Ascot Vale Self Storage Pty Ltd (in liq) v Nom De Plume Pty Ltd

Ascot Vale Self Storage Pty Ltd (in liq), as liquidator, brought proceedings against Nom De Plume Pty Ltd, seeking recovery of payments made under an alleged sham agreement. The matter was heard in the Supreme Court of Victoria, with an appeal subsequently brought by the liquidators against the Associate Judge's decision. The primary issue before the court was whether the liquidators were required to obtain court approval for a litigation funding agreement under section 477(2B) of the Corporations Act 2001 (Cth). Another significant point of contention was whether the liquidators abused the court’s process by engaging in litigation that lacked reasonable prospects of success, particularly in light of the principles set out in the Civil Procedure Act 2010 (Vic).

The court considered the principles of abuse of process and the relevance of the Civil Procedure Act 2010 (Vic) in determining whether the liquidators' decision to pursue the litigation was reasonable. It was noted that the reasonableness of the degree of control by the litigation funder was also a pertinent factor. The court examined the policy behind encouraging creditors to fund litigation by liquidators and whether such funding should be subject to court approval. The liquidators argued that they were not required to obtain court approval for the funding agreement, while the respondent contended that the liquidators had abused the court’s process.

In dismissing the appeal, the court found that the liquidators had not established any errors in the Associate Judge’s approach. It was held that the liquidators were not required to obtain court approval for the litigation funding agreement and that the decision to proceed with the litigation was reasonable. The court did not find any abuse of process, considering the liquidators' actions to be within the bounds of reasonableness. Consequently, the appeal was dismissed, and the orders made by the Associate Judge were upheld.