Newstart 225 Pty Limited v Condon

By its summons filed on 18 September 2023, the plaintiff, Newstart 225 Pty Limited (Newstart), appeals or, to the extent necessary, seeks leave to appeal, from orders made in the Local Court on 22 August 2023 by Greenwood LCM that Newstart’s statement of claim be dismissed and Newstart pay the costs of the defendant, Mr Schon Condon, on the ordinary basis until 8 December 2021 and thereafter on an indemnity basis.

In order to consider the plaintiff’s grounds of appeal and the principal issues in these proceedings, it is necessary to understand the relevant factual circumstances and the reasoning of the learned Magistrate.

The facts as to what relevantly occurred and the background to the proceedings between Newstart and Mr Condon are derived from the learned Magistrate’s reasons for judgment delivered on 22 August 2023 or were agreed and can be adequately summarised as follows.

From 15 October 2015, Waleycorp Pty Ltd (Waleycorp) leased premises at Marrickville owned by Newstart under a written lease with a term of 3 years. In 2019, the lease was extended for another three years until 14 October 2021.

On 13 January 2021, Waleycorp was placed into voluntary administration and Mr Condon was appointed as administrator. The lease was still in operation at that time. Plant equipment, fixtures and fittings belonging to Waleycorp remained at the premises.

On 14 January 2021, Mr Condon wrote to Newstart concerning the premises and, on about this date, he instructed Slattery & Co to value Waleycorp’s assets at the premises. Mr Condon’s letter to Newstart was found by Greenwood LCM to have said in effect:

On 18 January 2021, Kosmas Papadopoulos, director of Newstart, informed Mr Condon that a prospective tenant would start leasing the premises from March 2021.

On 21 January 2021, Mr Petrovic on behalf of Mr Condon informed Newstart that Waleycorp would continue to occupy the premises for two weeks for the purpose of realising Waleycorp’s assets held at the premises.

Between 21 January and 3 February 2021, Mr Condon remained in possession of the premises and Slattery & Co, as his agent, sold Waleycorp’s commercially realisable assets at the premises to Just Limitless Australia Pty Ltd (Just Limitless) and Just Limitless removed the purchased items from the premises.

On 3 February 2021, Mr Condon returned the key to Newstart.

On 4 February 2021, Newstart retook possession of the premises and issued an invoice for $4,308 for rent for the period 21 January to 4 February 2021. Mr Condon paid that amount on 4 February 2021.

On 17 February 2021, Newstart submitted a formal proof of debt in the administration of Waleycorp in the amount of $44,678, comprised of back rent and $24,376 for makegood costs in respect of the premises. The proof was accepted by Mr Condon as being lodged but, during his appointment as administrator, he did not adjudicate on whether the claims should be accepted or rejected.

On 18 February 2021, Waleycorp’s creditors resolved to put Waleycorp into liquidation with Mr Condon as liquidator and, at all relevant times, Mr Condon was either the administrator or liquidator of Waleycorp.

On 6 September 2021, Newstart commenced proceedings in the Local Court claiming damages of $45,722 from Mr Condon for “loss of rent between 5 February and 31 March 2021, the cost of performing [Waleycorps’s] makegood and other obligations under clauses of the lease and GST”, to use the Magistrate’s description.

Her Honour summarised Newstart’s case as follows:

Mr Condon’s case was summarised in the following terms:

The Magistrate effectively identified the issues to be determined as:

The Magistrate then summarised the evidence concerning whether the premises were damaged or left in an unclean and untidy state and the consequences as follows:

The findings in respect of the state of the premises and the consequences were then identified in the reasons for judgment. These findings included the matters set out below.

In the reasons for judgment, the Magistrate then noted that Newstart’s claims against Mr Condon were based on tort and also on the Corporations Act 2001 (Cth) and her Honour dealt with the claim based on the Corporations Act first.

For the purposes of the Corporations Act claim, her Honour recorded that it was not in dispute that Mr Condon was validly appointed as the administrator of Waleycorp. It was then noted that under s 437A of the Corporations Act, an administrator had control of the company’s business, property and affairs and could dispose of any part of the property, and under s 437B, while exercising as such a power, the administrator was taken to be acting as the company’s agent.

Based on s 437B and the decision in Gallop Investments Pty Ltd v Jones [2002] WASC 66, her Honour held that, subject to any exception established by Subdiv A of Div 9 of Pt 5.3A of the Corporations Act, Mr Condon could not be held personally liable for a claim for either debt or damages in respect of actions that he took as administrator of Waleycorp. As I understood it, this aspect of the Magistrate’s decision was not challenged on this appeal.

Her Honour then turned to consider the provisions of Subdiv A of Div 9 (ss 443A to 443C) dealing with the liability of administrators. Section 443C was referred to and the relevant principles of statutory construction were noted. Her Honour held that s 443C appeared to make clear that that subdivision covers the field in relation to the personal liability of administrators. This conclusion was not in dispute in the present case.

Her Honour then considered s 443A and held that the reference to “debts” in s 443A(1) did not include “a makegood type claim … a claim in damages”, relying on Branson J’s decision in Molit (No.55) Pty Ltd v Lam Soon Australia Pty Ltd (Administrator Appointed) (No 2) [1996] FCA 659; (1996) 148 ALR 472. Once again, I did not understand that this aspect of her Honour’s decision was challenged in this appeal.

Turning to s 443B(3), her Honour found that Mr Condon’s letter of 14 January 2021 (the substance of which has been quoted above) “was fully compliant with s 443B(3)”. It did not appear that anything turned on whether this conclusion was correct or not, since Waleycorp’s occupation and use of the premises in order to sell the company’s assets located on the premises meant that, if a notice had been given under s 443B(3), it ceased to have effect, by virtue of s 443B(5) and (6).

It was then noted that Newstart submitted that Mr Condon was personally liable for the lease because his notice to occupy the premises was out of time. Her Honour observed that Mr Condon had been appointed as administrator on 13 January 2021 and recorded Newstart’s submission that the letter of 21 January concerning occupation of the premises was at least a day late and this made Mr Condon liable by operation of s 443B(2).

The learned Magistrate then considered whether Mr Condon was liable under s 443B(2) which, in the circumstances referred to in subs (1) of that section, renders an administrator liable “for so much of the rent or other amounts payable by the company under the agreement as is attributable to a period [determined in accordance with paragraphs (a) and (b) of that subsection]”.

Her Honour noted that Mr Condon remained in possession of the premises until 3 February 2021 and was liable to pay rent for the period of occupation from 21 January to 3 February 2021, which her Honour found he did. It was then observed that Newstart sought to use s 443B(2) to hold Mr Condon personally liable also for the makegood and lost rent costs on the basis that they were “other amounts payable by the company under the agreement as is attributable to [the relevant period of his occupation]”.

Her Honour addressed the issue of whether the “makegood costs” were included in the words “other amounts payable by the company under the agreement as is attributable to [the relevant period of his occupation]”. The Magistrate was of the view that the Court of Appeal’s decision in De Vries v Rapid Metal Developments (Australia) Pty Ltd [2011] NSWCA 100; (2011) 84 ACSR 261 (De Vries) established the proposition that “any liability arising at the end of a rental period cannot be attributable to a period” and “therefore, s 443B applies to the rent payable during the administrator’s actual occupation of the premises and not makegood or loss of future rent costs that would arise only at the end of the lease.”

It was then observed that Mr Condon conceded that cutting the handrail went beyond the scope of his duties as administrator and he had offered to fix it or pay for it, which offer was refused by Newstart. But her Honour said that, in any event, the obligation to fix the handrail would have arisen at the end of the lease as part of the obligation to make good.

As to the lost rent claim, her Honour appeared to accept Mr Condon’s submission that he could not be held liable for periods when he was not using or occupying the premises and he had returned the key on 3 February 2021 and the lease was at an end.

It was implicit in the judgment that, for these reasons, the claim under s 443B(2) for makegood costs and lost rent was rejected.

The learned Magistrate then described Newstart’s alternative claim against Mr Condon as “a tort claim for failing to take reasonable care of the premises”. After outlining Newstart’s submissions in this regard, her Honour’s analysis was as follows:

Once again, it was implicit in the reasons for judgment that the Magistrate rejected Newstart’s tortious claim.

Her Honour concluded her reasoning by considering the application of s 443B(8) of the Corporations Act as follows:

The Magistrate’s rejection of all of Newstart’s claims was confirmed by the statement in the judgment that:

The orders made by the Local Court on 22 August 23 were:

As noted above, Newstart filed its summons appealing, and seeking leave to appeal, from these orders on 18 September 2023.

In its summons instituting the appeal, Newstart sought the following orders:

Newstart formulated its grounds of appeal in the summons as follows:

In its written submissions, however, Newstart identified what it called the “principal issues” in this appeal by way of three questions as follows:

Newstart’s rights of appeal to this Court are found in ss 39 and 40 of the Local Court Act 2007 (NSW). Under s 39, a party to proceedings in the Local Court may appeal to this Court as of right “but only on a question of law”. Under s 40 of that Act, a party may appeal “on a ground that involves a question of mixed fact and law … but only by leave of the Supreme Court”.

In an appeal only on a question of law under s 39 of the Local Court Act, a plaintiff is required to identify precisely the particular questions of law raised, in accordance with the principles referred to in cases such as Schwartz Family Co Pty Ltd v Capitol Carpets Pty Ltd [2017] NSWCA 223 at [13] (Meagher, Payne and White JJA), Ferella v Chief Commissioner of State Revenue [2014] NSWCA 378 (Ferella) at [6] (Leeming JA) and [22] (White J, Barrett JA agreeing) and Williams v The Queen (1986) 161 CLR 278 at 287 (Gibbs CJ); [1986] HCA 88.

Mr Gray of counsel, who appeared for Newstart, contended that the first two questions in the principal issues set out in his written submissions covered the first two grounds of appeal and could be seen to raise questions of law. Otherwise, it was submitted that leave should be granted under s 40 of the Local Court Act.

Although s 39 of the Local Court Act confines an appeal to this Court to an appeal “only on a question of law”, it has been held that there is no satisfactory test of universal application available to define what is a question of law: Ferella at [4], citing Collector of Customs v AGFA-Gevaert Ltd (1996) 186 CLR 389 (AGFA-Gevaert) at 394 (Brennan CJ, Dawson, Toohey, Gaudron and McHugh JJ); [1996] HCA 36. Nonetheless, some assistance can be derived from High Court authority which establishes that whether facts fully found fall within the provisions of a statutory enactment properly construed is a question of law: Hope v Bathurst City Council (1980) 144 CLR 1 (Hope) at 7 (Mason J); [1980] HCA 16; AGFA-Gevaert at 395. In Hope at 8 and AGFA-Gevaert at 395, the High Court indicated, however, that there was an exception to that principle, when a statute used words according to their ordinary meaning and it was reasonably open to hold that the facts of the case fell within those words. In that situation, it was said the question as to whether the facts did or did not fell within those words was one of fact. To illustrate the point, an example was given in Hope of a statute that gave rise to the question whether certain behaviour was within the statutory description “insulting” and, since it was not unreasonable to find that the behaviour met that description, it was said that the question was a question of fact.

On the basis that the relevant facts in the present case were fully found, the application of s 443B to those facts and the terms of the lease, including cll 3(a) and 3(w), as envisaged in the first two principal issues, covering the first two grounds of appeal, could be said in my view to raise questions of law. The present case does not raise questions similar to the example given in Hope which involved a value judgment about whether behaviour was “insulting”, about which minds might reasonably differ.

As to Newstart’s last two grounds of appeal and the question identified in the third principal issue, however, these appeared to me to raise, at most, questions of mixed fact and law. Consequently, leave to appeal in respect of those grounds was required. In that regard, the applicable principle is that ordinarily leave to appeal should only be granted if the appeal involves issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond what is merely arguable: Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164 at [32]-[37] (Basten JA, Tobias JA agreeing) and the cases there cited.

I shall deal with the first two grounds of appeal concerning s 443B of the Corporations Act first and then the last ground relating to whether Newstart pleaded a cause of action in trespass in the Local Court and was entitled to judgment on that basis. The remaining ground of appeal 3, concerning the Magistrate’s contingent consideration of s 443B(8), is relevant only if Newstart were successful on one of the other grounds. Consequently, I shall consider ground 3 last.

Newstart’s first two grounds of appeal concerned the proper construction and operation of s 443B in the circumstances found by the learned Magistrate.

Newstart’s submissions proceeded on the basis that, since Mr Condon as agent of Waleycorp used the premises during the period from 21 January to 3 February 2021, a notice, if any, given under s 443B(3) ceased to have effect by virtue of s 443B(5) and (6) and thus s 443B(2) became operative in respect of that period.

It was submitted that, on the proper construction of s 443B(2), damages for the makegood costs incurred by Newstart as a result of the removal of items and repairs carried out on its behalf by J&K and the rent lost as a result of being unable to let the premises while they were being made good were “other amounts payable by the company under the agreement as is attributable to [the period of Mr Condon’s occupation of the premises]”.

In support of this contention, Newstart submitted that, pursuant to cl 3(a) of the lease, Wayleycorp was under an obligation “… at all times during the said term hereby granted [to] well and sufficiently repair, maintain, cleanse, empty and amend the demised premises, the fixtures therein and all drains sewers closets sanitary arrangements, systems, yards, pavements, gutters, walls and erections and keep both the outside and inside of the premises in clean and attractive order, repair, and condition …”. This obligation was said to be a continuing obligation in the sense that it continued during every moment of Mr Condon’s occupation of the premises between 21 January and 3 February 2021 and was breached during every moment of that period when the premises were not “in a clean etc. condition”. Since the company was liable in damages for those breaches which continued while Mr Condon was in occupation, it was submitted that those damages were “amounts payable by the company … as is attributable to [the relevant period]” within s 443B(2). Consequently, under that subsection, Mr Condon was said to be personally liable for those damages.

Similarly, Newstart relied on the obligation, under cl 3(w) of the lease, to make good forthwith any damage done to the premises as a result of the removal of tenant’s fixtures when the fixtures were removed. It was submitted that since the damage from removal of the fixtures occurred during the period of Mr Condon’s occupation but was not made good at the time of removal, Waleycorp was at that time in breach of that clause and liable in damages, and such damages would therefore be “a money sum payable by Waleycorp attributable to the period … during which Mr Condon occupied the premises”. Thus, it was said that Mr Condon was also personally liable under s 443B(2) for those amounts.

In addition, Newstart pointed to cl 7(d) and (f), and cl 17 of the lease and contended that they established or supported Newstart’s right to claim damages for the breaches of cll 3(a) and (w) at any time after breach and not only at the end of the lease.

On these bases, it was submitted that the Local Court erred by concluding, in substance, that s 443B(2) did not apply to the costs of repairs and removals, referred to as the “makegood”, or to the consequential loss of future rent because the liability for those amounts arose at the end of the rental period and was not attributable to the relevant period.

As to the construction of s 443B(2), Newstart submitted that an administrator’s right of indemnity under s 443D(aa) indicated that the liability under s 443B(2) was not narrow and the approach contended for by Newstart was consistent with s 443D.

In response, Mr Condon made submissions, in relation to the first two grounds of appeal, covering the proper construction of s 443B(2), especially in the context of ss 437A, 437B, 443A, and 443C.

As to Newstart’s claim for rent for the period after Mr Condon had returned the key and Newstart had retaken possession, it was submitted that this was not rent that fell within “so much of the rent … as is attributable to a period … throughout which the company continues to use or occupy … the property”, as specified in s 443(2). Thus, it was contended that the claim for rent “could only be a damages claim against [Waleycorp] that fell outside s 443B”.

As to the “other makegood type damages claimed”, Mr Condon submitted that these damages were not “rent or other amounts payable … as is attributable to a period” in s 443B(2). Mr Condon submitted that the Court of Appeal’s judgment in De Vries established the proposition that the amounts payable by the relevant company in that case were not “attributable to a period” where they resulted from a failure, at the end of the hire agreement, to return the items hired in good condition. The present case was submitted to involve essentially the same situation and thus “any amounts claimed as damages in the present matter were not attributable to the period of administration, but instead were attributable to [Waleycorp’s] failure to return the Premises in good condition when the Lease came to an end.”

Mr Condon also submitted that, even if it were not the case that the liability only arose at the conclusion of the lease, the Magistrate did not make sufficient findings of fact to support any other outcome in the present case.

In relation to Newstart’s contentions based on continuing breaches of cll 3(a) or (w) of the lease, it was in effect submitted that:

Furthermore, even if the preceding submissions were not accepted and the Magistrate had made sufficient findings of fact, it was submitted that the types of damage claimed by Newstart would not fall within the clauses said by Newstart to constitute continuing obligations. This was because any relevant damage occurred because of Waleycorp installing the fittings on and bringing material into the premises before Mr Condon was appointed as administrator. In addition, in relation to cl 3(w), it was said that that clause related to damage done by removing fixtures not by failure to remove them, which was what Newstart claimed for, and that none of the items claimed actually fell within that clause. Rectifying previously caused damage to the premises was said not to be attributable to the relevant period of Mr Condon’s use of the premises.

Thus, it was contended that Newstart’s claims should fail.

The first two grounds of appeal (and the first two questions) depend on the proper construction of s 443B(2) of the Corporations Act. There was no dispute in the present case as to the principles of construction to be applied.

The construction of this provision must focus on the statutory text, considered in its context which includes, where relevant, the legislative history and extrinsic materials: Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12 at [22] (French CJ, Hayne, Kiefel, Gageler and Keane JJ). Attribution of meaning to the text in context is to be guided so far as possible by statutory purpose, on the understanding that a legislature ordinarily intends to pursue its purposes by coherent means: SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 at [20] (Kiefel CJ, Bell and Nettle JJ) and [41] (Gageler J, as his Honour then was).

Section 443B is found in Ch 5 of the Corporations Act which deals with external administration of a company’s affairs and, more specifically, in Pt 5.3A of that Chapter which is concerned with administration with a view to maximising the chances of the company continuing in existence, see s 435A(a). Another object of Pt 5.3A, set out in s 435A(b), is providing for the business, property and affairs of an insolvent company to be administered in such a way that, if it is not possible for the company or its business to continue in existence, the administration results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.

In the present case, Mr Condon was appointed as such an administrator of Waleycorp on 13 January 2021 and, on 18 February 2021, the creditors of the company resolved pursuant to s 439C(c) that the company be wound up. As a result and by virtue of s 435C(2)(c), the administration under Pt 5.3A which commenced on 13 January 2021 came to an end on 18 February 2021.

Section 437A defines the role of an administrator and provides, inter alia, that an administrator has control of the company’s business, property and affairs and can dispose of any part of the property. Section 437B states that, while exercising such powers, the administrator is taken to be acting as the company’s agent and s 437D establishes that “only the administrator can deal with the company's property”. Subject to the provisions of the Corporations Act providing for the personal liability of an administrator, when an administrator is taken to be acting as the agent of the company, the administrator does not generally become personally liable for the obligations of the company: Railway Commissioners for New South Wales v Orton (1922) 30 CLR 422 at 425-426 (Knox C.J., Gavan Duffy and Starke JJ); [1922] HCA 16; Molit (No.55) Pty Ltd v Lam Soon Australia Pty Ltd (Administrator Appointed) (No 2) [1996] FCA 659; (1996) 148 ALR 472 (Molit); and see also [86] of the Australian Law Reform Commission, General Insolvency Inquiry, Report No 45 (1988) (the Harmer Report) whose relevant recommendations were implemented by the enactment of Pt 5.3A (in its original form) relating to administrators by s 56 of the Corporate Law Reform Act 1992 (Cth).

The Corporations Act does make provision for an administrator to be personally liable for certain amounts, in Subdiv A of Div 9 of Pt 5.3A of Ch 5, which consists of ss 443A to 443C. Those sections provide, relevantly for present purposes:

In this Subdiv A, a number of types of amounts for which an administrator will be personally liable are identified:

Against that background, s 443C in effect establishes that, otherwise than as provided in those sections, an administrator is not liable for “the company’s debts”.

It has been held that “debts”, when used in s 443A(1), is used in its ordinary meaning and does not include a liability for unliquidated damages such as “a claim for damages for failure to comply with a covenant in a lease to make good damage caused to the leased premises”: Molit at ALR 474 (Branson J). The usual meaning a “debt” is a sum of money which is now payable or will become payable in the future by reason of a present obligation: Webb v. Stenton (1883) 11 QB 518 at 526-528 (Lindley LJ) and is something recoverable by an action for debt and thus involves a sum that is ascertained or can be ascertained: Ogdens Limited v. Weinberg (1906) 95 LT 567; Hunyh v Swanson [1999] NSWSC 72 at [37] (G James J). That “debts” in s 443A(1) do not include a liability to pay unliquidated damages was accepted by the learned Magistrate in the present case and Newstart did not seek to base its claims in the present matter on s 443A(1).

As noted above, the word “debts” is also used in s 443C in reference to the general effect, or scope of operation, of Subdiv A of Div 9 of Pt 5.3A of Ch 5. The applicable rule of construction is that the same words appearing in different parts of a statute should be given the same meaning, unless there is reason to do otherwise: The King v Rohan (a pseudonym) [2024] HCA 3 at [25] (Gageler CJ, Gordon and Edelman JJ); Registrar of Titles (WA) v Franzon (1975) 132 CLR 611 at 618 (Mason J, Barwick CJ and Jacobs J agreeing); [1975] HCA 41. In my view, there is no reason why the word “debts” should be given a meaning in s 443C different from its meaning in s 443A(1).

The express terms of ss 443A and 443C read in the context of the other provisions of Subdiv A of Div 9 of Pt 5.3A of Ch 5 suggest that the subject matter of this Subdivision is intended to be “debts” and, thus, the only type of liability for which the administrator was intended to be liable by operation of this Subdivision was one which met the description of a “debt”. This approach to Subdiv A of Div 9 of Pt 5.3A is supported by consideration of s 443D(a) which states, inter alia, that “[t]he administrator of a company under administration is entitled to be indemnified out of the company's property … for … debts for which the administrator is liable under Subdivision A [of Div 9 of Pt 5.3A] or a remittance provision as defined in subsection 443BA(2)”. The general assumption inherent in s 443D(a) is that Subdiv A relates to “debts” rather than the other types of liability that are referred to in s 443D.

As noted above, apart from the amounts specifically described as “debts” in ss 443A and 443C, there are two other types of amounts referred to in Subdiv A, namely those referred to in s 443BA and those referred to in s 443B(2).

As to the amounts referred to in s 443BA, these are amounts payable to the Commissioner of Taxation under certain former and current remittance provisions of relevant Commonwealth taxation legislation which require a withholding entity to deduct and withhold amounts from payment to the persons otherwise entitled to them because of actual or potential taxation liabilities. The withholding entity is then required to remit those amounts to the Commissioner of Taxation. Under provisions such as ss 250-10, 255-1 and 255-5 of Sch 1, Ch 4, Pt 4-15, Divs 250 and 255 of the Taxation Administration Act 1953 (Cth), any amount payable to the Commissioner under s 443BA is “a debt due to the Commonwealth”: s 255-5(1)(a). Thus, like ss 443A and 443C, s 443BA is limited to monetary obligations which are debts. This conclusion also explains why s 443D(a) refers to “debts for which the administrator is liable under … a remittance provision as defined in subsection 443BA(2)”.

It can also be noted that s 443BA deals with two types of debts payable to the Commissioner of Taxation. Under s 443BA(1)(a), the first type is an amount payable because of “a deduction made by the administrator” (emphasis added) which necessarily means that the amount will be limited to deductions made during the period of the administration. By way of contrast, under s 443BA(1)(b) the second type of amount payable relates to “deductions made by the company during the administration” (emphasis added) and only includes “so much of each [such] amount … as equals so much of the deduction as is attributable to a period throughout which the administration continued”.

The requirement to remit that part of the s 443BA(1)(b) amount as is “attributable” to the administration period appears to arise out of the fact that, under provisions such as s 16-75 in Sch 1 Ch 2 Pt 2-5 Subdiv 16-B of the Taxation Administration Act, the amounts required to be remitted to the Commissioner are to be remitted periodically. Thus, where the relevant remittal period is longer than the period of the administration, part of the amount required to be remitted may have been deducted during the administration and another part of the amount required to be remitted may have been deducted when the company was not in administration.

As used in s 443BA(1)(b) and elsewhere in the Corporations Act, “attributable” and cognate words do not appear to have a special or technical meaning. The ordinary English meaning of “attributable” is, according to the Oxford English Dictionary, [1] “capable of being attributed or ascribed, esp. as owing to, produced by” and the Macquarie Dictionary gives the meaning of the verb “attribute” as “to consider as belonging to; regard as owing, as an effect to a cause”. [2] Accepting the limitations on the usefulness of dictionary definitions in statutory construction, as explained for example in TAL Life Ltd v Shuetrim; MetLife Insurance Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 at [80] (Leeming JA, Beazley P and Emmett AJA agreeing), the description of “so much of each amount payable” as being “attributable” to a period in s 443BA(1)(b) indicates that the intention was to refer to that part of each amount payable which was deducted and withheld during the administration period and not when the company was not in administration.

On this construction, both types of amounts referred to in s 443BA, for which the administrator will be personally liable, are debts constituted by amounts deducted only during the period when the company was in the administration which are required to be remitted to the Commissioner of Taxation.

In that whole context, the provisions of s 443B are to be considered.

By virtue of s 443B(1), the section applies “if, under an agreement made before the administration of a company began, the company continues to use or occupy, or to be in possession of, property of which someone else is the owner or lessor”. Since Waleycorp, by its agent Mr Condon, continued to use or occupy or be in possession of Newstart’s premises under the lease while the fittings and fixture were sold, s 443B applied in the present case.

Section 443B contains a “general rule” concerning the liability of an administrator in subs (2). This general rule is rendered inapplicable by operation of subs (4) if a notice is given complying with subs (3) and if the notice does not cease to have effect as provided in subss (5) and (6). In the present case, it was not in dispute that Waleycorp continued to use the premises between 21 January and 3 February 2021 for the purpose of realising the assets on the premises and thus, by virtue of subss (5) and (6), any notice given under subss (3) and (4) ceased to have effect and the general rule in subs (2) applied. Consequently, it is not necessary to consider subss (3)-(6) any further.

The remaining subsections, subss (7)-(9), establish “[r]estrictions on the general rule” in subs (2) as follows.

Turning to the general rule, subs (2) provides that, subject to the other provisions of s 443B:

In the present case and in the circumstances identified above, the relevant period was from 21 January 2021 up to, and including, 3 February 2021.

There are two types of amounts referred to in s 443B(2) for which the administrator will be personally liable. The use of the singular verb “is” in the clause “as is attributable to a period”, however, indicates that its subject is not “rent” or “other amounts” payable under the agreement but rather “so much of” the rent or other amounts, or in other words that part of the rent or other amounts, as is attributable to the relevant period. The amounts which are the subject of subs (2) are, thus:

Since rent is a periodic charge for use or occupation of property, that part of the rent payable which is “attributable” to the relevant period naturally refers to the part of the rent incurred because of, or owing to, the occupation or possession of the premises during the relevant period and can be readily ascertained by reference to the rent expressed as an amount payable per period of time. In addition, given the nature of rent as an ascertained or ascertainable sum payable by the lessee and recoverable by the lessor in accordance with the agreement, it falls within the description of a debt.

The description of the second category of amounts to which subs (2) applies as “so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period” indicates that the other amounts payable can be divided into “so much … as is attributable” to the relevant period and the remainder which is not attributable to that period. In light of the construction of “attributable” referred to above, it appears that “so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period” identifies that part of the “other amounts payable” that belongs, or owes its existence, to the relevant period and not to some other period during which the agreement was in existence.

In addition to being “attributable” to the relevant period, the amounts must also be “payable”. It has been held in Glass v Defence Force Retirement and Death Benefits Authority (1992) 38 FCR 534 at 537 (Gummow J), cited by Black J in Melbourne Aircraft Leasing (UK) Ltd v Algeri and Ors in their capacity as joint and several Trustees of the Project Volar Creditors’ Trust [2022] NSWSC 443 at [152]; (2022) 161 ACSR 569, that:

If the “other amounts” to which s 443B(2) refers were intended to include unliquidated damages for breach of contract, that amount would not be “payable” or ascertainable until the claim for those damages had been made and determined.

Furthermore, given the use of the term “debts” in ss 443C and 443D(a) in relation to the general scope of operation of Subdiv A of Div 9 of Pt 5.3A and the fact that all of the types of amounts in ss 443A and 443BA and the rent referred to in s 443B(2) can properly be characterised as debts, the context of s 443B(2) suggests that the expression “other amounts” referred to in that subsection was also intended to be limited to debts rather than any unascertained amounts not yet payable, such as unliquidated damages. This construction, together with the requirement that the amounts be attributable to the relevant period of the administration and not some other period, is consistent with the purpose and practical operation of Div 9 of Pt 5.3A of Ch 5 of the Corporations Act in that it would ensure that the amounts for which an administrator will be liable could be ascertained at the end of the period of administration and, thus, the quantification of the administrator’s indemnification under s 443D could be determined and these matters could be taken into account in making the decision pursuant s 439C at the meeting convened under s 439A. If the “other amounts … attributable to [the relevant] period” referred to in s 443B(2) included amounts by way of unliquidated damages, the administrator’s liabilities and the extent of the administrator’s indemnification under s 443D might not be able to be determined for a considerable period, depending upon when proceedings to recover such unliquidated damages were commenced and determined. Such a result could hinder the achievement of the purpose of administration under Pt 5.3A in the appropriately short time frames envisaged under the relevant provisions of the Corporations Act for the making of a decision as to the future of the company’s affairs.

This construction of Subdiv A, including s 443B, is also consistent with relevant aspects of the extrinsic material, which may be relied on under s 15AB of the Acts Interpretation Act 1901 (Cth), including the Harmer Report and the Explanatory Memorandum to the Corporate Law Reform Bill 1992 (Cth). The Harmer Report included the following:

The Explanatory Memorandum to the Corporate Law Reform Bill 1992 dealt with Subdiv A at [562] et seq. as follows:

These extracts from the relevant extrinsic material, including especially the emphasised passages, provide significant support for the construction set out above.

The parties did not point to any High Court or intermediate appellate authority on the specific construction of the words “so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period” in s 443B(2) and I have not been able to find any such cases. Nor was there any first instance judgments that dealt with the specific issues raised in the present case. The Court of Appeal has, however, considered substantially the same words which appear in s 419A(2) of the Corporations Act and the construction adopted was consistent with the construction of s 443B(2) set out above.

In De Vries v Rapid Metal Developments (Australia) Pty Ltd [2011] NSWCA 100; 84 ACSR 261 (De Vries), the Court of Appeal dealt with s 419A(2) of the Corporations Act which relevantly provided in circumstances similar to s 443B(2):

In comments which were obiter dicta, [3] Sackville AJA (Hodgson and Macfarlan JJA agreeing) addressed the question whether a liability under an agreement for the hire of goods to replace lost or damaged goods at the hirer’s “ruling list prices” at the end of the hiring was “attributable” to the relevant period in that case. His Honour held, in De Vries at [161]-[162]:

This reasoning was primarily focused upon whether an obligation which arose at the end of the hiring was “attributable” to the period relevant in that case, but it is consistent with the construction referred to above.

It can also be noted that, in these obiter comments, Sackville AJA rejected, at [156], the contention that the words “other amounts” were to read ejusdem generis with “rent”. In doing so, his Honour adopted the reasoning of the trial judge, R A Hulme J, that there was no warrant for identifying a genus from the single word "rent", contrary to what Campbell J had held in Re: Nardell Coal Corporation (in liq) v Hunter Valley Coal Processing [2003] NSWSC 642; 21 ACLC 1505 (Nardell Coal). Sackville AJA and R A Hulme J cited the comments of Spigelman CJ in Deputy Commissioner of Taxation v Clark (2003) 57 NSWLR 113; [2003] NSWCA 91, at [126], that it is essential for the application of the ejusdem generis rule that at least one common characteristic described as a genus is to be identified and that at least two different species are required to determine a relevant genus.

In rejecting the application of the ejusdem generis rule to the construction of the words “other amounts payable by the corporation”, the Court of Appeal did not expressly consider the comments in the Harmer report quoted at [158] of the Court of Appeal’s judgment which described the relevant obligations intended to be covered as “rent and similar payments”, which may have provided alternative support for the conclusion reached by Campbell J in Nardell Coal at [97] to the effect that “other amounts payable by the corporation under the agreement” are limited to types of payment similar to rent such as “payment[s] which are payable by a lessee as consideration, payable periodically, for the rights conferred on the lessee by the lease”.

The reasoning in De Vries concerning the ejusdem generis rule does not, in any event, apply to the reasoning set out above concerning the context provided by ss 443C and 443D(a) in relation to the scope of operation of Subdiv A of Div 9 of Pt 5.3A and the fact that all of the amounts referred to in ss 443A and 443BA and the rent referred to in s 443B(2) are types of debts or are recoverable as debts, as well as the practical operation of these provisions, which all support the construction that the expression “other amounts payable” is intended to be limited to ascertained or ascertainable amounts presently recoverable and, in that sense, debts.

In so far as the Court of Appeal’s reasoning in De Vries was otherwise applicable in the present case, it supported the construction referred to above. Similarly, the extrinsic material such as that referred to by Sackville AJA in De Vries at [158]-[159] did not support a different construction.

In the absence of any clear authority to the contrary and for the reasons given above, in my view, the words “so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period” in s 443B(2) should be construed as referring to that part of such amounts:

For the purposes of disposing of the present appeal, it is not necessary, however, to hold that the “other amounts” referred to in s 443B(2) are limited to “debts” in the sense explained above. This is because there are other grounds which support the conclusion that Newstart’s claim did not involve “so much of the … other amounts payable by the company under the agreement as is attributable to [the relevant] period”.

Newstart sought to rely on s 443B(2) to establish that Mr Condon was personally liable for “other amounts payable by the company under the agreement as is attributable to [the relevant] period” from 21 January to 3 February 2021, namely:

More particularly, it was contended that Waleycorp’s breaches of cll 3(a) and 3(w) of the lease meant that the company was liable for unliquidated damages in respect of both the makegood costs and the lost rent, and the amount of such damages fell within the words “other amounts payable [by Waleycorp]”. Then, it was in substance contended that each of the makegood costs and the lost rent was “attributable” to the relevant period from 21 January to 3 February 2021 because the obligations under cll 3(a) and 3(w) were either breached during the relevant period or were continuing obligations and the breach continued during the relevant period.

In my view, these submissions should not be accepted for a number of reasons.

First, on the proper construction of s 443B(2), “other amounts payable” do not include amounts recoverable by way of a claim for unliquidated damages for breach of a covenant in a lease. The expression “other amounts payable” in s 443B(2) refers to sums that are ascertained or can be ascertained which are payable and effectively recoverable as a debt. As explained above, an administrator’s liabilities referred to in Subdiv A of Div 9 of Pt 5.3A of the Corporations Act are limited to debts and amounts which are payable and recoverable as a debt, they do not include liabilities for unliquidated damages for breach of covenants in the lease, whether the damages be for makegood costs or lost rent. Furthermore, since any such lost rent must be rent under a lease to a new tenant that could not be charged because the new tenant could not occupy the premises, the lost rent could not be “rent … payable by the company under the agreement” within s 443B(2).

Secondly, even if the expression “other amounts payable” did include unliquidated damages for breach of covenants in the lease, the amounts claimed for makegood costs and lost rent were not “so much of the … other amounts as is attributable” to the relevant period in the circumstances of the present case. This was so both factually and legally.

Factually, apart from the finding that “at least the office” was in a neat and tidy state before Just Limitless removed fittings and fixtures during the relevant period and was not in a neat and tidy state afterwards, there was no finding as to when the items which had to be removed were actually brought onto the premises. With respect to the items which had to be repaired other than the damaged handrail, there was no finding as to who caused the damage or when. Since the need to remove or repair items was not proved to have been caused, or to have arisen, during the relevant period, Newstart had not discharged the onus of proving that the damages flowing from breaches of cll 3(a) or 3(w) for makegood costs were “attributable” to the relevant period in the sense of belonging to, or owing its existence to, that period. Similarly, Newstart had not discharged the onus of proving that the lost rent was caused by anything that belonged to or arose during the relevant period so as to be “attributable” to that period.

Legally, the unliquidated damages claimed in relation to makegood costs and lost rent were not, on the proper construction of the lease, “attributable” to the relevant period because any liability for such damages only arose either at the end of the lease or after notice to rectify the breach had been given and not complied with. If a liability to make good arose at the end of the lease under cl 36(1)(b), then it was not “attributable” to the relevant period, on the basis explained in De Vries at [161]. The liability in respect of lost rent could only arise after the end of the lease, because prior to that time the premises could not be leased to another tenant. In addition, as to any liability that might arise from a breach of a continuing obligation under the lease, a liability for makegood costs or lost rent would only arise after a notice to rectify had been given and had not been complied with, and no such liability arose in the present case as there was no finding that any notice to rectify had ever been given. This reasoning depends on the proper construction of the lease.

In the present case, the construction of the relevant provisions of the lease is not entirely straightforward as there are numerous overlapping obligations relating to repair and maintenance, and remediation. The relevant clauses, including those relied upon by Newstart, were:

The principles concerning construction of a commercial lease were considered recently by the Court of Appeal in Willis Australia Ltd v AMP Capital Investors Ltd [2023] NSWCA 158 at [48]-[50] (Ward P, Beech-Jones JA and Griffiths AJA). At [49], it was relevantly held:

Applying those principles to the commercial lease between Newstart and Waleycorp, and bearing in mind the text of the relevant clauses, the purpose of the lease being to allow the lessor to occupy, and conduct its business from, the premises and the fact that the lease should be construed so as to avoid it working commercial inconvenience, in my view, the lease should be construed so as to have the following relevant effect.

As noted above, even if the obligations under provisions such as cl 3(a) to keep the premises in repair were continuing obligations, there was no finding, or evidence, in the present case that, prior to the lease coming to an end on 4 February 2021, Newstart had given any notice to rectify any failure to keep the premises in good repair under expanded cl 1(6) or cl 20 or that Waleycorp was in default in that regard. Accordingly, Newstart had no entitlement to enter the premises and effect repairs itself during the relevant period, under cl 7(f) or otherwise. Nor was there any finding that Newstart had carried out repairs and removed items during the period from 21 January to 3 February 2021 before the lease had come to an end.

In so far as cl 3(w) was relied on, this did not assist Newstart because it did not require Waleycorp to remove the Dynabolts and locksons, wiring, furniture and rubbish from the premises because none of these things were “damage to the premises” done “in such removal [of the tenant’s fixtures]” which is what Waleycorp was required to remedy under that clause. Similarly, lost rent was not such damage. In addition, there was no finding that the repair or replacement of the basement fan or making safe damaged wiring and lights was damage to the premises caused by or at the time of the removal of the tenant’s fixtures. Indeed, on the Magistrate’s findings, apart from the damage to the handrail, there was no evidence as to who caused the damage which was required to be repaired or when. Thus, Newstart failed to discharge its onus of establishing that the amounts claimed by it were “attributable” to the relevant period on those bases.

The makegood costs had been incurred by Newstart after the end of the lease because of Walyeycorp’s failure on termination of the lease to “restore the premises to a good and tenantable state of repair and cleanliness having regard to the condition of the premises of the commencing date of this lease reasonable wear and tear and structural defects not caused by the Lessee excepted” in breach of cl 36(i)(b). On the Magistrate’s factual findings and given the construction of “attributable” above, the amounts which might be payable by Waleycorp as a result of the breach of that obligation at the end of the lease were not “so much of the … other amounts payable by the company attributable to [the relevant] period”. This also follows if the reasoning in De Vries at [161] is adopted in relation to s 443B and the facts of the present case.

As to any lost rent, of its very nature that could not have been incurred prior to the end of Waleycorp’s lease nor did a right to recover it arise prior to the end of the lease on the findings in the present case. In other words, any entitlement to lost rent as a result of an inability to let the premises to a new tenant related only to Waleycorp’s failure to comply with its obligations under cl 36 “on termination … of this lease” and thus any damages for lost rent were not “attributable to the [relevant] period”, on the construction of “attributable” referred to above and consistently with the reasoning in De Vries.

For these reasons, I do not accept that the Local Court, in concluding that Newstart’s claims for makegood costs and lost rent should be dismissed, relevantly misconstrued s 443B(2) of the Corporations Act. Nor, on the facts as found, was there any relevant misconstruction of s 443B(4) and (5) since subs (4) was not engaged in respect of the period from 21 January to 3 February 2021 when Waleycorp was using the premises for the purposes of realising the assets on those premises. This was accepted by Mr Condon and, as a result, he paid the rent for that period in accordance with his liability, which arose under s 443B(2), in respect of rent attributable to that period.

Accordingly, grounds 1 and 2 have not been made out and the answers to each of questions 2(a) and (b) formulated in Newstart’s written submissions, in the circumstances of the present case and on the proper construction of s 443B, is: no.

The fourth ground of appeal, as it was developed in written submissions, related to whether, in the Local Court, Newstart pleaded a cause of action against the defendant in trespass and, if so, did the evidence entitle Newstart to a verdict against Mr Condon. This ground of appeal raises, at most, a question of mixed fact and law and consequently leave to appeal is required under s 40 of the Local Court Act.

In my view, given its focus on what was pleaded at first instance in this particular case, this ground of appeal 4 does not involve an issue of principle or a question of general public importance.

As to whether an injustice which was more than merely arguable was disclosed, it can be noted that the word “trespass” does not appear in the amended statement of claim, which was the pleading relied upon by Newstart in the Local Court. In oral submissions, the pleading of trespass was said to be found in par 2 of the amended statement of claim. That paragraph read as follows:

The tort of trespass is committed whenever there is interference with possession of land without the licence or consent of the person in possession or without other lawful authority: TCN Channel Nine Pty Ltd v Anning (2002) 54 NSWLR 333; [2002] NSWCA 82 at [23]-[24] (Spigelman CJ, Mason P and Grove J agreeing). Paragraph 2 of the amended statement of claim does not plead such a cause of action. It can be observed that, in par 2, there was no allegation of unlawful entry onto the premises nor could there have been. In the present case, Waleycorp was entitled to possession at all relevant times and Mr Condon was, by virtue of s 437B, taken to be Waleycorp’s agent when he entered and used the premises for the purposes of the administration. Moreover, the only unlawfulness apparently alleged against Mr Condon were breaches of covenants in the lease.

In my view, the amended statement of claim did not plead a cause of action in trespass and, even if had purported to, such an action would have been bound to fail because Mr Condon as Waleycorp’s agent was entitled to enter the premises. Furthermore, there were no findings by the Magistrate that anything that Mr Condon did after he entered the premises was unlawful or amounted to or could amount to a trespass so as to attract what was described by the High Court as “the old common law doctrine of trespass ab initio under which a person who had an authority under the general law to enter and be upon land would become a trespasser ab initio if he abused his authority”: Barker v The Queen (1983) 153 CLR 338 at 363 (Brennan and Deane JJ); [1983] HCA 18. As has already been noted, the Magistrate found that Mr Condon did not bring any of the fittings or other things which had to be removed onto the premises and that there was no evidence as to who caused the damage to the items which had to be repaired (other than the handrail) or when that damage occurred.

As a result, there did not appear to me to be injustice that was more than arguable raised by the fourth ground of appeal.

In these circumstances, I refuse leave to appeal in respect of ground 4.

The third ground of appeal related to whether reliance upon s 443B(8) had been pleaded or was otherwise part of Mr Condon’s case. Accepting for the purposes of consideration, but not deciding, that this ground raises a question of mixed fact and law and not only a question of fact, I would refuse leave to appeal. Ground 3 only has significance if Newstart were successful on at least one of the other grounds and established that Mr Condon should have been held liable under s 443B(2). If that is not so, nothing turned on the Magistrate’s contingent consideration of whether Mr Condon should be excused from liability under s 443B(2), as permitted under s 443B(8).

Since Newstart has not been successful on any other ground, and there was, in my view, no issue of principle or question of general public importance raised and no arguable injustice, leave to appeal should be refused in respect of ground 3.

For these reasons, Newstart has been entirely unsuccessful in that grounds of appeal 1 and 2 have not been made out and leave to appeal is to be refused in respect of each of the other grounds. The parties did not specifically identify any circumstances which would render it appropriate to order otherwise than that costs should follow the event. Nor did I identify any sufficient reason for doing so.

Accordingly, the orders of the Court are: