FEDERAL COURT OF AUSTRALIA Vision (Brisbane) Pty Limited (ACN 106 860 664) (Liquidators Appointed) in the matter of Vision (Brisbane) Pty Limited (ACN 106 860 664) (Liquidators Appointed) (No 2) [2010] FCA 937 Citation: Vision (Brisbane) Pty Limited (ACN 106 860 664) (Liquidators Appointed) in the matter of Vision (Brisbane) Pty Limited (ACN 106 860 664) (Liquidators Appointed) (No 2) [2010] 937 Parties: CHRISTOPHER ROBERT CAMPBELL, JOHN LETHBRIDGE GREIG AND SIMON JOHN CATHRO AS LIQUIDATORS OF VISION (BRISBANE) PTY LIMITED ACN 106 860 664 (LIQUIDATORS APPOINTED) and VISION DEVELOPER (QLD) PTY LIMITED ACN 128 565 739 (LIQUIDATORS APPOINTED) File number(s): NSD 114 of 2010 Judge: EMMETT J Date of judgment: 23 July 2010 Legislation: Corporations Act 2001 (Cth) s 477(2B) Date of hearing: 23 July 2010 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 13 Solicitor for the Plaintiff: Blake Dawson IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 114 of 2010 IN THE MATTER OF VISION (BRISBANE) PTY LIMITED (ACN 106 860 664) (LIQUIDATORS APPOINTED) CHRISTOPHER ROBERT CAMPBELL, JOHN LETHBRIDGE GREIG AND SIMON JOHN CATHRO AS LIQUIDATORS OF VISION (BRISBANE) PTY LIMITED ACN 106 860 664 AND VISION DEVELOPER (QLD) PTY LIMITED ACN 128 565 739 First Plaintiff VISION (BRISBANE) PTY LIMITED ACN 106 860 664 (LIQUIDATORS APPOINTED) Second Plaintiff VISION DEVELOPER (QLD) PTY LIMITED ACN 128 565 739 (LIQUIDATORS APPOINTED) Third Plaintiff JUDGE: EMMETT J DATE OF ORDER: 23 JULY 2010 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Pursuant to s 447(2B) of the Corporations Act 2001 (Cth), that the following be approved, namely, the making by the First Plaintiffs, as liquidators of and on behalf of the second plaintiff, an agreement which is in or substantially to the effect of the form which is Exhibit CRC21 to the affidavit of Christopher Robert Campbell sworn on 22 July 2010. 2. The costs of this application be paid out of the assets of the second plaintiff. 3. The material in the Confidential Exhibits to the affidavit of Christopher Robert Campbell, sworn on 22 July 2010 be returned to the plaintiffs I make orders in terms of the draft order which I have initialled, dated with today's date. Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 114 of 2010 IN THE MATTER OF VISION (BRISBANE) PTY LIMITED (ACN 106 860 664) (LIQUIDATORS APPOINTED) CHRISTOPHER ROBERT CAMPBELL, JOHN LETHBRIDGE GREIG AND SIMON JOHN CATHRO AS LIQUIDATORS OF VISION (BRISBANE) PTY LIMITED ACN 106 860 664 AND VISION DEVELOPER (QLD) PTY LIMITED ACN 128 565 739 First Plaintiff VISION (BRISBANE) PTY LIMITED ACN 106 860 664 (LIQUIDATORS APPOINTED) Second Plaintiff VISION DEVELOPER (QLD) PTY LIMITED ACN 128 565 739 (LIQUIDATORS APPOINTED) Third Plaintiff JUDGE: EMMETT J DATE: 23 JULY 2010 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Mr John Greig, Mr Simon Cathro and Mr Christopher Campbell (the Liquidators) are the liquidators of Vision (Brisbane) Pty Limited (Vision (Brisbane)). The Liquidators have applied to the Court for an order under s 447(2B) of the Corporations Act 2001 (Cth) (the Act) approving entry by the Liquidators on behalf of Vision (Brisbane) into two agreements for sale. The Liquidators were originally appointed joint and several administrators of Vision (Brisbane) by a resolution of the board of directors of Vision (Brisbane) under s 436A(1) of the Act on 15 January 2010. On 9 February 2010, for reasons that I gave on that day, the Court extended the convening period for the second meeting of creditors of Vision (Brisbane), pursuant to s 439A(6) of the Act. 2 At the second meeting of the creditors of Vision (Brisbane) held on 21 May 2010, the Liquidators were appointed as liquidators, by resolution pursuant to s 439C of the Act. Some background to the administration of Vision (Brisbane) is set out in my reasons of 9 February 2010. The significant fact is that Vision (Brisbane) is the owner of real property situated in Mary Street, Brisbane. Vision (Brisbane) was incorporated to purchase and own the property. A related company, Vision Developer (Qld) Pty Limited (Vision Developer), was incorporated to exercise the rights to develop the property in accordance with development approval given by Brisbane City Council. 3 Vision Developer engaged Grocon Constructions (Qld) Pty Ltd (Grocon) as a building contractor to develop the property in accordance with the development approval. Grocon excavated the property and constructed concrete shoring walls and floor and inserted rock anchors. However, no further substantive work has been carried out and, currently, the property is an excavation site. The Liquidators presently have no funds available to carry out any work involved in the development of the property and hence no substantial work has taken place other than mere maintenance. 4 There are several fixed and floating charges over the property of Vision (Brisbane), which have been registered with the Australian Securities and Investments Commission. The combined liability secured by the charges exceeds $216 million. In addition, there are unsecured creditors whose debts exceed $52 million. Thus the total amount owing by Vision (Brisbane) to all creditors exceeds $268 million. A valuation of the property as at 30 June 2008 indicates that it has a value significantly less than the amount owing to the secured creditors. On 27 January 2010, the insurer of the property informed Vision (Brisbane) that the insurance policy would be cancelled, partly because the design life of the rock anchors installed in the property was about to expire. 5 Works that have been carried out at the property include the excavation and the shoring up of the excavation. The shoring up process comprised building concrete walls and a floor in the excavated area and inserting rock anchors through the concrete walls into the surrounding rock. Since their appointment as administrators, the Liquidators have maintained constant monitoring of the property, including consideration of the state of the rock anchors and general maintenance. Robert Bird Group prepared the shoring system and Grocon was retained to perform maintenance of the property. On several occasions since January 2010 the Liquidators have had discussions with representatives of Robert Bird Group and Grocon, who have informed the Liquidators that it is essential to commence a program of works to ensure the integrity of the excavation and the shoring system. 6 In early June 2010, the Liquidators retained AnchorMac Pty Ltd (AnchorMac) to carry out site maintenance. AnchorMac inserted the rock anchors that are presently located in the walls of the property. The Liquidators have recently received a copy of a report from Robert Bird Group to AnchorMac concerning the state of the anchors. That report indicates that over 50% of the temporary anchors and rock bolts have exceeded their specified design life of two years. Further anchors and rock bolts will have exceeded their specified design life by the end of July. As I have said, the Liquidators have no funds to carry out any further work in the development of the property. They therefore regard it as essential to sell the property. 7 To that end they engaged Colliers International (Colliers) and Capland Real Estate Advisors (Capland) as joint selling agents. Colliers and Capland conducted a sales campaign designed to target prospective purchasers both in Australia and in the Asia region. A number of proposed purchasers of the property have been identified in the course of the administration and the liquidation. The best current price proposed is an offer made by a party with whom the Liquidators wish to enter into two contracts. The proposed purchaser has executed and provided to the Liquidators a copy of a proposed contract for the sale of the land and a copy of a contract for the sale of non-real property assets. 8 The price is significantly less than the value of the property shown in the valuation as at June 2008. The prospective purchaser has provided a cheque for the proposed deposit. The Liquidators have not yet banked the cheque and will not do so until the determination of this application for approval under s 477(2B). The Liquidators will not sign copies of either the contract for sale of land or the asset sale agreement unless and until such approval is given. The two proposed agreements are interdependent, in that the completion of each will be conditional upon the completion of the other. The Liquidators have formed the view that there is an urgent need for funds to be spent on maintaining the integrity of the excavation, including the making of a decision whether to replace some or all of the rock anchors, carry out some other form of stabilisation works or complete the building of a car park on the site which would help to stabilise the site. 9 The Liquidators have taken into account the warning given by Grocon and Robert Bird Group that it is necessary for a program of such works to be undertaken to ensure the integrity of the site. The advice received by the Liquidators is that, in extreme circumstances, there would be dire risks to the integrity of the site if one of the suggested steps is not undertaken in the reasonably near future. The Liquidators are satisfied that there is an urgent need for funds to be spent on maintaining the integrity of the excavation, but have no funds available to them to carry out that work. They are of the view that it is in the best interests of the creditors and others having an interest in Vision (Brisbane) to enter into agreements to sell the property, so that at least some funds can be realised, thereby enabling the purchaser to undertake any further work that may be necessary. 10 The proposed contract involves deferred payment of the total purchase price. It is intended that there will be a payment of a deposit on exchange of contracts. On completion there will be a further substantial payment. Completion is to take place at the earlier of 21 days after completion of another transaction in which the purchaser is engaged and four months after the execution of the proposed contract. The balance of the purchase price is to be paid subsequently dependent upon when completion takes place. If completion takes place at an earlier time the balance of the purchase price will be payable at a later date, thus there is an inducement for an earlier completion. Further, if the balance of the purchase price is paid earlier than the due date there is to be a discount factor for the payment. The outstanding payment is to be secured by an unconditional irrevocable bank guarantee. 11 It is clear from that brief description of the payment structure that it is possible that the obligations under the proposed contract may be performed and discharged more than three months after the agreement is entered into. Section 477(2B) of the Act prohibits a liquidator from entering into an agreement on a company's behalf if obligations of a party to the agreement may be discharged by performance more than three months after the agreement is entered into, unless the agreement is entered into with the approval of the Court or of a committee of inspection or a resolution of the creditors. 12 The Liquidators have chosen the first course and have applied to the Court for approval of the proposed agreements. The circumstances in which the Liquidators find themselves are such that it is clearly desirable to realise whatever funds are available from the sale of the property. The Liquidators are satisfied that they have entered into a reasonable sales campaign and that the best price presently offered is the best price that they are presently likely to be able to realise. Having regard to the urgency of the work that needs to be carried out they consider that it is in the creditors' interests that the funds presently offered be available for creditors. In all of the circumstances I am satisfied that it is appropriate to give approval for the Liquidators to enter into the proposed agreement. 13 Since the agreements have not yet been entered into, their terms and other material relating to the property are commercially sensitive. Accordingly, I will direct that the material contained in the confidential Exhibits be returned to the Liquidators. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 30 August 2010