Banking and Finance Update - Week Ending 27 February 2009

Charges mount for alleged conman
Alleged Melbourne conman Gabrial Pennicott, who fled Australia more than four years ago owing investors up to $20 million, will be tried on 47 charges. The former fugitive and his business partner, Jan Li, have been committed to stand trial in the Melbourne County Court over a string of collapsed property development schemes that lured investors via "wealth-creation seminars (21 February 2009)
http://www.theaustralian.news.com.au/story/0,25197,25085239-5006785,00.html

Foreign banks make no promises to support Australian market
At least one foreign bank has decided to pull out of Australia and others have told Treasury they can give no guarantee of their continued support for Australian borrowers.
http://www.theaustralian.news.com.au/story/0,25197,25108044-5013404,00.html

Twelve month jail sentence for compo fraud
An orthopaedic surgeon has sentenced to 12 months jail after defrauding WorkSafe Victoria of more than $153,000 in workers compensation payments. The surgeon pleaded guilty to five charges of obtaining property by deception under the Crimes Act 1958.  (26 February 2009)
http://www.safetowork.com.au/Article/Twelve-month-jail-sentence-for-compo-fraud/469049.aspx

AACo deals are worth a look at by the ASX
The Australian Securities Exchange should take a look at the incestuous round-robin of transactions easing the departure of Futuris Corporation from the share register of Australian Agricultural Co.
http://www.theaustralian.news.com.au/business/story/0,28124,25107003-16941,00.html

Case Note: The fiduciary nature of the bona fide and proper purposes duties of company directors: Bell Group Ltd (in Liq) v Westpac Banking Corp (no 9)
Author: Rosemary Teele Langford
Source: Australian Bar Review, Vol 31, No 3, February 2009: p326-344

Using liquidated damages clauses in Australian Standard Contracts
Author: Michael Hollingdale, Robert French
Source: Australian Construction Law Bulletin, Issue 9, February 2009: p91

(B) Practice Notes / Directions

Proposals to facilitate equity capital raising
ASIC has issued a consultation paper which considers measures to facilitate capital raising, building on existing exemptions in the law. ASIC is seeking comment on the proposals in Consultation Paper 105 Facilitating equity capital raising (CP 105). The proposals in this consultation paper add to proposals considered under Consultation Paper 103 Review of share purchase plan threshold, which contemplate changes to the existing thresholds around share purchase plans relief, further expanding investment opportunities for retail shareholders. Comments on the consultation paper are due by 30 March 2009.

Small Business and General Business Tax Break - Draft Legislation
Draft legislation and explanatory materials for the Small Business and General Business Tax Break announced as part of the Government's $42 billion Nation Building and Jobs Planhave been relased for Public Comment. The Government is delivering this Tax Break because it will give businesses a vital incentive to invest for the future with confidence. Small Business and General Business Tax Break – Consultation (25 February 2009)
http://www.treasurer.gov.au/displaydocs.aspx?doc=pressreleases/2009/018.htm&pageID=003&min=wms&Year=&DocType=0

Guidance for Non-Profit Organisations on Counter-Terrorism Financing
The Attorney-General's office has issued guidance for non-profit organisations on counter-terrorism finance measures. This outlines Best Practice Principles which NPOs can undertake to reduce this risk and assists NPOs to understand and comply with legal requirements in relation to terrorism financing.
Dwnload the guidance, click here.

Commonwealth Investor Class Actions conference
The Federal Court of Australia in Sydney and Melbourne will host an Investor Class Actions conference on 10 March 2009 with guest speakers including Professor Geoffrey P Miller from NYU, Professor Tyrone Carlin and Dr Peter Cashman (Adjunct Professor) Sydney University with an introduction by the Chief Justice, the Hon M E J Black AC.
Details and registration form can be downloaded from the Court's website. (further information)
http://www.fedcourt.gov.au/new/new_announcements.html

(C) Legislation

Western Australia

BDT Holdings Pty Ltd v Piscopo [2009] FCA 151
Applicant’s consideration is of the proof of debt - Discovery dispute involved a misapprehension by BDT of the function of the Court on the substance application it has made for a review under s 104 of the Act – BDT should pay cost
http://www.austlii.edu.au/au/cases/cth/FCA/2009/151.html

Deputy Commissioner of Taxation v Neo Rock Pty Ltd [2009] FCA 129
CORPORATIONS - winding up — insolvency —no application by company to set aside demand — leave to oppose winding up under s 459S sought – failure by company to show that proposed ground material to proving solvency – leave refused — company wound up
Corporations Act 2001 (Cth) s 459S  http://www.austlii.edu.au/au/cases/cth/FCA/2009/129.html

G & M Nicholas Pty Limited and Others v Minster for Finance and Deregulation [2009] FCA 121
ADMINISTRATIVE LAW – Procedural Fairness – whether procedural fairness applies to section 33 of the Financial Management and Accountability Act 1997 (Cth) – requirements of procedural fairness
ADMINISTRATIVE LAW – whether failure to consider totality of applicants’ claims

Hurricane Formwork Pty Ltd (In Liquidation) ACN 095 391 423 v Commissioner of Taxation [2009] FCA 133
CORPORATIONS LAW - consideration of an application by a liquidator for an order that the Commissioner of Taxation pay the company in liquidation amounts received as voidable transactions – consideration of an application by the Commissioner for an order that directors of the company pay an amount to the Commissioner by way of indemnity pursuant to s 588FGA(2) of the Corporations Act 2001 (Cth) having regard to ss 588FGA(1), 588FGA(3) and 588FGA(4)
Corporations Act 2001 (Cth), ss 588FA, 588FC, 588FE, 588FF, 588FGA, 588FGB
http://www.austlii.edu.au/au/cases/cth/FCA/2009/133.html

Max Reflectance Investment Pty Ltd v Drazcat Pty Ltd & Ors [2009] QSC 024
PRACTICE & PROCEDURE - summary judgment - CONTRACT - dispute arising pursuant to sale of business – where Heads of Agreement signed 'subject to a formal deed' - whether communications in contemplation of reaching a binding agreement have formed a contract - whether parties intended to form a concluded bargain - extrinsic evidence - nature of sum paid - legal principles discussed.
http://www.sclqld.org.au/qjudgment/2009/QSC/024

Leatherbarrow & The Chief Executive, Office of Fair Trading, Department of Justice And Attorney-General v Paceyard Pty Ltd (In Liquidation), Richard James King (A Bankrupt) & Jillian Maree Caton-King (A Bankrupt) [2009] CCT PC008-08
Claim on fund; application for finance to two financiers in respect of purchase of one vehicle; dealer keeps payment in respect of one, instead of refunding it, as arranged with purchaser
http://www.tribunals.qld.gov.au/PAMD/pamdDecisions/PC008-08%20DEC%2012-02-09.pdf

Simmons & Ors v Jordan Marketing Pty Ltd & Anor [2009] QDC 029
Contract… where buyer defaults and seller elects to affirm and seek specific performance; where buyer does not respond and seller then terminates and seeks forfeiture of deposit, whether seller was bound by its election, whether failure to complete constitutes a continuing default, where seller seeks deposit. http://www.sclqld.org.au/qjudgment/2009/QDC/029

Capital Finance Australia Limited v Brand [2009] QDC 35
Plaintiff has made reasonable attempts to effect personal service of those documents upon the defendant - documents be served by pre-paid post addressed
http://www.sclqld.org.au/qjudgment/2009/QDC/035

Max Reflectance Investment Pty Ltd v Drazcat Pty Ltd & Ors [2009] QSC 024
CONTRACT - dispute arising pursuant to sale of business – where Heads of Agreement signed 'subject to a formal deed' - whether communications in contemplation of reaching a binding agreement have formed a contract - whether parties intended to form a concluded bargain - extrinsic evidence - nature of sum paid - legal principles discussed.
http://www.sclqld.org.au/qjudgment/2009/QSC/024

Perpetual Trustees Victoria Limited v Peter Van den Heuvel & Anor [2009] NSWSC 57
Mortgage - signatures of one joint tenant forged by the other joint tenant on loan agreement and mortgage - whether money was advanced pursuant to the mortgage and loan agreement
service of s 57(2)(b) notice on innocent party - real property  - effect of registration of forged mortgage - extent of the mortgagee's interest in the property  -whether relief under Contracts Review Act and Consumer Credit Code - entitlement of innocent party to compensation from the Torrens Assurance Fund http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/57.html

Jameson v Professional Investment Services Pty Ltd [2009] NSWCA 28
CORPORATIONS – financial services and markets – disclosure – product disclosure statement – s1012A, s 1013D(1)(c), s 1013E Corporations Act 2001 (Cth)
CORPORATIONS – managed investment – issue of proscribed interest – unregistered scheme – s 601ED Corporations Act 2001 (Cth)
CORPORATIONS – financial services and markets – market misconduct and other prohibited conduct – misleading and deceptive conduct – representation as to effect of guarantee – s 947C(2)(b), s 947C(3), s 953A(1)(b)(ii) Corporations Act 2001 (Cth) – s 12DB(g) Australian Securities and Investments Commission Act 2001 (Cth) – s 53(g) Trade Practices Act 1974 (Cth)
PROCEDURE – Supreme Court Procedure – New South Wales – Procedure under rules of court – parties - representative proceedings – “substantial common issue of law or fact” – Uniform Civil Procedure Rules 2005 r 7.4 (1)(a)(iii)
PROCEDURE – Supreme Court Procedure – New South Wales – Procedure under rules of court – parties – representative proceedings – discretion to otherwise order that proceedings not be carried on as representative proceedings – common issues – legitimacy of “opt in” definition of group – access to justice – Uniform Civil Procedure Rules 2005 r 7.4(2)
http://www.austlii.edu.au/au/cases/nsw/NSWCA/2009/28.html

Blue Hills Village Management (Liverpool) Pty Ltd v Babcock & Brown International Pty Ltd [2009] NSWSC 87
CORPORATIONS - winding up - statutory demand - application for order setting aside - debt for costs in other proceedings ordered to be paid forthwith - whether substantial and genuine claims in those other proceedings against party with benefit of debt for costs is "offsetting claim" - whether statutory demand an abuse of process
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/87.html

ASIC v Matthews [2009] NSWSC 77
PROCEDURE - contempt - alleged contravention of permanent injunctions - construction of orders - CORPORATIONS - conduct relating to solicitation of investment in securities - "undertake" a "business" - content of such business
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/77.html

Re Commonwealth Bank of Australia [2009] NSWSC 81
PROFESSIONS AND TRADES - Lawyers- Costs- How far secured- Whether an unsecured creditor with a judgment debt can have monies owed to it paid out of court. REAL PROPERTY - Joint tenancy- Severance- Where there is a surplus on the sale by a mortgagee of property held under joint tenancy, that surplus is held under joint tenancy
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/81.html

Lykouressis v Lykouresis & Ors [2009] NSWSC 80
DECEIT – First Defendant induced deceased to lend money to company to start a business when First Defendant had no intention that company would carry on business – First Defendant withdrew loan monies from company for benefit of himself and family.
HELD: First Defendant liable in deceit
DIRECTORS’ DUTIES – First Defendant breached statutory and equitable duties as director – DERIVATIVE CLAIM – LEAVE TO PROCEED – administratrix of deceased’s estate sought leave under CA s 237 to bring suit in company’s name against First Defendant’s family who had withdrawn money from company’s account – relief sought related only to status of administratrix as secured creditor of company, not to status as shareholder.
HELD: Application for leave not “in good faith” – leave refused
COSTS: successful Defendants were guilty of dishonest conduct – claim against them failed only because Plaintiff had not appointed receiver who could have sued in company’s name without leave – successful Defendants deprived of costs order.
Corporations Act 2001 (Cth) – s 180(1), s 181(1), s 182(1), s 237, s 420, s 1317H
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/80.html

Director of Consumer Affairs Victoria v Australian Finance Direct Ltd (Credit) [2009] VCAT 129
Credit – application by Director of Consumer Affairs Victoria to have civil penalty imposed on respondent – VCAT found breach of key requirement of Code and decision affirmed on appeal – parties agree on civil penalty amount – whether that amount appropriate and tribunal should make orders accordingly – relevant factors in determining civil penalty – Consumer Credit (Victoria) Code ss15(B), 102, 105 and 106
http://www.austlii.edu.au/au/cases/vic/VCAT/2009/129.html

Re Maryvell Investments Pty Ltd (in liq) [2009] VSC 61
CORPORATIONS – Winding up – Sale of company property by the liquidator – Shareholder claim that property improperly sold for under value – Application by shareholder to terminate the winding up – Application by shareholder for an inquiry into the conduct of the liquidation – Claim by shareholder for damages against the liquidator – Standing of shareholder to claim damages – Applications stayed – ss 237, 471B, 482(1), 511 and 536 Corporations Act 2001.
PRACTICE AND PROCEDURE – Application for stay or dismissal of shareholder claims in interlocutory process – Abuse of process – Issues previously litigated in the Federal Court of Australia – Allegations scandalous and vexatious – Lack of evidence to support interlocutory process – Proceeding stayed - Rule 2.4 Supreme Court (Corporations) Rules 2003, Rule 23.01 Ch 1 Supreme Court (General Civil Procedure) Rules 2005.
PRACTICE AND PROCEDURE – Application to direct Prothonotary not to accept for filing from the plaintiff any originating procedure relating to the sale of the property without the leave of the court – Inherent jurisdiction – Rule 27.06 Ch 1 Supreme Court (General Civil Procedure) Rules 2005.
PRACTICE AND PROCEDURE – Costs – Plaintiff alleges fraudulent and dishonest conduct – No basis for claims – Indemnity costs not awarded.

Roda Australia Pty Ltd v Kaizen Strategic Alliances Pty Ltd [2009] VSC 41
CONTRACT – loan of money to company – whether misleading and deceptive representations made by directors – reliance upon continuing representations