Court rules over Diploma Construction settlement

The Supreme Court of Western Australia has allowed Diploma Construction liquidators to enter a deed of settlement, to avoid a pile up of legal costs.

WA Supreme Court Justice Jennifer Hill today published her judgment, over a deed of settlement entered by liquidators of Diploma Construction.

Grant Thornton liquidators David Hodgson and Andrew Hewitt were appointed to 20 Diploma Group-related entities, including Diploma Construction, in 2017.

Liquidators of Diploma Group started four legal proceedings in the Supreme Court of Western Australia, claiming breaches by chief executive Nick Di Latte, uncommercial and unreasonable director-related transactions, and insolvent trading.

The liquidators alleged a number of people and entities knowingly received benefits or helped Mr Di Latte in breaching his duty, according to the judgment.

In her judgment, Justice Hill allowed retrospective approval for the liquidators to enter into a deed of settlement.

This is despite the standard procedure of liquidators seeking the court’s approval before entering any settlement.

Justice Hill said, in her judgment, that the settlement would provide certainty and avoid further legal costs being incurred, enabling Diploma group to be wound up sooner.

“Very large numbers of documents have been produced by the parties on discovery (including in excess of 75,000 documents by the plaintiffs alone),” she said.

“Provisional dates of 12 weeks were allocated by the court for the trial of these proceedings.

“The settlement which is contained in the deed is the culmination of a number of attempts over almost two years to resolve the issues between the parties.”

Justice Hill also made comments on the dispute, which has been ongoing for some time.

“As a consequence of the terms of the funding agreement, notwithstanding the fact that four sets of proceedings were commenced and have been ongoing for almost five years, creditors will not receive any benefit from the commencement and running of these proceedings,” she said in her judgment.

“It is likely that they would have been better off had the proceedings not been commenced as the liquidations would almost certainly have concluded by now.

“In addition, the scarce public resources of the court would not have been required to be devoted to these matters.”

The liquidation of Diploma Group, which was publicly listed, and its subsidiaries in 2017 comes amid claims millions of dollars were owed to subcontractors.