Legal updates

The Part 5.3A administration regime was introduced to facilitate orderly and timely outcomes for creditors. This is clearly evidenced by the relatively short time frame stipulated by the Corporations Act 2001 (Cth) (the Act) between when the first and second creditors’ meetings are to be held. Under s 439A of the Act, an administrator must convene the second meeting of the company's creditors within the ‘convening period’ (generally 20 business days or so following the commencement of the administration).

As highlighted by a recent Full Bench decision of the WA AIRC (Spotless Group v Dennis Buckle [2017] WAIRC 00024), tribunals are prepared to refer to the National Employment Standards to resolve ambiguity in contracts. This follows on from a judgment last year where the District Court of South Australia refused to imply a reasonable notice term into an employment contract because of the existence and operation of the notice provisions in the Fair Work Act 2009 (Cth) (FW Act) (Kuczmarski v Ascot Administration Pty Ltd [2016] SADC 65). This raises new issues for employers to consider when drafting and interpreting employment contracts.

On 1 June 2017 a new law came into effect in New South Wales relevant to liquidators’ rights to directly pursue the insurer of a proposed defendant, taking away significant uncertainty which existed previously because of antiquated provisions in a 1946 act relating to charges over and priorities to those insurance monies.

Two recent decisions of the Fair Work Commission (FWC) mean that employers, particularly in the retail and hospitality industries, should confirm their minimum rate obligations to employees.

On 27 April 2017, the Commonwealth Government announced that it would implement the Australian Domestic Gas Security Mechanism (ADGSM) to ensure there is a sufficient supply of natural gas to meet Australia’s domestic demand. In short, the ADGSM allows the Minister to impose export controls on LNG projects where the Minister considers that such measure could increase gas supply to domestic consumers during periods of domestic gas shortfall.

The recent decision of the Supreme Court of Western Australia in Mighty River International Ltd v Hughes & Bredenkamp [2017] WASC 69 (Mighty River v Hughes) has confirmed the legality and the utility of ‘holding’ deeds of company arrangement (colloquially referred to as ‘Holding DOCAs’).

The Supreme Court of New South Wales recently considered section 420A of the Corporations Act 2001 (Cth) (the Act) in the context of a Receiver selling secured property without first advertising and offering the property for sale by auction.

Despite no final determination being made as to whether the statutory duty under section 420A had been breached, the decision of In the matter of Australasian Barrister Chambers Pty Ltd (in liquidation) [2017] NSWSC 597 provides Receivers with a timely reminder that they may breach their duty of care if they sell property over which they are appointed without first conducting a marketing campaign or running a public auction.

There has long been discussion in Australia and attempts by regulators to make their life easier in terms of bringing criminal proceedings against companies where conduct suggests economic or financial crimes have been committed.

The Personal Property Securities Act 2009 (Cth) (PPSA) applies to security interests in personal property including, but not limited to:

  • leases that “in substance” secure the payment or performance of an obligation;1 and
  • the interest of a lessor of goods under a “PPS lease”, regardless of whether the interest secures the payment or performance of an obligation.2

Justice Black in In the matter of Boart Longyear Limited [2017] NSWSC 537 has confirmed that section 411(16) of the Corporations Act 2011 (Cth) (the Act), can be used to provide companies proposing schemes of arrangement with appropriate protections from its creditors in a form that can be recognised under Chapter 15 of the US Bankruptcy Code.

In February 2017, the Australian Government released a consultation paper titled ‘Increasing Transparency of the Beneficial Ownership of Companies’ (Consultation Paper) to explore the potential to implement a beneficial ownership register for companies. The consultation was in response efforts by the G20 and related bodies to combat money laundering, the financing of terrorism and tax evasion.

As part of a wider effort to combat corporate tax avoidance and improve the transparency of multinational companies’ financial affairs, in late 2015 the Australian Parliament amended existing Australian tax legislation to require significant global entities (SGE), or their Australian subsidiaries or branch offices, to prepare and lodge general purpose financial statements (GPFS) with the Australian Taxation Office (ATO).