What’s News - Banking, Financial Services, Insolvency

News

ABA's privacy 'jaw dropper' still the Max Mosley case
There will be few topics at the Australian Bar Association conference that will be more provocative than the planned debate about privacy law. The Australian Bankers Association is also opposed to the commission's plan. The banks fear it will encourage a wave of class actions because, under the ALRC's scheme, "the plaintiff is generally protected from an adverse costs order if the action fails" (06 March 2009)  http://www.theaustralian.news.com.au/business/story/0,28124,25144424-17044,00.html

Domestic market dealing arrangements
The RBA has decided to continue with the recently expanded range of securities eligible for its repurchase operations to include a wider range of private sector securities. These arrangements applied until at least June 2009. Specific details of the eligibility criteria are available on the RBA website at http://www.rba.gov.au/MarketOperations/Domestic/eligible_securities.html.  (03 March 2009)

Foreign raiders threaten banks
Pressure is building on the nation's corporate regulator to renew the ban on short selling shares amid speculation that foreign hedge funds are waiting to pounce and drive down the share prices of the big four banks (03 March 2009)
http://business.smh.com.au/business/foreign-raiders-threaten-banks-20090302-8mdo.html

Cash reserve not our patch, ASIC tells banking regulator
The corporate watchdog has rejected calls from the banking regulator for it to encourage businesses to hold more cash to cushion themselves from the impact of future market downturns (03 March 2009)
http://www.theaustralian.news.com.au/business/story/0,28124,25129521-643,00.html

AIG makes largest loss in US corporate history
AIG, the fallen US insurer, has unveiled a $US62 billion loss - the largest in American corporate history - as it secured a fresh $US30 billion bailout package from the Government (03 March 2009)
http://www.theaustralian.news.com.au/business/story/0,28124,25131374-643,00.html

Four Pillars policy our shield against crisis
The Four Pillars policy has been credited with shielding the Australian banking system from the worst of the global financial crisis (03 March 2009)
http://www.theaustralian.news.com.au/business/story/0,28124,25129410-643,00.html

Scams proliferate in global financial crisis
A new wave of scams sparked by the global financial crisis has significantly increased the chances of Australians falling victim to fraud during 2009, Australasian Consumer Fraud Taskforce Chairman, Mr Peter Kell, has warned (01 March 2009)
http://www.accc.gov.au/content/index.phtml/itemId/862364/fromItemId/142

WTO looking at ways to improve export finance
The World Trade Organisation and the World Bank are looking at the possibility of setting up "liquidity pools" to keep trade flowing in the region as companies struggle to get export finance because of the global economic downturn (04 March 2009)
http://www.cch.com.au/au/News/ShowNews.aspx?ID=29869&Type=F&TopicIDNews=5&CategoryIDNews=0&u_i=59337
 
Call for inquiry into Elderslie
The receivers to the failed Elderslie Finance Corporation have called for a public examination into the group amid revelations it has lost about $125 million (05 March 2009)
http://www.theaustralian.news.com.au/story/0,25197,25140816-5013404,00.html

FSA sued over rogue trader
The Financial Services Authority is facing a multimillion-pound compensation claim from a group of investors who say that the City watchdog failed to stop the activities of a suspected rogue trader (05 March 2009) http://www.timesonline.co.uk/tol/news/uk/crime/article5848036.ece

Tricom Holdings sued by Bell over failed takeover bid
Bell Financial Group is suing Tricom Holdings, in a case linked to Bell's aborted purchase of the margin lender last year (02 March 2009)
http://www.theaustralian.news.com.au/business/story/0,28124,25123529-17044,00.html

St George calls time on indebted chain of pubs
St George the first of the big banks to pull the plug on a major group of hotels, the first of pub administrations in NSW (05 March 2009)
http://www.businessday.com.au/business/st-george-calls-time-on-indebted-chain-of-pubs-20090304-8oj6.html

Interest bill on $8b debt pushes Sydney Airport into the red
Sydney Airport has added to the jitters surrounding the state of its financial health, after it reported a $146 million loss and a blow-out in the interest bill on its $8.1 billion of debt (05 March 2009) http://www.businessday.com.au/business/interest-bill-on-8b-debt-pushes-sydney-airport-into-the-red-20090304-8oj5.html

AML/CTF information to be shared with Canada 
Australia and Canada have recently strengthened their AML/CTF legislation, which has provided both AUSTRAC and FINTRAC with expanded regulatory powers. Both agencies also perform a dual role as regulators and financial intelligence units. AUSTRAC and FINTRAC already share financial intelligence, under one of AUSTRAC’s 53 international instruments for financial intelligence exchange (04 March 2009)
http://www.cch.com.au/au/News/ShowNews.aspx?ID=29882&Type=F&TopicIDNews=7&CategoryIDNews=0&u_i=59337

Minister Sherry Convenes Industry Roundtables to Improve the Quality of Credit Ratings
Senator Nick Sherry, Minister for Superannuation and Corporate Law, has met with banking and finance industry representatives in Sydney to discuss how to improve the usefulness and quality of ratings issued by credit rating agencies. ASIC will be the regulator of credit rating agencies in Australia. Treasury and ASIC will issue a ratings user reform report to Minister Sherry based on the outcomes of the roundtables (05 March 2009) http://minscl.treasurer.gov.au/displaydocs.aspx?doc=pressreleases/2009/019.htm&pageID=003&min=njs&Year=&DocType=0

Super switchers not getting advice
New research conducted by Roy Morgan Research has revealed that few people are gaining professional advice before switching superannuation funds and that, unsurprisingly, declining super returns have made people less satisfied with their existing super funds (05 March 2009)
http://www.moneymanagement.com.au/article/Super-switchers-not-getting-advice/469958.aspx

Funds Freeze Building Approvals
Yet another big fall in building approvals indicates that more policy intervention is required, according to Master Builders Australia (05 March 2009)
http://www.masterbuilders.com.au/index.asp

Australian banks collect '$5b in fees'
Research by Fujitsu Consulting says Australian banks will collect about $5 billion in fees this year, $2 billion of that relates to transaction accounts and $1.5 billion is tied to credit card fees. Australians pay an average of 22 per cent more in bank fees than British customers and 11 per cent more than Americans (05 March 2009)
http://www.abc.net.au/news/stories/2009/03/05/2507742.htm

Articles / Reports

Meltdown fuels financial fraud
Author: Mark Phillips
Source: Lawyers weekly, 27 February 2009: p14-17
Suspicious financial statements, policies and procedures, trends

Feature: Corporate bonus hypocrisy
Author: Caroline Hutchinson
Source: The Daily, 06 March 2009
Chief Sharan Burrow said it best last week, "corporate Australia, it would seem, has lost its moral compass." If senior executive salaries had anything to do with profits or share price, there would have been no bonuses, golden hand shakes or pay rises awarded in 2008.
http://www.thedaily.com.au/blogs/is-it-just-me/2009/mar/06/corporate-bonus/

Senate Estimates Standing Committee on Economics
The Hansard transcript of the Senate Estimates Standing Committee on Economics held on Wednesday 25 February 2009 is now available (04 March 2009)  more info

Upturn in insolvency, restructure advice
A growing number of clients of suburban accounting and legal firms are seeking advice on restructuring and insolvency according to a Deloitte survey. View the full report: http://www.deloitte.com/dtt/article/0,1002,cid%253D249203,00.html
(03 March 2009)

Practice Notes / Directions

ASIC reviews policy on internet discussion sites
ASIC has released a consultation paper on the regulation of internet discussion sites that have commentary about financial products. Consultation Paper 104 Internet discussion sites (CP 104) will help guide ASIC’s review of Regulatory Guide 162 Internet discussion sites (RG 162).
Submissions on the proposals contained in the Consultation Paper CP 104 closes on 27 April 2009 (03 March 2009)

ATM reforms start today
The Australian Bankers’ Association (ABA) advises that bank customers will need to understand how to locate free ATMs, now that ATM reforms have started today. If customers use an ATM which belongs to their bank or a fee-free networked ATM1, they can minimise fees (02 March 2009)
http://www.bankers.asn.au/default.aspx?ArticleID=1296

Have you seen the fee when completing a foreign ATM transaction?
Sydney, 4 March, 2009: The Australian Bankers’ Association (ABA) said some customers will now have experienced seeing a fee disclosed on the screen when completing a foreign ATM transaction. A foreign ATM transaction is when bank customers use an ATM which does not belong to their bank or is not in a networked arrangement1.The changes mean that ATM operators – banks, building societies, credit unions and other ATM deployers - must disclose the fee on the screen2 at the time of the transaction. At that point, customers can choose to proceed and pay, or cancel at no cost (04 March 2009) http://www.bankers.asn.au/default.aspx?ArticleID=1297

RBA leaves cash rate unchanged, settings "appropriate"
The Reserve Bank of Australia (RBA) has left the cash interest rate unchanged, after its monthly board meeting on Tuesday www.rba.gov.au

Short-selling ban extended to end of May
ASIC seeks to justify extension of short-selling ban by citing continued market volatility and the potential damage from predatory practices. ASIC today said it would keep the ban on covered short selling of financial securities in place until 31 May 2009 but will keep this position under review (05 March 2009) Media release: ASIC extends ban on covered short selling of financial securities
http://www.moneymanagement.com.au/article/Short-selling-ban-extended-to-end-of-May/469960.aspx

Legislation

NSW

Proclamations commencing Acts
Fines Further Amendment Act 2008 No 110 (2009-83) — published LW 6 March 2009

Regulations and other statutory instruments
Uniform Civil Procedure Rules (Amendment No 24) 2009 (2009-88) — published LW 6 March 2009

Government
Associations Incorporation Bill 2009

Cases

R.E.B.A. v Low (No.2) [2009] FMCA 142
BANKRUPTCY – Sequestration order – fine and costs imposed in disciplinary proceedings – whether for offence against a law.
BANKRUPTCY – No statement concerning debt agreement – whether formal defect or irregularity.
http://www.austlii.edu.au/au/cases/cth/FMCA/2009/142.html

Yang v Mead & Anor [2009] FMCA 149
BANKRUPTCY – Sequestration order – review – debtor’s petition – where applicant speaks little English – whether petition ought to have been accepted by Official Receiver – whether applicant misled as to the purpose of engaging the trustee and the effect of signing the petition – whether applicant solvent.
http://www.austlii.edu.au/au/cases/cth/FMCA/2009/149.html

Frost v Sheahan (Trustee) [2009] FCAFC 20
BANKRUPTCY – appeal – exercise of Court’s discretion under Bankruptcy Act 1966 (Cth) s 178 – notices of objection to automatic discharge from bankruptcy – power to make such order as court thinks just and equitable – whether primary judge erred in not ordering withdrawal of the notices of objection – substantial compliance with bankrupt’s obligation to provide particulars of income – other discretionary factors Held: appeal dismissed
http://www.austlii.edu.au/au/cases/cth/FCAFC/2009/20.html

Hack & Ors v Kettering Pty Ltd & Ors [2009] QSC 027
EQUITY – TRUSTS AND TRUSTEES – POWERS, DUTIES, and RIGHTS AND LIABILITIES OF TRUSTEES – TRUSTEE-BENEFICIARIES – whether trust deed authorised distribution of capital only upon determination of the trust
http://www.sclqld.org.au/qjudgment/2009/QSC/027

Re Octaviar Ltd; Re Octaviar Administration P/L [2009] QSC 037
CORPORATIONS – CORPORATE FINANCE – CHARGES – PROPERTY CHARGED AND CHAREGABLE – where property charged was “all money, obligations and liabilities that are or may in the future become due, owing or payable … under or in relation to a Transaction Document” – where the inclusion of a document as a “Transaction Document” was subject to agreement in the future – where the parties agreed in writing that a particular document that secured an additional liability was a “Transaction Document” – whether this agreement created a new charge pursuant to s 263 Corporations Act – whether this agreement constituted a “variation in the terms of the [existing] charge” pursuant to s 268(2) Corporations Act
CORPORATIONS – VOLUNTARY ADMINISTRATION – DEEDS OF COMPANY ARRANGEMENT – GENERALLY – where charge is held to be invalid – whether the discretion not to make a declaration of invalidity should be exercised in light of the intended operation of the statutory scheme for company arrangement
http://www.sclqld.org.au/qjudgment/2009/QSC/037

Lombe re Australian Discount Retail Pty Ltd [2009] NSWSC 110
CORPORATIONS - voluntary administration - second meeting of creditors - extension of convening period - whether case for long extension made out - where special factors relevant to sale of business as going concern - one extension already made under s 439A(6) - whether s 439A(6) available to effect second extension - consideration of amendments made by Corporations Amendment (Insolvency) Act 2007 - continued availability of s 447A
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/110.html

Powell v Aymkone Pty Limited [2009] NSWSC 103
TRUSTS and TRUSTEES – Aymkone, Licensed Securities Dealer, received US$310,000 with instructions to invest which identified true owners as Camm and Therrien – reference to Therrien was fictitious – true owner was plaintiff Powell and moneys were impressed with trust for Powell – all funds were paid out on Camm’s instructions – Powell claimed he initiated investment by telling Pooley (principal of Aymkone) on the telephone that Powell was sending the money and limiting the way it was to be invested – on the facts, there was no telephone call to Pooley, Aymkone had no notice of the trust for Powell and was not accountable to him. Proceedings dismissed.
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/103.html

Barkley v Barkley Brown [2009] NSWSC 76
EQUITY – equitable remedies – accounts and inquiries – whether defendant should be ordered to account to deceased’s estate for withdrawals made from deceased’s bank account – whether defendant owed fiduciary duties to the deceased – HELD – defendant acted as deceased’s agent, owed a fiduciary duty to keep accounts and should be ordered to account
EQUITY – general principles – undue influence and duress – whether defendant’s account that withdrawn amounts were gifts from deceased to or for the benefit of the defendant and/or to or for the benefit of the first plaintiff should be accepted – whether relationship between defendant and deceased gives rise to presumption of undue influence – whether presumption displaced by evidence – HELD – relationship such as to give rise to presumption of undue influence – presumption not displaced by evidence – account that withdrawn amounts were gifts not accepted.
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/76.html

Vito Pennimpede v Gerard Pennimpede & 2 Ors [2009] NSWSC 85
MORTGAGES – claim that informal arrangements among brothers gave purchase of 50% interest in land by one brother (Gerard) and wife the character of a mortgage which the other brothers could redeem – on extended consideration of the facts, the transaction was a purchase by Gerard and wife of 50% share as beneficial owners – further disputes of fact relating to character of later disposition and transfer by owner of 25% (Vito) to Gerard and wife and whether Vito could require reconveyance – found he could not. Factual disputes relating to accounting for proceeds of rent Consideration of liability of a co-owner to account
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/85.html

Sanwick v Wily as Trustee of the Bankrupt Estate of Peter Robert Finn & Anor [2009] NSWSC 86
MORTGAGE – construction of mortgage – irregular drafting – held that the mortgage according to its terms did not secure any money to the mortgagee. BANKRUPTCY – avoidance of preferences – consideration of operation of s 120, s 122 and s 123 on irregularly drafted mortgage, granted shortly before bankruptcy to secure debt owed by person other than the mortgagor – HELD – the mortgage was a transfer of property. It was not void under s 122 because the mortgagee was not a creditor of the mortgagor. It was void under s 120
Bankruptcy Act 1966 (Cth)
Conveyancing Act 1919 (NSW)
Real Property Act 1900 (NSW)
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/86.html

Willard King Organisation (1978) Pty Ltd v CT Franchises Pty Ltd [2009] NSWSC 97
CORPORATIONS - winding up - application for winding up in insolvency - statutory demand served but not received - defendant seeks leave to amend notice of appearance to rely on defect in statutory demand and deficiency in accompanying affidavit - whether precluded by s 459S - whether leave should be granted under s 465C - PROCEDURE - subpoenas - whether subpoena too wide
http://www.austlii.edu.au/au/cases/nsw/supreme_ct/2009/97.html

Elders Rural Bank Ltd v Mapplelane Enterprises Pty Ltd [2009] VSC 46
BANKER AND CUSTOMER – claim pursuant to facility agreements and guarantee – allegation of forged signatures – alleged set-off agreement.