Parkes Leagues Club Co-op Limited (In Liq) [2004] NSWSC 16

New South Wales Supreme Court

CITATION : Parkes Leagues Club Co-op Limited (In Liq) [2004] NSWSC 16 HEARING DATE(S) : 23 January 2004 JUDGMENT DATE : 23 January 2004 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Leave granted to liquidator to appoint himself as voluntary administrator.

CATCHWORDS : CORPORATIONS [177] - Voluntary administration - Administrator - Appointment - By liquidator - Of liquidator himself - Relevant principles. LEGISLATION CITED : Co-Operatives Act 1992 s 332 Corporations Act 2001 (Cth) ss 436B(1) & (2), 436E(1), 436F, 439A & 447A Deputy Commissioner of Taxation v Foodcorp Pty Ltd (1994) 13 ACSR 796 CASES CITED : John R Turk & Sons (Artarmon) Pty Ltd v Newmont Television Pty Ltd [1999] NSWSC 622 Nardell Coal Corporation Pty Ltd (2003) 47 ACSR 122 Re Cobar Mines Pty Ltd (1998) 30 ACSR 125 PARTIES : Christopher Wykes (P) FILE NUMBER(S) : SC 1180/04 COUNSEL : A P Ryan, Solicitor (P) SOLICITORS : Blake Dawson Waldron (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

FRIDAY, 23 JANUARY 2004

1180/04 PARKES LEAGUES CLUB CO-OP LIMITED (In Liq) – APPLICATION OF CHRISTOPHER WYKES JUDGMENT 1 HIS HONOUR: This is an application made by the plaintiff under s 436B(2) of the Corporations Act 2001 (Cth) ("the CA") for the leave of the Court to appoint himself as an administrator of the company, as an administrator of Parkes Leagues Club Co-Op Limited. This entity is not a company but is a cooperative under the Co-Operatives Act 1992 and will be referred to as "the co-operative". However, by virtue of s 332 of the Co-Operatives Act a large number of provisions of the CA apply to co-operatives as if they were companies and those provisions include the various provisions of the CA adverted to in these reasons for judgment. 2 The travails of this co-operative are somewhat complex. Initially the plaintiff was appointed as its administrator and a proposal for a deed of company arrangement was brought forward. That proposal, however, did not proceed and the plaintiff became and is at the present time the liquidator of the co-operative. He has determined that he should appoint an administrator of the co-operative under s 436B(1) of the CA. That subsection provides for a liquidator by writing to appoint an administrator if he or she has certain views. The appointment is to be made by the liquidator in accordance with his or her views and is not something as to which the leave of the Court is necessary or the Court is required to form any view. The only relevant provision that requires leave is subs (2) which requires the Court's leave for the liquidator to be the person appointed by himself to be the administrator. 3 There is a deal of authority about the function of the Court to be exercised under this provision, including the decision of Hodgson J (as his Honour then was) in Deputy Commissioner of Taxation v Foodcorp Pty Ltd (1994) 13 ACSR 796; Re Cobar Mines Pty Ltd (1998) 30 ACSR 125, a decision of Bryson J; the decision of Austin J in John R Turk & Sons (Artarmon) Pty Ltd v Newmont Television Pty Ltd [1999] NSWSC 622; and the decision of Barrett J in Nardell Coal Corporation Pty Ltd (2003) 47 ACSR 122. 4 In short, as was pointed out by Hodgson J in Foodcorp at 799, the main question is simply whether the liquidator is an appropriate person to be an administrator or to be the administrator appointed in the circumstances which prevail. The reason for that appears from what has already been said, namely, that the decision whether or not to appoint an administrator is solely that of the liquidator, not that of the Court. See also Cobar at 126, Turk at [13], and Nardell at [8]. It is also for that reason that I do not have to go in any great detail into the proposal that is to be carried out and which the plaintiff as liquidator has determined should be implemented by the appointment of an administrator. Suffice it to say that the present offer is that the Jets Sports Club Limited ("Jets"), which conducts a club in Sydney, would provide some $950,000 for the benefit of the creditors of the cooperative. Thereafter the proposal is that the cooperative and Jets enter into an amalgamation under the provisions of the Registered Clubs Act 1976 and that a club continue operation in Parkes under the aegis of the amalgamated entity so created. The appointment by the liquidator of an administrator to implement this proposal has been approved by the committee of inspection in the liquidation of the cooperative and also by a resolution of a meeting of creditors of the cooperative. 5 Bryson J has stated in Cobar at 126 that the "test for leave is not a high one". What his Honour meant by that, I take it, is that, bearing in mind the desirability of continuity of those in charge of the management of the company and the implementation of the proposal, a liquidator who has commenced the process should generally be given leave to appoint himself as the administrator, unless there is some distinct reason why he should not be deemed a suitable person in the circumstances. Such a consideration might arise from doubts as to his independence, a suggestion that was considered but rejected by Barrett J in Nardell at [9] – [10]. There is no suggestion in the material laid before me in this matter that there is any reason from that point of view why Mr Wykes should not become the administrator, nor does any other reason appear from the material as to why it should not be himself that he appoints. In those circumstances I am prepared to grant leave under s 436B(2). 6 The plaintiff also asks for orders under s 447A of the CA to the effect that Part 5.3A of the CA should operate on the basis that the requirement under s 436E of the CA for an initial meeting of creditors be dispensed with; that the committee of inspection in the liquidation of the company should be for the purposes of s 436E(1) and 436F of the CA the members of the committee of creditors in the administration; that the administrator may use the proofs of debt of creditors received by him in the former administration and in the liquidation of the cooperative to establish the quantum of creditor claims in the new administration; and that, notwithstanding s 439A(2) of the CA, the meeting under section 439A may be commenced at the earliest convenient date rather than in the five day period immediately after the termination of the convening period. 7 As to the first three of these dispensations, they were made by Bryson J in Cobar at 127 on the basis that it would be inexpedient and wasteful for the steps already carried out to be repeated. The same considerations apply in this case and I propose to grant those dispensations. The last dispensation is asked for so that the new proposal may be brought before a meeting of creditors as soon as possible rather than left to a later time. This also seems desirable. Such a dispensation was granted by Barrett J in Nardell at [18]. A dispensation permitting an earlier holding of the meeting under s 447A has been granted in many other cases. I propose to grant that dispensation also.