IMF (Australia) Limited v Meadow Springs Fairway Resort Limited (in Liquidation) [2009] FCAFC 9

FEDERAL COURT OF AUSTRALIA

IMF (Australia) Limited v Meadow Springs Fairway Resort Limited (in Liquidation) [2009] FCAFC 9

CORPORATIONS – insolvency – winding up – litigation funding agreement – agreement providing that a proportion of any settlement or judgment received by company be paid to funder in addition to repaying it all moneys it had outlaid – competing claims and priorities to funds – priority between remuneration payable to litigation funder and moneys owing to secured creditors of company – competing equitable interests

CORPORATIONS – appeal – application of principle that expenses reasonably incurred in care, preservation and realisation of fund may be thrown against that fund, notwithstanding that fund belongs to a secured creditor: Re Universal Distributing Company Limited (in Liquidation) (1933) 48 CLR 171 – whether expenses incurred by liquidator in entering into litigation funding agreement expenses reasonably incurred –circumstances where action held by company in liquidation against third party would have been lost, but for decision by liquidator to enter into funding agreement – whether proportion of fund realised (over and above payments made by funder) payable to funder out of fund in priority to secured creditors

Held: Appeal allowed

Corporations Act 2001 (Cth), ss 477(2), 477(2B), 511(2), 1322(4)

Associated Alloys (2000) 202 CLR 588 cited Buchler v Talbot[2004] 2 AC 298 cited Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 cited G & M Aldridge Pty Ltd v Walshe (2001) 203 CLR 662 cited In Re Bank of Credit and Commerce International SA [1998] AC 214 cited Re Universal Distributing Company Limited (in Liquidation) (1933) 48 CLR 171 applied Shirlaw v Taylor (1991) 31 FCR 222 cited

IMF (AUSTRALIA) LIMITED (ACN 067 298 088) v MEADOW SPRINGS FAIRWAY RESORT LIMITED (IN LIQUIDATION) (ACN 084 358 592), BALANCED SECURITIES LTD (ACN 083 514 685), WESTRALIAN CAPITAL HOLDINGS PTY LIMITED (IN LIQUIDATION) (ACN 083 526 630), KNIGHTSBRIDGE MANAGED FUNDS LIMITED (IN LIQUIDATION) (ACN 089 532 169), KNIGHTSBRIDGE FINANCE PTY LIMITED (IN LIQUIDATION) (ACN 008 716 872), HURLY INVESTMENTS PTY LIMITED (ACN 082 972 067), TIMOTHY JOSEPH CASEY and BRIAN MCMASTER in his capacity as liquidator of Meadow Springs Fairway Resort Limited