University of Sydney v Australian Photonics Pty Ltd & Ors [2005] NSWSC 412

Reported Decision : 53 ACSR 579

New South Wales Supreme Court

CITATION : University of Sydney v Australian Photonics Pty Ltd & Ors [2005] NSWSC 412

HEARING DATE(S) : 8 April, 2005

JUDGMENT DATE : 8 April 2005

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

DECISION : Originating Process dismissed.

CATCHWORDS : CORPORATIONS - DEED OF COMPANY ARRANGEMENT - TERMINATION - Application for termination under s.445D(1)(e) and (f) - whether grounds made out - onus of proof - at what time does the Court consider characteristics of deed.

LEGISLATION CITED : Corporations Act 2001 (Cth) - s.445D(1), s.445D(2)

CASES CITED : JA Pty Ltd v Jonco Holdings Pty Ltd (2000) 33 ACSR 691

The University of Sydney - Plaintiff Australian Photonics Pty Ltd (subject to Deed of Co Arrangement) - First Defendant RCW Photonics Management Pty Ltd - Second Defendant

PARTIES : Putative Creditors (Appearance by leave granted by Palmer J on 08.04.05) University of New South Wales Australian National University University of Melbourne RMIT University

FILE NUMBER(S) : SC 1845/05

F. Gleeson - Plaintiff COUNSEL : C.R.C. Newlinds SC - First Defendant B.J. Coles QC, V. Whittaker - Second Defendant

Blake Dawson Waldron - Plaintiff Truman Hoyle - First Defendant SOLICITORS : Kemp Strang - Second Defendant PricewaterhouseCoopers - Putative Creditors

LOWER COURT JURISDICTION :

Ex tempore

Introduction

1 This is an application under s.445D(1) of the Corporations Act 2001 (Cth) whereunder the Plaintiff seeks an order terminating a Deed of Company Arrangement entered into between the First Defendant ("APPL") and the Second Defendant ("RCW"). Also party to the Deed is the administrator of APPL, Mr Palmer. Mr Palmer was appointed administrator of APPL on 15 November 2004. 2 A meeting of creditors of the company was held on 10 December 2004 and was adjourned. At the adjourned meeting of creditors, which was held on 8 February 2005, creditors considered two Deeds of Company Arrangement. One was proposed by the Plaintiff and the other was proposed by three entities which, for the sake of convenient reference, I will include within the description "CVC parties". 3 The Deed of Company Arrangement proposed by the CVC parties was amended at the meeting in accordance with variations proposed by Dr Koch, who was an employee of APPL and claims to be a creditor. A majority of creditors in both number and value voted against the Deed of Company Arrangement proposed by the Plaintiff and voted in favour of the Deed of Company Arrangement proposed by the CVC parties. The Deed was, therefore, executed by the parties to it on 1 March 2005. These proceedings were commenced on 9 March 2005. 4 The application by the Plaintiff is made on three of the grounds provided by s.445D(1), namely, that the Deed is oppressive or unfairly prejudicial to or unfairly discriminatory against unsecured creditors of APPL, including the Plaintiff (s.445D(1)(f)(i)), the Deed is contrary to the interests of creditors as a whole (s.445D(1)(f)(ii)), and effect cannot be given by the Deed without injustice or undue delay (s.445D(1)(e)). 5 Initially there was some debate as to whether the Plaintiff had standing as a creditor to make this application. However, the Plaintiff maintains that it has standing as an "interested person" , within the provisions of s.445D(2)(c). There are good reasons why, if possible, I should not endeavour to determine APPL's status as a creditor: there will, in due course, be a fully contested dispute about the debt. 6 Accordingly, it is sufficient that I proceed with the application on the basis that the Plaintiff and, so far as is relevant, the other institutions which support it, claim to be "interested persons" because they claim to be creditors of APPL in substantial amounts and the Deed deals with their claimed interests either in the fund established under the Deed or in the assets of APPL which would otherwise be available for distribution in a liquidation. At the end of the day I do not think that there was any opposition from Mr Coles QC, who appears with Ms Whittaker for RCW, as to the standing of the Plaintiff and of the others who support it, as "interested persons" .