Freezing orders and the Foreign Judgments Act

Freezing orders (also known as Mareva orders or Mareva injunctions) are oft-used tools available to a plaintiff to preserve the assets of a defendant, where there is a danger of the defendant absconding or of the assets being removed from the jurisdiction or otherwise diminished. Such dangers put in peril the ability of a plaintiff to recover any favourable judgment against that defendant.

Since the Global Financial Crisis it has been increasingly common for parties involved in property settlement disputes to be fighting over property with a net negative value or, in extreme cases, for one party to be declared bankrupt.

Despite common perception, a spouse being declared bankrupt in the middle of court proceedings for property settlement does not automatically end the proceedings or mean that the bankrupt’s assets are put out of reach of the other spouse in a property settlement.

BACKGROUND

Administrators were appointed to a company and as a result, the company entered into a Deed of Company Arrangement (DOCA). 

After the DOCA had been entered into, a secured creditor who had abstained from voting on the decision of whether the company should enter into the DOCA, purported to appoint an administrator under its security. 

The deed administrators sought a declaration from the Court that the second administration should be terminated (amongst other things). 

DECISION

In March 2015, the High Court delivered its judgment in Grant Samuel & Ors v Fletcher & Ors[2015] HCA 8, and unanimously overturned the decision of the New South Wales Court of Appeal, in holding that liquidators cannot rely on the procedural court rules of a State or Territory, to extend the time within which to commence voidable transaction proceedings, under section 588FF(3)(a) of the Corporations Act 2001 (“the Act”).

HOW THE GAME UNFOLDED

The Federal Court’s decision in Commissioner of Taxation v Warner [2015] FCA 659 has clarified that the Australian Taxation Office’s (ATO) coercive powers requiring a taxpayer to produce documents and information to the ATO prevail over section 486 of the Corporations Act 2001 (Cth) (CA) (section 486 provides that a Court order must first be obtained before a creditor is authorised to inspect the books of a company).

This week’s TGIF considers a decision in which the court appointed an additional liquidator to conduct further investigations alongside the incumbent liquidators in a creditors’ voluntary winding up.

WHAT HAPPENED?

On 18 July 2014, liquidators were appointed to Ambient Advertising Pty Ltd (Ambient) pursuant to the resolution of creditors under section 439C(c) of the Corporations Act 2001 (Cth).

In Austcorp Project Number 20 Pty Ltd v The Trust Co (PTAL) Limited, in the matter of Bellpac Pty Limited (Receivers and Managers Appointed) (in liq) [2015] FCA 850, the Federal Court of Australia had to determine whether to dismiss the proceedings for failure to comply with previous orders for security for costs, or vary those orders for security. The basis upon which the Court made the orders for security in the first place is set out in Austcorp Project Number 20 Pty Ltd v LM Investment Management Ltd [2014] FCA 1371, and was canvassed in an ear

Key Points:

A section 439A report must contain all material information which is known or reasonably ascertainable by administrators.

Victorian Supreme Court confirms that an application to set aside a statutory demand can be served electronically, and the Court’s evaluation of a genuine dispute concerns the establishment of a genuine level of claim, and not the likely result of the claim.

Background

In so far as they relates to creditor's statutory demands, the provisions of the Corporations Act 2001 (Cth) are construed by the courts particularly prescriptively.

On 5 June 2015, His Honour Justice Brereton delivered judgment in In the matter of Unity Resources Group Australia Pty Limited [2015] NSWSC 1174. This is another example of the technical application of these sections by the court.