Court of Appeal Clarifies the Tension Between Disclaimed Property and State Based Laws

On 9 March 2018, the Queensland Court of Appeal overturned the controversial first instance decision of the Supreme Court in the matter of Linc Energy Pty Ltd (In Liquidation).[1]

The Court of Appeal’s judgement is significant, as it clarifies the position regarding:

Liquidators will generally be pretty happy if a court finds that a transaction was both an uncommercial transaction and an unfair preference and dismisses any defence. Unfortunately for the liquidator in Re Cyberduck Software Pty Ltd (In Liq) & Anor [2018] VSC 122 you can still fail.

In Cyberduck:

Key Points:

In the recent Federal Budget, one change that hasn’t been given media attention is a change to the GST Legislation, which is to become effective from mid-July 2018 whereby purchasers of ‘new constructed residential premises’ and ‘new subdivisions’ become responsible to remit the GST to the Australian Taxation Office (ATO).

The Government has not published any details as to how these changes are going to operate other than claiming that the ATO expects to recover upwards of $650 million in GST revenue over the next four years.

Throughout 2016 a series of judgments were delivered that gave conflicting guidance to practitioners about what they should consider when accepting a voluntary administration appointment.

In 2014 the liquidators of Walton Constructions were removed by the Federal Court due to a perceived lack of independence arising from a referral relationship.

ASIC v Franklin¹ (Walton) was commented on by the media, ASIC and ARITA and brought about changes to the ARITA Code of Professional Practice to expand the scope of disclosure required in relation to referral relationships.

A liquidator has many competing duties and pressures in the performance of their role. Can the failure to make a simple phone call be a breach of those duties?

Under the Corporations Act 2001, directors have a duty to prevent insolvent trading. They can be ordered to pay compensation, and can even be convicted of an offence, where their company trades while insolvent. The threshold is low in that the director need only have a suspicion that the company is insolvent for the duty to be engaged. Once triggered, the duty requires directors to take steps to prevent further debts being incurred by ceasing active trading or by placing the company into administration. If prevented from doing those things, the director needs to resign.

The new Australian Privacy Principles (APPs) came into effect on 12 March 2014. In APP 8, they introduce a new 'accountability' approach to cross-border disclosures of personal information. 

In a decision of interest to both secured creditors and liquidators, the High Court has now overturned a decision of the Court of Appeal of the Supreme Court of Victoria that found a liquidator was not entitled to an equitable lien to secure his reasonable costs in obtaining a settlement sum.