Benchatter Pty Ltd, Re [1996] QSC 207

244!76 State A Reporting 5cq6/20r Bureau TRANSCRIPT OF PROCEEDINGS Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND AMBROSE J Application No 7540 of 1996 IN THE MATTER OF THE CORPORATIONS LAW IN THE MATTER OF BENCHATTER PTY LTD (ACN 067 158 516) BRISBANE .. DATE 17/10/96 ORDER REVISED COP:ES ISSUED Sta!B R8;JJ~:ng Bureau Dateol)/ /0 I 0 . • . . i ·' ... , ... 1! ... ,~ purpose of research and private ~tudy \j,l(hrwz. :it lS to br:1 C,)p,e..1 idl .l 1-., . • • • , r-'rer wav without l.,,-· ...~:. . 1_, ..,..-...-3 ..:.... i! .--:., · ,ui) i-· at1on In any ul, 1 :1 • 1, ..,. t·--. be r.c•~o,, or- u~,--;i...i i,.J. , c~. . • "' . J?h.J t (., ~V 'r'-" I .., • . / •• ~.. , ...,,,.,..·.;..:1.\... ~on}Jr;,:;1 ii i!V~! • 1 -11'1 Fl11111·, Tire L:rw Courts, Gl'orgi: Stn:d, llrisl,:111e, Q. -WOO Tcll'phonl': (07) .12..t7 ..tJ<iO F:n: (07) J2..t7 55.12 .1 -- 1 of 7 -- 171096 Tl0-ll/VT9 M/T 1118/06 (Ambrose J) HIS HONOUR: This is an application by Benchatter Proprietary Limited, administrators appointed, for an adjournment of an application to wind up that company which was made prior to the appoi~tment of the administrator, which was on 14 October last. The basis of the application for adjournment is to be found in an affidavit by Terry Grant Vanderveld of Hall Chadwick, who is one of the administrators appointed with Paul Desmond Sweeney on 14 October 1996. Those men were appointed as administrators under part 5.3A of the Corporations Law. They propose to call a creditors' meeting on 8 November 1996 to resolve whether the company should continue in-administration or be wound up. At this time, having regard to the lateness of their appointment, they have not had the opportunity to investigate company affairs or to consider whether a proposed deed of company arrangement is in the creditors best interest, that is, in the best interests of the creditors generally. They seek an adjournment so that all creditors may consider any proposal put by the director. At the moment there is a director of the company who is a substantial creditor of the company and the proposal under the deed is that she will defer her entitlement until all other creditors have been paid. She also proposes to assume the liability of the company to the bank, subject of course to the bank's agreement, and the deed then proposes that there will be a lump sum payment of 10 cents in the dollar to all creditors. 2 ORDER 10 20 30 40 50 60 I -- 2 of 7 -- 171096 Tl0-ll/VT9 M/T 1118/06 (Ambrose J) It is contended that it will be impossible for the creditors or for the Court, for that matter, to evaluate the question of whether it will be or will not be for the benefit of the creditors to enter into such a deed until there has been a proper examination of records and until, as correctly contended for by the applicant who opposes the adjournment, one can see what the assets of the company are; what the liabilities generally of the company are; whether the director is, in any event, personally liable to the bank as a guarantor; how much the bank is owed; and I assume, whether the dividend of 10 cents is to be a final dividend or not. Now, it seems to me the applicant creditor is owed, I think, something in the vicinity of $28,000 and it has served a statutory demand for that sum on the company and it is on failure of the company to meet the statutory demand that the applicant creditor seeks to wind up the company and the administrators appointed to the company on 14 October have applied for an adjournment until 11 November so that the creditors' meeting can be called to consider whether there should be this deed of arrangement; whether it would be in the interests of the creditors and the company generally to have it rather than to have the company wound up; and if it is decided by the creditors on 8 November, when the meeting is to be held, that it is not to their interests and it should be wound up, then the applicant can come along on the following Monday on the 11th and continue with its application to wind the company up. 3 ORDER 10 20 30 40 50 60 'J I -- 3 of 7 -- 171096 T10-11/VT9 M/T 1118/06 (Ambrose J) I assume, in the light of the material that has been filed, particularly on behalf of the company, that it is based upon its being in an insolvent situation, and there should not be much. of a problem in the applicant creditor succeeding. For the applicant creditor it is contended that I would not be justified in granting an adjournment having regard to observations made by the Court of Appeal in Creevy and Another against Deputy Commissioner of Taxation (1966) 19 ACSR at 456. That is a short judgment and the observations contained in it, in my view, must be considered in the context of the facts with which McPherson JA dealt with shortly in that case. That was a case in which upon an application for a winding up, an application was made by an administrator for an adjournment on the basis that it was in the interests of the company's creditors for the company to continue under a voluntary administration rather than be wound up. The Judge hearing the application to wind up refused any adjournment and found that he was not satisfied that it would be in the interests of the creditors for the administration to continue and therefore he made the order winding the company up. The object of the adjournment was to allow one of the directors of the company to assign to it a chose in action allegedly worth 1.5 million dollars. Their Honours took the view that it was not shown that the chose in action in fact was worth anything at all and it was demonstrated that the company had no assets and, in fact, had very large liabilities, one of which was 1.4 million dollars owing to the Taxation Commissioner. 4 ORDER 10 20 30 40 50 60 -- 4 of 7 -- 171096 T10-11/VT9 M/T 1118/06 (Ambrose J) Their Honours' observations, and particularly observations of Mr Justice McPherson in the case at page 458, must be considered in that context. His Honour there said that to succeed on appeal - and it was an appeal, I think, on behalf of the administrator, if not the administrator by one of the directors, I think. His Honour said: In any event, whoever the appellant was "It would have to be demonstrated that the trial Judge was wrong in concluding that he was not satisfied that it was in the interests of the company's creditors for the company to continue under administration rather than be wound up. 11 It is not clear to me, on the material, for just how long the company had been under administration but on the facts of this case, the company, although it is under administration technically, has not been under administration for more than a couple of days because the resolution appointing the administrator was only effected on 14 October 1996 and the current administrators were appointed on that date. The affidavit of the administrators saying that they had not had time to investigate the matters was only sworn on the 16th. Looking at the relevant section of the legislation, which is section 440A(2), it is clear that the Court may adjourn the hearing of the application to wind up the company if that company is then under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. 5 ORDER 10 20 30 40 50 60 -- 5 of 7 -- 171096 T10-ll/VT9 M/T 1118/06 (Ambrose J) In my view, it is to the interest of the company's creditors for the company to continue under administration until the proper investigation by the company administrators has been concluded. That will be concluded by the time there is a creditors' meeting to be held on 8 November. It will then be open to the company to consider whether the offer by the director of the company to meet some of the obligations of the company and to postpone her entitlement against the company to repayment of moneys to which she is entitled will be of sufficient advantage to the creditors to warrant the creditors entering into a deed of arrangement rather than the company being wound up. If the creditors, after consideration of the full investigation made and the offers made by the director and after considering other contents of the proposed deed of arrangement, conclude that it is not for their benefit, then no doubt the applicant creditor in this case will have little difficulty in procurinJ a winding.:...up order on 11 November. On the other hand, a proper investigation and consideration of the offers made by the director may persuade the creditors and indeed may persuade the applicant creditor, who will be one of the creditors attending the meeting, that it would be to their interests generally if the deed of arrangement went ahead rather than the windi_ng up proceed. In my view it is not necessary to show at this time that the proposed deed of arrangement is. in the interests of the co~pany's creditors. 6 ORDER 10 20 30 40 50 60 -- 6 of 7 -- 171096 Tl0-ll/VT9 M/T 1118/06 (Ambrose J) It is sufficient to show that it will be to the interest of the creditors if the hearing of the application to wind up is adjourned for a sufficient length of time to enable a proper evaluation of the company affairs to be made so that all creditors can determine whether it would be to their interests or not to have the company wound up or to enter into a deed of arrangement. In my"view, if it is decided by ·the creditors of the company, at that time, that it is not really to their advantage, I have very little doubt that the applicant creditor in this case will simply proceed on 11 November to a winding up. I therefore propose to adjourn the hearing of the application to wind the company up until 11 November for the express purpose of allowing the creditors' meeting to be held on 8 November. In my view however, as I have already indicated, it is no fault of the applicant creditor that the matter is being adjourned. It only learned yesterday of the appointment of the administrators and that they proposed to apply to have the hearing of the application to wind up adjourned. In my view, it should recover the co·sts thrown away. by virtue of today's adjournment and I therefore order that Benchatter Proprietary Limited, administrators appointed, pay the costs to be taxed thrown away by the applicant creditor, Realhome {Queensland) Proprietary Limited, administrators appointed, by virtue of today's adjournment. The winding-up application therefore will be adjourned until 11 November. Having regard to the time spent I will indicate that the matter should be listed before me on 11 November and the further matters can then be disposed of. 7 ORDER 10 20 30 40 50 60 -- 7 of 7 --