Banerjee (Liquidator), in the matter of Eastside Formwork Pty Ltd (in liq) v Stojic
[2022] FCA 1315
•28 October 2022
FEDERAL COURT OF AUSTRALIA
Banerjee (Liquidator), in the matter of Eastside Formwork Pty Ltd (in liq) v Stojic [2022] FCA 1315
File number(s): NSD 246 of 2021 Judgment of: HALLEY J Date of judgment: 28 October 2022 Date of publication of reasons: 11 November 2022 Catchwords: CORPORATIONS – interlocutory process – ex parte application – where first plaintiff seeks warrant directed at second defendant pursuant to s 530C of the Corporations Act 2001 (Cth) to search for and seize books of Eastside Formwork Pty Ltd (in liquidation) ACN 605 188 225 (Company) – where liquidator alleges second defendant concealed books of the Company – orders sought by first plaintiff in relation to the second defendant granted Legislation: Bankruptcy Act 1966 (Cth) s 58
Corporations Act 2001 (Cth) ss 438B, 438C, 530A, 530B, 530C, 588FE, 588G
Federal Court of Australia Act 1975 (Cth) ss 37AF, 37AG
Cases cited: Bailey, in the matter of Australian Recruiting Group Pty Ltd (in liq) v Young [2020] FCA 1473
Brooks (Liquidator) v Bull, in the matter of DV Bull Pty Ltd (in liq) [2021] FCA 967
Carello (Liquidator), in the matter of Drilling Australia Pty Ltd (in liq) [2019] FCA 1563
Hillig, in the matter of Battaglia [2019] FCA 2191
Mohen (Liquidator), in the matter of MAP Exports Pty Limited (in liq) v Rebelo [2021] FCA 1415
Naidenov (liquidator) v Davey, in the matter of Josa Civil Group Pty Ltd (in liq) [2021] FCA 1175
Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 63 Date of hearing: 28 October 2022 Counsel for the Plaintiffs: Mr R Notley Solicitor for the Plaintiffs: ERA Legal Counsel for the Defendants: The Defendants did not appear ORDERS
NSD 246 of 2021 IN THE MATTER OF EASTSIDE FORMWORK PTY LTD (IN LIQUIDATION) (ACN 605 188 225)
BETWEEN: SHUMIT BANERJEE IN HIS CAPACITY AS LIQUIDATOR OF EASTSIDE FORMWORK PTY LTD (IN LIQ) (ACN 605 188 225)
First Plaintiff
EASTSIDE FORMWORK PTY LTD (IN LIQ) (ACN 605 188 225)
Second Plaintiff
AND: CONNIE MELISSA STOJIC
First Defendant
DANE STOJIC
Second Defendant
MOHAMMED ZAIDAN (and others named in the Schedule)
Third Defendant
ORDER MADE BY:
HALLEY J
DATE OF ORDER:
28 OCTOBER 2022
THE COURT ORDERS THAT:
1.Any requirement that the interlocutory process dated 26 October 2022 (interlocutory process) be served on the defendants be dispensed with in the first instance, and leave be granted to the plaintiffs to make the application ex parte.
2.To the extent necessary, an order that the applicants have leave, pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth), to seek the relief sought in the interlocutory process.
3.The District Registrar issue, pursuant to s 530C of the Corporations Act 2001 (Cth), warrants substantially in the form of the warrant appearing at Annexure A to this order directed at the second defendant, Dane Stojic.
4.Pursuant to s 37 AF of the Federal Court of Australia Act 1975 (Cth), that, until further order or the discharge of this order pursuant to order 6 below:
(a)the interlocutory process is to be kept confidential and, except with the leave of the Court, is not to be disclosed to anyone other than the Court and Court staff;
(b)the affidavit of Shumit Banerjee affirmed 26 October 2022 and the exhibit SB-4 thereto remain confidential and, except with leave of the Court, is not to be open to inspection to any person other than the Court and Court staff; and
(c)these orders are to be kept confidential and, except with the leave of the Court, are not to be disclosed to anyone other than the Court and Court staff.
5.Within 14 days of the last date on which the warrant has been executed, the plaintiffs file an affidavit reporting on the execution of the warrant and annexing a list of the books and records seized.
6.On the filing of the affidavit referred to in order 5, order 4 shall be discharged.
7.Within 7 days of the filing of the affidavit referred to in order 5, the plaintiffs serve on the defendants the interlocutory process, the affidavit referred to in order 4, a copy of any orders made, any reasons for judgment and the affidavit referred to in order 5.
8.The parties have liberty to apply to re-list the proceedings on 2 days’ notice.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
ANNEXURE A
REASONS FOR JUDGMENT
HALLEY J:
INTRODUCTION
By an interlocutory process filed on 27 October 2022 (interlocutory process), the first plaintiff, Shumit Banerjee in his capacity as the liquidator of the second plaintiff, Eastside Formwork Pty Ltd (in liquidation) ACN 605 188 225 (Company), seeks an order directing the District Registrar to issue, pursuant to s 530C of the Corporations Act 2001 (Cth) (Act), a warrant authorising him as the liquidator of the Company (Liquidator) to search for and seize books of the Company, together with related orders, including suppression orders.
The Liquidator relies upon an affidavit that he affirmed on 26 October 2022 in support of his application.
The Liquidator sought orders in the interlocutory process for warrants to be issued against both the first defendant and the second defendant but in the course of the ex parte hearing of the interlocutory hearing, confirmed by his counsel, Mr Notley, that he only pressed for the issue of a warrant against the second defendant.
At the conclusion of the ex parte hearing of the application, I was satisfied that the conduct of the second defendant, Mr Stojic, justified the making of the orders sought by the plaintiffs and I made orders in those terms.
These are my reasons for making those orders.
BACKGROUND
The Liquidator was appointed liquidator of the Company on 13 November 2020.
These proceedings were commenced by the filing of an Originating Process on 25 March 2021.
A statement of claim was filed on 3 June 2021 and an amended statement of claim was filed on 21 December 2021. By an interlocutory process filed on 24 August 2022, the plaintiffs are seeking leave to file and serve a further amended statement of claim (Amendment Application). The Amendment Application is listed for hearing on 24 November 2022.
The plaintiffs completed service of their lay and expert evidence in chief on 10 August 2022. The defendants have not yet served any lay and expert evidence in chief.
The defendants are:
(a)the first defendant, Connie Stojic (Mrs Stojic);
(b)the second defendant, Dane Stojic (Mr Stojic), the husband of Mrs Stojic. He was made bankrupt, by way of a debtor’s petition, on 17 October 2022;
(c)the third defendant, Mohammed Zaidan (Mr Zaidan);
(d)the fourth defendant, Eastside Holdings Pty Limited ACN 605 028 840 (Eastside Holdings), of which Mrs Stojic is the sole director and shareholder; and
(e)the fifth defendant, Buildquip Pty Limited ACN 141 444 760 (Buildquip), of which Mrs Stojic is the sole director and shareholder.
From early to mid-2017 until the appointment of receivers and managers of the Company on 16 July 2020, the Company was in the business of providing formwork construction services to customers at construction sites primarily in New South Wales (the Business).
According to the records maintained by the Australian Securities and Investments Commission (ASIC), Mr Zaidan has been the sole director and secretary of the Company since 1 July 2016 and, currently, is the sole shareholder of the Company. However, based on the evidence the Liquidator has obtained, including an affidavit from Mr Zaidan which has been filed and served in these proceedings, the Liquidator considers that Mr Zaidan was effectively a “straw director” who took instructions from Mr Stojic and Mohamed Mustapha, the Company’s accountant. Mr Zaidan is currently an undischarged bankrupt and no relief is sought against him in these proceedings.
The Liquidator alleges in the proposed further amended statement of claim that Mrs Stojic, Mr Stojic, Mr Zaidan, Eastside Holdings and Buildquip were parties to a scheme pursuant to which, inter alia:
(a)the Company took over the Business from Red Con NSW Pty Ltd ACN 159 144 680 (formerly, Rediform Contracting Pty Limited) (Rediform), which Mr Stojic was the sole director and secretary of until its deregistration on 12 September 2020;
(b)Rediform is now deregistered and was wound up voluntarily by resolution of its sole member, Dancon Investments Pty Ltd ACN 123 017 890 (Dancon). Mrs Stojic was the sole director of Dancon at the time and Mr Stojic was the sole shareholder of Dancon;
(c)at the initial meeting of creditors of Rediform on 5 May 2017, the Commissioner claimed that Rediform owed $1,100,727.57 to the Australian Taxation Office (ATO) and the Chief Commissioner of State Revenue claimed that Rediform owed $673,514.42 to the New South Wales Office of State Revenue;
(d)the Company operated the Business for several years until the Company was placed into liquidation;
(e)the cash received by the Company from operating the Business was used to pay some but not all of the creditors of the Company and the balance was transferred to Eastside Holdings, Buildquip and Mr Stojic;
(f)the cash transferred by the Company to Eastside Holdings, Buildquip and Mr Stojic was more than the true and fair market value of the materials and services supplied by each of Eastside Holdings, Buildquip and Mr Stojic to the Company, or was transferred for no, or no real, consideration from each of Eastside Holdings, Buildquip and Mr Stojic;
(g)alternatively, if the cash transferred by the Company to one or more of Eastside Holdings, Buildquip and Mr Stojic was, in whole or in part, for the true and fair market value of the materials and services supplied by one or more of Eastside Holdings, Buildquip and Mr Stojic to the Company, or, in whole or in part, for real consideration from one or more of Eastside Holdings, Buildquip and Mr Stojic, the cash was transferred to Eastside Holdings, Buildquip and Mr Stojic, in preference to other creditors, so that it was not available to meet the claims of other creditors when the Company went into liquidation;
(h)the Company would not lodge, or would delay lodging, income tax returns, activity statements and other reports that it was obliged to lodge with the ATO;
(i)once creditors, including the ATO, began to take steps to recover from the Company amounts owing to them by the Company, the Company was placed into liquidation; and
(j)prior to the Company being placed into liquidation, the Business was taken over by Eastside Formwork Group Pty Limited (now in liquidation) (EFG), of which Mr Stojic was the sole director and secretary and Dancon was the sole shareholder,
(the Scheme).
The claims that the Liquidator advances against Mrs Stojic, Mr Stojic, Mr Zaidan, Eastside Holdings and Buildquip in the proposed further amended statement of claim may be broadly summarised as follows:
(a)Mr Stojic breached duties that he owed to the Company under the Act and at common law as a director, officer or employee of the Company;
(b)Mr Zaidan breached duties that he owed to the Company under the Act and at common law as a director, officer or employee of the Company;
(c)Mrs Stojic breached duties that she owed to the Company under the Act as a director, officer or employee of the Company;
(d)Mr Stojic, Eastside Holdings and Buildquip are liable as accessories for breaches of fiduciary duties owed by Mr Stojic and Mr Zaidan to the Company;
(e)Mrs Stojic is liable as an accessory to breaches of duties owed by Mr Stojic and Mr Zaidan to the Company;
(f)various payments made to Eastside Holdings, Buildquip and Mr Stojic are voidable transactions pursuant to ss 588FE(4) and 588FE(5) of the Act; and
(g)Mr Stojic breached his duty to prevent insolvent trading pursuant to s 588G(2) of the Act.
FACTUAL BACKGROUND
The Liquidator gave evidence that he was making this application as a result of several emails exhibited to an affidavit recently sworn by Mrs Stojic and served on the plaintiffs with respect to the Amendment Application.
The emails were sent from or to accounts with the domain name ending “@eastsideformwork.com.au”, including “[email protected]” (Eastside Admin Email).
The emails form part of the books and records of the Company and the Liquidator submits that they ought to have been produced to the Liquidator by Mr Stojic or Connie pursuant to either:
(a)notices issued to them by the Liquidator under ss 438B, 438C, 530A and 530B of Act (Notices); or
(b)orders for production issued to them by the Supreme Court of New South Wales (Orders for Production).
However, as set out below, they were not produced to the Liquidator pursuant to the Notices and Orders for Production.
Based on his investigations to date, the Liquidator has formed the view that the Eastside Admin Email was only used by Mrs Stojic.
In her public examinations in the Supreme Court of New South Wales on 25 August 2021, Mrs Stojic agreed that she used the Eastside Admin Email, albeit she gave evidence that it was a shared email address.
On 14 October 2020, the Liquidator, when he was the administrator of the Company, issued directions to Mr Stojic and Mr Zaidan pursuant to s 438B of the Act requiring each of them to assist in the preparation of a report on company activities and property and notices pursuant to s 438C of the Act requiring Mr Stojic and Mr Zaidan to each deliver up all the books and records of the Company in their possession.
On 15 October 2020, Mr Stojic sent the Liquidator the following email:
Hi Shumit,
thanks for the email below.
Firstly, I would like mention that I am not the director nor have I ever been the director of Eastside Formwork Pty Ltd.
All operational and financial decisions are made in consultation with the director.
I am happy to assist you with the below but I am busy onsite today and tomorrow and would need to consult with the Director and the accountants in order to give you the required information.
Will call you on Monday to organise the below.
Regards
Dane
On 18 December 2020, the Liquidator issued notices to Mr Stojic and Mr Zaidan pursuant to s 530A of the Act requiring them to each deliver up all books and records of the Company in their possession.
On 31 December 2020, Mr Stojic sent the Liquidator the following email:
Hi Jessa,
happy Christmas & all the best for the new year ahead.
In response to the below & as mentioned previously I am not the director of Eastside Formwork Pty Ltd.
The books & records I believe are in the possession of the receivers.
Finally, from my understanding the only external advice given was from the previous accountants Hall Chadwick.
I am on AL and have limited access to my emails till after the Australia Day weekend.
Regards
Dane
(Emphasis added.)
The reference to the “receivers” was presumably a reference to the receivers and managers appointed to the Company (Receivers) by its secured creditor, Australian Invoice Finance. The books and records of the Company in the possession of the Receivers were minimal and were provided by the Receivers to the Liquidator. Relevantly, they did not include any emails or any email server.
On 21 January 2021, the Liquidator issued a notice to Mrs Stojic, in her capacity as the director of Buildquip, pursuant to s 530B of the Act, requiring her to deliver up all books and records in her possession in relation to the Company.
On 29 January 2021, Mrs Stojic’s solicitor sent an email to the Liquidator in which he stated, inter alia:
I am instructed that neither she, nor Buildquip have books in their possession that satisfy the Notice.
On 10 February 2021, Mr Zaidan produced to the Liquidator a single box of physical records of the Company. According to the listing of the documents in the box, only one physical email was produced. No electronic records and no email server was produced by Mr Zaidan.
On 7 May 2021, the Liquidator obtained an order for production to Mr Stojic. The order for production required, inter alia:
All Documents, including Written Communications, referring or relating to the Company and any one or more of the following persons, created, sent or received in the Period:
(a) You;
(b) Connie Stojic;
(c) Eastside Holdings;
(d) Buildquip;
(e) Inestimable Holdings Pty Ltd.
In response to the order for production, Mr Stojic produced certain emails sent to or from various email accounts with the domain name “@eastsideformwork.com.au”.
On 7 May 2021, the Liquidator also obtained an order for production to Mrs Stojic. The order for production required, inter alia:
All Documents, including Written Communications, referring or relating to the Company and any one or more of the following Persons, created, sent or received in the Period:
(a) Dane;
(b) You;
(c) Eastside Holdings;
(d) Buildquip;
(e) Dancon;
(f) Acrow Formwork and Scaffolding Pty Ltd (ACN 004 284 806);
(g) Eastside Formwork Group Pty Ltd (ACN 639 285 671); and
(h) Inestimable Holdings Pty Ltd (ACN 627 338 925).
In response to the order for production, Mrs Stojic did not produce any emails sent to or from any email accounts with the domain name “@eastsideformwork.com.au”.
On 30 September 2022, the solicitor for the Liquidator was served with an affidavit sworn by Mrs Stojic and a bundle of documents exhibited to that affidavit and marked Exhibit CMS-1. This evidence was served in respect of the Amendment Application.
The affidavit exhibits a number of emails sent to or from email accounts with the domain name “@eastsideformwork.com.au”, including the Eastside Admin Email. None of these emails had previously been produced to the Liquidator. In her affidavit, Mrs Stojic referred to the emails as being “examples” and did not identify the source of the emails.
On 5 October 2022, the solicitors for the Liquidator wrote separately to Mr Stojic’s solicitor and Mrs Stojic’s solicitor noting that none of the emails referred to above had previously been provided to the Liquidator, despite the statutory notices and orders for production issued to Mr Stojic and Mrs Stojic.
On 7 October 2022, the solicitors for Mrs Stojic responded by letter in which they stated, inter alia, that:
We are instructed, unequivocally, that our clients do not have the email server of the Company, nor do they have access to the email server per se.
On 10 October 2022, the solicitors for the Liquidator sent a further letter to Mrs Stojic’s solicitor.
On 13 October 2022, the solicitors for Mrs Stojic responded by letter in which they stated, inter alia, that Mr Stojic had “recently” provided certain of the emails to Mrs Stojic for the purposes of her preparing her affidavit, and further, that some of the emails related to Eastside Holdings, and not the Company, despite the signature on each of the emails being that of the Company and not Eastside Holdings.
The 13 October 2022 letter also stated that they had been instructed by Mrs Stojic:
… that if an email was opened on the desktop, it would not show up on the other devices and so it may have been missed.
It is unclear what this is referring to, including whether it is referring to electronic devices containing books and records of the Company, noting that the Liquidator has not been provided with the email server for the Company and has only been provided with a very limited number of emails.
No response was received from Mr Stojic’s solicitor to the letter from the solicitors for the Liquidator dated 5 October 2022.
RELEVANT LEGAL PRINCIPLES
The relevant legal principles are well established.
Section 530C of the Act provides:
530C Warrant to search for, and seize, company’s property or books
(1) The Court may issue a warrant under subsection (2) if:
(a) a company is being wound up or a provisional liquidator of a company is acting; and
(b) on application by the liquidator or provisional liquidator, as the case may be, or by ASIC, the Court is satisfied that a person:
(i) has concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator or provisional liquidator will be prevented or delayed; or
(ii) has concealed, destroyed or removed books of the company or is about to do so.
Note: This section applies to a CCIV in a modified form: see section 1237Z.
(2) The warrant may authorise a specified person, with such help as is reasonably necessary:
(a) to search for and seize property or books of the company in the possession of the person referred to in subsection (1); and
(b) to deliver, as specified in the warrant, property or books seized under it.
(3) In order to seize property or books under the warrant, the specified person may break open a building, room or receptacle where the property is or the books are, or where the person reasonably believes the property or books to be.
(4) A person who has custody of property or a book because of the execution of the warrant must retain it until the Court makes an order for its disposal.
As Davies J said in Brooks (Liquidator) v Bull, in the matter of DV Bull Pty Ltd (in liq) [2021] FCA 967 at [7], there are three requirements for an order to be made under s 530C:
(a)the first is that the company is being wound up;
(b)the second is that the application is made by a liquidator; and
(c)the third is that the Court must be satisfied that the person has concealed or removed property of the company with the result that the taking of the property into the custody or control of the liquidator will be prevented or delayed.
There is no issue that the first and second requirements are satisfied here. It is the third requirement that the Court needs to determine.
In Carello (Liquidator), in the matter of Drilling Australia Pty Ltd (in liq) [2019] FCA 1563 Banks-Smith J said at [6] to [9]:
6Section 530C is ordinarily ‘a remedy of last resort’: see Cvitanovic v Kenna & Brown Pty Ltd (1995) 18 ACSR 387.
7A warrant should be granted if the Court finds that there has been a ‘persistent pattern of non-cooperation and evasion’: Whitemore Holdings Ltd (in liquidation) [2004] FCA 806 at [9] –[10] , affirmed in Beattie v Gray, in the matter of Control Rail Pty Ltd (in liq) [2018] FCA 1524 . This does not appear to be a requirement of granting a warrant, but provides useful guidance.
8Factors that have been relied upon in deciding that a person has concealed or removed the property of the company include:
(a)refusals to comply with liquidators’ requests to deliver up the books and records of the company: Vartelas v Kyriakou [2009] FCA 1489 at [6];
(b)transfer of assets to, and continued use of the assets by, related companies or entities without proper accounting: Crisp, in the matter of Buchanan Group Holdings Pty Ltd v Iliopoulos [2011] FCA 1521 at [11]; and
(c)moving of assets, books or records from one place to another: Crisp at [13].
9It is clear from the s 86 definition that property does not need to be registered to a person’s name or in their custody for them to be in possession of it. Control over the property will suffice. In Beattie v Gray, the property was held in storage lockers in the defendant’s mother’s name. The property was considered to be in the defendant’s possession: at [7].
As Mr Notley submitted, these authorities are regularly cited as being an accurate summary of the relevant legal principles: see, for example, Mohen (Liquidator), in the matter of MAP Exports Pty Limited (in liq) v Rebelo [2021] FCA 1415 at [6] to [9] (Banks-Smith J); Naidenov (liquidator) v Davey, in the matter of Josa Civil Group Pty Ltd (in liq) [2021] FCA 1175 at [16] to [20] (Halley J); Bailey, in the matter of Australian Recruiting Group Pty Ltd (in liq) v Young [2020] FCA 1473 at [8] to [10] (Markovic J).
CONSIDERATION
Issue of warrant
The warrant sought by the Liquidator is for the search and seizure of books of the Company.
I was satisfied that there has clearly been a “persistent pattern of non-cooperation and evasion” by Mr Stojic, in that there have been repeated failures to comply with requests by the Liquidator to deliver up the books of the Company.
First, it is apparent from the Liquidator’s investigations to date that Mr Stojic is the guiding mind and will of the Company.
Second, Mr Stojic has failed to produce any documents in response to the Notices and Orders for Production he has received. His claim that all the books and records of the Company had been provided to the Receivers is implausible given the limited documentation obtained by the Liquidator from the Receivers, particularly given that only one hard copy of an email was produced and no electronic records nor any email server were provided. Mr Stojic’s email responses to the Liquidator on 15 October 2020 and 31 December 2020 could otherwise be fairly characterised as an attempt to “fob off” the Liquidator’s requests for assistance rather than amount to any meaningful attempt to assist the Liquidator in obtaining access to the books and records of the Company.
Third, Mrs Stojic has confirmed that she obtained the emails that were included in Exhibit CMS-1 from Mr Stojic, each of which should have been produced earlier by Mr Stojic in response to the Notices and Orders for Production that had been addressed to Mr Stojic. Further, the explanation provided by Mrs Stojic in her solicitor’s letter dated 13 October 2022, that if “an email was opened on the desktop it would not show up on the other devices and so it may have been missed” suggests that there may well be further emails that have still not been produced.
Fourth, Mrs Stojic, but not Mr Stojic, has confirmed that she does not have access to the server on which the Company’s electronic records are located.
Fifth, Mr Stojic, unlike Mrs Stojic, has failed to provide any response to the Liquidator’s most recent request for information concerning the limited production of books and records of the Company and the belated production of the “sample” of emails.
In the circumstances, I was satisfied that it was likely that at least Mr Stojic has concealed books of the Company and that this was an appropriate case for the Court to exercise its discretion under s 530C of the Act to issue a warrant to Mr Stojic for the search and seizure of the books of the Company.
Confidentiality orders
The Liquidator also sought confidentiality orders under s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act), on the ground that the order was necessary to prevent prejudice to the proper administration of justice.
The Liquidator relied on what was said by Markovic J in Bailey, in the matter of Australian Recruiting Group Pty Ltd (in liq) v Young [2020] FCA 1473 at [30]:
Given the nature of the application and the relief sought, I was satisfied that such an order should be made. The application was made in a proceeding in which Mr Young is a party. In light of the difficulty the Liquidator has encountered in obtaining the books and records of ARG, including in interactions with Mr Young, it is possible that if Messrs Young or Campbell become aware of this application that they may, given the events which have transpired to date, hinder the Liquidator’s efforts to recover all of the books and records of ARG by execution of the warrants. If that were to occur, it would amount to conduct which would prejudice the proper administration of justice.
I was satisfied that it was appropriate to make confidentiality orders under s 37AF of the FCA Act given the difficulties that the Liquidator has experienced to date in obtaining access to the books and records of the Company, Mr Stojic’s lack of any meaningful co-operation and the risk that if Mr Stojic became aware of the issue of the warrant that he might take steps to conceal or otherwise delete or dispose of any relevant books and records of the Company.
Leave to proceed
Finally, as set out above, Mr Stojic was made a bankrupt on 17 October 2022.
Accordingly, to the extent necessary, the Liquidator sought leave, pursuant to s 58(3) of the Bankruptcy Act 1966 (Cth), to seek the relief sought in the interlocutory process.
The principles applicable to the grant of leave were summarised by Wigney J in Hillig, in the matter of Battaglia [2019] FCA 2191 at [6] to [8]:
6 The principles concerning leave under s 58(3)(b) of the Bankruptcy Act are fairly well settled. The purpose of the requirement for leave is to ensure that a bankrupt is not subjected to a multiplicity of actions which would be both expensive and time-consuming, and in some cases unnecessary: see Zervas v Burkitt [2019] NSWCA 112 at [15].
7 The requirement for leave focusses attention on the choice between litigation and the proof of debt procedure in a bankruptcy. It will generally be appropriate for leave to be granted in cases where the issues would be better and more comprehensively dealt with by a contested trial of the action in a court proceeding than would be the case if the creditor was required to lodge a proof of debt in the debtor’s bankruptcy: see Allanson v Midland Credit Ltd (1977) 30 FLR 108; [1977] FCA 66. That would particularly be the case where the creditor’s claims involve other parties.
8 The relevant factors to be taken into account cannot be stated exhaustively and will vary from case to case: see Burkitt at [15]. Nevertheless, the factors generally considered to be relevant to such applications include: the amount and seriousness of the claims; the degree and complexity of the legal and factual issues involved; the stage to which the proceedings have progressed; the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt; whether the claim has arguable merit; whether proceedings are already in motion at the time of the bankruptcy; whether the proceedings will result in prejudice to creditors; whether the claim is in the nature of a test case for the interest or large class of potential claimants; whether the grant of leave will result in further litigation; whether the cost of the hearing will be disproportionate to the size of the bankrupt estate; the risk of delay; and whether pre-trial procedures such as discovery and interrogatories are likely to be required or beneficial: see Cassegrain v Gerard Cassegrain & Co Pty Limited (in liq) [2012] NSWCA 435 at [33].
I was satisfied that leave should be given. The extent of the leave sought, at this stage, was limited. It did not concern the adjudication of any debt owed by Mr Stojic to the Plaintiffs and it could not conceivably place the Liquidator in any position of unfair advantage over other creditors with a claim against Mr Stojic’s bankrupt estate.
DISPOSITION
For the reasons set out above, I made orders granting the relief sought in the interlocutory process.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Halley. Associate:
Dated: 4 November 2022
SCHEDULE OF PARTIES
NSD 246 of 2021 Defendants
Fourth Defendant:
EASTSIDE HOLDINGS PTY LTD (ACN 605 028 840)
Fifth Defendant:
BUILDQUIP PTY LTD (ACN 141 444 760)
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