Roberts v Investwell Pty Ltd (In liq) [2012] NSWCA 134

Roberts v Investwell Pty Ltd (In liq) [2012] NSWCA 134

Clause 21 did not create an immediate equitable mortgage or charge because the obligation to grant security arose only upon request, the security was expressed as alternatives including such other security as Mr Roberts might consider necessary, and the form of security was not settled but had to be acceptable to his legal advisers. The extended definition of "charge" in s 9 of the Corporations Act 2001 (Cth) did not confer security where it otherwise did not exist. Clause 18 did not confer security but gave Mr Roberts control over dispersal of funds. Accordingly, when the company paid Mr Roberts $164,306.83, he was an unsecured creditor and the payment constituted an unfair preference...

Jurisdiction
Australia
Judgment Date
25 May 2012
Procedural Posture
Corporations Appeal Concerning Voidable Transaction and Unfair Preference / Appeal From Orders of Hammerschlag J in the Supreme Court of New South Wales
Outcome
Appeal dismissed with costs.
Legal Topics
['winding Up' 'unfair Preference' 'voidable Transaction' 'secured Debt' 'equitable Mortgage' 'equitable Charge' 'meaning of Charge']
['corporations Law' 'insolvency' 'statutory Interpretation'] ['winding Up' 'unfair Preference' 'voidable Transaction' 'secured Debt' 'equitable Mortgage' 'equitable Charge' 'meaning of Charge']

Case Brief

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Procedural Posture

Corporations Appeal Concerning Voidable Transaction and Unfair Preference / Appeal From Orders of Hammerschlag J in the Supreme Court of New South Wales

Legal Issues

  1. 1 ['Whether the payment made by Investwell Pty Ltd to Mr Roberts on 12 March 2003 was in respect of a secured debt and therefore not an unfair preference under s 588FA of the Corporations Act 2001 (Cth).' 'Whether cl 21 of the Directors & Shareholders Agreement created an equitable mortgage or equitable charge in favour of Mr Roberts.' 'Whether the definition of "charge" in s 9 of the Corporations Act 2001 (Cth) conferred security where security otherwise did not exist.' 'Whether cl 18 of the Directors & Shareholders Agreement conferred security over funds held or controlled by solicitors or conveyancers.']

Ratio Decidendi

Clause 21 did not create an immediate equitable mortgage or charge because the obligation to grant security arose only upon request, the security was expressed as alternatives including such other security as Mr Roberts might consider necessary, and the form of security was not settled but had to be acceptable to his legal advisers. The extended definition of "charge" in s 9 of the Corporations Act 2001 (Cth) did not confer security where it otherwise did not exist. Clause 18 did not confer security but gave Mr Roberts control over dispersal of funds. Accordingly, when the company paid Mr Roberts $164,306.83, he was an unsecured creditor and the payment constituted an unfair preference...

Court Disposition

Appeal dismissed with costs.

Orders

  • ['Appeal dismissed with costs.']