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JWS has achieved an excellent result for the liquidators of the Gunns Group, with success in the Federal Court’s judgment in Bryant (Liquidator) v L.V. Dohnt & Co Pty Ltd, In the Matter of Gunns Limited (In Liq.) (Receivers and Managers Appointed)  FCA 238.
The judgment will be welcomed by all liquidators, as Davies J’s decision provides a useful reference guide for liquidators in establishing insolvency within the context of complex corporate groups and confirms the capacity of liquidators to amend voidable transaction claims outside of the 3-year period specified by s 588FF(3) of the Corporations Act 2001 (Cth) (the Act) in circumstances where the claims were filed within that time period.
The judgment serves as a useful reminder to insolvency practitioners of:
The Gunns Group’s liquidators (for whom JWS acted) commenced proceedings in the Federal Court against various defendants alleging that payments received by them from the Gunns Group were voidable transactions pursuant to s 588FE of the Act. The proceedings raised some common questions, including when the Gunns Group became insolvent and whether subsequent amendments to the claims were statute barred by reason of s 588FF(3) of the Act.
The liquidators relied upon two expert reports in support of their position that Gunns Limited and the Gunns Group were insolvent from 30 March 2012.
Her Honour accepted the expert evidence and found that the Gunns Group was insolvent from 30 March 2012 on the following bases:1
The liquidators’ original claims were made within the 3 year period specified by s 588FF(3) of the Act, particularising that numerous matters (being certain events in the period between January 2012 and 25 September 2012) indicated that Gunns was “insolvent from at least 3 July 2012 and possibly earlier”.
Following the receipt of expert opinion that Gunns was insolvent from 30 March 2012, the liquidators amended their claims to include all payments made to the defendants from 30 March 2012 onwards.
The liquidators argued, primarily relying on Rodgers v Commissioner of Taxation2 (“Rodgers”) that the Court was empowered by the Federal Court Rulesto permit the liquidators to amend the pleadings to add the additional payments, as they arose “from the same or substantially the same facts” as those already pleaded.
Her Honour held that given that “the jurisdictional precondition is met by an action for relief under s 588FF(1) commenced within time, the Federal Court Rules are not being used to vary the time stipulated by s 588FF(3) within which a proceeding must be commenced.”3
1  FCA 238 at 
2 (1998) 88 FCR 61
3  FCA 238 at .
The Supreme Court of New South Wales has helpfully given guidance to the liquidators of the RCR Tomlinson Group on a number of unsettled questions that have challenged insolvency practitioners...
This week, the Federal Court published judgments in three unfair preference claims brought by the liquidators of the Gunns Group. We acted for the liquidators in each proceeding.
Times are changing rapidly with the current flow of Coronavirus measures introduced to support businesses in debt and distress.