This week’s TGIF considers the decision of Crowe-Maxwell v Frost [2016] NSWCA 46 in which the Court held that a liquidator did not discharge his onus of proving relevant transactions were unreasonable director-related transactions.

BACKGROUND

Failure to comply with a statutory demand can have serious consequences for a company. Failure to properly advise on a statutory demand can also have serious consequences for a solicitor. Dixon J, in Dual Homes Pty Ltd v Moores Legal Pty Ltd and Anor, provides a timely reminder of the consequences that can flow from a failure to take proper action in response to a statutory demand.

A recent decision of the Federal Court provides a timely warning for businesses engaged in cross-border trade where debts may be expressed in a foreign currency.  The take away point of the decision is that in issuing bankruptcy notices based on a judgment debt expressed in a foreign currency and allowing for payment in Australian currency, care must be taken to ensure the correct foreign exchange rate is applied.

BACKGROUND

The statutory order of priority as it relates to a superannuation guarantee charge liability was considered in the New South Wales Supreme Court proceeding In the matter of Independent Contractor Services (Aust) Pty Limited ACN 119 186 971 (in liquidation) (No 2)[2016] NSWSC 106.

In January 2014 I published an article titled “Directors Duties – Insolvent Trading: Five rules to deal with a company in financial difficulty” in which I called upon the Federal government to reform Australia’s harsh insolvent trading laws and bring in some protections against ipso facto clauses in order to facilitate the restructuring of businesses.

WHAT HAPPENED?

Rahan Constructions Pty Ltd (Rahan) was contracted to undertake commercial construction and other works in about April 2012.  On or about this date, Rahan entered into a credit account with Asset Flooring Pty Ltd (Asset Flooring).  Rahan’s obligations under this credit account were personally guaranteed by the respondent, Mr North.

On 30 July 2013, Rahan was wound up by order of the court and Asset Flooring sought to enforce the guarantee for the outstanding balance owing under the credit account.

After failing to sell Dick Smith as a going concern, receivers Ferrier Hodgson are now trying to sell the company’s New Zealand and Australian assets, including customer databases.  But does the Privacy Act 1993 allow it?

The legal position

A receiver or liquidator is bound by the provisions of the Privacy Act 1993.

In December 2015, the Department of Housing and Public Works Queensland released a discussion paper seeking feedback on the issue of security of payment in the building and construction industry.  The paper seeks feedback from the widest possible cross section of the building and construction industry on the following identified issues:

Tamaya Resources Limited (In Liq) v Deloitte Touche Tohmatsu [2016] FCAFC 2

It is common in large complex cases for plaintiffs to seek to amend their claims during the course of the litigation. A plaintiff may be required to pay the costs thrown away but if its amendment application was brought in good faith and with a proper explanation, it would usually be able to amend its claim.

Section 440D imposes a stay on “proceedings in a court” against a company whilst it is in administration under Part 5.3A of the Corporations Act. It is well established that the term “proceedings in a court” does not include an arbitration proceeding: see Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 1305 at [42] (Hammerschlag J). Notwithstanding this, can the Court use its general power to make orders under s447A to extend the reach of s440D in order to impose a stay on an arbitration against a company in administration?