In the matter of Henry Walker Eltin Group Ltd (Administrators Appointed) [2005] FCA 994

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FEDERAL COURT OF AUSTRALIA

In the matter of Henry Walker Eltin Group Ltd (Administrators Appointed) [2005] FCA 994

Corporations Act 2001 (Cth) s 436E, 436F(1), 437C, 439A, 445F, 449E, 447A

Corporations Regulations 2001 (Cth) regs 5.6.11 – 5.6.36A

Lombe, in the matter of Bosnjak Holdings Pty Ltd (Administrators appointed) [2005] FCA 275 cited

Re Regis Towers Real Estate Pty Ltd 51 ACSR 628 cited

IN THE MATTER OF HENRY WALKER ELTIN GROUP LTD (ADMINISTRATORS APPOINTED)

NSD 483 OF 2005

HELY J

31 MARCH 2005

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 483 OF 2005

BETWEEN:	HENRY WALKER ELTIN GROUP (ACN 007 710 483) (ADMINISTRATORS APPOINTED) FIRST PLAINTIFF ANTHONY GREGORY McGRATH SECOND PLAINTIFF SCOTT BRADLEY KERSHAW THIRD PLAINTIFF JOSEPH DAVID HAYES FOURTH PLAINTIFF SHAUN ROBERT FRASER FIFTH PLAINTIFF
JUDGE:	HELY J
DATE OF ORDER:	31 MARCH 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. Pursuant to s 447A of the Corporations Act 2001 (Cth) (‘the Act’), s 449E of the Act will operate in such a manner in relation to each of the companies in Schedule 1 attached (‘Companies’) as if it reads:

‘(1) The administrator of a company under administration, or of a deed of company arrangement, is entitled to:

(a) such remuneration as is fixed by a resolution of the company’s committee of creditors at a meeting of the committee convened by the administrator giving at least 7 days written notice, together with details of the amount of remuneration claimed, the manner in which the amount is comprised and calculated, and the staff members involved, including:

(i) details of the staff classification, hourly rate and hours charged by each staff member,

(ii) a description of the tasks completed by each staff member; and

(iii) details of the skills relevant to each staff classification;

and such a meeting of the committee of creditors of the company is a meeting convened under Part 5.3A for the purposes of Regulation 5.6.11 and Regulations 5.6.12 to 5.6.36A apply to such a meeting of the committee of creditors;

(b) such remuneration as is fixed by a resolution of the company’s creditors passed at a meeting convened under s 439A, or under s 439A or 445F, as the case may be; or

(2) Where remuneration is fixed under paragraph (1) (a) or (b), the Court may, on the application of the administrator or of an officer, member or creditor of the company:

(a) review the remuneration; and

(b) confirm, increase or reduce it.

(3) Subsection (2) has effect despite s 437C.’

2. Pursuant to s 447A of the Act, s 436F(1) of the Act will operate in such a manner in relation to each of the Companies as if it reads:

‘(1) The functions of a committee of creditors of a company under administration are:

(a) to consult with the administrator about matters relating to the administration;

(b) to receive and consider reports by the administrator; and

(c) to fix the remuneration of the administrator, so long as such remuneration is fixed by a resolution of the company's committee of creditors at a meeting of the committee convened by the administrator giving at least 7 days written notice, together with details of the amount of remuneration claimed, the manner in which the amount is comprised and calculated, and the staff members involved, including:

(i) details of the staff classification, hourly rate and hours charged by each staff member,

(ii) a description of the tasks completed by each staff member; and

(iii) details of the skills relevant to each staff classification;

3. Leave be granted to any creditor of any of the Companies to apply on reasonable notice to the Plaintiffs’ solicitors to vary or discharge these Orders.

4. The costs of this application be costs in the administration of each of the Companies.

5. Leave be granted to each Plaintiff to apply on 24 hours’ notice.

6. Further consideration of any application for orders in terms of the Originating Process by any of the following companies be reserved:

(a) Castlemaine Wastewater Treatment Pty Limited (Administrators Appointed);

(b) HWE Civil Pty Limited (Administrators Appointed);

(d) Northaust Auto Hire Pty Limited (Administrators Appointed); and

(e) Dover Investments Pty Limited (Administrators Appointed).

SCHEDULE 1

ENTITY NAME ABN / ACN

Henry Walker Eltin Group Limited 007 710 483

Bulumba Pty Limited 008 060 240

Capnorth Developments Pty Limited 009 640 251

HWE Finance Pty Limited 009 593 668

HWE Land Pty Limited 009 614 788

HWGL Services Pty Limited 009 615 436

HWIO Pty Limited 072 445 179

Inventive Pty Limited 009 639 310

Simon Engineering (Australia) Holdings Pty Ltd 000 142 165

Simon Engineering (Australia) Pty Limited 000 117 000

Bridge Autos Pty Limited 009 625 816

Eltin Surface Mining Pty Limited 062 450 113

Henry Walker Eltin Contracting Pty Limited 009 625 138

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 483 OF 2005

BETWEEN:	HENRY WALKER ELTIN GROUP (ACN 007 710 483) (ADMINISTRATORS APPOINTED) FIRST PLAINTIFF ANTHONY GREGORY McGRATH SECOND PLAINTIFF SCOTT BRADLEY KERSHAW THIRD PLAINTIFF JOSEPH DAVID HAYES FOURTH PLAINTIFF SHAUN ROBERT FRASER FIFTH PLAINTIFF
JUDGE:	HELY J
DATE:	31 MARCH 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1 On 1 February 2005 four members of the firm McGrathNichol & Partners were appointed as joint voluntary administrators of the 26 entities which comprise the Henry Walker Eltin Group (‘the HWE Group’). The first meeting of creditors required by s 436E of the Corporations Act 2001 (Cth) (‘the Act’) was held on 8 February 2005. On 16 February 2005 I extended the period within which the second meeting of creditors required by s 439A of the Act should be held until 23 May 2005.

2 The administrators’ entitlement to remuneration is fixed by s 449E of the Act which entitles the administrators to such remuneration as is fixed by resolution of the company’s creditors passed at a meeting convened under s 439A.

3 In the absence of an order made pursuant to s 447A of the Act, altering that which would otherwise have been the operation of s 449E, the administrators would not be entitled to receive any remuneration until the second meeting of creditors has occurred.

4 Accordingly, the plaintiffs seek orders to enable the committee of creditors to fix the administrators’ remuneration and associated orders. Orders 1 and 3, as sought in the originating process, generally follow the form of order made by Finklestein J in the matter of the ION Limitedadministration (proceeding number VID 92 of 2005) on 15 February 2005. Proposed order 2 reflects the fact that this application has been made ex parte.

5 There is no doubt that the Court has power to make the orders sought and there are precedents for the making of orders which entitle an administrator to receive such remuneration as is approved by the committee of creditors after the committee members have received adequate notice of the administrator’s proposal and of the basis for the proposal: Re Regis Towers Real Estate Pty Ltd 51 ACSR 628 at [9], Lombe, in the matter of Bosnjak Holdings Pty Ltd (Administrators appointed) 2005 FCA 275.

6 The orders sought provide for regs 5.6.12 – 5.6.36A of the Corporations Regulations 2001 (Cth) to apply to the convening and conduct of the meetings of the committee of creditors and, in particular, reg 5.6.21 would apply. Accordingly, if a poll were demanded on a resolution fixing the administrators’ remuneration, a majority of the representatives of the committee of creditors voting on the resolution by number and by value would need to vote in favour of the resolution for the resolution to be carried.

7 The orders now sought would not authorise the committee of creditors to fix the administrators remuneration prospectively by reference to a scale of charges. The committee is able to fix remuneration for work already undertaken by the administrators in accordance with detailed information provided by the administrators. In the present case, the administrators have already undertaken a substantial amount of work which, as at 18 March 2005, would attract fees in excess of $A2.4 million if the administrators’ remuneration were fixed by reference to the charging rates notified at the first meeting of creditors.

8 The creditors were notified of the administrators’ intention to make this application (although not of the exact date on which it would be made) and of the reasons for making the application by a circular issued by McGrathNichol & Partners on 14 March 2005. Creditors wishing to be heard on the application were invited to contact that firm by 23 March 2005. No creditor has responded to that invitation indicating that it wishes to be heard.

9 The Australian Securities & Investment Commission (‘ASIC’) has also been notified of the application and by letter dated 30 March 2005 has indicated that it does not oppose the application and does not wish to be heard on the application. Subject to a minor qualification, it is appropriate that I should make orders in terms of pars A1, 2 and 3 of the originating process, having regard to the scale of complexity and expected duration of the administrations in question. The minor qualification is that the orders are sought in relation to each of the companies specified in Schedule 1 to the originating process. Schedule 1 lists 25 entities. The HWE Group has apparently been omitted in error. Included in Schedule 1 are eight entities which do not have a committee of creditors and four entities where it might emerge that the committee of creditors was not validly constituted. The administrators do not seek to have their remuneration approved by a committee of creditors in the case of those 12 entities and they should be deleted from Schedule 1. I propose to reserve liberty to the administrators to apply should it later emerge that the assumption that the committee of creditors was not validly constituted is in error.

10 I therefore make the following orders: