Apr 282017
 

Issues impacted upon by this new legislation

Schedule 2 is now part of the Corporations Act 2001. The Act is available for viewing/download from www.legislation.gov.au. Schedule 2 is in Volume 6, and follows section 1637 of the Act. To see Schedule 2 only, go to this page at austlii.ed.au

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Nov 142011
 

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 

Lewis v Lamru Pty Ltd; In the Matter of Lewis (No 3) [2011] FCA 1177 (19 October 2011) BANKRUPTCY – whether monies paid into Court by a judgment debtor in satisfaction of a condition voluntarily offered by the judgment debtor as the price for obtaining an extension of the time for compliance with a bankruptcy notice should be paid out to the judgment creditor http://www.austlii.edu.au/au/cases/cth/FCA/2011/1177.html

 Interesting new way to lose a bankruptcy notice-  Rookharp Pty Limited v Webb & Anor [2011] FMCA 801 (14 October 2011) BANKRUPTCY – Creditor’s petition – whether bankruptcy notice must be issued in the names of all joint creditors – whether all joint creditors must be named as petitioners – scope of s.40(3)(d) of the Bankruptcy Act – whether respondents solvent – whether overstatement in bankruptcy notices or creditor’s petition – whether bankruptcy notices invalid as imposing interest on professional costs http://www.austlii.edu.au/au/cases/cth/FMCA/2011/801.html

 Bankruptcy Act – following Date of Bankruptcy

 Another instance where action / inaction of bankrupt may have given rise to significant costs to estate – debt to petitioning creditor not large – trustees remuneration, at one taxation, substantiallially reduced –  Maxwell-Smith v Donnelly (No 3) [2011] FCA 1226 (31 October 2011) BANKRUPTCY – application under s 179 of the Bankruptcy Act 1966 (Cth) – consideration of trustee’s refusals to reconvey property to former bankrupts in circumstances where trustee’s costs, charges and expenses of administration remain unpaid – application dismissed  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1226.html

 Singh v Khatri & Griffin [2011] FMCA 804 (27 October 2011) BANKRUPTCY – Proof of debt – application for an extension of time within which to file an application seeking review of Trustee’s decision to reject proof of debt – whether debt was legally enforceable – whether sufficient evidence of legally enforceable contract – allegation of sham contract – whether transaction represented gifts – indebtedness was contingent and remained a provable debt and is provable in the bankrupt’s bankruptcy http://www.austlii.edu.au/au/cases/cth/FMCA/2011/804.html

 Lasm v Body Corporate For La Porte D’Or CTS 12681 [2011] FMCA 800 (20 October 2011) BANKRUPTCY – Sequestration order – application for review of decision of Registrar – fresh proceeding – requirement on petitioning creditor to file fresh affidavits – where failure to file fresh affidavits http://www.austlii.edu.au/au/cases/cth/FMCA/2011/800.html

 Chubb v Dunlop [2011] FMCA 813 (14 October 2011) BANKRUPTCY – Trustee’s application for writ of possession – orders made in absence of bankrupt – application to set aside or stay – whether discretionary power – stay sought in support of Federal Court appeal from sequestration order – stay refused – interim application dismissed http://www.austlii.edu.au/au/cases/cth/FMCA/2011/813.html

 Goodridge v Robinson [2011] FCA 1213 (21 October 2011) PRACTICE AND PROCEDURE – Bankruptcy – urgent interim application – where judgment reserved in New South Wales Supreme Court – whether direction should be made that an application be withdrawn in the New South Wales Supreme Court – application dismissed http://www.austlii.edu.au/au/cases/cth/FCA/2011/1213.html

 Watts, in the matter of Watts [2011] FCA 1185 (21 October 2011) CORPORATIONS – leave to manage corporations generally – leave to manage specific classes of corporations – where no evidence of the business, activities or affairs of the corporations – where no evidence of plaintiff’s past or intended role in corporations http://www.austlii.edu.au/au/cases/cth/FCA/2011/1185.html

 Mortgage!! –  Menzies v Paccar Financial Pty Ltd [2011] FCA 1161 (21 October 2011) COSTS – indemnity costs orders sought – arising out of bankruptcy proceedings – stay of sequestration order – appeal from sequestration order allowed – contempt charges – motions for removal of trustees – brought for ulterior purpose http://www.austlii.edu.au/au/cases/cth/FCA/2011/1161.html

 Liprini v Liprini (No 2) [2011] FCA 1150 (7 October 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1150.html

 Barlaw Pty Ltd v Crouch (Trustee) [2011] FCA 1149 (4 October 2011) PRACTICE AND PROCEDURE – appeal – whether security for the respondent’s costs of an appeal from a Federal Magistrate should be ordered http://www.austlii.edu.au/au/cases/cth/FCA/2011/1149.html

 Debrossard & Official Trustee in Bankruptcy [2011] FamCA 648 (19 August 2011) FAMILY LAW – PROPERTY – Where consent orders provided for the former matrimonial home to be transferred into the wife’s name following the husband being declared bankrupt – Where Official Trustee sought orders that consent orders be set aside – Where consent orders were subsequently set aside – Where wife seeks orders that the consent orders be reinstated – Contributions – Division of property between the wife and the Official Trustee – Whether Official Trustee should be empowered to act as trustee for the sale of the property http://www.austlii.edu.au/au/cases/cth/FamCA/2011/648.html

 Cleary Bros (Parramatta) Pty Limited & Ors v Commonwealth Bank of Australia & Ors (No 3) [2011] ACTSC 139 (9 August 2011) PROCEDURE costs impecuniosity of corporate plaintiffs – absence of presumptions in relation to discretion to order corporate plaintiffs to provide security for costs – whether order for security for costs would stultify progress of plaintiffs’ action – absence of evidence about means of current officers and shareholders of corporate plaintiffs – application for security for costs granted http://www.austlii.edu.au/au/cases/act/ACTSC/2011/139.html

 Cleary Bros (Parramatta) Pty Limited and Ors v Commonwealth Bank of Australia and Ors (No 2) [2011] ACTSC 130 (8 August 2011) LEGAL PROCEEDINGS – dismissal of fourth plaintiff’s action – action of fourth plaintiff abandoned by trustee in bankruptcy – action that cannot be continued in any form should be dismissed – action of fourth plaintiff against all four defendants dismissed. LEGAL PROCEEDINGS – application by plaintiffs for adjournment of hearing of application for security for costs – new solicitor instructed two working days before hearing date – plaintiffs failed to take steps to be ready to hear the application for security for costs – application for adjournment refused http://www.austlii.edu.au/au/cases/act/ACTSC/2011/130.html

 Bankruptcy Act – Other Schemes under the Act

 Corporations – pre-appointment

 Deputy Commissioner of Taxation v Property Builders (Constructions) Pty Limited [2011] FCA 1221 (20 October 2011) DISCOVERY – application for general discovery – where plaintiff allegedly gave implied undertaking not to commence proceedings – where documents specifically sought to be discovered not relevant to substantive application for winding up of defendant company http://www.austlii.edu.au/au/cases/cth/FCA/2011/1221.html

 Deputy Commissioner of Taxation v Caporale Group Pty Ltd [2011] FCA 1189 (18 October 2011) CORPORATIONS – application to adjourn hearing of winding up proceedings – where no evidence of solvency http://www.austlii.edu.au/au/cases/cth/FCA/2011/1189.html

 Deputy Commissioner of Taxation v Interactive Community Planning Pty Ltd [2011] FCA 1173 (14 October 2011) CORPORATIONS – winding up in insolvency under s 459A Corporations Act – whether company is solvent – whether Court should exercise discretion to refuse order under s 459A http://www.austlii.edu.au/au/cases/cth/FCA/2011/1173.html

 In the matter of 7 Steel Building Solutions Limited [2011] NSWSC 1191 (11 October 2011) CORPORATIONS – winding up – statutory demand – application for order setting aside – no appearance for plaintiff when matter called on for hearing – counsel sought leave to appear for plaintiff’s directors – refused – defendant in liquidation when proceedings commenced and remains in liquidation – no attempt by plaintiff to seek leave to proceed – proceedings therefore doomed to fail – costs to be assessed on the indemnity basis http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/1191.html

 Deputy Commissioner of Taxation v Interactive Community Planning Pty Ltd [2011] FCA 1173 (14 October 2011) CORPORATIONS – winding up in insolvency under s 459A Corporations Act – whether company is solvent – whether Court should exercise discretion to refuse order under s 459A http://www.austlii.edu.au/au/cases/cth/FCA/2011/1173.html

 Cristovao v Forensic Documents Examiners Pty Ltd [2011] FCA 1131 (30 September 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1131.html

 Deputy Commissioner of Taxation v Polcarp Pty Ltd [2011] FCA 1142 (29 September 2011) CORPORATIONS – Winding Up – Application to adjourn winding up – Corporations Act 2001 (Cth) s440A http://www.austlii.edu.au/au/cases/cth/FCA/2011/1142.html

 Corporations – post appointment

 Velissaris v Fitzgerald [2011] FCAFC 120 (9 September 2011) CORPORATIONS – appeal against primary judge’s order dismissing application to terminate winding up of corporation – primary judge’s exercise of discretion not shown to have miscarried – appeal dismissed with costs http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/120.html

 Receivers & Managers caught up in a complex ‘barney’ – Transpacific Pty Ltd v Prudential Retirement Insurance and Annuity Company No 2 [2011] FCA 1215 (26 October 2011) PRACTICE AND PROCEDURE – application to vacate hearing date filed five days before commencement of hearing – applicant’s case not ready for trial – applicant yet to obtain expert evidence on issue of New York law in substantive proceeding – delays in filing evidence despite extensions of time – change of solicitor – consideration of respective prejudice to parties – applicant unable to make its case if hearing not adjourned – order for costs without more would not remedy prejudice to respondents if application allowed – consideration of principles relevant to exercise of Court’s discretion – objectives in s 37M Federal Court of Australia Act expressed at high level of generality – each case to be decided on its unique facts – in the circumstances, vacating the hearing and dissolving the injunction restraining the first respondent from dealing with the aircraft, coupled with indemnity costs and strict orders for preparation of hearing a fair resolution  COSTS – indemnity costs – application for applicant to pay respondents’ costs thrown away by vacation of hearing date on indemnity basis – Court has pre-eminent discretion – in the circumstances, such costs not unreasonable http://www.austlii.edu.au/au/cases/cth/FCA/2011/1215.html

 Binetter v Commissioner of Taxation (No 2) [2011] FCA 1214 (24 October 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1214.html

 Binetter v Commissioner of Taxation [2011] FCA 1195 (21 October 2011) CORPORATIONS – winding up – application for approval for director of companies in liquidation to bring proceedings in name of companies – whether companies were necessary parties to any winding up order made in relation to them – whether winding up order can take effect at the same time as order for reinstatement of deregistered company – principles relevant to exercise of discretion to grant approval under s 471A(1A)(d).  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1195.html

 Saker, in the matter of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liquidation) (No 3) [2011] FCA 1192 (21 October 2011) CORPORATIONS – managed investment scheme – liquidation of responsible entity – amendment to constitution – whether entitled to management fees – whether entitled to set-off for mismanagement – whether orders should be made under s 511(2) of the Corporations Act 2001 (Cth) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1192.html

 Walker and Moloney, in the matter of ZYX Developmental Learning Centres Pty Limited (in liq) (Receivers and Managers Appointed) [2011] FCA 1110 (20 October 2011) CORPORATIONS – application for Court’s approval for liquidators to enter into litigation funding agreement on behalf of company http://www.austlii.edu.au/au/cases/cth/FCA/2011/1110.html

 Includes an interesting order that the Liquidator not make further investigations    In the matter of JTS Property & Investments No. 1 Pty Ltd ACN 113 271 426 (In Liquidation) and JTS Property & Investments No. 2 Pty Ltd ACN 113 271 408 (In Liquidation) [2011] NSWSC 1210 (13 October 2011) CORPORATIONS – winding up by the court – application by liquidator under s 479(3) for directions from the court – directions made regarding shareholding and creditors of company in liquidation http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/1210.html

 Australian Securities and Investments Commission v Letten (No 14) [2011] FCA 1174 (18 October 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1174.html

 Australian Securities and Investments Commission v Letten (No 13) [2011] FCA 1151 (7 October 2011) CORPORATIONS – court appointed receiver – expenses incurred in receivership – expense of receivership – priority of payment – contract entered into before receiver appointed – whether payment accruing after appointment of receiver has priority http://www.austlii.edu.au/au/cases/cth/FCA/2011/1151.html

 Lion Energy Limited v Tulloch Lodge Limited (in liq), in the matter of Tulloch Lodge Limited (in liq) [2011] FCA 1139 (5 October 2011) CORPORATIONS – power of liquidator to compromise claim – time limit on power to enter into agreement – Corporations Act 2001 (Cth) s 477(2A), s 477(2B) – Confidentiality of litigation funding agreement – no prejudice to administration of justice – Federal Court of Australia Act 1976 (Cth) s 40(1).  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1139.html

 Genworth Financial Mortgage Insurance Pty Ltd v KCRAM Pty Ltd (in Liquidation) (No 2) [2011] FCA 1124 (4 October 2011) PRACTICE AND PROCEDURE – Parties – Joinder – application to join insurer as respondent – claims made policy – availability of statutory charge under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) – application for declaratory relief PRACTICE AND PROCEDURE – Parties – Joinder – Dispute between insurer and insured about cover – whether party suing insured entitled to declaration that insurer is liable to insured where insured in liquidation INSURANCE – Professional indemnity insurance – claims made policy – application to join insurer as respondent – statutory charge – discussion of availability of charge under s 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW) – where event giving rise to claim by third party occurred before policy period – application for declaratory relief – where insurer denies indemnity – insured in liquidation – where third party claims priority under Corporations Act 2001 (Cth) s 562  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1124.html

 Yeo v Damos Earthmoving Pty Ltd, in the matter of Beachwood Developments Pty Ltd (in liq) [2011] FCA 1129 (30 September 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1129.html

 Warner v Hung, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123 (30 September 2011) EQUITY – contested beneficial ownership of convertible bonds issued to a company – where liquidators sought declaratory relief against a defendant who was in possession of bond certificates and executed transfers, and who sought to become the registered holder of the bonds – whether an alleged series of undocumented assignments of equitable interest in the bonds was effective – whether the alleged assignments were made for valuable consideration EQUITY – effect of the Conveyancing Act 1919 (NSW) on alleged assignments of the equitable interest in the bonds – whether s 23C(1)(c) was required to be complied with in order for the alleged assignments to be effective – whether s 23C(1)(c) applies to equitable dispositions of personalty EVIDENCE – onus of proof – whether plaintiffs, as parties seeking declaratory relief and as the only parties seeking relief at all, bore the onus of disproving the chain of alleged assignments contended for by the defendants – whether defendants’ allegations constituted denials of essential ingredient in the plaintiffs’ cause of action or a defence of a prima facie claim – whether company’s registration as bondholder gave rise to a presumption of equitable ownership – whether possession of bond certificates and transfers gave rise to competing presumption of equitable ownership CORPORATIONS – whether company’s alleged equitable assignment of the bonds was an insolvent, uncommercial or unreasonable director-related transaction within the meaning of the Corporations Act 2001 (Cth) – whether transaction voidable – whether s 588FG available as a defence – degree to which the chain of alleged assignments could be regarded as a single transaction of the company – whether alleged equitable assignment of the bonds involved breach of directorial and fiduciary duties http://www.austlii.edu.au/au/cases/cth/FCA/2011/1123.html

 Higgins v Hancock as Liquidator of 246 Arabella Investments Pty Limited (in liq) [2011] FCA 1119 (30 September 2011) JUDICIAL REVIEWs 39B(1A)(c) of the Judiciary Act 1903 (Cth) – application for judicial review of decision of Administrative Appeals Tribunal to refuse an application to adjourn proceedings part heard in the Tribunal – Commissioner of Taxation sought to cross-examine the applicant on documents not included in T-documents – tender of those documents by the Commissioner ultimately rejected by Tribunal – Tribunal ruled it would not give consideration to applicant’s answers in cross-examination and ruled parts of the transcript be expunged or restricted – review on grounds of denial of natural justice and failure to take into account relevant considerationHeld: application dismissed, neither ground made out  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1119.html

 Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117 (1 September 2011) PRACTICE AND PROCEDURE – applications for leave to appeal a decision to refuse stay of Federal Court proceeding where Supreme Court proceeding on foot – proceeding in Federal Court issued shortly after Supreme Court proceeding instituted, raising overlapping issues – some parties to proceedings different – different relief sought – stay applications refused – whether the primary judge’s decision is attended by sufficient doubt to warrant its reconsideration by the Full Court – where it be desirable that all issues be heard and determined in one proceeding, while the other is stayed, or that by cross-vesting the two actions they be heard together – where the parties have made no attempt to resolve which action should proceed or the most desirable course – where the interests of justice do not simply demand that the proceeding which was commenced first in time be pursued http://www.austlii.edu.au/au/cases/cth/FCAFC/2011/117.html

 Miscellaneous

 Peters v Lithgow Forge Pty Ltd [2011] NSWSC 1185 (10 October 2011) EQUITY – solicitor claims charge over real property in name of corporation to secure payment of a judgment for costs against a former client – shares in corporation transferred by client to his wife – real property of corporation mortgaged – solicitor seeks to set aside both the transfer and mortgage under Conveyancing Act, s 37A – client funds acquisition of property by corporation – HELD – solicitor has equitable interest by way of charge over the real property – mortgage but not transfer voidable under Conveyancing Act, s 37A – corporation holds property on resulting trust for client http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/1185.html

 A Bank & Coleiro and Anor [2011] FamCAFC 157 (2 August 2011) FAMILY LAW – APPEAL – where the Federal Magistrate made an order joining the bank to the property settlement proceedings between the husband and wife – where there was no application before the Federal Magistrate seeking that the bank be joined as a party to the proceedings – where the bank was not given notice of the proposed joinder order, or the opportunity to make submissions in relation to the proposed joinder order – appealable error found – appeal allowed – order set aside.  FAMILY LAW – APPEAL – where the Federal Magistrate made an order which purported to relieve the husband and wife from compliance with the provisions of s 121 of the Family Law Act 1975 (Cth) – where there was no application before the Federal Magistrate seeking such an order – where the Federal Magistrate did not provide the opportunity for the bank to be heard prior to the making of the order – where the Federal Magistrate failed to give reasons for the making of the order – appealable error found – appeal allowed – order set aside.  FAMILY LAW – APPEAL – where the Federal Magistrate made an order that the bank provide further material to the Court – where it was argued that the bank should not have to disclose further material to the Court until the determination of the bank’s application for summary dismissal of the wife’s amended application was determined – appeal allowed – order set aside.  FAMILY LAW – CONTEMPT – in face of the Court – observations made concerning the Federal Magistrate’s use of the contempt procedure against the husband http://www.austlii.edu.au/au/cases/cth/FamCAFC/2011/157.html

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