Stewart v Bulla Tip & Quarry Pty Ltd [2008] VSC 160

What the court decided

Mr Stewart and Mr Brown, deed administrators of Bulla Tip & Quarry Pty Ltd (BTQ) and Bulla Tip & Quarry Operations Pty Ltd, sought orders, in effect, winding up both companies and terminating the deeds of company arrangement under which they operated [1]. The judgment identifies one deed, of 4 April 2007 [2], made by both companies and Mr Ariff, the former administrator [15]. Consent orders in the Supreme Court of New South Wales, on application by the Australian Securities and Investments Commission (ASIC), had replaced Mr Ariff with them [2]–[4]. The court was told ASIC supported their appointment as liquidators because they could more readily use their powers as liquidators to investigate a mortgage reportedly given over the companies' assets and the administration [3], and later supported termination and liquidation [10].

Robson J asked for further information to establish that Mr Stewart and Mr Brown had sought, as best they could, to resolve the claims of Mr Ariff's creditors as administrator before termination [6]–[8]. Mr Stewart's affidavit of 11 April 2008 listed four outstanding claims [9]. He proposed setting aside their full amounts and said that, once he received certain information, he would pay the portion of the claim relating to work performed during the administration and release the rest [10].

His Honour noted the only steps left under the deed were payment of those creditors, then distribution as if in liquidation, all other work being finished; affidavit material went to insolvency [11]. For all those reasons, Robson J exercised the section 447A power to make orders the court thought appropriate about how Part 5.3A operated for a particular company, including, by example, ending an administration where the court was satisfied it should [12]–[13].

Robson J ordered each company wound up, as sought, under section 461(1)(k), with Mr Stewart and Mr Brown as joint and several liquidators [14]. Under section 447A, the deed was terminated and each administration was to end forthwith, on conditions [15].

The termination did not affect any right, vested or not, to indemnity or remuneration, approved or to be approved, that Mr Ariff may be entitled to under clause 6, nor rights accrued by any of the three administrators under clause 6 or by their creditors [15]. The liquidators were to pay $100,753, equal to the four listed claims, into a separate account to discharge, by agreement, court order or resolution of creditors, the amounts claimed to be owing by Mr Ariff and those claims [15]. Within 28 days they were to tell Engineered Corporate Solutions Pty Ltd whether they intended to pay its $44,231 claim or any part of it [15]. Any further remuneration Mr Ariff claimed required approval by a creditors' meeting of both companies and, if approved, had the priority of the liquidators' fees and expenses [15]. His Honour said the conditions were to protect the rights of creditors of the former and current administrators, and to protect the rights of the former administrator himself [15] n 1.

Costs of the application, including reserved costs, were costs in both companies' winding up, and those of MJ Defrutos Nominees Pty Ltd, including reserved costs, in BTQ's [16]. Liberty to apply to the court was reserved [16].

Why it matters

The court asked for further information to establish that the deed administrators had sought, as best they could, to resolve the claims of Mr Ariff's creditors as administrator before termination [8]. The conditions, including the fund, were inserted for the two stated purposes [15] n 1.

Numbers in square brackets are paragraph numbers of the judgment. This note summarises a decided case for education and is not legal advice. See how the notes are written.