What kind of documents can a liquidator get access to and from whom?

Liquidators have various tools available to locate the assets of a company in liquidation and to trace company monies they suspect may been “siphoned away”.  These tools include applying to the Court for the officers of the company and related entities to “deliver up” various documents and for those parties to then submit to public examination before the Court in respect of the company’s examinable affairs.  The recent Federal Court decision of Cathro, in the matter of Lidcombe Plastering Services Pty Limited (in liq) [2018] FCA 1138 (Cathro) considered the power to compel a related entity to produce documents relevant to the liquidation of a company prior to a public examination.     [Read more…]

Safe Harbour granted to proactive Directors of an insolvent company who are not merely ‘living in hope’

Amendments to the Corporations Act 2001 (Cth) (Corps Act) introducing the safe harbour insolvency provisions come into effect on 1 July 2018.   Under section 588G of the Corps Act a director of a company may be personally liable for debts incurred by the company if at the time the debt is incurred there are reasonable grounds to suspect the company is insolvent.  The section 588GA safe harbour provisions aim to encourage directors to remain in control of a business in financial difficulty and to take reasonable steps, outside of a formal insolvency process, to restructure and / or allow it to trade out of its difficulties in anticipation that such action will achieve a better outcome for the company than immediately appointing an administrator or liquidator.  The provisions encourage directors to closely monitor the financial position of the business, engage early with financial distress and then actively take steps to either restructure the business or, if that is not possible, to move quickly to formal insolvency.   [Read more…]

Implications of non-compliance with the Building and Construction Commission Act (QLD) 1991

At common law there is no requirement for an enforceable contract to be in writing or for it to be accepted in the same way.  It is not uncommon for a contract to be wholly oral, or even partly written and partly oral.  Similarly, acceptance or entry into a contract (be it written, oral, or partly written and partly oral) does not have to be in writing but can be by conduct which evidences acceptance of the contractual offer made.

A simple example is a request for a quote to supply “widgets”, the supplier says they can supply the widgets but requires a 10% deposit and the buyer pays the deposit.  The buyer may not have spoken words to the effect that the quoted price has been accepted, but the conduct in paying the deposit evidences acceptance.  [Read more…]

Ipso facto clauses lose effectiveness post 1 July 2018

Standard form termination clauses such as “ipso facto clauses” (Ipso Facto Clauses) will need to be drafted with greater care in commercial contracts entered into after 1 July 2018.  The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act 2017 (Amending Act) was passed amending the effectiveness of Ipso Facto Clauses that are “self-executing provisions” (Self-executing Provisions).

This legislation also enacted the “safe harbour provisions” (Safe Harbour Provisions), which generally attempts to provide directors with some protection against liability for insolvent trading in certain situations if they are attempting to restructure the business.

[Read more…]

Interlocutory injunctions in patent disputes

An injunction is a Court order directing a person or entity to do a specific thing or refrain from doing something.  Whilst an injunction in itself can amount to final relief in litigious matters, it can also be sought on an interlocutory or temporary basis (Interlocutory Injunction).  This applies where a temporary remedy is sought to maintain the status quo until the larger legal issues can be heard at trial.

In matters relating to the infringement of a patent, an injunction may be sought by the patent owner (Applicant) to stop a defendant (Respondent) from doing the acts the patent owner alleges infringe the patent, until the Court has had the opportunity to determine whether or not the patent has been infringed.  In this article we consider Interlocutory Injunctions in patent matters and how the tests differ from non-patent matters. [Read more…]

What is security for costs?

The reality of any litigious proceedings is that they cost money (sometimes, lots of money).  Where a party is successful in the proceeding; whether that be successfully proving the claim (Plaintiff) or defending it (Defendant), that party will generally be entitled to their ‘costs’.  Costs refers to the legal expenses incurred by the successful party in prosecuting or defending the claim (as the case may be).  Where a Defendant successfully defends a claim, they may be placed in the frustrating circumstance of facing a Plaintiff who does not have sufficient money to pay the Defendant’s costs.  In this article we consider a Court order designed to alleviate this problem – a security for costs order. [Read more…]

Offers to settle: Federal Court Rules c.f. Calderbank offers

In litigation, an offer to settle is an offer by one party to the other to settle the dispute out of Court.  There are numerous advantages to settling a matter out of Court, including reduced legal fees, finality of proceedings and confidentiality of result.  A key issue for litigants when making or receiving an offer to settle is to understand the potential legal costs consequences of rejecting the offer.  In this article, we consider offers to settle in the Federal Court of Australia under both the common law and the Federal Court Rules 2011 (Cth) (Rules).

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What is an injunction?

An injunction in its simplest form is a Court order directing a person or entity to do a specific thing (Mandatory Injunction) or, more commonly, to not do a specific thing (Prohibitory Injunction).  Whilst an injunction in itself can amount to final relief in a matter, it is generally sought on an interlocutory basis (Interlocutory Injunction) which is where a temporary remedy is sought to maintain the status quo until the larger matter can be heard.  If a temporary order is granted it will generally become permanent if the applicant is successful in the larger claim. [Read more…]

Purchase Money Security Interests (PMSIs) and super priority

The general rule for resolving competing security interests is, in a general sense, first in best dressed.  In other words, a perfected security interest will take priority over all other security interests perfected after it.  There are of course certain exemptions to this principle, with one major exemption being the “super priority” enjoyed by purchase money security interests (PMSIs). [Read more…]

Vesting of unperfected security interests on liquidation – register or perish!

Under section 267(2) of the Personal Property Securities Act 2009 (Cth) (PPSA), a security interest granted by a company or individual (Grantor) in favour of another (Secured Party), may, if it is not previously perfected, upon insolvency or bankruptcy of the Grantor (as the case requires), vest with the Grantor and not the Secured Party.   In other words you may lose the property which is subject of the unperfected security interest! [Read more…]

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