Re Bosnjak Holdings Pty Ltd & Ors [2005] NSWSC 527

Reported Decision : (2005) 23 ACLC 1285

New South Wales Supreme Court

CITATION : Re Bosnjak Holdings Pty Ltd & Ors [2005] NSWSC 527

HEARING DATE(S) : 20/05/05

JUDGMENT DATE : 1 June 2005

Equity Division JURISDICTION : Corporations List

JUDGMENT OF : Young CJ in Eq

DECISION : Application allowed; meeting of creditors adjourned for a further 60 days.

CATCHWORDS : CORPORATIONS [180]- Voluntary administration- Meeting of creditors- Whether appropriate to further adjourn meeting that has already commenced- Meeting must be informed of possibility that application for extension will be made- Adjournment extended by further 60 days.

Corporations Act 2001 (Cth), ss 439B, 447A, 1337H LEGISLATION CITED : Corporations Regulations 2001 (Cth) regs 5.6.18(1), 5.6.18(3)

Cawthorn v Keira Constructions Pty Ltd (1994) 13 ACSR 337 CASES CITED : Re Double V Marketing Pty Ltd (1995) 16 ACSR 498 Re Taylor (1995) 16 ACSR 498

PARTIES : David John Frank Lombe and Peter George Yates (Administrators/Applicants)

FILE NUMBER(S) : SC 1563/05

COUNSEL : B A Coles QC (Administrators/Applicants)

SOLICITORS : Blake Dawson Waldron (Administrators/Applicants)

LOWER COURT JURISDICTION :

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

YOUNG CJ in EQ

Wednesday 1 June 2005

1563/ 05 – RE BOSNJAK HOLDINGS PTY LTD & ORS JUDGMENT 1 HIS HONOUR: The applicants are the administrators of a group of companies, of which the lead company is Bosnjak Holdings Pty Ltd. Under s 447A of the Corporations Act 2001 (Cth) they sought an order that the meeting of creditors that was commenced on 8 April 2005 be adjourned for a further 60 days after the present maximum period permitted by the Act. 2 The application is so clearly appropriate on the merits that on Friday 20 May 2005 I granted the order and indicated that I would give reasons on the two points that troubled me in due course. 3 The first point that troubled me was whether it was appropriate for the Court to further adjourn a meeting which had already commenced. 4 Although s 447A of the Corporations Act confers very wide powers on the Court; see eg Cawthorn v Keira Constructions Pty Ltd (1994) 13 ACSR 337, the Act also goes to considerable pains to ensure that in the working out of an administration of a company, various classes of interested parties have the right to play their part and protect their interests. 5 At common law, once a meeting has been commenced, the power of decision to adjourn lies with the meeting itself, that is, a majority of those present are able to pass a resolution to adjourn or to defeat a motion to adjourn; see Horsley's Meetings 4th ed (Butterworths, Sydney, 1998) [13.5]. This, of course, is subject to the constitution of the organisation and applicable statute law. The Court has no part to play once a meeting has been commenced unless it is given specific authority or in an administration, if s 447A is wide enough to cover the situation. 6 The Corporations Regulations 2001 (Cth) in 5.6.18(1) empower the chairperson of the meeting to adjourn the meeting: (a) if so directed by the meeting; or (b) with the consent of the meeting. There is no other power to adjourn a meeting. The Court is mentioned in sub-regulation (3) as having authority to change the place of the original meeting, but that is all. 7 In the instant case, the meeting resolved that the meeting was to be adjourned for the maximum period of 60 days allowed in accordance with s 439B of the Corporations Act. The documents show that the chairperson declared the meeting closed, but that was obviously a slip of the tongue. 8 Accordingly, we have the situation where the meeting resolved that it be adjourned for the period allowed by s 439B and now the administrators seek to extend that by 60 days. 9 Mr Coles QC, who appeared for the administrators, helpfully provided me with a number of cases on extensions of time for meetings of companies under administration. None of these, however, was a case where a meeting was further adjourned by the Court for a period after it had been begun. However, cases such as Re Taylor (1995) 16 ACSR 774 and Re Double V Marketing Pty Ltd (1995) 16 ACSR 498, show that if an extension is sought, a further 60 days from the 60 days set out in the statute is the maximum which should ordinarily be allowed. 10 Despite some initial doubts, Mr Coles has convinced me that the power in s 447A is wide enough to authorise the order which the administrators seek. 11 The next question is whether in this case it ought to be made. 12 In my view, if this sort of order is contemplated then it should be fairly put to the meeting of creditors that it is a distinct possibility that the Court will be asked for further time. That is why I called for evidence that the meeting was so informed. 13 The evidence was then tendered which showed that the thought was included in the administrators' report (though not very prominently), but more importantly, the administrator who was chairing the meeting said to the meeting, "I would also note that it may be necessary for us to go to court to seek an increase to the adjournment period pursuant to s 447A of the Act, and as I said, this would require an application to court. The reason that we would need to make a further application to court is that the Corporations Act allows up to 60 days, but because of the size and complexity of the group, it may be that we require further time." No creditor at the meeting asked any questions about this. Subsequently to the meeting the major creditors have indicated their concurrence in the extension. Accordingly I made it. 14 The other matter of concern was that this Court has been involved in the administration previously when it extended the convening period. However, between that application and the present there was an application to the Federal Court to approve the administrators' remuneration and it would seem that such application is still stood over part-head in the Federal Court, doubtless so that the administrators can continue to claim remuneration for current periods. 15 The Corporations Act gives concurrent jurisdiction to a series of courts. However, both in liquidations and administrations it is good practice that all proceedings in the liquidation or the administration be in the one court. In liquidations particularly, the theory is that the liquidator performs his or her functions as an officer of the Court and so ultimately it is the Court which is responsible for the fair administration of the winding up. Where various interlocutory processes are spread amongst different courts, it is not only impossible for one court to keep superintendence on the liquidation, it is also difficult for creditors and members of the public to be able to trace through what has happened even though the major milestones are recorded by ASIC. 16 There may be very good reasons in some cases for not filing all interlocutory processes in the one court. One situation may be where the company has been wound up in State A by a creditor resident in State A, but all its business and directors have functioned in State B and there is an interlocutory process to examine the directors or other persons, all of whom are resident in State B. The spirit of s 1337H of the Corporations Act almost mandates this. However, unless there is some good reason, it is more appropriate to keep everything in the one court. The same applies to administrations, though because they do not last as long, the problem is not as acute. 17 Finally, I should note that although, by chance, this present matter was able to be heard in the Friday Corporations List, that list is usually completely filled with special fixtures expected to fill the Judge's whole day. This type of application should be made to the Monday Corporations Judge or, if urgent, to the Duty Judge and not to the Judge taking the Friday Corporations List.