Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [null] null null (07 February 2020) (Besanko, Markovic and Banks-Smith JJ)


Catchwords:


PRACTICE AND PROCEDURE – discovery – where adequacy of discovery questioned after trial of preliminary issue and prior to hearing of appeals – whether liquidators of company complied with discovery orders – where liquidators sourced documents by obtaining hard copy documents, electronic images from certain servers and computers and by obtaining production orders – where hard copy documents of company disorganised – whether reasonable searches undertaken – whether electronic search terms for image searching sufficiently broad – where no interrogation of electronic records in cloud storage – where amount or nature of material in cloud storage unknown – whether technical difficulties a reason not to interrogate material – discovery inadequate

PRACTICE AND PROCEDURE – discovery – meaning of “reasonable search” for the purposes of r 20.14 of Federal Court Rules 2011 (Cth) – whether requirement of reasonable search applies to non-standard discovery under r 20.15 – whether requirement of r 20.14 that documents be “directly relevant” applies to non-standard discovery under r 20.15 unless excluded on application

PRACTICE AND PROCEDURE – relief – where parties who failed to comply with discovery in first instance proceedings are appellants – consequences of such failure on an appeal and cross appeal – where extent and effect of inadequate discovery on matters before primary judge unknown – where failure to comply with discovery orders is ongoing – effect of ongoing failure to make proper discovery – s 28 of Federal Court of Australia Act 1976 (Cth) – assessment of what will serve interests of justice – whether appeals should be dismissed where but for the question of discovery there may have been merit in grounds – whether remittal should be ordered – whether terms of remittal should be limited

CORPORATIONS – winding up – where unfair preference claims brought by liquidators against creditors under s 588FF of Corporations Act 2001 (Cth) – whether the company was insolvent when payments made – where primary judge made findings as to date of insolvency – s 95A of Corporations Act 2001 (Cth) and “forward looking test” of insolvency – whether forecast as to future cash flow ought to have been taken into account

CORPORATIONS – winding up – security – whether renewable energy certificates (RECs) were an asset of the company able to be realised to meet debts in the ordinary course of business – where sale other than in the ordinary course of the company’s ordinary business restricted by terms of loan facility and security in favour of bank by way of fixed and floating charge – whether scale of proposed sale of RECs such that outside the ordinary course of business – whether consent of bank to sale of RECs could be inferred

CORPORATIONS – winding up – tax – liability of company to Commissioner of Taxation – whether established that payment arrangement was in place under s 255-15 of Schedule 1 to Taxation Administration Act 1953 (Cth) – meaning of “due and payable” where used in s 255‑15 of Schedule 1 – statutory construction – whether open to treat tax obligation as deferred for reasons of “commercial reality”

CONTRACT – construction and interpretation – subordination deed – consideration of loan agreement in construing subordination deed – whether subordination deed abandoned – whether subordination continued such that liability under loan agreement not due and payable