What you need to know

The High Court has decided not to hear an appeal about the ability of the Linc Energy Limited (Linc Energy) liquidators to disclaim property of the company - this means the liquidators could disclaim that property, including any obligations under the specific environmental protection order (EPO) issued under Queensland's environmental legislation. The current position stands that the disclaimer notice had the effect of avoiding obligations of both the company and its liquidators under the EPO.

This week’s TGIF considers the decision in Mujkic Family Company Pty Ltd v Clarke & Gee Pty Ltd [2018] TASFC 4, which concerns a rather novel issue – whether a solicitor acting for a shareholder might also owe a duty of care to the company in liquidation.

What happened?

In 2015, the Supreme Court of Queensland ordered that the corporate trustee of a family trust be wound up.

The Commonwealth has released an exposure draft of the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018 (Bill) for consultation which will make key amendments to the Corporations Act 2001 (Cth) (Corporations Act). The Bill strengthens the current provisions aimed to deter companies from diverting assets to avoid the payment of employee entitlements on insolvency. The proposed changes will impact:

The High Court recently handed down its much anticipated judgment in Mighty River International Limited v Hughes, confirming that deeds of company arrangement which have the effect of extending the administration period can be valid under the Corporations Act 2001 (Cth) (the Act).

Key takeaways

The Western Australian Court of Appeal has ruled that giving security to a Bank does not destroy mutuality for the purposes of statutory set-off if the security allows the debtor to use assets to pay its debts in the ordinary course of business.

The dialogue is changing yet is the law enabling the practical change Directors need?

Achieving significant cultural shift in any business environment is no easy task, so it’s by no means ground-breaking to declare that after 1 year in operation, it still cannot be said that the new “Safe Harbour” legislation has resulted in a cultural change among directors.

What you need to know

The Court of Appeal - Supreme Court of Western Australia has confirmed that the existence of a general security interest does not of itself destroy mutuality between a company in liquidation and its creditors and as a consequence section 553C of the Corporations Act 2001 (Cth) (Corporations Act) can apply to allow a creditor to set-off its debts against amounts owed to the company in liquidation.1

In a comprehensive unanimous decision, the Court of Appeal confirmed the following propositions:

This week on Wednesday 12 September 2018, the High Court of Australia, by a majority judgment (3:2 Kiefel CJ, Edelman and Gaegler JJ concurring), handed down their decision in Mighty River International Limited v Hughes [2018] HCA 38. The majority of the Court held that holding DOCAs, which are deeds of company arrangement that provide additional time for administrators to undertake their investigations, are consistent with the object of Part 5.3A of the Corporations Act 2001 (Cth) and do not contravene any provision of that Part.

On 1 July 2018, the stay on ipso facto clauses introduced by the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 (Act) came into effect and will apply to contracts entered into on or after that date. The Act, left a number of issues up in the air which were expected to be filled by regulations. Those regulations, and a declaration, were released in late June 2018, providing little time for contracting parties, and their advisors, to understand how the new laws would impact them before their commencement.

The Stay

What are your responsibilities if there is a change to your company’s registered office?

The Corporations Act 2001 (Cth) (the Act) sets out an exhaustive (and even onerous) list of duties for Australian registered companies and their directors. Among these is the duty to notify the Australia Securities and Investment Commission (ASIC) of a change to the company’s registered office. This must be done within 28 days of the change in location.