Camm v Linke Nominees Pty Ltd (No 4)

The case of Camm v Linke Nominees Pty Ltd (No 4) involved the trustees of the estate of Gary Stirling Camm seeking to set aside a transaction between Camm and Linke Nominees. The trustees argued that the transaction was voidable under the Bankruptcy Act 1966 (Cth) as it was entered into at an undervalue. The dispute centred around the enforceability of a put option deed, which allowed Linke Nominees to purchase the property if it vested in the first trustee. The evidence presented by the trustees included affidavits from Mr John Park, Mr John Shanahan, and Mr John Maitland, who expressed concerns about the potential impact of the option deed on their ability to successfully prosecute their case. The trustees argued that had they known about the option deed earlier, it would have affected their decision to proceed with the case and the steps they would have taken.

The court was required to decide whether the trustees were under an obligation to disclose the existence of the put option deed to Linke Nominees under the discovery rules. The trustees argued that they were not obligated to disclose the deed, while Linke Nominees contended that the deed was material and should have been disclosed. The court also needed to determine the effect of the option deed on the trustees' ability to exercise control over the property if they were successful in their case. The court considered whether the deed could undermine the trustees' rights under the Bankruptcy Act to avoid the transfer of the property if it was found to be voidable.

The court found that the trustees were not under an obligation to disclose the existence of the option deed as it did not fall within the scope of the discovery rules. The court noted that the rules did not impose substantially different obligations on parties required to give discovery, and that the weight of authority supported the proposition that Rule 2 of the Federal Court Rules did not extend to documents which might put a party on a train of inquiry that may turn up evidence which is of assistance to its case. The court also found that the option deed was incapable, as a matter of law, of achieving its objective because the rights vested in trustees pursuant to the Bankruptcy Act were statutory rights which could not be transferred to other parties. The court held that if the trustees were successful in their case, they would have the power to have the transfer of the property from Camm to Linke Nominees avoided, and the deed could in no way undermine any rights which they would then have to exercise control over the property for the benefit of Camm’s creditors.

The court ordered that the trustees were not liable to pay costs to Linke Nominees in relation to the costs of the application for costs. The court also found that the trustees were not required to disclose the existence of the option deed to Linke Nominees, and that the deed was incapable, as a matter of law, of achieving its objective.