25 August 2015
This is a recent decision of the Supreme Court of Queensland considering the standing requirements for a claim made under s 228(1) of the Property Law Act 1974 (PLA). The defendants in the substantive matter brought the present application in an effort to strike out the plaintiffs proceeding against them, alleging that the claim be set aside or struck out on the ground that the plaintiff lacked standing. The substantive action had been brought by the plaintiff liquidators to have a series of transactions involving the plaintiff and the defendant made prior to the plaintiff going into liquidation, declared void and reversed, pursuant to s 228, on the basis that there had been an “intent to defraud creditors” and the transactions amounted to an “alienation of property”. . This application turned on the question of whether the plaintiff liquidators could be considered a “person prejudiced by the alienation of property.”
The plaintiffs were the liquidators of Blue Chip Property Services. Pursuant to s 477 of the Corporations Act 2001 (Cth), as liquidators they have the power to “bring or defend any legal proceeding in the name and on behalf of the company ...” (emphasis added). . In the substantive matter, however, the liquidators did not bring the claim on behalf of the company, but instead insisted that the matter had been brought on behalf of the creditors of the company, , claiming that they had the power to do so courtesy of s 477(2)(m) which confers on liquidators the power to “do all such ... things ... necessary for winding up the affairs” of a company. . The Court considered that though this interpretation did not “rest easily” with the existence of s 477, and the fact that it expressly allowed for a liquidator to bring or defend a legal proceeding, see –, the Court accepted that s 477(2)(m) might empower liquidators to institute proceedings pursuant to s 228 of the PLA. . The real issue was whether the liquidator was a person to whom s 228 applied.
Pursuant to s 228, the liquidator could only bring this action if it could establish that it was “prejudiced by the alienation”. Though, in the circumstances, it was arguable that the company was prejudiced, the Court considered that this prejudice did not extend to the liquidators as individuals. In reaching this decision the Court addressed the applicant’s contention that even accepting the plaintiff’s assertion or prejudice – which was, of itself questionable, see – – it was not occasioned “by the alienation of property”. . The Court considered that the language of s 228 required a causative link between the prejudice complained of, being in this case that it has remuneration outstanding, and the alienation. In this case, the plaintiff had no relevant interest at the time when the alienation is alleged to have occurred, the alienation occurring long before the liquidator assumed any connection with the company. –. Instead, the Court concluded, any prejudice suffered by the liquidator was caused by the liquidator’s decision to take on the appointment, and thus it lacked standing under s 228.
For these reasons, the Court struck out the statement of claim for its failure to disclose a reasonable cause of action. .