Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd (in liq); Yazbek v Gleeson as Liquidator of Atlas Construction Group Pty Ltd (in liq); Fitz Jersey Pty Ltd v Gleeson as Liquidator of Atlas Construction Group Pty Ltd (in liq) [2021] NSWSC 1692

Fitz Jersey Pty Ltd v Atlas Construction Group Pty Ltd (in liq); Yazbek v Gleeson as Liquidator of Atlas Construction Group Pty Ltd (in liq); Fitz Jersey Pty Ltd v Gleeson as Liquidator of Atlas Construction Group Pty Ltd (in liq) [2021] NSWSC 1692

The October Letter was not a contemporaneous or reliable account of the 2013 Agreement, and the variations agreed in 2013 did not encompass the 'payment claim items' (CPI uplift, Early Completion Bonus, Carbon Tax, Upgrades). On the facts, Atlas’s payment claim sought amounts to which it had no contractual entitlement. Atlas’s directors knew, or ought to have known, at the time dividends were declared and paid, that Fitz Jersey was a present creditor with rights to repayment of overpaid sums under the contract per s 32 of the SOPA. Atlas could not lawfully pay dividends as assets did not exceed its liabilities and payment materially prejudiced its ability to pay creditors. The declaration...

Jurisdiction
Australia
Judgment Date
22 December 2021
Procedural Posture
Principal Judgment Civil / Post Trial Judgment and Orders
Outcome
Plaintiff succeeds; declarations and orders to be made as set out and to be the subject of further submissions as to form and quantification.
Legal Topics
['building Contract Adjudication' "directors' Duties" 'security of Payment Act' 'voidable Transactions' 'dividends' 'tracing' 'pay Now Argue Later Regime' 'creditor Protection' 'insolvent Transaction' 'unreasonable Director Related Transaction']
['equity' 'building and Construction' 'corporations' 'contract'] ['building Contract Adjudication' "directors' Duties" 'security of Payment Act' 'voidable Transactions' 'dividends' 'tracing' 'pay Now Argue Later Regime' 'creditor Protection' 'insolvent Transaction' 'unreasonable Director Related Transaction']

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Procedural Posture

Principal Judgment Civil / Post Trial Judgment and Orders

Legal Issues

  1. 1 ['Was Atlas entitled to amounts claimed under the payment claim pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW)?' 'Did the payment of dividends by Atlas contravene section 254T of the Corporations Act 2001 (Cth)?' 'Did the payment of dividends constitute an alienation of property with intent to defraud creditors under section 37A of the Conveyancing Act 1919 (NSW)?' 'Did the directors of Atlas act in breach of their duties in declaring the dividends?' 'Were the dividends voidable transactions under the Corporations Act sections 588FA, 588FB, 588FC, 588FDA and 588FE?' "Is Fitz Jersey entitled to recover overpayments and/or trace proceeds into recipients' hands?"]

Ratio Decidendi

The October Letter was not a contemporaneous or reliable account of the 2013 Agreement, and the variations agreed in 2013 did not encompass the 'payment claim items' (CPI uplift, Early Completion Bonus, Carbon Tax, Upgrades). On the facts, Atlas’s payment claim sought amounts to which it had no contractual entitlement. Atlas’s directors knew, or ought to have known, at the time dividends were declared and paid, that Fitz Jersey was a present creditor with rights to repayment of overpaid sums under the contract per s 32 of the SOPA. Atlas could not lawfully pay dividends as assets did not exceed its liabilities and payment materially prejudiced its ability to pay creditors. The declaration...

Court Disposition

Plaintiff succeeds; declarations and orders to be made as set out and to be the subject of further submissions as to form and quantification.

Orders

  • ['Declaration that payment of dividends by Atlas contravened s 254T of the Corporations Act 2001 (Cth) and is voidable at Fitz Jersey’s instance under s 37A of the Conveyancing Act 1919 (NSW).' 'Declaration that the payment of dividends was a voidable transaction under Part 5.7B of the Corporations Act (as unfair...