░░░ INSOLVENCY INTERFACE

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

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