Insolvency: 03 June 2021
New case management directions provide guidance for insolvency practitioners and solicitors to resolve mother proceedings in the most time and cost efficient manner as possible.
Last year, we wrote an article about The Benefits of Boarding the Mothership which involve a plaintiff, generally a liquidator, issuing a single proceeding in respect of multiple claims against multiple defendants, such as unfair preference claims.
At the time of writing that article, there was limited case law as to how mother proceedings operate in a practical sense. Helpfully, a recent decision of Acting Master Strk in the Supreme Court of Western Australia in Matthew David Woods as joint and several liquidator of Brierty Ltd (in liq) v B&J Catalano Pty Ltd  WASC 90 (Brierty Ltd) has shed some light on the practicalities of mother proceedings.
In the Brierty Ltd matter, the plaintiffs were joint and several liquidators of a construction company and brought a joint proceeding against 12 defendants seeking to void payments made by the company to the defendants as insolvent transactions, alleging that each impugned transaction provided an unfair preference, priority or advantage over other creditors.
While there were (as there always are) factual differences between the 12 claims, at issue was one common question - the insolvency of the company at the time of the impugned transactions.
As the claims were not in respect of or arising out of the same transaction(s), leave of the court was required to join multiple parties to the one proceeding which was subsequently granted.
The question to be determined by Acting Master Strk was the appropriate case management directions as to how the proceeding should progress. In short, there were two competing positions put forward by the parties:
Further, the remaining defendants also proposed that instead of pleadings and particulars being filed, instead mediation should immediately follow the production of any expert report as to the date of solvency, allowing settlement to be explored before the costs of pleadings were incurred.
In weighing the balance of the submissions made on behalf of the parties, Acting Master Strk made case management orders that:
Such orders were made as they appeared to Acting Master Strk to be the most likely to achieve successful mediated outcomes at an early stage of the proceeding.
Further, requiring each party to provide a position paper articulating all defences was designed to limit the risk of duplication of work by the defendants, as the analysis required to prepare a mediation position paper is the analysis required to plead a defence.
The case management directions adopted in the Brierty Ltd case study provide guidance for insolvency practitioners and solicitors to efficiently resolve mother proceedings in the most time and cost efficient manner as possible.
Further the case:
Aitken Partners' Insolvency team is here to assist insolvency practitioners in assessing the merits of unfair preference claims, the best mechanism to maximise the returns from litigation and how to efficiently bring an action in the form of a mother proceeding.
If you need legal assistance with any aspect of an unfair preference claim or mother proceedings, please contact the following members of our insolvency team: