Liquidators of Perth Fashion Festival have failed in their bid to bolster a probe into collapsed industry body Fashion Council WA in the hope of clawing back half a million dollars.
Liquidators of Perth Fashion Festival have failed in their court bid to bolster a probe into collapsed industry body Fashion Council WA and its former directors in the hope of clawing back half a million dollars.
The two entities behind the city’s annual fashion festival have been locked in a bitter legal battle since collapsing within four months of each other, with Mariella Harvey-Hanrahan and Tony Sage’s PFF claiming the council owes it more than half a million dollars.
That outstanding bill centres around a written agreement signed in 2019 which helped the industry body acquire the intellectual property rights to the Perth Fashion Festival and other events.
The two payments, totalling $510,000, were to be repaid over a six-year period; of which about $50,000 was allegedly paid to PFF before its collapse.
Despite initially flagging the possibility of insolvent trading claims against the council’s directors, FCWA liquidator, HLB Mann Judd Insolvency WA boss Kimberley Wallman, later decided the directors may have defences.
While conceding his investigations had been hamstrung by a lack of funding, Mr Wallman concluded the chances of any substantial return for creditors were slim and the case should be closed.
But PFF's liquidators Cameron Shaw and Richard Albarran of Hall Chadwick disagreed, labelling Mr Wallman’s investigation unsatisfactory and insisting a more thorough probe could help it and other creditors claw back more funds.
In February last year, Mr Wallman allowed Mr Shaw and Mr Albarran to inspect the council’s books and records.
By April, Mr Wallman had concluded the council was insolvent from September 2019, meaning the quantum of the insolvent trading claim was a little over $150,000.
Two months later, PFF’s lawyers Mendelawitz Morton wrote to FCWA’s directors, including Foodbank chief Kate O’Hara, former NewsCorp leader Michelle d'Almeida, Stantons International managing director Martin Michalik and Moneycatcha founder Ruth Hatherley.
In it, lawyers allegedly claimed each of them had allowed the company to trade insolvent in December 2017 in breach of their duties and were now liable to PFF for $510,000.
But that claim never ensued, with PFF’s liquidators instead setting their sights on replacing Mr Wallman as liquidator; a move which failed.
Some months later, the pair sought the appointment of Sydney-based Westburn Advisory boss Shumit Banerjee to spearhead the probe as a special purpose liquidator, insisting the amounts recoverable could be in the order of more than $1 million.
But Supreme Court Justice Marcus Solomon was unconvinced, dismissing the application on the basis that he was not persuaded that the appointment was justified.
In a court determination, he pointed to persistent delays in PFF’s liquidators bringing forward the insolvent trading claim and its failure to provide any foundation for its suspicion directors breached their duties and that the claim could be successful.
“There is no explanation as to why, in the space of approximately one month, the prospects were elevated by Mr Shaw from 'may have some merit' to 'have respectable prospects',” Justice Solomon said.
“With respect, those bald assertions by a non-lawyer, without any explanation, do not provide any meaningful assistance to the court in demonstrating that the matters warrant investigation, or that there is sufficient evidence to support the possibility of an action being brought.”
He also lashed PFF’s lawyers for the letter lodged with directors, highlighting the privileged position lawyers held within society and the grave responsibility that carried.
“Lawyers are not permitted to cast aspersions or make allegations that do not have a proper foundation,” he said.
“Bluster ought never to be the tool of the lawyer; bluster without foundation must never be the tool of the lawyer.”