New twist in Walton collapse
THE business advisory group at the centre of the Walton Construction collapse has received another black eye in court with a judgment highly critical of its practices.
The Federal Court last month removed the Walton liquidator because of its ties to the Mawson Group, the advisory firm whose executives became directors of companies set up to take over Walton projects in Queensland.
In a unanimous decision the Federal Court on appeal decided that business links between Mawson and liquidator Lawler, Draper, Dillon were sufficient for a reasonable person to be concerned they may lead to bias.
In another judgment handed down on July 29, Mawson's involvement in the handling of the affairs of the Redset Group Pty Ltd was also questioned by the court.
It accused the Mawson Group of securing proxy over creditor votes to control the outcome of a vote on liquidation.
The court found that evidence revealed a concerted and successful effort on behalf of Redset sole director Ross Young and those advising him to procure the support of individual creditors by making secret side deals with individual creditors.
"The effect of these arrangements was to substantially corrupt the voting process,'' the court found. "The making of secret side deals is, and has always been, treated by the courts as deeply inimical to the spirit and objectives of statutory regimes such as Part 5.3A and its equivalents in the bankruptcy laws."
The court described the practice as "a species of equitable fraud" and said it was "corrupt".
It found that "the deed of company arrangement which would have precluded further investigation into serious questions regarding director misconduct, colourable transactions and preferable arrangements, and was produced through a corrupt voting process, is contrary to Part 5.3A of the Act and is properly to be set aside under s 445D(1)".
It ordered Redset be wound up.