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[2024] FCA 46
Federal Court of Australia
2024-01-30
Mr DP, Smith J
Original judgment source is linked above.
Division: General Division
Registry: Western Australia
National Practice Area: Commercial and Corporations
Sub-area: Corporations and Corporate Insolvency
Date of hearing: 30 January 2024
Counsel for the Plaintiffs: Mr DL Cook SC with Mr NL Pham
Solicitor for the Plaintiffs: King & Wood Mallesons
Counsel for the First to Third Respondents: Mr DP Butler
Solicitor for the First to Third Respondents: Murcia Pestell Hillard
Counsel for the Fourth Respondent: The fourth respondent did not appear
ORDERS WAD 332 of 2023 IN THE MATTER OF QUINTIS LEASING PTY LTD (AMINISTRATORS APPOINTED) (ACN 080 978 721) BETWEEN: RICHARD SCOTT TUCKER IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF QUINTIS LEASING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 080 978 727) First Plaintiff
SCOTT BRADLEY KERSHAW IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF QUINTIS LEASING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 080 978 721) Second Plaintiff
QUINTIS LEASING PTY LTD (ADMINISTRATORS APPOINTED) (ACN 080 978 721) Third Plaintiff AND FRIEDRICH GEORG BOLTEN AND ANDREA MARIE BOLTEN AS TRUSTEES FOR THE PIONEER FARMS TRUST First Respondent
FRIEDRICH GEORG BOLTEN Second Respondent
MARGRET LISELOTTE CONLEY AND AIRPORT FAMILY INVESTMENTS PTY LTD Third Respondent CHRIS HOWIE AND AMANDA HOWIE Fourth Respondent
order made by: BANKS-SMITH J DATE OF ORDER: 30 january 2024
Property leased, used or occupied
Extension of the convening period 2. Pursuant to s 447A(1) and s 439A(6) of the Corporations Act, s 439A of the Corporations Act is to operate as if the period within which the first and second plaintiffs must convene the second meeting of creditors of the third plaintiff (Second Meeting) pursuant to s 439A of the Corporations Act be extended to 13 February 2024. 3. Pursuant to s 447A(1) of the Corporations Act, that Part 5.3A of the Corporations Act is to operate such that the Second Meeting of the third plaintiff may be held at any time during, or within five business days after the end of, the convening period as extended by order 2 above, notwithstanding the provisions of s 439A(2) of the Corporations Act.
Other ancillary orders 4. Pursuant to s 447A(1) of the Corporations Act, Part 5.3A of the Corporations Act is to operate such that the requirement on the first and second plaintiffs to issue notices under s 75-15 and s 75-225(1) of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR) be modified such that notice of the Second Meeting will be validly given to any creditors, not less than five business days prior to the date of the proposed meeting, by: (a) giving such notice electronically by email sent to the email address of any creditor (including any persons claiming to be creditors) of the third plaintiff for whom or which the plaintiffs hold an email address; (b) sending such notice to the postal address or facsimile number, or as provided for by the Corporations Act or IPR, to any creditors not being a creditor referred to in sub-order (a); and (c) causing such notice to be published in The Insolvency Notices website located at: https://insolvencynotices.asic.gov.au/. 5. The plaintiffs must take all reasonable steps to cause notice of these orders to be given to each known creditor of the third plaintiff and each known owner or lessor and each known sub-lessee of property affected by order 1 of these orders and to the Australian Securities and Investments Commission in accordance with the regime provided for in order 2 of the Court's orders dated 22 December 2023. 6. The plaintiffs and any person who can demonstrate a sufficient interest (including any creditor of the third plaintiff) have liberty to apply on two (2) business days' notice being given to the plaintiffs and the Court to modify or discharge any orders made pursuant to orders 1 to 4 above. 7. The plaintiffs' costs of, or incidental to, this application be costs in the administration of the third plaintiff.
Joinder 8. The following persons are joined as respondents to these proceedings: (a) Friedrich Georg Bolten and Andrea Marie Bolten as trustees for the Pioneer Farms Trust as the first respondent; (b) Friedrich Georg Bolten as the second respondent; (c) Margret Liselotte Conley and Airport Family Investments Pty Ltd as the third respondent; and (d) Chris and Amanda Howie as the fourth respondent.
Interlocutory application filed 15 January 2024 9. The hearing of the interlocutory application filed 15 January 2024 by the respondents be adjourned to a date not before Tuesday, 13 February 2024. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
BANKS-SMITH: 1 On 20 December 2023 the first and second plaintiffs (Administrators) were appointed as the joint and several administrators of the third plaintiff, Quintis Leasing Pty Ltd. Quintis Leasing is a member of a group of companies referred to as the Quintis Group. Quintis Leasing is the only entity in the Quintis Group to which administrators have been appointed. 2 Relevantly, various companies within the Quintis Group are involved in managed investment schemes that operate within the sandalwood plantation industry. Sandalwood Properties Limited (SPL) is the responsible entity of a number of managed investment schemes. Quintis Forestry is the forestry manager for such schemes. Quintis Leasing is the lessee of land upon which the sandalwood plantations have been established. The lessors of the land include SPL and a number of third-party lessors. The land leased by Quintis Leasing from the lessors is sub-leased relevantly to investors (who are known as growers) under lease and management agreements. Growers have a proportional interest in the managed investment schemes. 3 Unsurprisingly, the administration of Quintis Leasing has a flow-on effect, not just for the lessors, but also for sub-lessors, growers and potentially the schemes as a whole. 4 Under s 443B of the Corporations Act 2001 (Cth) if the company remains in possession of property then its Administrators would ordinarily have a five-business day grace period before becoming personally liable for rent (or other amounts) payable to a lessor under a lease. 5 However, there is capacity for the five-business day period to be extended by Court order, in effect providing an administrator with a greater time period in which to consider options relating to the lease that may be in the interests of creditors, before becoming personally liable for rent. 6 In this case, almost immediately upon their appointment, the Administrators applied to this Court under s 443B for an order excusing them from personal liability for rent for an extended period, being until 30 January 2024. 7 On 22 December 2023, Feutrill J granted the Administrators the relief they sought (on an ex parte application), and relisted this proceeding on the expiry date of 30 January 2024 for the purpose of any application for further relief: Tucker, in the matter of Quintis Leasing Pty Ltd [2023] FCA 1673 (Quintis (No 1)). 8 After that hearing, further applications were brought, by both the Administrators and certain third-party lessors. 9 These new applications came before me on 30 January 2024 and having regard to the time restrictions in place, I made orders on that date, and indicated that I would publish reasons as soon as practicable after making those orders. 10 The third-party lessors sought to intervene or be joined in the proceedings. They sought to pursue their own relief under s 440B of the Corporations Act, to the effect that they could take possession of the leased properties, and also opposed the fresh applications brought by the Administrator. The Administrators opposed the s 440B application. 11 Having regard to their opposition to the Administrators' application under s 443B, it was appropriate that those lessors be joined in this proceeding as the first to fourth respondents respectively. I made an order to that effect.
The applications 12 In summary, these reasons address three applications: (a) an application by the Administrators for an order under s 447A(1) of the Corporations Act further extending the five-business day period under s 443B to a period ending on 13 February 2024; (b) an application by the Administrators to extend the date for convening the second meeting of creditors until 13 February 2024, and other ancillary relief; and (c) an application by the respondents under s 440B for leave to permit them to exercise any property rights under the respective leases, including the right to recover possession. 13 The evidence and arguments relied upon by the Administrators and the respondents were relevant to each of the applications. 14 Although I will touch on specific information below, it is not necessary to set out in detail the background, corporate structure or role of the various entities within the Quintis Group, because Feutrill J has undertaken that task in his reasons. These reasons are to be read against the backdrop of his Honour's reasons.
Application relating to s 443B 15 Section 443A(1) of the Corporations Act provides in effect that the administrator of a company under administration is liable for debts they incur in the performance of their functions, for services rendered, goods bought, property hired or leased, the repayment of money borrowed and interest and borrowing costs. 16 Section 443D of the Corporations Act provides administrators with a statutory indemnity out of the property of the company (other than certain retention of title property that is not relevant for present purposes) for, among other things, debts for which the administrator is liable under Subdivision A (which includes s 443A). 17 However, s 443B of the Corporations Act provides a grace period with respect to certain pre-existing agreements (such as leases) before an administrator becomes personally liable for amounts such as rent. The statutory duration of the grace period is five-business days. That period may be extended by court order. 18 For ease of reference, I include the relevant parts of s 443B: Payments for property used or occupied by, or in the possession of, the company Scope (1) This section applies if, under an agreement made before the administration of a company began, the company continues to use or occupy, or to be in possession of, property of which someone else is the owner or lessor, including property consisting of goods that is subject to a lease that gives rise to a PPSA security interest in the goods. General rule (2) Subject to this section, the administrator is liable for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period: (a) that begins more than 5 business days after the administration began; and (b) throughout which: (i) the company continues to use or occupy, or to be in possession of, the property; and (ii) the administration continues. (3) Within 5 business days after the beginning of the administration, the administrator may give to the owner or lessor a notice that: (a) specifies the property; and (b) states that the company does not propose to exercise rights in relation to the property; and (c) if the administrator: (i) knows the location of the property; or (ii) could, by the exercise of reasonable diligence, know the location of the property; specifies the location of the property. … (8) Subsection (2) does not apply in so far as a court, by order, excuses the administrator from liability, but an order does not affect a liability of the company. … 19 Section 447A provides a source of power for the Court to vary the operation of s 443B by extending the time period referred to in s 443B(2) and s 443B(3) of the Corporations Act. 20 The principles were summarised by Feutrill J in Quintis (No 1) at [20]-[27] and I respectfully adopt his Honour's summary. I add that I considered and applied the principles in Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) [2022] FCA 1506 at [7]-[14]. 21 In short, it is not uncommon where there is a degree of complexity in an administration for the time period to be extended so that an administrator may undertake further inquiries that are considered in the interests of creditors, having regard to the objects of Part 5.3A of the Corporations Act. 22 In Quintis (No 1), Feutrill J considered that it was appropriate to extend the grace period until 30 January 2024, because it was appropriate for the Administrators to have additional time to understand the nature of Quintis's leasing business, its interaction and role in relation to the managed investment schemes, and to assess and make rational decisions about the assets, including the leases (at [28]-[29]). 23 There is no reason that a further extension cannot be granted in appropriate circumstances. I take into account that Feutrill J indicated that it might take some persuasion for the Court to grant a further extension in the circumstances disclosed at the time. 24 However, I was satisfied on the evidence before me that this was a case where a further short extension was in the interests of creditors.
Matters relied upon in support of further extension under s 443B(2) and (3) 25 The Administrators refer to the central importance to the managed investment schemes of both the head leases, under which Quintis Leasing leases the land on which sandalwood trees are planted from SPL or third party landowners, and the lease and management agreements, under which Quintis Leasing sub-leases the lots to growers. 26 The future of the managed investment schemes is presently uncertain. SPL has commenced applications to wind up the managed investment schemes in the Supreme Court of Western Australia on the basis that the schemes are no longer financially viable. The applications were listed for directions before Hill J on 31 January 2024. 27 However, in the interim, the Administrators are of the view that it is in the interests of creditors of Quintis Leasing to guard against precipitous action relating to the Quintis Leasing agreements that might prejudice the managed investment schemes or any sale or recapitalisation in that regard. 28 According to Mr Tucker, the Administrators have not ruled out the possibility of a sale or recapitalisation proposal being made in respect of Quintis Leasing. Given the nature and complexity of the Quintis Group's business and Quintis Leasing's integral role within that business, the Administrators believe that any such proposal is likely to involve some or all of the managed investment schemes and some or all of the entities within the Quintis Group. They consider there is little prospect of a proposal being made with respect to Quintis Leasing alone. 29 Consistent with their view, the Administrators point to a confidential preliminary inquiry they have received about a potential proposal for some of the managed investment schemes. 30 The Administrators consider that the prospect of a sale or recapitalisation proposal being made in respect of some or all of the schemes may be assessed with greater clarity after the winding up directions hearing on 31 January 2024. It might become apparent at that hearing whether growers support or oppose the winding up of the schemes, or might wish to put forward a proposal that enhances the prospect of a sale or recapitalisation that requires retention in some form of the leasehold interests of Quintis Leasing. 31 The Administrators contend that a further short extension of the grace period under s 443B would have a number of benefits. 32 First, it will enable the Administrators to await the outcome of the winding up directions hearing and consider options, whilst leaving the door ajar to consider any proposal during that period. 33 Second, it will defer the need for the Administrators to otherwise immediately issue notices under s 443B(3) to owners and lessors stating that they do not propose to exercise rights in relation to the leased premise. I accept that based on current information the Administrators would inevitably issue such notices. It is inappropriate to expect the Administrators to become personally liable for rent under the leases when there is currently little clarity around the value of their right of indemnity from company assets. 34 Third, it protects the leases for an interim period. If notices are issued, then it is likely that the lessors would move to terminate the leases, so removing for practical purposes an essential element of the managed investment schemes and potentially prejudicing the prospect of a sale or recapitalisation of the schemes. Retention of the leases during this short period is likely to enhance the prospect of any proposal being received. Termination of the leases is likely to lead to the collapse of the schemes. The prospect of Quintis Leasing obtaining relief against forfeiture to revive terminated leases for the purpose of any sale or recapitalisation could not be said to be realistic where notices will have been issued under s 443B. 35 The respondents' submission in opposition to the relief sought by the Administrators emphasised what was said to be the 'fanciful' prospect that there would be any outcome other than a winding up of the schemes, having regard to an expert report obtained by SPL and prepared by KPMG, which, in summary, included an opinion that growers would be better off under an immediate winding up of the schemes. In particular, counsel for the respondent submitted that there was no scenario in any event that would require the leases to remain on foot, or that would require Quintis Leasing to be involved. It was submitted that the Administrators ought to have articulated the content of the report with creditors. 36 Further, the respondents submitted that there is no complexity with respect to the administration of Quintis Leasing that would justify any extension of the grace period or convening period (to which I will turn) - it is but one company and no other companies in the Quintis Group are in administration. It was submitted that the Administrators have placed inappropriate weight on the position of the creditors of the group as a whole, rather than focusing on Quintis Leasing.
Potential prejudice 37 The Administrators have also considered the potential prejudice to creditors of Quintis Leasing, including the lessors, if the extension of time is granted. In short, they contend that the lessors will be no worse off in terms of non-payment of rent. Because of Feutrill J's orders, the Administrators are not currently personally liable to pay rent. As already observed, if the extension of the grace period is refused, the Administrators would issue notices under s 443B(3). They would not assume ongoing personal liability for rent. 38 As to maintenance of the sandalwood trees in the interim period, there was evidence from Mr Richard Tucker (the first plaintiff) and from Mr Richard Henfrey about the steps being undertaken in that regard. 39 Mr Tucker deposed to there being difficulties in accessing the relevant plantation land in northern Australia because of the wet season. It was anticipated that it would be difficult to access and undertake work on the land until March 2024. However, Mr Tucker had asked SPL to confirm that it would continue to supervise and manage all commercial silviculture activities required to be carried out on the leased land in accordance with its existing contractual obligations during the period of the proposed extension. There was correspondence before the Court from SPL confirming that it would do so. Further, SPL confirmed that it would continue to manage each plantation during that period in accordance with its operational plan and practice of previous years. 40 Mr Henfrey is a director of SPL. He is the sole director and chief executive officer of Quintis Forestry. He is also the sole director of Quintis Leasing. I therefore accept that he is a person with general knowledge of the manner in which the plantations are managed and of the various contractual obligations of the different entities in the group. 41 Quintis Forestry is the forestry manager for each of the sandalwood plantations on which sandalwood trees are grown on land leased by Quintis Leasing. In response to the respondents' application under s 440B, Mr Henfrey sought information from Mr Luke Jones, the plantation manager for Quintis Forestry. On the basis of what he was told by Mr Jones, Mr Henfrey deposed as follows with respect to the relevant land owned by the respondents, referred to as Lots 1, 238 and 241 in their application (and referred to in the extracted evidence below as the 'Leased Land'): (a) Quintis Forestry, with the assistance of third party contractors, continued to perform its standard horticultural and silvicultural operations on plantations on which sandalwood trees have been planted, including the Leased Land (Plantations), up to the end of the most recent 'dry season' (which generally runs from mid-March to mid-December each year). These operations included maintaining inter-row and tail drains in order to allow water to freely drain from the Plantations; (b) following periods of heavy rainfall, water will usually be left standing on the plantations for a period of time; (c) there is limited practical ability to drain any water left standing on the Plantations during the course of the 'wet season' (which generally runs from mid-December to mid-March each year). Rather, any remaining water will naturally drain without further intervention and without detrimentally affecting the health of the sandalwood trees; (d) the activity described in subparagraphs (a) to (c) above has been consistently adopted by Quintis Forestry in its management of flood irrigated sandalwood plantations in Kununurra for approximately 20 years; (e) due to consistent rainfall over the last two weeks, it is not possible for any machinery to access the Plantations or any nearby access roads to conduct any maintenance operations on the Plantations; (f) approximately 80% of the Leased Land on Lots 238 and 241 was inspected on 25 January 2024. The result of that inspection is: (i) recent rainfall is draining well from the vast majority of the inspected land; (ii) there is no evidence of material standing water in Lot 238; (iii) there is limited evidence of standing water in Lot 241 (impacting approximately 10% to 15% of the rows of sandalwood trees in Lot 241); however, that water is naturally draining without further intervention and without detrimentally affecting the health of the sandalwood trees; (iv) generally, the water is draining well and standing water is not a significant issue in these plantations; and (g) until it is possible for vehicles and other machinery to access nearby access roads, there is no material action that could be taken, by Quintis Forestry or any other person, between the period from the date of this affidavit to 13 February 2024, to drain any water standing on the Leased Land. If an opportunity arises between the date of this affidavit and 13 February 2024, Quintis Forestry will conduct tail drain maintenance to the extent necessary, including to any minor blockages on the Leased Land (including Lots 238 and 241). In any event, there is no material risk to the health of the sandalwood trees planted on Lots 238 and 241 during the period between the date of this affidavit and 13 February 2024. 42 There was some potentially conflicting evidence of a general nature provided by the respondents in relation to the conditions on the lots. Ms Margrit Conley (on behalf of the third respondents) expressed concern that the sandalwood tree crops on Lot 1 may die or otherwise deteriorate if they are not irrigated or managed as required. Mr Friedrich Bolten (on behalf of the first and second respondents) deposed to inspecting parts of the land and seeing evidence of a drainage issue on at least some of the land. Mr Bolten gave evidence based on his experience as a landowner in the area as to potential side effects on the soil and sandalwood trees due to any failure to properly drain the land during the wet period. Mr Bolten said that if he were permitted to retake possession of the land, he '[would] be in a position to apply best practice to the Land'. This would include checking for blocked culverts and erosion events that might prevent water from flowing off the fields. Mr Bolten also said that some periods of full soil saturation are not unusual during the wet period and that at present it is difficult to access and do work on the land. I add that both Mr Henfrey and Mr Bolten provided photos of parts of the relevant lots in support of their evidence.
Stakeholder communications 43 By an affidavit of Mr Zachary Sharp, a solicitor at King & Wood Mallesons (the Administrators' solicitors), the Administrators disclosed a number of email communications they had received from various growers with respect to the applications. To be fair, some of the communications were addressed to the winding up proceedings in the Supreme Court, and some complain about the financial planning advice growers received prior to investing, rather than addressing the particular applications before me. In any event, it is apparent from the various communications that some growers oppose the winding up of the schemes and have asked the Administrators to look further at all information and consult with the lawyers for the 'Sandalwood Growers Association Co-Op'. At least one grower supported the extension on the basis that he and others he represented hoped that SPL might possibly be salvaged. Some of the communications from growers recorded objection to any further extension of the grace period and requested the Administrators to relinquish the leased land. Some support a winding up of the schemes. Some questioned whether new lease agreements could be entered into to ensure maintenance of the trees would continue. It is fair to say that there were mixed views revealed by the communications, but it was hardly the case that there was blanket opposition to the extension.
Consideration - s 443B 44 I considered it appropriate to exercise the power under s 447A in a manner that in effect granted the Administrators a further extension of the grace period the subject of s 443B(2) and (3). I have taken into account the interests of the creditors of Quintis Leasing and the objects of the administration regime. 45 In particular, whilst I accept that I am dealing with the affairs of only one company, it would be artificial to view the interests of its creditors divorced from its role within the managed investment schemes and its interrelationship with other entities in the Quintis Group. 46 As explained by Mr Tucker: Therefore, the Company's activities are inherently intertwined with, and cannot easily be isolated from, those of Growers and other entities in the Quintis Group. Based on my experience, I believe that maintaining the existing structure of the Managed Investment Schemes is likely to be a more attractive proposition to interested parties (including Growers), such that any sale and/or recapitalisation proposal would likely involve some or all of the Managed Investments Schemes and some or all of the entities in the Quintis Group (including the Company). 47 I take into account that Quintis Leasing is apparently dependent on other entities for financial support and that the KPMG report suggests that it may be difficult for the growers to avoid a winding up of the schemes. However, the position of the schemes must play out in the Supreme Court and it was appropriate to at least await the first directions hearing in that matter. 48 The directions hearing provides a short-term identifiable opportunity for information to be provided to SPL and, in turn, to the Administrators about any potential scope for a sale or recapitalisation in the interests of the creditors of Quintis Leasing and the group as a whole. In my view, although the focus of this administration is the creditors of Quintis Leasing, their interests may well be enhanced by some arrangement that affects the managed investment schemes as a whole. There is no guarantee that any proposal will be forthcoming in the near future. There is no guarantee that any proposal will include or will impact Quintis Leasing. So much may be accepted. But in circumstances where the period of the extension is short, and there is no real prejudice to the creditors or the respondents from another short extension, then I would prefer to leave the door open to facilitate consideration of any proposal or prospect that might see the Quintis Leasing leases remain on foot. 49 I accept that on the information before me, absent this extension and the extension of the convening period, the leases would inevitably be terminated and Quintis Leasing would be wound up forthwith. 50 I have taken into account the matters raised by the respondents about management of their lots. I do not consider that a further two week extension presents any real risk of prejudice to them of a nature that would outweigh the potential benefit to creditors from the grant of the extension. Although it is the wet season and I accept that there may currently be some drainage issues, I give significant weight to the evidence of Mr Henfrey (even allowing for the hearsay nature of the evidence), including the report provided by the plantation manager to the effect that the land continues to be managed in accordance with the regime that has been in place during the wet season for some 20 years; that the sites have been visited; and that once access permits, drainage obstruction checks will be carried out. It is common ground that there are currently difficulties with access issues.
Application under s 439A(6) to extend convening period 51 Under the statutory regime, and having regard to their appointment in December 2023, the Administrators had 25 business days' from the commencement of the administration in which to convene the second meeting of the creditors of Quintis Leasing. That period has now expired. However, the Court may extend that period on application under s 439A(6). At the hearing, an extension was granted to 13 February 2024. 52 The Administrators relied on the same evidence and submissions in support of their application to extend the convening period as was relied on for the purpose of the s 443B application. 53 The principles to be applied on an extension application have been collected and applied on many occasions in this Court, including in Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 2) [2020] FCA 717 at [64] (Middleton J); and Algeri, in the matter of WBHO Australia Pty Ltd (Administrators Appointed) (No 2) [2022] FCA 234 at [16]-[17] (Beach J). I adopt below summaries that I have previously provided in Nipps (Administrator) v Remagen Lend ADA Pty Ltd, in the matter of Adaman Resources Pty Ltd (Administrators Appointed) (No 2) [2021] FCA 577 at [17]-[22]; Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 2) [2022] FCA 1563 at [7]-[14]; and more recently in Woodhouse (Administrator), in the matter of Panoramic Resources Limited [2024] FCA 22 at [17]-[23]. 54 When considering an application to extend the convening period, the Court must have regard to the objects of Part 5.3A set out in s 435A and reach an appropriate balance between the expectation that an administration will be undertaken in a relatively speedy and summary manner with the need to ensure that the administration is not concluded without consideration of sensible and constructive options directed towards maximising the returns for creditors and any return for shareholders: Diamond Press Australia Limited [2001] NSWSC 313 at [10] (Barrett J). 55 The administrator's view on such an application is significant and, particularly where the administration is complex, it should carry weight: In the matter of Renex Holdings (Dandenong) 1 Pty Ltd (administrators appointed) [2015] NSWSC 2002 at [9] (Black J). 56 In considering an application for an extension, the Court must take into account the detriment to third parties, including the suspension of rights and remedies of secured creditors, lessors, and others: Shaw and Albarran (Joint and Several Administrators of Home Art Building Group Pty Ltd (Administrators Appointed)) v Home Art Building Group Pty Ltd (Administrators Appointed) [2016] WASC 274 at [18] (Beech J). 57 The Court has recognised that 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 adequate information for the preparation of the administrator's report in a form enabling creditors to make an informed decision: In the matter of Harrisons Pharmacy Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) [2013] FCA 458 at [13] (Farrell J) and the cases there cited. 58 In In the matter of Riviera Group Pty Ltd (admins apptd) (recs & mgrs apptd) [2009] NSWSC 585 at [13], Austin J identified the following relevant categories of cases in which an extension had been granted: (a) where the extension will allow the sale of the business as a going concern; (b) where the size and scope of the business in administration is substantial; and (c) more generally, where additional time is likely to enhance the return for unsecured creditors. 59 In Mighty River International Limited v Hughes [2018] HCA 38; (2018) 265 CLR 480, Nettle and Gordon JJ (in dissent, but not relevantly in this respect) cited many of the authorities in the area and observed: [73] 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. (footnote omitted)
Work undertaken since appointment 60 Mr Tucker deposed to work undertaken in the course of the administration since his appointment. Such work included issuing circulars to creditors; commencing an investigation into the affairs of the company; reviewing the operations of the managed investment schemes and the leases; liaising with secured creditors, other creditors, growers and land owners; liaising with the Quintis Group in relation to funding, including funding of the administration; and preparing notices to creditors and investigating potential options to recapitalise and restructure the company. Many of those tasks are standard statutory tasks, but I accept that the role of the Administrators was made more complex by the involvement of Quintis Leasing in the managed investment schemes and the need to inform and respond to a number of stakeholders, including growers and lessors.
Secured creditors 61 Mr Tucker deposed to communications by his solicitors with the solicitors for the secured creditors, all of which indicated support for the application.
Consideration 62 In my view this is an example of an administration where the reasonably short extension of the convening period for the second meeting (two weeks) is clearly justified and appropriate, as explained in Mighty River International. In particular, the Administrators have explained that they seek the time period to fully explore whether there is a valid alternative to liquidation that may result in a better return to creditors. Mr Tucker stated that the potential benefit of the extension would outweigh any prejudice that the creditors might suffer as a result of the application, and it is appropriate to give considerable weight to his opinion. 63 Absent an extension the Administrators state that they would have inevitably recommended at the creditors' meeting that the company be placed in liquidation. 64 The affidavits provided by Mr Tucker provided the evidentiary case for the requested extension. There is no evidence of material prejudice to those affected by the extension, and I repeat the comments as to prejudice made above in the context of the s 443B application. 65 The purpose of the extension falls generally within the principles set out in Riviera Group, albeit that I accept that there is doubt about whether the prospect of any sale or recapitalisation will present itself in the available time. The extension period is relatively short. 66 For those reasons I was persuaded to grant the extension of the convening period.
Respondents' application 67 It follows from the above that had I proceeded to determine the respondents' application, it would have been dismissed. The relief sought would have conflicted with the relief granted under s 443B. However, the parties (including the Administrators) agreed that rather than dismissing the application, I should adjourn it for the time being. Once the position with respect to Quintus Leasing becomes clearer, and depending on other outcomes, it might be that it is re-listed.
Orders 68 There were orders accordingly, including relatively standard ancillary orders as to notice. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Banks-Smith.
Tucker (Administrator)
Bolten