Shield Holdings Australia - Case Update

The Federal Court of Australia has granted key orders sought by the liquidator of Shield Holdings in a proceeding to determine the validity of a deed of release which purports to release certain members of the Binetter family from the company’s repayment obligations.

Specifically, Alan Walker as the liquidator of Shield Holdings sought to join Samantha Kelliher as a respondent, authorize overseas service of documents, and allow substituted service on both respondents, Andrew Binetter and Ms Kelliher. Mr Binetter was Shield’s sole director at the time, and Ms Kelliher is Mr Binetter’s wife. The company is alleged to have been involved in an elaborate tax evasion scheme perpetrated by certain members of the Binetter family.

The case stems from a 2018 deed of release allegedly executed by Shield, which purported to release Mr Binetter, Ms Kelliher and others from repayment obligations. The liquidator contends that Mr Binetter caused the company to enter into the deed improperly, breaching his statutory and fiduciary duties. Shield seeks to have the deed declared void or unenforceable, or to have its releases rescinded or severed. While no wrongdoing is alleged against Ms Kelliher, she is a party to the deed and Shield seeks relief that could affect her interests, justifying her joinder to the proceedings.

Given that both Mr Binetter and Ms Kelliher reside overseas (in Puerto Rico), the Court considered the mechanics and appropriateness of overseas service under the Federal Court Rules 2011 (Cth). The Court found that while service of the originating application did not require leave, service of supplementary documents required leave under Rule 10.44, which was granted. Substituted service was also approved under Rules 10.24 and 10.49, including email delivery and delivery to Australian lawyers who previously acted for the respondents in related proceedings.

The Court accepted the practical difficulties of personal service overseas and found the proposed methods sufficient to bring the proceedings to the respondents’ attention. While the Court noted potential future applications by the respondents challenging jurisdiction or service (as foreshadowed in parallel litigation), it declined to speculate on their merits.

Read the decision HERE.

Professionals involved: Stephen Puttick of 7 Wentworth Selborne (instructed by Ashurst) for the liquidator.