Court dismisses deed administrators’ amendathon

Amended originating processes, further amended originating processes, deeds of company arrangements and variants thereof – in the end perhaps it was all too much?

“The orders in large part seek to bootstrap the obligations in the Amended DOCA by embodying those obligations in Court orders or otherwise to make specific orders in respect of matters that would result from the operation of the relevant provisions of the Act.” Justice Elizabeth Cheeseman.

Certainly we can imagine Federal Court judge Elizabeth Cheeseman tossing papers about her chambers in respect of the much amended application brought by the external administrators of J.W. Mailing Services Pty Ltd which the judge on Wednesday dismissed for lack of evidence, amongst other reasons.

“Although the plaintiffs press to have the Court make orders, now framed by reference to the Amended DOCA, they have not relied on any evidence which would justify the Court in making the orders sought,” the judge said.

“The orders in large part seek to bootstrap the obligations in the Amended DOCA by embodying those obligations in Court orders or otherwise to make specific orders in respect of matters that would result from the operation of the relevant provisions of the Act.”

The judge’s reasons are detailed in Ball, in the matter of J.W. Mailing Services Pty Ltd (in liq) (Subject to Deed of Company Arrangement) [2023] FCA 1479 which tracks the progress of this administration from its commencement in August 2017, at which time Mitchell Ball was appointed liquidator via a resolution of its members.

In late 2021 Ball determined that a DoCA proposal put forward by sole director John “Fratelli Fresh” White was worth recommending to creditors and in January 2022 he and Mackay Goodwin chief Domenic Calabretta were appointed as deed administrators.

In July of this year Ball and Calabretta approached the court for orders terminating the deed and the voluntary liquidation but Justice Cheeseman adjourned the hearing of their application part heard because they’d failed to give interested parties adequate notice.

The resumption of the hearing was then delayed because Ball and Calabretta needed time to put to creditors a proposal to amend the DoCA.

This necessitated the filing and service of an amended originating process prior to the resumption the hearing on November 9.

But on the day the hearing resumed Ball and Calabretta sought leave to file a further amended originating process – a FAOP no less – and also tendered the amended DoCA executed the previous day.

As her honour explains, the amended DoCA differed in that the original terms allowing for the payment of unsecured creditors in full was replaced with terms that would see unsecureds’ return cut by half and $65,000 directed to paying Ball and Calabretta’s legal fees.

White it appears wanted to cap a second contribution he’d committed to making to the deed fund and Ball and Calabretta decided that enforcing the director’s original commitment wasn’t realistic given there were no funds to fight White through the courts and according to her honour neither they or their lawyers would do it on spec.

Ultimately this meant that when the hearing resumed the judge felt she had nothing before her justifying her making the orders sought and dismissed the amended originating process whilst leaving the way open for Ball and Calabretta to commence fresh proceedings in relation to the amended DOCA should they deem it desirable to do so.

“Any such proceeding should be accompanied by cogent evidence in support of the relief claimed,” the judge added.

Calabretta and Ball did not respond to a request for comment.