Re Buckby[2009] QSC 170

SUPREME COURT OF QUEENSLAND

[1] This is an application for orders pursuant to s 439A(6) of the Corporations Act 2001 (“the Act”) extending the period in which the administrator of Rutherford Pty Ltd must convene a meeting of creditors and pursuant to s 447A(1) of that Act that the meeting may be held at any time during or within five business days after the end of the convening period.

[2] There are 362 unsecured creditors, including 165 employees.  The corporation has ceased to trade. 

[3] No notice, formal or informal, of the proposed extension of the convening period has been given to any creditor.

[4] Such orders have sometimes been made without notice to creditors. Re Henry Walker Eltin Group Ltd [2005] FCA 316 and Re Global Food Equipment Pty Ltd; Carter v Global Food Equipment Pty Ltd [2007] NSWSC 901 are examples of that. But the reasons in those cases suggest that the attention of the judges was not drawn to authorities emphasizing the importance of notice to those whose pecuniary interests might be adversely affected by orders sought in the Corporations jurisdiction, such as BP Australia Ltd v Brown (2003) 58 NSWLR 322, where, in the context of an application to extend time under s 588FF(1) of the Act, Spigelman CJ (Mason P and Handley JA concurring) said (at 348):

"The obligation to comply with procedural fairness imports a higher level of content when imposed on a court than in decision-making processes conducted by administrators or tribunals.  It requires, in my opinion, that a person likely to be adversely affected by the order of the court is given an opportunity of making submissions to the court before any such order is made or if, exceptionally, an order is made without such an opportunity being given that, upon application, the person must be put in the same position as he or she would have been prior to the order being made. It is the inherent difficulty of achieving the latter that makes an ex parte order a course to be followed only in the case of necessity or other strong reason.

The creation of a situation in which a person must apply to vacate or vary an order after the order has been made is an exceptional situation…

No power given to the court by the Act or the Rules should be interpreted in such a manner as to permit the court to act in breach of the obligation of procedural fairness. …”

[5] See also Greig v Stramit Corporation Pty Ltd [2004] 2 Qd R 17, 25, 49; cf Re Guerra Transport Pty Ltd [2004] NSWSC 245, at [26] – [27], which concerned an application under s 447A(1).

[6] At one stage, it appeared as though proceeding ex parte was sought to be justified on the basis that it would be costly and time consuming to notify all the hundreds of creditors. But that it would be expensive and inconvenient to give notice to all is no justification for not telling any: in particular, those owed most.

[7] In Brown v DML Resources Pty Ltd (2001) 52 NSWLR 685, in discussing the way in which notification of an application might be given to affected persons in the context of applications under the Act, Austin J, at 700, said:

"At one extreme, there will be cases where it is plain that the application seeks relief against a person, and therefore that person should be a respondent to the application.  At the other extreme, there will be cases where the Corporations Law gives the court a discretion to permit an administrative step to be taken which would otherwise be prohibited, but there is no need to join any respondent to the application or give notice to affected persons for one or more of several reasons. Those reasons may relate to such matters as the large number of affected persons, difficulty in identifying them, or the relatively insignificant effect of the order upon them. But even where it is not feasible to notify all affected persons, there may be one or a small number of identified persons who have an interest in the application or a legitimate expectation to be consulted before the order is made."

[8] See also Re LED Builders Pty Ltd [2008] NSWSC 633, [33] – [34], where Austin J adjourned an application to extend time for convening a second meeting of creditors to enable members of a committee of creditors to express their view.

[9] Apart from the procedural fairness considerations engaged when relief is sought ex parte, there is another reason not to encourage an application such as this to be made without affording those who may be adversely affected an opportunity to be heard.

[10] Although an applicant who proceeds ex parte must draw the Court's attention to matters of which the applicant is, or by the exercise of reasonable diligence could be, aware tending against the application (Surefire Holdings Pty Ltd v Oxley Sports Drome Pty Ltd [2001] QSC 85; Hall v Hall [2007] WASC 198 [30] – [35]), an applicant’s imagination might not always identify significant factors that would justify refusal of the application.

[11] However, a creditor informed of an intention to seek the kind of relief claimed here could tell the administrator, if not the Court, of the basis of any concern about the extension. No doubt the administrator would then alert the Court to any fairly arguable ground of opposition raised in that way.

[12] There is no material to indicate that undue delay, expense or inconvenience would attend notification of this application to at least some of the company’s creditors. Nothing reveals circumstances of necessity to justify proceeding to extend time in this case without notice to any of the many creditors who may be prejudiced by the extension.