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Compliance with the ARITA Code not always enough according to the Federal Court

Korda, in the matter of Ten Network Holdings Ltd [2017] FCA 914

IT IS THE PUBLIC’S OPINION that matters, not that of the profession, when determining if there is the apprehension of a conflict of interest of an administrator.  That is what the Federal Court held recently anyway.

In this well-known case, the application of the ARITA Code was considered as to whether it provided “exceptions” to the “rule” regarding the apprehension of a conflict of interest.

The Federal Court found that compliance with the ARITA Code won’t necessarily be enough to satisfy courts that there is no conflict. Justice O’Callaghan noted that the code “has no legal status”, but that it is permissible for the court to take into account what the guide says to garner what is common practice and the profession’s own view of proper standards. (See [93]-[95]).

The court confirmed that the relevant test for whether there is an apprehension of a conflict of interest is that of a fair-minded lay observer (so not the perspective of other insolvency practitioners but that of the public). (See in particular [71]-[80]).

To access the full judgment, follow this link – http://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/cth/FCA/2017/914.html

Key Words

  • ARITA Code
  • Conflict of interest
  • Fair-minded lay observer
  • Guidelines
  • Compliance
  • Exceptions
By |December 20th, 2017|Categories: Uncategorized|0 Comments