Bumbak v Dalian Huarui Heavy Industry Group International Co Ltd, in the matter of Duro Felguera Australia Pty Limited (Subject to a Deed of Company Arrangement) [2023] FCA 765

Bumbak v Dalian Huarui Heavy Industry Group International Co Ltd, in the matter of Duro Felguera Australia Pty Limited (Subject to a Deed of Company Arrangement) [2023] FCA 765

Where a final award as to liability was made before the appointment of administrators, but the award of costs was mandatory under the Supply Contract by reason of its incorporation of UNCITRAL Arbitration Rules (art 40(1)), the resulting costs claim (but not interest, which remains discretionary) is sufficiently grounded in the pre-appointment contract to be provable under s 553(1) of the Corporations Act and therefore under the DOCA. However, if costs/interest remain at the post-appointment discretion of a tribunal or arise under a purely statutory discretion, they are not provable. Only those costs/expenses directly adopted and incurred by administrators after their appointment (such as...

Jurisdiction
Australia
Judgment Date
07 July 2023
Procedural Posture
Corporations – Proofs of Debt/arbitration Costs in Administration / Judgment on Admissibility of Proofs of Debt and Directions to Deed Administrators
Outcome
Declarations and directions as to admissibility of proofs of debt ordered. Administrators directed as to allowed and disallowed claims.
Legal Topics
['provability of Claims in Deeds of Company Arrangement' 'costs in Arbitration Proceedings' 'priority of Expenses in Administration' 'construction of S 553(1) Corporations Act' 'application of Uncitral/arbitration Rules' "administrators' Expenses"]
['corporations' 'insolvency' 'arbitration'] ['provability of Claims in Deeds of Company Arrangement' 'costs in Arbitration Proceedings' 'priority of Expenses in Administration' 'construction of S 553(1) Corporations Act' 'application of Uncitral/arbitration Rules' "administrators' Expenses"]

Case Brief

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Procedural Posture

Corporations – Proofs of Debt/arbitration Costs in Administration / Judgment on Admissibility of Proofs of Debt and Directions to Deed Administrators

Legal Issues

  1. 1 ['Whether costs and interest awarded in arbitration after appointment of administrators are provable under deed of company arrangement (DOCA)' 'Whether such costs/interest are expenses of the administration under DOCA' 'Correct construction of s 553(1) of Corporations Act for provability']

Ratio Decidendi

Where a final award as to liability was made before the appointment of administrators, but the award of costs was mandatory under the Supply Contract by reason of its incorporation of UNCITRAL Arbitration Rules (art 40(1)), the resulting costs claim (but not interest, which remains discretionary) is sufficiently grounded in the pre-appointment contract to be provable under s 553(1) of the Corporations Act and therefore under the DOCA. However, if costs/interest remain at the post-appointment discretion of a tribunal or arise under a purely statutory discretion, they are not provable. Only those costs/expenses directly adopted and incurred by administrators after their appointment (such as...

Court Disposition

Declarations and directions as to admissibility of proofs of debt ordered. Administrators directed as to allowed and disallowed claims.

Orders

  • ['Order for parties to bring in orders consistent with these reasons by 4 pm on 14 July 2023.' 'Declaration that costs awarded on 27 May 2020 in TGP Arbitration are not admissible to proof under DOCA and not expenses of administration.' "Direction that administrators are justified in rejecting TGP's claim for those...