Allen in his capacity as administrator of Walden Cloud Group Pty Ltd (Administrators Appointed), in the matter of Walden Cloud Group Pty Ltd (Administrators Appointed) [2021] FCA 97

Allen in his capacity as administrator of Walden Cloud Group Pty Ltd (Administrators Appointed), in the matter of Walden Cloud Group Pty Ltd (Administrators Appointed) [2021] FCA 97

Once leave was granted under s 440B(2) to the mortgagee (Bella Joll) to enforce its mortgage and sell the property, and the property was sold to ACN 644 as a bona fide purchaser for value without notice, neither the mortgagor nor any third party (including Best Capital or Weijie Chen) could restrain settlement or defeat purchaser's interest. Modification under s 447A is not warranted post-contract. Subrogation rights are precluded by contract and priority rules. Employee entitlements were secured by endorsed undertaking and fund. Redress for prior enforcement by predecessor mortgagee does not satisfy s 441A exception.

Parties
First Plaintiff: Paul A Allen and Jason G Stone (administrators of Walden Cloud Group Pty Ltd, Cloud Abacus Holdings Pty Ltd, Odyns Holdings Pty Ltd, and Youteam Pty Ltd); Second Plaintiff: Walden Cloud Group Pty Ltd, Cloud Abacus Holdings Pty Ltd, Odyns Holdings Pty Ltd, and Youteam Pty Ltd; First Defendant: Bella Joll Pty Ltd; Second Defendant: ACN 644 931 108 Pty Ltd; Third Defendant: Dunes Land Developments Pty Ltd; Fourth Defendant: Registrar of Titles for the State of Victoria; Fifth Defendant: Best Capital Investments Pty Ltd; First Intervener: Weijie Chen; Second Intervener: Voya Holdings Pty Ltd; Plaintiff (vid 58 of 2021): Weijie Chen
Jurisdiction
Australia
Judgment Date
10 February 2021
Procedural Posture
Corporate Insolvency Application & Interlocutory Proceedings / Post Administration Orders; Interlocutory Rulings; Order for Dismissal (final) (vid 58 of 2021)
Outcome
Applications by Best Capital and by Weijie Chen dismissed. Fifth defendant's application dismissed. Mortgagee sale allowed to proceed. Undertakings concerning employee entitlements accepted.
Legal Topics
Voluntary Administration, Receivership, Mortgage Enforcement, Trust Assets, Sale of Property, Employee Entitlements, Modification of Statutory Operation, Interlocutory Injunction, Deed of Company Arrangement, Subrogation
Corporations Insolvency Commercial Law Equity Voluntary Administration Receivership Mortgage Enforcement Trust Assets +6 more

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Parties

Paul A Allen and Jason G Stone (administrators of Walden Cloud Group Pty Ltd, Cloud Abacus Holdings Pty Ltd, Odyns Holdings Pty Ltd, and Youteam Pty Ltd)

First Plaintiff

Walden Cloud Group Pty Ltd, Cloud Abacus Holdings Pty Ltd, Odyns Holdings Pty Ltd, and Youteam Pty Ltd

Second Plaintiff

Bella Joll Pty Ltd

First Defendant

ACN 644 931 108 Pty Ltd

Second Defendant

Dunes Land Developments Pty Ltd

Third Defendant

Registrar of Titles for the State of Victoria

Fourth Defendant

Best Capital Investments Pty Ltd

Fifth Defendant

Weijie Chen

First Intervener

Voya Holdings Pty Ltd

Second Intervener

Weijie Chen

Plaintiff (vid 58 of 2021)

Procedural Posture

Corporate Insolvency Application & Interlocutory Proceedings / Post Administration Orders; Interlocutory Rulings; Order for Dismissal (final) (vid 58 of 2021)

Legal Issues

  1. 1 Whether leave should be granted to mortgagee to enforce mortgage and sell property during administration under s 440B of the Corporations Act 2001 (Cth)
  2. 2 Applicability of s 441A exception for enforcement by secured party during the decision period
  3. 3 Whether sale to bona fide purchaser should be restrained pending alternative Deed of Company Arrangement

Ratio Decidendi

Once leave was granted under s 440B(2) to the mortgagee (Bella Joll) to enforce its mortgage and sell the property, and the property was sold to ACN 644 as a bona fide purchaser for value without notice, neither the mortgagor nor any third party (including Best Capital or Weijie Chen) could restrain settlement or defeat purchaser's interest. Modification under s 447A is not warranted post-contract. Subrogation rights are precluded by contract and priority rules. Employee entitlements were secured by endorsed undertaking and fund. Redress for prior enforcement by predecessor mortgagee does not satisfy s 441A exception.

Court Disposition

Applications by Best Capital and by Weijie Chen dismissed. Fifth defendant's application dismissed. Mortgagee sale allowed to proceed. Undertakings concerning employee entitlements accepted.

Orders

  • The fifth defendant's application dated 4 February 2021 be dismissed.
  • The fifth defendant pay the parties' costs of and incidental to its application.