In the matter of BBY Limited (Receivers and Managers appointed) (in liquidation) [2016] NSWSC 1366

Supreme Court New South Wales

Medium Neutral Citation: In the matter of BBY Limited (Receivers and Managers appointed) (in liquidation) [2016] NSWSC 1366 Hearing dates: 22, 23 March 2016 Date of orders: 27 September 2016 Decision date: 27 September 2016 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Refer to para [152] Catchwords: PROCEDURE – Miscellaneous procedural matters – Other matters – separate question – whether appropriate to answer – whether question was an advisory opinion, not judicial determination – held, not inappropriate to answer

CORPORATIONS – financial services and markets – financial markets – where cash cover for margin returned to market participant following appointment of administrators to participant ("Returned Collateral") – whether, regardless of various unresolved issues, individual clients ("Relevant ETO Clients") to whose account cover was credited in records of ASX at direction of participant exclusively entitled to Returned Collateral – whether received by administrators impressed with equitable obligation to pay to relevant clients – held, no such obligation arises from regulatory and contractual framework or correspondence – whether sourced only in funds provided by relevant clients – held, not possible to determine at this stage that sourced solely in funds provided by relevant clients – not possible to conclude that relevant clients entitled to Returned Collateral regardless of unresolved issues

CORPORATIONS – financial services and markets – financial services providers – dealing with clients' money – money related to derivatives – insolvency – where licensee in administration – where moneys "swept" from Relevant ETO Clients' personal accounts into pre-administration client segregated account ("CSA") pursuant to standing client authority after administrators appointed ("Erroneous Withdrawals") – whether, regardless of various unresolved issues, Relevant ETO Clients entitled to return of Erroneous Withdrawals – where purpose of payments was to cover margin obligations of licensee – where purpose of payment failed as licensee did not meet its margin obligations and clients' funds not used to cover those obligations – whether client moneys were paid into CSA "in error" – payment made in furtherance of payer's purpose and in accordance with payer's intention is not made in error – payment made on assumption that is later falsified is not made in error – amounts ought to have been paid into separate post-administration account and thus paid into CSA in error – whether reg 7.8.03(6) applies to moneys paid into account after insolvency event – held, it does not – held, relevant clients entitled to return of payments Legislation Cited: (CTH) Corporations Act 2001, s 446A, s 499, Part 7.8 Division 2 Subdivision A, s 981A, s 981B, s 981D, s 981F, 981H (CTH) Corporations Regulations 2001, regs 7.8.01, 7.8.03. ASX Clear Operating Rules Cases Cited: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 MF Global Australia Ltd (in liq), In the matter of (2012) 267 FLR 27; [2012] NSWSC 994 Georges v Seaborn International (Trustee), in the matter of Sonray Capital Markets Pty Ltd (in liq) (2012) 87 ACSR 442; [2012] FCA 75 Georges v Seaborn International Pty Ltd (2012) 206 FCR 408; [2012] FCAFC 140 All Class Insurance Brokers Pty Ltd (in liq), In the matter of; Vardy v Westpac Banking Corporation [2014] NSWSC 475 Category: Procedural and other rulings Parties: Stephen Ernest Vaughan and Ian Richard Hall in their capacity as liquidators of BBY Limited (Receivers & Managers appointed) (In liquidation) ACN 007 707 777 (first plaintiff) BBY Limited (Receivers & Managers appointed) (In liquidation) ACN 007 707 777 (second plaintiff) J Mazzetti Pty Ltd ATF J Mazzetti Pty Limited Staff Superannuation Fund & Ors (first defendant) Peter Brian Haywood and Bronwen Menai Haywood (ATF the Haywood Superannuation Fund) (second defendant) Clive Riseam (third defendant) Securities Exchange Guarantee Corporation Ltd (fourth defendant) David Nadin (fifth defendant) Representation: Counsel: I M Jackman SC w R M Foreman (plaintiffs) D J Williams QC w G J Parncutt (first defendant) P J Brereton SC w V Whittaker (second defendant) G E S Ng (third defendant) J J Hutton (fourth defendant) M S Henry (fifth defendant)