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.

Dec 062014
 

When the Insolvency Law Reform Bill 2014 is passed, creditors in an external administration of a company (except under receivership or provisional liquidation) will be granted the power to have the external administrator’s fees reviewed by another external administrator. In the draft legislation, the person appointed by creditors is called a reviewer, a reviewing liquidator and, occasionally, a cost assessor.
reviewer
The following table sets out the proposed legislation by using extracts from the Bill and related official material.
 

SUBJECT: CREDITORS’ REVIEW OF REMUNERATION OF EXTERNAL ADMINISTRATORS

 

SELECTED EXTRACTS FROM THE DRAFT BILL, PROPOSED RULES, ETC.

SOURCE OF TEXT

5-20 Meaning of external administrator of a company

A person is an external administrator of a company if the person is:
(a) the administrator of the company; or
(b) the administrator under a deed of company arrangement that has been entered into in relation to the company; or
(c) the liquidator of the company; or
(d) the provisional liquidator of the company.Note: A person is not an external administrator of a company for the purposes of this Schedule merely because the person has been appointed as a receiver, receiver and manager, or controller in relation to property of the company.

Insolvency Law Reform Bill 2014 Exposure Draft, Insolvency Practice Schedule (Corporations), section 5-20,
page 157
90-22 Application of this Subdivision

This Subdivision applies in relation to a company that is under external administration, other than a company in relation to which a provisional liquidator has been appointed.

Insolvency Law Reform Bill 2014 Exposure Draft, Insolvency Practice Schedule (Corporations), Subdivision C
section 90-22, page 263
Appointment to carry out review
(1) A registered liquidator may be appointed to carry out a review into either or both of the following matters:
(a) remuneration of the external administrator of the company;
(b) a cost or expense incurred by the external administrator of the company.
Appointment by resolution
(2) The appointment may be made by resolution of:
(a) the creditors; or
(b) if the company is being wound up under a members’ voluntary winding up—the company;
(3) If the appointment is made by resolution, the resolution must specify:
(a) the remuneration, costs or expenses which the liquidator is appointed to review; and
(b) the way in which the cost of carrying out the review is to be determined.

Appointment by one or more creditors or members
(4) The appointment may be made by:
(a) one or more of the creditors; or
(b) if the company is being wound up under a members’ voluntary winding up—one or more of the members.
(5) However, an appointment may only be made under subsection (4) if the external administrator of the company agrees to the appointment.
(6) The agreement must:
(a) be in accordance with the Insolvency Practice Rules; and
(b) specify:
(i) the remuneration, costs or expenses which the liquidator is appointed to review; and
(ii) the way in which the cost of carrying out the review is to be determined.
Appointments by creditors etc.—limit
(7) Despite subsection (1), a registered liquidator appointed under this section has no power to review the remuneration to which the external administrator of a company is entitled under subsection 60-5(2) (remuneration if no remuneration determinations made).

Insolvency Law Reform Bill 2014 Exposure Draft, Insolvency Practice Schedule (Corporations),
Subdivision C, section 90-24, pages 264 and 265
…. Creditors, ASIC and the Court will also have the power to appoint a cost assessor to assess and report on the reasonableness of the remuneration and costs incurred during a portion or all of an administration. Explanatory Material, page 163, para 7.22
Review of the external administration of a company

The creditors may resolve by majority of creditors in both value and number, or the external administrator may agree, to appoint a reviewer to review and report on the reasonableness of the remuneration and costs incurred in an external administration ….
The purpose of the report is to provide information for interested parties to exercise their rights in relation to the administration, such as to remove the liquidator or challenge the liquidator’s remuneration.
The review is not determinative of the issues considered.
The costs of the review will form part of the expenses of the administration, unless so agreed with the liquidator.
The Court may make any orders it deems fit in relation to the review.
The reviewer must be a registered liquidator.
The Insolvency Practice Rules may prescribe, amongst other things, the duties of a reviewer.

Explanatory Material, Comparison of key features of new law and current law, page 168
90-29 Rules about reviews

(1) The Insolvency Practice Rules may provide for and in relation to reviews under this Subdivision.
(2) Without limiting subsection (1), the Insolvency Practice Rules may provide for and in relation to any or all of the following matters:
(a) the giving of notice to the external administrator of a company before appointing, or making an application for the appointment of, a reviewing liquidator under this Subdivision;
(b) the meaning, for the purposes of section 90-26, of properly incurred in relation to costs or expenses incurred by an external administrator of a company;
(c) the appointment of reviewing liquidators, including requirements as to who may be appointed and the provision of declarations of relevant relationships;
(d) the powers and duties of reviewing liquidators in carrying out a review;
(e) the form and content of reports by reviewing liquidators;
(f) the preparation and provision of reports by reviewing liquidators.

Insolvency Law Reform Bill 2014 Exposure Draft, Insolvency Practice Schedule (Corporations), section 90-29,
page 268
Subdivision D of Division 90 provides ….for the creditors to resolve to appoint, or otherwise agree with the liquidator, to appoint a reviewer to report on external administrator remuneration or costs only. Section 90-27 provides for the Insolvency Practice Rules to contain rules about such reviews. Insolvency Practice Rules Proposal Paper, page 25, para 143
Only a registered external administrator would be able to be appointed as a reviewer. Insolvency Practice Rules Proposal Paper, page 26, para 147
In conducting a review of remuneration and/or costs, the reviewer will be empowered to do any of following:
• conduct the review;
• direct the external administrator to provide an itemised invoice in a form, and within the time, specified in the direction for work undertaken by the liquidator;
• direct a third party to give an itemised bill of costs in a form, and within the time, specified in the direction in relation to work undertaken by the third party;
• interview any party to the review and allow that party to be questioned by any other party to the review;
• direct a person to give a written statement, in a specified form and signed by the person, about a matter relevant to the review;
• direct the external administrator to produce all or part of the liquidator’s files or documents in relation to the administration of the estate.
Insolvency Practice Rules Proposal Paper, page 26, para 150
It is proposed that the new rules would also stipulate that:
• if the reviewer gives a person a direction, and the person does not comply with the direction, the reviewer may conduct the assessment on the basis of the information available to the reviewer; and
• the reviewer will have a duty to act independently, in the interests of creditors and to avoid actual and apparent conflicts of interest.
Insolvency Practice Rules Proposal Paper, page 26, para 151
The report to be prepared by the reviewing practitioner would be required to be provided in the form, and with the content, as agreed between the reviewer and the appointing body. Insolvency Practice Rules Proposal Paper, page 27, para 152
Once the report is completed, it would be required to be provided to the external administrator responsible for the administration, the committee of inspection (if applicable) and ASIC. Insolvency Practice Rules Proposal Paper, page 27, para 153
ASIC may give a registered liquidator notice in writing asking the liquidator to give ASIC a written explanation why the liquidator should continue to be registered, if ASIC believes that …. (g) the liquidator has been appointed to act as a reviewing liquidator … and has failed to properly exercise the powers or perform the duties of a reviewing liquidator Insolvency Law Reform Bill 2014 Exposure Draft,
Insolvency Practice Schedule (Corporations), section 40-40,
page 180
Jun 122012
 

Complied by Michael Ennis.  Michael developed an interest in insolvency case law, while a Deputy Registrar in Bankruptcy at the Federal Court of Australia and while undertaking various roles at the  Insolvency Trustee Service Australia (ITSA).  He has maintained this interest since retiring.  If you would like to receive the Insolvency Decisions schedule direct, advise Michael of additional decisions, or share your observations, you may contact  Michael direct on rmci53mje@spin.net.au.

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Bankruptcy Act – Prior to Date of Bankruptcy

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

 

Bankruptcy Act – following Date of Bankruptcy

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

 

Bankruptcy Act – Other Schemes under the Act

nil

Corporations – pre-appointment

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

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

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

 

Corporations – post appointment

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

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

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

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

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

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

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

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

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

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

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

 

Miscellaneous

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

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

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

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

Apr 262012
 

Complied by Michael Ennis.  Michael developed an interest in insolvency case law, while a Deputy Registrar in Bankruptcy at the Federal Court of Australia and while undertaking various roles at the  Insolvency Trustee Service Australia (ITSA).  He has maintained this interest since retiring.  If you would like to receive the Insolvency Decisions schedule direct, advise Michael of additional decisions, or share your observations, you may contact  Michael direct on rmci53mje@spin.net.au.

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Bankruptcy Act – Prior to Date of Bankruptcy

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

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

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

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

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

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

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Bankruptcy Act – following Date of Bankruptcy

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Bankruptcy Act – Other Schemes under the Act

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

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Corporations – pre-appointment

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

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

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

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

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

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Corporations – post appointment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Miscellaneous

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

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

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

PERSONAL PROPERTY SECURITY LEGISLATION

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

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

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

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

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

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

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

LINK

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

LINK

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

LINK

END

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

Nov 142011
 

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

Bankruptcy Act – Prior to Date of Bankruptcy 

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

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

 Bankruptcy Act – following Date of Bankruptcy

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

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

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

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

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

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

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

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

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

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

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

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

 Bankruptcy Act – Other Schemes under the Act

 Corporations – pre-appointment

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

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

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

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

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

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

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

 Corporations – post appointment

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 Miscellaneous

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

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

 END

“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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Budget 2011: Tax Office director penalty notices (DPN) extended and tightened

 Insolvency practices, Tax debts, Taxation Issues, White collar crime  Comments Off on Budget 2011: Tax Office director penalty notices (DPN) extended and tightened
May 112011
 

Under the heading “countering fraudulent phoenix activities by company directors”, the Australian Government has announced in the Budget that with effect from 1 July 2011:

  • the director penalty regime will be extended to superannuation guarantee amounts, making directors personally liable for their company’s failure to pay employee superannuation;
  • the Australian Taxation Office (ATO) will be given the power to commence recovery against directors under the director penalty regime, without providing a 21 day grace period, for certain unpaid company liabilities that remain unreported after three months of becoming due; and
  • in certain circumstances directors and associates of directors will be prevented from obtaining credits for withheld amounts in their individual tax returns where the company has failed to pay withheld amounts to the ATO.

The Budget paper describes fraudulent  phoenix activity as:

“… which involves a company intentionally accumulating debts to improve cash flow or wealth and then liquidating to avoid paying the debt. The business is then continued as another corporate entity, controlled by the same person or group and free of their previous debts and liabilities.”

This measure is estimated to result in an additional $260 million in revenue in fiscal balance terms over the forward estimates period. There is a related increase in ATO departmental expenses of $22.1 million over the same period. In underlying cash terms, the estimated increase in receipts is $245 million over the forward estimates period.

See http://www.budget.gov.au/2011-12/content/bp2/html/bp2_revenue-07.htm