Brown v DML Resources (No 3)

In Brown v DML Resources (No 3), the respondents, who were liquidators of a company, sought to challenge a transaction that they considered an unfair preference under section 588FF of the Corporations Act 2001 (Cth). The applicants, creditors of the company, were not initially joined as parties when the liquidators applied for an extension of time to bring their proceedings, and the orders were made ex parte. The applicants subsequently applied for the orders to be set aside on the ground that the liquidators had denied them natural justice by not joining them as parties. The central legal issue was whether the applicants could be joined as parties outside the three-year time limit specified in section 588FF(3) of the Act. The court also considered whether the proceedings could proceed inter partes without the applicants being joined as defendants.

The court found that the ex parte orders could be set aside because they denied the applicants procedural fairness. The court reasoned that the applicants were directly affected by the orders and had a legitimate interest in the proceedings. The court held that the liquidators had a duty to join the applicants as parties to ensure that all interested parties were given an opportunity to be heard. The court noted that section 588FF(3) did not preclude the possibility of joining a party outside the three-year time limit if it was in the interests of justice to do so. However, the court held that the liquidators had not demonstrated that it was in the interests of justice to proceed without joining the applicants as parties. The court held that the applicants had a right to be heard and that the proceedings could not proceed inter partes without their participation. The court set aside the ex parte orders and directed that the applicants be joined as parties.