Wednesday, June 1, 2011

A win for ASIC in the High Court

The High Court today allowed an appeal brought by ASIC against a decision of the Full Federal Court. The Full Court had allowed an appeal by Lanepoint Enterprises Pty Ltd from the decision of Gilmour J in which ASIC was granted leave to apply for a winding up order, and ordered that Lanepoint be wound up in insolvency pursuant to s 459A of the Corporations Act. Lanepoint had sought to establish its solvency so as to rebut a presumption of insolvency under s459C(2)(c) of the Act. However, Gilmour J held that certain transactions relied upon by Lanepoint to establish its solvency were ineffective to reduce its indebtedness to a related company and the presumption was therefore not rebutted.

The Full Court accepted the argument of Lanepoint that the discretion exercised by Gilmour J in ordering that the company be wound up rather than to stay or dismiss the proceedings, had miscarried.  The Full Court considered the winding up application to be an inappropriate vehicle for the determination of Lanepoint’s solvency.

The High Court unanimously allowed ASIC’s appeal from the decision of the Full Court.  Lanepoint was unable to point to further evidence relevant to rebutting the presumption of insolvency that was not adduced at the hearing of the winding up application. It was not necessary that other parties be joined to the proceedings before the question of Lanepoint's solvency should be determined.  Rather, the postponement of the winding up application would have added to the considerable delays that had already been encountered by ASIC since the application had been filed.

ASIC v Lanepoint Enterprises Pty Ltd [2011] HCA 18

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