The Federal Court recently handed down another decision arising from the collapse of Babcock & Brown. In its decision, it clarified how continuous disclosure obligations intersect with insolvency.

The case was brought by various shareholders against Babcock & Brown Limited and its liquidator. Amongst other things, the shareholders claimed that:

When a buyer’s characteristics can determine whether they are misled about the features of a property

Orchid Avenue Pty Ltd v Hingston & Anor [2015] QSC 42 per McMurdo J

This case highlights the importance of buyers making their own enquiries when purchasing properties for reasons that relate to features external to the property, such as ocean views. 

ASIC has recently released its report regarding the regulation of registered liquidators for the 2014 calendar year.

In brief: The Supreme Court of Queensland recently considered whether liquidated damages in a standard form construction contract were a penalty. In a decision that traversed long-held doctrines on penalties and recent developments in Andrews and Paciocco, the court ruled that the obligation to pay liquidated damages in this case was not penal.

When a company goes into liquidation liquidators will often try to ‘claw back’ uncommercial transactions. The recent case of 640 Elizabeth Street Pty Ltd (in liq) & Ors v Maxcon Pty Ltd [2015] VSC 22 considered whether securing the indebtedness of a third party to avoid potential litigation exposure is an uncommercial transaction. 

Background facts

The High Court has granted special leave to appeal the decision in Commissioner of Taxation v Australian Building Systems Pty Ltd(in liq) [2014] FCAFC 133 which held that a liquidator is not required to retain funds from the proceeds of sale of an asset to pay tax before an assessment is issued.

Practical Implications

Background

Coin Co International PLC (Administrators Appointed) (Coin Co) was a company incorporated in the UK which conducted a cash services business in the UK and a global currency exchange business in various countries, including Australia.

In brief: A Supreme Court of Queensland judgment handed down today has provided greater certainty for secured creditors of companies that earn profits following the appointment of a receiver. The judgment dispels suggestions that the law was uncertain and means that secured creditors can continue to fund receivers confident that any trading profits will be distributed to them as secured creditors and not to priority creditors.

Personal liability of members of management committees of incorporated associations for debts incurred by the association if it traded while insolvent has been an uncertain area of law in Queensland. Directors of companies that trade while insolvent have potentially been personally liable for debts incurred by the company, but there has always been a question mark over whether members of management committees of incorporated associations face the same personal liability. 

On 17 April 2015, the Commissioner of Taxation successfully sought special leave to appeal the decision in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2014] FCAFC 133 to the High Court.