Federal Court of Australia

Beattie (Administrator), in the matter of Sharvain Facades Pty Ltd (Administrator Appointed) (No 3) [2025] FCA 671

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 447A(l) of the Corporations Act 2001 (Cth) (Corporations Act), the period within which the plaintiff must convene the second meeting of creditors (second meeting) of Sharvain Facades Pty Ltd ACN 116 437 462 (Administrator Appointed) (Sharvain) be extended to 15 August 2025, save that if prior to 10 August 2025 the Supreme Court of New South Wales orders any further stay of, or stay of execution of, the judgment for $3,278,043.27 in favour of Sharvain obtained on 18 June 2025 against Roberts Co (NSW) Pty Ltd, then the extension of time pursuant to this order will be until the date which is five business days after the grant of that stay.

2.    Pursuant to s 447A(l) of the Corporations Act, Part 5.3A of the Corporations Act is to operate in relation to Sharvain such that, notwithstanding s 439A(2) of the Corporations Act, the second meeting must be held at any time before, or within five business days after, the end of the convening period as extended by Order 1.

3.    The plaintiff’s costs of the interlocutory process dated 13 June 2025 be costs in the voluntary administration of Sharvain.

4.    The plaintiff take steps to cause notice of these orders to be given, within one business day of making these orders, to the creditors of Sharvain 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 administration of Sharvain; and

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

5.    Any person who demonstrates a sufficient interest to vary or discharge Orders 1 to 3 above (including any creditor of Sharvain) have liberty to apply to the Court on three business days’ written notice to the plaintiff.

6.    The plaintiff has liberty 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

MOORE J

Background

1    This is the third application brought by Mr Graeme Beattie (the Administrator), who is the administrator of Sharvain Facades Pty Limited ACN 116 437 462 (Sharvain), for an extension of time in which to hold the second meeting of creditors of Sharvain. The first application led to Halley J extending the time by two weeks: Beattie (Administrator), in the matter of Sharvain Facades Pty Ltd (Administrator Appointed) [2025] FCA 304 (Sharvain 1). The second extension led to Cheeseman J extending the time by a further 10 weeks: Beattie (Administrator), in the matter of Sharvain Facades Pty Ltd (Administrator Appointed) (No 2) [2025] FCA 355 (Sharvain 2).

2    This third application is brought pursuant to s 447A of the Corporations Act 2001 (Cth) (Corporations Act), and seeks an extension of time for an initial period of eight weeks until 15 August 2025, although the Administrator has foreshadowed the possibility of applying for a further extension of time until the hearing and determination of a potential appeal to the New South Wales Court of Appeal. For the reasons set out below, I have decided to grant a limited extension of time.

3    The background to the administration of Sharvain and the facts giving rise to the two prior extensions are set out in Sharvain 1 at [7] – [22] and Sharvain 2 at [10] – [29]. I will not repeat any of that background here, although I note the following matters of particular relevance to the present application. On 4 March 2025, the Administrator was appointed by resolution, pursuant to s 436A of the Corporations Act, as the administrator of Sharvain. Sharvain is in the business of supplying and installing custom made facade materials for large construction projects. At the time the Administrator was appointed, Sharvain was partway through the performance of a construction contract with Roberts Co (NSW) Pty Ltd (Roberts) in relation to the Westmead Children’s Hospital development project.

4    At or about 7:17 pm on Friday, 28 February 2025, Sharvain served a payment claim on Roberts under the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOPA). The next business day was Monday, 3 March 2025. Roberts served a payment schedule purportedly under the SOPA within 10 days of 3 March 2025, but not within 10 days of 28 February 2025.

5    On 31 March 2025, Sharvain commenced proceedings against Roberts in the Supreme Court of New South Wales (NSWSC) seeking judgment for an unpaid portion of its payment claim in an amount of $3,207,999.03 plus interest (the NSWSC proceeding).

6    On 12 June 2025, a day prior to the filing of this application, reasons for judgment in the NSWSC proceeding were delivered in Sharvain’s favour: Sharvain Facades Pty Ltd (Administrators Appointed) v Roberts Co (NSW) Pty Ltd [2025] NSWSC 606 per Stevenson J. His Honour held that the relevant date on which the payment claim was served was 28 February 2025 (and had not been varied by agreement between the parties), such that the payment schedule was outside the 10 day period provided for by the SOPA and Sharvain was therefore entitled to judgment against Roberts on its payment claim.

7    On 18 June 2025, orders were entered in the NSWSC proceeding which provided for judgment for Sharvain against Roberts in the amount of $3,278,043.27.

8    I have been informed, although there is no evidence before the Court, that these orders were the subject of a temporary stay until 18 June 2025, or, if a motion to extend the stay was filed by 18 June 2025, until the determination of that motion. I will assume that there is a temporary stay on foot now, and that Roberts is intending to seek a further stay until the determination of any appeal. I will treat the temporary stay as a current stay, such that Order 1 of the orders I propose to make acts by reference to any further stay obtained after this temporary stay.

9    In the NSWSC proceeding, Sharvain, through the Administrator, has filed an undertaking to the NSWSC in the form of a “Deed of Undertaking and Declaration of Trust” pursuant to which Sharvain undertakes to hold any proceeds of any judgment obtained in its favour on trust for Roberts pending the final determination of the parties’ rights and not to distribute them to any third party, including any creditor of Sharvain. Thus, if Sharvain recovers the judgment debt in the NSWSC proceeding, those funds will be held separate from the general funds of Sharvain and cannot be distributed until the rights of the parties are finalised, including by way of any appeal in the NSWSC proceeding, adjudication of a proof of debt, or determination in relation to set off.

10    By interlocutory process filed on 13 June 2025, the Administrator seeks an extension of the convening period (currently ending on 20 June 2025) for a further eight weeks until 15 August 2025 to allow any stay application brought by Roberts in the NSWSC proceeding to be heard and determined, and (if there is no further stay) for the money to be paid. The Administrator has also foreshadowed that, if the stay application is successful, he intends to apply to the Court for a lengthier extension until any appeal to the New South Wales Court of Appeal is heard and determined.

11    The matter originally came before me on 17 June 2025. At that time, although Sharvain had reasons for judgment, it had not yet obtained any order from the NSWSC. I therefore stood the matter over until 19 June 2025 at 3:00 pm, to see if Sharvain could obtain an order in the nature of a money judgment in the meantime. As noted above, such an order was obtained on 18 June 2025. I was preparing to deal with the matter on the basis of the argument under s 32B of the SOPA at the hearing on 19 June 2025. However, shortly prior to that hearing, the basis for the present application changed. In its further written submissions, Sharvain raised an additional issue of concern.

12    I will deal with the original basis for the application, before turning to deal with the revised basis.

Concern about the application of s 32B of the SOPA

13    Originally, the basis for the present application was said to be that the Administrator is concerned that if Sharvain is placed into liquidation, somebody could potentially mount an argument that the enforcement of the NSWSC judgment against Roberts is prevented by the operation of s 32B of the SOPA. The Administrator is concerned that, in that event, Sharvain would have to enforce its money claim against Roberts by way of a conventional claim for breach of contract, which would give rise to delay, costs and uncertainty for Sharvain to the potential prejudice of its creditors.

14    The Administrator is therefore concerned with a hypothetical prejudice to creditors that might result if s 32B is construed in a way that prevents the enforcement of a judgment of the NSWSC and Sharvain is forced to pursue its claim against Roberts in another way.

15    On the other hand, the Administrator has also identified an actual prejudice to employees of Sharvain which will result if an order is made delaying the second creditors’ meeting. In his first affidavit in these proceedings dated 26 March 2025, the Administrator estimated that there was an amount of approximately $1,260,820 in unpaid employee entitlements. In the event that the liquidation of Sharvain is delayed, this will delay the payment to employees of their entitlements, either by the company or pursuant to the Fair Entitlements Guarantee scheme (FEG) under the Fair Entitlements Guarantee Act 2012 (Cth).

16    I accept that, if the Administrator’s feared scenario came about, that could cause prejudice to Sharvain and its creditors. However, in my view, the hypothetical risk identified by the Administrator is not a meaningful risk because s 32B of the SOPA does not operate to prevent the enforcement of the NSWSC judgment. In those circumstances, the hypothetical risk identified by the Administrator is decisively outweighed by the actual prejudice to employees that would result from any further delay to the second meeting of creditors.

Revised basis – s 553C of the Corporations Act

17    As noted above, just prior to the second hearing of this matter, a separate basis was identified in support of the present application. This was a concern about the potential operation of s 553C of the Corporations Act. The concern was articulated by counsel for the Administrator, Mr Hazan. There was no evidence from the Administrator that he was concerned about this matter. That is not to suggest that such evidence was required. It does, however, explain why the concern was expressed in a fairly unstructured way and the content and mechanism of the concern only became clear in the course of exchanges between the Court and counsel. It also explains why no notice was provided to any creditor (including Roberts) that such an argument would be made. There was evidence before the Court that the legal representatives for Roberts had been notified about the argument under s 32B and had chosen not to appear on the application, but no evidence that they knew about the argument under s 553C (which was a late emerging idea).

18    The concern as expressed is that if Sharvain is placed into liquidation before the judgment debt of $3,278,043.27 is paid, the effect of s 553C of the Corporations Act is that Roberts may be entitled to set off that judgment debt against any claims Roberts has against Sharvain, which might reduce (including potentially to nil) the amount of money that is payable to Sharvain. The concern expressed is that this could cause prejudice to Sharvain in two possible ways:

(a)    First, if Roberts was itself to go into liquidation, and Roberts’ claim against Sharvain was ultimately not maintainable, then Sharvain might only receive a portion of the judgment debt as a creditor of Roberts, rather than the full judgment debt now. The Administrator points to the fact that related entities in the Roberts group of companies, including the ultimate parent entity of Roberts, have recently been placed into administration.

(b)    Secondly, if the debt is subject to a set off, Sharvain will likely have to fully litigate the issues of claim and counter-claim between the parties in order to recover the judgment debt. By contrast, if Sharvain receives the judgment debt now, and Roberts is required to lodge a proof of debt in the insolvency of Sharvain, the full litigation of the issues might be avoided because the liquidator will admit or not admit the proof of debt as the case may be, or admit for part only, which might be accepted by Roberts, avoiding the need for litigation. This involves some degree of speculation.

19    For the reasons set out below, I am satisfied that this second concern provides (but only just) a sufficient basis for extending the date for the second meeting of creditors for a relatively short period.

Legislative framework

20    The legal principles underpinning the Court’s discretion and power to extend the time for holding a second creditors’ meeting are well settled. They have been considered in Strawbridge, in the matter of Virgin Australia Holdings Pty Ltd (administrators appointed) (No 2) (2020) 144 ACSR 347; [2020] FCA 717 at [64] – [68] per Middleton J; Hams (Administrator), in the matter of Onesteel Manufacturing Pty Ltd (Administrators Appointed) [2025] FCA 219 at [24] – [30] per Neskovcin J and Frisken, in the matter of Xpress Transport Solutions Pty Ltd (Receivers and Managers Appointed) (Administrator Appointed) [2023] FCA 448 at [30] – [38] per Cheeseman J.

21    In the present case, the Administrator relies on the Court’s power to make orders under s 447A rather than s 439A(6), given that this is the third application for an extension of time. In Lombe, Re Australian Discount Retail Pty Ltd (2009) 27 ACLC 115; [2009] NSWSC 110 at [31], Barrett J expressed doubt as to whether the power in s 439A(6) extended to granting multiple extensions. The Court nevertheless has that power under s 447A: Strawbridge, in the matter of Virgin Australia Holdings Ltd (administrators appointed) (No 7) [2020] FCA 1182 (Virgin No 7) at [12] – [13] per Middleton J. The principles that apply when considering a further extension are the same as those that apply for any extension of the convening period: Virgin No 7 at [14].

22    Section 32B of the SOPA provides as follows:

(1)    A corporation in liquidation cannot serve a payment claim on a person under this Part or take action under this Part to enforce a payment claim (including by making an application for adjudication of the claim) or an adjudication determination.

(2)    If a corporation in liquidation has made an adjudication application that is not finally determined immediately before the day on which it commenced to be in liquidation, the application is taken to have been withdrawn on that day.

23    Counsel was not able to identify any cases that had considered whether the words in s 32B “A corporation in liquidation cannot… take action under this Part to enforce a payment claim” could prevent the corporation from enforcing a judgment debt obtained as a result of the application of the SOPA.

24    The Second Reading Speech for the SOPA Bill contains the following relevant passage in relation to s 32B:

The bill will insert section 32B to prevent the Act applying to a claimant corporation in liquidation. This reform will ensure that the Act operates consistently with the object of promoting cash flow. The prime objective of the Act is to keep cash flowing in the contracting chain by enforcing timely payment. On this basis, the Act operates on a “pay-now-argue-later” basis, enabling claimants to obtain payment on an interim basis but preserving a respondent’s final rights. If a claimant in liquidation were able to access the Act, any payment a respondent would be required to make to the claimant would not be interim as intended. This is because the respondent would not be able to sue for recovery as the payment would enter the general pool for distribution to the claimant's creditors.

25    Section 553C of the Corporations Act relevantly provides as follows:

(1)    Subject to subsection (2), where there have been mutual credits, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company:

(a)    an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and

(b)    the sum due from the one party is to be set off against any sum due from the other party; and

(c)    only the balance of the account is admissible to proof against the company, or is payable to the company, as the case may be.

(2)    …

Consideration

26    In relation to the operation of s 32B of the SOPA, the relevant passage from the Second Reading Speech might, in a broad sense, be seen to support an approach that insolvency should bring an end to the utilisation of the benefits of the SOPA. However, the key words in the relevant passage are “access the Act”. That is consistent with the language of s 32B, which refers to “take action under this Part”, i.e. under Part 3 of the SOPA.

27    I do not consider that s 32B prevents a corporation which has obtained a judgment in a fixed amount from the NSWSC from enforcing that judgment. Section 32B relevantly operates to prevent a person from taking action “under this Part to enforce a payment claim”. The words “this Part” are a reference to Part 3 of the SOPA, which comprises ss 13 to 32B. Part 3 provides (in ss 13-15) procedures whereby a person can make a payment claim and, if there is no payment schedule within the requisite time, recover the unpaid portion of the claim. Section 15 provides that such a person can “recover the unpaid portion of the claimed amount from the respondent, as a debt due to the claimant, in any court of competent jurisdiction”.

28    Part 3 therefore provides a procedure by which a company can bring an application to, inter alia, the NSWSC to obtain a judgment debt. However, once a judgment is obtained, a company enforcing the judgment is not doing so pursuant to any procedure under Part 3. The relevant rights under the SOPA have merged in the judgment. The company enforcing the judgment does so pursuant to the Civil Procedure Act 2005 (NSW). It does not avail itself of any procedural mechanism set out in any section of Part 3. The procedural apparatus under Part 3 has concluded its operation. Further, the company is not enforcing “a payment claim”. It is enforcing a judgment, which is the source of separate rights. This may be contrasted with the position if the company enters liquidation during the pendency of the process under the SOPA – for example, after a payment claim has been served but before the time has elapsed for a payment schedule, or after a proceeding has commenced but prior to judgment.

29    That position is not altered by the existence of a separate procedure in Part 3 for the adjudication of payment claims through the appointment of an adjudicator. Section 17 provides that a claimant may apply for adjudication of a payment claim. Section 22 provides that an adjudicator is to determine the payment claim. If the respondent fails to pay, s 24 provides that the authorised nominating authority may issue an “adjudication certificate”. Section 25 provides that the adjudication certificate may be filed “as a judgment for a debt in any court of competent jurisdiction and is enforceable accordingly”. None of these provisions apply in the present case. But in any event, nothing in those provisions suggests that the enforcement of a judgment debt involves the taking of action under Part 3 of the SOPA.

30    Any alternative construction would produce anomalous results. A judgment for a money sum creates a separate, enforceable right, as well as a res judicata. The claim merges in the judgment. If the plaintiff was forced to relitigate the claim to obtain a separate but duplicative judgment, how would the two judgments sit together? What is the second court to do with the first judgment? Why would the court give judgment twice, potentially for the same amount, or potentially for a different amount?

31    In light of this conclusion, I do not think that the potential operation of s 32B of the SOPA provides an adequate justification for postponing the second meeting of creditors, particularly when that postponement will cause prejudice to employees with entitlements, the payment of which will be postponed.

32    In relation to s 553C, I accept that the two types of prejudice identified by Sharvain could conceivably arise. The first type of prejudice is quite speculative, because it depends on Roberts going into liquidation. Further, if an extension of time was granted on that basis, it would involve the Court in a process of preferring the interests of one group of creditors (being the creditors of Sharvain) over another group of creditors (being the creditors of Roberts). No basis for making a choice of this type was identified by Sharvain.

33    The second type of prejudice is somewhat more concrete, in that I accept that if Sharvain goes into liquidation it might be more difficult and more costly for the liquidator to obtain the benefit of the $3,278,043.27 for Sharvain and its creditors. That benefit flowing from an extension of time is somewhat speculative. It depends upon:

(a)    Sharvain avoiding a stay, and obtaining payment of the judgment debt from Roberts; and

(b)    Roberts’ counter-claim not being litigated, and being resolved on some pragmatic basis in the liquidation of Sharvain.

34    Further, in one sense there is something slightly curious about postponing a liquidation so as to avoid the consequences of the application of a provision (s 553C) which forms a conventional part of the suite of provisions applicable in the event of a corporate insolvency.

35    I do not find the present case to be a clear case. On balance, and not without hesitation, I conclude that there is a sufficient reason (but barely sufficient) to support a single extension of time to enable Sharvain to see if it can obtain prompt payment by Roberts of the judgment debt.

36    This, however, assumes that Roberts does not obtain a stay. If Roberts obtains a stay of the judgment pending an appeal, then I consider that there would be insufficient reason for a further extension of time. At that point, the prospect of avoiding some detriment, such as additional costs, for Sharvain and its creditors becomes quite speculative and attenuated, and would be outweighed by the prejudice to employees flowing from a further delay (which could be extensive) in the payment of their entitlements.

37    In those circumstances, I will order an extension of time. However, I will condition that order so that the extension of time comes to an end if Roberts obtains a stay of the NSWSC judgment.

38    The Administrator also seeks an order commonly described as a “Daisytek order” to allow the second meeting of the creditors required by s 439A to be held at any time before, or within five business days after, the end of the extended convening period, notwithstanding the operation of s 439A(2): In the matter of Daisytek Australia Pty Limited (2003) 45 ACSR 446; [2003] FCA 575 at [10] – [14] per Lindgren J. In effect, s 439A(2) does not permit an administrator to hold a creditors’ meeting earlier than five days before the end of the convening period. Pursuant to the Court’s power under s 447A, a “Daisytek order” will dispense with that timing requirement. As observed by Banks-Smith J in Algeri (Administrator), in the matter of Murray & Roberts Pty Ltd (Administrators Appointed) (No 2) [2022] FCA 1563 at [6], a “Daisytek order” “gives administrators greater flexibility in that they can convene a meeting earlier if appropriate in the circumstances”. I consider that, in this instance, a “Daisytek order” is sensible and will enable the administrator flexibility to determine, if it sees fit, to convene the second creditors’ meeting earlier than the time allowed.

39    I will otherwise order that the Administrator give notice of these orders to creditors, and give interested parties liberty to apply to vary or discharge the orders. I will also grant liberty to apply to the Administrator. The Administrator’s costs of the interlocutory process will be costs in the administration.

Associate:

Dated:    23 June 2025