They may have recommended a dog of DoCA and been punted as a consequence but two Sydney practitioners are lucky they don’t have more wounds to lick.
On Monday, NSW Supreme Court judge Ashley Black made costs orders in respect of Minle Wine Negociants of Australia Pty Ltd (Minle) after last week terminating a deed of company arrangement (DoCA) and ordering that the company be wound up.
“With respect, it seems to me that one obvious way in which the Administrators could have assisted the Court was to be candid and open as to the extent to which matters had emerged in the hearing which were not previously known to them, and that would not have required that they depart from a position of neutrality as to the outcome. The Administrators were not prepared to address that question, even after they were invited to do so.” Justice Ashley Black.
As is detailed In the matter of ACN 613 909 596 Pty Ltd (formerly Minle Wine Negociants of Australia Pty Ltd) (subject to Deed of Company Arrangement) [2023] NSWSC 801 Hogan Sprowles partners Michael Hogan and Brendan Copeland were the deed administrators and in the wake of the termination, deed proponent and Minle’s sole director Thanh Heip Le sought to have the pair appointed as Minle’s liquidators.
That prospect had no appeal for petitioning creditor Monoova Global Payments Pty Ltd (MGP), which had obtained consents from Liam Healy and Quentin Olde and had agreed to fund the Ankura pair to undertake initial investigations, something that would seem to be necessary given certain pre-appointment transactions and the subsequent founding of a new and curiously similar business.
Justice Black ruled that Healy and Olde should take on the winding up but Hogan and Copeland then had to contend with MGP’s efforts to deny them recourse to the deed fund or the company’s assets for their costs and expenses of the proceedings, despite their being no application for any adverse findings in terms of their conduct.
The judge wasn’t prepared to go that far but when it came to the question of the costs and expenses they incurred during the two day hearing of the termination application last month the judge deemed that Hogan, who was cross-examined, had had no need to be represented by solicitors and counsel and he and Copeland should therefore be denied the right to impose those costs on creditors.
This the judge said was because their participation at the hearing added nothing.
“The Administrators submit that the costs of attendance on 20 and 22 June 2023 were reasonably and honestly incurred,” the judge said.
“I would likely have accepted this submission, had the Administrators been prepared to assist the Court by making any substantive submission as to what had emerged from the two days of hearing which Mr Hogan, their Counsel and their solicitors had attended.
“Where they were not prepared to do so, it seems to me that Mr Hogan’s role was limited to that of a witness, and there was no necessity for him to be represented by Counsel and instructing solicitors in that capacity.
“It also seems to me that the Administrators’ lack of assistance in identifying any new matters that had emerged from the hearing tells strongly against their recovery of the costs of the two hearing days.
“… it seems to me that one obvious way in which the Administrators could have assisted the Court was to be candid and open as to the extent to which matters had emerged in the hearing which were not previously known to them, and that would not have required that they depart from a position of neutrality as to the outcome”, the judge said
“The Administrators were not prepared to address that question, even after they were invited to do so.”
Further reading:
It must always be remembered that the Courts expect external administrators to assist when appearing in court. The comments of Black J are not surprising therefore. In fact any changed circumstances and attitude by the external administrators not only would have assisted the court but also the perception of the court of the conduct of the external administrators. The is even that the primary task of the administrators tis to act in interests of creditors and seek to uphold the DOCA – unless there has been a change in circumstances.