In the matter of Courtenay House Capital Trading Group Pty Ltd (in liq) [2019] NSWSC 495

In the matter of Courtenay House Capital Trading Group Pty Ltd (in liq) [2019] NSWSC 495

The Court was satisfied that the liquidators were justified in entering the settlement deeds because, although the constructive trust claims were strongly arguable and very likely to succeed on one view, continued litigation involved risk and significant unrecoverable costs. The settlements would recover the substantial majority of funds at lesser cost and risk, were likely to be more advantageous to creditors than pursuing full recovery through contested proceedings, had been supported by the liquidators' considered view and the committee of inspection, and prudently preserved potential claims if undisclosed assets or third-party recipients were later identified.

Jurisdiction
Australia
Judgment Date
26 April 2019
Procedural Posture
Corporations Winding Up Application for Directions That Liquidators Are Justified in Entering Into Deeds of Settlement and Release / Interlocutory Process Filed by Leave; Ex Tempore Decision
Outcome
The liquidators are justified in entering into the deeds of settlement and release.
Legal Topics
['winding Up' "liquidators' Directions" 'settlement and Release' 'constructive Trust' 'judicial Advice to Trustees']
['corporations' 'insolvency' 'trusts'] ['winding Up' "liquidators' Directions" 'settlement and Release' 'constructive Trust' 'judicial Advice to Trustees']

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Procedural Posture

Corporations Winding Up Application for Directions That Liquidators Are Justified in Entering Into Deeds of Settlement and Release / Interlocutory Process Filed by Leave; Ex Tempore Decision

Legal Issues

  1. 1 ['Whether the liquidators should be directed under s 90-15 of the Insolvency Practice Schedule (Corporations) and s 63 of the Trustee Act 1925 (NSW) that they are justified in entering into deeds of settlement and release with certain defendants and associated entities.' 'Whether it was proper for the liquidators, despite a strongly arguable constructive trust claim, to accept settlements recovering substantially all claimed amounts while leaving some assets or funds with defendants or third parties to avoid litigation risk and costs.']

Ratio Decidendi

The Court was satisfied that the liquidators were justified in entering the settlement deeds because, although the constructive trust claims were strongly arguable and very likely to succeed on one view, continued litigation involved risk and significant unrecoverable costs. The settlements would recover the substantial majority of funds at lesser cost and risk, were likely to be more advantageous to creditors than pursuing full recovery through contested proceedings, had been supported by the liquidators' considered view and the committee of inspection, and prudently preserved potential claims if undisclosed assets or third-party recipients were later identified.

Court Disposition

The liquidators are justified in entering into the deeds of settlement and release.

Orders

  • ['Orders made in accordance with the short minutes of order initialled by the Court and placed in the file.' 'The exhibit is to be returned.']