CSC's solicitors requested the scheme administrators to reconsider their decision to reject the claim. The solicitors pointed out that on 28 or 29 August their client had informed Ms Byers that it would be lodging the documents by mail no later than midday on 29 August 2013 to ensure that the form was received by the relevant date, that the form was lodged by mail on 29 August 2013: that according to Australia Post, in the ordinary course of post it should have been received on 2 September 2013, being two business days after posting; and that on that basis, the form was completed and returned "so as to reach the scheme company on the relevant date", and that if it did not do so that represented a delay in the ordinary operations of the postal system and was not the fault of CSC. 12On 18 September 2013, the scheme administrators' solicitors responded that they had no knowledge of the date on which CSC lodged its form by mail, and that the instructions to creditors stated that all forms must reach the scheme administrators before midnight 2 September 2013 British Summer Time (being 9am 3 September 2013 AEST). They concluded: With respect, we do not think that this matters as our instructions make it clear that the risk in late delivery was with the creditor. 13By originating process filed on 24 September 2013, CSC claims an order pursuant to (Cth) Corporations Act 2001, s 1321, reversing the defendant's decision to reject the form and, alternatively, pursuant to s 1322(4)(b) extending time for submission of the form. 14Although CSC's written submissions proceeded in a different order, it seems to me that it is appropriate to consider first the application for review of the scheme administrator's decision under s 1321, since if that decision was wrong and the claim was in fact made in time then there is no requirement for an extension of time. In this respect, the present issue does not involve the review of the exercise of a discretion by the scheme administrators, but turns simply on whether on the proper construction of the scheme document the final claim form was returned in time. 15Clause 25.1 of the scheme document provides that no scheme creditor shall be entitled to have any liability determined to be an acknowledged creditor claim unless (emphasis added): A final claim form for estimation is completed by the scheme creditor detailing each of its liabilities and returned to a scheme company so as to reach the scheme company, on or before the date 3 months after the estimation date. 16Accordingly in this case the question is whether the final claim form was returned to CIC so as to reach CIC on or before 9am on 3 September 2013 AEST. 17In Ronay Investments Pty Ltd v Pinnacle V R B Pty Ltd [2000] VSC 333, Hedigan J of the Supreme Court of Victoria considered a prospectus which included lodgement instructions in the following terms: 1. If you are accepting your entitlement in full or in part please: Complete the form overleaf. Forward it together with your cheque for the application monies at 35 cents per share subscribed for so as to reach: Computershare Registry...by no later than 5:00pm Melbourne time on 6 December 1999. 18His Honour observed that the instructions did not address actual delivery in person or by courier, but that the language used was "forward it together with your cheque ... so as to reach" Computershare Registry, which language conveyed instructions as to what should be done and clearly comprehended the use of mail post. The language of "forward it ... so as to reach", when applied to the use of the mails: [16] ... clearly instructs that acceptance can be constituted by posting it so as to reach the Computershare Registry destination by a specified date and time. Since the person posting the acceptance cannot control the delivery activity, the instruction must be addressing the reasonable expectation of the person posting as to the time that will be taken, having regard to the form of posting employed. In this case the expectation (guaranteed by Australia Post) was delivery on the business day following. In this case that meant Monday the 6th, prior to 5.00pm. Every witness in the case stated that the expectation was that acceptances posted by Express Post on Friday the 3rd would be delivered to the addressee before 5.00pm on Monday the 6th. Thus, there is no failure to comply by the plaintiffs on this construction of the lodgement instructions. That is, they did comply because they posted the acceptances, so as to reach by 5.00pm on 6 December. 19I should follow a decision of a judge of the Supreme Court of Victoria, particularly on matters relating to the application of Corporations law which are of universal application across the nation, at least unless convinced that that decision is plainly wrong. 20When viewed in the context of paragraph 25.1(b) of the scheme document as a whole, what is required by the clause is, first, completion by the scheme creditor of the form; and, secondly, return by the scheme creditor of that form so as to reach the scheme company on or before the requisite date. Applying the construction adopted by Hedigan J in the case to which I have referred, the scheme creditor must be taken to have returned the document "so as to reach" the scheme company if it caused it to be posted at a time when its reasonable expectation was that it would reach the scheme company by the specified time. The evidence to which I have referred plainly establishes that it was the reasonable expectation of the plaintiff, having placed the form in the outgoing mail tray at 3pm on 29 August, that it would be delivered to Australia Post by 6pm on the same day and received by the scheme company in Sydney by 9am on 3 September 2013. 21Accordingly, it seems to me that CSC complied with clause 25.1(b) of the scheme document, and the scheme administrators were wrong to exclude CSC's claim on the basis that it was late. It follows that, the appeal should succeed. 22On that basis, it is unnecessary to consider the application for an extension of time. However, for more abundant caution I will indicate that, had I not reached the conclusion which I have in respect of the appeal, I would have extended time under s 1322(4)(b). That section permits the Court to extend the period for doing any act, matter or thing under the Act or "in relation to a corporation". Even if the return of a final claim form does not fall within the rubric of being a matter "under the Act", and it is seriously arguable that it does, it is plainly a matter "in relation to a corporation", see Re Affinity Health Ltd (2006) 58 ACSR 461. 23It is true that in cases such as the present deadlines are imposed for the benefit of all scheme creditors and there can be unfairness involved in extending time for one without extending time for others who might have been excluded. That said, there is no suggestion that others have been excluded for late lodgement of a claim in this case. It is also true that CSC left to a very late stage lodging its claim form, when it could have done so earlier. However, in circumstances where CSC lodged the claim at a time when, on any view, it was reasonable to expect it would be received within time that objection does not have much force. It is common ground that, if CSC's claim is ultimately admitted, it will receive an additional amount of about $1.3 million, whereas the other admitted creditors will have their dividends reduced by less than 1 cent in the dollar. In all of those circumstances, I am satisfied that there will be no substantial injustice to any person, and that the discretion to grant the extension would appropriately be exercised in favour of CSC. However, as I have said, because of the conclusion I have reached under s 1321, that course is unnecessary. 24The scheme administrators have sought as a consequential order, in the event that CSC's appeal succeeds, an additional order pursuant to s 1321 extending time for the determination of CSC's claim to three months after the date of the court's order. CSC does not oppose that order, and it does not appear that it will occasion any substantial injustice to any person. 25The scheme administrators seek an order for costs. Had CSC succeeded only under s 1322(4), that would have been on the basis that they needed an indulgence in respect of their non-compliance, and the case for a costs order would have been powerful. However, CSC succeeded on the basis that the scheme administrators' decision was wrong and that it was entitled to have its claim accepted. The scheme administrators' argument that this was so only because of evidence filed today does not really sustain examination: CSC's solicitors spelt out their case reasonably comprehensively in the letter of 17 September 2013, to which I have referred, and the scheme administrators in rejecting that case in their letter of 18 September 2013, proceeded on a wrong view of the effect of the instructions issued to creditors. CSC does do not seek an order for costs in its favour. In those circumstances, there will be no order as to costs, to the intent that each party bear its own costs. 26My orders therefore are: (1)Order pursuant to Corporations Act s 1321 that the decision of the defendants to reject the plaintiff's final claim form for estimation be reversed and in lieu thereof the defendants are to treat the liability notified in the plaintiff's final claim form for estimation as a "notified liability" for the purposes of clause 26.1 of the Australian Scheme of Arrangement. (2)Further order that the period of time within which the scheme administrators are to determine the plaintiff's final claim form under clause 26.1 of the Australian Scheme of Arrangement be extended to three months after the date of this order, that is to say 30 January 2014. (3)No order as to costs, to the intent that each party bear its own costs.