News
Bell rings for banks
West Australian Supreme Court Justice Neville Owen ordered a syndicate of 20 banks to pay the record compensation to the Bell Group liquidator on behalf of bondholders. The massive award to Bell Group creditors of around $350 million, as well as an estimated $1.2 billion in compound interest has the potential to mar the financial performance of major banks this year. Lawyers acting for the creditors, said it was the biggest financial judgment in Australian history (01 May 2009)
Read moreCool response to PI probeA decision by parliamentary joint committee on corporations and financial services chair Bernie Ripoll to probe the adequacy of the $20 million professional indemnity cover cap for advisers has drawn a quick industry response (01 May 2009)
Advisers risk being 'locked out' of client data
When Storm Financial failed, its advisers were denied access to their client records as software provider Ignite was in dispute with its associate company, highlighting the risks of storing client data offsite (01 May 2009)
FPA plots new course on fees and commissions
The Financial Planning Association has moved to take hold of the fees versus commissions agenda by producing a consultation paper which proposes a phase out of existing commission arrangements (01 May 2009)
Dollarforce wind up ordered by ASICASIC has obtained Federal Court orders for the winding up of a number of property and construction companies within the Dollarforce Group (29 April 2009)
Federal Court orders Dollarforce wind up
ETS 'may bankrupt power stations' The National Generators Forum told a Senate committee yesterday that many power stations would simply not be able to afford the 100 to 200 per cent increase in operating costs under the current plan to require them to buy more than 80 per cent of necessary emissions permits. This would leave some insolvent and all struggling to find $50 billion in new and refinancing capital over the next five years (01 May 2009)
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Slater & Gordon pursue ANZ Bank
A litigation giant is suing the ANZ Bank for allegedly recommending clients to invest in a Basis Capital hedge fund that collapsed, owing investors $320 million. The litigation could affect investors, who are understood to have poured tens of millions of dollars into the failed Basis Yield Fund via ANZ. It is one of the first legal cases involving Australian investors caught up in the US sub-prime fallout (29 April 2009)
Bankruptcy spike set for coming months: academic Bankruptcy cases set to rise dramatically in the last quarter of this financial year due to fear of recession. The current conditions brought about by the global financial crisis now mean that regulatory bodies like
APRA (Australian Prudential Regulation Authority) and
ITSA (Insolvency and Trustee Services Australia) need to be even more alert and ready to make early identifications of failing businesses, according to a Bond University academic (29 April 2009)
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Matthew Perrin's wife alleges fraud
The wife of declared bankrupt and former Billabong surfwear boss Matthew Perrin has made startling allegations of identity fraud and forgery in a Supreme Court bid to save her assets from the banks (03 May 2009)
Read moreSirocco claims wind-up to be extinguished tomorrow Sirocco Telecom’s debt to marketing company Principals will be resolved tomorrow in a move the company claims will end a wind-up application lodged on April 24 (30 April 2009)
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Expansion of the Optional CGT Loss Roll Over for Complying Super Funds that Merge The optional capital gains tax (CGT) roll-over for capital losses for mergers of complying superannuation funds with APRA-regulated superannuation funds with at least five members will be expanded following consultation with industry. Treasury will release the draft legislation for consultation on the website
www.treasury.gov.au shortly (29 April 2009)
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FPA launches new services for Small Principal membersThe Financial Planning Association of Australia (FPA) has launched a new online resource centre for its Small Principal Members who are Australian Financial Services Licensees with less than 20 representatives (27 April 2009)
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Australian borrowers enjoy more interest rate pass-through than other developed countries – ABA says result of strong banking sectorThe Australian Bankers’ Association (ABA) said for the Australian banking industry to remain stable and secure, it is essential for the banks to remain well-run and profitable, especially while the effects of the global financial crisis continue to impact our economy. The ABA was responding to media reports today which claim banks are subsidising bad debts through mortgages by not passing on all of the Reserve Banks cash rate cuts and increasing margins (30 April 2009)
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ATMs - Banks increase security measures
The Australian Bankers’ Association (ABA) says banks are increasing security measures on ATMs following recent attacks by criminals. Banks reported to yesterday’s meeting with NSW Police and other ATM owners that the sector had been involved in a continuing risk assessment program for their ATM fleets and had been enhancing ATM security (28 April 2009)
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Superannuation industry agrees sweeping reviewA coalition of government and representative bodies from across the superannuation sector have resolved to examine the structure, operation and efficiency of the Australian superannuation industry. A Communiqué of Principles (see below) says that after 20 years of compulsory superannuation, with the addition of numerous new features without systemic analysis, it is time to examine operational features. It says the superannuation review will complement the Henry tax review (30 April 2009)
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Crime watchdog investigates "magic pudding" land dealsQueensland's crime watchdog has been asked to probe land deals at Mutdapilly, southwest of Ipswich which saw the value of a paddock go from $675,000 to tens of millions of dollars in five years (29 April 2009)
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Lenders face jail for giving loans that can't be paid Mortgage brokers and lenders face jail or hefty fines if they place borrowers in unsuitable loans they cannot repay, and for the first time they will be forced to obtain a credit licence, under a planned government crackdown. The laws will allow borrowers to sue for damages as a result of being put into loans they cannot repay, and to seek court injunctions to stop interest accruing (28 April 2009)
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New credit laws will push up cost of lending: banksConsumers will end up paying more for a loan and waiting longer for approval under new "heavy-handed" consumer credit laws, the Australian Bankers' Association (ABA) says (28 April 2009)
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FPA welcomes new Credit Regulation regimeThe Financial Planning Association of Australia (FPA) today welcomed the release of the draft National Consumer Credit Protection Bill 2009 (27 April 2009)
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Articles and Reports
Weekly insolvencies list Water-services provider Noblewater is among companies listed in QBR’s new weekly listing of companies entering external administration (30 April 2009) [sub access for QBR only]
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Monthly Banking Statistics as at March 2009 The Australian Prudential Regulation Authority (APRA) today released the statistics publication, Monthly Banking Statistics for March 2009 (30 April 2009)
more info
Practice
Public Exposure of National Consumer Credit Protection Bill 2009The introduction of a comprehensive national licensing scheme will see consumers benefit through robust licensing that will bar unscrupulous operators from the industry; and lead to improved standards in the way lenders and brokers operate. This law will see simple, standard, national regulation of consumer credit for the first time in our country's history. The package of consumer credit reforms can be found and downloaded at
www.treasury.gov.au/consumercredit . Comments on the draft legislation can be provided by email to
consumercredit@treasury.gov.au by Friday 22 May 2009.
Queensland Police Service - Execution of search warrants on lawyers' premises
In February 2009, the Queensland Police Service advised the Queensland Law Society that it had updated section 2.8.5 of its Operational Procedures Manual. This is the section which deals with the execution of search warrants on lawyers' premises. The revisions deal with developments in the law of legal professional privilege and changes to section numbers in the Police Powers and Responsibilities Act. Solicitors will find the updated version of the QPS document on the QLS website under 'For the Profession > Resources for Practitioners > Search Warrants and ATO Access Powers'
APRA consults on the use of reserves in superannuation funds
A new draft guide provides practical guidance on measures APRA would regard as good practice for a trustee and its directors to take in respect of management of fund reserves. APRA invites interested parties to comment on the draft guide by 5 June 2009 The guide is available on the APRA website (29 April 2009)
Legislation
Commonwealth
Corporations Amendment Regulations 2009 (No. 4)
Legislative Instrument - F2009L01627 Number: SLI 2009 No. 70
These Regulations amend the Corporations Regulations 2001 to update the provisions to improve the operation of financial services and market regulatory policy. Date Registered: 01/05/2009
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NSW
Queensland
Bills
Financial Accountability Bill 2009
Charter of Budget Honesty Bill 2009
Crime and Misconduct and Summary Offences Amendment Bill 2009
Regulations
Legal Profession (Society Rules) Amendment Notice (No. 1) (SL No 42 of 2009)
Public Trustee Amendment Regulation (No. 4) (SL No 49 of 2009)
Cases
Miller v Nationwide News Pty Ltd [2009] FCA 411 BANKRUPTCY – exercise of appellate jurisdiction by a single judge pursuant to subs 25(1A) of the Federal Court of Australia Act 1976 (Cth) – whether discretion to refuse to grant an extension of time to comply with bankruptcy notice or set notice aside was exercised correctly – no error in the exercise of discretion.
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P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) [2009] FCA 413PRACTICE AND PROCEDURE – Subpoena to Produce – Public Interest Immunity Privilege claim – rejection of claim by trial judge – reversed on appeal – ex parte in camera hearing – duty of full disclosure – re-hearing of interlocutory applications – abuse of process – relevant principles – Notice to Produce.
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Carter, in the matter of SFM Australasia Pty Ltd (Administrators Appointed) ACN 105 317 333 (No 2) [2009] FCA 419The administrators have been appropriately active to date, but it is clear that they will be in a much better position to provide a useful report to creditors pursuant to
s 439A(3) and (4) of the Act if a longer period than that specified is allowed.
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Consolidated Byrnes Holdings Limited ACN 111 052 585 v Hardel Investments Pty Limited ACN 083 276 000 [2009] FCA 399 PRACTICE AND PROCEDURE – costs – application for indemnity costs brought by defendants against plaintiffs and non-parties – originating action an application for winding up under Corporations Act 2001 (Cth) – application previously dismissed – circumstances necessary to award costs in absence of hearing – whether plaintiffs and non-parties acted reasonably in bringing proceedings – whether plaintiffs and non-parties acted reasonably in prosecution of the proceedings – whether plaintiffs and non-parties acted reasonably in events leading up to proceedings being dismissed – application brought for improper and collateral purposes – application was an abuse of process – plaintiffs’ and non-parties’ conduct entirely unreasonable – application for indemnity costs granted
PRACTICE AND PROCEDURE – costs – application for costs against non-parties – where plaintiffs may not be capable of satisfying orders for costs – Court can make an order for costs against non-parties even though proceedings have been dismissed – whether operation of s 43 of Federal Court of Australia Act 1976 (Cth) was affected by s 1335(2) of Corporations Act 2001 (Cth) – s 1335(2) only operates to save earlier enactments which otherwise would be inconsistent with the provision introduced – intended to be an enabling provision – does not prevent Court from making an order for costs against non-parties in proceedings brought under the Corporations Act 2001 (Cth) – Court can utilise O 6 r 8(1)(b) to join a non-party even where s 1335(2) would prevent an order for costs against non-parties – application granted
PRACTICE AND PROCEDURE – costs – application for costs against non-parties – where non-parties were legal practitioners – where proceedings had been dismissed – whether O 69 r 9(1)(d) empowers the Court to make an order for costs against legal practitioners if s 1335(2) operates to prevent an order being made against a non-party – statute must prevail where power under Federal Court Rules to award costs against legal practitioner is inconsistent with statute – legal practitioners joined as parties to proceedings so costs orders could be made – application granted
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Hardel Investments Pty Ltd (ACN 083 276 000) v Consolidated Byrnes Holdings Limited (ACN 111 052 585) [2009] FCA 400 CORPORATIONS – application pursuant to s 459G of the Corporations Act 2001 (Cth) to set aside statutory demands issued against plaintiffs – whether initiation of winding up procedures could be considered service of statutory demand – where initiation of proceeding was unnecessary – proceeding dismissed
PRACTICE AND PROCEDURE – costs – where plaintiffs sought indemnity costs from defendants and non-parties – where defendants sought costs – where proceedings were unnecessary – no order for costs made
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Storm Financial Limited (Receivers and Managers Appointed) (In Liquidation) v Victorian Families Retirement & Investment Group Pty Ltd (No 2) [2009] FCA 410CORPORATIONS — application by contributory to wind-up corporation on just and equitable ground and appoint official liquidators — where corporation is a subsidiary of ultimate holding company — where holding company is in liquidation — where directors of corporation have vacated office — no replacement director — where entity is no longer trading as a corporation — whether a conflict of interest exists in the appointment of the liquidators of the holding company as liquidators of the corporation — court satisfied that it was in the interests of creditors to wind-up the corporation — potential for conflict of interest remote — order that company be wound up on just and equitable ground — order that liquidators of holding company be appointed liquidators of subsidiary
STATUTES — law reform — interpretation — inconsistencies between ss 473(8) and 530 of the Corporations Act 2001 (Cth) — need for harmonisation
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Official Trustee in Bankruptcy v Gargan (No 2) [2009] FCA 398Gargan may not institute or continue any proceeding in this Court without the leave of the Court. - copy of these reasons for judgment be forwarded to the Registrar or Chief Executive Officer for each court in each State, the Registrar of the Federal Magistrate’s Court, the Registrar of the Family Court of Australia and the Registrar of the High Court of Australia, together with the Attorneys-General for the States, the Territories and the Commonwealth
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Julie Anne Barrow Charitable Trust (ABN 91 975 681 079) v Brisconnections Management Company Ltd (ACN 128 614 291) [2009] FCA 412another instalment in the recent controversy surrounding BrisConnections Management Company Ltd, as responsible entity for the BrisConnections Investment Trust and the BrisConnections Holding Trust - dismissed
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Brown and Australian Securities and Investment Commission [2009] AATA 286
CORPORATIONS – security lodged in relation to a dealers licence – whether should be applied to compensate licensee’s client – whether failure of licensee to carry on business under the licence adequately and properly – whether client suffered pecuniary loss due to any such failure – decision set aside
Whiley Investments (Qld) Pty Ltd & Ors v Pet's Paradise Franchising (Qld) Pty Ltd & Ors [2009] VSC 144
PRACTICE AND PROCEDURE – Transfer of proceedings – Application for removal of proceedings before Magistrates’ Court to Supreme Court – Criteria for transfer – s 17 Courts (Case Transfer) Act 1991 – Whether discretionary relief should be granted – Proceeding involving special federal matters – s 8 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Vic) – Stay pending transfer – s 101 Magistrates’ Court Act 1989
Turco v HP Mercantile Pty Ltd; Marinelli v HP Mercantile Pty Ltd; Turco v HP Mercantile Pty Ltd [2009] NSWCA 88
Practice and procedure - application for stay of execution pending appeal - stay to preclude act of bankruptcy - stay refused on respondent's undertaking to consent to adjournment of hearing of creditor's petition
Tagget v Sexton [2009] NSWCA 91DISTRICT COURT – interlocutory relief - freezing order restraining assets of a third party – whether the District Court has jurisdiction to make such an order
DISTRICT COURT – interlocutory relief - freezing order restraining assets of a third party – whether the District Court has the power to make orders effectively making a third party a guarantor of the judgement debtor’s debt
INTERLOCUTORY RELIEF – freezing orders – extent of order – must be limited so as not to exceed what is reasonably necessary in the circumstances
COSTS- interlocutory proceedings – entitlement to appellate intervention where costs ordered at interlocutory stage
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Tuftevski v Total Risks Management Pty Ltd [2009] NSWSC 315Employer - Employee Superannuation Fund - Claim Based on Trust Deed construed according to Victorian law -absence of bona fide inquiry and genuine consideration
Rules of Natural Justice inapplicable - Trustee not disclosing thrust of adverse material to employee -no opportunity to meet it -execution of Trust by Court due to behaviour of Trustee - limitations defences rejected -need for law reform
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Commonwealth Bank of Australia v Shahen Serobian [2009] NSWSC 302BANKER AND CUSTOMER – contract – plaintiff bank sues for repayment of two loans made to the defendant customers – held bank entitled to the repayment of the two loans - MORTGAGES - mortgages and charges generally – form and execution – whether a mortgage is void or voidable due to witnessing by an officer of a bank where the bank was a party to the mortgage – held that the officer of the bank was not a party to the mortgage, and that witnessing by the bank officer was not an action taken on behalf of the bank – held that the mortgage is valid - TRADE AND COMMERCE - Trade Practices Act 1974 (Cth) and related legislation - consumer protection – defendants claimed bank loans should be set aside or varied as the bank had engaged in misleading or deceptive conduct or conduct likely to mislead or deceive under s 52 - GUARANTEE AND INDEMNITY - the contract of guarantee - parties and capacity – whether guarantee executed by the defendants for the debts of their company should be set aside under s 7(1) of the Contracts Review Act 1980 (NSW) for being unjust
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GE Commercial Finance Australia Limited v Lynette Meredith & Anor [2009] NSWSC 327Practice and Procedure – UCPR - Power to make orders setting aside judgment following entry - Whether orders were given 'in the absence of a party' who attends at the commencement of the hearing and elects to withdraw
Real Property Act 1900Read more
Australian Regional Credit v Mula; Australian Regional Credit v Raphael [2009] NSWSC 325MORTGAGES - mortgage taken as part of security for payments due under three lease agreements
mortgage forged - lease agreements partly forged - lease agreements and mortgage executed for the benefit of mortgagor’s de facto son-in-law - mortgagor had no knowledge of transaction
finance company seeking order for possession due to default under lease agreement - whether mortgage charged the land with debts owed under the three leases
NEGLIGENCE - whether solicitor liable for negligent misstatement whether initials and signatures of solicitor were forged whether solicitor signed mortgage and left it in the possession of the probable fraudster - whether solicitor liable for loss suffered by finance company
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Lauren Kay Cordes as Trustee for Alexander George v Dr Peter Ironside Pty Ltd & Ors [2009] QSC 089
TRUSTS AND TRUSTEES – EVIDENCE – IN GENERAL – where dispute as to the existence of trust property – sufficiency of evidence of trust – where claimant became a bankrupt – where dispute as to where property vests
BANKRUPTCY – SUMMARY DISMISSAL – determination of a trust alleged by the bankrupt in respect of certain property – resulting and/or constructive trusts – indefeasibility of title by the mortgagee
PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – where matters claimed by the bankrupt fall within the exclusive jurisdiction of the Federal Magistrates Court
ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDGMENT INTER PARTES – ISSUE ESTOPPEL – IDENTITY OF ISSUES – where matters claimed have already been litigated in another court
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Starport Futures Trading Corporation, Re [2009] QSC 094 CORPORATIONS – WINDING UP – GENERALLY – JURISDICTION OF COURT – COMPANY NOT INCORPORATED IN JURISDICTION – where company’s registered office was in Delaware, United States of America – where the respondent had regular dealings with investors in Australia – where the company had an Australian postal address and telephone numbers – where sole director and employee of respondent resides in Australia – where the respondent had a wholly owned subsidiary in Australia – whether the respondent is a Part 5.7 Body – whether the respondent was carrying on a business in Australia by directly dealing with Australian investors or though its agent
CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – where there were several demands made by the applicants and other Australian investors – where the court approved the methods of service of the demands on the respondent – where the debts are unpaid – whether the respondent is taken to be unable to pay these debts under s 585(a)
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Hirvonen v White [2009] QDC 103
JUDGMENT – APPLICATION TO SET ASIDE- SUMMARY JUDGMENT – Where judgment entered in absence of defendant – whether prima facie defence raised – conduct of defendant before and after judgment entered – whether irreparable harm to plaintiff if judgment set aside - application for judgment was filed and determined and steps taken to commence its execution while applicant overseas – applicant seeks relief under the Consumer Credit Code - loan was for personal not business purposes
THE BELL GROUP LTD (IN LIQ) -v- WESTPAC BANKING CORPORATION [No 10] [2009] WASC 107 Equity - Equitable relief - Declarations, monetary relief, compensatory interest - Relief relating to transactions of non-parties - Turns on own facts
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SMITH -v- COMMISSIONERS OF THE RURAL AND INDUSTRIES BANK OF WESTERN AUSTRALIA [2009] WASC 100
Practice and procedure - Application to dismiss third party proceedings - Defendants' concession
Practice and procedure - Dismissal for want of prosecution - Forensic strategy employed by the plaintiffs - Over 22 years have elapsed since last substantive step was taken in these proceedings
Doctrines of election and waiver - Proceedings against defendant instituted in 1982 - Proceedings against counsel formerly representing the plaintiffs instituted in 1995 - The 1995 proceedings concerned alleged liability of former counsel for plaintiffs' loss of opportunity to pursue claim against the defendant - Whether plaintiffs elected to pursue 1995 proceedings instead of 1982 proceedings
Practice and procedure - Abuse of process - Principles established in Batistatos' case - Whether continued prosecution of the proceedings amounts to an abuse of process - Whether inconsistency in the claims advanced between the two proceedings constitutes an abuse of process
Practice and procedure - Leave to be heard - Party seeking intervention has indirect interest in the proceedings
CARRELLO -v- ALUMINEX RESOURCES LTD [2009] WASC 98Corporations - Administration - Application for declaration that appointment as administrators is valid - Dismissal of application by consent of administrators and parties who had challenged validity of appointment of administrators
Corporations - Administration - Meeting of creditors - Convening period - Application for extension
Corporations - Administration - Resignation of administrator - Protection of interests of creditors and members - Corporations Act 2001 (Cth), s 447A, s 447C, s 449C
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