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This week’s TGIF considers a recent decision of the High Court of Australia, in which a 4:3 majority held that a former trustee is not owed any fiduciary obligation by a successor trustee.

Key takeaways

In Davis-Jacenko v Roxy’s Bootcamp Pty Limited [2024] NSWSC 702, McGrath J delivered an extempore decision, appointing provisional liquidators in respect of Roxy’s Bootcamp Pty Limited (theCompany). His Honour stated that it was “a paradigm case” for the court to intervene to preserve the status quo.

Key Takeaways

When do amounts owed to a company constitute ‘circulating assets’ and how should they be distributed? This crucial question has not always been answered predictably in recent cases. The Court of Appeal’s decision in Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) [2023] NSWCA 118 has provided a framework for navigating the relevant principles in the context of a priority dispute over R&D tax refunds.

Key takeaways

An extension to the Debt Warehousing Scheme has been announced by the Revenue Commissioners.

The Debt Warehousing Scheme (DWS) was introduced during the COVID-19 pandemic to provide support to businesses that were experiencing liquidity and trading difficulties. It has permitted businesses to “warehouse” or defer payment of their tax debts for a specified period.

Ordinarily, in civil proceedings a successful party in litigation will be awarded their costs.

This is known as the legal rule or principle that costs follow the event. But a decision of the Court of Appeal in 2021 suggests that this rule may not necessarily apply in examinership proceedings.

Since the Veolia case in the mid 2000s the Irish courts have taken the view that the costs follow the event rule need not necessarily be followed in every instance and that they have a certain discretion to depart from this default rule.

In the recent case of Stubbings v Jams 2 Pty Ltd [2022] HCA 6, the High Court has allowed an appeal relating to asset-based lending (ABL) and the enforceability of security associated with these loans. The High Court held that whilst asset-based lending itself is not unconscionable, certain conduct may render loans and security unenforceable. The decision is a reminder that lenders should ensure the circumstances of potential borrowers are fully scrutinised prior to lending.

The existence of a personal guarantee over a debt may affect the enforceability of that debt after a company has gone through an examinership process.

A creditor’s ability to enforce a debt subject to a guarantee after a period of examinership is dependent upon that guarantor having been granted a right to vote at the creditors’ meeting approving the scheme of arrangement.

The new formal rescue process for small and medium sized companies, SCARP, is now formally a part of Irish law. The legislation underpinning the new rescue process was officially commenced on Tuesday 7 December 2021.

The High Court recently refused a winding up petition brought by a landlord against a tenant company that had not paid rent on its commercial premises for more than a year.

Lestown Property Limited v The Companies Act 2014 [2021] IEHC 513.

A dispute arose between a landlord, Lestown Property, and a tenant that operated a Leisureplex in Charlestown Shopping Centre. The Leisureplex was only accessible through the lobby of an adjacent cinema. The cinema was leased to a separate entity and was closed during the COVID-19 pandemic.