HIS HONOUR: The plaintiff, Rosecell Pty Limited, ("Rosecell") seeks leave to proceed against the 13th defendant, Antqip Pty Limited, subject to Deed of Company Arrangement ("Antqip") pursuant to s 444E(3) of the Corporations Act 2001 (Cth). Antqip was joined to these proceedings on the filing of an amended statement of claim on 12 September 2011. The proceedings have had a long history involving numerous defendants. The claims against all defendants other than Antqip have been resolved.
On 3 February 2014, administrators were appointed to Antqip. On 8 May 2014 Antqip entered into a deed of company arrangement. Earlier this year, at a hearing before me, the plaintiff sought judgment against Antqip in default of its appearance. I then declined to give the judgment as sought and expressed the view that Rosecell needed leave pursuant to s 444E of the Corporations Act to proceed against Antqip. (See Rosecell Pty Ltd v JP Haines Plumbing Pty Ltd [2015] NSWSC 1238 at [77]-[82].) Rosecell accepts that leave to proceed against Antqip is required. The deed administrators neither consented to nor opposed Rosecell's application for leave to proceed. Antqip opposed the application acting through its director to whom control of the company has reverted pursuant to the deed of company arrangement.
Section 444E provides:
"444E Protection of company's property from persons bound by deed
(1) Until a deed of company arrangement terminates, this section applies to a person bound by the deed.
(2) The person cannot:
(a) make an application for an order to wind up the company; or
(b) proceed with such an application made before the deed became binding on the person.
(3) The person cannot:
(a) begin or proceed with a proceeding against the company or in relation to any of its property; or
(b) begin or proceed with enforcement process in relation to property of the company;
except:
(c) with the leave of the Court; and
(d) in accordance with such terms (if any) as the Court imposes.
(4) In subsection (3):
property of a company includes:
(a) any PPSA retention of title property of the company; and
(b) any other property used or occupied by, or in the possession of, the company.
Note: See sections 9 (definition of property) and 51F (PPSA retention of title property)."
Section 444E(1) applies in relation to a person bound by a deed of company arrangement. For some purposes, or at least in some respects, I understood Rosecell to accept that it is a party so bound. Mr Allen, for Rosecell, referred to what I said in Henaford Pty Ltd v Strathfield Group Ltd [2009] NSWSC 539; (2009) 72 ACSR 240 at [20] and accepted that leave was required.
It is settled that the considerations which affect the exercise of a discretion to give or refuse leave to a plaintiff to proceed against a company in liquidation apply also to a plaintiff's application to proceed against a company which is subject to a deed of company arrangement (Meehan v Stockmans Australian Cafe (Holdings) Pty Ltd (1996) 22 ACSR 123). Those considerations are discussed notably by McPherson J in Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314 and by the Full Court of the Federal Court in Vagrand Pty Ltd (in liq) v Fielding (1993) 41 FCR 550.
Rosecell sues Antqip in the torts of conversion and detinue. It claims damages, and further or in the alternative, an order under s 93 of the Civil Procedure Act 2005 (NSW) for delivery up of equipment that it says was converted by Antqip and wrongly detained by it after demand for its return. The plaintiff pleads the making of a demand in 2011 or prior to 2011. It is not disputed that the equipment has not been returned. The equipment is described as a Komatsu 4556 hydraulic excavator with attachments, another excavator, a water cart, and a Holden space cab ute.
In this case it is not common ground that all of Rosecell's claims are subject to the deed of company arrangement. Rosecell contends that at least its claim for delivery up of the items of equipment and its claim for damages arising from the continued detention, day by day, of the equipment after 3 February 2014 are not barred by the deed.
3 February 2014 is the date in respect of which creditors could prove under the deed in respect of any debt which would be a provable debt if the company were being wound up which was incurred as a result of anything done or omitted to be done by, or on behalf of, the company on or before that date. Clause 13 of the deed provides that the deed can be pleaded by the company against any creditors (with immaterial exceptions) to bar any debt or claim that is admissible under the deed. Clause 16 of the deed provides that every person (with an immaterial exception) who is entitled to establish a claim against the company but who fails to prove within the time prescribed by operation of the deed, or fails to institute proceedings to establish a claim as prescribed by the deed, is barred from instituting any action, claim or other proceedings.
In the present case, I think there is a serious question to be tried as to whether at least the plaintiff's claim for orders under s 93 of the Civil Procedure Act for delivery up of equipment is not barred by the terms of the deed.
Antqip's response is to say that having regard to the nature of the equipment and the considerations explained by Young J in McKeown v Cavalier Yachts Pty Limited (1988) 13 NSWLR 303, it is clear that Rosecell will fail on that claim. I do not accept that that is necessarily so.
Apart from any other questions, the intervention of the administration and deed of company arrangement may be a relevant consideration to the exercise of the discretion under s 93. There may be other questions which arise in relation to a claim under s 93 including the interests of any other persons in the goods in question. A question might also arise under s 442C of the Corporations Act, but those questions cannot be resolved on this leave application.
The issues concerning the construction and operation of the deed of company arrangement, and the issues on the substantive claim, are reasonably complex, a factor to be taken into account in determining whether leave should be given to the claim being determined by the Court rather than being left to the deed administrator. It also appears to me, at least prima facie, that the deed administrator might not be able to give the relief for the return of the equipment that is sought by the plaintiff. That also is a relevant consideration in favour of giving leave (Vagrand Pty Ltd (in liq) v Fielding at 553).
The proceedings had progressed a considerable distance before the administrators were appointed.
Subject to the question of the delay in making this application, I consider that the factors favouring the grant of leave significantly outweigh the factors in favour of refusing it. Counsel for Antqip points to the delay in seeking leave and submits this may have occasioned prejudice to the creditors who voted in favour of the deed and its apparent subsequent variation in circumstances where Rosecell had, it seems, neither proved in the deed administration nor sought leave to proceed with the claim which was on foot.
But Mr Allen, for Rosecell, says, I think rightly, that there is no sufficient evidence of prejudice to creditors from the delay. In any event, any such prejudice should only sound against the granting of leave if at relevant times it were shown that Rosecell knew of the appointment of the administrators and of the convening of creditors' meetings for the passing of resolutions for entry into the deed of company arrangement. There is no evidence one way or the other to which I have been referred on that question.
In any event, even if there is substance to the complaint about delay and prejudice to creditors, the question of leave to proceed has to be considered now and involves a comparison between the course of the plaintiff's seeking to prove in the deed administration and being able to continue these proceedings.
The complexity of the proceedings is such that I think the balance of convenience clearly favours the grant of leave so that the questions which have been debated today can be determined by the Court, rather than a deed administrator's being put in the difficult position of having to determine the extent of his powers, to what extent the plaintiff's claim is admissible under the deed and the not insignificant factual and legal complexities of the claim itself.
For these reasons, I make an order in accordance with the paragraph 2 of the notice of motion.
As to costs, having regard to the fact that this has been a contested application and the plaintiff has succeeded on it, the costs of the application for leave should be the plaintiff's costs in the proceedings. I so order.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 01 December 2015