Rexel Electrical Supplies Pty Limited v Mentha (Administrator) in the matter of ACN 004 410 833 Limited (formerly Arrium Limited) [2018] FCAFC 229

FEDERAL COURT OF AUSTRALIA

Rexel Electrical Supplies Pty Limited v Mentha (Administrator) in the matter of ACN 004 410 833 Limited (formerly Arrium Limited) [2018] FCAFC 229 Appeal from: Mentha v Epic Energy South Australia Pty Ltd, in the matter of ACN 004 410 833 Limited (formerly Arrium Limited) [2017] FCA 1530

File number: VID 1412 of 2017

Judges: MIDDLETON, YATES AND O'CALLAGHAN JJ

Date of judgment: 20 December 2018

Catchwords: BANKRUPTCY AND INSOLVENCY – proofs of debt; where companies subject to deeds of company arrangement owe amounts to various lenders; where debts are unsecured; where debts are guaranteed by solvent companies in the same corporate group; where the solvent companies are sold and the proceeds distributed to the lenders pursuant to contractual arrangements; where sale proceeds insufficient to discharge the amounts owing in full; where proofs of debt are lodged by the lenders for the full amount owing to each of them without deduction for the amounts received by them from the sale of the guarantor companies; where other unsecured creditors object to the deed administrators admitting the proofs of debt without making that deduction – whether deed administrators are contractually bound to admit proofs of debt lodged by the lenders for the total amounts owing to them without deduction for the sale proceeds received by them. CONTRACTS – contract construction; recourse to background and surrounding circumstances – whether construction needed to avoid commercial nonsense or working commercial inconvenience.

Legislation: Corporations Act 2001 (Cth) s 444D Insolvency Practice Schedule (Corporations), being Sch 2 to the Corporations Act 2001 (Cth) s 90-15(1)

Cases cited: Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104 Westpac Banking Corporation v Gollin & Co Ltd (in liq) [1988] VR 397