mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Re Royal Society's Charitable Trusts [1956] Ch 87
Outcome: considered
In Re Royal Society's Charitable Trusts [1956] Ch 87, Vaisey J was asked by the Royal Society to permit it, inter alia , to consolidate various different trust funds of which it was trustee for investment and accounting purposes. Vaisey J held that the application did not come within s 57 of the Trustee Act 1925 (UK) (the equivalent section to s 63 of the Trustee Act 1958 (Vic)) or alternatively under what he called "the rather ill-defined scope of the court's general jurisdiction". However, he held that the Court had power under its special jurisdiction relating to charities to consider the applications. 86 I doubt whether s 63 provides a basis for the directions sought by the Administrators as they are seeking directions as to how they may exercise their power as trustees, rather than seeking a direction for a particular transaction, even though a particular transaction will result from the exercise of their power, if approved or directed by the Court. Notwithstanding the breadth of the definition of "expedient", I do not consider that it is expedient, in the interests of the trust properties or the beneficiaries under the trusts that the Administrators be given the power to put a resolution and vote in favour of it adversely to the interests of the beneficiaries. 87 I turn to deal with the issue of the pooling of assets and liabilities of companies. Pooling of assets and liabilities of companies in administration or liquidation as a concept is well known although it does not appear that pooling has been approved in circumstances where a number of the creditors of one or more of the companies have been disadvantaged by the pooling proposal and the creditors have not unanimously consented to, or approved of, the pooling proposal.
Case: Anmi Pty Ltd v Williams [1981] 2 NSWLR 138
Outcome: considered
In Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209, Young J gave effect to pooling resolutions passed by creditors of two companies at s 439A meetings by recourse to s 447A of the Corporations Law . Young J noted at 213, the rule that had grown up in the bankruptcy jurisdiction that: "where estates were so inextricably blended as to render it impracticable to keep them distinct, the court would order them to be administered in consolidation." Young J found support for this principle of consolidation in corporate insolvency in Anmi Pty Ltd v Williams [1981] 2 NSWLR 138 which involved an application by a liquidator in the course of the winding-up of three companies which carried on business in partnership. Powell J at 164 referred to the exception to the rule in bankruptcy that separate creditors could not have access to joint assets, namely that separate creditors could have access to a pool comprising joint and separate assets. Powell J relied on the following statement in Archbold on Bankruptcy , 11 th ed, p 598 as a formulation of the exception: "'Where (the joint and separate) estates are so blended together as to render it impracticable to keep them separate, they may be consolidated; but not where the accounts can be kept distinct, and a single creditor objects (In re Buliver; Ex p Sheppard (1833) Mon &amp; B 415; 3 Dea &amp; C 190); and even if the creditors at a general meeting agree to consolidate the estates, they will not be consolidated without it is ascertained that the proposed consolidation will be for the benefit of creditors generally (In re Higton and Breever; Ex p Strutt (1821) 1 G1 &amp; J29)': Archbold on Bankruptcy, 11 th ed, p 598.' Powell J continued: "To this must be added, as a gloss, that the mere fact that proofs may be difficult of investigation or that difficult questions may arise as to whether creditors are joint or separate creditors seems not to be sufficient to bring a case within the exception: Re Kriegel; Waring &amp; Co; Ex parte Trotman (1893) 68 LT 588; 10 Morr 99; Re Sydney Barker &amp; Co (1914) 21 Mans 238". 100 This review of the recent authorities on pooling leads me to the conclusion that there is no authority or support for the view that a Court will approve a pooling proposal in circumstances where a number of the creditors of one or more of the companies will be significantly disadvantaged. These authorities also proceed on the basis that it is not sufficient for an order for pooling that the administration or liquidation is complex or that the identity of creditors is difficult to determine. So much was stated by Powell J in Anmi Pty Ltd v Williams (supra) at 164 (par [88] above). The observation of Powell J was cited with approval by Young J in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (supra) at 213 and by Barrett J in Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (supra) at 17.
Case: Re Charter Travel Co Ltd (1997) 25 ACSR 337
Outcome: considered
In Re Charter Travel Co Ltd (1997) 25 ACSR 337, Young J approved of the calling of a joint meeting of creditors of two companies to consider a pooling proposal for two companies in liquidation in circumstances where it was virtually impossible to define which creditor belong to which company. Young J said at 338: "As I indicated in my judgment in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 24 ACSR 79, administration of two companies in insolvency conjointly is something that can occur only in exceptional cases. As I said at 85, this normally means a scheme of arrangement, but if no creditor objects and it is impracticable to keep the assets and liabilities of different companies separate, and the consolidation is for the benefit of creditors generally, then the court might advise the liquidators concerned that they would be justified in consolidating the administration." One of the factors which persuaded Young J that the case fell within the exceptional circumstances was that no creditor could be disadvantaged by the proposal. 114 I have not lost sight of the fact that the pooling proposal by the Administrators is sensible and advantageous to most of the creditors from a practical point of view. I am mindful of the observations of Young J in Re Charter Travel Co Ltd (supra) at 338: "So long as there is a power under the Corporations Law or otherwise available to the court, the court is anxious to see that liquidations are conducted with commercial efficiency and will not allow any technical rules to frustrate that attempt". (This passage was referred to with approval by Santow J in Re Switch Telecommunications Pty Ltd (in liq); Ex parte Sherman (supra) at 184).
Case: Re Switch Telecommunications Pty Ltd (in liq); Ex parte Sherman [2000] NSWSC 794 ; (2000) 35 ACSR 172
Outcome: considered
In Re Switch Telecommunications Pty Ltd (in liq); Ex parte Sherman [2000] NSWSC 794 ; (2000) 35 ACSR 172, Santow J approved of a pooling proposal for two companies in liquidation pursuant to ss 510 and 1322(4) of the Corporations Law . A combined meeting of creditors of both companies had been unanimously in favour of the proposal. It does not appear from the judgment whether any creditors were disadvantaged by the proposal. 114 I have not lost sight of the fact that the pooling proposal by the Administrators is sensible and advantageous to most of the creditors from a practical point of view. I am mindful of the observations of Young J in Re Charter Travel Co Ltd (supra) at 338: "So long as there is a power under the Corporations Law or otherwise available to the court, the court is anxious to see that liquidations are conducted with commercial efficiency and will not allow any technical rules to frustrate that attempt". (This passage was referred to with approval by Santow J in Re Switch Telecommunications Pty Ltd (in liq); Ex parte Sherman (supra) at 184).
Case: Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (2004) 50 ACSR 15
Outcome: considered
In Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (2004) 50 ACSR 15, Barrett J approved a pooling proposal by recourse to ss 447A of the Act for two companies in liquidation over the objection of one creditor. The dissenting creditor objected to the pooling proposal at a meeting of creditors held pursuant to s 439A of the Act, and also availed itself of the opportunity to have its grounds of dissent placed before the court. Barrett J was satisfied that the circumstances in which the pooling proposal was put before the creditors of the relevant company and voted upon justified a conclusion that the majority vote both by number and value ought to be recognised as a properly informed expression of the will of the creditors reflective of the interests of the general body of creditors. 100 This review of the recent authorities on pooling leads me to the conclusion that there is no authority or support for the view that a Court will approve a pooling proposal in circumstances where a number of the creditors of one or more of the companies will be significantly disadvantaged. These authorities also proceed on the basis that it is not sufficient for an order for pooling that the administration or liquidation is complex or that the identity of creditors is difficult to determine. So much was stated by Powell J in Anmi Pty Ltd v Williams (supra) at 164 (par [88] above). The observation of Powell J was cited with approval by Young J in Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (supra) at 213 and by Barrett J in Dean-Willcocks; Alpha Telecom (Aust) Pty Ltd (in liq) (supra) at 17.
Case: Mentha v GE Capital (1997) 27 ACSR 696
Outcome: considered
In Mentha v GE Capital (1997) 27 ACSR 696, Finkelstein J accepted that in appropriate circumstances pooling of assets and liabilities of companies in insolvency might be "both just and equitable if not essential". His Honour said at 702: "In my opinion the power to enter into a deed of company arrangement under Pt 5.3A is sufficiently broad to permit an arrangement binding on two or more insolvent companies pursuant to which their respective assets and creditors will be consolidated. There is no justification for a construction of this part of the Corporations Law that would lead to the conclusion that arrangements made pursuant to Pt 5.3A must be more narrowly confined than arrangements made under s 411." However, Finkelstein J was not required to address this issue in circumstances where it was apparent that any creditors would be disadvantaged by the pooling proposal.
Case: Humphris, Re ACN 004 987 866 (2003) 21 ACLC 1474
Outcome: considered
In Humphris, Re ACN 004 987 866 (2003) 21 ACLC 1474, I approved of a pooling proposal where the creditors present at the meetings unanimously approved of the proposal to enter into deeds of company arrangements which contained provisions to pool the assets and liabilities of each company. In those particular circumstances, it was inevitable that if pooling did not occur, all creditors would be worse off. This was because the costs which would be incurred if there was no pooling would erode the balance available for distribution to creditors.
Case: Re Tayeh; the Black Stump Enterprises Pty Ltd (2005) 53 ACSR 684
Outcome: considered
In Re Tayeh; the Black Stump Enterprises Pty Ltd (2005) 53 ACSR 684, an application for approval of a pooling proposal in a creditors' voluntary liquidation scenario was dismissed. What weighed heavily in the reasoning of Barrett J was the fact that the creditors as a body had not been given a clear opportunity to make a positive expression of their views. Barrett J said at 692: "As I have said, Charter Travel was a case in which what was effectively a clearance for the liquidators to implement a specific pooling arrangement if 'creditors unanimously approved the proposal' was given by Young J in a context where his Honour made an order that the liquidators would be justified in convening a combined meeting of the creditors of two companies. There was thus to be a forum for the positive statement of opinions and wishes actively sought, no doubt by way of proposed resolution in relation to a specifically identified proposal. The lack of objection contemplated there (as well as in Soluble Solution which involved a s 447A application) was in a context quite different from the context involved in the present case. Here, there has been no attempt to engage any of the statutory provisions under which rights in a winding up may be varied." 96 The Administrators submitted that pooling was justified on the basis of a number of propositions to be extracted from United States of America authorities. They relied upon what they called: &#8226; the reliance test as a single economic unit; &#8226; the entanglement test, that is to say the interrelationship of the companies in the group is so hopelessly inter-related that to disentangle it would be both time and cost prohibitive; and &#8226; the balancing test, that is to say the benefits of the consolidation outweigh the harm it would cause creditors if there was no consolidation.
Case: In Re Owens Corning 419 F.3d 195 (3 rd Cir. 2005)
Outcome: considered
The principles applicable to what is called in the United States of America "substantive consolidation", which is akin to "pooling", were recently re-stated by the United States Court of Appeals for the Third Circuit in In Re Owens Corning 419 F.3d 195 (3 rd Cir. 2005). The Court analysed In re Augie/Restivo 860 F.2d 515 (2 nd Cir. 1988) where the Court found that there were two rationales, to be extracted from previous decisions, for substantive consolidation. These rationales were: (a) where the creditors dealt with the various entities in the group as a single economic unit and did not rely on their separate identity in extending credit; (b) where the affairs of the companies in the group were so entangled that consolidation would benefit all creditors. The Court noted that there was nearly unanimous consensus in the substantial body of case law on substantive consolidation that it was a remedy to be used "sparingly".
Case: In re Augie/Restivo 860 F.2d 515 (2 nd Cir. 1988)
Outcome: considered
The principles applicable to what is called in the United States of America "substantive consolidation", which is akin to "pooling", were recently re-stated by the United States Court of Appeals for the Third Circuit in In Re Owens Corning 419 F.3d 195 (3 rd Cir. 2005). The Court analysed In re Augie/Restivo 860 F.2d 515 (2 nd Cir. 1988) where the Court found that there were two rationales, to be extracted from previous decisions, for substantive consolidation. These rationales were: (a) where the creditors dealt with the various entities in the group as a single economic unit and did not rely on their separate identity in extending credit; (b) where the affairs of the companies in the group were so entangled that consolidation would benefit all creditors. The Court noted that there was nearly unanimous consensus in the substantial body of case law on substantive consolidation that it was a remedy to be used "sparingly". 98 Having analysed the competing lines of authority on substantive consolidation, the Court's conclusion was to follow the In re Augie/Restivo (supra) approach. It said, at 211: "In our Court what must be proven (absent consent) concerning the entities for whom substantive consolidation is sought is that (i) prepetition they disregarded separateness so significantly their creditors relied on the breakdown of entity borders and treated them as one legal entity, or (ii) postpetition their assets and liabilities are so scrambled that separating them is prohibitive and hurts all creditors." The Court rejected the proposition that mere benefit to the administration of the various companies was sufficient to warrant substantive consolidation. The Court also rejected the proposition that the commingling of assets justified consolidation when the affairs of the companies were so entangled that consolidation would be beneficial. The Court set out the following principle at 214: "...commingling justifies consolidation only when separately accounting for the assets and liabilities of the distinct entities will reduce the recovery of every creditor that is, when every creditor will benefit from the consolidation. Moreover, the benefit to creditors should be from cost savings that make assets available rather than from the shifting of assets to benefit one group of creditors at the expense of another. Mere benefits to some creditors, or administrative benefit to the Court, falls far short." The Court emphasised that the theoretical justification for what it called "hopeless commingling" consolidation was that no creditor's rights would be impaired. 99 I consider these principles appropriate to apply within the context of the proper approach to pooling in the Australian jurisdiction. They are not inconsistent with the Australian decisions on pooling to which I have referred and I consider that they complement the principles which underlie those decisions.
Case: Re Coaleen Pty Ltd (Admin. Appointed ) [2000] 1 Qd R 245
Outcome: applied
No guidelines are provided by the statute or the regulations as to the manner in which the casting vote may be exercised. The cases support the proposition that a person in the position of an administrator has a discretion as to how to exercise a casting vote at a meeting of creditors but that such a vote should be exercised honestly and in the best interests of the body of creditors as a whole: Re Coaleen Pty Ltd (Admin. Appointed ) [2000] 1 Qd R 245; Re Martco Engineering Pty Ltd (1999) 32 ACSR 487; Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21.
Case: Re Martco Engineering Pty Ltd (1999) 32 ACSR 487
Outcome: applied
No guidelines are provided by the statute or the regulations as to the manner in which the casting vote may be exercised. The cases support the proposition that a person in the position of an administrator has a discretion as to how to exercise a casting vote at a meeting of creditors but that such a vote should be exercised honestly and in the best interests of the body of creditors as a whole: Re Coaleen Pty Ltd (Admin. Appointed ) [2000] 1 Qd R 245; Re Martco Engineering Pty Ltd (1999) 32 ACSR 487; Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21.
Case: Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21
Outcome: applied
No guidelines are provided by the statute or the regulations as to the manner in which the casting vote may be exercised. The cases support the proposition that a person in the position of an administrator has a discretion as to how to exercise a casting vote at a meeting of creditors but that such a vote should be exercised honestly and in the best interests of the body of creditors as a whole: Re Coaleen Pty Ltd (Admin. Appointed ) [2000] 1 Qd R 245; Re Martco Engineering Pty Ltd (1999) 32 ACSR 487; Kirwan v Cresvale Far East Ltd (2002) 44 ACSR 21.
Case: Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456
Outcome: applied
there exists power to further extend the convening period is, in my opinion and clear: see Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 984. There is also, in my opinion, clear authority further to adjourn the winding up application: see Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 , and; Deputy Commissioner of Taxation v First Netcom Pty Ltd (2001) 19 ACLC 324.
Case: Deputy Commissioner of Taxation v First Netcom Pty Ltd (2001) 19 ACLC 324
Outcome: cited
there exists power to further extend the convening period is, in my opinion and clear: see Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 984. There is also, in my opinion, clear authority further to adjourn the winding up application: see Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 , and; Deputy Commissioner of Taxation v First Netcom Pty Ltd (2001) 19 ACLC 324.
Case: Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 984
Outcome: applied
there exists power to further extend the convening period is, in my opinion and clear: see Re Henry Walker Eltin Group Limited (Administrators Appointed) [2005] FCA 984. There is also, in my opinion, clear authority further to adjourn the winding up application: see Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 , and; Deputy Commissioner of Taxation v First Netcom Pty Ltd (2001) 19 ACLC 324.
Case: Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337
Outcome: cited
With respect to the claim of actual bias, I can find no evidence to support such a claim. Nothing before me demonstrates a "closed mind" on the part of the Tribunal: see SBBA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 90 at [15] , referring to Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at 530 per Gleeson CJ and Gummow J. The appellant has not identified any particular material or findings in support of any claim of bias, actual or apprehended, and I cannot be satisfied that a fair-minded and informed person might reasonably apprehend that the Tribunal might not have brought an impartial mind to bear on the decision: see Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337 at 344; and NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 214 ALR 264 at [14].
Case: Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507
Outcome: cited
With respect to the claim of actual bias, I can find no evidence to support such a claim. Nothing before me demonstrates a "closed mind" on the part of the Tribunal: see SBBA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 90 at [15] , referring to Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at 530 per Gleeson CJ and Gummow J. The appellant has not identified any particular material or findings in support of any claim of bias, actual or apprehended, and I cannot be satisfied that a fair-minded and informed person might reasonably apprehend that the Tribunal might not have brought an impartial mind to bear on the decision: see Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337 at 344; and NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 214 ALR 264 at [14].
Case: NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 214 ALR 264
Outcome: cited
With respect to the claim of actual bias, I can find no evidence to support such a claim. Nothing before me demonstrates a "closed mind" on the part of the Tribunal: see SBBA v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCAFC 90 at [15] , referring to Minister for Immigration and Multicultural Affairs v Jia Legeng [2001] HCA 17 ; (2001) 205 CLR 507 at 530 per Gleeson CJ and Gummow J. The appellant has not identified any particular material or findings in support of any claim of bias, actual or apprehended, and I cannot be satisfied that a fair-minded and informed person might reasonably apprehend that the Tribunal might not have brought an impartial mind to bear on the decision: see Ebner v Official Trustee in Bankruptcy [2000] HCA 63 ; (2000) 205 CLR 337 at 344; and NADH of 2001 v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 214 ALR 264 at [14].