City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130

FEDERAL COURT OF AUSTRALIA

City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130

CORPORATIONS - deed of company arrangement - Corporations Act 2001 (Cth) Pt 5.3A - clauses in deed of company arrangement providing for some creditors to release claims against creditors other than the company under administration - clauses in deed of company arrangement (1) imposed a moratorium on proceedings by a creditor not only against the company but also against any company in which its parent had a direct or indirect shareholding and their insurers; (2) gave to the deed administrators the sole conduct of any claim for insurance proceeds relating to a creditor's claim against the company or any of its related entities; and (3) on payment of a final dividend, released not only the company but also companies in which its parent had a direct or indirect shareholding, and all of their insurers, from any liability to all creditors - whether Pt 5.3A gave binding force to the clauses - s 444D only applies to creditors' claims against the company - s 444D does not authorise a deed that releases creditors' claims against entities other than the company under administration

Held: Deed of company arrangement void and of no effect: impugned clauses not severable and not capable of binding creditors in respect of their rights against persons or entities other than the company STATUTES - cannons of construction - parliament does not intend to interfere with fundamental rights, including property rights, unless it uses unambiguously clear language - principles of statutory interpretation - legislation affecting fundamental rights, including property rights, should be construed strictly - whether Corporations Act 2001 (Cth) Pt 5.3A permitted the execution of a deed of company arrangement that deprived creditors of causes of action against persons other than the company subject to the deed of company arrangement