ROBERT MICHAEL KIRMAN and ROBERT CONRY BRAUER in their capacity as joint and several voluntary administrators of TIGER RESOURCES LTD (ADMINISTRATORS APPOINTED) [2021] WASC 93 (12 April 2021)

(i) replaced "; or" in s75-140(1) with ".' and

(ii) omitted s75-140(1)(b).

1. The first plaintiffs are to give notice of these orders to all known creditors of the Company by no later than 5.00 pm on 17 February 2021 by sending a copy of these orders made by the Court by:

(a) email to all creditors of the Company who have provided the first plaintiffs with an email address; and

(b) in all other cases, mail.

1. Liberty to apply to any person affected by these orders, including any creditors of the plaintiffs, to vary or set aside these orders on 48 hours' notice to the plaintiffs and to the Court.
2. The first plaintiffs' and the second plaintiff's costs of and incidental to this application be costs in the administration of the Company, and be paid out of the assets of the Company. Any interested party wishing to make submissions as to costs do so within 7 days.
3. At the hearing the plaintiffs were represented, as were three interested parties. Jinji Resources Finance Pty Ltd were designated as the first interested party, Yingkou Yangzhou Trade Co Ltd were designated as the second interested party and Kipoi Mauritius Holdings Limited were designated as the third interested party. These are my reasons for making the orders set out above.
4. There is much common ground between the parties and essentially no difference on the facts. In summary, the position was as follows. On 5 November 2020, the plaintiffs were appointed as voluntary administrators of Tiger Resources Limited. The second meeting of the company's creditors had on 9 December 2020 been held and adjourned for a period not exceeding 45 business days - that is until on or before 16 February 2021. On 16 February 2021, the first and second interested party submitted what is referred to in the affidavit material and the submissions as the 'initial DOCA proposal' filed 16 February 2021. The plaintiffs issued a notice of the adjourned meeting with a supplementary report on 9 February 2021.
5. On 11 February 2021, the third interested party submitted what is referred to as the 'initial KHML DOCA proposal'. On 13 February 2021, the third interested party submitted the 'revised KHML DOCA proposal'. On 14 February 2021, the second interested party submitted the 'revised YYT DOCA proposal. Although it was not in evidence, I understand that just as the hearing commenced the plaintiffs circulated to creditors a further revised KHML DOCA proposal. That being the case, it is clear the creditors were faced with a highly compressed timeframe within which to consider the competing DOCA proposals.
6. The statutory position relating to an adjournment extension can be explained in this was: Section 75‑140 of the Insolvency Practice Rules (Corporations) 2016 (Cth) reads as follows:

(1) A meeting may be adjourned from time to time and from place to place:

(a) by resolution; or

(b) by the person presiding at the meeting.

(2) The meeting must not be adjourned to a day that is more than 15 business days after the first day on which the original meeting was held.

(3) Despite subsection (2), a meeting convened under section 439A of the Act must not be adjourned to a day that is more than 45 business days after the first day on which the original meeting was held.

(4) Unless otherwise provided by the resolution by which it is adjourned:

(a) if any of the persons entitled to attend the adjourned meeting is entitled to physically attend the adjourned meeting - the meeting is adjourned to the same location or locations as were specified for the original meeting; and

(b) if the original meeting was held using virtual meeting technology - participation in the resumed meeting by means of the technology must be provided in the same manner as set out in the notice for the original meeting.

(5) The convenor of the meeting or a person nominated by the convenor must, by the end of the next business day, give notice of the adjournment to the persons to whom notice of the meeting must be given under section 75‑10.

(6) If a meeting is adjourned to a day more than 6 business days after the passing of the resolution by which it is adjourned, the company must cause notice of the day, time and place of the resumption of the meeting to be lodged in accordance with subregulation 5.6.75(4) of the regulations at least 5 business days before that day.

Note: Subregulation 5.6.75(4) provides for notices to be electronically lodged and published on a website maintained by ASIC.

(7) A resolution passed at a meeting resumed after an adjournment is passed on the day it was passed.

1. It would appear that these provisions have not been the subject of any judicial determination. But they appear to be in large measure identical to the former regime which relied on s 438B of the Act and reg 5.6.18 of the Corporations Regulations 2001 (Cth). Gleeson JA dealt with these provisions in In the matter of Keystone Group Holdings Pty Ltd (Receivers and Managers Appointed) (Administrators Appointed) [2017] NSWSC 454 [14] - [15]:

[14] In Re PriceRight Construction Pty Ltd (Admin Apptd) (2006) 57 ACSR 206; [2006] NSWSC 324 Barrett J explained that an order under s 477A can not only vary the operation of s 439B(2) (a provision, at that time, within Pt 5.3A) but also state that Pt 5.3A is to operate on the basis that reg 5.6.18(2) does not apply. His Honour said at [7] ‑ [9]:

[7] The order the plaintiffs seek is one empowering them to adjourn to a date not later than 31 May 2006. But it is clear from reg 5.6.18 that adjournment is a matter for the meeting itself and is implemented by the chairperson who must adjourn the meeting "from time to time and from place to place" if so directed by the meeting and may do so with the consent of the meeting. The chairperson cannot, consistently with reg 5.6.18, act unilaterally, that is to say, without either a direction or the consent of the meeting (see Re Vouris; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (in liq) (2003) 177 FLR 289 ; 47 ACSR 155; [2003] NSWSC 702), although it may well be that emergency powers of unilateral adjournment of the kind considered in cases such as Byng v London Life Assn Ltd [1990] Ch 170 are available: see Re Vouris, above; Selim v McGrath (2003) 177 FLR 85; 47 ACSR 537; [2003] NSWSC 927.

[8] Regulation 5.6.18(2) is in terms which reinforce s 439B(2). This raises a point that requires brief discussion. Under s 447A, the court may make any order it thinks appropriate about how "this part" - that is, Pt 5.3A of the Act - is to operate in relation to a particular company. As is testified by the decision of the High Court in Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270 ; 172 ALR 28; 34 ACSR 250; [2000] HCA 30 , the jurisdiction under s 447A is very broad. It is now well recognised, for example, that the power may be used to extend the convening period in a way that s 439A itself does not allow. In addition, it was held by Lindgren J in Re Double v Marketing Pty Ltd [1995] FCA 1151; (1995) 16 ACSR 498 that s 447A may be employed in a case such as the present to extend the s 439B(2) deadline: see also Re Open Telecommunications Ltd; ex parte Whitton [2002] NSWSC 930.

[9] There is not, I think, in Lindgren J's judgment any reference to the separately imposed version of the s 439B(2) deadline arising from reg 5.6.18(2). But it is my opinion that an order under s 447A can not only vary the operation of s 439B(2) (a provision within Pt 5.3A) but also state that Pt 5.3A is to operate on the basis that reg 5.6.18(2) does not apply. Even with that added element, the order is still one about how Pt 5.3A is to operate in relation to the particular company.

[15] Other cases in which s 477A has been used to alter the operation of s 439B(2) and reg 5.6.18(2) of the Corporations Regulations, so that the date on which a second meeting of creditors could be held would be extended from the date on which they would be required to be held under s 439A to a later date include: In the matter of Beechworth Land Estates Pty Ltd (admins apptd) and Griffith Estates Pty Ltd (admins apptd) [2014] NSWSC 1918; In the matter of Palace Memories Pty Ltd (Administrator Appointed) [2015] NSWSC 56; and In the matter of Canberra Eye Hospital Pty Ltd (Administrator Appointed) [2015] NSWSC 1215.

[26] In Re Diamond Press Australia Pty Ltd [2001] NSWSC 313 at [10], Barrett J explained the approach to an application under s 439A(6) to extend the convening period for the second meeting as follows:

The function of the Court on an application such as this is, as I see it, to strike an appropriate balance between, on the one hand, the expectation that administration will be a relatively speedy and summary matter and, on the other, the requirement that undue speed should not be allowed to prejudice sensible and constructive actions directed towards maximising the return for creditors and any return for shareholders.

[27] In Re ABC Learning Centres (admins apptd)(recs and mgrs aptd); Application by Walker and Another (No 8) [2009] FCA 994; (2009) 73 ACSR 478 Emmett J observed at [28] that Part 5.3A indicates acceptance by Parliament that it is not only the well-being of creditors that is at stake but the possibility of continuing the business of the company for the benefit of employees and customers.

1. In Re Porter as Joint Administrators of Price Right Construction Pty Ltd (Administrators Appointed) [2006] 57 As Cr 206 Barrett J considered whether s 447A of the Act could be invoked to provide that pt 5.3 of the Act was to operate in respect of a particular company on the basis that reg 5.6.18(2) the Corporations Regulations 2001 (Cth) did not apply. Barrett J reasoned that such an order could be made in reliance on s 447A because, even though the time limit was one prescribed by the particular regulation, the orders sought were still about how pt 5.3A of the Act was to operate in relation to the company concerned.
2. Yates J considered these authorities in Georges, Re Vical MSW Pty Ltd (Administrators Appointed) [2018] FCA 1974. His Honour concluded that (1) the court has power to make orders extending the time under r 75‑140(3) of the Insolvency Practice Rules (IPR), notwithstanding that the IPR are not found in pt 5.3A of the Act; (2) although r 75‑140(3) mandates that the period of adjournment in respect of a meeting conveyed under s 439A of the Act must not be more than 45 business days after the first day on which the original meeting was held. An order invoking the facility provided by s 447A of the Act, and which has the effect of modifying the stipulated maximum period of time, is still an order about how pt 5.3A is to operate, particularly, in relation to, a meeting that is required to be held under s 439A of the Act; and (3) extending the adjournment period was, on the facts of that case, consistent with the object of pt 5.3A of the Act.
3. The administrators submitted, and I accept, that the objective of pt 5.3A is to provide for the business, property and affairs of an insolvent company to be administered in such a way as to maximise the changes of the company continuing in existence. If that is not possible, then the aim is to provide a better return to the company's creditors and members than would result from an immediate winding up of the company. That is the clear objective of s 435A of the Act.
4. It was clear from the affidavit material filed 16 February 2021 by the plaintiffs they were balancing two competing interests. On the one hand, they were keen to obtain the best possible outcome for the creditors. That meant assessing the various DOCA proposals, providing creditors with their considered views and taking sufficient time to properly pursue that process. On the other hand, they were mindful of the imperative manifest in the legislation of bringing the process to a conclusion.
5. The first and second interested parties were the principal lenders to the company. They indicated if their DOCA proposal was not accepted by the meeting of creditors at the meeting on 16 February 2021, then the proposal would lapse and they would move to exercise their rights under securities they held. On that basis their initial position was they opposed any extension of time. During the course of argument heard 16 February 2021, counsel modified his position somewhat. He indicated the first and second interested parties were content to allow the meeting of creditors to adjourn if they saw fit. However, he opposed the making of any order which allowed one or other of the administrators as chair of the meeting to adjourn the meeting of their own motion.
6. It was the position of the third interested party that the orders sought by the administrators ought be made and, in addition, the person chairing the meeting should have the right to adjourn of his own motion. In essence, counsel submitted that although the thrust of the legislation was to give the creditors the right to make such decision as they saw fit. In circumstances where a number of proposals had been put in a short timeframe, it was appropriate to give the administrators the power to adjourn the creditors meeting, so that the administrators could be sure that the creditors were fully informed when they make their decision.
7. For their part, the administrators were concerned that if they were given the power to adjourn the creditors meeting of their motion and did not do so, they could be liable for suit. In fact at the hearing, counsel for the administrators produced a minute of proposed orders which effectively sought judicial advice to the effect that if they (the administrators) chose not to adjourn the creditors meeting they were acting properly and were therefore not liable either to the third interested party or any of the other creditors.
8. In the end, the issue that separated the parties was whether or not the administrators should have the power to adjourn the meeting. There was some debate between counsel as to whether or not an administrator as chair of a second creditors meeting could, of his or own motion, adjourn the meeting - that is, of course, in circumstances where the maximum time limit had not expired. It is unnecessary for me to resolve that question. I determined that if the creditors determined the meeting should be adjourned because they wished to take time to consider the various DOCA proposals - or indeed for any other reason - then they should be entitled to do so. They were well aware of the consequences of not making a decision at the meeting because the first and second interested parties had drawn the possible consequences to their attention. They were in a position to weigh in the balance the adverse effects of the first and second interested parties moving to exercise their security rights as against the prospect of a DOCA from the third interested party producing a better outcome. In other words, this was a situation where it was both proper and appropriate for the creditors to make a decision which they saw as in their best interests. So they could adjourn or not adjourn - that was a matter for them.
9. It was for those reasons that I made the above orders.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.