The New South Wales Supreme Court case of Forge Group Power Limited (in liquidation) (receivers and managers appointed) v General Electric International Inc [2016] NSWSC 52 provides guidance on the following issues in relation to the Personal Property Securities Act 2009 (Cth) (the PPSR):

When pursuing outstanding owners corporation fees, suing the right person or entity at the right time is critical. 

If you get this wrong, you will not recover any money.

So, who is the owner?

Section 3 of Owners Corporations Act 2006 and the Subdivision Act 1988 state:

“an owner is a person who has an estate in fee simple in the land (except a mortgagee), or is empowered by or under an Act to convey an estate in fee simple in the land in an identified folio under the Transfer of Land Act 1958.”

With the number of companies entering external administration on the rise and the crucial post-Christmas retail trading period nearing an end, it is important for owners to ensure that they fully understand what rights they have to terminate a lease and recover unpaid rent if a tenant goes into external administration and its creditors then vote to enter into a Deed of Company Arrangement (DOCA).

If a tenant is in arrears and a DOCA is in place, can an owner exercise its contractual right to terminate the lease?

The assignment of debts is common in many transactions - from the sale of businesses to restructuring scenarios.

Assigning a debt requires written notice of the assignment being given to the debtor.  Under conveyancing legislation this notice can be given by either the assignor or assignee (for example, section 12 Conveyancing Act (NSW)).

Additional rules now apply for debts captured by the Personal Property Securities Act (PPSA).

Today, by a majority of 3-2, the High Court of Australia in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2015] HCA 48 confirmed that s 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) does not impose an obligation on trustees (including administrators, receivers and liquidators) to retain sufficient moneys from the trust fund to pay tax unless a relevant assessment has been issued.

The important role of standard terms of sale

The standard terms of sale of a supplier can form part of a credit application by its customer, appear on sales invoices or order forms or on the supplier’s website and there are many other combinations of documentation and procedures that can be used to establish written evidence of the terms of the contract between the supplier and its customer. Just as important, there are many reasons why these combinations may come unstuck.

When a buyer’s characteristics can determine whether they are misled about the features of a property

Orchid Avenue Pty Ltd v Hingston & Anor [2015] QSC 42 per McMurdo J

This case highlights the importance of buyers making their own enquiries when purchasing properties for reasons that relate to features external to the property, such as ocean views. 

When a company goes into liquidation liquidators will often try to ‘claw back’ uncommercial transactions. The recent case of 640 Elizabeth Street Pty Ltd (in liq) & Ors v Maxcon Pty Ltd [2015] VSC 22 considered whether securing the indebtedness of a third party to avoid potential litigation exposure is an uncommercial transaction. 

Background facts

The Federal Court has recently handed down a decision that clarifies the power of receivers to administer trust property under a debenture. In Benton, in the matter of Mackay Rural Pty Ltd (Receivers and Managers Appointed) [2014] FCA 1285, the Federal Court confirmed that section 420 of the Corporations Act 2001 (“the Act”) confers upon receivers a power to dispose of trust property, provided that this is necessary for the purpose for which they have been appointed.

FACTS

The recent decision of Australian Building Systems Pty Ltd v Commissioner of Taxation [2014] FCA 116 involves a significant development in the taxation collection obligations of liquidators involved in winding up a company.

In this Alert, Special Counsel Justin Byrne and Solicitor Rachael Nyst discuss the implications of the case in regard to the need to retain an amount from sale proceeds of a property in order to meet capital gains tax (CGT) liabilities.

Key points