Tagged: Case Note

Modified universalism: Full Federal Court protects the rights of a local creditor in a cross-border insolvency

The Full Federal Court has confirmed a “modified universalism” approach to cross-border insolvencies, and provided guidance on what is required for the “adequate protection” of rights of local creditors under the Model Law on Cross-Border Insolvency (‘Model Law’), as enacted in Australia by the Cross-Border Insolvency Act 2008 (Cth).

Change of position – ‘Disenrichment’ principle not accepted

On 7 May 2014, the High Court unanimously held that Hills Industries Ltd (Hills) and Bosch Security Systems Pty Ltd (Bosch) established the defence of change of position. Hills and Bosch were not required to repay monies to Australian Financial Services and Leasing Pty Limited (“AFSL”), the party who had paid them monies as a result of a third party’s fraud. AFSL appealed from the decision of the NSW Supreme Court of Appeal. The appeal was unanimously dismissed.

High Court upholds validity of Northern Territory Drugs Forfeiture Law

The High Court, by majority, upheld the validity of a statutory scheme for the forfeiture of property. The scheme provided that, on application by the DPP, the Supreme Court of the Northern Territory could declare a person who had been convicted of three or more drug related offences within a ten year period to be a “drug trafficker”, and consequent upon the declaration, all property owned, effectively controlled or given away by that person was forfeited to the Northern Territory.

High Court Lets Liens for Litigating Liquidators Lie

The High Court held unanimously that a liquidator is entitled to an equitable lien over settlement monies for litigation expenses which the liquidator incurred for the purpose of impugning a secured creditor’s charge, applying and confirming the principle in Universal Distributing in the process.

High Court strikes down laws prohibiting donations to political parties and spending on election campaigns

The High Court held invalid recent changes to the NSW political donations and campaign expenditure laws. The laws would have prohibited donations to political parties by any person not on the electoral roll, and where an overall cap on campaign spending by political parties otherwise applied, would have deemed expenditure on a campaign by ‘affiliated organisations’ of a political party (eg, unions) as being expenditure by that political party.

A wider ambit for the unreasonable director-related transactions provisions of the Corporations Act?

In Vasudevan & Ors v Becon Const & Anor [2014] VSCA 14, the Victorian Court of Appeal adopted a broader interpretation of the phrase ‘for the benefit of … a director’ in s 588FDA of the Corporations Act 2001 (the Act) than has been accepted in previous cases. The decision has the potential to widen the ambit of the unreasonable director-related transactions provisions of the Act.

Standing as a creditor in accordance with s 459P(1)(b) Corporations Act 2001 (Cth)

Challenge to creditor standing on application to wind up appellant company on grounds of insolvency. Standing examined with reference to bona fides of the appellant’s asserted counter claim and circumstances surrounding the failure of appellant to take steps to advance asserted counter-claim or demonstrate solvency. Court held respondent had standing as a creditor in accordance with s 459P(1)(b) Corporations Act 2001 (Cth).

Forgery of guarantee

Roslyn Kaye – The New South Wales Court of Appeal allowed this appeal brought by the ANZ bank. The trial judge had found that the bank was not entitled to rely upon an assumption that a forged guarantee document had been duly executed. The Court of Appeal held that the bank was entitled to rely upon the assumptions in sections 129(4) and (5) of the Corporations Act 2001 that the guarantee had been duly executed, and accordingly the guarantee was enforceable against the respondent company.