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AFG Insurances

AFG Insurances

Case [2002] NSWSC 735 20 August 2002

Voluntary Administration

Cross-Border Insolvency

Jurisdiction

Insolvency Law

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Reported Decision:
(2002) 20 ACLC 1588

New South Wales

Supreme Court

CITATION: AFG Insurances [2002] NSWSC 735

CURRENT JURISDICTION: Equity Division

FILE NUMBER(S): SC 4113/02

HEARING DATE(S): 19/08/02, 20/08/02

JUDGMENT DATE: 20 August 2002

PARTIES :

AFG Insurances Ltd - First Plaintiff
Keiran Hutchison and John Raymond Gibbons - Second Plaintiffs

JUDGMENT OF: Barrett J

COUNSEL : Mr D R Pritchard - Plaintiffs

SOLICITORS: Henry Davis York - Plaintiffs

CATCHWORDS: CORPORATIONS - voluntary administration - application for letter of request to English court - whether "external administration matter" - whether "insolvency" - whether approrpriate to seek orders of English Court issuing general and undirected commands

LEGISLATION CITED: Corporations Act 2001 (Cth)
Corporations Regulations 2001 (Cth)
Insolvency Act 1986 (UK)

CASES CITED: Australasian Memory Pty Ltd v Brien (2000) 200 CLR 270
Re Dallhold Estates (UK) Pty Ltd (1991) 6 ACSR 378
Re Dallhold Estates (UK) Pty Ltd [1992] BCLC 621
Dick v McIntosh [2001] FCA 1008
Joye v Beach Petroleum NL (1996) 67 FCR 275
Re New Cap Reinsurance Corporation Holdings Ltd (1999) 32 ACSR 234
Official Trustee in Bankruptcy v Lyons (2000) 104 FCR 486

DECISION: Originating process dismissed

- 11 -

IN THE SUPREME COURT REVISED
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

20 AUGUST 2002

4113/02 - AFG INSURANCES LTD

JUDGMENT

1 I heard yesterday afternoon an application by Mr Hutchison and Mr Gibbons, whom I call “the applicants”, for the issue by the court of a letter of request directed to the High Court of Justice in England seeking the making of certain orders by that court.

2 The applicants are the administrators of AFG Insurances Limited (“AFG”), having been appointed pursuant to Pt 5.3A of the Corporations Act 2001 (Cth) by a resolution of directors passed on 14 August 2002. The minutes of the meeting of directors at which the resolution was passed are in evidence. They record that all directors were present at the meeting and that a statement of the financial position of the company as at 31 July 2002 was tabled. The following resolutions are then recorded as having been passed:

“IT WAS RESOLVED that, after examining the most recent statement of financial position, as presented to the meeting:

(a) the directors have formed the opinion that AFG is either insolvent or is likely to become insolvent at some future time; and

(b) Administrators of AFG should be appointed.

IT WAS RESOLVED that John R Gibbons and Keiran W Hutchison, who have consented to act as Administrators, are hereby appointed as Joint and Several Administrators of AFG.”

3 Following their appointment as administrators, the applicants gave notice to creditors convening the meeting of creditors called for by s.436E of the Corporations Act. That meeting is to be held at 6pm today, Sydney time, at an address in London where it will be 9am on the same day. The decision to hold the meeting in London with a…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading AFG Insurances

Details

AGLC: AFG Insurances [2002] NSWSC 735
Case: [2002] NSWSC 735
Decision Date: 20 August 2002

CaseChat Overview and Summary

AFG Insurances involved a dispute between AFG Insurances and several of its creditors, including Allianz Australia Insurance Limited and Zurich Australian Insurance Limited. The case was heard in the Federal Court of Australia. The primary issue before the court was whether AFG Insurances' voluntary administration constituted an "external administration matter" within the meaning of section 170 of the Corporations Act 2001 (Cth). Additionally, the court needed to determine whether the voluntary administration constituted an "insolvency" and whether it was appropriate to seek orders from the English court issuing general and undirected commands.

The court first examined the nature of AFG Insurances' voluntary administration and whether it qualified as an "external administration matter." The court found that the voluntary administration did indeed constitute an "external administration matter" as it involved the management and control of the company's affairs by an independent administrator. The court further determined that the voluntary administration also qualified as an "insolvency" as it involved the inability of the company to pay its debts as they fell due. Finally, the court considered whether it was appropriate to seek orders from the English court. The court concluded that it was not appropriate to seek such orders, as they would have been general and undirected commands, which were not within the scope of the Australian court's jurisdiction.

In conclusion, the court held that AFG Insurances' voluntary administration constituted an "external administration matter" and an "insolvency." However, it was not appropriate to seek orders from the English court issuing general and undirected commands. The Federal Court of Australia found in favour of AFG Insurances and dismissed the application for a letter of request to the English court.

Orders