May 292017
 

crime-cloud

Inquiries by Parliamentary committees can be a waste of everyone’s time. The Senate’s Inquiry into criminal, civil and administrative penalties for white collar crimes is a good example.

It began in November 2015 and ended in March 2017 (after pausing for 5 months because of the  election). It received 139 submissions, 2 lots of “additional information”, and had a public hearing at which 23 witnesses appeared. It’s report, which carries the grandiose title “Lifting the fear and suppressing the greed” (23 March 2017), runs to 108 pages. The committee said:

“A clear message to the committee from inquiry participants was that white-
collar crime and misconduct can cause serious harms, both at the individual level and
in the community as a whole.”

But despite this statement and the enormous amount of work that went into making submissions, conducting the inquiry and writing the report, media coverage has been almost non-existent. Perhaps news editors thought the subject matter was fairly dry, and/or that the report’s  recommendations were not particularly noteworthy or inspiring or controversial.  Such a conclusion would be understandable. To which I would add, that the report is unlikely to have much of an impact on how we deal with white collar crime.

 THE COMMITTEE’S RECOMMENDATIONS
Recommendation 1 That the government consider reforms to provide greater clarity regarding the evidentiary standards and rules of procedure that apply in civil penalty proceedings involving white-collar offences. paragraph 3.52
Recommendation 2 That the Australian Securities and Investments Commission (ASIC) consider ways in which the accessibility and usability of the banned and disqualified register might be enhanced, in order to create greater transparency regarding banning and disqualification orders. paragraph 5.24
Recommendation 3 That the government consider making infringement notices available to the ASIC to respond to breaches of the financial services and managed investments provisions of the Corporations Act. paragraph 5.34
Recommendation 4 That the government amend the Corporations Act 2001 to increase the current level of civil penalties, both for individuals and bodies corporate, and that in doing so it should have regard to non-criminal penalty settings for similar offences in other jurisdictions. paragraph 6.55
Recommendation 5 That the government provide for civil penalties in respect of white-collar offences to be set as a multiple of the benefit gained or loss avoided. paragraph 6.56
Recommendation 6 That the government introduce disgorgement powers for the ASIC in relation to non-criminal matters. paragraph 6.57

The committee’s full report is available for viewing and download at the committee’s Parliament of Australia website.

Incidentally, insolvency practitioners will be disappointed that there are so few references in the report to insolvency and liquidation, although potentially recommendation 4 could have an impact in corporate insolvency.

The next part of this blog post contains extracts which reveal “The Committee’s Views”  and the “Table of Contents of Report”.

Continue reading »

Insolvency law in United Kingdom to help external administrators obtain essential supplies

 Corporate Insolvency, External administration, Insolvency Law  Comments Off on Insolvency law in United Kingdom to help external administrators obtain essential supplies
Feb 102015
 

In the UK on 9 February 2015 the government issued the following statement by the Parliamentary Under Secretary of State for Employment Relations and Consumer Affairs (Business Minister, Jo Swinson) :

Rescuing struggling but viable businesses out of formal insolvency helps save jobs and improves the prospect of creditors recovering some of what they are owed. The Enterprise and Regulatory Reform Act 2013 introduced new powers to help insolvency practitioners secure essential IT and utility supplies to keep a business going whilst it is being rescued.

I have today laid an Order to ensure that insolvency practitioners can retain the essential supplies they need to save viable businesses. There will be an impact on suppliers in the IT and utility sectors but I believe that by providing strong safeguards to ensure the supplier can have  confidence they will be paid, we will ensure that the benefits of this measure far outweigh the
costs. In particular:

1. The supplier will be able to seek a personal guarantee from the insolvency practitioner at any time to give them more certainty that the supplies will be paid for.
2. The supplier will be able to apply to court to terminate their contract on the grounds of
‘ hardship’.
3. Guidance will be issued to insolvency practitioners to urge them to make contact with essential suppliers at the earliest possible time following their appointment to discuss their needs in relation to supply, to ensure that undue costs are not incurred.

The Government’s aim remains to ensure that a balance is struck between ensuring the rescue of viable businesses against the obligations placed on those suppliers that will be impacted by the Order. The proposed changes will have effect in relation to contracts made after 1 October 2015.

The Government consulted on how those new powers should be exercised and whether the safeguards proposed were adequate to ensure that those essential suppliers bound to supply an insolvent business would be paid. A total of 31 responses were received and I am very grateful for the time those respondents took to provide constructive feedback to the consultation. Almost all respondents expressed their support for the aims of the proposals with some suggesting ways to make the safeguards more effective. The draft Order was amended in the light of comments received.

Source: House of Commons: Written Statement (HCWS265)

Press Release: Insolvency Service Essential supplies to be guaranteed during business rescue

The Insolvency Service: Summary of Responses: Consultation on the Continuity of Essential Supplies.

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

Mar 052012
 

 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 – following Date of Bankruptcy

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

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

Sresbodan & Sresbodan and Ors (No. 2) [2011] FamCAFC 240 (16 December 2011)FAMILY LAW ─ APPEAL ─ Application for leave to appeal ─ Appeal against order of Family Court Judge joining the third and fourth respondents (“the solicitors”) as parties to the proceedings ─ Where the solicitors lodged a proof of debt with the husband’s bankruptcy trustees ─ Where the solicitors lodged an appeal in the Federal Court against the trustees decision regarding the quantum of their entitlement ─ Where beyond what is recorded in the trial Judge’s reasons for judgment, this Court is unable to know on what basis the solicitors sought leave to intervene in the proceedings, and on what basis the husband opposed such leave being granted ─ Where the basis upon which the solicitors sought to remain interveners in the Family Court proceedings was squarely submitted to relate to “the mechanics of getting paid if and when the quantum of our debt is determined” ─ Where the Court was not aware of any suggestion, nor did they suggest that it would be appropriate in any event,

for the dispute between the solicitors and the trustees with respect to the quantum of the husband’s indebtedness to the solicitors to be determined other than by the Federal Court, which has been seized of the dispute for months ─ Where it was concluded that, absent consideration of section 58(3) of the Bankruptcy Act 1966 (Cth), the discretion to grant leave for the solicitors to intervene miscarried, in that the trial Judge failed to have regard to a matter which was material to the exercise of his Honour’s discretion ─ Leave to Appeal granted ─ Appeal allowed FAMILY LAW ─ APPEAL ─ COSTS ─ Where it was common ground that, if the application was granted and the appeal allowed, an order for costs against the solicitors was appropriate ─ That the solicitors are to pay the husband’s costs of and incidental to the application for leave to appeal and appeal as agreed or assessed on a party/party basis http://www.austlii.edu.au/au/cases/cth/FamCAFC/2011/240.html  

 Sresbodan & Sresbodan and Ors [2011] FamCAFC 239 (16 December 2011) FAMILY LAW ─ APPEAL ─ Application in an appeal – Where to adjourn the husband’s application for leave to appeal would have only increased the costs of all parties, with no prospect of the application having greater utility on any later occasion – Adjournment of the application for leave to appeal refused FAMILY LAW ─ APPEAL ─ Application for leave to appeal against interlocutory order of Family Court Judge ─ Property settlement ─ Where the trial Judge made orders for the sale of a property and that on completion of the sale the proceeds be disbursed to various creditors ─ Not established that the trial Judge was seized of an application pursuant to section 116(2) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) or that his Honour erred in not applying “correctly or otherwise” the provisions of that section ─ The Court was not referred to any evidence or submissions before the trial Judge asserting that the husband’s creditors ought not to be paid out of the proceeds of the sale of a property ─ Not established that the trial Judge erroneously applied the provisions of section 58 of the Bankruptcy Act on the evidence before him in light of the competing applications which were before him ─ Application for leave to appeal dismissed FAMILY LAW ─ APPEAL ─ COURTS AND JUDGES ─ Disqualification ─ Court was not referred to any application before the trial Judge to disqualify himself ─ Not identified or demonstrated that the trial Judge denied the parties natural justice http://www.austlii.edu.au/au/cases/cth/FamCAFC/2011/239.html

Corporations – pre-appointment

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

Corporations – post appointment

 A small but growing number of Corporation / Family Law decisions =  C Pty Ltd and Ors & PGW as Liquidator of S Pty Ltd (In Liq) [2011] FamCAFC 231 (9 December 2011) FAMILY LAW – APPLICATIONS FOR LEAVE TO APPEAL – where two applications for leave to appeal were filed – where leave to appeal is required as these are interim financial proceedings – where the basis upon which leave is sought in both applications is essentially the same – where the jurisdiction of the Family Court to hear an application by the Liquidator of S Pty Limited to recover from Mr and Mrs Rand monies that S Pty Limited as guarantor had paid to discharge a loan to National Australia Bank is challenged – where if the Court has the jurisdiction to hear that application it should exercise that jurisdiction – where the exercise of jurisdiction by the Family Court to hear an application by C Pty Limited to reverse the decision by the Liquidator to reject a proof of debt is challenged – where the applicants contend that both applications should be transferred to the Supreme Court of New South Wales – where the issues raised are of importance – leave granted. FAMILY LAW – APPEAL – THE APPEAL BY MR AND MRS RAND – where the appellants argue that the trial judge was in error in finding that the guarantee proceedings were a “matrimonial cause” within s 4(1)(f) of the Family Law Act 1975 (Cth) – where the trial judge found that both the s 79 proceedings and the winding up proceedings were matrimonial causes and the guarantee proceedings were related to them – where there is no doubt that the Family Court has jurisdiction to hear the winding up proceedings pursuant to the power vested in it under s 1337C of the Corporations Act 2001 (Cth) – where the “remoteness” of the guarantee proceedings from the s 79 proceedings is dependent upon the meaning of the phrase “in relation to” in s 4(1)(f) of the Family Law Act 1975 (Cth) – where the necessary connection is established and the trial judge was correct in finding that the guarantee proceedings are a “matrimonial cause” and that the Family Court has jurisdiction to hear the proceedings – where the trial judge erred in holding in the alternative that the guarantee proceedings were a civil matter arising under the Corporations Act 2001 (Cth) and within the jurisdiction of the Family Court – where the guarantee proceedings arise under general law and are not a civil matter arising under the Corporations Act 2001 (Cth) – where the trial judge was correct in holding in the further alternative that the guarantee proceedings were within the Family Court’s accrued jurisdiction – where the winding up proceedings have not been completed and they therefore satisfy the need for there to be a family law claim as part of the justiciable controversy – where the trial judge was correct in exercising his discretion to exercise the jurisdiction – where it is beyond doubt that the trial judge correctly applied the criteria for the exercise of jurisdiction – whether the trial judge erred in concluding that the conduct of the Rands was “wrongful” – where this is a challenge to the trial judge’s findings as to the facts – where there were no oral submissions made by either side in relation to this challenge – where this challenge fails given that it was a challenge to orders 4 and 5 of the trial judge which orders have been complied with – where the trial judge was correct in rejecting the application of Mr and Mrs Rand for security for costs against S Pty Ltd in respect of the guarantee proceedings – where the trial judge was correct in applying s 117 of the Family Law Act 1975 (Cth) instead of s 1335 of the Corporations Act 2001 (Cth) – where the guarantee proceedings are “proceedings” within the meaning of s 117 – where on the basis that s 117 applies the trial judge did not err in taking into account other considerations such as the financial circumstances and conduct of the parties – where no error by the trial judge was found – appeal dismissed. FAMILY LAW – APPEAL – THE APPEAL BY C PTY LIMITED – where the appellant complains that the trial judge erred in dismissing the application to transfer the proof of debt proceedings – where the appellant concedes that in the event that the guarantee proceedings are found to be a matrimonial cause and the Family Court has original jurisdiction to hear those proceedings it is not appropriate to transfer them – where it was found that the guarantee proceedings are within the original jurisdiction of the Family Court – where this appeal becomes “academic” – appeal dismissed. FAMILY LAW – COSTS – where the appellants seek that the respondent pay the costs of and incidental to the appeal and the proceedings before the trial judge – where the respondent sought an order for costs – where both the appellants sought that a regime be put in place for the filing of written submissions on costs and for further evidence to be presented – where the respondent did not oppose this – where a regime as requested was put in place http://www.austlii.edu.au/au/cases/cth/FamCAFC/2011/231.html

C Pty Ltd & PGW as Liquidator of S Pty Ltd (In Liq) [2011] FamCAFC 230 (9 December 2011) FAMILY LAW – APPEAL – Application to adduce further evidence – where the application was filed after the hearing was completed and judgment was reserved – where the Court determined to treat the application as an application to re-open the hearing in order to adduce further evidence pursuant to s 93A(2) of the Family Law Act 1975 (Cth) – where the further evidence sought to be adduced was that the wife in the original family law proceedings (not a party to the appeal) had declared herself bankrupt prior to the hearing of the appeal – where the fact of the wife becoming bankrupt was of no relevance to the issue of the exercise of jurisdiction which was the subject of the appeal – where there was no basis to admit the further evidence – application dismissed.

FAMILY LAW – COSTS – where in the event the application was dismissed the respondent sought an order for costs on an indemnity basis, or if not, on a party and party basis – where the dismissal of the application would justify an order for costs being made in favour of the respondent – where the Court was not persuaded that the applicant’s prior knowledge of the wife’s bankruptcy and failure to file an application to adduce further evidence prior to the hearing constituted the necessary exceptional circumstances to award indemnity costs – costs ordered on a party and party basis http://www.austlii.edu.au/au/cases/cth/FamCAFC/2011/230.html

Amaca Pty Ltd (under NSW Administered Winding Up) v King [2011] VSCA 447 (22 December 2011) NEGLIGENCE – Occupier’s liability – Asbestos cement sheet manufacturing plant – Duty of care – Known risk of asbestos dust causing mesothelioma – Whether magnitude of risk sufficient to require occupier to take reasonable care to protect occasional visitor from risk – Jury directions – Whether judge erred in directions as to existence and scope of relevant duty – Breach – Causation – Distinction between risk and causation – Motion for judgment non obstante veredicto – Whether judge erred in dismissing application – Whether sufficient evidence of causation to support verdict – Damages – Pain and suffering – Whether amount awarded by jury excessive – Awards previously made in like cases – Appeal dismissed http://www.austlii.edu.au/au/cases/vic/VSCA/2011/447.html

National Australia Bank Ltd & Anor v Horne & Anor (No 2) [2011] VSCA 414 (8 December 2011) COSTS – Substantial success by both sides – No order as to costs http://www.austlii.edu.au/au/cases/vic/VSCA/2011/414.html

Action Cycles Pty Ltd (recs & mgrs apptd) & Ors v Ross & Ors [2011] VSCA 411 (1 December 2011) PRACTICE AND PROCEDURE – Stay pending appeal – Interlocutory appeal – Application for stay of order dissolving interlocutory injunction to restrain receivers from selling mortgaged properties pending hearing and determination of action – Serious question to be tried – Interest – Dispute as to applicable interest rate – Dispute as to date interest payments due for payment – Balance of convenience – Whether material change in circumstances so exceptional as to warrant discharge of injunction – Delay – Whether delay coming to trial caused by respondent – Injunction granted http://www.austlii.edu.au/au/cases/vic/VSCA/2011/411.html

Baker & Ors v Ambridge Investments Pty Ltd (in liq) & Ors (No 2) [2011] VSCA 400 (1 December 2011 COSTS – Application for indemnity costs by successful defendant to appeal – No special circumstances that would justify a departure from the usual order as to costs – Application refused – Costs to be taxed on a party and party basis http://www.austlii.edu.au/au/cases/vic/VSCA/2011/400.html

In the matter of Norman Nominees Pty Ltd (in liq) & Ors v Zervos Pty Ltd & Ors [2011] QSC 320 (4 November 2011) Amendment out of time to add new cause of action – Commonwealth statutory cause of action – Commonwealth statutory limitation time – s 588FF(5) Corporations Act 2001 (Cth) – interaction of State procedural rules and Commonwealth statutory limitation time – construction of “a relevant period of limitation” in r 376 – whether s 81 Supreme Court Act 1991 (Qld) is a separate source of power to amend in respect of Commonwealth causes of action – discretion not to allow amendments which would be futile – substantially the same facts Acts Interpretation Act 1954 (Qld), s 32A, s 32AA  http://www.austlii.edu.au/au/cases/qld/QSC/2011/320.html

ACN 078 272 867 Pty Limited (In liquidation) (Formerly Advance Finances Pty Limited) v Deputy Commissioner of Taxation; Binetter v Deputy Commissioner of Taxation [2011] HCA 46 (2 November 2011) Corporations – Reinstatement to register – Winding up – Companies deregistered under Corporations Act 2001 (Cth) (“Act”) – Federal Court made orders reinstating companies to register pursuant to s 601AH(2) of Act and thereupon winding them up – Companies and former director sought writs of certiorari, to quash winding-up orders made by Federal Court, mandamus and prohibition – Whether Federal Court had jurisdiction to wind up companies – Whether Federal Court wound up deregistered companies – Whether Federal Court ordered that winding up take effect from date when companies reinstated – Whether s 601AH(5) of Act requires that company, when reregistered, come back into existence in same form as on deregistration. Procedural fairness – Whether companies should have been given opportunity to be heard before winding-up orders made – Discretionary nature of relief sought – Whether there was unfairness as matter of substance – Whether opportunity to be heard could have made difference to outcome. Words and phrases – “company”, “jurisdictional error”. http://www.austlii.edu.au/au/cases/cth/HCA/2011/46.html

“Australian Insolvency Decisions” September 2011 edition

 Industry People, Insolvency practices, Personal Bankruptcy  Comments Off on “Australian Insolvency Decisions” September 2011 edition
Oct 032011
 

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

Four judgments attached to BN –   Dowd v Garde [2011] FMCA 713 (14 September 2011) BANKRUPTCY – Opposed Creditor’s Petition on the basis of an error in the Bankruptcy Notice where the stated sum does not equate to the amount contained in the four judgments attached – whether defect or irregularity curable under s.306 of the Bankruptcy Act 1966 – Bankruptcy Notice invalid – Creditor’s Petition dismissed http://www.austlii.edu.au/au/cases/cth/FMCA/2011/713.html

Applications to Stay Sequestration Orders always seemed to come in clumps after reasonable intervals of not seeing any, so we will have to keep an eye out  for some more – Trustees can take the normal precautionary actions, these are not the actions contemplated by the Stay Order – Favell v Mbuzi [2011] FMCA 710 (5 September 2011) BANKRUPTCY – Creditor’s Petition – service of Bankruptcy Notice – deemed service – delivery in ordinary course of post – no receipt because of no mailbox – cl. 24.1.3 of Australia Post Terms and Conditions – no proved non-delivery. BANKRUPTCY – Stay of Sequestration Order – refused http://www.austlii.edu.au/au/cases/cth/FMCA/2011/710.html

Parnell Corporate Services Pty Ltd v Lieurance [2011] FMCA 709 (31 August 2011) BANKRUPTCY – Creditor’s petition – no appearance by debtor – sequestration order made http://www.austlii.edu.au/au/cases/cth/FMCA/2011/709.html

Trkulja v Gibsons Solicitors Pty Ltd [2011] FMCA 655 (26 August 2011) BANKRUPTCY – Application to review – application to set aside bankruptcy notice out of time – leave opposed – extension of time for compliance – adjournment of proceedings http://www.austlii.edu.au/au/cases/cth/FMCA/2011/655.html

Thomas & Anor v Nash [2011] FMCA 661 (24 August 2011) BANKRUPTCY – Petition – sequestration order granted http://www.austlii.edu.au/au/cases/cth/FMCA/2011/661.html

Demandem Holdings Pty Ltd & Anor v Christou [2011] FMCA 489 (24 August 2011) BANKRUPTCY – Contested creditor’s petition – whether the debtor is solvent and whether the debtor has an off-setting claim that provides a reason for the Court to refrain from making a sequestration order considered. http://www.austlii.edu.au/au/cases/cth/FMCA/2011/489.html

A most curious matter – I’ve never heard of an application to rescind a Set Aside order, let alone such an application being successful  – also, I had thought only a Judge could set aside a Seq Order, but Registrar Luxton is very experienced in the jurisdiction = a comment from a member of this email group: ‘yes, a very interesting case concerning the rescission of a setting aside of a sequestration order. I have not heard of that happening before.

 I wonder when the bankruptcy starts from?

It appears that there was some “creative accounting “going on concerning the debtor’s financial status which just a bit too creative and bore little resemblance to his actual state of insolvency. I did note that in the setting aside proceedings, the RT was able to get an order that he be paid $12,000 for his remuneration which was well done when you look at how Mr Pattison failed to receive remuneration in a number of his matters where the SO s were set aside. Barro Group Pty Ltd v Poljakovic & Jacaranda Cooperative Housing Society Ltd [2011] FMCA 706 (23 August 2011) BANKRUPTCY – Application to rescind setting aside of sequestration order – application successful http://www.austlii.edu.au/au/cases/cth/FMCA/2011/706.html

Novel matter in relation to a Bankruptcy Notoce  –  Lewis v Lamru Pty Ltd; In the Matter of Lewis (No 2) [2011] FCA 1025 (31 August 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1025.html

 

Bankruptcy Act – following Date of Bankruptcy

David Lombe as trustee of the bankrupt estate of Salah Eddine Dib v Mohamed Dib & Anor [2011] NSWSC 1062 (9 September 2011) CONTRACT – general contractual principles – offer and acceptance – first party alleges he provides advance to assist in funding purchase of property by others – whether agreement to repay the funds advanced to first party or whether first party agreed to receive other benefits for advance – HELD: no agreement to repay funds advanced – TRUSTS AND TRUSTEES – resulting trust – constructive trust – allegations of resulting trust and constructive trust arising from first party’s advance of funds to purchase property in the names of others – whether contrary agreement – HELD: no resulting or constructive trust http://www.austlii.edu.au/au/cases/nsw/NSWSC/2011/1062.html

Very interesting decision – thanks to Bob for alerting me to it – note use of s. 77c transcript – note ‘heavies’ appearing –  Nelson v Mathai & Ors [2011] FMCA 686 (2 September 2011) BANKRUPTCY – Trustee Application pursuant to s.121 of the Bankruptcy Act 1966 – meaning of ‘creditor’ http://www.austlii.edu.au/au/cases/cth/FMCA/2011/686.html

A Section 139ZQ matter –  Combis (Trustee) v Spottiswood [2011] FCA 1082 (16 September 2011) PRACTICE AND PROCEDURE – substituted and deemed service – whether service can be deemed after multiple unsuccessful attempts – where no evidence that documents came to the attention of respondent – where impracticable to personally serve respondent – substituted service ordered in lieu of deeming service  http://www.austlii.edu.au/au/cases/cth/FCA/2011/1082.html

Singh v Official Trustee In Bankruptcy & Anor [2011] FMCA 677 (6 September 2011) BANKRUPTCY – Leave to commence, continue and take fresh steps in proceeding – whether leave to be granted – where failure to comply with undertaking – costs – payment by solicitor personally http://www.austlii.edu.au/au/cases/cth/FMCA/2011/677.html

Harrison v Ponting & Anor [2011] FMCA 680 (2 September 2011) BANKRUPTCY – Application by the Trustee for possession of the property http://www.austlii.edu.au/au/cases/cth/FMCA/2011/680.html

A Ferrari is a nice bankruptcy asset, if it can be located!! –  BMW Australia Finance Limited v Cheihk [2011] FMCA 720 (26 August 2011) BANKRUPTCY – Application to declare for or against trustees title – claim for declarations against the bankrupt, her trustees and another in respect of the ownership and right to possession of a chattel – no dispute – no proper claim under the Bankruptcy Act 1966 – no proper claim under the Court’s associated jurisdiction http://www.austlii.edu.au/au/cases/cth/FMCA/2011/720.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

Jones Lang Lasalle (NSW) Pty Ltd v Simpson; In the Matter of Simpson (Bankrupt) [2011] FCA 1006 (26 August 2011) BANKRUPTCY – whether the applicant should have leave to proceed pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth) against the first and second respondents in a proceeding in the Supreme Court of New South Wales in which the applicant (as plaintiff) alleges that the first and second respondents were knowing participants in a breach of trust by a corporation of which they were directors and executives http://www.austlii.edu.au/au/cases/cth/FCA/2011/1006.html

 

Bankruptcy Act – Other Schemes under the Act

Nil

 

Corporations – pre-appointment

Statewide Secured Investments Pty Ltd v Tarrant [2011] FCA 1067 (15 September 2011) CORPORATIONS – application to set aside statutory demand – interlocutory application for substituted service http://www.austlii.edu.au/au/cases/cth/FCA/2011/1067.html

Deputy Commissioner of Taxation v Marro (SA) Pty Ltd, in the matter of Deputy Commissioner of Taxation [2011] FCA 1024 (1 September 2011) CORPORATIONS – winding up – setting aside winding-up order made in the absence of a party – procedural irregularity – agreement to seek adjournment departed from without notice – irregularity cured by subsequent giving of notice before making of winding-up order http://www.austlii.edu.au/au/cases/cth/FCA/2011/1024.html

 

Corporations – post appointment

Ann Street Mezzanine Pty Ltd v Beck [2011] FCA 1047 (8 September 2011) PRACTICE AND PROCEDURE – order for interrogatories sought – interrogatories seeking identity of ASIC delegates who, on behalf of ASIC, made decisions to wind up relevant companies – relevant principles – claim of misfeasance in public office – order made http://www.austlii.edu.au/au/cases/cth/FCA/2011/1047.html

S & V Nominees Pty Ltd (in liquidation) v Rabobank Australia Limited (Formerly known as Primary Industry Bank of Australia Limited) (No 2) [2011] FCA 1039 (6 September 2011) PRACTICE AND PROCEDURE — Application by plaintiffs to amend their statement of claim in a manner which includes claim for declarations that defendant had breached s 427 and s 432 of the Corporations Act 2001 (Cth) (‘Corporations Act’) without any further claim with respect to alleged breaches — where defendant said claim for declarations was untenable — where plaintiffs had no real interest in determination of the question and where declaration served no practical purpose Held: Leave to file a statement of claim incorporating a claim for declarations of breaches of the Corporations Act refused http://www.austlii.edu.au/au/cases/cth/FCA/2011/1039.html

Singleton, in the matter of Lehman Brothers Australia Limited (in Liq) [2011] FCA 1068 (2 September 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1068.html

Vickers, in the matter of York Street Mezzanine Pty Ltd (in liq) [2011] FCA 1028 (1 September 2011) http://www.austlii.edu.au/au/cases/cth/FCA/2011/1028.html

 

Miscellaneous

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

“Australian Insolvency Decisions” August 2011 edition

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

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Bankruptcy Act  – Prior to Date of Bankruptcy

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

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

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

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Bankruptcy Act – following Date of Bankruptcy

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

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

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

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

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

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Bankruptcy Act – Other Schemes under the Act

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

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Corporations – pre-appointment

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

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

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

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Corporations  – post appointment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Miscellaneous

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

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

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

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

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