Fair Work Ombudsman v Foot & Thai Massage Pty Ltd (in liquidation)

In this case, the Fair Work Ombudsman sought leave from the Court to continue their proceeding against Foot & Thai Massage Pty Ltd (in liquidation), a company which has been in liquidation since August 2019. The company, previously known as FTM, was registered in November 2010, and was placed in voluntary administration in December 2015. The company's sole director, Mr Elvin, was also its secretary and sole shareholder. FTM entered into a deed of company arrangement on 11 April 2016, and Viet Ngo was appointed as sole director, secretary and shareholder of FTM. The deed of company arrangement was terminated on 17 October 2017, and FTM ceased to be under external administration. On 15 October 2018, the company was referred to Jirsch Sutherland, a firm of insolvency practitioners, by Mills Oakley. On 13 August 2019, a resolution was passed to wind up the company under s 491(1) of the Corporations Act, and Trent Andrew Devine and Andrew John Spring of Jirsch Sutherland were appointed liquidators. The winding up was a "creditors' voluntary winding up" as no declaration of solvency was made in accordance with s 494 of the Corporations Act. The Fair Work Ombudsman sought leave to continue their proceeding against FTM for alleged underpayments to employees, and this application was not opposed by any party.

The primary legal issue before the Court was whether the Fair Work Ombudsman should be granted leave to continue their proceeding against FTM. Under s 500(2) of the Corporations Act, after the passing of a resolution for voluntary winding up, no action or other civil proceeding against a company is to be proceeded except by leave of the Court and on such terms as the Court imposes. The Fair Work Ombudsman submitted that their claim had a solid foundation and gave rise to a serious dispute, and there was good reason to depart from the course of lodging a proof of debt. The Court considered the relevant principles guiding the exercise of the discretion to grant leave, and concluded that the Fair Work Ombudsman had made out their case for relief and should have leave to continue their proceeding.

The Court found that the Fair Work Ombudsman's claim had a solid foundation and gave rise to a serious dispute, and there was good reason to depart from the course of lodging a proof of debt. The Court also found that the circumstances surrounding the voluntary liquidation suggested that Mr Elvin may have had a role in placing the company into liquidation and that the assets of the company were sold to a company owned by Mr Elvin’s partner, Khara Sanchez. Although the Fair Work Ombudsman only submitted that the evidence raised a suspicion of an "uncommercial transaction" or an "unreasonable director-related transaction", the Court found it unnecessary to deal with the relevant evidence or to decide whether it rises higher than a suspicion. The Court granted leave to the Fair Work Ombudsman to continue their proceeding against FTM.

In conclusion, the Court granted leave to the Fair Work Ombudsman to continue their proceeding against FTM for alleged underpayments to employees. The Court found that the Fair Work Ombudsman's claim had a solid foundation and gave rise to a serious dispute, and there was good reason to depart from the course of lodging a proof of debt. The Court also found that the circumstances surrounding the voluntary liquidation suggested that Mr Elvin may have had a role in placing the company into liquidation and that the assets of the company were sold to a company owned by Mr Elvin’s partner, Khara Sanchez. Although the Fair Work Ombudsman only submitted that the evidence raised a suspicion of an "uncommercial transaction" or an "unreasonable director-related transaction", the Court found it unnecessary to deal with the relevant evidence or to decide whether it rises higher than a suspicion. The Court's decision was based on the relevant principles guiding the exercise of the discretion to grant leave under s 500(2) of the Corporations Act.