Sherman v Companies in Schedule One [2000] NSWSC 667

Reported Decision : (2000) 34 ACSR 619

New South Wales Supreme Court

CITATION : Sherman v Companies in Schedule One [2000] NSWSC 667 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 3073 of 2000 HEARING DATE(S) : 5 and 6 July 2000 JUDGMENT DATE : 6 July 2000

Steven John Sherman and Ian Douglas Ferrier (Plaintiffs) PARTIES : Companies Listed in Schedule 1 (First Defendants) Australia and New Zealand Banking Group Limited (Second Defendants) JUDGMENT OF : Windeyer J at 1

Mr P. Wood (Plaintiffs) COUNSEL : No Appearance (First Defendants) Mr J Thomson with him Mr N. Newton (Second Defendant) Mr L.M. Powers (for certain noteholders) Henry Davis York (Plaintiffs) SOLICITORS : No Appearance (First Defendants) Blake Dawson Waldron (Second Defendant) Minter Ellison (for certain noteholders) CATCHWORDS : CORPORATIONS - voluntary administration - statutory time limit for convening of meeting not complied with - whether to extend convening period - s437A Corporations Law LEGISLATION CITED : Corporations Law s447A, s447A(1) s1132(4)(d) CASES CITED : Australasian Memory Pty Limited v Brien [2000] HCA 30 DECISION : See paragraph 8

3 IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WINDEYER J

THURSDAY 6 JULY 2000

3073/00 SHERMAN & FERRIER v COMPANIES LISTED IN SCHEDULE 1 & ANOR

JUDGMENT

1 HIS HONOUR: In this matter the plaintiffs, who were appointed as administrators of the first defendant companies, seek orders extending the time for the convening of the second meeting of creditors and extending the date on which that second meeting is to be held. 2 The difficulties arise, first because an order was made by Brownie AJ extending the convening period until 28 June 2000. By error, the plaintiffs, through one of their employees, considered that the date had been extended until 29 June, but in any event that would not have solved the problem because the notice of meeting was not published until 30 June. There was an additional problem because 10 July, being the meeting date, is not a date within the five business days of the expiration of the convening period. 3 The plaintiffs seek to have both those problems resolved by orders under section 447A(1) and/or section 1132(4)(d) of the Corporations Law. It has now been determined by the High Court of Australia in Australasian Memory Pty Limited v Brien [2000] HCA 30 that in appropriate circumstances the power exists. As I understand that decision, it relates to the power under section 447A of the Corporations Law, and as I intend to make an order I intend to make it under that section. 4 On the evidence before the court it is put that it is desirable that the administration continue because from the report of the administrators to creditors it is apparent the recommendation will be that a deed of company arrangement be entered into rather than the companies be placed into liquidation. That is because if they were placed into liquidation it seems unlikely that the priority creditors would obtain anything, and the general creditors, it seems, are certain to receive no dividend. If a scheme can be satisfactorily conducted then there is a possibility that there might be some return. 5 In view of the short period of time which has elapsed it could not be thought that any interested person could have been affected by the fact that it would appear as a matter of law that the administration has technically come to an end. 6 The second defendant bank has sought that a condition be imposed in its favour to preserve any rights relating to the affairs of the first defendant companies between 28 June and today which would otherwise be affected by the orders which are sought. I do not think it appropriate to make such an order. It is not possible to know at this stage what effect it might have, but there is at least a risk that by making such an order the bank would be given some preferential position above other creditors which it would not otherwise be entitled. 7 It is, I think, appropriate that the matter be left in the hands of the creditors who can either decide to place the company into liquidation or decide to support a scheme. I think it is necessary to say, as I have said at least on two occasions, which I hasten to add did not relate to the present plaintiffs, that persons who put themselves forward as being experts in the field and are paid accordingly are expected to be able to understand the extraordinarily complicated provisions of the Corporations Law and give effect to them according to their terms. 8 I make orders in accordance with the document initialled by me and dated today. In addition I make the following order 4, that the plaintiffs not make any charge against the first defendant companies in respect of these proceedings. The exhibits can be returned.