Grant of special leave from Slea Pty Ltd & Ors v Connective Services Pty Ltd & Ors [2018] VSCA 180 (27 July 2018)

On 14 December 2018, special leave to appeal was granted by the High Court from the decision of the Victorian Court of Appeal in Slea Pty Ltd & Ors v Connective Services Pty Ltd & Ors [2018] VSCA 180 (27 July 2018). For those of us who find the topic of financial assistance (s 260A of the Corporations Act 2001) fascinating, this will be an appeal to watch, particularly because it concerns the provision of financial assistance in the context of a company funding legal proceedings compelling acquisition of shares in the company.

Electronic service of insolvency applications on ASIC

I recently spent a LONG time on hold with the ASIC call centre trying to find the address to serve an application to terminate the appointment of a liquidator.

Pursuant to r 2.18 of the Supreme Court (Corporations) Rules 1999 (NSW) (and equivalent provisions in the relevant Federal Court rules) the following application and affidavit in support should be served on ASIC. While the rule requires “reasonable time,” ASIC has requested 14 days to review applications. The email address for serving applications on ASIC is IP.Legal@asic.gov.au.

Trustees' powers of advancement

I've spoken recently on Litigation involving Trustees for the City of Sydney Law Society, and then shot a Benchmark TV production on the same topic.  That led to writing a case note for Bar News on Fischer v Nemeske Pty Ltd [2016] HCA 11.  The dissenting judgment of Kiefel J provides some guidance to practitioners seeking to draft a resolution of a corporate trustee that validly engages a power of advancement.  In finding that it had not been validly engaged in the case in question, her Honour stated that the advance  was not authorised because it did not identify:


a.    The source of power to make an advance ([51]-[52]); 
b.    That the distribution was made for the “advancement in life or benefit” of the beneficiaries ([52]); 
c.    Whether the distribution was made from capital or income ([53]). 


Further, Kiefel J held that no capital or income had actually been advanced to the beneficiaries:


“[64] (…) for a conclusion that capital was applied, there should be a corresponding reduction in the capital of the Trust.”

The judgment of majority (French CJ, Bell and Gageler JJ) found that the power of advancement had been engaged by reference to the specific power in the trust deed in question.  When drafting any resolution in which an advance is made, careful reference to the trust deed should be made to ensure that the advance is indeed capable of being authorised.

 

 

Barrak Corporation Pty Ltd v Jaswil Properties Pty Ltd [2016] NSWCA 32 (7 March 2016)

In conveyancing practice, the receipt of a Notice to Complete from a vendor is a relatively common event, and failure to comply with a Notice to Complete may justify the termination of the contract by the vendor, causing the purchaser to forfeit their deposit.

The Court of Appeal (Beazley P, Sackville AJA and Emmett AJA) recently considered this issue in the context where a vendor had issued a Notice to Complete, but at the nominated time for settlement, was unable to settle because the transfer had not been executed by the vendor as required by the Corporations Act 2001 (Cth).  Following the nominated time for settlement, the vendor purported to issue a notice of termination.

The Court held that through its failure to execute the transfer, the vendor was not "ready, willing and able" to complete.  This was despite the fact that the contract imposed the obligation to prepare the transfer on the purchaser.  The Court commented generally on the requirements for a valid Notice to Complete:

"[33] It is a fundamental principle of land law that a party who seeks to terminate a contract for breach of an essential stipulation, must itself be ready, willing and able to complete. As was explained by Reynolds JA in McNally v Waitzer [1981] 1 NSWLR 294 at 296, “the vendor must show that he is willing and able to provide the full consideration which is to pass from him at the due time”. See also Hutley JA at 303. The principle is well established and it is not necessary to review the authorities: this has been done many times in other cases. It is sufficient for the Court to refer to the following.

[34] In Malouf v Sterling Estates Development Corporation Pty Ltd [2002] NSWSC 920 Young CJ in Eq (as his Honour then was) observed, at [36]:

“If a vendor wishes to issue a notice to complete, it will only be able to do so, (a) if it is free from any relevant breach of contract which may have provided the purchaser a good excuse not to complete by the due date; and (b) it is able to proceed to completion and deliver to the purchaser all the purchaser is entitled to under the contract no later than the expiry of the notice to complete.” (emphasis added)

This statement was not disturbed on appeal: Sterling Estates Development Corporation Pty Ltd v Malouf [2003] NSWCA 27858 NSWLR 685 and has been approved in this Court: see Carrapetta v Rado [2012] NSWCA 202; 16 BPR 30, 997 at [25].

[35] To the same effect is the statement of Kourakis J in Kraguljac v A & B Property Developments Pty Ltd (No 2) [2012] SASC 1 at [92]. His Honour, after reviewing the authorities, observed, relevantly:

“... the effect of these authorities is as follows: ... the party serving the notice must be in a position to perform any still executory obligations by the date he or she has nominated for settlement.” (emphasis added)"

 

 

 

 

Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 1400) [2016] FCAFC 15

The Full Court recently handed down a very interesting decision on the construction of contracts of insurance generally in Todd v Alterra at Lloyds Ltd (on behalf of the underwriting members of Syndicate 1400) [2016] FCAFC 15 (19 February 2016).  

Allsop CJ and Gleeson J rejected (at [25]) the submission of the Insurer that as the policy was an indemnity insurance policy, the insurance policy should be construed as a contract of indemnity.  Such a construction would have the result that in case of any doubt as to the proper construction of an insuring clause, the doubt should be resolved in favour of the insurers.  Beach J concurred with the analysis of Allsop CJ and Gleeson J on this point commenting (at [77]):

"Special rules of interpretation developed for the benefit of those who agree to indemnify a creditor against the credit risk of a debtor, who have been in various ways “the object of some favour both at law and in equity” (In re Sherry; London and County Banking Co v Terry (1884) 25 Ch D 692 at 703 per the Earl of Selborne LC), have little to do with policies of indemnity insurance.  In the latter case, the indemnifier is in a quite different category.  It is engaging in the business of providing indemnities.  It is doing so for reward, calculated in part by reference to the risk assessment of whether the relevant contingent event will occur.  Moreover, the indemnified in the latter case is in a quite different situation to the indemnified in the former case.  Different risk allocations are involved, although superficially each situation involves an indemnity contract."

Allsop CJ and Gleeson J further confirmed the principles of interpretation of commercial contracts apply to contracts of insurance ([42]),  noting especially at [42]:

"To refer to “social” purpose (where relevant) is not to detach the process of interpretation and construction from the objective enquiry as to the meaning of a document regulating the private rights of the parties.  It is to identify the reality that in some circumstances a policy of insurance as a commercial document will find its place in some aspect of the organisation of society through the rights and obligations thereby created by it.  That place or purpose will have its weight in the description of meaning to the words in question."

On that point, Beach J commented that he would prefer to use the language of "commercial purpose" in contrast to the language of "social purpose" (at [76]).

The appellants succeeded in seeking cover for negligent financial planning advice which had been provided by the insured financial planner, in relation to products which were not on the financial planner's approved products list.

 

Cross-examination Workshop

I am part of the NSW Bar Association's New Barrister's Committee, and have been assisting in the organisation of the annual Cross-Examination Workshop which will be held in late February - March this year.

This workshop is only for "under 6" barristers, and helps to hone cross-examination skills.  It is especially useful for barristers who are spending a lot of court hours being led as a junior.  I completed it in my first year of practice, and found it a valuable exercise.  Following some practical exercises, participants will also have a chance to see some experienced silks in action with the same material.

Securities Markets Law 2016

I will be teaching Securities Markets Law at UTS again in 2016. 

The subject builds on the compulsory company law subject by examining key issues in the Australian scheme for the regulation of markets for corporate securities. Topics include an introduction to corporate finance, regulation of major equity and debt capital transactions such as reductions, buy-backs and the raising of new capital through equity and debt issues. The subject has a particular focus on the role of disclosure in securities market regulation, including the regulation of continuous disclosure, misleading statements to the market and insider trading. The subject also provides an introduction to takeover regulation with an emphasis on the role of disclosure in takeovers and the regulation of takeover disputes.

For more information on enrolment and course readings visit the UTS Website.