Reported Decision : (2006) 24 ACLC 655 New South Wales Supreme Court CITATION : Re Priceright Construction Pty Limited [2006] NSWSC 324 HEARING DATE(S) : 21/04/06 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 04/21/2006 DECISION : Order under s.447A CATCHWORDS : CORPORATIONS - voluntary administration - second meeting of creditors - administrators wish to see meeting adjourned beyond sixty day deadline arising under s.439B(2) - whether s.447A may be used to extend deadline - whether such order may also deal with identical deadline arising under regulation 5.6.18(2) LEGISLATION CITED : Corporations Act 2001 (Cth), Part 5.3A, ss.439A, 439B, 447A Corporations Regulations 2001 (Cth), Reg. 5.6.18 Australasian Memory Ltd v Brien (2000) 200 CLR 270 Byng v London Life Association Ltd [1990] Ch 170 CASES CITED : Re Double v Marketing Pty Ltd (1995) 16 ACSR 498 Re Open Telecommunications Ltd; Ex parte Whitton [2002] NSWSC 930 Re Vouris; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (2003) 177 FLR 289 Selim v McGrath (2003) 177 FLR 85 PARTIES : Richard James Porter and David Ian Mansfield as joint administrators of Priceright Construction Pty Limited - Plaintiffs FILE NUMBER(S) : SC 2438/06 COUNSEL : Mr S. Cork, Solicitor - Plaintiffs SOLICITORS : Matthews Folbigg Pty Ltd - Plaintiffs IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J FRIDAY 21 APRIL 2006 2438/06 RICHARD JAMES PORTER and DAVID IAN MANSFIELD AS JOINT ADMINISTRATORS OF PRICERIGHT CONSTRUCTION PTY LTD (ADMINISTRATORS APPOINTED) JUDGMENT 1 The plaintiffs are the administrators under Part 5.3A of the Corporations Act 2001 (Cth) of Priceright Construction Pty Ltd. The second meeting of creditors called for by s.439A commenced on 3 March 2006. It was, on that occasion, adjourned to 12 April 2006 at which point there was a further adjournment to 1 May 2006. 2 The plaintiffs now seek an order under s.447A which will have the effect of allowing further adjournment to a day not later than 31 May 2006. That is later than the latest day allowed by s.439B(2). Section 439B is as follows:: " Conduct of meeting (1) At a meeting convened under section 439A, the administrator is to preside. (2) A meeting convened under section 439A may be adjourned from time to time, but cannot be adjourned to a day that is more than 60 days after the first day on which the meeting was held, even if no resolution under section 439C has been passed at the meeting." 3 The affidavit evidence refers to a deed of company arrangement proposal which is in the course of being formulated and appears to be well advanced. Under that proposal, if it came to fruition, there would be a deed fund for the benefit of creditors which would consist of not only the residual assets of the company, but also contributions to be made by the proponent of the deed being the company's director, Mr Price. He would provide an "up front payment" of $100,000 within 30 days of the execution of the deed and a further $400,000 by instalments of $25,000 per month over a period of 16 consecutive months commencing 60 days after the execution of the deed. 4 The plaintiffs consider this proposal to be realistic. They calculate that it would provide a return to unsecured creditors far superior to that likely to be achieved in a winding up. They estimate that under the deed proposal unsecured creditors would receive up to 51 cents in the dollar; while in a winding up, and disregarding any legal recoveries potentially available for possible unfair preferences or insolvent trading, the return to unsecured creditors is estimated at between 8 and 19 cents in the dollar. 5 While it is desirable that voluntary administration proceed relatively swiftly, this is a case in which further time should be afforded in the expectation that it may result in the favourable deed of company arrangement proposal coming to fruition. 6 The matter of adjourning a meeting convened in accordance with s.439A is governed not only by s.439B(2) but also by regulation 5.6.18 of the Corporations Regulations 2001 (Cth): " Adjournment of meeting (1) The chairperson of a meeting: (a) if so directed by the meeting — must; or (b) with the consent of the meeting — may; adjourn the meeting from time to time and from place to place. (2) A meeting convened under section 439A of the Act must not be adjourned to a day that is more than 60 days after the first day on which the meeting was held. (3) An adjourned meeting must be held at the place of the original meeting unless: (a) the resolution for adjournment specifies another place; or (b) the Court otherwise orders; or (c) the liquidator or provisional liquidator, or the administrator of a company under administration or of a deed of company arrangement, otherwise orders; or (d) the place of the original meeting is unavailable, in which case the chairperson may appoint another place." 7 The order the plaintiffs seek is one empowering them to adjourn to a date not later than 31 May 2006. But it is clear from regulation 5.6.18 that adjournment is a matter for the meeting itself and is implemented by the chairperson who must adjourn the meeting "from time to time and from place to place" if so directed by the meeting and may do so with the consent of the meeting. The chairperson cannot, consistently with regulation 5.6.18, act unilaterally, that is to say, without either a direction or the consent of the meeting (see Re Vouris; Epromotions Australia Pty Ltd and Relectronic-Remech Pty Ltd (2003) 177 FLR 289), although it may well be that emergency powers of unilateral adjournment of the kind considered in cases such as Byng v London Life Association Ltd [1990] Ch 170 are available: cf Re Vouris (above); Selim v McGrath (2003) 177 FLR 85. 8 Regulation 5.6.18(2) is in terms which reinforce s.439B(2). This raises a point that requires brief discussion. Under s. 447A, the court may make any order it thinks appropriate about how "this Part" – that is, Part 5.3A of the Act - is to operate in relation to a particular company. As is testified by the decision of the High Court in Australasian Memory Ltd v Brien (2000) 200 CLR 270, the jurisdiction under s.447A is very broad. It is now well recognised, for example, that the power may be used to extend the convening period in a way that s.439A itself does not allow. In addition, it was held by Lindgren J in Re Double v Marketing Pty Ltd (1995) 16 ACSR 498 that s.447A may be employed in a case such as the present to extend the s.439B(2) deadline (see also Re Open Telecommunications Ltd; Ex parte Whitton [2002] NSWSC 930). 9 There is not, I think, in Lindgren J's judgment any reference to the separately imposed version of the s.439B(2) deadline arising from regulation 5.6.18(2). But it is my opinion that an order under s.447A can not only vary the operation of s.439B(2) (a provision within Part 5.3A) but also state that Part 5.3A is to operate on the basis that regulation 5.6.18(2) does not apply. Even with that added element, the order is still one about how Part 5.3A is to operate in relation to the particular company. 10 For the reasons I have stated, I am satisfied about the merits of this application. The appropriate form of order, as I see it, is as follows: "Order pursuant to section 447A of the Corporations Act that Part 5.3A of that Act is to operate in relation to Priceright Construction Pty Limited as if section 439B(2) omitted all words after 'a day that is' and included instead of the omitted words the words 'later than 31 May 2006' and as if that Part allowed adjournment of the meeting convened under section 439A to a day not later than 31 May 2006 despite the operation of regulation 5.6.18(2)." 11 I make that order. 12 In view of the fact that the application is an ex parte application by the administrators, they have seen fit to include in their originating process an application for an order reserving leave to any person claiming to be interested to make application to vary the substantive order upon 24 hours' notice to the plaintiffs. That is a sensible precaution and one indicated as desirable and appropriate by both Re Double v Marketing Pty Ltd (above) and Re Open Telecommunications Ltd; Ex part Whitton (above). I therefore make order 3 in the originating process. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.