Part X Overhauled to Defeat Dodgy Debtors 25/3/2004

Increased Accountability for NT Associations 18/3/2004

ASIC has Property Development Companies Wound Up 5/3/2004

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Imagine if it was possible to link a cited case, mentioned in a Word document or judgment you're reading, to its case history and full text. CiteLink is an exciting new tool available exclusively on Westlaw Australia that enables you to do this. It will make your eyes light up!
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What is Insolvency?
By Paul Nicols of Allens Arthur Robinson
The Corporations Act defines a person which is not solvent as being insolvent. The enquiry which should be made under the section to ascertain whether a company is insolvent is as follows: Is the company able to pay all of its debts as and when they become due and payable?

What is a Debt and When is One Incurred?
By Paul Nicols of Allens Arthur Robinson
There is no definition of "debt" within the Corporations Act. There is no "quick and fast" rule of what constitutes a debt as its meaning varies according to the type of transaction in question. This article discusses corporate debts and when they are incurred for the purposes of insolvent trading considerations.

To Whom do Directors' Duties Apply?
By Paul Nicols of Allens Arthur Robinson
The law imposes a wide range of duties and responsibilities on directors and other officers. However, the law on "who can be considered a director" is far from settled.

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Below is a selection of cases for the last week. Click here for more cases .

Patane v Asteron Life Ltd (formerly Royal Sun Alliance Financial Services Ltd), [2004] FCA 232 RTF
BANKRUPTCY - appeal from a decision of Federal Magistrate dismissing application for review of Registrar's decision refusing application to set aside bankruptcy notice - whether appellant had 'counter-claim, set-off or cross demand equal to or exceeding the amount' in the bankruptcy notice - claim under policy of insurance brought in District Court - date at which quantum of 'counter-claim, set-off or cross demand' should be calculated for purposes of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) - appeal dismissed.Federal Court Rules O 77 r 7Federal Magistrates Court Rules r 20.00A, r 20.03Bankruptcy Act 1966 (Cth) ss 40(1)(g), 41(7), 41(6A)Insurance Contracts Act 1984 (Cth)District Court Act 1991 (SA)Patane v Royal Sun Alliance Financial Services Ltd [2003] FMCA 128 affirmedPatane v Associated National Life Insurance [2000] SADC 60 referred toAssociated National Life Insurance Co and Tyndall Life Insurance v Patane [2000] SASC 443 referred to In re GEB, a debtor [1903] 2 KB 340 citedIn re a Bankruptcy Notice (1934) Ch 431 citedGuss v Johnstone (2000) 171 ALR 598 discussedMoss and Moss v Sun Alliance (1990) 55 SASR 145 referred toSettlement Wine Company Pty Ltd v National General Insurance Co Ltd (1994) 62 SASR 40 followedTatt v NRMA Insurance Ltd (1988) 5 ANZ Insurance Cases 75,196 referred toCIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 citedElilade Pty Ltd v Nonpareil Pty Ltd [2002] FCA 909 citedRe Schmidt; Ex parte Angelwood Pty Ltd (1968) 13 FLR 111 distinguished

Wenkart v Pantzer (No 8), [2004] FCA 280 RTF
PRACTICE AND PROCEDURE - objection to jurisdiction - bankrupt applies for order compelling trustee in bankruptcy to call meeting of creditors to consider proposal by bankrupt under s 73 of the Bankruptcy Act 1966 (Cth) - if proposal accepted by special resolution of creditors, bankruptcy would be annulled by operation of s 74(5) of Act - question of protection of trustee's entitlement to remuneration - question of Court's power under s 74(6) to impose terms and conditions on reverter of title of 'property of the bankrupt' to bankrupt on annulment - whether Court could make part of that property subject to a charge in favour of trustee as security for his remuneration - bankrupt and trustee compromise proceeding - as part of compromise bankrupt charges a particular property in favour of trustee as security for trustee's entitlement - meeting called, creditors pass special resolution accepting proposal, bankruptcy annulled - subsequent disputes between former bankrupt and former trustee - former trustee applies by motion in the proceeding for appointment of trustee for sale of the property charged - whether Court has jurisdiction to enforce the charge - whether it can do so by appointing trustee for sale.BANKRUPTCY - objection to jurisdiction - bankrupt applies for order compelling trustee in bankruptcy to call meeting of creditors to consider proposal by bankrupt under s 73 of the Bankruptcy Act 1966 (Cth) - if proposal accepted by special resolution of creditors, bankruptcy would be annulled by operation of s 74(5) of Act - question of protection of trustee's entitlement to remuneration - question of Court's power under s 74(6) to impose terms and conditions on reverter of title of 'property of the bankrupt' to bankrupt on annulment - whether Court could make part of that property subject to a charge in favour of trustee as security for his remuneration - bankrupt and trustee compromise proceeding - as part of compromise bankrupt charges a particular property in favour of trustee as security for trustee's entitlement - meeting called, creditors pass special resolution accepting proposal, bankruptcy annulled - subsequent disputes between former bankrupt and former trustee - former trustee applies by motion in the proceeding for appointment of trustee for sale of the property charged - whether Court has jurisdiction to enforce the charge - whether it can do so by appointing trustee for sale.FEDERAL COURTS - objection to jurisdiction - bankrupt applies for order compelling trustee in bankruptcy to call meeting of creditors to consider proposal by bankrupt under s 73 of the Bankruptcy Act 1966 (Cth) - if proposal accepted by special resolution of creditors, bankruptcy would be annulled by operation of s 74(5) of Act - question of protection of trustee's entitlement to remuneration - question of Court's power under s 74(6) to impose terms and conditions on reverter of title of 'property of the bankrupt' to bankrupt on annulment - whether Court could make part of that property subject to a charge in favour of trustee as security for his remuneration - bankrupt and trustee compromise proceeding - as part of compromise bankrupt charges a particular property in favour of trustee as security for trustee's entitlement - meeting called, creditors pass special resolution accepting proposal, bankruptcy annulled - subsequent disputes between former bankrupt and former trustee - former trustee applies by motion in the proceeding for appointment of trustee for sale of the property charged - whether Court has jurisdiction to enforce the charge - whether it can do so by appointing trustee for sale.Bankruptcy Act 1966 (Cth) ss 27, 30, 73, 74, 75, 162Federal Court of Australia Act 1976 (Cth) ss 19, 22Judiciary Act 1903 (Cth) ss 39B(1A)(c), 79Re Wong; Ex parte Robinson [1995] FCA 805 referred toRe Love; Hill v Spurgeon (1885) 29 Ch D 348 citedRe Beddoe; Downes v Cottam [1893] 1 Ch 547 citedAdsett v Berlouis (1992) 37 FCR 201 citedMayne v Jaques (19

Maher v Commonwealth Bank of Australia, [2004] FCA 248 RTF
PRACTICE AND PROCEDURE judgment made in absence of party application to set aside principles to be applied LEASES AND TENANCIES tenant at sufferance whether can maintain action for trespass or assault and battery against mortgagor where tenancy post-dates mortgage whether mortgagor entitled to possessionBANKRUPTCY lease executed during bankruptcy whether vests in trustee abandonment by trustee Bankruptcy Act 1966 (Cth) ss58(1)(b), 116(2) Transfer of Land Act 1958 (Vic), ss42(2)(e), 66(2), 76Federal Court Rules O 32 r 2(2)Australia and New Zealand Banking Group Ltd, Re [1993] 2 Qd R 477 referred to Britannia Building Society v Earl [1990] 1 WLR 422 citedCity Mutual Life Assurance Society Ltd v Lance Creek Meat Works Pty Ltd [1976] VR 1 citedCommonwealth Bank of Australia v Baranyay [1993] 1 VR 589 citedCommonwealth Bank of Australia v Figgins Holdings Pty Ltd [1994] 2 VR 505 citedCommonwealth v Orr (1981) 37 ALR 653 cited Dudley District Benefit Society v Emerson [1949] Ch707 cited Edmonds Juddv Official Assignee [1999] NZCA 283 discussedEvansv Bartland [1937] AC 473 referred toFisherv Giles (1829) 5 Bing 421; 130 ER 1123 cited Grahamv Peat (1801) 1 East 224; 102 ER 95 consideredHarrisonv Murrell (1837) 8 CP 134; 173 ER 430 cited Jonesv Chapman (1849) 2 Exch 803; 154 ER 717 cited Keechv Hall (1778) 1 Doug KB 21; 99 ER 17 cited Lauv Citic Australia Commodity Trading Pty Ltd [1999] VSCA 34 citedMaher v Commonwealth Banking Corporation [2002] FCAFC 104 followed Moss v Gallimore (1779) 1 Doug KB 279; 99 ER 182 cited Quennell v Maltby [1979] 1 WLR 318 cited Randallv Stevens (1853) 2 EB 641; 118 ER 907 citedReevesv Davies [1921] 2 KB 486 appliedRobyv Maisey (1828) 8 BC 767; 108 ER 1228 cited Rogers v Humphreys (1835) 4 AD E 299; 111 ER 799 cited Tarn v Turner (1888) 39 Ch D 456 cited Taylor v Ellis [1960] Ch 368 cited United Starr-Bowkett Co-operative Building Society v Clyne [1968] 1 NSWR 134 citedWeaverv Belcher (1803) 3 East 449; 102 ER 669 cited Wilson v Kelly [1957] VR 147 citedColes Ejectment, 1857Fisher and Lightwoods Law of Mortgage, 10th ed, 1988Foas General Law of Landlord and Tenant, 8th ed, 1957Halsburys Laws of England, 4th ed, vol 27.1, 1981P Butt, Can a lessee of Torrens title land redeem a mortgage given by the landlord? (1994) 68 ALJ, 899

Coshott v Principal Strategic Options Pty Ltd, [2004] FCAFC 50 RTF
BANKRUPTCY - Whether loss attributable to the making of an order under s 50 of the Bankruptcy Act 1966 (Cth)Bankruptcy Act 1966 (Cth) s 50Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 appliedCubillo v Commonwealth (2001) 112 FCR 455 appliedMcNamara v Langford (1931) 45 CLR 267 citedNational Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 601 citedWater Board v Moustakas (1988) 180 CLR 491 appliedSpry, Equitable Remedies (6th ed, 2001)Dal Pont and Chalmers, Equity and Trusts in Australia and New Zealand (2nd ed, 2000)

Mathers and Anor v Commonwealth of Australia, [2004] FCA 217 RTF
CORPORATE INSOLVENCY - whether penalty imposed under s 76 Trade Practices Act 1974 (Cth) admissible to proof against insolvent company - whether contravention of ss 46 or 47 of the Trade Practices Act constitutes an 'offence against a law' within the meaning of s 553B Corporations Act 2001 (Cth) WORDS AND PHRASES - 'offence' - 'offence against a law' Corporations Act 2001 (Cth) s 553BTrade Practices Act 1974 (Cth) ss 46, 47, 76Bankruptcy Act 1966 (Cth) s 82(3)Re Bradbury; Ex parte The King; Official Receiver (1931) 3 ABC 204 approvedRe Pascoe; Ex parte Trustee of the Bankrupt v Lords Commissioners of HM Treasury [1944] 1 Ch 310 consideredRe Curtis; Ex parte The Deputy Commissioner of Taxation; the Official Receiver [1951] St R Qd 240 consideredVictoria v Mansfield (2003) 199 ALR 395 at [32] appliedKingswell v The Queen (1985) 159 CLR 264 at 276 appliedBrown v Allweather Mechanical Grouting Co Ltd [1954] 2 QB 443 at 447 appliedCEO Customs v Labrador Liquor Wholesale Pty Ltd (2003) 201 ALR 1 applied

Australian Prudential Regulation Authority v Rural and General Insurance Ltd, [2004] FCA 185 RTF
CORPORATIONS - winding up - voluntary administration - company placed in voluntary administration after commencement of winding up application - whether leave to proceed with winding up proceeding requiredSTATUTES - interpretation - generalia specialibus non derogantCorporations Act 2001 (Cth) ss 440A, 440DGIO Workers Compensation (NSW) Ltd v Primbee Pty Ltd (2003) 21 ACLC 1481 discussedHall v Mercury Information Technology (South Australia) Pty Ltd [2002] FCA 272, (2002) 20 ACLC 496 not followedLubavitch Mazal Pty Ltd v Yeshiva Properties No 1 Pty Ltd (2003) 47 ACSR 197 referred toYoung v Sherman (2002) 20 ACLC 149 referred to

Jarbin Pty Ltd v Clutha Ltd (In Liq), [2004] NSWSC 28 RTF
CORPORATIONS - winding up - litigation funder purchases debts and notes of company in liquidation, finances litigation by that company - litigation settles and funder seeks preferential distribution of the proceeds under section 564 Corporations Law - whether any significance in vendors of debts and notes to financier receiving a higher proportion of the face value of those debts and notes than the dividend declared in the winding up - how financier's costs of becoming a creditor ought be treated - consideration of factors relevant to manner of distribution of settlement sumACTS CITED: Bankruptcy Acts Amendment Act 1896 (NSW)Bankruptcy Act 1898 (NSW)Bankruptcy Act 1924 (Cth)Bankruptcy Act 1966 (Cth)Bankruptcy Amendment Act 1980 (Cth)Bankruptcy Amendment Act 1985 (Cth)Companies Act 1899Companies Act 1936Companies Act 1961Companies Act 1981Corporations LawDECISION: No significance in vendors of debt and notes receiving higher percentage return on their debt than the dividend declared in the liquidation. Financier's costs of acquiring debt not treated as an expense for purposes of section 564. Net proceeds divided between financier and other creditors 50/50.

Re HIH Insurance Group Ltd (In Liq), [2004] NSWSC 20 RTF
CATCHWORDS: CORPORATIONS [286] - Winding up - Liquidators - Rights and powers - In winding up by Court - Power to enter into agreement on company's behalf - Necessity for approval if performance of contract may extend beyond 3 months - Approval by Court - Basis on which discretion may be exercised - Relevant considerations - Necessity for approval of compromise of debt greater than $20,000. ACTS CITED: Corporations Act 2001 (Cth) s 477(2A) (2B)

Qunilivan v Prentice and Anor, [2004] FMCA 1 RTF
BANKRUPTCY Income contributions surplus contributions paid by bankrupt to the trustee payments made in advance of income contribution assessments whether the trustee is entitled to retain the surplus contributions the trustee is entitled to retain surplus contributions until the process of making income contribution assessments is complete thereafter the funds could only be retained if the funds could be treated as a voluntary contribution the funds were not a voluntary contribution they were paid under a mistake and should now be disbursed as the bankrupt intended.Bankruptcy Act 1966 (Cth), ss.82, 134, 139K, 139P, 139W, 139WA, 139ZH, 178Legal Profession Act 1987 (NSW), s.38FCChallen v Benedeich [1999] FCA 845Codelfa Construction Pty Limited v State Rail Authority of New South Wales (1982) 149CLR 337David Securities Pty Ltd v Commonwealth Bank (1992) 175 CLR 353Ex parte James; In re Condon (1874) LR 9 Ch App 609Hepworth v Hepworth (1963) 110 CLR 309Hypec Electronics Pty Ltd (in liq) v Mead Ors [2003] NSWSC 934Lloyd v Federal Commissioner of Land Tax (1933) 49 CLR 160Macchia v Nilant [2001] FCA 7Muschinski v Dodds (1984) 160 CLR 583Re Gillies; ex parte the Official Trustee in Bankruptcy v Gillies (1993) 42 FCR 571Re Lofthouse (2001) 107 FCR 151Re Tyndall; ex parte Official Receiver (1977) 17 ALR 182In the matter of the bankrupt estate of Sharpe (1998) 80 FCR 536

Shield Mercantile Pty Ltd v Kyriackou (No.3), [2003] FMCA 526 RTF
PRACTICE AND PROCEDURE BANKRUPTCY Costs of witness answering subpoena documents produced non-compliance with requirement for conduct money non-compliance by subpoenaed party with Rule 15.13 of the Federal Magistrates Court Rules relevance of non-compliance common law principles apply party answering subpoena despite absence of conduct money entitled to reasonable costs and disbursements production of documents assists Court amount of costs fixed responsibility of person answering subpoena to do so with minimum amount of costs and expense in answering the subpoena solicitor/client or time based charge out rate not appropriate.

The NSW State Legal Conference (Sydney, 29-31 March)

Undoing the Asset Protection Strategies of Bankrupts Using the Family Law Act (Sydney, 31 March)

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