M & S Butler Investments Pty Ltd & Ors v Granny May's Franchising Pty Ltd & Ors [1997] FCA 901

M & S Butler Investments Pty Ltd & Ors v Granny May's Franchising Pty Ltd & Ors [1997] FCA 901

The Deed of Company Arrangement was terminated because it was unfairly discriminatory and prejudicial to the respondent (GMF). The Deed's primary purpose was to protect the directors from their obligations as guarantors, which was impermissible under the Corporations Law. Further, material details of the proposed Deed were not supplied to creditors prior to their vote, resulting in non-compliance with s 439A(4)(c) of the Law.

Parties
First Applicant: M & S Butler Investments Pty Ltd; Second Applicants: Mark Butler & Shauna Butler; Third Applicants: Jack Stewart & Jann Stewart; First Respondent: Granny May's Franchising Pty Ltd; Second Respondent: Michael Tenner; Third Respondent: Robert Michael Smith
Jurisdiction
Australia
Judgment Date
05 September 1997
Procedural Posture
Corporations Application to Terminate Deed of Company Arrangement / Judgment on Notice of Motion Seeking Termination of Deed Under S 445 D of the Corporations Law
Outcome
The Deed of Company Arrangement is terminated. Costs to the applicant on the motion.
Legal Topics
Deed of Company Arrangement, Voluntary Administration, Creditors' Meetings, Unfair Prejudice, Unfair Discrimination, Administrator's Duties
Corporations Deed of Company Arrangement Voluntary Administration Creditors' Meetings Unfair Prejudice Unfair Discrimination Administrator's Duties

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Parties

M & S Butler Investments Pty Ltd

First Applicant

Mark Butler & Shauna Butler

Second Applicants

Jack Stewart & Jann Stewart

Third Applicants

Granny May's Franchising Pty Ltd

First Respondent

Michael Tenner

Second Respondent

Robert Michael Smith

Third Respondent

Procedural Posture

Corporations Application to Terminate Deed of Company Arrangement / Judgment on Notice of Motion Seeking Termination of Deed Under S 445 D of the Corporations Law

Legal Issues

  1. 1 Whether the Deed of Company Arrangement is unfairly discriminatory, unfairly prejudicial or oppressive within s 445D(1)(f) of the Corporations Law
  2. 2 Whether the administrator complied with s 439A(4)(c) of the Corporations Law by providing creditors material details of the proposed deed
  3. 3 Whether the Deed should be terminated for non-compliance or unfairness

Ratio Decidendi

The Deed of Company Arrangement was terminated because it was unfairly discriminatory and prejudicial to the respondent (GMF). The Deed's primary purpose was to protect the directors from their obligations as guarantors, which was impermissible under the Corporations Law. Further, material details of the proposed Deed were not supplied to creditors prior to their vote, resulting in non-compliance with s 439A(4)(c) of the Law.

Court Disposition

The Deed of Company Arrangement is terminated. Costs to the applicant on the motion.

Orders

  • The Deed of Company Arrangement entered into on 1 October 1996 between M&S Butler Investments Pty Ltd (Administrator Appointed), M&S Butler Investments Pty Ltd, Mark & Shauna Butler and Roger Walker is terminated.
  • The applicant on the motion have its costs of the motion to be taxed if not agreed.