We are proud to share the news that Gavin Parsons and Associates has been approached by Lexology.com after being chosen for the quality and calibre of its articles on our website.

Links to the articles appearing on Lexology.com are set out below.

• https://www.lexology.com/library/detail.aspx?g=b78506ea-07f4-4984-a536-276fc927fb27

• https://www.lexology.com/library/detail.aspx?g=252b4fbc-814f-44b5-97c6-bd1c4a0c611b

Gavin Parsons and Associates has been chosen as leaders in the Practice Areas of Bankruptcy and Insolvency Law, Property Law and Commercial and Business Law for the thought leadership and topical nature of our articles. Ordinarily, top-tier and well known law firms pay considerable fees to Lexology to have their high quality articles published by Lexology, however, our firm was approached and requested to publish our articles on Lexology.com on a no-fee basis.

Lexology delivers the most comprehensive source of international legal updates, analysis and insights to the legal profession worldwide. They publish over 500 articles every day from 900+ leading law firms. Their content has a combination of timeliness, quality, granular information and relevant insight. It is for this reason it is such a distinct privilege to be approached by Lexology and have it speak to the reputation of Gavin Parsons and Associates.

As mentioned in each article, should you require legal assistance or have any questions regarding these topics please contact Gavin Parsons and Associates on (02) 9262 4471 or gavin@gpalaw.com.au for a free no-obligation consultation today

On 16 December 2021, the Full Court of the Federal Court delivered the judgment in Morton as Liquidator of MJ Woodman Electrical Contractors Pty Ltd v Metal Manufacturers Pty Limited [2021] FCAFC 228, confirming that a creditor of an insolvent company cannot rely on the right of set-off under section 553C of the Act in response to an unfair preference claim under section 588FA of the Act.

The case

The defendant, Metal Manufacturers Pty Ltd (Creditor), received payments of $190,000 during the relation back period from MJ Woodman Electrical Contractors Pty Ltd (Company). Before going into liquidation, the Company also obtained goods from the Creditor on credit terms in the amount of $194,727.23.

The Creditor sought to set-off the unfair preference in the amount of $194,727.23, being the amount owed by the Company to the Creditor.

The decision

Justice Derrington reserved the following question for consideration by the Full Court:

?Is statutory set-off, under s553C(1) of the Act, available to the defendant in the proceeding against the plaintiff’s claim as liquidator for the recovery of an unfair preference under s558FA of the Act??

The Full Court’s answer to this question was no.

The Full Court rejected the Creditor’s argument that a liability to repay a preference can be set-off against another debt owed to the same creditor and disagreed that it fell within the scope of section 553C of the Act.

The Creditor was unable to satisfy the elements of mutuality. Specifically, the lack of mutuality arose from the different interests. That is, the right to seek repayment of the preference is not the right of the company, but instead, it is a right executed by a liquidator in their duty to gather in the assets of a company for the benefit of unsecured creditors.

In addition, the Court reiterated that section 553C of the Act is based on the equitable principle of equality. The purpose of the unfair preference provisions is to achieve fairness. Accordingly, if the Court was to accept the Creditor’s position, the funds disgorged by the Creditor would not be available to distribute equally to other unsecured creditors and to priority creditors.

Summary

• A creditor cannot rely on section 553C of the Act as a defence to an unfair preference claim by setting off another debt owed by the company to the creditor.

• The underlying purpose of the statutory set-off is to protect creditors where genuine mutual debts or dealings exist without affecting the pari passu distribution.

• Under section 588FA of the Act, the obligation to pay will arise from a court order made following a successful application by a liquidator. Therefore the right to seek repayment of the preference is not the right of the company but a right executed by a liquidator.

This article is not exhaustive on this complex area of law, various exceptions and qualifications apply. Gavin Parsons and Associates can assist you with your enquiries and explain how the new laws apply to you. Contact us on (02) 9262 4471 for a free no obligation consultation.

It goes without saying that how we have operated our lives and businesses has changed many times over throughout the course of the COVID-19 pandemic. Restrictions are being wound back. We are moving forward. However, in news that will benefit all involved in business dealings, we confirm that some of the pandemic response changes are here to stay. These new laws centre on permanently allowing electronic and split execution of documents.

Our previous articles on this topic, which can be accessed via the links below, outline some of the changes that were originally made on a temporary basis:

On 23 February 2022, the Corporations Amendment (Meetings and Documents) Bill 2021 (Bill) became law, bringing with it a greater sense of convenience whilst also facilitating efficiency. The core principle of the Bill allows companies to execute documents, including deeds, contracts and agreements, by electronic means.

The Bill effectively implements the temporary measures introduced in response to the COVID-19 outbreak, when many people worked remotely and without in-person contact, on a permanent basis. Alongside the freedom to electronically execute documents, many other changes have been made, all of which offer increased convenience and efficiency.

These changes, include but are not limited to, are summarised as follows:

1. Allow for documents that fall under the scope of sections 126 and 127 of the Corporations Act 2001 (Act) to be presented in electronic means, not a paper copy as was previously required by law.

2. Allow an authorised individual or agent, appointed under section 126 of the Act, to execute deeds, without the need of an accompanying deed to give authorisation.

3. Allow for an authorised person's signature on a deed to occur without the need of a witness.

4. Allow for a document to be executed by split execution. This removes the requirement of a face to face exchange when signing a document.

5. Allow a proprietary company with a sole director and no company secretary to sign, regardless of the sole director's status as director and/or secretary.

6. Allow an agent to execute a document without the need to be appointed by a deed.

As you can see, these changes will continue to allow us to operate in a more time-friendly and convenient way well after the COVID?19 Pandemic has ended.

Should you need further information or assistance as to how this affects you, please reach out to Gavin and the team at Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au

It goes without saying that how we have operated our lives and businesses has changed many times over throughout the course of the COVID-19 pandemic. Restrictions are being wound back. We are moving forward. However, in news that will benefit all involved in business dealings, we confirm that some of the pandemic response changes are here to stay. These new laws centre on permanently allowing electronic and split execution of documents.

On 23 February 2022, the Corporations Amendment (Meetings and Documents) Bill 2021 (Bill) became law, bringing with it a greater sense of convenience whilst also facilitating efficiency. The core principle of the Bill allows companies to execute documents, including deeds, contracts and agreements, by electronic means.

The Bill effectively implements the temporary measures introduced in response to the COVID-19 outbreak, when many people worked remotely and without in-person contact, on a permanent basis. Alongside the freedom to electronically execute documents, many other changes have been made, all of which offer increased convenience and efficiency.

These changes, include but are not limited to, are summarised as follows:

1. Allow for documents that fall under the scope of sections 126 and 127 of the Corporations Act 2001 (Act) to be presented in electronic means, not a paper copy as was previously required by law.

2. Allow an authorised individual or agent, appointed under section 126 of the Act, to execute deeds, without the need of an accompanying deed to give authorisation.

3. Allow for an authorised person’s signature on a deed to occur without the need of a witness.

4. Allow for a document to be executed by split execution. This removes the requirement of a face to face exchange when signing a document.

5. Allow a proprietary company with a sole director and no company secretary to sign, regardless of the sole director’s status as director and/or secretary.

6. Allow an agent to execute a document without the need to be appointed by a deed.

As you can see, these changes will continue to allow us to operate in a more time-friendly and convenient way well after the COVID?19 Pandemic has ended.

Should you need further information or assistance as to how this affects you, please reach out to Gavin and the team at Gavin Parsons and Associates on (02) 9262 4471 or at gavin@gpalaw.com.au