Longley, in the matter of Dixon Advisory & Superannuation Services Pty Ltd (Administrators appointed) [2022] FCA 471

ANASTASSIOU J: 1 By originating process dated 14 February 2022, the Plaintiffs, Stephen Graham Longley and Craig Crosbie in their capacity as joint and several administrators of Dixon Advisory & Superannuation Services Pty Ltd (ACN 103 071 665) (the Company) seek an extension of the convening period for the second meeting of the creditors of the Company pursuant to s 439A(6) of the Corporations Act 2011 (Cth). 2 The Plaintiffs also seek an order that pursuant to s 447A(1) of the Act, Part 5.3A of the Act is to operate in relation to the company, such that the second meeting of the creditors of the Company required by s 439A of the Act may be held at any time within the (extended) convening period, or within 5 business days after the end of the convening period. The Plaintiffs also seek orders allowing creditors to be notified of the meeting via email. 3 The Plaintiffs rely on the Affidavit of Stephen Graham Longley sworn 15 February 2022 and their cogent written submissions dated 15 February 2022. 4 For the reasons that follow, I grant the orders sought by the Plaintiffs.

background 5 On 19 January 2022, the Plaintiffs were appointed as joint and several voluntary Administrators of the Company, by the directors of the Company, pursuant to s 436A of the Act. 6 The Company is a subsidiary of an ASX-listed entity E&P Financial Group Ltd (EP1). The Company holds an Australian financial services licence (No 231143) (AFSL) which authorises it to provide a range of financial services in relation to various financial products to wholesale and retail clients. 7 The Company primarily provides the following services: (1) personal and general investment advice on client portfolios - including asset allocation, portfolio construction, market or stock driven events (for instance, if clients are eligible to participate in a "Share Purchase Plan" just announced by a company in the client's portfolio) and periodic portfolio reviews; (2) strategic financial advice and planning - that is, structuring advice, transition to retirement strategies, redundancy advice and pre-retirement and post-retirement strategies; (3) ASX and international trade execution services - the vast majority of clients require access to their adviser to place trades on their behalf (which, with respect to Australian-listed securities, are executed via another EP1 Group entity, Evans and Partners Pty Limited, which is an ASX Market Participant, and Pershing LLC with respect to international trade execution); and (4) processing client instructions for other financial products and investments. For example, managed fund applications, redemptions and cash transfers; and (5) periodic portfolio reporting and online portal access to client portfolios. 8 As at the date of the Plaintiffs' appointment as Administrators: (1) The Company had approximately 4,000 active clients and an estimated 2,000 former clients, each of which is a potential creditor of the Company. (2) The Company had no employees, where the human resources, systems and infrastructure required by the Company to conduct its financial services business were provided by other companies within the EP1 group of companies. (3) The Company did not own or lease any property in its own right. (4) The Company's few realisable assets included cash at bank of $1 million and some related party receivables. (5) The Company was subject to at least four Court proceedings, including a proceeding by ASIC seeking civil penalties against the Company and two representative proceedings. The Company was also the subject of complaints lodged with the Australian Financial Complaints Authority in respect of services provided to current and former clients. 9 In the period since their appointment on 19 January 2022, in addition to undertaking statutory, administrative and investigative tasks, the Administrators have focused on: (1) Preservation of the Company's AFSL. (2) Securing the ongoing provision of services to enable the Company's clients' needs to be met until their transition to an alternative service provider, principally by the commitment by EP1 to provide necessary resources for this purpose until at least 30 June 2022. (3) Providing oversight of the ongoing provision of services to the Company's current clients. (4) Assessment of the prospects of the business and/or assets of the Company being sold. (5) Liaising with ASIC, including regarding the status of a $7.2 million penalty agreed between the Company and ASIC in the pre-appointment period. 10 The first meeting of creditors was held on 1 February 2022. At this meeting, the creditors were informed that the Plaintiffs would seek to extend the convening period of the second meeting. The minutes of that meeting record that the Chairperson (Mr Longley) "advised the meeting that the Administrators intend to make an application to Court seeking an extension of up to six months to hold the second meeting". 11 On 7 February 2022, the Committee of Inspection, appointed by creditors of the Company, formally resolved in favour of an extension of the convening period for up to six months.

Applicable Principles 12 Sections 439A(6) and 447A appear in Part 5.3A of the Act. The overall object of Part 5.3A of the Act (as stated in s 435A) is to maximise the chances of the company continuing in existence or to achieve a better result for the company's creditors and members than would otherwise be achieved in an immediate winding up. 13 Section 439A(1) of the Act requires the administrator of a company under administration to convene a meeting of creditors within the convening period as fixed by s 439A(5), unless extended by the Court under s 439A(6). The meeting must be held within five business days before, or within five business days after, the end of the convening period: s 439A(2). 14 The purpose of the second meeting of creditors required by s 439A is to consider the company's future. At the s 439A meeting, the creditors may resolve that either: (1) the company execute a deed of company arrangement (DOCA); (2) the administration end; or (3) the company be wound up: s 439C. Rule 75-225(3) of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPRC) requires an administrator to provide a report to creditors about the company's business, property, affairs and financial circumstances to assist the creditors with making their decision at the s 439A meeting. 15 Section 447A of the Act provides the Court with a general power to make orders as it thinks appropriate about how Part 5.3A is to operate. Relevantly, s 447A(1) empowers the Court to make an order enabling administrators to hold a second meeting of creditors at any time during, or within five business days after, the end of the convening period as extended by the Court under 439(6) of the Act. The practice of making orders of this kind was initiated in Re Daisytek Australia Pty Ltd [2003] FCA 575; 45 ACSR 446 (Lindgren J) and these "Daisytek" orders have since been described as "sensible" and "almost routine": see Re LED Builders Pty Ltd [2008] NSWSC 633 (Austin J) at [2]. 16 The principles applicable to the extension of the second meeting have been discussed in a number of recent authorities and are now well settled. The Plaintiffs, at [13] and [14] of their very detailed written submissions, have canvassed the recent authorities, and I refer to, and gratefully adopt, those principles, which were set out by Middleton Jin Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717; 144 ACSR 347 (at [64] - [68]): 64. The circumstances in which the Court will extend a convening period are well established. In making such an order, the Court must reach an appropriate balance between an expectation that the administration will be relatively speedy and summary, and the countervailing factor that undue speed should not be allowed to prejudice sensible and constructive actions directed to maximising a return for creditors: Mann v Abruzzi Sports Club Ltd (1994) 12 ACSR 611 (Young J); Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10] (Barrett J). 65. The approach to be adopted was recently set out by Thawley J in Farnsworth v About Life Pty Ltd (Administrator Appointed), in the matter of About Life Pty Ltd [2019] FCA 11 at [3] - [8], where his Honour endorsed the comments of Austin J in Re Riviera Group Pty Ltd (admins apptd) (recrs & mgrs. apptd) [2009] NSWSC 585 ('Re Riviera') at [13] as to the categories of cases in which an extension is granted including, relevantly: (1) where the size and scope of the business in administration is substantial (citing Lombe, in the matter of Babcock & Brown Limited (Administrators Appointed [2009] FCA 349; Worrell; In the matter of Storm Financial Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2009] FCA 70; and ABC Learning Centres Limited, in the matter of ABC Learning Centres Limited; application by Walker (No 5) [2008] FCA 1947); (2) where the extension will allow sale of the business as a going concern, citing Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110; Stewart, Re Kleins Franchising Pty Ltd (administrators appointed) (ACN 007 348 236) [2008] FCA 721; Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619, Re Uni-Aire Security Pty Ltd (Administrators Appointed) ACN 085 430 619 [2006] FCA 1423; and (3) more generally, where additional time is likely to enhance the return for unsecured creditors: Deputy Cmr of Taxation v Scottsdale Homes No 3 Pty Ltd (No 2) [2009] FCA 190; Fitzgerald, Re Primebroker Securities Limited (Administrator Appointed) (Receivers and Managers Appointed) [2008] FCA 1247; Ex parte Vouris;Re Marrickville Bowling & Recreation Club Ltd (under Administration) [2008] FCA 622. 66. An extension of the administration period to facilitate either (or both) of: (a) the sale of the business of the company as a going concern, so as to maximise the value of the company's assets; or (b) the progression and assessment of a DOCA proposal that may provide a better return to creditors than a winding up, are well-recognised examples of situations where the Court has extended the convening period: Mentha, in the matter of Hans Continental Smallgoods Pty Ltd (Administrators Appointed) [2008] FCA 1933 (Jacobson J); Re Riviera (Austin J); Silvia, in the matter of Austcorp Group Ltd (Administrators Appointed) [2009] FCA 636 (Lindgren J) ('Re Austcorp'); and Re Kavia Holdings Pty Limimted (administrators appointed) (receivers and managers appointed) [2013] NSWSC 737 (Black J). 67. In Mighty River International Ltd v Hughs (as deed administrators of Mesa Minerals Ltd) (2018) 359 ALR 181 at 201-202, [73], Nettle and Gordon JJ (in dissent, but not relevantly in this respect) referred to a number of cases including Re Riviera and concluded: … Generally speaking, courts have been disposed to grant substantial extensions in cases where the administration has been complicated by, for example, the size and scope of the business, substantial offshore activities, large numbers of employees with complex entitlements, complex corporate structures and intercompany loans, and complex recovery proceedings, and, more generally, where the additional time is likely to enhance the return to unsecured creditors. Provided the evidentiary case for extension has been properly prepared, there has been no evidence of material prejudice to those affected by the moratorium imposed by the administration, and the administrator's estimate of time has had a reasonable basis, the courts have tended to grant extensions for the periods sought by administrators. … 68. Finally, the administrator's own opinion as to the need for an extension will be given weight in an application of this kind: Owen in their capacity as joint and several administrators of Rivercity Motorway Pty Ltd (ACN 116 665 304) (admins apptd) (recs and mgrs. Apptd)) v Madden (No 4) (2012) 92 ACSR 255 at [26] (Logan J); Re Belmont Sportmans Club Co-Operative Limited (Administrators Appointed) [2015] NSWSC 543 at [9] (Black J); Jahani, Re Northern Energy Corporation Ltd (Administrators Appointed) (No 2) [2019] FCA 382 at [67] (Farrell J); Bumbak (Administrator), Re Duro Felguera Australia Pty Limited (Administrators Appointed) [2020] FCA 422 at [32] (Gleeson J). 17 As was observed in Re Gunns Plantations Limited (Administrators Appointed) (Receivers and Managers Appointed) [2012] VSC 513 at [23] (Gardiner AsJ), administrators should have sufficient time to investigate the affairs of the company and to provide considered and informed opinions to the creditors as to the Company's future to discharge their function properly: It has been recognised ... that the interests of creditors can be prejudiced not only by delay but also by the convening of premature meetings where the administrator has been unable to obtain information for the preparation of the report and statements required by s 439A(4) in the form on which creditors can make an informed decision.

consideration 18 The application of the principles canvassed above to the present application is, in my view, uncontroversial. The Plaintiffs, for the reasons that have been advanced in Mr Longley's affidavit, have explained that, in their judgment, it is in the interests of creditors that the meeting date be extended for a variety of reasons. Specifically the extension will give the Plaintiffs sufficient time to: (1) Complete the investigations required to report to creditors in accordance with r 75-225(3) of the IPRC. (2) Oversee the orderly transition of the Company's clients to alternative providers of the services provided by the Company (completion of which by 30 June 2022 is considered possible). (3) Assess the DOCA Proposal, in circumstances where it has the potential to be complex, as it will entail consideration of a related scheme of arrangement (to facilitate the release of claims against parties other than the Company). (4) Consider a formula for evaluation and quantification of anticipated unliquidated damages claims from the Company's estimated 6,000 active and former clients. (5) Explore the prospect of generating revenue upon the transition of existing clients of the Company to a new provider. 19 For those reasons, I am satisfied that I should exercise the discretion to extend the time for convening the meeting as it would be to the detriment of the creditors to not do so. 20 As to the duration of the extension, six months may, in some circumstances, seem to be an excessive extension. However, in the circumstances of this Company and its affairs, and having regard to the matters advanced by Mr Longley in his affidavit stated above at [18], I consider that an extension of that period is warranted and appropriate. As noted by the Plaintiffs in their submissions, there are a "growing number of precedents for extensions in the order of 6 months": see In the matter of Harrisons Pharmacy Pty Ltd (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 at [46] (Farrell J). The Plaintiffs referred to a range of authorities between 2013 and 2020 where six month extensions were granted. These authorities illustrate that a six month extension is by no means unreasonable, particularly in circumstances where, such is the case here, the Plaintiffs are of the view that the six month extension would result in a better return for creditors. 21 Further, I note that at the first meeting held on 1 February 2022, the creditors were informed of, and expressed no opposition to, the Plaintiffs' proposal to make this application and also that the application would be for an extension of up to six months. The creditors support the application and have fortified that support via the Committee of Inspection. The Committee is supportive of both the extension and the duration of the extension to the meeting. 22 As to the ancillary orders, I am satisfied that the "Daisytek" order should be granted as it will provide practical flexibility as to when the second meeting of the creditors is convened. I am also satisfied that the Plaintiffs may notify the creditors via email, as the grant of such relief is increasingly routine: see Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) [2020] FCA 571; 144 ACSR 310 at [27] (Middleton J).

disposition 23 For these reasons, I am satisfied that the orders should be made as sought by the Plaintiffs. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou.