Aug 062012

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


Bankruptcy Act – Prior to Date of Bankruptcy

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

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

Rookharp Pty Ltd & Anor v Webb & Anor [2012] FMCA 607 (5 July 2012) BANKRUPTCY – Creditor’s petition – no appearance of debtors at hearing – no grounds of opposition – sequestration order made

Bankruptcy Act – following Date of Bankruptcy

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

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

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

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

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

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

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

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

The end (perhaps) of an interesting, long running series of hearings in this bankruptcy Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost (No 4) [2012] FCA 708 (29 June 2012)

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

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

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

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

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

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

 Corporations – pre-appointment

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

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

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

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

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

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

Corporations – post appointment

Handberg & Anor v MIG Property Services Pty Ltd [2012] VSCA 126 (15 June 2012) PRACTICE AND PROCEDURE – Application for leave to appeal – Whether substantial injustice demonstrated

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

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

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

Re Traditional Values Management Ltd [2012] VSC 308 (19 July 2012) PRACTICE AND PROCEDURE – COSTS – Orders made without adjudication on the merits – Discussion of relevant principles – Costs order made

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

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

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

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

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

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

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

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

Australian Securities and Investments Commission v Storm Financial Limited (Receivers and Managers Appointed) (in liq) [2012] FCA 750 (16 July 2012)

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

Carson, in the matter of Hastie Group Limited (No 3) [2012] FCA 719 (5 July 2012) CORPORATIONS – application for directions under s 447D of the Corporations Act 2001 (Cth)

Australian Executor Trustees Ltd v Provident Capital Ltd (No 2) [2012] FCA 754 (3 July 2012) PRACTICE AND PROCEDURE – stay – principles applying to grant of a stay

Smith in the matter of Actively Zoned Pty Ltd (in liq) [2012] FCA 605 (8 June 2012)

Quikfund (Australia) Pty Ltd v Prosperity Group International Pty Limited (In Liquidation) [2012] FCA 603 (7 June 2012) CORPORATIONS – consideration of an application for leave to proceed to prosecute an appeal

Hancock, in the matter of St Hilliers Construction Pty Limited (administrators appointed) [2012] FCA 602 (7 June 2012) CORPORATIONS – extension of time to convene a second meeting of creditors of a company in administration

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

Australian Competition and Consumer Commission v ACN 135 183 372 (Administrators Appointed) (formerly known as Energy Watch Pty Ltd) [2012] FCA 586 (1 June 2012)

Moodie, in the matter of Gowinta Farms Pty Ltd (administrators appointed) [2012] FCA 578 (31 May 2012) CORPORATIONS – extension of time to convene a second meeting of creditors of company in administration

An on-going matter – looking forward to seeing where it all ends up MG Corrosion Consultants Pty Ltd v Gilmour [2012] FCA 568 (31 May 2012) CORPORATIONS – variation to freezing order