What's News in Banking, Financial Services and Insolvency

A survey commissioned by ACI Worldwide has found that more than 15 percent of Australian credit and debit cardholders have been victims of bank card fraud in the past five years. ACI Worldwide, a provider of application software for electronic payments, surveyed 2409 people globally, of which 310 responded from Australia (03 August 2009)

 

Octaviar is heading for oblivion and its former directors are set for a grilling after the Queensland Supreme Court yesterday ordered the one-time financial services giant to be liquidated (03 August 2009)

Advisers could face tougher hurdles to get professional indemnity cover as insurers expect a $300 million claims bill in the next three years resulting from collapses such as Storm Financial, according to an industry expert

A Sydney liquidator, Stuart Ariff, could face allegations ranging from negligence to fraud and could be asked to reimburse more than $4 million during a NSW Supreme Court inquiry into his conduct (28 July 2009)

Across the country, lawyers are preparing for a spike in cases against financial planners in the wake of the global financial crisis. There is no compensation for the stress and pain many investors suffer as a result of bad advice, nor are punitive damages imposed on the adviser (29 July 2009) http://www.theaustralian.news.com.au/business/story/0,28124,25829546-5001942,00.html

A Launceston man has had two and a half years added to his jail term after admitting he defrauded two banks of almost $70,000 (29 July 2009)

The Australian Prudential Regulation Authority (APRA) has successfully taken action in the Supreme Court of South Australia to recover assets for members of the failed Harts Australia Staff Superannuation Fund. APRA Deputy Chairman Ross Jones said that without the power in section 298 of the SIS Act, APRA would not have been able to initiate legal action to recover the amounts owing under the mortgage (29 July 2009)

In light of NAB’s decision to abolish overdrawn fees, Queensland businesses are being encouraged to assess their own penalties accrued over the past six years. Perth-based Financial Redress is the first law firm in Australia to specialise in recovering compensation from financial institutions for excessive charges or mis-selling

The Commonwealth Bank of Australia will hand over documents about devastated Storm Financial customers in a resolution process with lawyers Slater & Gordon. Disclosing documents is part of an agreement reached for a scheme for up to 2500 former Storm clients who had loans with CBA or subsidiary Colonial Geared Investments (30 July 2009)

 

APRA Researchers have raised the spectre of US financial fraudster Bernie Madoff in highlighting flaws in how managed fund performance data is compiled in Australia in a paper “Investment Performance Ranking by Superannuation Firms”. The paper notes that "there are no laws governing the creation, destruction, naming, classifying or performance recording of managed funds", in the US and Australia (30 July 2009)

Multimillion-dollar identity fraud syndicate member have been arrested for allegedly stealing cheques and banking details from letterboxes across metropolitan Sydney. These documents have then been used to produce forms of fake identification, including driver's licences and Medicare cards, which were then used to open bank accounts to launder money (27 July 2009)

HIGH COURT AND FEDERAL COURT –– Federal Court of Australia Act 1976 (Cth) –– s 25(6) –– separate questions –– whether separate questions should be reserved for consideration by a Full Court sitting in the original jurisdiction –– importance of minimising potential for delay and expense –– utility of separate questions –– public interest in the prompt determination of questions concerning administrators’ and creditors’ rights and obligations –– reserving questions for consideration by a Full Court will ensure expeditious resolution of separate questions

CORPORATIONS –– voluntary administration –– deeds of company arrangement –– Pt5.3A Corporations Act 2001 (Cth) –– questions of construction and validity of deed under Pt 5.3A to be decided on a separate question –– clause providing that upon payment under deed creditors release third parties and other creditors from liability –– clauses prohibiting, or providing moratorium inhibiting, creditors from pursuing rights against third parties including statutory rights to enforce charges over insurance money payable in respect of company –– power under Pt 5.3A for deed of company arrangement to provide for creditors to release third parties http://www.austlii.edu.au/au/cases/cth/FCA/2009/784.html

Bankruptcy – Notice – Official Receiver issued notice under s 139ZQ of the Bankruptcy Act 1966 (Cth) ("the Act") asserting certain property transactions void under s 120 of the Act – Notice asserted market value of properties at time of transfer – Failure to comply with notice may result in criminal sanctions under s 139ZT of the Act – Whether notice should be set aside under s 30 or s 139ZS if value stated incorrect.

Bankruptcy – Notice – Whether value in s 139ZQ of the Act value at time of transfer or when notice given.

Practice and procedure – Pleadings – Whether correctness of value traversed in defence or cross-claim – Effect of failure to make specific denial or specific non-admission in pleadings where trial conducted on basis that correctness of value was in issue.

BANKRUPTCY – Practice & Procedure – interim application to transfer proceedings to the Federal Court – applicant seeking to have matter tried before a jury pursuant to s.30(3) of the Bankruptcy Act 1966 (Cth) – application dismissed.

BANKRUPTCY – Sequestration order – application for review.

PRACTICE AND PROCEDURE – Adjournment – interests of justice – self-represented litigant.

PROCEDURE – COSTS – JURISDICTION – PERSONS NOT PARTIES TO PROCEEDINGS – costs against solicitors personally for serious dereliction of duty to the Court – where an ex parte application was made for a freezing order – where the solicitor applying for the order deliberately omitted from the draft order the undertaking as to security contained in the pro forma freezing order contained in Practice Direction 1 of 2007 – where the removal of the undertaking was not disclosed to the Court before the order was made and counsel for the applicants erroneously informed the Court that the draft order followed the form – where the order was later discharged because of the failure to disclose the removal of the undertaking – where costs order made against the applicants on an indemnity basis – where applicants are unlikely to be able to pay the costs order – whether the solicitor engaged in serious dereliction of duty – whether a costs order should be made against the solicitor’s firm

PROCEDURE – where failure to comply with duty of disclosure to the Court on ex parte application for freezing order

PROCEDURE – power to make supplemental order – whether the order is a supplemental order – whether supplemental order is appropriate

 

Brothers Neilson and Brothers Neilson International created fixed and floating charges, originally to Provident Trade Capital Ltd. of which the Challenger interests in these proceedings (Challenger) are the successor in title (the Challenger charges).- El Safty Enterprises Pty Ltd. advanced in excess of $2 million

 

CORPORATIONS - Application to wind up on grounds of oppression and on just and equitable grounds – Company conducted as a quasi partnership – Director in day to day control distributed his share of the profits to himself without distributing other director’s share to him - Partnership broken down – Conduct oppressive – Order for purchase of shares at an agreed value – Sections 233 and 461(e), (f), (g) and (k) of the Corporations Act 2001

 

EQUITY – assignments – parties held charge over assets of a jointly owned company which owned land – transfer of interests in the charge from the respondents to the appellant - whether appellant took absolute title or held the interests on trust for the respondents – no trust document executed – no express trust on face of transfer - equitable estoppel – appellant estopped from asserting that took the interests other than as trustee – failure of underlying business agreement does not stop the operation of the deed of assignment - products of the assignment were royalties from use of land and settlement proceeds from sale of land - appellant held product of assignment on trust proportionately as per the parties’ original intention

EQUITY – assignments – assignment of interest under a mortgage – acquisition of mortgage facilitated potential acquisition of the land by removing mortgager as potential obstacle to sale - equitable estoppel – appellant estopped from asserting that took the interests other than as trustee – product of the assignment held on trust proportionately as per the parties’ original intention

EQUITY – remedies – equitable remedy appropriate in the circumstances

APPEALS – case on appeal not run below

Conveyancing Act 1919 (NSW)

 

ESTOPPEL - promissory estoppel - representations by financier that would not charge interest at default rate - extent of detrimental reliance on representations by borrower

SET-OFF - set-off at law under s 21 Civil Procedure Act 2005 - no set-off where debt sought to be set-off was owed to joint but not joint and several creditor

 

CORPORATIONS - receivers - directions - moneys received by company as agent for service providers - such moneys paid by customers into company bank account designated "trust account" - balance after commission paid out to services providers - whether trust moneys - whether direction should be given to receivers accordingly

 

CORPORATIONS - statutory demand for payment of debt - application to set aside - whether genuine dispute as to existence of debt - dispute as to identity of contracting parties – CONTRACT – whether a contract comes into being between two parties – effect of subsequent conduct – when did the contract come into existence

Sentence for offences in breach of regulatory provisions concerned with finance broking - plea of guilty - sentences imposed.

Consumer Credit Administration Act 1995 - ss 4C(1), 4C(3)(c), (e), (f), (g), (i), (m), 4C(4), 4H(1), 41(1), 43(1)(b); Credit (Finance Brokers) Act 1984 (now repealed)