Three entities, CBS International Television Australia Pty Ltd, CBS Broadcasting Inc and Showtime Distribution BV seek to be joined as party to these proceedings, as additional Defendants to the seventeen Defendants who are already party to the proceedings, being the administrators of Ten Network Holdings Limited (admins apptd) (recs and mgrs apptd) and others and companies within the Ten Group.
Mr Potts identifies his clients as persons who are necessary parties to the proceedings, so far as orders are sought against them that the operation of, inter alia, s 75-85 of the Insolvency Practice Rules (Corporations) 2016 (Cth) be modified in a specified manner. It seems to me that the entities represented by Mr Potts are plainly necessary parties, at least in the sense that the relief sought by the Plaintiffs could not be granted if they were not joined as party to the proceedings and given an opportunity to be heard in respect of it.
For this reason, and without opposition by any other party to the proceedings, I make an order that CBS International Television Australia Pty Ltd, CBS Broadcasting Inc and Showtime Distribution BV be respectively joined as the 18th, 19th and 20th Defendants.
[3]
Initial issues as to hearing date
An application was yesterday made to the Court by leave for short service of an Originating Process seeking a wide range of relief in respect of the conduct of the second meetings of creditors in the administration of the Ten Group.
Orders were made for short service yesterday in the presence of legal representatives of the administrators and companies within the Ten Group. The matter was returnable today for directions and several other entities, CBS International Television Australia Pty Ltd and others ("CBS entities"), which plainly have an interest in the matter and as to which relief is sought, were joined as Defendants in the proceedings.
There was debate before me, when the matter was returnable for short service yesterday, as to the date on which the matter would be listed for hearing. After hearing submissions from the administrators and the Ten Group companies I had listed the matter for hearing at 10am on 8 September 2017, that is, tomorrow. I had taken that course because, as I observed in submissions, the timetable which is presently proposed for the second meetings of creditors of the Ten Group, which involves the lodgement of proofs of debt and proxies on Sunday 10 September 2017 and second meetings of creditors on Tuesday 12 September 2017 is such that, if the matter were not heard until Monday (the position for which the administrators yesterday contended), then creditors who are presently taking steps to lodge proofs of debts and proxies, on a basis which is attacked by the proceedings, would be put to the time and cost and trouble of doing so and possibly preparing to attend a meeting on Tuesday, only to find late on Monday that meeting was restrained if the Plaintiffs are successful in their application.
Events have somewhat developed this morning, at least so far as the administrators and the Ten Group companies, represented by Mr McHugh, now do not support a hearing on Monday, but press for a hearing later next week, implicitly, after the meetings sought to be restrained have already occurred. It is plain enough that at least the Plaintiffs and the administrators and the Ten Group companies are motivated, in part, by strategic considerations, in their approach to a hearing date and I do not say that in a critical fashion. So far as the Plaintiffs are concerned, they have shaped the relief they seek as final relief and, as Mr McHugh points out, it follows from their seeking final relief that they would not be required to give an undertaking as to damages as the price of such relief. That, however, is not, or is not necessarily, a matter for criticism of the Plaintiffs. There are transactions that are of a scale that it is unrealistic to expect that parties could sensibly give undertakings as to damages, when the range of persons affected by orders and the scope of their loss are potentially substantial and possibly unquantifiable. This is not a novel proposition. It was recognised, for example, by the Court of Appeal as a reason to grant leave to appeal in respect of the Boart Longyear scheme, where the Court of Appeal held that leave to appeal should be granted, because, inter alia, it was unrealistic to expect that the appellant would give an undertaking as to damages in the relevant circumstances.
Mr McHugh submits, with substantial force, that there will be great difficulty in proceeding with a hearing tomorrow, so far as the administrators and the Ten Group companies are concerned, and that they would seek to lead evidence which they may not be ready to lead tomorrow. Mr McHugh therefore submits that the hearing should be set down late next week and the Court could readily accommodate that position. However, Mr McHugh does not, so far as the administrators and the Ten Group companies are concerned, take any step which would address the fact that, in the interim, proxies would be lodged on the basis of information provided to creditors that is challenged, proofs of debts would be required to be submitted, the meeting would proceed on that challenged basis and, potentially, steps would be taken to implement the transaction.
Mr McHugh submits that the Plaintiffs should simply seek interlocutory relief and offer an undertaking as to damages. It seems to me that Mr McHugh, those instructing him and the administrators and Ten Group companies would all recognise the obvious fact that such an undertaking as to damages could not readily be given in an application of this character, for the reasons I noted above. That proposition was, in truth, a proposition that the Plaintiffs should be required to do what it is known that they will likely not do and, therefore, the meetings should be permitted to proceed without the Court having determined the application to restrain them on their merits. It is difficult to avoid the conclusion that proposition was intended to bring about the result that the meeting would proceed and the egg would be scrambled without a determination on the merits.
Mr Potts, who appears for the CBS entities, submits that the CBS entities recognised the urgency of the matter and would themselves wish to have a hearing as soon as possible, but they do not seek to have a hearing earlier than the administrators and the Ten Group companies would be ready for it, which is on Mr McHugh's submissions late next week.
I have pointed to the strategic positions adopted by the parties, and I emphasise I do so without criticism, recognising that each of them have legitimate commercial interests to be served. The Court, however, has a much simpler objective in matters of this kind, which is defined by s 56 of the Civil Procedure Act 2005 (NSW) and its obligation to bring about the just, quick and cheap resolution of the real issues in dispute in the proceedings. In determining whether, among other things, to adjourn the hearing which has already been set down for tomorrow, I am required to have regard to the matters set out in ss 56-58 of the Civil Procedure Act, which include the dictates of justice and the provisions of ss 56 and 57, namely, the overriding purpose of the just, quick and cheap resolution of the real issues in dispute in the proceedings and the need for the proceedings to be managed having regard, inter alia, to the just determination of the proceedings.
In doing so, I have regard, first, to the fact that the proceedings are in fact an application for final relief, in circumstances that the Plaintiffs have not sought interlocutory relief, likely for the reasons I have indicated above. Therefore, the question for the Court is not how a different application, which has not been brought, should be managed, but how the application which in fact has been brought should be managed. I also have regard to Mr McHugh's suggestion that the Plaintiffs have delayed this application. I am not persuaded by that submission where, whatever its commercial motivations, the application involves substantial focus on the adequacy of a s 439A report which was only issued earlier this week.
I also have regard to the matters which Mr McHugh identifies, including the commercial urgencies of the matter so far as the Ten Group, its employees, its customers and other third parties are concerned. I accept that, as Mr Potts also points out, there are likely to be subsequent steps in the process and delays in them may increase the risk for all parties involved. Having said that, it is difficult to see that a delay of the proceedings between a hearing tomorrow and a hearing late next week of the kind that Mr McHugh sought would involve any difficulty of that kind and such a delay could be readily be achieved by the Court, by allocating a hearing late next week, as Mr McHugh sought, but for the fact that the meeting would already have proceeded on the administrators' present timetable.
It seems to me that, for present purposes, the obligation to bring about the just, quick and cheap resolution of the real issues in dispute requires the determination of the matters on their merits, by allocating a hearing date such that the issues can be determined, rather than deferring it so that the meeting occurs and the transactions are potentially advanced without a determination of the challenges to the information provided to creditors.
I should emphasise that does not involve forcing on - to use Mr McHugh's language - the administrators or the Ten Group companies to a hearing in circumstances that they will not be ready for it. It does not have that consequence, first, because I will shortly identify steps which the parties may wish to consider to avoid that result. It does not have that consequence, second, because as Dr Bell points out, these matters are largely within the administrators' control, so far as the only matters which are creating the urgency at this stage are the timing of the lodgement of the proxies, the proofs of debt and the second meetings, which are capable of being varied either by the administrators themselves or by an application to the Court, which it could be expected would readily be granted, in order to promote the interests of the administration and the interests of creditors.
It seems to me that where complaints are, on their face, seriously advanced - notwithstanding Mr McHugh indicates the administrators' confidence that they will be rebutted - justice is served by determining them rather than leaving them to become moot because the meetings and possibly the transactions have occurred without a determination on the merits. On the hypothesis which the administrators consider is unlikely, that the Plaintiffs are correct and the information provided to creditors is incomplete or insufficient, then what is contemplated is the meetings will proceed on the basis that creditors are not properly informed. I emphasise that I express no view as to that matter. I simply identify the consequence of the fact that a challenge is made to the nature of the information provided to creditors, but the administrators indicate they are content to proceed with the meetings, on that basis, without that challenge being determined or that information being supplemented, and to have that challenge determined only after creditors have voted and, potentially, the transaction is further advanced.
I return to the steps which may be taken to address the administrators' concerns as to procedural fairness which is a real issue, albeit one which, as I have noted, is to some extent of their own making. First, Dr Bell has foreshadowed the possibility that the range of matters to be determined at a final hearing could be narrowed and it will be desirable to stand down the matter briefly so the parties have an opportunity to discuss that question and to consider the making of any formal order in that respect. It seems to me undesirable in the circumstances that the matter be left in a state of uncertainty, or that the parties are unclear as to what matters are or are not being determined at a final hearing.
I do not neglect the fact that Mr McHugh points out that, even if the only matters sought to be determined are those which have the most obvious urgency, namely, the allegations that the information provided to creditors are misleading or incomplete and, possibly, the allegations that the time provided to creditors is insufficient, the administrators will still seek to lead evidence. Again, I repeat, the Court can accommodate the time which is required for them to do so, so long as steps are taken to preserve the Court's ability to rule upon the matters on their merits.
Second, I do not foreclose the possibility, although none of the parties raised it, that the Court may allow additional time to the administrators, if they wish to have it, by, for example, hearing this matter on a weekend, where the Court has a capacity to take that course in respect of matters that are duty applications with real urgency. I would have no difficulty with taking that course, if it would allow the administrators greater time to prepare and where it would, to that extent, promote the interests of justice.
Otherwise, it seems to me possible that, now that the course that events are likely to take has been clarified, the parties may rethink their own positions and may respectively agree a more sensible way in which to proceed, which accommodates their commercial urgencies, the need not to frustrate access to justice and the need to allow a determination of the matter on the merits.
Finally, for completeness, I should note that I have not neglected the fact that difficulties may still arise, as I noted in submissions, because whether or not the matter started tomorrow it may not complete tomorrow. If it starts tomorrow and does not complete tomorrow, then issues as to the possibility of interlocutory relief and the giving of an undertaking as to damages may arise in any event.
It seems to me that the preferable course will now be to stand the matter down either briefly, if that is what the parties would prefer, or alternatively to 2pm this afternoon to allow them to reconsider the approach to be taken and to determine whether, between them, a more sensible approach may be adopted than that which is presently proposed between them.
[4]
Further judgment as to hearing date
After I adjourned the matter, and following discussions between the parties, they appear to have reached the common view, it seems to me sensibly, that the matter would not be ready to proceed tomorrow, as would have been required if they could not reach an accommodation as to what should be done in respect of the second creditors meetings that are due to take place on Tuesday next week.
The administrators have proposed, with the support of the CBS entities that the second meetings of creditors which were due to take place next Tuesday be deferred to the following week and that the hearing proceed on Tuesday and Wednesday next week.
There is not complete agreement as to that matter, because the Plaintiffs would prefer to commence the hearing either tomorrow afternoon, or on Monday, and have also made a somewhat complex offer that they would not presently press certain aspects of their application under s 600H of the Corporations Act 2001 (Cth) while reserving the right to bring that application, if time permitted, if the meeting of creditors had further been restrained. While I have given consideration to that offer, it seems to me that the fact that it would involve a splitting of issues in the hearing, with the usual difficulties of a splitting of issues, and the potential for a further application in respect of a matter already raised by the Plaintiffs in this application, is such that an already complex situation should not be complicated further by adopting that approach on a non-consensual basis.
Dr Bell identified two matters which would support the earlier start of the hearing for which the Plaintiffs contend. The first is that, if the hearing takes place next Tuesday and Wednesday, and the meetings are due to take place in the following week, there would be limited time for a Judge to prepare a judgment, or at least to reach sufficient certainty that he or she can make orders with reasons to follow. That is plainly the case, but it seems to me that it will not be resolved by a start earlier on the Friday, or the Monday. The Defendants, by their Senior Counsel, indicate, with some force, that the time that they spend attending Court for the Plaintiffs' opening tomorrow or Friday is time that is diverted from the preparation of evidence, and that they would prefer to be in a position to have led their evidence before the hearing commences.
It seems to me that the Judge determining the matter will simply have to do the best that he or she can, consistent with the commercial urgencies of the matter, to make orders or deliver judgment in sufficient time to bring about justice in the particular circumstances. If that is ultimately not possible, then the Plaintiffs may, as I noted in a Judgment earlier this morning, have to be put to the choice whether or not to seek interlocutory relief in circumstances that a final judgment has not been given, and may or may not be required to give an undertaking as to damages in order to obtain such relief. Whether that issue arises may depend, ultimately, in part upon the scope of the evidence and the complexities of the matters. There is also always a risk, even where the matter is allocated a two day hearing, that it will not complete in that period.
The other issue by reference to which an earlier start was supported by the Plaintiffs was the fact that, without any determination being made to the Court as to the adequacy of the time period permitted, the administrators seek to extend the time for lodgement of proofs of debt and proxy forms from Sunday 10 September, when it is presently due, to Friday 15 September 2017. It is possible, as I noted in submissions and Mr McHugh recognises, that the result will be that proxy forms and proofs of debt are lodged in circumstances that are affected by a judgment, most obviously if it is ultimately found that there are defects in the information provided to creditors. I had recognised the difficulty involved in that result in earlier judgments setting down the matter for hearing.
It seems to me, however, that a slightly earlier start of the hearing will not avoid that difficulty because, whatever date were allocated for proxy forms and proofs of debt, it is likely that some creditors will be completing them before a judgment is delivered, and that issue will have to ultimately be addressed depending upon the outcome of the judgment. As matters stand, there is a prospect, but not a certainty, that the Court could deliver judgment before the time for lodgement of proxies is due, and in any event it can make orders varying that time or allowing an opportunity to withdraw proxies in a final judgment.
On balance, it seems to me that the course proposed by the administrators allows an appropriate balance between the need for an urgent determination of the matter, and importantly, a judgment on the merits before the second meetings of creditors proceed, and the need to afford procedural fairness and allow the administrators to lead the evidence on which they rely. I accept that the alternative versions which Dr Bell propounded may have achieved the same result, but they are not plainly preferable so as to require they be preferred to those proposed by the administrators in circumstances that both timetables will require the parties to prepare for a complex hearing within a relatively short time.
The orders contemplate that the Court will make an order, under s 447A of the Corporations Act or s 90-15 of the Insolvency Practice Schedule (Corporations) extending the date for the meetings of creditors from 12 September 2017 to 19 September 2017. The authorities as to when the Court may make such an order under s 447A of the Corporations Act are well-established, although s 90-15 of the Insolvency Practice Schedule raises novel considerations. In this case it is plainly in the interests of the administration and the creditors that a dispute, of the kind raised in this matter, as to the adequacy of information provided in the s 439A report to creditors be determined, if it can be, prior to the second meeting of creditors and that is sufficient reason to adjourn the second meeting of creditors to permit the determination of that dispute. I will insert at the commencement of the administrators' proposed Order 1 the words:
"Pursuant to s 447A of the Corporations Act 2001 (Cth) and/or s 90-15 of the Insolvency Practice Schedule."
The administrators also seek an order extending the time for the lodgement of proxy forms and proofs of debt to 5.00pm, Friday 15 September 2017. The Plaintiffs raise an issue in their Originating Process as to the adequacy of the time provided to creditors for lodgement of proofs of debt and proxies. However, I am satisfied that I can make that order, and I can expressly do so without determination as to adequacy of the time provided, on the basis that that order is made to facilitate the hearing of these proceedings, and it is in the interests of the administration and creditors to take these steps, even where it does not resolve any question as to the adequacy of the time provided to creditors. The fact that the Court makes that order to facilitate a merits hearing, on a limited basis, does not involve any determination as to the adequacy of the time provided, other than that the extended time is preferable to the time presently provided, and consistent with the need to provide a merits determination of the proceedings. I will insert at the beginning of Order 2 the words:
"Pursuant to s 447A of the Corporations Act and without determination as to the adequacy of the time provided for lodgement of proxies and proofs of debt."
Order 3 proposed by the administrators is a relatively common form of order for notification to creditors, permitting email notification where practicable and alternatives to notification by post, and takes a form similar to that made by O'Callaghan J in the Federal Court of Australia in July 2017, and is similar to that which has commonly been made by this Court in substantial administrations. I am satisfied that that order can be made. Orders 4 and 5 provide for steps to be taken in preparation for the hearing.
I note that, as discussed with the parties in submissions, I will not make those orders at this stage but provide for copies of them to be provided to the parties so that they may be reviewed by the parties, reduced to typescript and any amendments necessary to them can be discussed between the parties. If agreement is reached between the parties, it would be sufficient if a solicitor either attends court this afternoon for the orders to be made or, alternatively, they are sent to my Associate to be made in Chambers if they are agreed between the parties. I will also reserve the costs of today.
[5]
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Decision last updated: 12 September 2017