Anshun risk foils receivers’ cut price compromise

For those who secrete – in a strictly Pavlovian manner – whenever an Anshun point’s dissected, do we have the judgment for you.

The decision in Vines (Trustee), in the matter of the Bankrupt Estate of Mitchell v The Edge TC Pty Ltd (No 5) [2026] FCA 4 highlights the limitations applying to receivers appointed in an interim capacity and the difficulty of settling matters when related “potential claims” exist.

The practitioners in this instance are Hall Chadwick worthies Brent Kijurina and Richard Albarran, who were brought in in October 2024 on the application of colleague Matthew Vines in his capacity as trustee of the estate of bankrupt West Australian agri-business promoter and Wealthcheck Finance Pty Ltd (WFPL) principal Sam Alexander Mitchell.

Vines was concerned that the assets of certain entities in which estate creditors might have an interest were at risk.

Two months before Vines applied in the Federal Court to have his Hall Chadwick colleagues appointed WFPL had commenced a proceeding in the Supreme Court of Queensland against O’Shea and Partners Lawyers Pty Ltd (O’Shea Partners) and O’Shea and Associates Services Pty Ltd (O’Shea Services, together, O’Shea).

WFPL claims to be entitled to $381,361.19 which O’Shea Partners holds in its trust account.

It also claims that on 10 July 2024, it directed O’Shea Partners to disburse the trust funds to it.

As that didn’t happen WFPL is seeking a declaration that O’Shea Partners does not have a statutory or equitable lien over the funds. Predictably it’s also claiming interest and costs.

O’Shea has been reluctant to part with the cash because as far as it’s concerned, this is the amount its owed for the work it did for Mitchell prior to his bankruptcy and departure from the jurisdiction. He is reportedly in the USA these days.

While the receivers haven’t been moved to characterise Mitchell as a paragon of cooperation, the bankrupt has apparently been firm on the point that the invoices O’Shea Partners has issued are disputed.

But in the wake of their appointments Kijurina and Albarran sought to settle the stoush for half.

Mindful of their limited powers the interim receivers sought the court’s guidance on whether or not they would be justified in entering into a deed of settlement which envisaged taking a 50 per cent hair cut on the amount WFPL claimed it’s owed.

Federal Court judge Darren Jackson reasoned that it wasn’t the size of the discount as much as the anshun threat the settlement posed to the viability of any “potential claims” which might be available to the company and pursued in some hypothetical future.

“Were it not for the Potential Claims, I would have concluded that the proposed settlement is not imprudent, unreasonable or affected by any error of law or impropriety,” the judge said.

“If the issues currently raised in the proceeding are considered in isolation, the proposed settlement appears reasonable, because the amount of the Disputed Funds is relatively small and the legal costs of pursuing it are likely to be relatively large.

“Also, it is supported by considered written legal opinions provided by the Receivers’ solicitors, on which it is reasonable for the Receivers to rely.

“But those issues cannot be considered in isolation. The impact of the proposed settlement on the Potential Claims must also be addressed.

“The Anshun argument put by the Interested Respondents may or may not be correct; that is something that could only be determined if the Potential Claims were to be pleaded in a subsequent proceeding and the Anshun point taken in that proceeding.

“But contrary to the Receivers’ position, the argument is not necessarily a misapplication of Anshun, for it is an application of the principle that has found favour in other courts.

“While I am, with respect, willing to give weight to Mr Kirjuana’s assessment of the advisability of settlement, as an experienced insolvency professional, it does not appear that the assessment takes account of the Potential Claims.

“The same may be said of the HWL Ebsworth opinions. On the state of the materials presently before the Court, I decline to order that the Receivers would be justified in proceeding with the proposed settlement.”