Clout v Andi-Co Australia Pty Ltd and Ors

In the case of Clout v Andi-Co Australia Pty Ltd and Ors, the liquidator of a company that was trading as a retailer of electrical goods sought to extend the period within which to apply to the court for an order that certain transactions were voidable under section 588FF(1) of the Corporations Act 2001 (Cth). The company had wound up in a creditors' voluntary winding up, and the liquidator investigated payments made to the respondents as suppliers as unfair preferences. The liquidator applied under section 588FF(3)(b) of the Corporations Act for an order extending the period within which to apply to the court for an order that the transactions were voidable. The court was required to determine whether it was fair and just in all the circumstances to extend the limitation period.

The court held that the absence of specific prejudice caused to the respondents, the lack of funds in the liquidation, and the liquidator's decision to give preference to paid work over unpaid work were factors that should be taken into account in determining whether it was fair and just to extend the limitation period. The court further held that the liquidator should have sought advice on the prospects of success of the proposed proceedings and litigation funding before commencing proceedings. However, the court found that it was fair and just to extend the limitation period in this case, as the liquidator had acted reasonably in giving preference to paid work over unpaid work and had not acted unreasonably in failing to seek advice on the prospects of success of the proposed proceedings and litigation funding before commencing proceedings.

The court ordered that the period within which applications under section 588FF(1) of the Corporations Act may be made by the applicant against certain respondents, or any "related entity" of any such respondent, be extended up to and including 17 April 2014. The court also adjourned the issue of the costs of the application to a date to be fixed.