Tonks, in the matter of Ambient Rail Pty Ltd (in liquidation) [2019] FCA 1556

Tonks, in the matter of Ambient Rail Pty Ltd (in liquidation) [2019] FCA 1556

The Court approved the Litigation Funding Deed because it was for the proper purpose of assisting the winding up of Ambient Rail Pty Ltd (in liquidation), represented the only source of funding available to the liquidator, and without it the liquidator could not pursue investigations and there would likely be no return to creditors. Although PLF's potential benefit was large, the Court was not persuaded that it was disproportionate to the risk undertaken or would yield a grossly excessive profit. The Court rejected the submission that the executed deed was subject to a suspensory condition, but held that this was not fatal because retrospective approval could be granted.

Jurisdiction
Australia
Judgment Date
19 September 2019
Procedural Posture
Corporations Application for Approval to Enter Into a Litigation Funding Agreement / Final Orders on Application for Approval Under S 477(2 B) of the Corporations Act 2001 (cth) and Declaration Under S 1322(4)(a)
Outcome
Application granted; Litigation Funding Deed approved and retrospective relief granted.
Legal Topics
['liquidator Powers' 'litigation Funding Agreement' 'retrospective Approval' 'winding Up']
['corporations' 'insolvency'] ['liquidator Powers' 'litigation Funding Agreement' 'retrospective Approval' 'winding Up']

Case Brief

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Procedural Posture

Corporations Application for Approval to Enter Into a Litigation Funding Agreement / Final Orders on Application for Approval Under S 477(2 B) of the Corporations Act 2001 (cth) and Declaration Under S 1322(4)(a)

Legal Issues

  1. 1 ['Whether the Court should approve the liquidator entering into the Litigation Funding Deed with Premier Litigation Funding Pty Ltd under s 477(2B) of the Corporations Act 2001 (Cth).' "Whether the funding arrangement, including PLF's entitlement to priority repayment and an additional amount representing 45% of recoveries after deducting funds advanced, was appropriate in the circumstances." 'Whether retrospective approval could be granted, and whether entry into the Litigation Funding Deed was invalid because prior approval under s 477(2B) had not been obtained.']

Ratio Decidendi

The Court approved the Litigation Funding Deed because it was for the proper purpose of assisting the winding up of Ambient Rail Pty Ltd (in liquidation), represented the only source of funding available to the liquidator, and without it the liquidator could not pursue investigations and there would likely be no return to creditors. Although PLF's potential benefit was large, the Court was not persuaded that it was disproportionate to the risk undertaken or would yield a grossly excessive profit. The Court rejected the submission that the executed deed was subject to a suspensory condition, but held that this was not fatal because retrospective approval could be granted.

Court Disposition

Application granted; Litigation Funding Deed approved and retrospective relief granted.

Orders

  • ['The Litigation Funding Deed between the plaintiff, Ambient Rail Pty Ltd (in liquidation), and Premier Litigation Funding Pty Ltd ACN 629 061 427 as trustee for Premier Litigation Funding Trust #2 dated 16 August 2019, as amended on 13 September 2019, is approved.' 'The plaintiff is directed that he may act on the...