Rapsey, in the matter of Australasian Mortgage Finance Limited (Administrator Appointed) [2021] FCA 189

Rapsey, in the matter of Australasian Mortgage Finance Limited (Administrator Appointed) [2021] FCA 189

There was a binding agreement (either contractual variation or election under contract) that the consultants/directors were to accept equity in lieu of cash for accrued fees until a qualifying funding event occurred; because any failure to issue shares is attributable to the directors' own omissions (they did not take steps to procure allotment), they are estopped from claiming AMFL's liability for breach of contract or any cash entitlement; thus, they are not creditors for the purpose of voting or dividends in respect of the consultancy fees (outside any undisputed debts).

Parties
First Plaintiff: Chad Robert Rapsey in his capacity as Voluntary Administrator of Australasian Mortgage Finance Limited (Administrator Appointed); Second Plaintiff: Australasian Mortgage Finance Limited (Administrator Appointed); First Defendant: Peter Julian Cossetto; Second Defendant: Lenross Financial Group Pty Ltd; Third Defendant: Crayform Pty Ltd; Fourth Defendant: Rous Investments Pty Ltd in its personal capacity and as trustee for Rous Investments Trust; Fifth Defendant: Remara Capital Pty Ltd
Jurisdiction
Australia
Judgment Date
09 March 2021
Procedural Posture
Application for Judicial Direction in Insolvency/administration / Judgment After Hearing (directions Sought Under S 90 15(1) of Insolvency Practice Schedule)
Outcome
Direction given: Administrator not justified in permitting the first, second or third defendants to vote at the second meeting of creditors in respect of any amounts claimed under their consultancy agreements with AMFL.
Legal Topics
Consultancy Agreements, Variation of Contract, No Oral Modification Clauses, Directors' Remuneration, Proof of Debt in Insolvency, Estoppel in Contracts, Damages Assessment
Corporations Law Insolvency Contract Law Consultancy Agreements Variation of Contract No Oral Modification Clauses Directors' Remuneration Proof of Debt in Insolvency +2 more

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Parties

Chad Robert Rapsey in his capacity as Voluntary Administrator of Australasian Mortgage Finance Limited (Administrator Appointed)

First Plaintiff

Australasian Mortgage Finance Limited (Administrator Appointed)

Second Plaintiff

Peter Julian Cossetto

First Defendant

Lenross Financial Group Pty Ltd

Second Defendant

Crayform Pty Ltd

Third Defendant

Rous Investments Pty Ltd in its personal capacity and as trustee for Rous Investments Trust

Fourth Defendant

Remara Capital Pty Ltd

Fifth Defendant

Procedural Posture

Application for Judicial Direction in Insolvency/administration / Judgment After Hearing (directions Sought Under S 90 15(1) of Insolvency Practice Schedule)

Legal Issues

  1. 1 Whether the director-related defendants agreed to vary their consultancy agreements to receive equity in lieu of cash for accrued fees; if so, whether that agreement was legally binding; whether the defendants are entitled to claim as creditors for consultancy fees or only for an entitlement to equity; whether the Administrator should permit these parties to vote at creditors' meeting; whether variation required to be in writing; whether the parties are estopped from claiming breaches or losses; how (if at all) damages should be assessed.

Ratio Decidendi

There was a binding agreement (either contractual variation or election under contract) that the consultants/directors were to accept equity in lieu of cash for accrued fees until a qualifying funding event occurred; because any failure to issue shares is attributable to the directors' own omissions (they did not take steps to procure allotment), they are estopped from claiming AMFL's liability for breach of contract or any cash entitlement; thus, they are not creditors for the purpose of voting or dividends in respect of the consultancy fees (outside any undisputed debts).

Court Disposition

Direction given: Administrator not justified in permitting the first, second or third defendants to vote at the second meeting of creditors in respect of any amounts claimed under their consultancy agreements with AMFL.

Orders

  • The first plaintiff is not justified in permitting the first, second or third defendants to vote at the second meeting of creditors in respect of any amount claimed to be presently or contingently owed under their consultancy agreements with the second plaintiff.
  • The parties file and serve written submissions in relation to costs by 4.00pm 12 March 2021 limited to 2 pages.