Pitcher Partners’ Perth office nabob Bryan Hughes has come in for some stick in a judgment of the Supreme Court of Western Australia, which has rejected Hughes’ multiple claims of voidable transactions in respect of stricken developer Westgem.
In what may turn out to be a costly decision for Hughes’ litigation funder IMF, Justice Paul Tottle said yesterday that the basis on which Hughes founded his claims of voidable transactions were inconsistent with the opinions he’d expressed in several reports to Westgem creditors.
“In statements made by him about Westgem’s solvency in a report to creditors prepared in his capacity as administrator prior to his appointment as liquidator and, subsequently in a report by him as liquidator, he expressed opinions in relation to Westgem’s solvency which are contrary to the allegations made by him in these proceedings,” Justice Tottle said.
His honour also seemed to lament the fact that Hughes chose not to give evidence in the proceedings, which culminated in the delivery yesterday of a 532 page judgment in the matter of Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [No 6] [2020] WASC 302.
“The liquidator did not give evidence in support of the allegations of insolvency and nor did he adduce any expert evidence,” Justice Tottle said.
“The liquidator was not appointed by the court and was not acting as an officer of the court.
“That said, it is regrettable the liquidator did not give evidence to assist in reconciling the contradiction between the opinions expressed by him in his reports and the position adopted by him in this litigation.
“As noted earlier, however, the solvency or insolvency question is one of fact for the court to resolve irrespective of any opinion expressed by the liquidator.
“The facts as I have found them speak for themselves. The liquidator’s opinion about Westgem’s solvency is inconsistent with the assessment made by me on the facts as I have found them.
“I have not attached any significance to the fact the liquidator did not give evidence,” Justice Tottle said.
Hughes did not respond to iNO’s inquiries in respect of whether or not he and his backers might challenge the decision but given the sums invested so far, an appeal cannot be discounted.
IMF in fact may have had some inkling of the judge’s ruling given it asked the Australian Securities Exchange (ASX) to halt trading yesterday in its shares prior to the judgment being delivered.
“ … the reason for the trading halt is to facilitate an orderly market in the Company’s securities pending an announcement with respect to the decision of the Supreme Court of Western Australia in relation to the Westgem case,” IMF’s announcement to the ASX read.
Why halt trading unless you knew or suspected that the horse you’d backed had been scratched? Support INO’s continued chronicling of the insolvency sector.
Further reading:
Peter, had you wanted to find out why Omni Bridgeway requested a trading halt, you could have done a simple thing like use a telephone and ask. A trading halt was requested because the implications from a judgment are not always immediately clear and as a public company there is an obligation to inform the market. This was the approach we also employed on Wivenhoe (which our clients won). There are rules relating to the provision of the advance judgment before His Honour hands down the decision, which if breached can be a contempt of Court. Please be a bit more careful with your speculation.
Thank you for your comment Andrew. The story contains a quote directly from the ASX announcement, confirming the halt was requested in regard to the anticipated imminent delivery of the judgment.
Thanks Peter. The quote is, but the speculation is not. As suggested, a phone call may have assisted your reporting.
Peter
A review of the judgement demonstrates that justice tottle agreed with the liquidators contention in the proceedings that the companies were insolvent from 25 September 2009. The below reference was to the insolvency conclusion in the liquidators report to creditors which identified a later insolvency date of 30 September 2010.
“The facts as I have found them speak for themselves. The liquidator’s opinion about Westgem’s solvency is inconsistent with the assessment made by me on the facts as I have found them.”
The voidable transaction case was essentially lost because the judge did not agree that the transactions contemplated between the companies were uncommercial (notwithstanding that the companies were insolvent).