Ariff case prompts calls for Royal Commission into white collar crime

 ASIC, Australian Senate 2009-2010, Insolvency practices, Offences, Official Inquiries, Prosecution of Liquidators, Regulation, White collar crime  Comments Off on Ariff case prompts calls for Royal Commission into white collar crime
Sep 292011
 

The Senator who instigated the Senate Economics References committee inquiry into the role of administrators and liquidators has called for a Royal Commission into white collar crime. 

Senator John Williams, the Nationals Senator for New South Wales, has congratulated the Armidale Dumaresq Council for supporting his call.  Senator Williams said yesterday (28/9/2011) that Armidale Dumaresq Council has first-hand knowledge of the damage that can be done to community assets through unscrupulous practices of some in the insolvency industry.  The YCW Leagues Club in Armidale was the victim of the administration of Newcastle liquidator Stuart Ariff who this week was found guilty on 19 criminal charges relating to a separate matter.

Senator Williams said the Council’s submission to the 2009 Senate inquiry was damning of the Australian Securities and Investments Commission (ASIC) for a lack of action. Since then, Armidale Dumaresq Council Deputy Mayor Jim Maher has been keen to see reform in the insolvency industry, and successfully moved two motions.

On 21 September 2011 Senator Williams called for a Royal Commission into white collar crime in Australia, and handed a file of statutory declarations alleging wrongdoing to the Australian Federal Police and the NSW Fraud Squad.

“Unfortunately there is no confidence in the industry regulators like ASIC anymore. Mr. Ariff is a case in point. I hope the Federal government acts on white collar crime because it is destroying peoples’ lives. To do nothing would be a green light for the illegal activities to continue”, Senator Williams said.

SOURCE: MEDIA RELEASE BY SENATOR JOHN WILLIAMS, 28 September 2011. Click here for  Senator William’s Website.

Jury finds liquidator guilty of white collar crimes

 Industry People, Insolvency practices, Offences, Prosecution of Liquidators, Regulation, White collar crime  Comments Off on Jury finds liquidator guilty of white collar crimes
Sep 272011
 

On 26 September 2011 former liquidator Stuart Ariff was  found guilty of various charges brought under the NSW Crimes Act and the Corporations Act. The Australian Securities and Investments Commission has  issued the following media release.  (The photo of Mr Ariff is from The Australian.)

“Former liquidator Stuart Ariff was today found guilty by a jury in the New South Wales District Court on all 19 criminal charges brought by ASIC. The offences relate to Mr Ariff’s conduct while he was the liquidator of HR Cook Investments Pty Ltd (in liquidation) (“HR Cook Investments”) during the period 9 June 2006 to 29 March 2009. Mr Ariff was found guilty on 13 charges under section 176A of the NSW Crimes Actconcerning the transfer of funds totalling $1.18 million with intent to defraud HR Cook Investments. Mr Ariff was also found guilty on six charges under section 1308(2) of the Corporations Act 2001of making false statements in documents lodged with ASIC recording receipts and payments relating to HR Cook Investments. The NSW Crimes Act charges each carry a maximum penalty of 10 years imprisonment. The Corporations Act 2001 charges each carry a maximum fine of $22,000 or imprisonment for five years or both.

Mr Ariff’s conditional bail was revoked and he was remanded into custody. The matter will return to Parramatta District Court on 25 November 2011 for sentencing.

The matter was prosecuted by the Commonwealth Director of Public Prosecutions.”

When should liquidators apply to court for approval and directions?

 Checklists and guides, Industry People, Insolvency practices, Legal opinion, Regulation  Comments Off on When should liquidators apply to court for approval and directions?
Sep 212011
 

 Michael J Galvin, barrister and insolvency law expert from Melbourne, has kindly contributed the following article for insolvency practitioners on applications for Court approval and directions, and the powers of administrators and liquidators.

 

 Applications for Court approval and directions

In addition to cases where liquidators and administrators are obliged to seek directions (see later in this paper), there are many circumstances where it may be thought desirable to apply for Court approval.  

This will be so where the liquidator or the administrator is uncertain as to the course he or she should adopt in relation to a matter (e.g. Re Mento Developments (2009) 73 ACSR 622).  It is particularly so where it is anticipated that a decision is likely to be controversial or where there is likely to be a complaint about a transaction which a liquidator or administrator proposes entering into, or has entered into (e.g. see Handberg (in his capacity as liquidator of S & D International Pty Ltd) (in liq) v MIG Property Services Pty Ltd (2010) 79 ACSR 373; Bufalo v Official Trustee in Bankruptcy [2011] FCAFC 111).

Section 479(4) of the Corporations Act 2001 provides that a liquidator may apply to the Court for directions regarding any matter arising in the winding up.  Section 511 makes similar provision for liquidators in creditors’ voluntary windings up, including liquidations which have ensued from a voluntary administration. Whilst they are expressed in different terms, it has been held that there is no material difference between the provisions.

Section 447D gives the Court power to give directions to administrators, and deed administrators, about matters arising in connection with the performance or exercise of their functions and powers.

Sections 479(4), 511 and 447D have a common pedigree.  The history of s 479(4) and its relationship to applications by trustees (particularly of deceased estates) for judicial advice were considered in detail by McClelland J. in GB Nathan & Co Pty Ltd (in liq) (1991) 24674 (see also Macedonian Orthodox Community Church St Petka Inc (2008) 249 ALR 250; see also Bufalo v Official Trustee in Bankruptcy [2011] FCAFC 111 (Mansfield, Besanko and Flick JJ).

The primary purpose of the court’s power to give judicial advice is the protection of those appointed by the Court to administer estates from allegations that they have acted improperly (Southern Cross Airlines Holdings Ltd (1998) 1 Qd R 84 at 93).  It is also aimed at protecting the interests of trusts (Macedonian Orthodox Community Church St Petka Inc at [71] & [72]).

That is not to say that the court will grant a direction or approval whenever sought (Southern Cross Airlines Holdings Ltd at 92).  It is important that the proposed direction:

  • relates to the manner in which the liquidator should act in carrying out the liquidator’s functions; and
  • will not adversely affect the legal rights or interests of other persons (or allow the liquidator to do so with impunity) (Southern Cross Airlines Holdings Ltd at 92).

However, an application for directions may be readily converted to an adversarial proceeding where the circumstances warrant it (Re Mento Developments (2009) 73 ACSR 622).

The power to give judicial advice extends to whether or not a liquidator is justified in prosecuting or defending proceedings (particularly having regard to the associated costs of doing so) (Macedonian Orthodox Community Church St Petka Inc at [71] & [72]).

The court may exercise its power to give judicial advice even with respect to and the liquidator’s proposal to enter into a commercial arrangement (Re Timbercorp Securities Ltd (in liq) (2009) 74 ACSR 626).

Further:

A liquidator is entitled to seek directions on the administration of the winding up even though the issue about which he seeks a direction may be or become an adversarial issue in other proceedings;

The direction or advice is to be directed to advising the liquidator on whether or not he or she is justified in conduct and winding up in a certain way and not deciding disputes between competing parties;

The direction or advice should not seek to resolve an issue between competing parties, but the fact that the advice may tend to foreclose an issue in other disputed proceedings is not of special significance in the court exercising its discretion to give private advice to the liquidator; and

Where a liquidator seeks advice on an issue which may be contested between competing parties, the court should be alert to not going further than is necessary to give the advice sought (Re Mento Developments (2009) 73 ACSR 622 at [49]).

It is common, for the applicant liquidator to nominate willing parties to act as contradictors in the proceeding. These are usually persons, such as creditors or classes of creditors, who have an interest in the outcome of the application. The identification of such persons is helpful because they are usually able to promote counter arguments that assist the Court in resolving the relevant issue or issues. The costs of such persons are usually agreed in advance to be met out of the assets of the liquidation.

Opinions differ as to the appropriate wording of a direction. Some judges prefer to give a direction that a liquidator is “justified” in taking a particular action. Others prefer to direct that the liquidator would be acting “reasonable” were he or she to adopt a particular course.

As to the equivalent law governing trustees in bankruptcy, see Bufalo v Official Trustee in Bankruptcy [2011] FCAFC 111.

 When is Court/creditor approval required

A. Liquidators

As to liquidators’ powers generally, see s 477 Corporations Act 2001.

Liquidators are prohibited from doing any of the following unless they have the approval of the Court (Federal or Supreme), the approval of the committee of inspection (if there is one) or a resolution of creditors:

  • compromise a debt due to the company which is greater than $100,000 (s 477(2A));
  • enter into an agreement on the company’s behalf (such as a lease or a charge) which may remain on foot or involve the performance of obligations beyond three months from the date of the agreement (s 477(2B)).

Quaere whether settlement of a claim against a director for insolvent trading, which according to the terms of s 459M is a debt due to the company, requires Court or creditor approval.

A liquidator in a creditors’ voluntary winding up is prohibited from doing any of the following without the leave of the Court, unless and until the initial meeting of creditors under s 497 has been held:

  • pay any class of creditors in full (subjection to s 556) (ss 477(4) and 477(l)(b);
  • compromise or make any arrangement with creditors, or persons claiming to be creditors, of the company, or whereby the company may be rendered liable (s 477(4) and s 477(l)(c)); and
  • do anything necessary for the winding up of the company and distributing its property (ss 477(4) and 477(2)(m)).

The exercise by a liquidator of the powers conferred by s 477 is always subject to the control of the Court. Any creditor or contributory, or ASIC, may apply to the Court with respect to any exercise, or proposed exercise, of any of those powers (s 477(6); note also the power of the Court to review the actions, decisions and omissions of liquidators under s 1321).

A liquidator must have regard to any directions given by resolution of the creditors or by the committee of inspection. A direction by the former will override a direction by the latter (s 479(1)). The liquidator may convene meetings of creditors to ascertain their wishes, and is obliged to convene a meeting if required to do so by creditors having one tenth of the company’s debt (s 479(4)).

B. Administrators

While a company is under administration, the administrator:

  • has control of the company’s business, property and affairs;
  • may carryon the company’s business and manage its property and affairs;
  • may terminate or dispose of all or part of the business, and may dispose of any of the property; and
  • may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration (s 437A(l)).

The administrator has additional powers:

  • to remove a director from office;
  • to appoint a director;
  • to execute a document, bring or defend proceedings, or do anything else, in the company’s name and on its behalf; and
  • whatever else is necessary to the purposes of part 5.3A (s 442A).

A transfer of shares in a company during administration is void, unless:

  • the administrator has given written and unconditional consent to the transfer;
  • the administrator gives written consent and any conditions have been satisfied; or
  • the Court authorises the transfer (s 437F(1)).

An administrator’s consent to a transfer of shares is subject to review by the Court (s 437F(5) and (6). The Court will only authorise the transfer under s 437F(l)(c) if it is satisfied the transfer is in the best interests of the company’s creditors as a whole.

An administrator is prohibited from disposing of property subject to a charge, or property used by the company but owned by someone else (e.g. property leased by the company), unless:

  • the disposal is in the ordinary course of business;
  • the charge or owner consents; or
  • the administrator obtains the leave of the Court (s 442C).

The Court will only grant leave if it is satisfied that the chargee’s or owner’s rights are adequately protected (s 442C(3».

As in the case of liquidators, the actions, decisions and omissions of administrators, and deed administrators, are subjection to review by the Court (s 1321).

Author: Michael J Galvin 5 September 2011

Michael’s Profile

 From the date of his admission in 1989 until commencing the Readers’ Course earlier in 1999, Michael worked with Gadens Lawyers, formerly J M Smith & Emmerton.  He became an associate in 1991 and then a partner in 1994.  He conducted an extensive insolvency practice as a solicitor for ten years advising liquidators, receivers, voluntary administrators, company directors, debtors, creditors, trustees and the Insolvency and Trustee Service Australia.  He appeared in a variety of proceedings as a solicitor advocate including commercial hearings and trials in the Magistrates’, County, Supreme and Federal Courts and public examinations under the Corporations Law and Bankruptcy Act. Michael is co-author of the recently published Butterworth’s loose-leaf service “Bankruptcy Law and Practice”.

Telephone: (03) 9225 8235 Secretary: (03) 9225 6059 Chambers: Lonsdale Chambers, Level 5, 530 Lonsdale Street, Melbourne Vic 3000.  Clerk: Michael Green (03) 9225 7222.

“Australian Insolvency Decisions” August 2011 edition

 Industry People, Insolvency practices, Personal Bankruptcy  Comments Off on “Australian Insolvency Decisions” August 2011 edition
Sep 012011
 
Compiled by Michael Ennis.   Michael developed an interest in insolvency case law, while a Deputy Registrar in Bankruptcy at the Federal Court of Australia and while undertaking various roles at the  Insolvency Trustee Service Australia (ITSA).  He has maintained this interest since retiring.  If you would like to receive the Insolvency Decisions schedule direct, advise Michael of additional decisions, or share your observations, you may contact Michael direct on rmci53mje@spin.net.au.

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Bankruptcy Act  – Prior to Date of Bankruptcy

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Goodman v Zhao [2011] FMCA 578 (26 July 2011) BANKRUPTCY – Creditors petition – debtor disputing the judgment debt – issues in relation to the judgment debt already litigated as far as the High Court – previous judgment of this Court dismissing a challenge to the bankruptcy notice subject to appeal in the Federal Court – no reason to defer a sequestration order http://www.austlii.edu.au/au/cases/cth/FMCA/2011/578.html

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Kwok v Bank of Western Australia Limited [2011] FMCA 559 (22 July 2011) BANKRUPTCY – Application to set aside a Bankruptcy Notice brought pursuant to s.41(7) – requirements of section not make out – application dismissed http://www.austlii.edu.au/au/cases/cth/FMCA/2011/559.html

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 “A question resolved – I had thought that there was a decision on point the other way” – M Ennis –  Autron Pty Ltd v Benk [2011] FCAFC 93 (28 July 2011) BANKRUPTCY AND INSOLVENCY – bankruptcy notice – validity – whether post-judgment interest included in a bankruptcy notice can be a component of the prescribed statutory minimum for which a bankruptcy notice can be issued – consideration of the meaning of “final judgment” and “final order” http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/93.html

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Bankruptcy Act – following Date of Bankruptcy

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Mango Boulevard Pty Ltd v Whitton; In the matter of Spencer (Bankrupt) (No 2) [2011] FCA 845 (28 July 2011) COSTS – bankruptcy – application for directions by trustee – whether trustee ought to have his costs paid out of funds held by him for the calling of a meeting of creditors – where trustee’s application to the court was reasonable – where need for directions arose from instruction of principal proceeding – order for costs reserved to the discretion of the trial judge COSTS – costs of interlocutory proceeding – application that costs be paid forthwith – circumstances in which order for costs to be paid forthwith may be made – where applicant had costs awarded against it in respect of transfer application – where bankruptcy jurisdiction is exercised in national court – order would cause injustice – order not made http://www.austlii.edu.au/au/cases/cth/FCA/2011/845.html

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 “Note service of Bankruptcy Notice by email” – M Ennis  – Topalides v Edey [2011] FMCA 556 (22 July 2011) BANKRUPTCY – Application for Review – suggestions of procedural faults and of misleading conduct – allegations of improper service or no service at all – consideration of statutory requirements – determination of no fault or error arising from service or otherwise http://www.austlii.edu.au/au/cases/cth/FMCA/2011/556.html

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 “How rare is this, a S. 50; so it follows the subsequent decision is going to be of interest” – M Ennis – Tang & Anor v Bassili & Ors [2011] FMCA 544 (20 July 2011) BANKRUPTCY – ATO delivery of s.260-5 ITAA notices upon third party – questions of whether money “due” by third party to taxpayer debtor – third party purchaser due to pay money to taxpayer pursuant to contract for sale of land – land subject to registered mortgages securing debt due – money not due to taxpayer – money due to mortgagee – arrangements between parties to secure disputed fund pending trial – such arrangement did not disturb legal rights of parties – arrangement not render disputed fund due by party subject to s.260-5 notice http://www.austlii.edu.au/au/cases/cth/FMCA/2011/544.html

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CostaExchange Limited & Ors v Shephard (No.2) [2011] FMCA 545 (12 July 2011) BANKRUPTCY – Creditor’s petition – application to set aside sequestration order – operation of sequestration order stayed for 21 days on condition of payment by debtor to trustee – mistake affecting ability of debtor to comply – no grounds for setting aside sequestration order – no evidence of ‘fraud’ – sequestration order did reflect intentions of court – delay in applying for remedy – application refused http://www.austlii.edu.au/au/cases/cth/FMCA/2011/545.html

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CostaExchange Limited & Ors v Shephard [2010] FMCA 804 (12 October 2010) BANKRUPTCY – Creditor’s petition – costs in protracted litigation with debtor – debtor’s evidence did not show ability to pay debt – sequestration order made http://www.austlii.edu.au/au/cases/cth/FMCA/2010/804.html

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Bankruptcy Act – Other Schemes under the Act

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“As the year goes on the most complex of matters seem to be occurring – looking forward to decisions in these bankruptcies” – M Ennis –  Robertson & Anor v Moran & Ors [2011] FMCA 496 (20 July 2011) BANKRUPTCY – Personal insolvency agreement – application to set aside – agreement not calculated to benefit creditors generally – large unsecured indebtedness – token contribution under agreement – dominant related creditors benefiting from continuing business activities of debtor – controlling trustee recommended against acceptance of agreement – further investigation of debtor’s business affairs warranted – application set aside – sequestration order made http://www.austlii.edu.au/au/cases/cth/FMCA/2011/496.html

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Corporations – pre-appointment

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Time Of My Life Pty Limited -v- Windsor Turf Supplies Pty Limited (In Liquidation) [2011] NSWSC 916 (16 August 2011) CORPORATIONS – Corporations Act 2001 (Cth) s 459G(1), 459H(1) – application to set aside a statutory demand – genuine dispute as to existence of debt – statutory demand set aside http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/916.html

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Forensic Document Examiners Pty Ltd v Cristavao [2011] FCA 843 (28 July 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/843.html

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Refund Property Fees Pty Ltd v Prime Project Development (Cairns) Pty Ltd [2011] FCA 851 (21 July 2011) PRACTICE AND PROCEDURE – interim receiver – whether to appoint an interim receiver of a secured loan under s 57 of the Federal Court of Australia Act 1976 (Cth) – where first respondent had purportedly assigned the loan to the applicant – where substantive proceeding claimed relief under the Trade Practices Act 1974 (Cth) and the Property Law Act 1974 (Qld) – where receiver would have powers to release security – where receiver would receive monies under loan and pay unsecured creditors instead of secured creditors – where security was effectively held separately – misunderstanding as to the nature of a receiver – necessary party not joined – receiver not appointed – applicant to file and serve statement of claim http://www.austlii.edu.au/au/cases/cth/FCA/2011/851.html

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Corporations  – post appointment

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S E Vineyard Finance Pty Ltd (recs & mgrs apptd) v Casey [2011] VSC 403 (26 August 2011) APPEAL – Magistrates’ Court – Whether numerous challenges to Magistrate’s findings raised a question of law. TRADE PRACTICES – Whether there were misleading and deceptive representations in prospectus for establishment of vineyard – Omission to mention round robin transaction involving monies borrowed from appellant to pay management fees for vineyard – Whether credit provider knowingly concerned – Whether linked credit provider liable for misrepresentation – Meaning of consumer – Whether claims outside limitation period – Unconscionable conduct – Trade Practices Act 1974 (Cth), ss 48, 51AC, 52, 73, 82. EQUITY – Whether fiduciary relationship existed – Whether there was a breach of fiduciary duty – Equitable damages – Constructive trust http://www.austlii.edu.au/au/cases/vic/VSC/2011/403.html

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Re Keldane Pty Ltd (in liq) [2011] VSC 385 (23 August 2011) CORPORATIONS – Termination of winding up – Sufficiency of material for the Court to order termination – Doubt about whether the creditors’ resolution would have been passed on the material before them – Validation of appointment of administrators – Whether approval by creditors is to be given before or at the time of administrator’s appointment – ss 436B(2) and 482(1) Corporations Act 2001 (Cth). http://www.austlii.edu.au/au/cases/vic/VSC/2011/385.html

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Re Timbercorp Limited (in liq) [2011] VSC 189 (23 August 2011) Corporations – Approval of compromise – Insurance claim – Allocation of proceeds – Confidentiality of terms of settlement and legal advice – Applications under ss 477(2A) and 511 of the Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/vic/VSC/2011/189.html

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CAREY -v- KORDA & WINTERBOTTOM [No 2] [2011] WASC 220 (26 August 2011) Catchwords:
Evidence – Privilege – Legal professional privilege – Receivers and managers – Whether solicitors engaged by receiver and manager are engaged to act for company – Whether sufficient basis to maintain claim for legal professional privilege over bills of costs and recharge schedules – Whether legal professional privilege waived – Whether privilege abrogated by statute http://www.austlii.edu.au/au/cases/wa/WASC/2011/220.html

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GREAT SOUTHERN MANAGERS AUSTRALIA LTD (IN LIQ) IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 1 -v- THACKRAY [No 3] [2011] WASC 195 (12 August 2011) Catchwords: Corporations – Managed Investment Scheme – Rights Proceeding – Withdrawal of defences and counterclaims in Rights Proceeding – Allocation of net proceeds of fund – Rights of respective claimants – Turns on own facts http://www.austlii.edu.au/au/cases/wa/WASC/2011/195.html

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MICHAEL OSCAR BASEDOW AS ADMINISTRATOR OF FIRST GROWTH FUNDS LTD (ADMINISTRATOR APPOINTED) [2011] SASC 132 (16 August 2011) Application for directions by Administrator – consideration of assets of company – whether approval should be given to dispose of certain assets prior to the second creditors meeting – difficulty of attributing value to assets – some assets consisted irrecoverable debts – agreements entered into by Administrator subject to the Court’s direction http://www.austlii.edu.au/au/cases/sa/SASC/2011/132.html

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Constantinidis & Anor v Landcorp (NSW) Pty Ltd (in liq) & Ors [2011] NSWSC 872 (16 August 2011) Costs – costs ordered against plaintiffs where application to extend caveat could not have succeeded http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/872.html

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In the matter of Tumut River Orchard Management Limited (in liq) ABN 003 501 611 [2011] NSWSC 915 (15 August 2011) CORPORATIONS – application for appointment of liquidator – s 502 of the Corporations Act 2001 (Cth) – where company in liquidation without liquidator — r 7.2 of the Supreme Court (Corporations) Rules 1999 (NSW) – whether plaintiff can bring the application where it is neither a creditor nor a contributory of the company – held r 7.2(2)(a) does not create a closed class – held s 502 of the Corporations Act 2001 (Cth) does not restrict who may properly make the application – s 14 of the Civil Procedure Act 2005 (NSW) – if it were otherwise the present case is an appropriate one in which to dispense with rule – r 1.8 of the Supreme Court (Corporations) Rules 1999 (NSW) – liquidator appointed http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/915.html

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 Chand v Azurra Pty Ltd (in liquidation) [2011] NSWCA 227 (5 August 2011) ADMINISTRATIVE LAW – judicial review – procedural fairness – whether Consumer, Trader and Tenancy Tribunal denied applicants procedural fairness in giving no weight to expert report on basis of non-compliance with Makita v Sprowles principles – whether Tribunal denied applicants procedural fairness in excluding one applicant from hearing room while her husband was being cross-examined – whether excluded applicant was denied a reasonable opportunity to be present and participate in the proceedings on second hearing day  ADMINISTRATIVE LAW – judicial review – relief sought in the nature of certiorari – whether Consumer, Trader and Tenancy Tribunal made factual findings in the absence of any evidence to support those findings  EVIDENCE – principle in Jones v Dunkel – whether failure to call available party eyewitness relevant to assessment of evidence of another party eyewitness who was called http://www.austlii.edu.au/au/cases/nsw/NSWCA/2011/227.html

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CHICAGO BOOT CO P/L v DAVIES & MCINTOSH AS JOINT & SEVERAL LIQUIDATORS OF HARRIS SCARFE LTD [2011] SASCFC 92 (23 August 2011) CORPORATIONS – WINDING UP – CONDUCT AND INCIDENTS OF WINDING UP – EFFECT OF WINDING UP ON OTHER TRANSACTIONS – PREFERENCES http://www.austlii.edu.au/au/cases/sa/SASCFC/2011/92.html

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Bridgeport Pty Ltd v Yelyruss Pty Ltd (in liq) and Anor [2011] QSC 237 (2 August 2011) Procedure – Supreme Court procedure – Queensland – Procedure under Uniform Civil Procedure Rules and predecessors – Other matters – application for leave to add contributor to notice of claim – factors considered – significant delay – prejudice – contribution would not be significant – leave not granted http://www.austlii.edu.au/au/cases/qld/QSC/2011/237.html

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In the matter of Lawrence Waterhouse Pty Ltd (in liq) – Shaw v Minsden Pty Ltd [2011] NSWSC 964 (24 August 2011) CORPORATIONS – whether transfer of land and/or creation of charge over land is/are insolvent transaction(s) pursuant to s 588FC of the Corporations Act 2001 (Cth) or unreasonable director-related transaction(s) pursuant to s 588FDA (and, in either case, voidable pursuant to s 588FE) – in the alternative, whether transfer and/or creation of charge is/are alienation(s) of land with intent to defraud a creditor pursuant to s 37A of the Conveyancing Act 1919 (NSW) – CONTRACTS – whether rights and equitable interest arising under transfer have been abandoned – TRUSTS – whether transferee (Minsden) holds land and/or charge on constructive trust for transferor (Lawrence Waterhouse) – whether Lawrence Waterhouse held land as trustee for its director (Wayne Lawrence) and, if so, whether Lawrence Waterhouse is entitled to indemnification – whether, if transfer void or set aside, land is held on constructive trust for Wayne Lawrence and subject to an equitable charge in his favour – HELD – abandonment not established – Lawrence Waterhouse held land as trustee for Wayne Lawrence at time of transfer – Lawrence Waterhouse entitled to indemnification and to trace land into hands of Minsden for that purpose – charge set aside as unreasonable director-related transaction and alienation of property with intent to defraud creditor – CORPORATIONS – whether Lawrence Waterhouse has kept proper books and records for purposes of s 286 of the Corporations Act – if not, whether presumption of insolvency has been rebutted – whether Wayne Lawrence has breached any civil penalty provisions and exculpatory relief should be granted – HELD – failure to keep proper books and records – presumption of insolvency rebutted up to date of withdrawal of support by Wayne Lawrence – breach of statutory duty established – exculpatory relief not granted so as to absolve director from obligation to account for any loss sustained through breach of that duty http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/964.html

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 “Receivers & Managers” – M Ennis – Olde & Ors v Primary Compass Limited ACN 129 159 812 [2011] NSWSC 845 (8 August 2011) PROCEDURE – civil – interlocutory issues – injunction to restrain call on bank guarantee – whether implied term of guarantee that would only be used to meet certain liabilities – no serious question to be tried – interrelationship between “serious question to be tried” and “balance of convenience” http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/845.html

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Horley v Sector 7G Architecture Pty Ltd (in liquidation) [2011] NSWSC 827 (4 August 2011) APPEAL – appeal under s 39 of the Local Court Act 2007 – leave sought to carry on proceedings pursuant to s 500(2) of the Corporations Act 2001 (Cth) – leave under s 40 of the Local Court Act 2007 – adequate reasons for decision not given – architectural services provided for the reconstruction of a guest house – whether claim decided in contract or quantum meruit – credit findings – terms of agreement reached – whether agreement reached as to fixed fee on implied term that reasonable sum would be paid – appeal upheld – decision below set aside http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/827.html

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Roufeil v Gliderol International Pty Limited [2011] FCA 847 (29 July 2011) CORPORATIONS – voidable transactions – whether certain payments were voidable transactions within the meaning of s 588FE(2) of the Corporations Act 2001 (Cth) – whether payments were “unfair preferences” given by company to creditor – whether payments were made while company was insolvent – whether company presumed to be insolvent by virtue of s 588E of the Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/cth/FCA/2011/847.html

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 “Significant debts in this matter” – M Ennis – Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89 (25 July 2011) CORPORATIONS – powers of liquidator in winding up – whether company’s entry into agreement to fund litigation intended to be commenced by a creditor was expedient for the winding up of the company’s affairs and the distribution of its property – whether possible commercial return from sharing in proceeds of litigation adequate to attract s 477(2)(m) of the Corporations Act 2001 (Cth) PRACTICE AND PROCEDURE – application for leave to appeal by non-party – where prospective appellant held charge over the assets of the party to be funded in the litigation, which security would potentially be diminished according to the terms of the litigation funding agreement if that agreement were approved  http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/89.html

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Miscellaneous

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COMMONWEALTH BANK OF AUSTRALIA -v- SHADDICK [2011] WASC 205 (22 August 2011) Catchwords: Property law – Service of default notice – Whether notice has to come to attention of mortgagor – Proper mode of service http://www.austlii.edu.au/au/cases/wa/WASC/2011/205.html

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YZERMAN -v- SCHOFIELD [2011] WASC 200 (15 August 2011) Catchwords: Conflict of laws – Leave to issue writ and serve out of jurisdiction – Application to revoke or set aside order granting leave to issue writ and serve out of jurisdiction – Related proceedings instituted in England – Dispute over beneficial ownership of land – Forum non conveniens – Relationship between remedies – Inappropriateness of local forum – Registered joint tenancy of land in Western Australia – Parties resident in England – Action for sale of land in Western Australia under s 126 of Property Law Act – Discretionary considerations http://www.austlii.edu.au/au/cases/wa/WASC/2011/200.html

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Break Fast Investments Pty Ltd v C & O Voukidis Pty Ltd [2011] NSWSC 871 (15 August 2011) Caveat – form of caveat – whether description of interest adequate – leave to lodge further caveat http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/871.html

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Gigi Entertainment Pty Limited v Basil John Macree (No. 2) [2011] NSWSC 869 (12 August 2011) SOLICITOR – COSTS – lien – delivery of former client’s papers to new solicitor – solicitor’s rules – whether solicitors undertaking satisfactorily secures payment of former solicitor’s costs and disbursements – Legal Profession Act 2004, s 728 – appropriate conditions http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/869.html

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