20029422 wrote: » I have a company question on unfair preferences and fraudulent dispositions.I understand that if there is no intention to prefer disposing of assets could still be a fraudulent disposition I just don't get the point of unfair preference when it would be a fraudulent disposition.is the outcome different??surely there's a reason for trying to get the disposition under unfair preferences.thanks
shellbm wrote: » Here's my understanding of it, if thats any help? Please someone correct me if I am wrong! An unfair preference under s604 would be a payment made to any creditor of the company within 6 months of the winding up, or 2 years if this creditor was a person connected to the company, with a view to giving that creditor a preference over other creditors of the company. A successful application can be seen in Station Motors v Allied Irish Bank Ltd 1985 – the controllers of the applicant company had given a personal guarantee on a large overdraft with the defendant bank (a creditor). Before the company went into liquidation, the controllers arranged for certain payments to be paid into this account and therefore mitigated risk to themselves. This constituted an unfair preference as the intention to prefer was inferred by the court. A fraudulent disposition on the other hand is a payment made which perpetrates fraud on the company, its creditors and its members. An example of a successful application under s608 would be the case of Devey Enterprises v Devey; personal expenditure by the directors of the company which had been described in the books as business expenditure on behalf of the company constituted a fraudulent disposition. The difference is that an unfair preference is in favour of a one creditor over another. Again, if I have this wrong, please someone let me know haha
CP92 wrote: » Hi guys, In relation to Equity, do you think resulting trusts in regards to direct/indirect contributions is likely to appear? Thanks!
20029422 wrote: » thanks a lot it just seems arnt all unfair preferences a fraud on creditors really because it's disposing of assets that might be available to them.by preferring one creditor(jumping the queue) a fraud on another creditor is a certainty anyway.also the 6 months (2 years) requirement for unfair preference is there no such requirements for fraudulent dispositions?
claiomh solais wrote: » Do we think charitable trusts is going to come up for this sitting? It came up in October I believe. Just wondering if its going to be one of the last things I look over the night before ya know?
shellbm wrote: » I'm not sure if this sheds any further light but, according to s608 (3) on fraudulent dispositions; "This section shall NOT apply to any conveyance, mortgage, delivery of goods, payment, execution or any other act relating to property made or done by or against a company to which s604 relates." So, if the transaction in question can be caught under s604, then take it to be an unfair preference rather than a fraudulent disposition. There is no 6 month/2 year requirement for fraudulent disposition as far as I am aware.
ak4321 wrote: » Can anyone give guidance as to what topics they're doing / cutting for constitutional? Was looking to cover the main 12 or so, Is this madness?
shellbm wrote: » From what I can see, S1182 refers to the Capacity of the CLG. However s 1183(1) states that the capacity of CLG is not limited by the CLG's constitution. Maybe have a quick glance over those sections to see if that clears anything up?
hullaballoo wrote: » CLG = company limited by guarantee; CLS = compnay limited by share capital. Ultra vires has not been abolished by the act in my opinion, so the manual is wrong in that regard. Certain companies maintain objects and acts outside of those objects are still UV. I wouldn't be surprised to see courts in the future read in objects to Companies' constitutions where acts done by the company that are not UV as a result of the 2014 Act ought to be as injustices on stakeholders - creditors/members/others. The above explanation by shellbm in relation to fraudulent disposals/unfair preferences is good but it is of crucial importance that we do not yet know the import of the change in terminology in relation to preferences under the now s 604 - changed from "fraudulent" to "unfair". It can only be that the legislature wish to remove the obligation on applicants under that section to prove dominant intention to defraud where they make a preferential payment to a creditor. As such, it may be far easier now to make an application under s. 604 as against its predecessor and if you are addressing a question on this, imo, it is vital that you show you are aware of this difference. The wording aroudn s. 608/fraudulent disposal remains the same. Fraudulent disposals would typically be things like directors paying themselves massive fees or reducing directors loan accounts etc. The directors are usually not creditors - so it isn't a preferential payment. It's more like theft of company assets. As such, it's easier to get those applications home.
Redo91 wrote: » Thanks again. So if in a problem question a transaction is carried out which is ultra vires can it still be made void ab initio or is that no longer possible as the Act states no ultra vires acts can be invalidated. I have another quick question in relation to agency. Regulation 6 of the EC Companies Regulations and S 40 of the 2014 Act provide that where a registered person carries out an act which they are not empowered to do under the articles of association, constructive notice has been limited and the contract can be enforced. Does this nullify the exception to the rule in Turquands that actual reliance is needed. In Rama Corp Ltd V Proved Tin and General Investments the court found against the applicants where a director didn't have actual authority, but the memorandum provided that he could have if the power was delagated. They hadn't read the memorandum so they couldn't rely on the rule. As they were contracting with a registered person would the court not find in their favour now? Edit: Yes my manual clearly states that where a DAC acts outside its objects clause, the transaction is void ab initio. This is a direct contradiction to S 973 of the Act which states that the validity of an Act done by a DAC which isn't contained in its objects will not be invalidated.
hullaballoo wrote: » It says, "The validity of an act done by a DAC shall not be called into question on the ground of lack of capacity by reason of anything contained in the DAC's objects." There are similar provisions in relation to CLGs, PLCs and unlimited companies. This is not representative of an abolition of UV imo. Also, what the hell does "called into question" mean in a legal sense? If I'm an interested party looking to set out that the company lacked corporate capacity to do something, I'm not going to call anything into question. I'm going to set out in certain terms that the company doesn't have the capacity. Those provisions are all in sub-section (1) of the relevant sections and are then limited by the following sub-sections: (2) A member of an unlimited company may bring proceedings to restrain the doing of an act which, but for subsection (1), would be beyond the company's capacity but no such proceedings shall lie in respect of any act to be done in fulfilment of a legal obligation arising from a previous act of the company. (3) Notwithstanding the enactment of subsection (1), it remains the duty of the directors to observe any limitations on their powers flowing from the unlimited company's objects and action by the directors which, but for subsection (1), would be beyond the unlimited company's capacity may only be ratified by the company by special resolution. (4) A resolution ratifying such action shall not affect any liability incurred by the directors or any other person; if relief from any such liability is to be conferred by the unlimited company it must be agreed to separately by a special resolution of it. Sub-section (5) appears to me to pertain to notice but it is not clear in that regard: "(5) A party to a transaction with a [relevant company type] is not bound to enquire as to whether it is permitted by the company's objects." It suggests that a party who transacts with one of these companies is not deemed to know whether the transaction is permitted. It seems to be presumed that the company has capacity unless proceedings are mounted by members restraining the company from acting further. It also seems that acts already done cannot be reversed but why couch it in those terms? Why not say the transactions are not avoidable? The general capacity supposedly replacing the common law rules is further limited by the lack of capacity for any company type to do things that are inconsistent with any enactment and the general law. Of course, I am aware of the difficulty in you presenting my musings in the context of your exams... "hullaballoo on boards says UV is still alive and well, albeit fettered somewhat by providing companies with general corporate capacity and it remains unclear how or whether the doctrine will be applied under the 2014 regime." That said, you need to be critical of what the legislature have done here. As I said, they could have just said, "The common law doctrine of ultra vires is hereby abolished" and that would be the end of it. Instead, they've used inconsistent language to describe what companies supposedly can and can't do and who can sue for relief where a company purports to act beyond the scope of its capacity.
hullaballoo wrote: » @Redo It does make a difference. The crucial point is that it remains to be seen how extensive the difference is. I suppose there was a view that too many innocent parties were getting diddled by the operation of UV and the legislature tried to correct this to protect these people. I would say the changes in relation to UV are extensive and I think that the current model does protect persons dealing with companies who have no notice (actual or constructive) of the company's actual capacity. Now it seems they are not obliged to take any steps to try and find out what a company's actual capacity is. It has certainly made it more difficult to void transactions but it is not yet clear how difficult.
OMGWACA wrote: » Absolutely random, but can anyone tell me about parking at the red cow? Can I park at the hotel or am I better to park at the park and ride? *Please and thank you very much!
Pickpocket wrote: » Can somebody tell me what topics appeared for equity in October?
Yoop wrote: » 1. Essay on certainty of objects and one of the other two certainties. 2. Problem question on promissory estoppel. 3. Essay on new model constructive trusts. 4. Problem on charitable trusts. 5. Essay on personal service contracts. 6. Problem on quia timet injunctions. 7. Note on 2/3: doctrine of satisfaction, standard of care of trustees, rectification of unilateral mistake. 8. Problem on undue influence.
Pickpocket wrote: » Don't laugh, but how reliable are Nutshells for some of the smaller topics? I'm seriously stuck for time and I was thinking that I could get a quick grasp of subjects like rectification, recession and tracing. Just in case they pop up in an answer 2 of 3 question or form part of a problem question that I'd otherwise miss out on. Better than nothing I suppose, I'm just worried about cutting too many corners.
