Quinlan, in the matter of Halifax Investment Services Pty Ltd (Administrators Appointed) [2018] FCA 1891

On the undertaking given on behalf of the plaintiffs by their Counsel that the Originating Process will be filed electronically forthwith after the conclusion of today's hearing, the Originating Process be returnable instanter.
Pursuant to s 447A(1) of the Corporations Act 2001 (Cth) (the Act), Pt 5.3A of the Act is to operate in relation to Halifax Investment Services Pty Ltd (Administrators Appointed) ACN 096 980 522 (the Company) such that notice of the first meeting of the creditors of the Company required to be given pursuant to s 436E(3) of the Act, and the declaration required to be given pursuant to s 436DA(3)(a) of the Act, and any notice under r 75-15(1) of the Insolvency Practice Rules (Corporations) 2016 (the Notices) will be validly given to creditors of the Company by: (a) causing the Notices to be published on the ASIC published notices website at https://insolvencynotices.asic.gov.au/; (b) publishing the Notices on the website maintained by the plaintiffs at https://www.ferrierhodgson.com/au/creditors/halifax-investment-services-pty-ltd; (c) publishing the Notices on the website of the Company at www.halifax.com.au (the Company Website); (d) alerting clients of the Company, who use the electronic trading platforms provided by the Company "Halifax Plus", "Halifax Pro" and "Trader Workstation" to the publication of the Notices on the Company Website via a message published on those electronic trading platforms; (e) sending a hyperlink to the Notices published on the Company Website by email to the email address of each creditor at such email address as is recorded in the books and records of the Company; and (f) where an email address is not recorded in the books and records of the Company but a postal address is recorded, sending by post the Notices to the postal address of each creditor at such postal address as is recorded in the books and records of the Company.

YATES J: 1 This is an application under s 447A of the Corporations Act 2001 (Cth) (the Act) to modify the requirement under s 436E(3) of the Act and s 436DA(3)(a) of the Act to provide that the notice and declaration respectively required by those provisions be given electronically. 2 Section 436DA(3) of the Act in relation to an administrator's declaration of independence, relevant relationships and indemnities provides: The administrator must: (a) give a copy of each declaration under subsection (2) to as many of the company's creditors as reasonably practicable; and (b) do so at the same time as the administrator gives those creditors notice of the meeting referred to in section 436E. Note: Failure to comply with this subsection is an offence (see subsection 1311(1)). 3 Section 436E(3) of the Act in relation to notice of the first meeting of creditors provides: The administrator must convene the meeting by: (a) giving written notice of the meeting to as many of the company's creditors as reasonably practicable; and (b) causing a notice setting out the prescribed information about the meeting to be published in the prescribed manner; at least 5 business days before the meeting. Note: For electronic notification under paragraph (a), see section 600G. 4 The present application is supported by an affidavit of the first-named plaintiff, Mr Quinlan, made 26 November 2018. He and the other plaintiffs were appointed as administrators of Halifax Investment Services Pty Ltd (Administrators Appointed) (the company) pursuant to s 436A of the Act. The company is a financial services provider which deals in financial products on behalf of its clients, including listed stocks and bonds, over-the-counter derivatives, and other financial products, primarily through three trading platforms known as "Halifax Plus", "Halifax Pro", and "Trader Workstation". 5 One of the plaintiffs, Mr Kelly, issued a circular to creditors notifying them of the plaintiffs' appointment as administrators by publishing a copy of the circular on the trading platforms by way of a pop-up message, which the company's clients will see when logging into their accounts. 6 Mr Quinlan has given evidence that the company's creditors are primarily its clients. It has approximately 8,325 active client accounts on its Halifax Plus and Halifax Pro trading platforms. It appears that the company holds email addresses for 7,509 of those accounts. After filtering out duplicate email addresses, it appears that the company has 6,862 email addresses for clients with accounts on those platforms. 7 It appears that there are at least 4,195 active accounts associated with the Trader Workstation trading platform. However, unlike the Halifax Pro and Halifax Plus platforms, no de-duplication or other filtering process has been carried out in relation to the known active accounts. In his affidavit, Mr Quinlan stresses that, as the administration is only at a very early stage, there may well be more clients or further creditors of the company than those presently identified. 8 The data shows that the clients are located not only in Australia, but overseas. Most of the clients (75%) are located in Australia with the remaining 25% located in China, New Zealand and other countries. The data does not provide postal addresses for the majority of the clients. It does, however, show that email addresses are held for at least 90% of clients. Given the large number of creditors, including the company's clients, Mr Quinlan has deposed that it would be difficult to ensure that as many creditors as reasonably practicable are given written notice of the first meeting of creditors by 27 November 2018, if notice is to be given by post. This is because the data does not provide a postal address for the majority of clients and it is unlikely that the plaintiffs will have sufficient time to investigate the clients to see if a postal address can be obtained. 9 Mr Quinlan has also carried out an analysis which indicates that if notices are required to be given by post, assuming postal addresses can be obtained, the cost will be significantly greater than if notice is to be given electronically. Mr Quinlan has provided some working examples in his affidavit which graphically illustrates the significant cost difference in the two methods. 10 Mr Quinlan deposes, and I accept, that the most expedient and cost-effective way to notify creditors is to permit notices to be given electronically in respect of those creditors who have email addresses, and to publish a notice on the three trading platforms. I note in this regard Mr Quinlan's evidence that, from his discussion with the company's administrative employees, the most usual means by which the company communicates with its clients is via email. 11 The plaintiffs also propose that the notice required to be give under s 436E(3) and the declaration required to be given under section 436DA(3)(a) of the Act be given by publishing notices, where required, on ASIC's website; on the website maintained by the plaintiffs; and on a website of the company. 12 They also propose to alert creditors by publishing notices on the company's trading platforms, and sending a hyperlink to the notices published on the company's website by email to the email addresses of each creditor known by reference to the records kept by the company. They also propose that where an email address is not recorded in the books and records of the company, but a postal address is recorded, then notice be given by post. 13 I am satisfied that it is appropriate to grant the relief that the plaintiffs seek. It seems to me that, in the circumstances, what is proposed will achieve the object of notifying as many creditors as practicably possible. It will also do so in a way that is the most expeditious and cost-effective way. 14 Orders of the kind now sought are not unusual. They have been made in a number of cases. As Brereton J observed in In the matter of BBY Limited [2015] NSWSC 974 at [7], courts have become increasingly willing to make orders such as those now sought both to save costs and to save time, and thus to conserve the limited available assets of the company for the benefit of creditors. As I have said, those objectives will be secured by the orders that are sought today. 15 Orders will be made accordingly. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.

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