Nikitins (Liquidator) v EncoreFX (Australia) Pty Ltd (in liq), in the matter of EncoreFX (Australia) Pty Ltd (in liq) (No 2) [2021] FCA 27

Federal Court of Australia

Nikitins (Liquidator) v EncoreFX (Australia) Pty Ltd (in liq), in the matter of EncoreFX (Australia) Pty Ltd (in liq) (No 2) [2021] FCA 27 File number: NSD 631 of 2020

Judgment of: COLVIN J

Date of judgment: 28 January 2021

Catchwords: CORPORATIONS - application by liquidators for directions as to whether justified in treating contested funds as property of liquidation - where company provided foreign exchange and global payment services - where client companies entered into arrangements for foreign exchange transactions and wire transfer of funds - where transactions and wire transfers not completed due to placement of company in administration - where company's settlement account swept after receipt of funds for transaction - whether amounts paid by client companies held by liquidators on trust under s 1017E or s 981H of Corporations Act 2001 (Cth) - whether amounts paid for purpose of securing issue of financial product or as part of performance of arrangements that constitute financial product - whether amounts held on trust according to Quistclose principles - claims by client companies that amounts held on trust upheld

Legislation: Corporations Act 2001 (Cth) ss 9, 760A, 761A, 761D, 761E, 762C, 763A, 763D, 764A, 981A, 981B, 981D, 981E, 981H, 766A, 766B, 766C, 766D, 766E, 766F, 1010B, 1012A, 1016F, 1017A, 1017B, 1017C, 1017D, 1017E, Chapter 7

Cases cited: Australian Conference Association Ltd v Mainline Constructions Pty Ltd (in liq) (1978) 141 CLR 335 Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 Basis Capital Funds Management Ltd v BT Portfolio Services Ltd [2008] NSWSC 766 Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 George v Webb [2011] NSWSC 1608 Georges v Seaborn International (Trustee), in the matter of Sonray Capital Markets Pty Ltd (in liq) [2012] FCA 75 Horsell International Pty Ltd v Divetwo Pty Ltd [2013] NSWCA 368 Hoy v Coffs Harbour City Council [2016] NSWCA 257 Legal Services Commissioner v Brereton [2011] VSCA 241; (2011) 33 VR 126 Minister for Immigration and Multicultural Affairs v Singh [2000] FCA 845; (2000) 98 FCR 469 Nikitins (Liquidator) v EncoreFX (Australia) Pty Ltd (in liq), in the matter of EncoreFX (Australia) Pty Ltd (in liq) [2020] FCA 1189 Peter Cox Investments Pty Ltd (in liq) v International Air Transport Association [1999] FCA 27 R v Khazaal [2012] HCA 26; (2012) 246 CLR 601 Rambaldi (Trustee) v Commissioner of Taxation, in the matter of Alex (Bankrupt) [2017] FCAFC 217 Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 Twinsectra Ltd v Yardley [2002] 2 AC 164 Walker v Corboy (1990) 19 NSWLR 382 Warner, in the matter of GTL Tradeup Pty Ltd (in liq) [2015] FCA 323