The current fragmentation of insolvency law principles across various pieces of legislation leaves ample room for confusion and uncertainty, especially in instances where multiple Acts could potentially apply to the same insolvency, or where it is unclear which legislation applies. This issue is nowhere more apparent than in the case of insolvency of companies that operate in partnership. This article identifies some of the complexities and potential confusion that arise as a result, particularly in relation to the relationship between insolvency and the dissolution of the partnership, the distribution rules that will apply where corporate partners become insolvent, and the way in which the insolvent trading prohibition applies in respect of directors of insolvent companies operating in partnership. Ultimately, it advocates for legislative reform to provide greater clarity and certainty in this context.
Central to the conflict of environmental and insolvency law is the question of who pays when the polluter cannot. Environmental standards provide impractical accountability mechanisms for the liability of corporations in liquidation. Limited legislative guidance in Australia and other Commonwealth jurisdictions has resulted in unsettled judicial outcomes that appear to produce ad hoc decisions affecting company control and liquidator liability, challenges to disclaimers, and the priority ranking of creditors' claims in liquidation. These points to unresolved tensions between environmental law and insolvency law as areas with divergent public interest concerns.
This note summarises the recent New Zealand Court of Appeal decision in Francis v Gross1 which reversed a direction given by the High Court to the liquidators of Podular Housing Systems Ltd (in liq) (Podular) that purchasers of partly constructed modular residential pods had an equitable lien over the pod that was identifiable as the subject of their contract to the extent of purchase price each had paid prior to commencement of Podular's liquidation.2 The Court of Appeal's decision overturns a line of High Court authorities3 and has the consequence that New Zealand law on this issue now deviates from the majority decision of the High Court of Australia in Hewitt v Court.4 The Court of Appeal also reversed a subsequent direction made by the High Court that the liquidators' costs and disbursements were not to be deducted from the sale proceeds of the pods before the remaining balance was paid to the purchasers.5
Pursuant to Div 45 of the Insolvency Practice Schedule, both Corporate and Bankruptcy, the court is given oversight of trustees and liquidators. To date there have been only two cases which have considered s 45-1, one in relation to a registered liquidator and one in relation to a trustee in bankruptcy; Australian Securities and Investments Commission v Bettles and Pekar v Holden (No 2), respectively. This article aims to examine the relevant provisions and case law noted above and will consider the approach the courts will take when delivering this oversight. Moreover, it will consider the relevance of the prior case law dealing with the former s 536 of the Corporations Act 2001 (Cth) and s 178 of the Bankruptcy Act 1966 (Cth). The conclusion reached in this article is that when considering the new provisions, the Courts will need to consider the old cases.
