This was an application by general purpose and special purpose liquidators seeking judicial advice to the effect that they were justified in entering into a settlement deed that resolved certain litigation.
The deed resolved a dispute between the two companies in liquidation (Octaviar Limited and Octaviar Administration Pty Ltd) and the Commissioner of Taxation concerning the effect of a garnishee notice issued under section s 260-5 of schedule 1 to the Taxation Administration Act 1953 (Cth). The notice had been issued to Octaviar Administration requiring it to pay any amount it owed to Octaviar Limited to cover tax debts owed by Octaviar Limited. The notice was issued at a time when a floating charge had crystallised over all debts owed to Octaviar Limited.
The deed also resolved a dispute between Octaviar Limited and Octaviar Administration as to the amount of the debt owed by Octaviar Administration to Octaviar Limited.
The Court advised the liquidators that they were justified in entering into the settlement deed. Although it was not possible to be sure that the settlement reflected the outcome that would follow from a final determination of all disputes, the Court cited the aphorism attributed to Voltaire ‘Don’t let perfect be the enemy of the good’. The Court noted that the liquidators had ‘each given careful consideration to the cost, delay and risk of litigating all those issues to finality, including by obtaining legal advice from appropriately experienced senior and junior counsel on the merits of critical issues. Having done so, they have formed the view that they are justified in entering into the settlement deed. The great majority of unsecured creditors – who might be expected to be the best judges of their own interests – support the settlement.’
The Court also made confidentiality orders concerning certain material relied upon by the liquidators in support of the application.
Michael May (with J D McKenna QC) appeared on behalf of the first applicant, instructed by K&L Gates.
The judgment is published here.
