CGU Insurance Limited v Blakeley & Ors [2016] HCA 2

The High Court of Australia has held unanimously¹ that a person who commences proceedings against an insolvent company or a bankrupt individual can join that defendant’s insurer to the proceedings and seek a declaration that the insurer is liable to indemnify the defendant.

In a decision which potentially increases the assets available to liquidator and bankruptcy trustee plaintiffs, the High Court in CGU Insurance v Blakeley¹ has recently determined that plaintiffs may seek to join insurers to proceedings in circumstances where indemnity under the insurance contract is denied and the defendants to the primary claim are bankrupt or being wound up or likely to become so as a result of the claim.

Vizcaya Partners Limited v Picard and another [2016] UKPC 5

Privy Council advice that addresses what is required for foreign judgements

Two critical components affecting liquidators have come out of Tuesday’s decision by Brereton J in the NSW Supreme Court.

Simona Kornhaas v Thomas Dithmar (Case C-594/14)

The ECJ have ruled that a director of an English company that had entered into insolvency proceedings in Germany is liable to reimburse the company under German law for payments made after the company became insolvent.

The facts  

The Plaintiffs were appointed joint and several liquidators to three separate companies (“Companies”) which were being wound up in insolvency.  

The three companies had previously traded in partnership (“Partnership”) in an accounting practice.  

The decision in Adhesive Pro Pty Ltd v Blackrock Supplies Pty Ltd [2015] ACTSC 288 reinforces the strict rule that an application to set aside a statutory demand must be filed and served within 21 days of receiving the demand.

Statutory demands are a common and useful tool for many unsecured creditors seeking payment of a debt.  Non-compliance with a statutory demand results in a presumption of insolvency and the possibility that a creditor can apply to wind up a company debtor.

When a company is deregistered, it ceases to exist.[1] So what happens when a person has a genuine claim against that company but fails to commence proceedings before it is deregistered?

The High Court of Australia in CGU Insurance Ltd v Blakeley & Ors [2016] HCA 2 unanimously confirmed that a third party can join a defendant’s insurer to a proceeding and seek a declaration of rights under the insurance agreement, provided that third party has a ‘real interest’ in the performance of the agreement and that there is practical utility in the court providing that declaration.

Key Points:

Complex cross-border issues can be dealt with relatively easily under the Cross-Border Insolvency Act as long as flexibility is built into the relevant orders.