May 212015
 

Slap with feather … (updated 4 December 2015)

Case 3

Australian Financial Security Authority – Media release: (NSW) Hull – Bankrupt pleads guilty to three offences under the Bankruptcy Act

Wed 02 December 2015

A man was sentenced for disposing of property within 12 months prior to becoming a bankrupt with intent to defraud his creditors and having made a false declaration on his Statement of Affairs. Mr Denis John Hull was sentenced in the Downing Centre Local Court on 24 November 2015 following a guilty plea being entered to having disposed of property within 12 months prior to becoming a bankrupt with intent to defraud his creditors and to having made a false declaration on his Statement of Affairs.

On 31 March 2012 Mr Hull received a total of $21,175.44 from the sale of two parcels of shares authorised for sale on 26 March 2012. On 10 April 2012 he became bankrupt via Debtor’s Petition, by which time he had disposed of monies totalling $16,000 received from the sale of shares. In his Statement of Affairs completed on 5 April 2014, Mr Hull failed to disclose the sale of the two parcels of shares, and failed to disclose the existence of the bank account into which the share proceeds were subsequently deposited.

During the proceedings Magistrate Milledge remarked that the offending was “quite deceitful and very worrying”. She later stated that the offending was “despicable, mean and criminal”, but acknowledged that it was clear that Mr Hull accepted that as demonstrated in his letter to the court. In passing sentence, Magistrate Milledge gave consideration to Mr Hull’s age at the date of the offending; the fact that he had previously managed to lead a trouble free life; and that his recent efforts to repay the monies showed remorse; and remarked that it was her view that whilst there was serious criminality she saw it as something that was done at a critical place in life and understood that this was why Mr Hull had done what he had done, noting that this did not excuse the offending.

Mr Hull was sentenced and was ordered to enter into a 2 year good behaviour bond in the amount of $200 with nil conviction to be recorded pursuant to Section 19B(1)(d) Crimes Act 1914. Magistrate Milledge noted that no restitution order would be made as this was being taken care of.

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


Amazing … (updated 11 August 2015)

Case 2

Australian Financial Security Authority – Media release: (TAS) Smith – Discharged bankrupt faces court and imprisonment for failing to disclose financial details and withdrawing cash of $72,600

Thu 06 August 2015

A dairy farmer formerly of King Island, Dominic Luke Smith was prosecuted in the Launceston Court of Petty Sessions on 24 July 2015 for removing $72,600 from his bank accounts in 2012, prior to and just after the date of bankruptcy.
Mr Smith also failed to keep appropriate books and records relating to his business transactions for five years prior to his bankruptcy and failed to disclose information as required by the trustee. Mr Smith was not able to account for how he spent a $100,000 loan and failed to produce bank account statements and cheque butts when requested by his bankruptcy trustee. Mr Smith pleaded guilty to 15 offences under the Bankruptcy Act and was sentenced to a total effective sentence of 4 months’ imprisonment, released on a $1,000 two-year good behaviour bond. The matter was prosecuted by the Office of the Commonwealth Director of Public Prosecutions.

Case 1

Australian Financial Security Authority – Media release NSW (McElwaine) – Nine-month bond for offence against the Bankruptcy Act

Thu 14 May 2015

A NSW woman has pleaded guilty to gambling away more than $137,000 from the sale of her property rather than paying creditors before declaring bankruptcy with debts of $438,000. Dee Why resident Bridgett McElwaine was sentenced in the Downing Centre Local Court on 12 May 2015 after pleading guilty to an offence against the Bankruptcy Act. Ms McElwaine filed for voluntary bankruptcy in October 2012 with debts of $438,000 mostly from the use of 22 credit cards. Before her bankruptcy, Ms McElwaine had received proceeds of more than $137,000 after selling her property in Frenchs Forest, NSW. She withdrew more than $96,000 in the 12 months before her bankruptcy and told the court she ‘blew the lot’ on gambling instead of making the money available to her creditors. In sentencing Magistrate Goodwin noted a jail term was available for Ms McElwaine’s serious offence and that a clear message needed to be sent to the community about the unacceptable nature of that behaviour. Ms McElwaine was convicted and placed on a nine-month good behaviour bond, recognisance of $500 and to accept Community Corrections Service supervision. The case was prosecuted by the Office of the Commonwealth Director of Public Prosecutions.Media release NSW (McElwaine) – Nine-month bond for offence against the Bankruptcy Act


 

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Jul 212014
 

 

In a recent decision concerning liquidators of the Walton Construction group, Justice Robertson of the Full Court of the Australian Federal Court has determined that it would be inappropriate and against the law to take into account the insolvency practitioners’ Code of Professional Conduct.

In Australian Securities and Investments Commission v Franklin (liquidator), in the matter of Walton Constructions Pty Ltd [2014] FCAFC 85 (judgment 18 July 2014), His Honour said:

“I should add that I do not regard the Insolvency Practitioners Association of Australia’s guide entitled Code of Professional Practice for Insolvency Practitioners, on which ASIC relied, as extrinsic material appropriate or permitted to be taken into account in construing ss 60 and 436DA of the Corporations Act. To my mind, the general law would not permit that guide to be taken into account in construing those provisions and that guide is outside the scope of s 15AB of the Acts Interpretation Act 1901 (Cth). For example, the relevant parts of that guide were not reproduced or referred to in the explanatory memorandum to the Corporations Amendment (Insolvency) Bill 2007 (Cth). ”           (Judgment paragraph 38.)

what-how-when-why

Conflict of interest

At the heart of the main decision in this case is the issue of conflict of interest and duty. I will analyse this part of the decision in a separate post. But here I want to discuss issues concerning compliance with and enforcement of the association’s Code of Professional Conduct.

An interesting predicament for ARITA

Justice Robertson’s comments are likely to cause something of a predicament for the association of insolvency practitioners, the Australian Restructuring Insolvency and Turnaround Association (ARITA). Naturally its Code of Professional Conduct (the Code) is binding on its members. So, it will probably review and amend this particular rule to bring it into line with the comments by Justice Robertson. Otherwise it would be imposing a requirement that the law does not acknowledge.

But, theoretically, it is not essential that ARITA bring its rules into line. If it thinks it necessary to have ethical rules that impose on its members duties greater than those imposed by the insolvency laws, it is entitled to do so. And it is entitled to take disciplinary action against members who breach such rules. Any member who doesn’t want to be bound by these extra duties can choose to resign from the association.

However it appears that enforcement of those rules by ARITA would be problematic. At the moment ARITA appears to enforce its rules only after a law enforcement agency (e.g. the Australian Securities and Investments Commission and the Companies Auditors and Liquidators Disciplinary Board) has made an unfavourable decision.

Apart from ARITA’s Code containing guidance as to what is meant by sections 60 and 436DA of the Corporations Act, ARITA has rules that impose greater duties and obligations than those imposed by the law. In constructing these extra duties and rules ARITA hopes that the courts will recognise them as a proper standard for judging the behaviour of insolvency practitioners and, by doing so, raise the standard of practice in the profession.

Until the comments by Justice Robertson in the Walton Constructions appeal case, it was widely believed that the statements and rules in ARITA’s Code applied not only to members of the association but effectively applied to all liquidators, because the courts would look to the Code when assessing whether the behaviour of a liquidator complied with his or her duties.

ARITA could suffer financially if this belief, based as it is on previous judgments by the courts, has been thrown into doubt by Justice Robertson. ARITA says that around 83% of all registered insolvency practitioners in Australia are ARITA members. But if its Code continues to impose standards that are more onerous than those imposed by the Corporations Act, and if the courts don’t continue to support its Code, more practitioners may choose not to join ARITA.

Comment by ARITA

Writing on behalf of the authors of the Code – the Australian Restructuring Insolvency & Turnaround Association (ARITA) – Michael Murray, Legal Director of ARITA,  says:

“Interestingly, Justice Robertson said that he did not regard the ARITA Code of Professional Practice for Insolvency Practitioners, on which ASIC relied, as extrinsic material appropriate or permitted to be taken into account in construing ss 60 and 436DA of the Corporations Act. This was the case as a matter of law under the Acts Interpretation Act 1901 (Cth).  As a matter of interpretation of the sections that comment is no doubt correct.  But it continues to be the case that the Code is relied upon by the courts in assessing standards of practitioners’ conduct: Dean-Willcocks v Companies Auditors and Liquidators Disciplinary Board [2006] FCA 1438.”


END OF POST

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Mar 072014
 

[UPDATE 19/3/2014: THE ATO HAS APPEALED AGAINST THE DECISION DISCUSSED IN THIS POST] [UPDATE 10/10/2014: THE ATO FAILED IN ITS APPEAL; THE DECISION OF LOGAN J WAS CONFIRMED.]

When the Insolvency Practitioners Association of Australia (since renamed the Australian Restructuring Insolvency & Turnaround Association, or ARITA) and the Australian Taxation Office (ATO) decided to run a test case on the obligations of liquidators upon the occurrence of a Capital Gains Tax (CGT) event, they probably knew they risked broadening the contentious issues.  But they had to try settling a far-reaching and long-standing argument ­ which ARITA and the ATO had been having since 2009.  (1)

Unfortunately for ARITA and the ATO, the Court decided not to adjudicate in one important area, deeming it “unnecessary to answer in light of the conclusion reached …”

In running Australian Building Systems Pty Ltd v Commissioner of Taxation ([2014] FCA 116), decisions were sought on the following questions:

–          whether the liquidators (this was a joint appointment) are obliged by s 254 of the Income Tax Assessment Act 1936 , prior to the issuing of a notice of assessment to Australian Building Systems Pty Ltd (ABS), to retain monies so as to meet what may be a taxation liability in respect of the income year when the CGT event occurred; and

–          whether the liquidators are obliged to pay to the Commissioner the whole of any tax due by ABS in priority to other creditors of that company notwithstanding  ss 501, 555 and 556 of the Corporations Act.

Tax law gavel

On the first question the Court –  Logan J presiding – concluded:

“ … that s 254 of the ITAA36 had no application to the liquidators. They were not, in the absence of any assessment, subject to any retention and payment obligation derived from that section…..” (para 25 of the judgment) and “s 254 does not require retention upon the mere happening of a CGT event …” (para 31).

As the ATO had argued that it was not necessary for there to be a notice of assessment before the retention obligation of S. 254 could arise, this decision was a victory for the liquidators.

But Logan J added the following cautionary advice:

“… Even though, for the reasons given, s 254 does not require retention upon the mere happening of a CGT event, that does not mean that a liquidator is obliged immediately to distribute the resultant gain or part thereof as a dividend to creditors in the course of the winding up. A prudent liquidator, like a prudent trustee of a trust estate or executor of a will, would be entitled to retain the gain for a time against other expenses which might arise in the course of the administration. Further, in relation to income tax, the liquidator would at the very least be entitled to retain the gain until the income tax position in respect of the tax year in which the CGT event had occurred had become certain by the issuing of an assessment or other advice from the Commissioner that, for example, no tax was payable in respect of that income year….” (para 31).

Caution-taxes

ATO back to the drawing board

The ATO will need to withdraw its exhaustive Draft Taxation Determinations TD 2012/D7 and TD 2012/D6 of September 2012 and try again to state the correct legal position.  In those determinations the ATO took the view that

  • “a receiver who is an agent of the debtor is required by paragraph 254(1)(d) of the ITAA 1936 to retain from the sale proceeds that come to them in the capacity of agent sufficient money to pay tax which is or will become due as a result of disposing of a CGT asset”; and
  • “The phrase ‘tax which is or will become due’ in paragraph 254(1)(d) of the ITAA 1936 is not restricted to tax that has been assessed, and includes tax that will become due when an assessment is made. Consequently, the obligation to retain an amount under paragraph 254(1)(d) can arise in respect of tax that has not yet been assessed”.

 

An advisory note from ARITA?

One can imagine that the decision and the words of caution by Logan J will eventually find their way into an advisory note or practice guide from ARITA to liquidators and other insolvency practitioners.  But in getting there the Judge’s caution is bound to cause ARITA’s technical advisers and members considerable trouble.

ARITA’s initial interpretation

ARITA posted a summary of the judgment on its website on 23 February  (“Liquidator succeeds in CGT dispute with ATO” by Michael Murray), and ended with a note that it will closely examine the decision and the Judge’s comments and will raise the matter at its next liaison meeting with the ATO.

ARITA’s interpretation included the following comment:

In the case in hand, no assessment had issued when the sale took place.  This means that there is no personal liability for a liquidator if, once the assessment issues, there are insufficient funds to meet the liability.

Kicking off the discussiondiscussion meeting

I would make a couple of preliminary observations regarding this comment.

First, the fact that no assessment had issued when the sale took place is unremarkable.  Normally, a tax assessment is not made until after an event occurs.  Ordinarily, the ATO would not even be aware that an event had occurred until it was disclosed in a return lodged by the taxpayer.  (2)

Secondly, I agree that, based on this decision, there would be no personal liability under s. 254(1)(d) or (e) of the ITAA 1936 for the tax payable as the result of a profit, etc., if the money the liquidator had was expended and/or disbursed before a tax assessment was issued.

But there are other important issues to consider.  If a tax return covering
a post-appointment period was lodged and/or a tax assessment was issued showing tax payable in respect of that period, this would give rise to a debt payable by the company; and that debt would, it seems to me, be entitled to priority payment under the Corporation Act, as are other costs
of the winding up.

Such a tax debt would probably be entitled to classification as an expense “properly incurred by a relevant authority” (e.g., a liquidator) (S. 556(1)(dd) of the Corporations Act).  If so, it would have a higher priority than, for example, liquidator’s remuneration (S. 556(1)(de)) and employee entitlements (S. 556(1)(e) and (g)).

So … if, when the assessment issues “there are insufficient funds to meet the liability”, the liquidator may be deemed to have breached his or her duty to distribute the proceeds in accordance with the priorities established by law.

It seems to me that this very issue was the one being broached by Logan J in his caution at para 31 of the judgment when he said:

“ … in relation to income tax, the liquidator would at the very least be entitled to retain the gain until the income tax position in respect of the tax year in which the CGT event had occurred had become certain by the issuing of an assessment or other advice from the Commissioner that, for example, no tax was payable in respect of that income year….”.

_______________________________________________

NOTES:
(1)    In October 2012 the ATO issued draft rulings on the subject; and in February 2013 the  hearing of the test case began.
(2)    In the case being examined here, the ATO was informed of the CGT event when the company sought a private ruling from the Commissioner on whether s.254(1)(d) applied.

_______________________________________________

For more on this topic see my article “Post-appointment income tax debts of liquidator” published on this site on 10 October 2010.

 

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Sep 032013
 

Melbourne liquidator Andrew Leonard Dunner is likely to be prohibited from being registered as a liquidator for 5 years, following a decision by the Federal Court in an action brought against him by the Australian Securities and Investments Commission (ASIC).

In a media release on 30 August 2013 ASIC said that:

“In handing down his reasons for judgment today, Justice Middleton found that Mr Dunner had failed to adequately investigate the circumstances and affairs of companies to which he was appointed and had inaccurately reported to ASIC and creditors.

“The Court also found that he had drawn remuneration in excess of $600,000 without appropriate approval or adequate supporting documentation. The Court considered it appropriate that he should repay that remuneration and have leave to apply to the Court for justification of an entitlement to recoup remuneration where appropriate. Justice Middleton found that Mr Dunner’s conduct indicated ‘…a systemic failure of administration and internal protocols, as well as (in a number of instances) extremely poor professional judgment. In this way, Mr Dunner has failed to satisfy the high standards of conduct required of his offices’.

“In finding that a banning period of 5 years was appropriate, Justice Middleton said:

‘Withdrawing a liquidator’s registration operates directly to protect the public from the work of the person. It also operates generally by deterring other liquidators from acting in a similar fashion. ASIC submitted – and I accept – that there is a compelling public interest in the maintenance of a system which recognises that registration as a liquidator is a privilege, the continuance of which is conditional upon diligent performance of its attendant duties.’

To see the ASIC media release, CLICK HERE.

To see Justice Middleton’s important 67 page report and judgment, CLICK HERE .

Case citation:

Australian Securities and Investments Commission v Dunner [2013] FCA 872.

Case catchwords:

CORPORATIONS – Corporations Act 2001 (Cth), ss 423, 499, 536 – Duties of liquidator – Duties of receiver – Court inquiry into defendant’s conduct as liquidator and receiver – Failure by defendant to investigate circumstances of companies to which he was appointed – Drawing remuneration without approval or adequate supporting documentation – Inaccurate reporting to ASIC and creditors regarding external administrations – Repayment of remuneration drawn without approval – Unfitness to remain registered as liquidator – Duration of prohibition order.

 

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Sep 242012
 

Complied 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. Michael’s comments appear in red text.

Note: There is no July 2012 edition of Australian Insolvency Decisions.

Bankruptcy Act – following Date of Bankruptcy

Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako [2012] FCA 889 (21 August 2012) BANKRUPTCY – where transfer void against trustee in bankruptcy – property jointly owned by bankrupt and another person – appropriate orders in circumstances

BANKRUPTCY – where transfer void against trustee in bankruptcy – transferee paid part consideration – property subject to mortgage – mortgagee’s rights – mortgage funds used to pay part consideration – operation of s 120(4) regarding repayment of consideration paid by transferee

BANKRUPTCY – whether two transfers of property are void against the trustee in bankruptcy – undervalued transactions – transfer of residential properties by bankrupt to family members – whether the properties were held in trust – reliability of evidence – repayment of consideration paid http://www.austlii.edu.au/au/cases/cth/FCA/2012/889.html

Mulhern v Pearce [2012] FCA 884 (17 August 2012)  http://www.austlii.edu.au/au/cases/cth/FCA/2012/884.html

Maxwell-Smith v Donnelly [2012] FCAFC 82 (16 May 2012) http://www.austlii.edu.au/au/cases/cth/FCAFC/2012/82.html

Seems to be an important matter, providing review of s.179 – clearly a lot going on Liprini v Pascoe as Trustee of the Bankrupt Estate of Liprini [2012] FCA 886 (16 August 2012) BANKRUPTCY – application for inquiry pursuant to s 179 Bankruptcy Act 1966   – threshold requirements for inquiry http://www.austlii.edu.au/au/cases/cth/FCA/2012/886.html

Freeman v National Australia Bank Limited [2012] FCA 866 (16 August 2012) PRACTICE AND PROCEDURE – vexatious litigant – application for extension of time for leave to appeal – application for leave to appeal against decision dismissing application to rescind vexatious litigant orders – order declaring vexatious litigant interlocutory not final – relevant principles in considering application for extension of time and for leave to appeal – reopening previous decision because of alleged fresh evidence – merits of case – whether primary judge had proper regard to issues raised by applicant – indemnity costs http://www.austlii.edu.au/au/cases/cth/FCA/2012/866.html

Interesting reading – looking forward to future hearings National Australia Bank Limited v Moore [2012] FCA 865 (15 August 2012) BANKRUPTCY AND INSOLVENCY – bank seeking leave pursuant to s 58(3)(b) of the Bankruptcy Act 1966   to take fresh steps in, and to continue with, proceedings in the Supreme Court of New South Wales http://www.austlii.edu.au/au/cases/cth/FCA/2012/865.html

Rose v Meriton Apartments Pty Limited [2012] FCA 844 (13 August 2012) BANKRUPTCY AND INSOLVENCY – discretion to make sequestration order – whether discretion miscarried – whether leave should be granted to amend notice of appeal http://www.austlii.edu.au/au/cases/cth/FCA/2012/844.html

Frost v Bovaird [2012] FCA 831 (10 August 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/831.html

Rahman v Dubs [2012] FCA 849 (9 August 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/849.html

 Corporations – pre-appointment

 Valuestream Investment Management Ltd v Richmond Management Pty Ltd [2012] FCA 898 (22 August 2012) CORPORATIONS – urgent ex parte interlocutory application for the appointment of an interim receiver and manager – managed investment scheme – whether circumstances justified appointment of a receiver and manager – prima facie evidence that the trustee company no longer had director resident in Australia or registered office – prima facie evidence that the trustee company had made improper investments, failed to keep accounting records, appoint an auditor and report to unit holders http://www.austlii.edu.au/au/cases/cth/FCA/2012/898.html

Valeba Pty Ltd v Deputy Commissioner of Taxation [2012] QSC 200 (2 August 2012) STATUTORY DEMAND – SETTING ASIDE – DEMAND SERVED BY DEPUTY COMMISSIONER OF TAXATION – CONCLUSIVITY PROVISIONS OF TAXATION LEGISLATION – GENUINE DISPUTE – OTHER REASON TO SET ASIDE http://www.austlii.edu.au/au/cases/qld/QSC/2012/200.html

 Corporations – post appointment

 Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 3) [2012] FCA 819 (6 August 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/819.html

Robinson, in the matter of Darrell Lea Chocolate Shops Pty Ltd (Administrators Appointed) [2012] FCA 833 (3 August 2012) period for holding meeting extended http://www.austlii.edu.au/au/cases/cth/FCA/2012/833.html

Shannon (in his capacity as receiver and manager of North East Wiradjuri Co Limited) v North East Wiradjuri Co Limited (No 4) [2012] FCA 836 (2 August 2012) Fees fixed http://www.austlii.edu.au/au/cases/cth/FCA/2012/836.html

WARWICK ENTERTAINMENT CENTRE PTY LTD (RECEIVERS AND MANAGERS APPOINTED) atf THE WARWICK ENTERTAINMENT CENTRE UNIT TRUST -v- SILKCHIME PTY LTD (RECEIVERS AND MANAGERS APPOINTED) atf THE SILKCHIME UNIT TRUST [No 2] [2012] WASC 275 (1 August 2012) Companies – Payment by one company to another in group – Existence of debt – Evidence of Joint Venture Agreement – Interest payments
Evidence – Corporations Act s 1305 – Books kept – Admissible
Directors’ duties – Corporations Act s 181 – Breaches of statutory duties http://www.austlii.edu.au/au/cases/wa/WASC/2012/275.html

Gannell v Seaquest Pleasure Boats Pty Ltd (In Liquidation) [2012] VCC 893 (26 July 2012) CATCHWORDS – Personal injury claim – negligence of boat builder – breach of contract of sale of boat – assessment of damages for pain and suffering and pecuniary loss http://www.austlii.edu.au/au/cases/vic/VCC/2012/893.html

VCC & the QDC! – seldom, if ever see insolvency matters in this jurisdiction  Andrew Fielding as Liquidator of Lyngray Developments Pty Ltd v Dushas & Anor [2012] QDC 96 (11 May 2012) Corporations – external administration – voidable transactions – uncommercial transactions http://www.austlii.edu.au/au/cases/qld/QDC/2012/96.html

Vouris and Tonks as Deed Administrators Of Good Impressions Offset Printers Pty Limited (ACN 002 306 587) [2012] NSWSC 603 (30 May 2012) CORPORATIONS – Deed of company arrangement –   Corporations Act 2001, 444DA – employees – employees not given priority by deed – employee creditors consent to deed – circumstances in which court will approve non-inclusion of provision under 444DA – whether approval can be given after execution of deed http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/603.html

Inglewood Farms Pty Ltd v AM No. 1 Pty Ltd (administrators appointed) (No 2) [2012] NSWSC 591 (29 May 2012) CORPORATIONS – Winding up – Corporations Act 2001   s 440A(2) – Application for the adjournment of winding up application – Relevant factors as to whether application should be adjourned – Whether requirements satisfied http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/591.html

Moodie, in the matter of Gowinta Farms Pty Ltd (administrators appointed) [2012] FCA 578 (31 May 2012) CORPORATIONS – extension of time to convene a second meeting of creditors of company in administration http://www.austlii.edu.au/au/cases/cth/FCA/2012/578.html

 Miscellaneous

Lowe v Pascoe (No 2) [2012] NSWSC 885 (3 August 2012) Cash payments journals and expert report in relation to them admitted as evidence in fresh trial http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/885.html

Appoint of a Receiver and Manager of the partnership businessesLowe v Pascoe [2010] NSWSC 388 (7 May 2010) Existence of partnership Unusual signed partnership agreement Family patriarch conducting partnership business (or businesses) as if it (they) was (were) his own and controlling all aspects Numerous disputed questions of fact and law and subsidiary issues
Substantial cash businesses (grocery and butchery) Non-disclosure of full partnership income to ATO
Evasion of tax – plushttp://www.austlii.edu.au/au/cases/nsw/NSWSC/2010/388.html 

END OF POST. 

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Aug 062012
 

Complied 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.auMichael’s comments appear in red text.

____________________________________________________________________________________

Bankruptcy Act – Prior to Date of Bankruptcy

Commonwealth Bank of Australia v Oswal [2012] FCA 772 (12 July 2012) BANKRUTPCY – debtor resident outside of Australia – substituted service of bankruptcy notice – service upon solicitors who are representing or have represented the debtor in other proceedings in Australia – whether leave to serve a bankruptcy notice out of Australia is required http://www.austlii.edu.au/au/cases/cth/FCA/2012/772.html

Westpac Banking Corporation v Cossar & Anor [2012] FMCA 602 (10 July 2012) BANKRUPTCY – Creditor’s Petition – whether respondent debtors’ proposed proceeding against supporting creditor warrants adjournment or constitutes other sufficient cause not to make a sequestration order – whether sufficient evidence that proposed proceedings will proceed without undue delay and are likely to be successful – this criteria not established on evidence before Court – sequestration order made http://www.austlii.edu.au/au/cases/cth/FMCA/2012/602.html

Rookharp Pty Ltd & Anor v Webb & Anor [2012] FMCA 607 (5 July 2012) BANKRUPTCY – Creditor’s petition – no appearance of debtors at hearing – no grounds of opposition – sequestration order made http://www.austlii.edu.au/au/cases/cth/FMCA/2012/607.html

Bankruptcy Act – following Date of Bankruptcy

Quickly & thoroughly review all estates transferred from another Trustee  Newman v Bain [2012] FMCA 629 (5 July 2012) BANKRUPTCY – Application for extension of time for election by trustee pursuant to s.60(3) of the Bankruptcy Act – matters relevant to exercise of discretion http://www.austlii.edu.au/au/cases/cth/FMCA/2012/629.html

One with the lotCooper v Mbuzi [2012] QSC 190 (17 July 2012) PROCEDURE – MISCELLANEOUS PROCEDURAL MATTERS – VEXATIOUS LITIGANTS AND PROCEEDINGS – where the respondent in this matter has had a vexatious proceeding order made against him– where the applicant in this matter is the respondent in a matter commenced by the current respondent before the vexatious proceeding order was made against the current respondent – whether the applicant should be granted leave to be added to the earlier vexatious litigant proceedings – whether the earlier order under the Vexatious Proceedings Act 2005 should be amended to stay the other proceeding brought by the respondent http://www.austlii.edu.au/au/cases/qld/QSC/2012/190.html

Bankruptcy was annulled 9 months after Sequestration Order made, but action continues Phillip Segal & Anor v Max Christopher Donnelly & Ors [2012] NSWSC 833 (24 July 2012) Whether solicitor authorised by registered proprietors of property to conduct sale process on their behalf – whether emails between solicitor and plaintiffs evidence an intention to enter into binding contract – where one co-owner acted as agent for the purchasers – whether other co-owner entitled to reject offer made by plaintiffs for purchase of the Property http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/833.html

Maxwell-Smith v Hall & Anor [2012] NSWCA 205 (25 June 2012) PRACTICE AND PROCEDURE – application for pro bono assistance under UCPR 7.36 – where litigant had received assistance under a previous referral twice within preceding three years – determining whether interests of justice are in the applicant’s favour requires assessment of whether the appeal has reasonable prospects of success – prospects of success found to be insufficient – application refused
PRACTICE AND PROCEDURE – power to waive, postpone and remit fees under Civil Procedure Regulation 2005 reg 11 – power to be exercised by Registrar on separate application http://www.austlii.edu.au/au/cases/nsw/NSWCA/2012/205.html

Same mistake still being made!! – “…a search by an officer of the Deputy Commissioner in April 2012 did not reveal the 2010 Order because the search was made by entering only the first name and surname of Mr Russell which, due to the form of that search, did not reveal the 2010 Order” Deputy Commissioner of Taxation v Russell [2012] FMCA 598 (9 July 2012) BANKRUPTCY – Annulment – whether second sequestration order ought to have been made http://www.austlii.edu.au/au/cases/cth/FMCA/2012/598.html  

Unusual circumstance in which this application considered – it occurred during the transfer of the bankruptcy administration to a registered trustee in bankruptcy pursuant to s 181A of the Bankruptcy Act 1966 – given outcome of the FMCA matter above, should in-coming Trustee be ‘engaged’ by ITSA to manage the administration, till transfer confirmed? Leader Computers Pty Ltd v Johnson [2012] FCA 716 (6 July 2012) BANKRUPTCY AND INSOLVENCY – application pursuant to s 58(3)(b) of Bankruptcy Act 1966 (Cth) for leave to proceed in actions in the District Court of South Australia against bankrupt for voidance of transfer of property – whether leave should be granted in absence of indication from trustee in bankruptcy as to whether application opposed – where urgency in leave being granted due to impending trial date for District Court actions. Held: It was appropriate to grant leave pursuant to s 58(3)(b) of the Act.  http://www.austlii.edu.au/au/cases/cth/FCA/2012/716.html

Re s. 153B Stewart v Grauby [2012] FCA 703 (2 July 2012) BANKRUPTCY AND INSOLVENCY – application under r 36.05 of the Federal Court Rules 2011 to extend time to appeal – order from Federal Magistrates Court of Australia dismissing application for annulment – whether time should be extended http://www.austlii.edu.au/au/cases/cth/FCA/2012/703.html

Sullivan v Macquarie Leasing Pty Ltd [2012] FMCA 601 (2 July 2012) BANKRUPTCY – Application to set aside substituted service orders and sequestration order of Registrars of the Federal Magistrates Court – where applicant concedes debts owed – where applicant provides no evidence of ability to repay debts – where applicant claims unaware of papers relating to bankruptcy – whether to set aside orders http://www.austlii.edu.au/au/cases/cth/FMCA/2012/601.html

The end (perhaps) of an interesting, long running series of hearings in this bankruptcy Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost (No 4) [2012] FCA 708 (29 June 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/708.html

One of two significant decision Bob referred to me – as Bob remarked: “The judgment at paras 143-145, succinctly details the operation of s.58(1)(b) & (6) and s.116(1) of the Bankruptcy Act, and confirms that unrealised divisible property remains vested in the bankrupt estate notwithstanding that the bankrupt has been discharged from bankruptcy” Falloon v Madden; Madden v Madden [2012] NSWSC 652 (14 June 2012) TRUSTS – sole proprietor – resulting trust – beneficiary bankrupt at the time – joint tenants or tenants in common – payments for benefit deceased estate – occupation fee http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/652.html

The 2nd from Bob – again I will include Bob’s worthy comment “So I would submit that the lesson to be learnt from this judgment is that when you are fully engaged in investigating a “suspect” transaction with a view to recovery a property etc, from time to time stand back and ask the question “ Is the investigation/legal action still going to bring money into the estate ?”” –  Travaglini v Raccuia [2012] FCA 620 (14 June 2012) COSTS – application for leave to discontinue with no order as to costs – application of r 26.12(7) of the Federal Court Rules 2011 that the discontinuing party is liable for costs unless the Court is satisfied there is a good reason for ordering otherwise – whether parties acted reasonably in prosecuting and defending the proceeding  Held: when applicant commenced proceeding there was a reasonably foreseeable risk that litigation would become futile – applicant should pay the respondents’ costs upon discontinuance http://www.austlii.edu.au/au/cases/cth/FCA/2012/620.html

Tarrant v Statewide Secured Investments Pty Ltd [2012] FCA 582 (6 June 2012) BANKRUPTCY – Appeal from sequestration order – where federal magistrate refused to adjourn creditor’s petition – federal magistrate allowed the creditor’s petition to be amended to correct judgment date and dispensed with service of the amended petition – federal magistrate refused to receive bankrupt’s evidence where bankrupt required for cross-examination on her affidavits but did not attend – whether grounds of appeal disclose any appealable error http://www.austlii.edu.au/au/cases/cth/FCA/2012/582.html

A ‘must read’ – the circumstances in which a S of A could be rejected by ITSA has not been considered by the Court as far as I’m aware – I wonder where these Orders would put the Offence provisions, if the answers are not answered accurately  Vince (Trustee), in the matter of Sopikiotis (Bankrupt) v Sopikiotis [2012] FCA 573 (1 June 2012) BANKRUPTCY – s 54(1) Bankruptcy Act 1966 (Cth) – whether document purporting to be a statement of affairs defective – whether bankrupt should be required to file a statement of affairs – order made http://www.austlii.edu.au/au/cases/cth/FCA/2012/573.html

Another matter deserving a good read & consideration  Weeden v Rambaldi [2012] FCA 552 (29 May 2012) BANKRUPTCY – whether notices of objection to discharge filed pursuant to s 149B of the Bankruptcy Act 1966 (Cth) valid – whether notices of contribution assessment made pursuant to s 139(1)(c) of the Bankruptcy Act valid – whether notices were invalid because made by a joint trustee acting alone – unanimous concurrence required for act of joint trustee – whether joint trustees were appointed or a sole trustee appointed by meeting of creditors – s 257 of Bankruptcy Act and presumption that minutes of meeting provide prima facie evidence of meeting – whether evidence of concurrence of joint trustees – whether s 306(1) of the Bankruptcy Act validates the act of a joint trustee acting alone, where the consent of other trustee is later given, in relation to the making and notification of an assessment pursuant to s 139W(1) of the Bankruptcy Act and in relation to the filing of an objection to discharge pursuant to s 149B of the Bankruptcy Act – whether a formal defect or irregularity within the meaning of s 306(1) http://www.austlii.edu.au/au/cases/cth/FCA/2012/552.html

I’m not quite sure what is going on here – also, the plaintiff, joint trustees, use subpoena rather that s. 77C Notice Re estate of Mischel [2012] VSC 296 (13 June 2012) PRACTICE AND PROCEDURE – Objection to a subpoena – Whether the Commissioner has power to release documents pursuant to the Taxation Administration Act 1997 (Vic) – Sections 91, 93, 94, 95 considered http://www.austlii.edu.au/au/cases/vic/VSC/2012/296.html

 Corporations – pre-appointment

TRINH OPTICAL YLLUSION PTY LTD v VAN [2012] SASC 125 (25 July 2012) Application to set aside a statutory demand – amount due under a trust – whether a debt for the purposes of the Corporations Act 2001 – creditor/beneficiary an eight year-old boy – statutory demand served on the instructions of his mother – whether mother had authority to do so http://www.austlii.edu.au/au/cases/sa/SASC/2012/125.html

Williams (as liquidator of Willahra Pty Ltd (in liq)) v Kim Management Pty Ltd [2012] QSC 143 (19 June 2012) CORPORATIONS – WINDING UP – CONDUCT AND INCIDENTS OF WINDING UP – LIQUIDATORS – where an application was made to set aside an order made pursuant to s 588FF(3)(b) of the Corporations Act – whether an order should be set aside as of right because a party affected by the order made was not given an opportunity to be heard on the s 588FF(3)(b) application – circumstances in which a shelf order can be made on an ex parte basis – where the plaintiff liquidator did not know that the defendant was a potential target of an application under s 588FF(1) – whether the plaintiff liquidator ought to have known that the defendant was a potential target of an application under s 588FF(1) and served the defendant – the standard expected of a party and its lawyers on an ex parte application – the duty to make proper inquiries before making an ex parte application http://www.austlii.edu.au/au/cases/qld/QSC/2012/143.html

GMW Group Pty Ltd (Receivers and Managers Appointed) (in liquidation) & ors v Michael Saadie in his own right and trading as GMW1 & ors [2012] QSC 140 (4 June 2012) PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – DEFAULT OF PLEADING – where the applicants apply for summary judgement against the respondents under r 374 of the Uniform Civil Procedure Rules 1999 – where the proceeding was commenced by originating application and pleadings were later ordered – where service and timing of service of the statement of claim on the second and third respondents within the required period is unclear – where the first respondent has filed a defence and the second and third respondents have filed no defence – where the respondents have not complied with a court order requiring them to file affidavits detailing their personal assets – whether the applicants have satisfactorily proven that the respondents have failed to take a step in the proceeding thus warranting summary judgment under r 374 http://www.austlii.edu.au/au/cases/qld/QSC/2012/140.html

Applicant became bankrupt subsequent to initial application  McElligott v Boyce & Ors [2012] QSC 189 (17 July 2012) PROCEDURE – JUDGMENTS AND ORDERS – AMENDING, VARYING AND SETTING ASIDE – where applicant seeks to set aside under r 667(2) of the Uniform Civil Procedure Rules an earlier order of the court for the winding up of a company on the basis of allegations of fraud – where earlier appeals against winding up order were dismissed – where the allegation of fraud was considered in the appeal – where the applicant is a bankrupt – whether the applicant has standing to bring the application – whether the applicant’s contentions are based on newly-discovered material http://www.austlii.edu.au/au/cases/qld/QSC/2012/189.html

Field Camp Services Pty Ltd v Green (No.3) [2012] FMCA 577 (6 July 2012) CONSUMER PROTECTION – Alleged misleading and deceptive conduct – hire of transportable accommodation and camp units. PRACTICE AND PROCEDURE – Failure to pay costs of earlier proceedings in other courts – statutory demand made – whether application to be dismissed or permanently stayed. COSTS – Failure to pay costs of earlier proceedings in this court and State courts – statutory demand made – whether application to be dismissed or permanently stayed http://www.austlii.edu.au/au/cases/cth/FMCA/2012/577.html

Deputy Commissioner of Taxation v Compumark Pty Ltd [2012] FCA 583 (5 June 2012) CORPORATIONS – application to wind up company in insolvency by reason of tax debt – court’s residual discretion in applications for winding up – test for reasonably arguable case to challenge the existence of a tax debt PRACTICE AND PROCEDURE – corporate respondent – leave to appear otherwise than by a lawyer – dispensing with r 4.01(2) of the Federal Court Rules 2011
EVIDENCE – “fullest and best” evidence principles http://www.austlii.edu.au/au/cases/cth/FCA/2012/583.html

Corporations – post appointment

Handberg & Anor v MIG Property Services Pty Ltd [2012] VSCA 126 (15 June 2012) PRACTICE AND PROCEDURE – Application for leave to appeal – Whether substantial injustice demonstrated http://www.austlii.edu.au/au/cases/vic/VSCA/2012/126.html

Mischel v Mischel Holdings Pty Ltd (in liq) [2012] VSC 292 (27 July 2012) CO-OWNERSHIP – Joint tenancy at law – whether tenancy in common in equity – whether consideration given for acquisition of share – severance of joint tenancy by agreement and by conduct – effect of death of joint tenant after exchange of contracts but before completion of sale of the subject land EQUITY – Maxims – Equity will not assist a volunteer http://www.austlii.edu.au/au/cases/vic/VSC/2012/292.html

Clarke & Ors v Great Southern Finance Pty Ltd & Ors [2012] VSC 312 (24 July 2012) COSTS – Privilege – Loss of privilege under s 124 Evidence Act 2008 (Vic) determined before trial – Plaintiffs successful. COSTS – Application by plaintiffs under s 1321 Corporations Act 2001 (Cth) to review decision of liquidators to assert joint privilege – application adjourned sine die without determination http://www.austlii.edu.au/au/cases/vic/VSC/2012/312.html

Clarke & Ors v Great Southern Finance Pty Ltd (in liq) & Ors (Ruling No 1) [2012] VSC 295 (29 June 2012) PRACTICE AND PROCEDURE – Application by Plaintiffs to amend statement of claim – whether proposed amendments are defective – whether prejudice is likely to be suffered if the application were to be allowed – application refused http://www.austlii.edu.au/au/cases/vic/VSC/2012/295.html

Re Traditional Values Management Ltd [2012] VSC 308 (19 July 2012) PRACTICE AND PROCEDURE – COSTS – Orders made without adjudication on the merits – Discussion of relevant principles – Costs order made http://www.austlii.edu.au/au/cases/vic/VSC/2012/308.html

Traditional Values Management Limited (in liq) v Taylor & Ors [2012] VSC 299 (10 July 2012) PRACTICE AND PROCEDURE – Consolidation of proceedings – Separate proceedings against directors and officers, auditors, accountants and unitholders in failed managed investment scheme – Supreme Court (General Civil Procedure) Rules 2005 (Vic), r 9.12 http://www.austlii.edu.au/au/cases/vic/VSC/2012/299.html

Hoddinott & Ors v Willmott Forests Limited (recs & liq apptd) (in liq) [2012] VSC 282 (27 June 2012) PRACTICE AND PROCEDURE – COSTS – Orders agreed without adjudication on the merits – Relevant principles for an award of costs in a compromised proceeding – Costs order made http://www.austlii.edu.au/au/cases/vic/VSC/2012/282.html

TNT Building Trades Pty Limited v Benelong Developments Pty Limited (administrators appointed) [2012] NSWSC 766 (9 July 2012) CORPORATIONS – Creditors’ meeting – Resolution of meeting – Corporations Act 2001 (Cth) s 600A(2)(a) – Application to set aside resolution of creditors’ meeting.
CORPORATIONS – Termination of deed of company arrangement – Whether deed should be terminated by Court – Interests of creditors of company as a whole – Whether winding up would allow more favourable outcome or better return to creditors than deed of company arrangement and whether deed of company arrangement would be contrary to the interests of or prejudicial to creditors as a whole http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/766.html

Fw: Napier Constructions Pty Ltd (Subject to DOCA)(Receivers & Managers Appointed) -v- Christopher Honey (in his capacity as Joint and Several Receiver and Manager of Napier Constructions Pty Ltd) [2012] NSWSC 762 (6 July 2012) CONTRACT – Construction of deed recording agreement as to the basis upon which a party would assist companies and their receivers in prosecuting proceedings against certain third parties – where another party (the bank) makes available funds to facilitate prosecution of proceedings and is owed money under secured facilities – construction of formula for the sharing of settlement proceeds (between the companies and the bank) where provision is capable of two meanings – construction of clauses providing for the taking into account of interest http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/762.html

St Hilliers Construction Pty Ltd (In Administration) -v- Fitzpatrick Investments Pty Ltd [2012] NSWSC 804 (2 July 2012) BUILDING AND CONSTRUCTION – where design and construct building contract requires provision by the contractor of bank guarantees as security for performance – where, upon satisfaction of certain conditions, the contractor is entitled to a reduction of the security – whether such conditions satisfied – whether, by taking possession of the works, the principal has exercised an election amounting to a waiver of its right to continue to keep the security http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/804.html

Management 3 Group Pty Ltd (In Liq) v Lenny’s Commercial Kitchens Pty Ltd (No 2) [2012] FCAFC 92 (25 June 2012) PRACTICE AND PROCEDURE – pre-judgment interest – date from which interest is to run – interest to run until judgment is entered – rate at which interest accrues – whether penalty interest rate or Reserve Bank of Australia cash rate plus 4% – Practice Note CM16 Pre-judgment Interest Federal Court of Australia Act 1976 (Cth), ss 51A, 52  http://www.austlii.edu.au/au/cases/cth/FCAFC/2012/92.html

In the matter of KASH Aboriginal Corporation ICN 108 (Administrators Appointed) No 2 [2012] FCA 789 (27 July 2012) CORPORATIONS – Aboriginal Corporation – administrators seeking directions in respect of proposed loan and mortgage with associated entity – whether administrators personally liable for monies borrowed – potential liability of administrators in respect of workplace health and safety issues – proposal to borrow funds from related entity http://www.austlii.edu.au/au/cases/cth/FCA/2012/789.html

Roumanus v Orchard Holdings (NSW) Pty Limited (In Liq) [2012] FCA 775 (20 July 2012) CORPORATIONS –Whether the defendant corporation in liquidation should be held liable as the primary contravenor or, alternatively, as an accessory, in respect of misleading and deceptive conduct constituted by representations made by persons who occupied office as directors of the corporation in connection with the sale by one of those persons to others of shares in the corporation – whether causes of action out-of-time in any event – whether causes of action could be maintained pursuant to ss 52, 75B and 82 of the Trade rPractices Act 1974 (Cth)  http://www.austlii.edu.au/au/cases/cth/FCA/2012/775.html

Australian Securities and Investments Commission v Storm Financial Limited (Receivers and Managers Appointed) (in liq) [2012] FCA 750 (16 July 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/750.html

Australian Competition and Consumer Commission v ACN 135 183 372 (in liquidation) (formerly known as Energy Watch Pty Ltd) [2012] FCA 749 (13 July 2012) CONSUMER LAW – declaratory relief, penalties and costs – breach of ss 18(1), 29(1)(g) and 34 of the Australian Consumer Law, Schedule 2 to the Competition and Consumer Act 2010 (Cth) – misleading and deceptive conduct – false and misleading representations – in trade or commerce – multimedia mass advertising campaign – retail energy prices – energy brokering services – general and specific deterrence – consumer protection http://www.austlii.edu.au/au/cases/cth/FCA/2012/749.html

Carson, in the matter of Hastie Group Limited (No 3) [2012] FCA 719 (5 July 2012) CORPORATIONS – application for directions under s 447D of the Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/cth/FCA/2012/719.html

Australian Executor Trustees Ltd v Provident Capital Ltd (No 2) [2012] FCA 754 (3 July 2012) PRACTICE AND PROCEDURE – stay – principles applying to grant of a stay http://www.austlii.edu.au/au/cases/cth/FCA/2012/754.html

Smith in the matter of Actively Zoned Pty Ltd (in liq) [2012] FCA 605 (8 June 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/605.html

Quikfund (Australia) Pty Ltd v Prosperity Group International Pty Limited (In Liquidation) [2012] FCA 603 (7 June 2012) CORPORATIONS – consideration of an application for leave to proceed to prosecute an appeal http://www.austlii.edu.au/au/cases/cth/FCA/2012/603.html

Hancock, in the matter of St Hilliers Construction Pty Limited (administrators appointed) [2012] FCA 602 (7 June 2012) CORPORATIONS – extension of time to convene a second meeting of creditors of a company in administration http://www.austlii.edu.au/au/cases/cth/FCA/2012/602.html

Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 6) [2012] FCA 590 (7 June 2012) COSTS – security for costs application – compliance with a subpoena – whether the Court is empowered under the Federal Court Rules 2011 to award security for costs in advance for costs and expenses of a non-party who is subpoenaed by a party Held: a stranger to litigation should not be put to onerous expense in complying with a subpoena issued by a party not resident in the jurisdiction – that quantum of security should be reviewed and fixed by a Registrar http://www.austlii.edu.au/au/cases/cth/FCA/2012/590.html

Australian Competition and Consumer Commission v ACN 135 183 372 (Administrators Appointed) (formerly known as Energy Watch Pty Ltd) [2012] FCA 586 (1 June 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/586.html

Moodie, in the matter of Gowinta Farms Pty Ltd (administrators appointed) [2012] FCA 578 (31 May 2012) CORPORATIONS – extension of time to convene a second meeting of creditors of company in administration http://www.austlii.edu.au/au/cases/cth/FCA/2012/578.html

An on-going matter – looking forward to seeing where it all ends up MG Corrosion Consultants Pty Ltd v Gilmour [2012] FCA 568 (31 May 2012) CORPORATIONS – variation to freezing order http://www.austlii.edu.au/au/cases/cth/FCA/2012/568.html

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Jun 292012
 

A NSW Supreme Court judge has replaced the special purpose liquidator of the collapsed telecommunications company One.Tel.

Registered Liquidator, Paul Weston, who has served as special purpose liquidator since December 2003, was removed from his role after judge Patricia Bergin found creditors, led by Optus, had lost confidence in Mr Weston’s capacity “to bring a dispassionate mind to bear in exercising his powers in the liquidation”.  Mr Weston contended that the creditors’ loss of confidence in him was not enough to justify his removal. He contended that there must be some serious misconduct, conflict of interest or lack of independence.

Justice Bergin appointed another registered liquidator, Stephen Parbery, in Mr Weston’s place.

The application for removal of was Mr Weston was brought under section 503 of the Corporations Act 2001: “The Court may, on cause shown, remove a liquidator and appoint another liquidator.”

Issues considered in the case included:

  • The special liquidator’s relationship with the creditors’ Committee of Inspection.
  • The liquidator’s remuneration and expenses.

THE JUDGMENT ALSO CONTAINS A “BRIEF” HISTORY OF THE LONG BATTLE THAT HAS BEEN GOING ON BETWEEN THE PACKER/MURDOCH/RICH INTERESTS, THE SPECIAL LIQUIDATOR AND THE COMMITTEE OF INSPECTION.

Extracts from the court judgment, and a link to the full judgement of 19 June 2012, are given below.

“In a court appointed liquidation (or a liquidation by the Court), a liquidator, as an officer of the Court, is a representative of the Court, entrusted with the reputation of the Court. It is expected that the liquidator will discharge the relevant functions and powers with impartiality and proper dispatch: Commissioner for Corporate Affairs v Peter William Harvey [1980] VR 669. Albeit that it may be inappropriate to refer to the defendant as “an officer of the Court” in this particular liquidation, it is expected that he would discharge his relevant functions and powers with impartiality and proper dispatch.”  (para 151)

“It is expected that the defendant will maintain an “even and impartial hand” in his dealings with those interested in the liquidation … It is expected that he will be independent in the sense that he will deal impartially and objectively in the interests of the creditors …”. (para 152)

“In City & Suburban Pty Ltd v Smith, Merkel J observed at 336 (excluding citations): Section 503 of the Law provides that the court may “on cause shown” remove a liquidator and appoint another liquidator. It has long been accepted that the section and its predecessors were not confined to situations where it is established that there is personal unfitness, impropriety or breach of duty on the part of the liquidator. Cause is shown for removal whenever the court is satisfied that it is for the better conduct of the liquidation or, put another way, it is for the general advantage of those interested in the assets of the company that a liquidator be removed.” (para 160)

“In the present case the acrimony which has arisen between the liquidator and the committee of inspection has not come about as a result of any unreasonable conduct on the part of the committee. Rather, it has come about because the liquidator has carried out his tasks in respect of the liquidation with some insensitivity to the angst of the members of the committee of inspection.” (para 162)

“In AMP Music Box Enterprises Ltd v Hoffman [2002] BCC 996, Neuberger J (as his Lordship then was) considered the power under s 180(2) of the Insolvency Act 1986 (UK) to remove a liquidator “on cause shown” and said at 1001-1002:

On the other hand, if a liquidator has been generally effective and honest, the court must think carefully before deciding to remove him and replace him. It should not be seen to be easy to remove a liquidator merely because it can be shown that in one, or possibly more than one, respect his conduct has fallen short of ideal. So to hold would encourage applications under s 108(2) by creditors who have not had their preferred liquidator appointed, or who are for some other reason disgruntled. Once a liquidation has been conducted for a time, no doubt there can almost always be criticism of the conduct, in the sense that one can identify things that could have been done better, or things that could have been done earlier. It is all too easy for an insolvency practitioner, who has not been involved in a particular liquidation, to say, with the benefit of the wisdom of hindsight, how he could have done better. It would plainly be undesirable to encourage an application to remove a liquidator on such grounds. It would mean that any liquidator who was appointed, in circumstances where there was support for another possible liquidator, would spend much of his time looking over his shoulder, and there would be a risk of the court being flooded with applications of this sort. Further, the court has to bear in mind that in almost any case where it orders a liquidator to stand down, and replaces him with another liquidator, there will be undesirable consequences in terms of costs and in terms of delay.” (para 164)

“Conclusion

  1. I am satisfied that it is in the best interests of this liquidation for the defendant to be removed as special purpose liquidator and for Mr Parbery to be appointed in his place. The defendant is to meet with Mr Parbery and provide him with any advice, documents or other assistance sought by Mr Parbery so that he may be in a position to pursue the remaining purposes of the special purpose liquidation in the most cost efficient manner.
  2. I am conscious that ASIC’s review of the defendant’s remuneration and fees has effectively been put on hold pending the outcome of these proceedings. I am satisfied that it is appropriate to defer any ruling in relation to conducting an inquiry under s 536 of the Act until ASIC’s review has concluded. It may be that, having regard to the defendant’s removal and/or the outcome of ASIC’s review, the plaintiffs may no longer wish to press for such an inquiry.”

FULL JUDGMENT:

SingTel Optus Pty Limited & Ors v Weston [2012] NSWSC 674 (19 June 2012)

Click here to read and/or copy judgment.

 

 

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Jun 122012
 

Complied 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.

____________________________________________________________________________

Bankruptcy Act – Prior to Date of Bankruptcy

You will recall the following Decision from the previous email – I now understand that it is related to the earlier  Decision , In the matter of Macryannis [2011] FCA 1272) , which itself had some particularly interesting features , especially in relation to the conduct of the Trustee –  National Australia Bank Limited v Oberg [2012] FMCA 233 (27 March 2012) BANKRUPTCY – Creditor’s petition – whether debtor satisfied court that he is able to pay his debts within s.52(2)(a) of the Bankruptcy Act 1966. http://www.austlii.edu.au/au/cases/cth/FMCA/2012/233.html

 

Bankruptcy Act – following Date of Bankruptcy

Worth a solid read-  Rambaldi (The Trustees of the Estate of John Edward Atkinson a Bankrupt) v Woodward [2012] NSWSC 434 (11 May 2012) REAL PROPERTY – co-owners – statutory power of sale – application by bankruptcy trustees of one co-owner – property encumbered – whether trustees entitled to sell if no equity remaining in property – whether sale would be outside provisions of Bankruptcy Act and Regulations – whether discretion in court to refuse order for sale http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/434.html

 

Bankruptcy Act – Other Schemes under the Act

nil

Corporations – pre-appointment

In the matter of Samkev Investments Pty Limited [2012] NSWSC 527 (21 May 2012) Statutory Demand set aside http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/527.html

Elite Catering Equipment Pty Ltd v Serosthan [2012] VSC 194 (11 May 2012) CORPORATIONS – External administration – Application to set aside statutory demand pursuant to Section 459G of the Corporations Act 2001 on basis of alleged genuine dispute – Accounts of plaintiff and other documents support defendant’s contentions as to existence of debt and are not satisfactorily rebutted by the plaintiff – Demand varied to reflect recalculation of interest by reason of reduction in principal component of demand http://www.austlii.edu.au/au/cases/vic/VSC/2012/194.html

Golden Era Investments Pty Ltd v Commonwealth Bank of Australia Limited [2012] VSC 178 (4 May 2012) CORPORATIONS – External administration – Corporations Act 2001 (Cth) – Application to set aside statutory demand by reason of existence of genuine dispute – Defendant bank deals with bearer cheques in accordance with mandate without notice of impropriety of bearer who was plaintiff’s accountant – No plausible contention requiring investigation – Application dismissed http://www.austlii.edu.au/au/cases/vic/VSC/2012/178.html

 

Corporations – post appointment

Dolores Correa and The Spanish Club Limited (subject to Deed of Company Arrangement) v Kenneth Michael Whittingham (No 3) [2012] NSWSC 526 (21 May 2012) CORPORATIONS – External administration – Administration under deed of company arrangement – Validity of appointment of administrator – Whether appointment invalid by reason of lack of number of directors as required by articles of association – Whether appointment invalid by reason of lack of quorum for directors meeting – Indoor management rule – Whether appointment valid by reason of statutory assumptions under ss 128-129 of Corporations Act 2001 (Cth) – Whether appointment should be validated under s 447A and s 1322 of Corporations Act 2001 (Cth) – Factors relevant to validation application brought when administration largely complete – Relevance of delay on part of party challenging validity of administrator’s appointment – Whether exposure to statutory regime for assessment of remuneration under s 449E of Corporations Act 2001 (Cth) amounts to substantial injustice http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/526.html

McCracken v Phoenix Constructions (Qld) Pty Ltd [2012] QCA 129 (18 May 2012) CORPORATIONS – GENERALLY – CORPORATIONS LEGISLATION – where respondent is creditor of corporation of which appellant is director – where trial judge found appellant in contravention of s 182(1) Corporations Act 2001 (Cth) and awarded damages to respondent pursuant to s 1324(10) – where appellant argued s 1324(10) does not confer right of damages upon creditor for contravention of s 182 – where appellant argued award of damages under s 1324(10) would amount to preference over other unsecured creditors – where respondent argued damages available under s 1324(10) – where respondent argued jurisdiction for granting injunction sufficient to enliven award of damages under s 1324(10) – whether trial judge erred in awarding damages under s 1324(10) EVIDENCE – ADMISSIBILITY AND RELEVANCY – FACTS SHOWING STATE OF MIND – INTENTION – where the appellant sought to rely on affidavit at trial as evidence of understanding or agreement between appellant and his wife in relation to proper construction of joint venture agreement – where trial judge concluded that the affidavit evidence was not admissible – where appellant argued evidence admissible on different ground that it showed appellant’s purpose of entering into deed of amendment – where respondent argued that affidavit not tendered as evidence of appellant’s purpose, but evidence of conduct – whether the trial judge erred in not admitting the affidavit evidence EVIDENCE – GENERAL – OTHER GENERAL MATTERS – where trial judge awarded damages equal to respondent’s contractual claim against appellant for contravention of s 182(1) Corporations Act 2001 (Cth) – where appellant argued respondent failed to prove alleged loss due to existence of unsecured creditors and no evidence of financial position – where respondent argued contention should not be considered because not pleaded, not subject of any disclosure, not subject of evidence, and because appellant was only person capable of doing so – whether appellant not giving evidence could justify drawing adverse inference – whether respondent failed to prove claimed loss http://www.austlii.edu.au/au/cases/qld/QCA/2012/129.html

Perpetual Nominees Limited v Rytelle Pty Ltd (recs & mgrs apptd) & Ors [2012] VSC 209 (18 May 2012) PRACTICE AND PROCEDURE – Joinder of party to proceedings – Discretion of court to permit joinder – Supreme Court (General Civil Procedure) Rules 2005 (Vic), rule 9.02. CORPORATIONS LAW – Managed Investment Scheme – Whether former Responsible Entity entitled to indemnity from fund – whether new Responsible Entity liable for obligations and liabilities of former Responsible Entity – Whether new Responsible Entity entitled to indemnity from fund – Corporations Act 2001 (Cth) Pt 5C, ss 601FS, 601FT, 601GA. http://www.austlii.edu.au/au/cases/vic/VSC/2012/209.html

Sanelli v Acee Victoria Pty Ltd (No 2) [2012] VSC 190 (14 May 2012) COSTS ― Judgment for plaintiff after defendant company withdrew defence ― Costs order in favour of plaintiff ― Insolvent defendant ― Application for company directors to pay plaintiff’s costs ― Principles applicable for costs orders against non parties ― Application refused http://www.austlii.edu.au/au/cases/vic/VSC/2012/190.html

Re Environinvest Ltd (No 6) [2012] VSC 173 (14 May 2012) CORPORATIONS – Managed Investment Scheme – Winding up by a person appointed under s 601NF(1) of the Corporations Act 2001 (Cth) – Conflict of duty – Person appointed to wind up the schemes also the liquidator of the Responsible Entity – Directions in winding up under s 601NF(2) of the Corporations Act – Approval of deeds of sale – Approval of mediated agreement as to costs, expenses and remuneration – Scheme liquidator excused from compliance with obligations arising under scheme constitution – Discharge of scheme liquidator on completion of winding up http://www.austlii.edu.au/au/cases/vic/VSC/2012/173.html

Sellers & Anor v Flinn & Anor [2012] VSC 132 (13 April 2012) PRACTICE AND PROCEDURE – Injunctions – Interlocutory injunctions – Application to restrain the defendants from dealing with livestock – Application for declarations as to ownership of livestock pursuant to stock mortgage http://www.austlii.edu.au/au/cases/vic/VSC/2012/132.html

KLEENTEX (THAILAND) CO LTD & ORS v CORPORATE IM PTY LTD & ORS [2012] SASC 71 (2 May 2012) The chargee of a fixed and floating charge seeks by way of summary judgment a declaration that its interest in the charged property is superior to that of the defendants and an injunction restraining the defendants from interfering with the exercise by its appointed receiver of his functions. Whether the appointment of the receiver was invalid – whether an event of default had occurred justifying the receiver’s appointment – whether the failure to give notice of a default invalidated the appointment – whether the charge had an ulterior purpose which invalidated the appointment – whether permission should be granted for the defendants to bring proceedings in the name of the second plaintiff. http://www.austlii.edu.au/au/cases/sa/SASC/2012/71.html

COMMONWEALTH BANK OF AUSTRALIA -v- PANKAJ OSWAL (IN HIS PERSONAL CAPACITY AND AS TRUSTEE OF THE BURRUP TRUST) [2012] WASC 128 (26 April 2012) Application for summary judgment – Extension of time – Issue to be determined – Arguable case – Turns on own facts
Appointment of receiver – Whether beyond power – Improper purpose – Good faith obligation – Sale of assets – Undervalue – Fair market value http://www.austlii.edu.au/au/cases/wa/WASC/2012/128.html

In the matter of Steven Sherman & Peter Walker in their capacities as liquidators of One.Tel Limited [2012] NSWSC 544 (3 May 2012) CORPORATIONS – Payment of Special Purpose Liquidator’s legal costs by General Purpose Liquidator is justified – undertaking to repay legal costs if those costs were not properly incurred http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/544.html

Another worth a good read =  In the matter of Purcom No 34 Admin Pty Ltd (Receiver and Manager Appointed) [2012] NSWSC 543 (3 May 2012) CORPORATIONS – Australian Securities and Investments Commission Act 2001(Cth) ss 502 and 503 – Where liquidator is to be removed or has resigned his appointment in a number of external administrations after disciplinary proceedings – appointment of new liquidator being a principal of the firm where the first liquidator works – comprehensive undertakings having been given by the first liquidator to ASIC under s 93AA of the Australian Securities and Investments Commission Act 2001(Cth) – appointments made http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/543.html

Leslie John Schirato -v- SCW Pty Ltd (In Liquidation) [2012] NSWSC 541 (24 April 2012) CORPORATIONS – Corporations Act 2001 (Cth) s 488(2) – application under s 488(2) for special leave to distribute surplus funds in circumstances where shareholders and contributories consent to distribution and where company has adequate funds to meet any possible further obligations – HELD – surplus funds appropriate to be distributed – operation of orders subject to receipt of notice from Commissioner of Taxation pursuant to s 260-45 of Schedule 1 of the Taxation Administration Act 1953 (Cth) CORPORATIONS – Corporations Act 2001 (Cth) – application under s 477(2B) for retrospective approval of agreement between liquidator and his solicitors – HELD – agreement approved by the Court http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/541.html

 

Miscellaneous

Whild v GE Mortgage Solutions Ltd [2012] VSC 212 (18 May 2012) MORTGAGES – Mortgagee’s power of sale – Whether mortgagee’s notice to pay in the exercise of the statutory power of sale mistakenly referred to extent of moneys owing or to extent of default – Requirements as to form of statutory notice – Whether financial information provided to mortgagor indicating arrears could amount to statutory or contractual notice – Whether mortgagee of a registered Torrens system mortgage could also have available and exercise contractual power of sale – Websdale v S & JD Investments Pty Ltd (1991) NSWLR 573 (CA); Bunbury Foods v National Bank of Australasia Ltd [1984] HCA 10; (1984) 153 CLR 491; Midland Montagu v Cuthbertson (1989) 19 NSWLR 309 – Transfer of Land Act 1958, ss 76 and 77. http://www.austlii.edu.au/au/cases/vic/VSC/2012/212.html

Have not seen reference to this Act for a while – the instalment provisions of the Act have interesting implications for Bankruptcy Notices –  Davidson v Greedy & Anor [2012] VSC 202 (15 May 2012) JUDGMENTS ORDERS AND DECLARATIONS ― Judgment debt ― Application for payment of judgment debt by instalments ― Applicable considerations ― Judgment debt includes interest payable on judgment debt ― Application refused ― Judgment Debt Recovery Act (No 10063 of 1984) http://www.austlii.edu.au/au/cases/vic/VSC/2012/202.html

Butler & Ors v Vavladelis & Ors [2012] VSC 186 (9 May 2012) PRACTICE AND PROCEDURE – Application to set aside default judgment – Whether arguable defence based on unconscionable conduct – Asset based lending – Arguable defence established – Judgment set aside on conditions.  EQUITY – Unconscionable conduct – Whether asset based lending unconscionable – Loan by clients of solicitor’s mortgage practice – Arguable defence of unconscionability established – Default judgment set aside on conditions –Elkofairi v Permanent Trustee Co Ltd [2002] NSWCA 413; Kowalczuk v Accom Finance Pty Ltd [2008] NSWCA 343; Perpetual Trustees Australia Limited v Schmidt & Anor [2010] VSC 67; Perpetual Trustee Company Limited v Khoshaba [2006] NSWCA 41 considered. http://www.austlii.edu.au/au/cases/vic/VSC/2012/186.html

Thiess Pty Ltd & Anor v Arup Pty Ltd & Ors [2012] QSC 131 (17 May 2012) EVIDENCE – ADMISSIBILITY AND RELEVANCY – OPINION EVIDENCE – EXPERT OPINION – Qualifications of witness – Where witness is accountant and auditor – Whether witness possesses expertise in a specialised field of knowledge relevant to the proceedings – Whether report prepared by witness sufficiently discloses the bases or reasoning for opinions http://www.austlii.edu.au/au/cases/qld/QSC/2012/131.html

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Apr 262012
 

Complied 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

I like to see matters such as this where the Constitution is considered – Capital Finance Australia Ltd v Vellar [2012] FMCA 285 (4 April 2012) BANKRUPTCY – Creditors petition – opposition challenging authority of Federal Magistrate – High Court summons filed on eve of hearing – adjournment applications refused – sequestration order made.

CONSTITUTIONAL LAW – Creation of Federal Magistrates Court – appointment of Federal Magistrates – whether invalid under Chapter III of the Constitution by reason of exclusion from judges’ pensions http://www.austlii.edu.au/au/cases/cth/FMCA/2012/285.html

‘Stay Orders’ seem to go in & out of favour – a good summary of where the Court has gone in relation to the definition of insolvency in recent times – I’m not sure that I understand the basis for the change. Could it be that given that there is much more ready access to credit now, as opposed to a generation ago, the debtor is demonstrating reluctance to pay rather than insolvency?? – National Australia Bank Limited v Oberg [2012] FMCA 233 (27 March 2012) BANKRUPTCY – Creditor’s petition – whether debtor satisfied court that he is able to pay his debts within s.52(2)(a) of the Bankruptcy Act 1966. http://www.austlii.edu.au/au/cases/cth/FMCA/2012/233.html

It will be interesting to see if there is more Court action in this matter – Zekry v Nair [2012] FMCA 237 (19 March 2012) BANKRUPTCY – Application to set aside bankruptcy notice – controlling trustee appointed – applicant failed to appear

 http://www.austlii.edu.au/au/cases/cth/FMCA/2012/237.html

No surprises – Deputy Commissioner Of Taxation v Caporale [2012] FMCA 206 (16 March 2012) BANKRUPTCY – Contested creditor’s petition – unpaid tax – taxpayer objecting to assessments – second such objection – no reason to delay making a sequestration order http://www.austlii.edu.au/au/cases/cth/FMCA/2012/206.html

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Bankruptcy Act – following Date of Bankruptcy

Romeo v The Trust Company (PTAL) Ltd [2012] NSWCA 62 (30 March 2012) APPEAL – application for leave to appeal – default judgment for possession of property set aside on condition that mortgagors pay part of claimed debt into court – whether condition should have been imposed – effect of bankruptcy of one mortgagor http://www.austlii.edu.au/au/cases/nsw/NSWCA/2012/62.html

A Bankruptcy & a Part X!! – The Trustee of the Property of Paul Jason Uhrhane, A Bankrupt & Anor v Gunn & Anor [2012] QCA 75 (30 March 2012) PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING – DEFENCE AND COUNTERCLAIM – where the appellants made an admission in their original defence that a registered mortgage was granted in favour of the respondents – where the appellants subsequently filed an amended defence that challenged the validity of that mortgage – where the primary judge struck-out the amended defence for inconsistency with the admission in the original defence – whether the appellants’ original defence contained an admission that was inconsistent with their amended defence – whether the primary judge was correct in striking-out the amended defence http://www.austlii.edu.au/au/cases/qld/QCA/2012/75.html

** follows Setting Aside of Sequestration Order ** –  Mbuzi v SV Partners & Anor [2012] QSC 84 (5 April 2012) PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – ORIGINATING PROCESS – where the applicant started proceeding by originating application – where the applicant claims compensatory damages for negligence, undue harassment and defamation and aggravated and vindicatory damages – where the applicant sought an order under r 14 of the Uniform Civil Procedure Rules 1999 (Qld) that the proceeding continue as if started by claim – where claims for damages could proceed only if properly pleaded and particularised – where purpose of return date of application was to address the applicant’s choice of originating process – where the amounts claimed for damages did not require the claim to be started in the Supreme Court – whether the choice of incorrect originating process was an abuse of the court’s processes

http://www.austlii.edu.au/au/cases/qld/QSC/2012/84.html  

Should Trustees start reading the transcript of Sequestration Order hearings ? Mbuzi v Favell (No 2) [2012] FCA 311 (28 March 2012) BANKRUPTCY AND INSOLVENCY – appeal against sequestration order made by Federal Magistrate – service of bankruptcy notice – reg 16.01 Bankruptcy Regulations 1996 (Cth) – bankruptcy notice alleged to have been sent by post – evidence given of standard office practice for sending mail – claimed register of outgoing mail – claim that secretary/receptionist put bankruptcy notice in post – no evidence given by any person who may have put bankruptcy notice in post – system of postage – sequestration order of utmost seriousness – strict proof of service of bankruptcy notice required – onus of establishing proof of service of bankruptcy notice lies with creditor – appeal allowed COSTS – unrepresented litigant – self-represented litigant – appeal successful but no costs awarded http://www.austlii.edu.au/au/cases/cth/FCA/2012/311.html

Frost v Sheahan as Trustee of the Bankrupt Estate of Allen Gordon Frost [2012] FCAFC 46 (28 March 2012) BANKRUPTCY – whether property held on trust – findings of fact – impermissible attempt to re-canvass evidence on appeal – no appellable error – a mortgage – whether a transfer of property PRACTICE AND PROCEDURE – leave to amend Notice of Appeal – overturning factual conclusions on appeal – denial of procedural fairness

http://www.austlii.edu.au/au/cases/cth/FCAFC/2012/46.html

Part IV Compositions are so uncommon, but an application to have one set aside!! – Hingston v Westpac Banking Corporation [2012] FCAFC 41 (23 March 2012) BANKRUPTCY AND INSOLVENCY – consideration of an appeal by the bankrupt to set aside orders of the primary judge setting aside a composition made between the bankrupt and his creditors under Division 6 of Part IV of the Bankruptcy Act 1966 (Cth) – consideration of the grounds set out in s 222(1)(d) and s 222(5)(e)(i) of the Bankruptcy Act in setting aside the composition made by the bankrupt with his creditors under Division 6 of Part IV – consideration of the construction to be attributed to s 222(5)(e)(i) and s 76B in applying the grounds contained in that subsection to a composition under Division 6 of Part IV – consideration of the construction to be attributed to s 222(5)(e)(i) and s 76B in circumstances where the omission of a material matter from the debtor’s statement of affairs concerns a statement of affairs presented to the Official Receiver under s 55 of the Act rather than a debtor’s statement of affairs for the purposes of s 188(2C) or (2D) of the Bankruptcy Act – consideration of the factors informing the exercise of the discretion to set aside a composition made between the bankrupt and his creditors under Division 6 of Part IV in the context of s 222(1)(d) and s 222(5)(e)(i) as applied to a composition by s 76B of the Bankruptcy Act BANKRUPTCY AND INSOLVENCY – consideration of the scope of consequential orders to be made consequent upon setting aside a composition under s 222(1)(d) and s 222(5)(e)(i) and s 30(1) of the Bankruptcy Act 1966 (Cth) – consideration of the relationship between s 74(5) of the Bankruptcy Act and the power of the Court to make remedial orders that put the parties in their pre-composition position

http://www.austlii.edu.au/au/cases/cth/FCAFC/2012/41.html

Samootin v Official Trustee in Bankruptcy (No. 2) [2012] FCA 316 (28 March 2012) PRIVILEGE – Legal professional privilege – waiver – common interest – documents coming into existence after sequestration order made and challenged – litigation involving Official Trustee in Bankruptcy and bankrupt – interests of Official Trustee potentially in conflict with interests of bankrupt http://www.austlii.edu.au/au/cases/cth/FCA/2012/316.html

Ambrose v Poumako [2012] FCA 318 (22 March 2012)

http://www.austlii.edu.au/au/cases/cth/FCA/2012/318.html

Owners Corporation PS334337A v Hoiles [2012] FMCA 218 (19 March 2012) BANKRUPTCY – Application of trustees under s.146 of the Bankruptcy Act 1966 (Cth) for distribution of dividends – no statement of affairs received in relation to deceased’s estate – application acceded to – costs charges and expenses incurred by applicants including in period between initial bankruptcy and subsequent bankruptcy of a deceased estate be paid in priority by bankrupt deceased estate http://www.austlii.edu.au/au/cases/cth/FMCA/2012/218.html

Hansen Yuncken Pty Ltd v Ian James Ericson trading as Flea’s Concreting & Anor [2012] QSC 51 (14 March 2012) TAXES AND DUTIES – ADMINISTRATION OF FEDERAL TAX LEGISLATION – COLLECTION AND RECOVERY OF TAX – COLLECTION OF AMOUNT FROM THIRD PARTY – Taxation Administration Act 1953 (Cth), Schedule 1 s260-5 – notices – statutory charge created by – where moneys paid into court by recipient of notice – where debt owing be recipient to taxpayer discharged by that payment – whether Commissioner of Taxation entitled to a charge over money in court

http://www.austlii.edu.au/au/cases/qld/QSC/2012/51.html

Must have missed this one earlier, worth a good look – Burness v Taliauli [2011] FMCA 910 (10 November 2011) BANKRUPTCY – Application for vacant possession of property – failure to annul bankruptcy – application successful http://www.austlii.edu.au/au/cases/cth/FMCA/2011/910.html

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Bankruptcy Act – Other Schemes under the Act

Moran v Robertson [2012] FCA 371 (13 April 2012) BANKRUPTCY – application to have personal insolvency agreements set aside – terms of agreement unreasonable – derisory dividend payable to creditors – some creditors electing not to participate in distribution GUARANTEES construed strictly in favour of guarantor PRACTICE AND PROCEDURE – filing of written submissions after hearing – submissions manifestly in excess of that contemplated TRUSTS – personal liability of trustee http://www.austlii.edu.au/au/cases/cth/FCA/2012/371.html

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Corporations – pre-appointment

Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Limited [2012] FCA 363 (16 April 2012) CORPORATIONS – application to wind up company in insolvency by reason of tax debt – tax debt the subject of pending review proceedings in the Administrative Appeals Tribunal – application to adjourn winding up application until decision in review proceedings CORPORATIONS – extension of period within which application for company to be wound up in insolvency be determined – “special circumstances” under s 459R(2) of the Corporations Act 2001 (Cth) TAXATIONapplication to wind up company – tax debt the subject of pending review proceedings in the Administrative Appeals Tribunal – adjournment PRACTICE AND PROCEDURE – corporate respondent – leave to appear otherwise than by a lawyer – dispensing with r 4.01(2) of the Federal Court Rules 2011 EVIDENCE – “fullest and best” evidence principle – standard of proof – balance of probabilities http://www.austlii.edu.au/au/cases/cth/FCA/2012/363.html

Hillam v Ample Source International Ltd (includes Corrigendum dated 18 April 2012) [2012] FCA 374 (13 April 2012) PRACTICE AND PROCEDURE – winding up order on the ground of oppression previously stayed on conditions pending appeal – preservation of status quo – interlocutory application for the reconstitution of the board of the company and for the sale of a substantial asset of the company pending appeal

http://www.austlii.edu.au/au/cases/cth/FCA/2012/374.html

Lifese Pty Limited v Lee Crane Hire Pty Limited [2012] FCA 302 (28 March 2012) CORPORATIONS – statutory demand for payment of debt – application to set aside – whether “genuine dispute” – whether abuse of process Held: statutory demand be set aside

http://www.austlii.edu.au/au/cases/cth/FCA/2012/302.html

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Corporations – post appointment

MG Corrosion Consultants Pty Ltd v Gilmour [2012] FCA 383 (16 April 2012) CORPORATIONS – freezing orders – appointment of an external administrator – s 440D of the Corporations Act 2001 (Cth) – proceeding – in relation to – any of its property – legal or equitable estate or interest – a thing in action – chose in action – bare right to litigate – third parties – Mareva type order – undertaking – discretionary considerations – dissipation or disposal of assets – Div 7.4 of the Federal Court Rules 2011 (Cth) – good arguable case – inference – danger or real risk http://www.austlii.edu.au/au/cases/cth/FCA/2012/383.html

An interesting matter – also related to a Bankruptcy – Healy, in the matter of Falaren Pty Ltd (deregistered), v Australian Securities and Investments Commission [2012] FCA 368 (12 April 2012) CORPORATIONS – whether a deregistered company should be reinstated – whether the deregistration of a company should be deferred – whether proposed liquidator is qualified to be appointed as a replacement liquidator http://www.austlii.edu.au/au/cases/cth/FCA/2012/368.html

Australian Property Custodian Holdings Ltd v Capital Finance Australia Ltd & Ors [2012] VSC 124 (4 April 2012) CORPORATIONS – Whether future chose in action secured under charges – Construction of charges – Whether bare right to sue – Genuine commercial interest – Right incidental or ancillary to transfer of interest in property – Whether liquidators may prosecute chose in action when charges enforced and receivers appointed – Whether trustee charged its right of indemnity including right of exoneration – Application by liquidators for approval of litigation funding agreement – Director of proposed funder defendant in other proceedings brought by the liquidators – Corporations Act 2001 (Cth) s 477(2B)http://www.austlii.edu.au/au/cases/vic/VSC/2012/124.html

It sounds like this will be an interesting matter to follow this matter –  AGBC Pty Ltd & Anor v Dessa & Ors [2012] VSC 118 (30 March 2012) CORPORATIONS – Application for interim injunction pursuant to Section 1324(4) of the Corporations Act 2001 (Cth).

http://www.austlii.edu.au/au/cases/vic/VSC/2012/118.html

Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd [2012] VSC 112 (30 March 2012) CORPORATIONS LAW – Set-off provisions for insolvent companies under s 553C – Meaning “mutual credits, debts or other mutual dealings” – To be construed widely. CORPORATIONS LAW – Set-off provisions for insolvent companies under s 553C – Whether funds were trust funds thereby precluding mutuality and set-off. CORPORATIONS LAW – Set-off provisions for insolvent companies under s 553C – Whether post liquidation expenses can be set-off against post liquidation income – Relevance of antecedent agreement – Meaning of contingent or vested claims. CORPORATIONS LAW – Set-off provisions for insolvent companies under s 553C – Whether notice of insolvency precludes set-off under s 553C(2) – Relevant time that creditor must have such notice. CORPORATIONS LAW – Insolvent companies – Whether costs and expenses were properly incurred and are priority claims under s 556(1)(a) Corporations Act. AMENDMENT AND LEAVE TO RE-OPEN CASE – Whether late amendment should be permitted – No prejudice to plaintiff – Matter raised early in proceeding – Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27; (2009) 239 CLR 175 applied

http://www.austlii.edu.au/au/cases/vic/VSC/2012/112.html

Georges v Seaborn International Pty Ltd (Trustee) [2012] FCA 294 (26 March 2012) APPEAL – Application for leave to appeal – whether order for directions was final or interlocutory – application for leave to appeal by non party – refusal of application to be appointed as a representative in the proceedings http://www.austlii.edu.au/au/cases/cth/FCA/2012/294.html

Sheahan; In the matter of SK Foods Pty Ltd (In Liquidation) [2012] FCA 268 (23 March 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/268.html

Gould Bros & Co Pty Limited (Administrators Appointed), in the matter of Gould Bros & Co Pty Limited (Administrators Appointed) [2012] FCA 285 (22 March 2012) CORPORATIONS – administration – application as to how Pt 5.3A of the Corporations Act 2001 (Cth) is to operate – administrators’ liability and indemnity for debts of administration – funding agreement http://www.austlii.edu.au/au/cases/cth/FCA/2012/285.html

STARRS -v- RETRAVISION (WA) LTD [2012] WASCA 67 (27 March 2012) Practice and procedure – Application to set aside default judgment – Merits of proposed defence – Turns on own facts http://www.austlii.edu.au/au/cases/wa/WASCA/2012/67.html

Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd (In Liquidation) (Receivers and Managers Appointed) & Ors [2012] NSWCA 49 (22 March 2012) APPEAL – interlocutory injunction pending appeal – balance of convenience – no question of principle

http://www.austlii.edu.au/au/cases/nsw/NSWCA/2012/49.html

C Pty Limited and Ors & PGW as Liquidator of S Pty Limited (in Liq) (Costs) [2012] FamCAFC 38 (15 March 2012) FAMILY LAW – APPEAL – COSTS – where the appellants seek that each party bear their own costs or in the alternative that they be granted a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) – where the respondent seeks costs on “the ordinary basis” – where costs certificates cannot be granted pursuant to the Federal Proceedings (Costs) Act 1981 (Cth) given the appeals have been dismissed – where the appellants object to the Full Court receiving the respondent’s submissions in reply which they assert were filed out of time – where the submissions in reply were received – where both sets of proceedings before the Family Court were proceedings under the Family Law Act 1975 (Cth) (“the Act”) and thus the applications are governed by s 117 of the Act – where the appeals have been wholly unsuccessful – where there is no evidence as to the financial circumstances of the parties which either supports or prevents an order for costs being made – where there is no basis for making an order for costs based on the conduct of the respondent – where there is relevant conduct by the appellants to be taken into account in favour of an order for costs being made – where the offers of settlement made by the appellants are disregarded – where the applicants are to pay the respondent’s costs of and incidental to the appeals as agreed and in default of agreement as assessed on a party/party basis – costs order made http://www.austlii.edu.au/au/cases/cth/FamCAFC/2012/38.html

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Miscellaneous

Income for Income Tax purposes – what about if a Bankrupt? – Sent apears to be an interesting fellow – Sent v Commissioner of Taxation [2012] FCA 382 (16 April 2012) INCOME TAX – Employee incentive share trust plan — Whether payment to trust had character of ordinary income – Whether payment in substitution for bonuses from employment is ordinary income – Whether when part of amount deemed to be ordinary income assessable to the respondent but the remaining part is not — Whether respondent obtained a benefit or gain — Whether amount of ordinary income “derived” – When amount is applied or dealt with by a taxpayer – Whether exemptions applied to treat amount as a fringe benefit – PENALTIES and OFFENCES — Recklessness – Failure by taxpayer to discharge onus regarding recklessness of tax agent – Failure to adopt a reasonably arguable position ADMINISTRATIVE LAW — Whether error of law by the Administrative Appeals Tribunal —– Statutory requirement to provide reasons – Whether inadequacy of reasons an error of law – Whether appropriate to set aside decision for failure to provide adequate reasons – Whether facts as found are capable of supporting the decision http://www.austlii.edu.au/au/cases/cth/FCA/2012/382.html

NORTHWEST CAPITAL MANAGEMENT -v- WESTATE CAPITAL LTD [2012] WASC 121 (5 April 2012) Corporations – General meeting – Validity of purported resolutions – Whether chairperson appointed – Requirement of chairperson for validity of general meeting – Whether meeting in such disarray that no valid resolutions passed – Whether proxy votes invalidly excluded – s 1322 Corporations Act – Whether irregularities substantive or procedural Corporations – Whether proxy appointment ineffective under s 250B of the Corporations Act if it is provided to a third party for delivery to the company – Whether proxies tabled prior to general meeting Trade practices – Conduct likely to mislead or deceive – Misleading or deceptive conduct in relation to voting process for purported resolutions and circulating resolution – Whether s 18 The Australian Consumer Law (sch 2 of the Competition and Consumer Act 2010 (Cth) applies – Whether s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) applies – Meaning of ‘engage in conduct’ – Relevance of lack of evidence that any person was misled or deceived – Nature of injunctive relief under s 232 of The Australian Consumer Law and s 12GD of the Australian Securities and Investments Commission Act Trusts and trustees – Written circulating resolution – Whether power in Trust Deed for the removal of trustee by a circulating resolution – Nature of requirement for notice of meetings – Whether the same principle extends to requiring circulating resolutions to be provided to all unit holders Trusts and trustees – Whether implied term arises from a clause providing for removal of trustee for a power to appoint a new trustee – Powers under the Trustees Act 1962 (WA) to appoint a new trustee – History of powers to remove trustees and appoint new trustees – Trusts and trustees – Trustees Act 1962 (WA) s 77(1) – Whether expedient to appoint a new trustee – Whether issue of units in Trust and stapled shares in company occurred for purpose of procuring voting support – Whether it is inexpedient, difficult or impracticable to appoint a new trustee in substitution for an existing trustee without the assistance of the Court – Considerations in exercise of discretion under s 77(1) – Rule against direction of trustee – Whether meeting of unit holders should be convened by Trustee – Powers of unit holders http://www.austlii.edu.au/au/cases/wa/WASC/2012/121.html

Barescape Pty Ltd & Anor v Bacchus Holdings Pty Ltd & Anor (No 6) [2012] NSWSC 257 (21 March 2012) EVIDENCE – Expert evidence – Expert’s reports – Rules of court as to admissibility of expert’s reports – Rule 31.28 of Uniform Civil Procedure Rules 2005 (NSW) – Whether “exceptional circumstances” exist supporting the admissibility of expert’s reports – Whether substantial prejudice exists preventing the admission of expert’s reports.EVIDENCE – Tender of MYOB records – Whether sufficient evidence exists to establish how MYOB records were prepared – Whether business records under s 69 of Evidence Act 1995 (NSW).

PERSONAL PROPERTY SECURITY LEGISLATION

As the PPSA is about to take effect, I thought I’d have a look at what is happening in NZ  – surprise, surprise the 1st three decisions feature corporate insolvency practitioners!!  – Does anyone know of a Canadian equivalent to AUSLII?Commissioner of Inland Revenue v Stiassny [2012] NZCA 93 (15 March 2012) Were the receivers personally liable to pay the GST? Can any of the respondents recover the GST from the Commissioner on the basis it was paid under a mistake of law, namely that the receivers were personally liable to pay the GST?

http://www.nzlii.org/cgi-bin/sinodisp/nz/cases/NZCA/2012/93.html?query=”personal%20property%20securities%20

Marac Finance Limited v Greer [2012] NZCA 45 (1 March 2012) A question of priorities – if the PPSA does not apply

 http://www.nzlii.org/cgi-bin/sinodisp/nz/cases/NZCA/2012/45.html?query=”personal%20property%20securities%20

Glenmorgan Farm Limited (in rec and in liq) v New Zealand Bloodstock Leasing Limited [2011] NZCA 672 (20 December 2011)

http://www.nzlii.org/cgi-bin/sinodisp/nz/cases/NZCA/2011/672.html?query=”personal%20property%20securities%20

Stop looking!  I’ve found a Canadian source – note Price Waterhouse as Receiver and Receiver/Manager in this decision – AGT Financial Corporation v. Ellake Services Limited, 2011 BCSC 578 ‘The standard described in Re Searcy does not require an individual to have conscious knowledge. Rather, it requires that the relevant information be delivered to a corporation in a manner such that a reasonable person would take cognizance of it. The court’s concern in Re Searcy, leading to its discussion of “actual knowledge”, was that the basis for the knowledge did not require the corporation to draw inferences (however reasonable) in order to arrive at the requisite conclusion’

LINK

And now a Bankrupt Estate – Bankruptcies of Arseneau and Arseneau, 2005 NSSC 26 

LINK

An older Canadian case, but useful in terms of what you might need to consider in conducting a search of the PPSR (Aust) – of interest to me because of the eccentricities of the Bankruptcy database Harry Watson Farm Supply Ltd. v. Hi-Way Service Inc., 2000 ABQB 26 There can be little doubt that a farm tractor is equipment and serial numbered goods as defined by the Act and by Personal Property Security Regulation Alt. Reg. 234/90 (see Regulations l(j);1(1); 1(s);1(t); and Section 1 (1)0 of the Act)

LINK

END

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Apr 202012
 

Complied 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.

 

Bankruptcy Act – Prior to Date of Bankruptcy

Bank of Western Australia Limited v   Srinivasan [2012] FMCA 177 (12 March 2012) BANKRUPTCY – Creditors   petition – ground of opposition challenging authority of Federal Magistrate –   interim applications for disqualification, transfer to Federal Court, or   adjournment – interim applications refused – ground of opposition rejected –   sequestration order made.
CONSTITUTIONAL LAW – Creation of Federal Magistrates Court   – appointment of Federal Magistrates – whether invalid under Chapter III of   the Constitution   by reason of exclusion from judges’ pensions http://www.austlii.edu.au/au/cases/cth/FMCA/2012/177.html

Warren Mckeon Dickson Pty Ltd v Maytom [2012] FMCA 160 (6 March 2012) BANKRUPTCY – Contested creditor’s petition – grounds of opposition – consideration of whether any reason existed for the Court to defer making or refrain from making a sequestration order  http://www.austlii.edu.au/au/cases/cth/FMCA/2012/160.html

Carlamax Properties Pty Ltd v Phontos [2012] FMCA 125 (28 February 2012) BANKRUPTCY – Creditor’s petition – whether grounds for an adjournment – whether the creditor was a secured creditor – whether for other sufficient cause a sequestration order ought not to be made http://www.austlii.edu.au/au/cases/cth/FMCA/2012/125.html

Thanks Bob – 4 time bankrupt, I understand – The Council Of The New South Wales Bar Association v Archer [2012] FMCA 81 (13 February 2012) BANKRUPTCY – Contested Creditor’s Petition – question of effectiveness of service of Bankruptcy Notice by email pursuant to regulation 16.01(1)(e). http://www.austlii.edu.au/au/cases/cth/FMCA/2012/81.html

An older decision, but interesting in the consideration given to amendment of creditors petition – Napiat Pty Ltd v Salfinger; In the Matter of Salfinger (No 3) [2011] FCA 1279 (8 November 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1279.html

 

Bankruptcy Act – following Date of Bankruptcy

Salfinger v Napiat Pty Ltd [2012] FCA 247 (19 March 2012) PRACTICE AND PROCEDURE – security for respondent’s costs of appeal – appeal against sequestration order pursuant to which appellant/bankrupt made bankrupt – where appellant resident out of the jurisdiction – where no statement of affairs filed by appellant – whether security for costs should be ordered http://www.austlii.edu.au/au/cases/cth/FCA/2012/247.html

Another instance where the value of the debt upon which a Sequestration Order was based will be costs of the administration – Charan v Gleeson [2012] FCA 236 (16 March 2012) BANKRUPTCY – appeal against Federal Magistrate’s decision that transfer of property from son to his parents was void against the Trustee – held that Federal Magistrate entitled to reasonably infer from circumstances that the son was or was about to become insolvent and that the main purpose of the transfer was to defeat creditors – insufficient evidence from parents to rebut presumption of advancement or rely on defence of an equity of exoneration PRACTICE AND PROCEDURE – whether it was appropriate for affidavit evidence of Trustee to be taken without his being available for cross-examination – reasonable explanation for why Trustee was unavailable – held that appellate courts must exercise caution in interfering with discretionary exercises of a primary judge’s discretionary rulings on matters of practice and procedure http://www.austlii.edu.au/au/cases/cth/FCA/2012/236.html

This Application & decision follows a number of hearings in a range of Court, largely brought by the bankrupt (Liprini) against the Trustee of his estate – the decision sets out the requirements for bringing vexatious proceedings – note that the Orders only apply in NSW (& only to NSW Courts?) & the Trustee’s costs are to be paid by the bankrupt (not payable from the Estate)  Pascoe v Liprini [2011] NSWSC 1484 (5 December 2011) PRACTICE AND PROCEDURE – vexatious proceedings – whether proceedings are vexatious – meaning of “vexatious” – whether proceedings were conducted frequently – meaning of “frequently” http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/1484.html

Commonwealth Bank of Australia v Tarrant & Hawkins [2012] NSWSC 165 (5 March 2012) PROCEDURE – possession proceedings – Defendant fails to comply with orders for filing of pleadings and evidence – Defendant subsequently made bankrupt – stay sought by Defendant until appeal against sequestration order determined – no utility in stay – Plaintiff seeks summary judgment – final hearing directed  http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/165.html

Hill and The Inspector-General in Bankruptcy [2012] AATA 69 (8 February 2012) BANKRUPTCY – power of trustee to object to bankrupt’s discharge before usual period – Trustee raised special and ordinary grounds of objection under s 149D – Decision under review affirmed http://www.austlii.edu.au/au/cases/cth/AATA/2012/69.html

Capital Finance Australia Limited v Brookfield [2012] FMCA 165 (7 March 2012) BANKRUPTCY – Application to set aside sequestration and other orders made in the absence of the debtor http://www.austlii.edu.au/au/cases/cth/FMCA/2012/165.html

Young, in the matter of Macryannis (No 2) [2012] FCA 175 (2 March 2012) COSTS – principles relevant to an award of costs – Court has unfettered discretion – Trustee to be treated as an ordinary litigant – consideration given to what would be just in the circumstances http://www.austlii.edu.au/au/cases/cth/FCA/2012/175.html

Thanks for this one Bob –  Young, In the matter of Macryannis [2011] FCA 1272 (8 November 2011) BANKRUPTCY – application under s 179 Bankruptcy Act 1966 (Cth) for enquiry into Trustee’s conduct in administering deceased estate – administration under Part XI Bankruptcy Act– Trustee appointed by Court order – delay in distributing assets – application for enquiry brought by creditor of estate – whether creditor has standing to bring application – whether issues identified by creditor warrant an enquiry being ordered – consideration of principles relevant to exercise of Court’s discretion under s 179 – consideration of principles governing the duties of trustees in bankruptcy – Court has high degree of supervision and control over trustees’ conduct – powers of Inspector-General in Bankruptcy – reasons referred to Inspector-General for consideration BANKRUPTCY – administration under Part XI Bankruptcy Act – whether Trustee entitled to deal with non-divisible assets as part of administration – reference to bankrupt’s assets or estate to be read as reference to whole of deceased person’s property – Trustee required to administer whole of estate which includes non-divisible assets BANKRUPTCY – application by Trustee to have remuneration fixed – whether Trustee entitled to be remunerated for dealing with exempt assets – consideration of mechanism by which remuneration to be calculated – consideration of s 162(4) Bankruptcy Act and reg 8.08 Bankruptcy Regulations and relevant authorities – whether Trustee entitled to costs, charges and expenses of administration – remuneration and any costs, charges and expenses to be drawn from divisible assets http://www.austlii.edu.au/au/cases/cth/FCA/2011/1272.html

Dyason v Pascoe [2012] FMCA 146 (27 February 2012) BANKRUPTCY – Removal of trustee – failure to provide particulars of complaints – application summarily dismissed for default http://www.austlii.edu.au/au/cases/cth/FMCA/2012/146.html

Sheikholeslami v Tolcher (No 2) [2012] FCA 199 (9 March 2012) COSTS – apportionment http://www.austlii.edu.au/au/cases/cth/FCA/2012/199.html

Sheikholeslami v Tolcher [2011] FCA 1050 (9 September 2011) BANKRUPTCY AND INSOLVENCY – whether certain real property part of bankrupt’s divisible property – whether bankrupt held property on trust for another at the commencement of her bankruptcy TRUSTS AND TRUSTEES – whether an express trust exists – informal family arrangement between siblings in respect of the ownership of real property EQUITY – defence of unclean hands – whether applicant should be denied equitable relief in circumstances where notice under s 26A of the Foreign Acquisitions and Takeovers Act required but not given http://www.austlii.edu.au/au/cases/cth/FCA/2011/1050.html

Sutherland as Trustee of the Bankrupt Estate of Leayr v Leayr [2012] FMCA 128 (20 February 2012) BANKRUPTCY – Application by trustee for an order that bankrupt vacate property – consent of bankrupt  http://www.austlii.edu.au/au/cases/cth/FMCA/2012/128.html

Samootin v Official Trustee in Bankruptcy [2012] FCA 64 (10 February 2012) PRACTICE AND PROCEDUREFederal Court Rules 2001 (Cth) – r 30.01 – Application for separate trials – Discretion to order separate hearing – Separate questions – Whether preliminary question of whether application made within time should be heard separately from other questions – Factors affecting discretion to order separate hearing http://www.austlii.edu.au/au/cases/cth/FCA/2012/64.html

Halsted (Bankrupt) v The Official Trustee in Bankruptcy, in the matter of Halsted (Bankrupt) (No 2) [2012] FCA 66 (9 February 2012) COSTS – loan contract – valid equitable charge in favour of respondent – application of contra proferentum rule – order for costs – whether applicant should be ordered to pay costs on a party and party basis or indemnity basis – construction of contractual arrangement – clause insufficiently explicit to require costs be paid on indemnity basis COSTS – imprudent or unreasonable refusal of an offer of compromise by applicant – whether indemnity costs to be ordered – indemnity costs ordered to be paid from date of expiry of reasonable offer of compromise http://www.austlii.edu.au/au/cases/cth/FCA/2012/66.html

                        Halsted (Bankrupt) v The Official Trustee in Bankruptcy, in the matter of Halsted (Bankrupt) [2011] FCA 1242 (17 October 2011) BANKRUPTCY AND INSOLVENCY – settlement proceeds – whether settlement proceeds from personal injury claim are property of the bankrupt – proceeds are not property of bankrupt EQUITY – equitable charges – whether intention to create equitable charge over settlement proceeds in favour of the third respondent – where third respondent had entered into two loans with bankrupt – where loans included inevocable instruction not to pay money to bankrupt until loan debt had been paid out of settlement proceeds – whether there was intention to keep settlement proceeds separate and loan would be paid out of those separate funds – equitable charge created over settlement proceeds in favour of third respondent  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1242.html

Holden v Van Houten [2012] FCA 4 (13 January 2012) BANKRUPTCY AND INSOLVENCY – Bankruptcy annulled – Trustee’s entitlement to costs, expenses and remuneration http://www.austlii.edu.au/au/cases/cth/FCA/2012/4.html

This decision was in last month, but I include it again because of the very useful observation proffered by one the recipients – “In respect of the above case and on an associated tack, I have always “preached” that if you as the trustee can not find anything to decline acceding to the bankrupt’s application to leave Australia you notify creditors of your decision and inform them that if they are not happy with your decision to let the bankrupt go, they can seek a review of your decision by the Court.” –  Good to see these decisions still go back to the Court to provide guidance to Trustees = Pearce (Trustee) v Mulhern (Bankrupt) (No 4) [2012] FCA 54 (2 February 2012) BANKRUPTCY – application for return of passport – whether just and equitable to do so – where respondent bankrupt had complied with obligations under the Bankruptcy Act 1966 (Cth) http://www.austlii.edu.au/au/cases/cth/FCA/2012/54.html

Interesting series of decisions in relation to the one estate Pearce (Trustee) v Mulhern (Bankrupt) (No 4) [2012] FCA 54 (2 February 2012) BANKRUPTCY – application for return of passport – whether just and equitable to do so – where respondent bankrupt had complied with obligations under the Bankruptcy Act 1966 (Cth)  http://www.austlii.edu.au/au/cases/cth/FCA/2012/54.html

Pearce (Trustee) v Mulhern (Bankrupt) (No 3) [2012] FCA 16 (16 January 2012) BANKRUPTCY – warrant for arrest – warrant executed – order for release from custody after public examination http://www.austlii.edu.au/au/cases/cth/FCA/2012/16.html

Pearce (Trustee) v Mulhern (Bankrupt) (No 2) [2012] FCA 7 (12 January 2012) BANKRUPTCY AND INSOLVENCY – arrest warrant – failure to attend public examination – use of an alias – flight risk http://www.austlii.edu.au/au/cases/cth/FCA/2012/7.html

Pearce (Trustee) v Mulhern (Bankrupt) [2011] FCA 930 (9 August 2011) BANKRUPTCY AND INSOLVENCY – arrest warrant – whether to issue – where respondent bankrupt had not appeared for public examination – where it appeared respondent had not complied with obligations of a bankrupt under the Bankruptcy Act 1966 (Cth) – arrest warrant issued http://www.austlii.edu.au/au/cases/cth/FCA/2011/930.html

 

Bankruptcy Act – Other Schemes under the Act                                        

Osborne v Gangemi (No 3) [2012] FCA 188 (6 March 2012) COSTS – application to set aside a Personal Insolvency Agreement – whether allegations were made against Trustees personally sufficient to justify a costs order in favour of Trustees where Trustees were unsuccessful in their opposition to the application http://www.austlii.edu.au/au/cases/cth/FCA/2012/188.htmlhttp://www.austlii.edu.au/au/cases/cth/FCA/2012/188.html

Osborne v Gangemi (No 2) [2011] FCA 1278 (4 November 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1278.html

Osborne v Gangemi [2011] FCA 1252 (4 November 2011) BANKRUPTCY AND INSOLVENCYSection 222(1) of the Bankruptcy Act 1966 (Cth) – whether the Court should set aside Personal Insolvency Agreement on grounds of unreasonableness or because it is not calculated to benefit the interests of creditors generally – amount available for distribution trivial or negligible when compared to the debtor’s total debts – debtor’s affairs call for further investigation – closeness of the vote of creditors a relevant factor – Personal Insolvency Agreement set aside and sequestration order made http://www.austlii.edu.au/au/cases/cth/FCA/2011/1252.html

It’s a long time since I can remember seeing a Part X decision, so two is just great – Gore v Prentice (Trustee), in the matter of the Personal Insolvency Agreement of Gore [2012] FCA 104 (3 January 2012) PRACTICE AND PROCEDURE – interlocutory injunctions – whether serious question to be tried – where applicant alleged second respondent was not or appeared not to be impartial – where second respondent was partner of liquidator of a company of which the applicant was a director – no serious question to be tried – where balance of convenience favoured the respondent – interlocutory application dismissed http://www.austlii.edu.au/au/cases/cth/FCA/2012/104.html

 

  Corporations – pre-appointment

Interesting matter, but did not find the result too surprising – Surdex Steel Pty Ltd v GB Manufacturing Pty Ltd [2012] VSC 90 (13 March 2012) CORPORATIONS – Winding up application filed before time for compliance with statutory demand had expired – Corporations Act 2001, s 459C(2)(a), s 459F(2)(a)(ii) – Application dismissed http://www.austlii.edu.au/au/cases/vic/VSC/2012/90.html

Dynamics Co Pty Limited v G and M Nicholas Pty Limited [2012] NSWSC 206 (9 March 2012) CORPORATIONS – Winding up – Statutory demand – Costs of application to set aside statutory demand where orders were made by consent -Whether service of statutory demand was reasonable http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/206.html

GEORGIOU BUILDING PTY LTD -v- PERRINEPOD PTY LTD [2012] WASC 72 (1 March 2012) Winding up application – Insolvency – Adjudication under Construction Contracts Act 2004 (WA) – Whether winding up application is an abuse of process – Enforcement of adjudication – Whether creditor is a judgment creditor under s 457P Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/wa/WASC/2012/72.html

Mintoo Property Developers Pty Ltd v Multiboard Australia Pty Ltd [2012] VSC 61 (29 February 2012) CORPORATIONS – Setting aside a statutory demand – Genuine dispute about the existence of debt – Offsetting claim – Corporations Act 2001 (Cth), s 459G http://www.austlii.edu.au/au/cases/vic/VSC/2012/61.html

Armadale Retail Investments Ptd Ltd & Ors v Owenlaw Mortgage Managers Ltd [2012] VSC 9 (25 January 2012) CORPORATIONS — Appeal against decision of an Associate Justice — Rehearing de novo on the merits — Statutory demand— When statutory demand served — Service by post — Whether the deemed service provisions in the Acts Interpretation Act 1901 (Cth) and Evidence Act 2008 (Vic) rebutted by evidence — Corporations Act 2001 (Cth) ss 109X, 459G, Acts Interpretation Act 1901 (Cth) s 29, Evidence Act 2008 (Vic) s 160 http://www.austlii.edu.au/au/cases/vic/VSC/2012/9.html

In The Matter of HEZ Pty Limited (Receivers and Managers Appointed) ACN 084 052 595In The Matter of HEZ Nominees Pty Limited (Receivers and Managers Appointed) ACN 100 786 187 [2012] NSWSC 26 (31 January 2012) CORPORATIONS –Corporations Act 2001 (Cth) s 459A winding up in insolvency – no issue of principle http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/26.html

Deputy Commissioner of Taxation v National Skin Institute (Aust) Pty Ltd [2012] FCAFC 2 (2 February 2012) CORPORATIONS – winding up application – affidavit in support – verification that debt still due and payable – a formal affirmation – formal proof not required http://www.austlii.edu.au/au/cases/cth/FCAFC/2012/2.html

Norman, in the matter of Forest Enterprises Australia Limited (Subject to Deed of Company Arrangement) (Receivers & Managers Appointed) v FEA Plantations Limited (Subject to Deed of Company Arrangement) (Receivers Appointed) (No 2) [2011] FCAFC 169 (23 December 2011) http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/169.html

Northside Deli Pty Limited, in the matter of Deputy Commissioner of Taxation v Deputy Commissioner of Taxation [2011] FCA 1474 (12 December 2011) CORPORATIONS – application for stay of winding-up orders – where applicant asserted serious and fundamental error in taxation assessments forming basis of statutory demand – where applicant expressed intention to apply for review by Administrative Appeals Tribunal – where no evidence of error and no application for review brought – where company not otherwise trading http://www.austlii.edu.au/au/cases/cth/FCA/2011/1474.html

Lee, in the matter of Hyperbarics Australia Pty Ltd v Hyperbarics Australia Pty Ltd [2011] FCA 1429 (9 December 2011)  CORPORATIONS – application for appointment of provisional liquidator http://www.austlii.edu.au/au/cases/cth/FCA/2011/1429.html

 

Corporations – post appointment

McElligott v. Commonwealth Bank of Australia [2012] QCA 61 (20 March 2012) CONVEYANCING – MATTERS ARISING AFTER COMPLETION – OTHER MATTERS – CAVEATS AGAINST DEALINGS – where appellant lodged a registered owner’s caveat against land on behalf of a company in liquidation – where the caveat prevented registration of a transfer of the land and mortgage over the land – where the mortgagee applied for removal of the caveat pursuant to s 127 Land Title Act 1994 (Qld) – where the caveat was based upon alleged fraudulent conduct – where the alleged fraudulent conduct related to persons other than the transferee and mortgagee – whether the primary judge’s discretion under s 127 Land Title Act 1994 (Qld) miscarried in ordering that the caveat be removed PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – OTHER MATTERS – whether the primary judge erred in refusing to stay an order for removal of a caveat to permit the appellant to add a party to the proceeding APPEAL AND NEW TRIAL – APPEAL PRACTICE AND PROCEDURE – QUEENSLAND – POWERS OF COURT – COSTS – where the respondent contends that the appellant advanced the same hopeless position on appeal as at first instance – whether costs should be awarded on the indemnity basis Land Title Act 1994 (Qld), s 127 http://www.austlii.edu.au/au/cases/qld/QCA/2012/61.html

In the matter of Richard James Porter and David Ian Mansfield. [2012] NSWSC 220 (13 March 2012) CORPORATIONS – Winding up – Replacement of liquidator – Administration – Replacement of administrator http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/220.html

In the matter of Free Wesleyan Church of Tonga in Australia Inc (administrators appointed) Phoenix Lacquers & Paints Pty Limited v Free Wesleyan Church of Tonga in Australia Inc (administrators appointed) & Ors [2012] NSWSC 214 (13 March 2012) CORPORATIONS – Creditors’ meeting – Plaintiff seeks declaration as to validity of resolution to remove and replace joint and several administrators – Plaintiff submitted proof of debt to chairperson of creditors’ meeting- Chairperson admitted debt after recalculating interest at a lower simple interest rate – Debt treated as “a debt the value of which was not established” for the purposes of reg 5.6.23(2)(d) of Corporations Regulations 2001 (Cth) – Whether chairperson’s decision effected by bad faith, mistake as to facts, error of law or error of principle – Whether the declarations sought by the Plaintiff ought to be made http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/214.html

BOSI SECURITY SERVICES LTD -v- PAKWEST PTY LTD (RECEIVER AND MANAGER APPOINTED) [2012] WASC 52 (17 February 2012) Practice and procedure – Whether trial of preliminary issues should be ordered – Turns on its own facts http://www.austlii.edu.au/au/cases/wa/WASC/2012/52.html

& the saga continues –  THE BELL GROUP LTD (In Liquidation) -v- WESTPAC BANKING CORPORATION [2011] WASC 367 (16 January 2012) Practice and procedure – Case management principles – Application to vary order that two related applications be heard together – High likelihood of appeal of interlocutory proceedings – Proceedings potentially impacted by proceedings in United Kingdom – Turns on own facts http://www.austlii.edu.au/au/cases/wa/WASC/2011/367.html

This Decision has me interested for a number of reasons – now we see a Winding-up Order Set Aside!! – Is this very common??  I’ve only ever seen it in relation to a Sequestration Order – Worth a look at to see how a Taxing Officer might review a Bill of Costs – the legislative restrictions impinging on this process are also of interest – Is anyone aware of any instances where these Corporations decisions where referred to in applications to set aside Sequestration Orders? –  Barbo Group Pty Ltd v Investment and Construction Enterprise Pty Ltd [2012] VSC 71 (2 March 2012) http://www.austlii.edu.au/au/cases/vic/VSC/2012/71.html

Re AED Oil Limited (admns app’td) (No 2) [2012] VSC 54 (27 February 2012) CORPORATIONS – Administration under Part 5.3A of the Corporations Act 2001 – Application for further extension of time to convene second meeting of creditors pursuant to s 447A(1) of the Act http://www.austlii.edu.au/au/cases/vic/VSC/2012/54.html

Algeri; Re Colorado Group Limited (No 2) [2012] VSC 22 (17 February 2012) CORPORATIONS – Further extension of time to convene second meeting of creditors – ss 439A(6), 447A(1) of the Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/vic/VSC/2012/22.html

In the matter of Norman Nominees Pty Ltd (in liq) & Ors v Zervos Pty Ltd & Ors (No 2) [2012] QSC 18 (16 February 2012) Costs – discretionary factors – turns on own facts http://www.austlii.edu.au/au/cases/qld/QSC/2012/18.html

 Amaca Pty Limited (under NSW administered winding up) & Ors v Messrs A G McGrath & C J Honey (as liquidators of the HIH Group of Companies) & Anor [2012] NSWSC 176 (5 March 2012) CORPORATIONS – Winding up – Insolvency – Proceeds of contract of reinsurance – Application for orders under Corporations Act 2001 (Cth) s 562A(4) – Whether “just and equitable” to make orders sought by the Plaintiffs http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/176.html

Australian Receivables Ltd v Tekitu Pty Ltd (Subject to Deed of Company Arrangement) (Deed Administrators Appointed) & ors [2012] NSWSC 170 (5 March 2012) EQUITY – “fruits of the action” lien – prior to commencement of hearing in main proceedings solicitor acted for company defending a claim and prosecuting a cross-claim – judgment in favour of the company on the cross-claim – HELD – lien arose in favour of the solicitor over moneys recovered in the litigation by reference to the cross-claim – EQUITY – trust over litigation proceeds claimed – no question of principle – HELD – no trust was created – CORPORATIONS – deed of company arrangement – charges registrable under s 262(1) Corporations Act 2001 (Cth) – whether a “fruits of the action” lien is registrable – whether equitable charge created by deed over money to be recovered by company in litigation is registrable – HELD – “fruits of the action” not registrable under s 262(1) as it arises by operation of law and is exempt under s 262(2) – express charge over money claimed in litigation registrable as a book debt insofar as secured claim was for reimbursement of expenses incurred in ordinary course of business – CORPORATIONS – deed of company arrangement – competing priorities between a fixed charge and an administrator’s statutory and/or equitable lien – circumstances in which an equitable lien may arise in favour of the administrator and take priority over a fixed charge – AGENCY – claim that a grant of irrevocable authority to current solicitor to pay former solicitor created a secured interest in favour of former solicitor – HELD – no such secured interest – CONTRACT – whether personal obligation of directors of company to pay solicitors’ costs – created by either the retainer or the deed – HELD – no personal obligation created by deed, but personal obligation arose from joint retainer under which the directors were joint and severally liable with the company for costs of the proceedings http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/170.html

Sutherland v Ghougassian & Ors [2012] NSWSC 125 (29 February 2012) MORTGAGE – account of moneys secured by mortgage – no question of principle http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/125.html

Daniel Ivan Cvitanovic in his capacity as liquidator of Master Education Services Pty Ltd (in liquidation) [2012] NSWSC 205 (17 February 2012) CORPORATIONS – Insolvency – Liquidation – Application by liquidator to Court under s 511 of Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/205.html

In the matter of Ursidae Pty Ltd formerly trading as Powerfab Engineering (in liquidation) -v- Commissioner of Taxation [2012] NSWSC 172 (13 February 2012) CORPORATIONS – application by company and its liquidator under s 588FF of the Corporations Act 2001 (Cth) to recover tax paid as voidable transactions – Commissioner admits liability and seeks indemnity against directors under s 588FGA(2) http://www.austlii.edu.au/au/cases/nsw/NSWSC/2012/172.html

Deputy Commissioner of Taxation v West Apartments Pty Ltd (in liq) [2012] FCA 222 (9 March 2012) CORPORATIONS – resignation of liquidator – appointment of liquidator by the Court http://www.austlii.edu.au/au/cases/cth/FCA/2012/222.html

Crisp, in the matter of ACN 069 895 585 Pty Ltd (in liq) v ACN 069 859 585 Pty Ltd (in liq) [2012] FCA 148 (5 March 2012) PRACTICE AND PROCEDURE – Discovery – Privilege – Whether claim of privilege waived by making of claims in proceeding – Whether maintenance of privilege inconsistent with those claims – Whether contents of documents necessarily laid open for scrutiny by those claims http://www.austlii.edu.au/au/cases/cth/FCA/2012/148.html

Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) v Oswal (No 5) [2012] FCA 191 (6 March 2012) COSTS – security for costs – whether springing order for dismissal on non-compliance http://www.austlii.edu.au/au/cases/cth/FCA/2012/191.html

Duties of Provisional Liquidators set out by Court – is this usual? –  Griffin Energy Group Pty Ltd v Griffin Windfarm Holdings Pty Ltd, in the matter of Griffin Energy Group Pty Ltd (subject to Deed of Company Arrangement) [2012] FCA 197 (2 March 2012) CORPORATIONS – appointment of provisional liquidators – circumstances in which usual undertaking as to damages not required http://www.austlii.edu.au/au/cases/cth/FCA/2012/197.html

White v Norman; In the Matter of Forest Enterprises Australia Limited (Receivers and Managers Appointed) (in Administration) (No 2) [2012] FCA 163 (2 March 2012) CORPORATIONS ACT – where plaintiff successful on appeal from decision of receivers under s 1321 of the Corporations Act 2001 (Cth) – form of orders – whether order for payment of disputed amount appropriate in context of legislative scheme – whether the court has power to award interest under s 1321 – whether the court has power to award interest under s 51A of the Federal Court of Australia Act 1976 (Cth). Held: The proceeding be dismissed. The appropriate orders are declarations and an order modifying the receivers’ decision. No power to award interest under s 1321 of the Corporations Act 2001 (Cth) or s 51A of the Federal Court of Australia Act 1976 (Cth)
COSTS – where plaintiff claimed indemnity costs on basis that proceeding concerned proper administration of a fund – consideration of appropriate costs order in appeal under s 1321 – whether proceeding adversarial in nature. Held: The proceeding was of an adversarial nature and costs should be assessed on a party and party basis http://www.austlii.edu.au/au/cases/cth/FCA/2012/163.html

Deputy Commissioner of Taxation v 24 x 7 Direct Pty Ltd (No 2) [2012] FCA 157 (1 March 2012) http://www.austlii.edu.au/au/cases/cth/FCA/2012/157.html

From CPA Insolvency Group – highlighted for consideration of ‘creditor’ and earlier cases on point – good review of earlier decisions –  BE  Australia WD Pty Ltd (subject to a Deed of Company Arrangement) v Sutton [2011] NSWCA 414 (20 December 2011) CORPORATIONS – voluntary administration – whether person having unadjudicated claim under s 106 Industrial Relations Act 1996 is a “creditor” bound by a Deed of Company Arrangement – whether Court has power under s 447A(1) Corporations Act 2001 (Cth) to vary operation of Pt 5.3A to allow admission of such claim
CORPORATIONS – voluntary administration – definition of “creditor” in Pt 5.3A – whether term has same meaning as defined in s 553 – Brash Holdings v Katile Pty Ltd [1996] 1 VR 24 – whether scheme, purpose and scope of Pt 5.3A require class of claims broader than that of claims under s 553
CORPORATIONS – voluntary administration – definition of “claim” in Pt 5.3A – contingent claim – Community Development Pty Ltd v Engwirda Construction Co [1969] HCA 47; (1969) 120 CLR 455 – requirement of existing obligation
INDUSTRIAL LAW – unfair contracts – status of unadjudicated claim under s 106 Industrial Relations Act – whether “claim” within meaning of s 553 – Majik Markets Pty Ltd v Brake & Service Centre Drummoyne Pty Ltd (1991) 28 NSWLR 443 – Fisher v Madden [2002] NSWCA 28 – Colley v Futurebrand FHA Pty Ltd [2005] NSWCA 223 – whether basis, founded on existing legal right, for asserting a right to participate in the division of the assets of the company – whether legally enforceable right to have Industrial Relations Commission determine application according to law is sufficient – analogy with claim for costs
CORPORATIONS – voluntary administration – power of Court – s 447A – whether Court has power under s 447A(1) Corporations Act 2001 (Cth) to vary operation of Pt 5.3A to deem to be a creditor someone who is not a creditor – Re Motor Group Australia Pty Ltd [2005] FCA 985
CORPORATIONS – voluntary administration – power of Court – s 447A – whether limitations imposed by the subject matter, scope and purpose of the statute – whether order falls within objectives within s 435A or other purpose within Pt 5.3A
CORPORATIONS – voluntary administration – power of Court – s 447A – where broad power conferred on court, requirement to exercise judicially – requirement to exercise power to achieve purposes for which it was conferred
CORPORATIONS – voluntary administration – power of Court – s 447A – whether nexus with how Pt 5.3A is to operate
CORPORATIONS – voluntary administration – power of Court – s 447A – Standing – person with unadjudicated claim under s 106 Industrial Relations Act seeking order deeming them to be creditor – whether “any other interested person” – Allatech Pty Ltd v Construction Management Group Pty Ltd [2002] NSWSC 293
APPEAL – right of appeal – jurisdiction of the Court of Appeal – s 101(2)(r)(ii) Supreme Court Act 1970 – whether leave to appeal required – whether appeal involves a matter at issue amounting to $100,000 or more
COSTS – general rule – costs follow the event – whether departure from general rule – where proceedings relate to fund being administered subject to control of court – whether costs should be treated as costs in administration – no reason to depart from general rule http://www.austlii.edu.au/au/cases/nsw/NSWCA/2011/414.html

Australian Securities and Investments Commission v Letten (No 17) [2011] FCA 1420 (12 December 2011) CORPORATIONS – unregistered managed investment scheme – receivership – whether claims of trust creditors and investor claimants are “trust creditor claims” for purposes of the Pooling Orders – trustee’s right of indemnity – clear accounts rule – trustee’s duties – duty to get in / secure surplus investor funds – duty to account for income generated and debt funding secured against scheme property – duty to account for distributions to investors – duty to comply with the law http://www.austlii.edu.au/au/cases/cth/FCA/2011/1420.html

Termicide Pest Control Pty Ltd, in the matter of Granitgard Pty Ltd (in liq) v Albarran [2011] FCA 1410 (9 December 2011) CORPORATIONS – application under s 503 of the Corporations Act 2001 (Cth) to remove a liquidator – liquidator voluntarily appointed by insolvent company – insolvent company involved in a transaction that is at least questionable – consideration of ‘cause’ to remove a liquidator – liquidator may be removed if the Court is satisfied that it is in the general interest of the creditors of the insolvent company to do so – liquidator need not have demonstrated unfitness, impropriety or breach of duty HELD – application granted http://www.austlii.edu.au/au/cases/cth/FCA/2011/1410.html

In the Matter of Sullivans Cove IXL Nominees Pty Ltd; Crawford v de Kantzow (No 2) [2011] TASSC 53 (27 September 2011) Corporations – Winding up – Conduct and incidents of winding up – Applications to court for directions or advice – Costs of applications – Application by liquidator for directions – Dispute between shareholders as to distribution of surplus on winding up – Outcome of dispute depended on the construction of a contract between shareholders – Company not a party to the contract – Whether losing shareholder should pay the costs of the winning shareholder and the liquidator – Whether the company should pay the costs of all parties http://www.austlii.edu.au/au/cases/tas/TASSC/2011/53.html

In the Matter of Sullivans Cove IXL Nominees Pty Ltd; Crawford v de Kantzow [2011] TASSC 9 (2 March 2011) Corporations Share capital – Shares – Classes of shares and shareholders – Generally – Whether the holders of the “B” class ordinary shares are to receive a distribution from a surplus on winding up – Whether an agreement between shareholders conferred any special privileges, rights or conditions on the “B” class ordinary shares http://www.austlii.edu.au/au/cases/tas/TASSC/2011/9.html

Miscellaneous

Agusta Pty Ltd v Provident Capital Ltd [2012] NSWCA 26 (8 March 2012) REAL PROPERTY – conveyancing – voluntary alienation to defraud creditors – transfer of land by judgment debtor – whether intent to defraud creditors by making execution against land impossible – PROCEDURE – judgments and orders – enforcement of judgments and orders – whether writ of execution may be enforced in respect of judgment debt of trustee – EQUITY – trusts and trustees – money judgment against trustee – trustee’s right of indemnity and preferred beneficial interest in trust assets – subrogated position of trust creditors – protection of preferred beneficial interest from destruction by levy of execution http://www.austlii.edu.au/au/cases/nsw/NSWCA/2012/26.html

Equuscorp Pty Ltd v Haxton; Equuscorp Pty Ltd v Bassat; Equuscorp Pty Ltd v Cunningham’s Warehouse Sales Pty Ltd [2012] HCA 7 (8 March 2012) Restitution − Restitution of benefits derived from unenforceable or illegal contracts − Recovery of money paid as money had and received − Respondents invested in tax driven blueberry farming schemes − Respondents borrowed funds to pay farm management fees − Each investment a “prescribed interest” under Companies Code of each respondent’s home State (“Code”) − Contrary to s 170(1) of Code, no valid prospectus registered when prescribed interests offered − Farming schemes collapsed − Respondents did not repay loan funds − Loan agreements unenforceable against respondents due to illegality − Whether restitution of loan funds available − Whether failure of consideration − Whether respondents’ retention of loan funds unjust. Personal property − Alienation of personal property − Assignment of choses in action − Assignment of right to restitution − Deed of assignment included assignment of legal right to debts and “all legal and other remedies” − Whether right to restitution capable of assignment − Whether deed of assignment assigned right to restitution. Words and phrases – “bare right of action”, “chose in action”, “failure of consideration”, “legal and other remedies”, “money had and received”, “prescribed interest”, “unjust enrichment”.  http://ww w.austlii.edu.au/au/cases/cth/HCA/2012/7.html

Sounds interesting –  Australia and New Zealand Banking Group Limited v Konza [2012] FCA 196 (9 March 2012) TAXATION – notices to furnish information issued by Deputy Commissioner pursuant to s 264(1)(a) of Income Tax Assessment Act 1936 (Cth) – notices directed to Australian bank – information sought in notices provided to bank from subsidiary in Vanuatu – information stored electronically in Australia – whether notices invalid – whether notices require bank to breach common law and statutory confidentiality obligations under Vanuatu law – whether s 264 authorises Commissioner to issue notices that infringe foreign sovereignty – whether notices were issued for a proper purpose – whether notices are uncertain – whether bank “not capable of complying” with notices within meaning of s 8C(1B) of Taxation Administration Act 1953 (Cth) – application dismissed  http://www.austlii.edu.au/au/cases/cth/FCA/2012/196.html

Waller v Hargraves Secured Investments Ltd [2012] HCA 4 (29 February 2012) Mortgages – Mortgagee’s remedies – Farm Debt Mediation Act 1994 (NSW) (“Act”) – Creditor must provide notice of intention to take “enforcement action” under “farm mortgage” (“Notice”) – Notice must specify availability of mediation regarding farm debts – Creditor unable to take enforcement action until NSW Rural Assistance Authority (“Authority”) issues certificate that Act does not apply because satisfactory mediation has occurred – Borrower mortgaged land to secure all monies owed under loan agreement – Borrower defaulted and lender provided Notice – Borrower requested mediation under Act – Following mediation parties executed second and third loan agreements, discharged previous debts and created new farm debts – Authority satisfied of successful mediation and issued certificate certifying that Act did not apply to farm mortgage – Borrower defaulted in making interest payments due under third loan agreement – Whether successive farm debts created new “farm mortgage” requiring satisfactory mediation before creditor could pursue enforcement action – Whether separate Notice required for enforcement action under subsequent loan agreements – Whether certificate issued by Authority void – Whether lender’s entitlement to possession of secured land and outstanding monies barred. Words and phrases – “enforcement action”, “farm debt”, “farm mortgage”, “in respect of the farm debt involved”, “in respect of the farm mortgage concerned”.  http://www.austlii.edu.au/au/cases/cth/HCA/2012/4.html

 

Questions and (perhaps) Answers

(1)    Peter asked me for decisions where a bankrupt had claimed that they held property in ‘trust’ only, especially where it is held for minor children. I readily recalled two bankruptcies which expended generous amounts of Court time.

Marchesi v Apostolou [2007] FCA 986 (4 July 2007) BANKRUPTCY – Torrens system land registered in name of bankrupt – Whether bankrupt had made effective gift of land – Whether bankrupt held beneficial title to land.
EQUITY – Gift of Torrens system land – Registered title not transferred – Instrument of transfer held by solicitor acting for donor and donee – Whether instrument had been delivered to donee – Whether donor had done everything necessary to be done by him to transfer registered title – Whether gift perfect in equity.
EQUITY – Torrens system land – Agreement by registered proprietor to transfer equitable interest for value – Full price not paid by other party to agreement – Agreement not complied with in other respects – Whether agreement specifically enforceable – Whether agreement gave rise to option – Whether other party acquired equitable interest in land as a result of agreement.
BANKRUPTCY – Gift of Torrens system land to registered proprietor’s family trust – Whether purpose was to defeat creditors – Bankruptcy Act 1966 (Cth), s 121.
BANKRUPTCY – Torrens system land – Agreement by registered proprietor to transfer equitable interest for value – Whether purpose was to defeat creditors – Bankruptcy Act 1966 (Cth), s 121.
TRUSTEES – Land held on trust – Expenses and outgoings relating to land – Trustee incurring expenses incidental to proposed development of land but not in capacity of trustee – Whether trustee entitled to indemnity from trust estate- http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2007/986.html?stem=0&synonyms=0&query=”vasiliou%20

Owens v Lofthouse [2007] FCA 1968 (12 December 2007) BANKRUPTCY — appeal from orders of Federal Magistrates Court transferring beneficial title of properties to trustee in bankruptcy — whether appellant beneficial owner of properties
TRUSTS — whether document titled “Declaration of Trust” effective — whether document manifested intention to declare a trust — document ambiguous in its terms — whether parol evidence rule applicable — appellant’s subsequent conduct inconsistent with declaration of trust
PRACTICE AND PROCEDURE — application to adduce “further evidence” pursuant to Federal Court Act 1976 (Cth) s 27 — further evidence relevant to creation of purported “Declaration of Trust” — principles relevant to reception of further evidence — whether evidence could have been led below — whether evidence sufficiently cogent to warrant its reception — whether evidence likely to have produced different result  http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2007/1968.html?stem=0&synonyms=0&query=”sue%20owens%20

Lofthouse v Baxter & Anor (No2) [2007] FMCA 1481 (30 August 2007) BANKRUPTCY – Application by Trustee pursuant to ss.58 and 116 of the Bankruptcy Act 1966 – whether valid trust – equitable principles – relevance of evidence of Bankrupt in other proceeding claiming ownership of property and no reference to trust http://www.austlii.edu.au/au/cases/cth/FMCA/2007/1481.html

(2)    Matthew referred me to an article from one of the published Insolvency newsletters of February 2012 about the decision below.

I was aware of the decision and was surprised it was not more well known. The article included the following observation: “Readers can assess whether that is a decision on the facts or is worthy of legislative attention, or neither.”

I also will leave that to you to decide, though would be please to hear your views & / or other decisions on point.

My early enquiries elicited the following two observations:  “ … the decision was very much based on the failure of the trustee to include in the deeming of the income the bankrupt as the doctor was generating the income by his personal exertion and that the employer company was an alter ego of the bankrupt . Also there was no provision for the operating expenses of the “business” allowed by the trustee , if I recall correctly.”  and

“Appeal dismissed- this is going to cause a lot of problems where we deem income.

Law needs to be beefed up here asap.”

Inspector-General in Bankruptcy v McGushin [2009] FCA 662 (18 June 2009) BANKRUPTCY – appeal by Inspector-General in Bankruptcy from decision of Tribunal – surgeon employed by company – Tribunal found net income of company was distinct from income paid to respondent – held net income of company not income ‘derived by the bankrupt’ for the purposes of s 139W of the Bankruptcy Act 1966 (BA) – whether Tribunal correctly interpreted operation of s 139(L)(a)(vii) BA – whether income received by company was income ‘derived by’ the respondent – whether income derived by company could be deemed as being income derived by employee by virtue of s 139M BA  http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2009/662.html?stem=0&synonyms=0&query=”mcgushin%20

The AAT decision:

McGushin and Inspector-General in Bankruptcy [2008] AATA 769 (27 August 2008) Bankruptcy – Applicant was the sole income producing employee of a Company of which he held 10/11ths of the issued capital as at the date of his bankruptcy – net income of Company, as distinct from income paid to applicant, not held to be “income … derived by the bankrupt” for the purposes of s 139W of the Bankruptcy Act 1966 http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/AATA/2008/769.html?stem=0&synonyms=0&query=”mcgushin%20

A Contributions decision with a more pleasing outcome, to Trustees:

McPhee and Inspector-General in Bankruptcy [2011] AATA 322 (13 May 2011) “Everett” Assignment – applicant assigned 50% of income from legal practice carried on in partnership with others – effect of such arrangement following dissolution of partnership and applicant’s subsequent bankruptcy – held assignment not operative in relation to income derived by applicant as a sole practitioner – such income derived solely by applicant http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/AATA/2011/322.html?stem=0&synonyms=0&query=”mcgushin%20

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