Open Telecommunications Ltd (Subject to Deed of Company Arrangement) [2003] NSWSC 1198

New South Wales Supreme Court

CITATION : Open Telecommunications Ltd (Subject to Deed of Company Arrangement) [2003] NSWSC 1198 HEARING DATE(S) : 3 December 2003 JUDGMENT DATE : 3 December 2003 JURISDICTION: Equity JUDGMENT OF : Hamilton J DECISION : Directions given to DCA administrator.

CATCHWORDS : CORPORATIONS [176] - Voluntary administration - Jurisdiction and powers of court - General power to make orders - Application for directions - Principles on which discretion will be exercised. LEGISLATION CITED : Corporations Act 2001 (Cth) s 447D Derwinto Pty Ltd (in liq) v Lewis (2002) 42 ACSR 645 Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141 CASES CITED : Re Ansett Australia Ltd v Korda (2002) 115 FCR 409 Re Ansett Australia Ltd v Mentha (2002) 41 ACSR 605 Re Magik Australia Pty Ltd (in liq) (1992) 7 ACSR 742 PARTIES : Open Telecommunications Ltd (P) Peter George Yates (Administrator) FILE NUMBER(S) : SC 6086/03 COUNSEL : A P Ryan, Solicitor (P/Administrator) SOLICITORS : Blake Dawson Waldron (P/Administrator)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

HAMILTON J

WEDNESDAY, 3 DECEMBER 2003

6086/03 RE OPEN TELECOMMUNICATIONS LTD (subject to Deed of Company Arrangement) JUDGMENT 1 HIS HONOUR: In these proceedings a deed administrator applies for directions under s 447D of the Corporations Act 2001 (Cth) ("the CA"). The directions that he applies for are directions that he would be justified in executing and giving effect to a varied deed of company arrangement and a creditors' trust deed which are proposed. Section 447D(1) of the CA provides as follows: "The administrator of a company under administration, or of a deed of company arrangement, may apply to the Court for directions about a matter arising in connection with the performance or exercise of any of the administrator's functions and powers." 2 The principles on which this discretion will be exercised by the Court have been addressed in a number of cases. The discretion is a wide one. The deed administrator's right to apply for directions should be treated as analogous to a liquidator's right to apply for directions under s 479(3) of the CA; see the decision of Lindgren J in Editions Tom Thompson Pty Ltd v Pilley (1997) 77 FCR 141. The circumstances in which the discretion should be exercised were discussed at length by Goldberg J in Re Ansett Australia Ltd v Korda (2002) 115 FCR 409. After a lengthy review of the authorities his Honour said at [65]: "This review of the authorities satisfies me that the prevailing principle adopted by the courts, when asked by liquidators and administrators to give directions, is to refrain from doing so where the direction sought relates to the making and implementation of a business or commercial decision, either committed specifically to the liquidator or administrator or well within his or her discretion, in circumstances where there is no particular legal issue raised for consideration or attack on the propriety or reasonableness of the decision in respect of which the directions are sought. There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, the decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised. It is insufficient to attract an order giving directions that the liquidator or administrator has a feeling of apprehension or unease about the business decision made and wants reassurance. There must be some issue which arises in relation to the decision. A court should not give its imprimatur to a business decision simply to alleviate a liquidator's or administrator's unease. There must be an issue calling for the exercise of legal judgment. "