Federal Court of Australia

Beattie, in the matter of National Projects and Maintenance Pty Limited (administrators appointed) (No 2) [2024] FCA 950

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 439A(6) of the Corporations Act 2001 (Cth) (the Act), the period within which the plaintiffs must convene the second meeting of creditors in respect of National Projects and Maintenance Pty Ltd (ACN 165 833 901) (Administrators Appointed) under s 439A of the Act be extended to 20 August 2025.

2.    Pursuant to s 447A(1) of the Act, Pt 5.3A of that Act is to operate in relation to National Projects and Maintenance Pty Ltd (ACN 165 833 901) (Administrators Appointed) such that, notwithstanding s 439A(2) of that Act, the meetings referred to in Order 1 must be held at any time before, or within five business days after, the end of the convening period as extended by Order 1 and the meeting may be held at any time during that period.

3.    Pursuant to s 439A(6) of the Act, the period within which the plaintiffs must convene the second meetings of creditors in respect of National Projects QLD Pty Ltd (Administrators Appointed) A.C.N. 652 810 618 and NPM (VIC) Pty Ltd (Administrators Appointed) A.C.N. 623 232 637 under s 439A of the Act be extended to 20 February 2025.

4.    Pursuant to s 447A(1) of the Act, Pt 5.3A of that Act is to operate in relation to National Projects QLD Pty Ltd (Administrators Appointed) A.C.N. 652 810 618 and NPM (VIC) Pty Ltd (Administrators Appointed) A.C.N. 623 232 637 such that, notwithstanding s 439A(2) of that Act, the meetings referred to in Order 3 must be held at any time before, or within five business days after, the end of the convening period as extended by Order 3 and the meetings may be held together or separately at any time during that period.

5.    The costs of the relief sought in Orders 1 to 4 be costs in the voluntary administrations of the companies.

6.    The plaintiffs take steps to cause notice of these orders to be given within one business day to the creditors of the companies by:

(a)    publishing a copy of the orders on the creditor information portal of the website maintained by the accounting firm Worrells in respect of the administrations of the companies; and

(b)    by sending the orders by email to those creditors who have notified the administrators of their email addresses.

7.    Leave be granted to any person who demonstrates a sufficient interest to vary or discharge Orders 1 to 6 (including any creditor of the companies) on three business days’ written notice to the plaintiffs.

8.    Leave be granted to the plaintiffs to apply for further or other orders and to vary or discharge these orders.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

1    This is the third application by the plaintiffs under s 439A(6) of the Corporations Act 2001 (Cth) (the Act) to extend convening periods. On 9 August 2024, I made orders granting the extensions sought. These are my reasons for making those orders.

background

2    On 23 October 2023, Graeme Beattie, Christopher Darin, and Aaron Kevin Lucan were appointed as joint and several administrators (the administrators) of 10 companies in a group of companies carrying on a commercial office design, construction, and maintenance business under the NPM brand. The group includes National Projects and Maintenance Pty Ltd (administrators appointed) (NPM NSW), NPM (VIC) Pty Ltd (administrators appointed) (NPM VIC), National Projects QLD Pty Ltd (administrators appointed) (NPM QLD), National Projects (WA) Pty Ltd (administrators appointed) (NPM WA), and National Projects (ACT) Pty Ltd (administrators appointed) (NPM ACT) (together, the Companies).

3    On 15 November 2023, the Court extended the period within which the administrators must convene meetings of the Companies’ respective creditors under s 439A of the Act to 15 February 2024: Beattie, in the matter of National Projects and Maintenance Pty limited (administrators appointed) [2023] FCA 1470. At the time, Goodman J at [14] noted that the plaintiffs had sought an extension of six months in each case. His Honour was not persuaded, however, that extensions of that length were required. He considered that extensions of three months were more appropriate, and made orders accordingly.

4    A further application was made to extend the convening periods. On 1 February 2024, the Court extended the convening periods to 20 August 2024.

5    So far as the present application is concerned, the plaintiffs seek to further extend the convening periods for the second meetings of creditors of NPM NSW, NPM VIC, and NPM QLD, respectively.

6    At the time of the administrators’ appointments, the principal assets of the Companies were debts owing to them for the maintenance, construction, and design services they had provided. The administrators formed the view that these debts were best recovered using the security of payments (SOP) regimes available under State and Territory legislation. The general nature of these regimes is described in [30] – [35] of Mr Lucan’s affidavit sworn 10 November 2023. The administrators were of the view that, if these regimes were not used: (a) the Companies’ ability to recover debts owing to them would be significantly hampered; and (b) inevitably, they would be met with defences or counterclaims that may require complex and substantial litigation to resolve as well as applications for security for costs given their financial circumstances.

7    Since 23 October 2023, the administrators have recovered the following amounts using the SOP regimes:

THE PLAINTIFFS’ SUBMISSIONS

8    The reason for the present application is that the administrators require further time to continue their work to recover sums owing to NPM NSW, NPM VIC, and NPM QLD.

9    In his affidavit sworn on 2 August 2024, Mr Beattie deposes that, in relation to NPM VIC, there are seven payment claims where the respondent to the claim has not issued a payment schedule, thereby giving rise to statutory debts due to NPM VIC under s 16(2) of the Building and Construction Industry Security of Payment Act 2002 (Vic). The total amount of the statutory debts is $277,209.16. The plaintiffs seek an extension of a further six months to 20 February 2025. They consider that this extension will permit them to take steps to commence proceedings in respect of the statutory debts, obtain judgment, and enforce any judgments obtained.

10    In relation to NPM QLD, there are two payment claims where the respondent has not issued a payment schedule, thereby giving rise to statutory debts due to NPM QLD under ss 78(2) and 100 of the Building Industry Fairness (Security of Payment) Act 2017 (Qld). The total amount of the statutory debts is $355,432.51. As with NPM VIC, the plaintiffs seek an extension of a further six months to 20 February 2025. Once again, they consider that this extension will permit them to take steps to commence proceedings in respect of the statutory debts, obtain judgment, and enforce any judgments obtained.

11    The position in relation to NPM NSW is more complicated. Mr Beattie deposes:

11.    The administrators consider there are approximately 294 claims in the amount of $4,579,669.32 that may be pursued under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA NSW).

12.    In NSW, a head contractor may not issue a payment claim under SOPA NSW unless the head contract certifies that all subcontracts have been paid in relation to the work claimed (section 13(7) of SOPA NSW).

13.    Based on my review of the NPM NSW’s records, most of the contracts or arrangements entered into by NPM NSW were entered into by it as head contractor within the meaning of SOPA NSW.

14.    Accordingly, it has not been possible to issue payment claims without first confirming the extent to which subcontractors in relation to the work claimed have been paid.

15.    The administrators, with the assistance of their solicitors, have been manually reviewing NPM NSW’s primary materials which are dispersed across different databases and systems to identify:

(a)    The contract between NPM NSW and its client/customer (the Principal Contract);

(b)    The stage of the works that had been completed by NPM NSW but not yet paid by NPM NSW's client;

(c)    The subcontract between NPM NSW and its subcontractors relating to work undertaken for NPM NSW under the Principal Contract;

(d)    The specific works undertaken by NPM NSW’s subcontractors for which the subcontractor has not been paid, as against the work undertaken by the subcontractor for which the subcontractor has been paid;

(e)    By reference to the information above, the works that NPM NSW has undertaken under the Principal Contract for which payment has not been made, and in respect of which all subcontractors have been paid.

16.    Based on the review undertaken to date, in some cases, subcontractors have not been paid for all of the work that remains unpaid under the Principal Contract and therefore no payment claim under SOPA NSW can be made. However, in other cases work has been completed by the subcontractor, the subcontractor has been paid for that work, but the client/customer has not paid for that work, in which case the provisions of SOPA NSW are able to be deployed.

17.    Because of the large volume of material, the lack of centralisation of documents relating to the above issues, and the number of potential claims involved, the administrators anticipate it will take a further 12 months before all recovery action under SOPA NSW can be finalised. That allows for the finalisation of analysis referred to in paragraph 15 above, the issuing of claims, engaging in the adjudication process (if applicable), and enforcing any statutory debt arising.

12    Given the substantial issues to which Mr Beattie refers, the plaintiffs seek an extension of a further 12 months to 20 August 2025 to allow the manual tasks (identified above), and then the relevant steps to make and enforce the remaining claims, to be undertaken.

13    At the time that the first extensions were sought, substantial employee entitlements were outstanding. Continuation of the administrations of the Companies prevented employees from accessing their entitlements under the Fair Entitlement Guarantee Act 2012 (Cth) (the FEG Act) scheme (the FEG scheme), which would be triggered only upon the Companies being placed in liquidation.

14    On 22 May 2024, the administrators received confirmation that the Minister for Employment and Workplace Relations had made a declaration under s 49 of the FEG Act that now enables employees to access their entitlements under the FEG scheme while the Companies remain in administration. The administrators are currently liaising with the Department of Employment and Workplace Relations - FEG Branch to confirm the outstanding employee entitlements. They have lodged the required employee entitlement verification statements. The administrators understand that the statements are currently under review.

15    In light of this development, the administrators do not consider that the further extensions of the convening periods in respect of NPM NSW, NPM VIC, and NPM QLD will prejudice the former employees of these companies.

16    By a circular dated 5 August 2024, the administrators advised creditors of their intention to make the present application. They asked that any objection to this course be notified by 4.00 pm on 8 August 2024.

17    There has only been one objection, which is from an employee creditor in Queensland. The creditor has asked that his objection be brought to the Court’s attention. His proposal is that an extension of one month be granted in respect of NPM QLD and that the Court order the administrators to provide certain information. I note that, on the evening of 8 August 2024, the administrators sent an email to the creditor providing the information he seeks.

CONSIDERATION

18    Although the administrations have been on foot for some time, I am persuaded that the extensions that are sought are appropriate for the reasons advanced by the administrators.

19    As to NPM QLD, I note the objection that has been made. I am not persuaded, however, that an extension of the convening period for one month is of any utility. I am satisfied that this would be an insufficient period to enable the administrators to pursue the work they need to do. Such an extension would, inevitably, invite a further application for extension which would lead, most likely, to the administrators incurring unnecessary costs.

20    As to NPM NSW, the extension that is sought is very—indeed, unusually—lengthy, particularly bearing in mind the extensions that have already been granted. Although mindful of this, I am persuaded, nonetheless, that the extension is justified having regard to the magnitude of the further work that the administrators must undertake to recover the debts that are due, including the time-consuming nature of that work. The length of the extension must be balanced against the prospect of the administrators recovering the significant sum in question, or at least a significant portion of it.

21    I note that the Australian Securities and Investments Commission has been given notice of the application.

22    For these reasons, the orders, as sought, should be made.

Associate:

Dated:    23 August 2024

SCHEDULE OF PARTIES