Karen Petch recently appeared in an application by the Liquidators of Halifax Investment Services Pty Ltd (Halifax AU) and Halifax New Zealand Limited (Halifax NZ).
Upon their appointment, the Liquidators discovered that Halifax AU and Halifax NZ had comingled the funds of clients (between the entities, with each other, and with their own funds) leading to a deficiency of over AUD19 million into which it was practically impossible to trace most client entitlements.
The Liquidators sought directions as to whether they were justified in pooling client entitlements and, if so, how those entitlements ought to be valued and distributed.
Atlas Asset Management Pty Ltd (as trustee for the Atlas Management Trust), for whom Ms Petch acted (led by Richard Scruby SC and instructed by Gilbert + Tobin), contended that all client assets ought to be pooled and distributed rateably. Other clients contended that the Courts should recognise various proprietary interests and took differing positions as to how client entitlements ought to be valued and distributed.
The Courts held that, with some limited exceptions for clients who were able to specifically identify their assets, the Liquidators were justified in closing out open positions and pooling all client monies, and to calculate entitlements rateably.
The hearing of the Liquidators’ application was the first ever concurrent hearing between the Federal Court of Australia and the High Court of New Zealand. Counsel were physically present in court in Sydney or Auckland but appeared before both Courts, which were joined by video-link.
Kelly (liquidator), in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Loo [2021] FCA 531: https://assets.kpmg/content/dam/kpmg/au/pdf/creditors/halifax-investment-services/halifax-judgment-justice-markovic-19-may-2021.pdf
In the matter of Halifax New Zealand Limited (in liquidation) [2021] NZHC 1113: https://assets.kpmg/content/dam/kpmg/au/pdf/creditors/halifax-nz-limited/halifax-nz-judgment-justice-venning-19-may-2021.pdf
