Re Regis Towers Real Estate [2004] NSWSC 1251

New South Wales Supreme Court

CITATION : Re Regis Towers Real Estate [2004] NSWSC 1251 HEARING DATE(S) : 14 December 2004 JUDGMENT DATE : 14 December 2004 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Committee of creditors entitled to approve fees if approved by a majority in value and majority in number, and after adequate notice of amount and basis of fees

CATCHWORDS : CORPORATIONS - voluntary administration - fees of administrator accruing during lengthy adjournment of second meeting of creditors - terms on which order to be made under section 447A Corporations Act 2001 (Cth) permitting committee of creditors to approve payment of fees LEGISLATION CITED : Corporations Act 2001 (Cth) CASES CITED : Re Ansett Australia Ltd v Mentha (2002) 40 ACSR 409 AFG Insurances Ltd [2002] NSWSC 845 PARTIES : Regis Towers Real Estate Pty Limited (Administrator Appointed) - Plaintiff FILE NUMBER(S) : SC 6578/04 COUNSEL : GM Colman - Plaintiff SOLICITORS : Coudert Brothers - Plaintiff

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

CAMPBELL J

TUESDAY 14 DECEMBER 2004

6578/04 REGIS TOWERS REAL ESTATE PTY LIMITED (ADMINISTRATOR APPOINTED) JUDGMENT – Ex Tempore 1 HIS HONOUR: This is an application made under section 447A of the Corporations Act 2001 (Cth). The applicant is an accountant who is the voluntary administrator of Regis Towers Real Estate Pty Limited. He was appointed on 17 September 2004. 2 The first meeting of creditors was held on 24 September 2004. It appointed a committee of creditors, comprising 7 members. The debts claimed by those 7 members are $1,225,000, $19,873.00, $1,250,000, $1,250,000, $30,611.53, $355,000 and $106,000. The combined debt of the entities represented on the committee of creditors is a little over $4.2 million, which represents approximately 69 percent of the overall debts of the company. 3 At a second meeting of creditors, held on 14 October 2003, the creditors passed a resolution approving the remuneration of the administrator for a period from 17 September 2004 to 14 October 2004. A resolution was also passed that that meeting be adjourned for 60 days. 4 A meeting of the committee of creditors was held on 29 November 2004, at which the administrator informed the creditors on the committee of his intention to make an application to the Court requesting an extension of the time by which the second meeting of creditors should be concluded and that he be authorised to draw fees to the end of January 2005 for his remuneration up to $50,000. 5 The administrator began proceedings, which resulted in his Honour, Justice Palmer, making orders on 3 December 2004, granting an extension of the time in which to conclude the second meeting to 31 March 2005. For some reason, the application relating to the administrator's fees which had been foreshadowed to the committee of creditors was not made. 6 The administrator's present estimate of the fees likely to be incurred over the period from 14 October 2004 to 31 March 2005 is a touch less than $155,000. 7 The order the administrator seeks is, in effect, that the he be entitled to be paid such fees as the committee of creditors approves. 8 Ordinarily, in accordance with section 449E Corporations Act 2001 (Cth), the administrator's fees would be approved by the second meeting of creditors. When the second meeting of creditors is three and a half months off, he does not wish to have his fee position unclear for so long. 9 In AFG Insurances Ltd [2002] NSWSC 845 Barrett J made an order in circumstances somewhat similar to this, following the decision of the Federal Court in Re Ansett Australia Ltd v Mentha (2002) 40 ACSR 409, entitling the administrator to receive such remuneration as was approved by the committee of creditors, after the committee members had received adequate notice of the administrator's proposal, and of the basis of the proposal. 10 In the present case, the composition of the committee of creditors is such that the four smallest creditors could out-vote the other creditors, even though the debts owed to the four smallest creditors are nothing like as large as those owed to the other three. In those circumstances, I think it desirable to require such a resolution to be one passed by members of the committee representing a majority in number, and also a majority in value, of the creditors represented on that committee. In that way, if there is any significant dispute about the administrator's fees, that dispute will be able to be referred to the general body of creditors, and if a dispute remains the dispute can ultimately be decided by the Court. However, if there is no such dispute, the administrator will be able to receive prompt payment of his fees. I should say that there is nothing in the evidence which suggests anything other than that the committee in this administration should be one able to have proper regard to the interests of the general body of creditors. 11 I order, pursuant to section 447A of the Corporations Act 2001 (Cth), that Part 5.3A of the Act is to operate in relation to the plaintiff as if section 449E(1)(a) also provided that the administrator of the plaintiff is entitled to such remuneration as is approved by a resolution passed by a majority in value, and a majority in number, of those creditors of the plaintiff who are on the plaintiff's committee of creditors, passed after the members of that committee have received no less than 7 days prior written notice of the amount of remuneration claimed, together with details of the manner in which the amount claimed is comprised and calculated. 12 When the order made by Justice Palmer was taken out, it contained a clerical error, which stated the wrong number of the proceedings in which it was brought. If leave be needed to correct that error, I grant it. These orders may be entered forthwith. **********