RE KNIGHTSBRIDGE MANAGED FUNDS LTD (IN LIQ); EX PARTE CARRELLO [2007] WASC 306

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2007] WASC 306
Published:	17/12/2007
Case No:	COR:151/2007	Heard:	26 OCTOBER 2007
Coram:	EM HEENAN J	Delivered:	26/10/07
No of pages:	20	Judgment Part:	1 of 1
Result:	Leave to enter proposed LFA agreement subject to conditions
Category:	A
PDF Version

Parties:	GIOVANNI MAURIZIO CARRELLO
Catchwords:	Corporations Liquidation Corporations Act 2001 (Cth) Application by liquidator for leave to enter into obligation where performance may take more than three months Trust obligations Separation of trust assets Managed investment scheme under court-appointed winding up Leave to apply under liberty to apply in original order Consolidation of proceedings Proposal to conduct litigation Litigation funding agreement (LFA) Potential effect on beneficiaries Relevant considerations Approval on conditions requiring notification to beneficiaries Undertaking by litigation funder to accept any variations to LFA which may later be ordered by the court
Legislation:	Corporations Act 2001 (Cth) Trustees Act 1962 (WA)
Case References:	Australian Securities and Investments Commission v Knightsbridge Managed Funds Ltd [2001] WASC 339 Australian Securities Investments Commission v Knightsbridge Managed Funds Ltd [2001] WASC 339 Buiscex Ltd v Panfida Foods Ltd (in liq) (1998) 28 ACSR 357 Dean-Willcocks v Nothintoohard Pty Ltd (in liq) [2006] NSWCA 311 Re ACN 076 673 875 Ltd [2002] NSWSC 578; (2002) 42 ACSR 296 Re Addstone Pty Ltd (in liq) (1998) 83 FCR 583 Re Byrne Australia Pty Ltd [1981] 1 NSWLR 394 Re Enhill Pty Ltd [1983] 1 VR 561 Re GA Listing & Maintenance Pty Ltd (1994) 15 ACSR 308 Re Suco Gold Pty Ltd (1983) 33 SASR 99

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : RE KNIGHTSBRIDGE MANAGED FUNDS LTD (IN LIQ); EX PARTE CARRELLO [2007] WASC 306 CORAM : EM HEENAN J HEARD : 26 OCTOBER 2007 DELIVERED : 26 OCTOBER 2007 PUBLISHED : 18 DECEMBER 2007 FILE NO/S : COR 151 of 2007 MATTER : Section 477(2B) of the Corporations Act 2001 (Cth) and KNIGHTSBRIDGE MANAGED FUNDS LTD (IN LIQ) EX PARTE

GIOVANNI MAURIZIO CARRELLO

Plaintiff

Catchwords:

Corporations - Liquidation - Corporations Act 2001 (Cth) - Application by liquidator for leave to enter into obligation where performance may take more than three months - Trust obligations - Separation of trust assets - Managed investment scheme under court-appointed winding up - Leave to apply under liberty to apply in original order - Consolidation of proceedings - Proposal to conduct litigation - Litigation funding agreement (LFA) - Potential effect on beneficiaries - Relevant considerations - Approval on conditions requiring notification to beneficiaries - Undertaking by litigation funder to accept any variations to LFA which may later be ordered by the court

(Page 2)

Legislation:

Corporations Act 2001 (Cth)

Trustees Act 1962 (WA)

Result:

Leave to enter proposed LFA agreement subject to conditions

Category: A

Representation:

Counsel:

Plaintiff : Mr K L Christensen

Solicitors:

Plaintiff : Christensen Vaughan

Case(s) referred to in judgment(s):

Australian Securities and Investments Commission v Knightsbridge Managed…

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.

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Details

Case: [2007] WASC 306
Decision Date: 26 OCTOBER 2007

CaseChat Overview and Summary

In the matter of Knightsbridge Managed Funds Ltd, the court was presented with an application by the liquidators for leave to enter into a litigation funding agreement. The funds were under a court-appointed winding up, and the liquidators sought to engage in litigation that might extend beyond the typical three-month period for the performance of trust obligations. This request raised questions regarding the separation of trust assets and the implications for beneficiaries under a managed investment scheme.

The primary legal issue before the court was whether the liquidators could validly enter into a litigation funding agreement when the performance of the obligations under such an agreement would extend beyond the three-month period. This necessitated an interpretation of the Corporations Act 2001, particularly concerning the separation of trust assets and the protection of beneficiaries. The court also had to consider whether the liquidators' proposed agreement complied with the requirements for obtaining leave and what conditions, if any, should be imposed.

The court concluded that the liquidators could enter into the proposed litigation funding agreement, but subject to certain conditions. These included requiring the liquidators to notify the beneficiaries of the proposed agreement and to obtain their approval. The court also stipulated that the litigation funder must accept any variations to the agreement that the court might later order. This decision balanced the need for the liquidators to pursue litigation to protect or enhance the assets of the trust with the statutory requirement to avoid obligations that could extend beyond three months without specific approval.

The court's orders granted leave to the liquidators to enter into the proposed litigation funding agreement, subject to the conditions mentioned. This ruling provided a framework for the liquidators to proceed with litigation while ensuring that the interests of the beneficiaries were protected.

Orders

Orders of the court

Leave to enter proposed LFA agreement subject to conditions

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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