Jonsson (Liquidator), in the matter of National Aboriginal and Torres Strait Islander Corporation Transport and Community Service (in liq)
[2025] FCA 232
•20 March 2025
FEDERAL COURT OF AUSTRALIA
Jonsson (Liquidator), in the matter of National Aboriginal and Torres Strait Islander Corporation Transport and Community Service (in liq) [2025] FCA 232
File number(s): QUD 681 of 2024 Judgment of: MEAGHER J Date of judgment: 20 March 2025 Catchwords: CORPORATIONS – Application pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) to extend the period in which the plaintiffs may commence proceedings under s 588FF(1) of the Act – Voidable transactions – Insolvency – Liquidation
PRACTICE AND PROCEDURE – Service of documents – Deemed service
PRACTICE AND PROCEDURE – Orders – Variation of suppression orders – Interests of justiceLegislation: Corporations Act 2001 (Cth) ss 588FF (1), 588 FF (3), 588FF (3) (b)
Federal Court of Australia Act 1976 (Cth) s 37AF
Federal Court Rules 2011 (Cth) rr 1.32, 10.01, 10.23
Cases cited: Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 3) [2016] FCA 303
Australian Securities and Investments Commission v China Environment Group Ltd [2013] FCA 286
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Green v Chiswell Furniture Pty Ltd (in Liq) [1999] NSWSC 608
Krejci (liquidator), in the matter of Half Price Enterprises Pty Ltd (In Liquidation) [2021] FCA 805
Laurie v Carroll (1958) 98 CLR 310
Marsden (liquidator) v CVS Lane PV Pty Limited, in the matter of Pentridge Village Pty Limited (in liq) (receiver and manager appointed) (controller appointed) (2018) 124 ACSR 100
Re Clarecastle Pty Ltd (in liq) (2011) 85 ACSR 260
Ricegrowers Co-operative Ltd and Another v ABC Containerline NV and Others (1996) 138 ALR 480
Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA (1994) 15 ACSR 347
Vaughan v Catanzariti, in the matter of Italian Prestige Jewellery Pty Limited (in Liq) [2018] FCA 1403
Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Number of paragraphs: 63 Date of hearing: 21 February 2025 Counsel for the Plaintiff: Mr MA Goldsworthy with Ms K Molkentin Solicitor for the Plaintiff: Results Legal Solutions Pty Ltd ORDERS
QUD 681 of 2024 IN THE MATTER OF NATIONAL ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATION TRANSPORT AND COMMUNITY SERVICES (IN LIQUIDATION) ICN 7866
ANTHONY JAMES JONSSON AND CAMERON ALEXANDER CRICHTON AS JOINT AND SEVERAL LIQUIDATORS OF NATIONAL ABORIGINAL AND TORRES STRAIT ISLANDER CORPORATION TRANSPORT AND COMMUNITY SERVICES (IN LIQUIDATION) ICN 7866
Plaintiff
ORDER MADE BY:
MEAGHER J
DATE OF ORDER:
20 MARCH 2025
THE COURT ORDERS THAT:
1.Pursuant to rule 10.23 of the Federal Court Rules 2011 (Cth), Mr James Golden-Brown is taken to have been served with the originating process and notice of this hearing on 13 February 2025.
2.The applicant is to serve a sealed copy of this order on Mr Golden-Brown by email to his email address [email protected] by 24 March 2025.
3.Mr Golden-Brown has liberty to apply to vary or set-aside this order within 14 days of the date of this order.
4.Pursuant to section 588FF(3)(b) of the Corporations Act 2001 (Cth) (Act), the time for commencing proceedings under section 588FF(1) of the Act in respect of National Aboriginal and Torres Strait Islander Corporation – Transport and Community Services (In Liquidation) ICN 7866 is extended for 12 months to 25 March 2026.
5.The applicants are relieved from the consequences of the orders of Justice Sarah C Derrington dated 22 November 2024 made pursuant to section 37AF of the Federal Court of Australia Act 1976 (Cth) for the purposes of providing a copy of Schedule A of the order of 22 November 2024 to Mr Ian Mye.
6.Mr Ian Mye is required to file and serve the affidavit contemplated by order 4 of the orders of Justice Sarah C Derrington dated 22 November 2024 by 28 March 2025.
7.The costs of the application be costs in the liquidation of National Aboriginal and Torres Strait Islander Corporation – Transport and Community Services (In Liquidation) ICN 7866.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
MEAGHER J
INTRODUCTION
The applicants sought an order pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) to extend the time by which the applicants must bring proceedings under s 588FF(1) of the Act. The applicants sought an extension of 12 months.
In addition, the applicants sought orders which would relieve them of the consequences of a suppression order, made pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) by Justice Sarah C Derrington on 22 November 2024 (the suppression order). This relief is sought for “the limited purpose of enabling them to serve Schedule A of the Substantive Orders on Mr Ian Mye as contemplated by paragraph 4 of the Substantive Orders” made by Justice Sarah C Derrington on 22 November 2024.
Further, the applicants sought orders which would fix the time for Mr Mye’s compliance with order 4 of the substantive orders made by Justice Sarah C Derrington on 22 November 2024 (the substantive orders) one month before the commencement of the public examination.
Finally, the applicants sought an order, as per r 10.23 of the Federal Court Rules 2011 (Cth) (FCR), that Mr James Golden-Brown “is taken to have been served” with respect to the originating process and notice of the hearing scheduled for 21 February 2025 on 13 February 2025.
The applicants relied upon:
(1)the affidavit of Mr Anthony Jonsson, affirmed 7 February 2025; and
(2)the affidavit of service of Ms Kate Molkentin affirmed 18 February 2025; and
(3)the suppression order of Derrington SC J dated 22 November 2024; and
(4)the substantive orders of Derrington SC J dated 22 November 2024.
The hearing was conducted ex parte. The applicants identified the following persons likely to have an interest in the proceedings: Mr Golden-Brown, Mr Graham Aitken, Mr Abdul Harun, and Ms Kate Whiteley. In relation to Mr Aitken, Mr Harun and Ms Whiteley personal service was effected. In relation to Mr Golden-Brown, the applicants were unable to effect personal service. They seek to rely on r 10.23 of the FCR to establish that Mr Golden-Brown be deemed to have been served. That will be dealt with below.
BACKGROUND
In their written submissions the applicants set out that the National Aboriginal and Torres Strait Islander Corporation (NATSIC) was incorporated, in order to, inter alia:
(1)Relieve Aboriginal and Torres Strait Islander (ATSI) peoples of “disadvantage and poverty”; and
(2)Advance the “social and public welfare” of ATSI peoples and provide “holistic services and assistance to” ATSI peoples; and
(3)Establish and operate “transport services across all transport modes and networks to ATSI people”, which included “supporting and enhancing” the careers of ATSI peoples within this sector.
The applicants noted that “substantially all” of NATSIC’s income came from government grant funding.
On 25 March 2022, NATSIC was placed into administration.
On 5 May 2022, NATSIC was placed into liquidation.
The applicants’ preliminary allegations, raised through their investigations, related to “mismanagement of the Corporation”, “unauthorised spending of the Corporation’s available funds” and “misappropriation of the Corporation’s assets and funds”. The applicants submitted that this conduct allegedly occurred “over a period of approximately five years prior to the date of their appointment” as joint and several liquidators.
The applicants reported to NATSIC’s creditors regarding “their investigations into voidable transactions”.
Between July 2022 and early 2024, the applicants submitted that they “sought funding from third parties in order to enable them to carry out a public examination”.
An agreement was made with a creditor of NATSIC on 30 May 2024 to fund the public examination.
On 22 November 2024, Justice Sarah C Derrington made orders including in relation to the issue of summonses and as to a funding agreement.
The Court Registry listed the public examination to take place on the dates between 28 April 2025 to 30 April 2025.
LEGAL PRINCIPLES
Rule 10.01 of the FCR provides:
10.01 Service on individual
A document that is to be served personally on an individual must be served by leaving the document with the individual.
As identified above, r 10.23 of the FCR relates to deemed service. Rule 10.23 of the FCR states:
10.23 Deemed service
A party may apply to the Court, without notice, for an order that a document is taken to have been served on a person on a date mentioned in the order if:
(a) it is not practicable to serve a document on the person in a way required by these Rules; and
(b) the party provides evidence that the document has been brought to the attention of the person to be served.
Note: Without notice is defined in the Dictionary.
This rule applies to circumstances where service has already been effected, but in a non-compliant method: r 10.23 FCR.
Section 588FF(3) of the Act provides:
588FF Courts may make orders about voidable transactions
…
(3) An application under subsection (1) may only be made:
(a) during the period beginning on the relation‑back day and ending:
(i) 3 years after the relation‑back day; or
(ii) 12 months after the first appointment of a liquidator in relation to the winding up of the company;
whichever is the later; or
(b) within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.
An application under s 588FF(1) of the Act relates to voidable transactions.
The applicants relied upon Krejci (liquidator), in the matter of Half Price Enterprises Pty Ltd (In Liquidation) [2021] FCA 805 at [19] per Markovic J which set out principles relevant to the exercise of the discretion to extend time under s 588FF(3)(b) of the Act, referring to an earlier judgement of Her Honour’s as follows:
In Vaughan v Catanzariti, in the matter of Italian Prestige Jewellery Pty Limited (in Liq) [2018] FCA 1403 at [29] and [31]-[32] I set out the following principles relevant to the exercise of the discretion to extend time under s 588FF(3)(b) of the Act:
In McGrath v National Indemnity Company (2004) 182 FLR 309; [2004] NSWSC 391 at [18] Barrett J held that “the ambiguity in s 588FF(3)(b)” should be resolved in favour of a construction under which an extension order made after the period of three years has expired is effective for the purposes of the section provided that the application upon which the order was made was itself, by the filing of the appropriate initiating process, within that period.
…
Section 588FF(3)(b) of the Act confers a discretion on the Court. In Marsden (liquidator) v CVS Lane PV Pty Limited, in the matter of Pentridge Village Pty Limited (in liq) (receiver and manager appointed) (controller appointed) (2018) 124 ACSR 100; [2018] FCA 102 at [54]-[55] Gleeson J set out the principles which guide the exercise of that discretion:
The Court is required to consider what is fair and just in all the circumstances: BP Australia Ltd v Brown (2013) 58 NSWLR 322; [2003] NSWCA 216 (BP Australia) at [187]. The applicant for the extension must satisfy the Court that it should be granted: BP Australia at [183].
The matters that ordinarily inform the exercise of the Court’s discretion are:
(1) the liquidator’s explanation for the delay in taking action within the three year period provided for by the statute;
(2) the merits of the foreshadowed proceeding, assessed by a “preliminary review”; and
(3) any likely prejudice that would be suffered if the extension of time is granted: Parker, Re Worldwide Specialty Property Services Pty Ltd (in liq) v Worldwide Specialty Property Services Pty Ltd (in liq) [2017] FCA 687 at [15]-[16]; Walker and Moloney v CBA Corporate Services (NSW) Pty Ltd [2012] FCA 328 (Walker) at [43].
In Walker and Moloney v CBA Corporate Services (NSW) Pty Limited (2012) 88 ACSR 153; [2012] FCA 328 at [44] Nicholas J said the following about the issue of the assessment of the merits of a proposed action in circumstances where an extension is sought to permit further investigation:
The preliminary review of the merits of the proposed proceedings is “an investigation as to whether such proceedings would be so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit”: Green v Chiswell Furniture Pty Ltd (in liq) [1999] NSWSC 608 at [15] (Green) per Austin J. However, a review of the merits may be unnecessary if the purpose of the application for an extension of time is to allow the liquidator time in which to properly decide whether or not to bring the proposed proceedings: Green per Austin J at para [15]; see also the summary of the relevant principles of White J in New Cap Reinsurance Corporation Ltd (in liq) v Reaseguros Alianza SA (2004) 186 FLR 175; [2004] NSWSC 787 at [52]-[55].
With respect to delay, the applicants submitted that Ward J’s comments in Re Clarecastle Pty Ltd (in liq) (2011) 85 ACSR 260; [2011] NSWSC 857 at [134] were useful. Ward J stated:
Circumstances of the kind that may be relevant to a consideration of delay on the part of a liquidator can be gleaned from the judgment of Finn J in Taylor (to which reference was made by Barrett J in Arnautovic) in which reference was made to indications in the material there before the court as to matters such as the complexity of the affairs of the companies and the gross deficiencies in records; the lack of assets in the companies and hence lack of financial resources to fund an investigation; “importantly, the need to obtain, and the time lag involved in obtaining, financial backing for the investigation”; the place of this event in the web of matters in respect of which legal proceedings could be considered and on which advice was necessary; the other proceedings that have already been brought on; and the course the liquidator was then taking in holding a s 596A examination for the purpose of obtaining further evidence. In Itek, Burley J noted the listing of those relevant factors by Finn J as of assistance in identifying what may need to be established by the applicant in any given case.
With respect to the proceeding’s merits, the applicants submitted that their application was similar to that which was contemplated by Austin J in Green v Chiswell Furniture Pty Ltd (in Liq) [1999] NSWSC 608 at [15]. His Honour stated:
Considerations relevant to the exercise of the Court's discretion under s588FF(3) were stated by Finn J in Taylor v Woden Constructions Pty Ltd (Federal Court, 23/8/98, unreported). The following propositions, with which I respectfully agree, emerge from that case:
(a) ordinarily, the issues raised on an extension application are threefold:
(i) the explanation for the delay in bringing proceedings;
(ii) a preliminary review of merits of the foreshadowed proceedings - that is, an investigation as to whether such proceedings would be so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit;
(iii) whether the likely actual prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting an extension;
(b) where the liquidator's purpose in seeking the extension of time is simply to put himself into a position where he can properly decide whether or not to bring proceedings, a preliminary inquiry into the merits of any consequent proceedings may not always be necessary.
In the present case there is no evidence of any prejudice which would flow from granting an extension and so that is not an issue.
CONSIDERATION
Service
As set out above, the applicants must rely upon r 10.23 of the FCR for service to be deemed to have been effected upon Mr Golden-Brown.
Ms Molkentin’s affidavit of service sets out that she received a field services report from Sharmans Investigation & Process Serving (Sharmans) via email, which stated that on 12 February 2025 an agent attempted personal service at Mr Golden-Brown’s address. The agent was informed by a neighbour that Mr Golden-Brown was in hospital and would not return for two weeks. On the same day, the agent received a call from Mr Golden-Brown. Mr Golden-Brown informed the agent that he was “not in a mental state to accept documents”.
For r 10.23 of the FCR to be satisfied, personal service must not be “practicable”.
Whether personal service is “practicable” or not depends on several factors. The word “practicable” imports considerations of “feasibility and capability”: Australian Securities and Investments Commission v China Environment Group Ltd[2013] FCA 286 at [11]. The “circumstances of the particular proceedings, including the relief sought and the requirement that the litigation be progressed quickly and efficiently” are relevant factors: China Environment Group Ltd at [12], citing Rohalo Pharmaceutical Pty Ltd v R P Scherer SpA (1994) 15 ACSR 347 at 366 and referring to Ricegrowers Co-operative Ltd and Another v ABC Containerline NV and Others (1996) 138 ALR 480 at 482. Reliance on substituted service cannot assist a party to otherwise avoid the requirements of proper service: China Environment Group Ltd at [13] – [14], referring to Laurie v Carroll (1958) 98 CLR 310 and citing Ricegrowers Co-operative Ltd at 482.
Therefore, the word “practicable” must be given a wide and adaptable meaning by the Court.
Additionally, for r 10.23 of the FCR to be satisfied, the party serving the document must provide evidence that it has been “brought to the attention of the person to be served”: r 10.23 of the FCR.
In Australian Competition and Consumer Commission v Safety Compliance Pty Ltd (in liq) (No 3) [2016] FCA 303, Farrell J said of this requirement at [10]:
I accept the ACCC’s submission that r 10.23(b) is best understood as requiring that a document has been brought to a person’s attention, without imposing the additional requirement that the person has accorded it attention or acknowledged it. I accept the reasoning of Dodds-Streeton J in British American Tobacco Australasia Ltd v Taleb (No 1) [2012] FCA 1065 at [46] that to impose the latter requirement would materially reduce the ambit and efficacy of the rule which is characteristically being invoked precisely because service is being evaded or is otherwise difficult.
This is not a case where personal service has not been attempted. The applicants have attempted personal service in circumstances where they had no reason to suspect that it would be impractical. The applicants do not seek to use r 10.23 to circumvent r 10.01 of the FCR.
Mr Golden-Brown’s absence from his home, and the evidence from his neighbour that he was, and would remain, in hospital for a further two weeks, lends weight to an argument that personal service was impractical.
Further, given that this is an application for an extension of time to allow the applicants to investigate NATSIC for the purposes of bringing any voidable transactions proceedings, it is arguable that there is some urgency. The proceedings should “be progressed quickly and efficiently”: China EnvironmentGroup Ltd at [12].
On 13 February 2025, Ms Molkentin served Mr Golden-Brown by sending the relevant documents to an email address. The email included the following documents:
(1)A letter dated 13 February 2025; and
(2)The originating process, excluding the schedules, dated 31 October 2024; and
(3)The third affidavit of Mr Jonsson, dated 7 February 2025.
Ms Molkentin deposed in her affidavit of service that later that day she received an email from Mr Golden-Brown which “acknowledged receipt of my email of 4:10pm and the proceeding”.
I am satisfied that the service effected by the applicants meets the requirements in r 10.23 of the FCR, such that it is appropriate for me to make an order that the documents referred to at [35] above are taken to have been served on Mr Golden-Brown.
In their oral submissions, the applicants also proposed an order allowing Mr Golden-Brown to apply to vary or set aside this order within 14 days. I am content to grant that order as per r 1.32 of the FCR in the “interests of justice” so that Mr Golden-Brown, should he so wish, may have the opportunity to be heard on this matter.
Extension of Time
The applicants seek an extension of time, for 12 months, in order to ascertain whether they will bring proceedings for voidable transactions claims under the Act. Section 588FF(3)(b) enables the Court to extend the time for an application under s 588FF(1).
As set out at [22] above, there are three factors which the Court ought to consider when determining whether to exercise their discretion in s 588FF(3)(b) of the Act.
The first factor is the “explanation for the delay” referred to at [19] of Krejci, citing Vaughan v Catanzariti, in the matter of Italian Prestige Jewellery Pty Limited (in Liq) [2018] FCA 1403 at [31], which in turn cited Marsden (liquidator) v CVS Lane PV Pty Limited, in the matter of Pentridge Village Pty Limited (in liq) (receiver and manager appointed) (controller appointed) (2018) 124 ACSR 100; [2018] FCA 102 at [55].
As enunciated above, in Re Clarecastle Pty Ltd at [134], circumstances such as “gross deficiencies in records”, “lack of financial resources to fund an investigation”, delay involved in obtaining such funding, and the liquidator’s opinion on “holding a s 596A examination for the purpose of obtaining further evidence” are relevant.
The applicants submitted that their investigations into NATSIC had revealed incomplete books and records, such that the liquidators were unable to ascertain the manner in which NATSIC had conducted its affairs. Further, the applicants submitted that their investigations remained ongoing and unresolved. The applicants submitted that the delay in obtaining funding to conduct a public examination for almost two years was a relevant factor. Since obtaining such funding in May 2024, the applicants point to their actions taken with respect to the funding agreement and as to the preparation and filing of the originating process for the issue of summonses.
Mr Jonsson deposed in his affidavit, affirmed 7 February 2025, that once the public examination has been undertaken, he will require further time to “review the documents produced and analyse the public examination transcript”, “undertake any further investigations which are appropriate and if necessary, relist the public examination to ask the examinees further questions regarding the examinable affairs of the Company”, “obtain legal advice in relation to any voidable transaction claims which may be available” and “seek funding” to pursue such claims, if they arise.
Mr Jonsson also deposed that NATSIC’s affairs were conducted by Mr Golden-Brown, Mr Mye, Mr Aitken and Mr Harun, and that they were “the only individuals with complete knowledge of what occurred and why”.
I am satisfied on these facts that the applicants’ investigations have revealed deficiencies in the records of NATSIC. A public examination and the production of documents may assist the applicants in that regard. I am also satisfied that the delay thus far in commencing proceedings has arisen as a result of NATSIC’s failure to keep proper financial records and the lack of available funding agreements. In my view, the applicants have explained the delay satisfactorily.
The second factor to be considered in determining whether the Court should exercise its discretion as per s 588FF(3)(b) of the Act is the merits of the proceeding, considered at a preliminary level, as referred to in Krejci at [19], citing Vaughan at [31] which in turn cited Marsden at [55].
As set out above at [24] above, the applicants acknowledged that this matter is one of the kind identified by Austin J in Green at [15]. Nonetheless, the applicants submitted that the Court should be satisfied of the merits of the applicants “finalising their investigations before commencing proceedings”.
It is true that the applicants sought this order to place themselves in a position such that they could determine whether to bring proceedings for voidable transactions claims. Mr Jonsson deposed that his investigations had revealed the following:
·NATSIC had practically “no internal financial controls”; and
·NATSIC’s chief executive officer “had the ability to control all steps of a financial transaction”; and
·There was evidence that NATSIC may have engaged in insolvent trading; and
·There were allegations, which if substantiated, included “mismanagement of the Corporation, unauthorised spending of the Corporation’s available funds including the misuse and misappropriation of the Corporation’s assets and funds over a period of approximately five years prior to the date of my appointment”; and
·The “collective amount of transactions” with respect to these allegations was around $1,030,000; and
·The alleged conduct included in the alleged “personal expenditure” constituted, amongst other things:
·“personal accommodation, flights and holiday expenditure”; and
·“hospitality and entertainment, including alcohol and meals”; and
·“personal traffic fines”; and
·“incorrect leave payments”; and
·“personal medical and associated accommodation costs”; and
·“personal pet care expenses”; and
·“travel for relatives”.
As set out at [45] above, Mr Jonsson deposed to the fact that some of NATSIC’s affairs were undertaken within the knowledge only of individuals summonsed for public examination.
I accept the applicants’ submission that the merits of these proceedings disclose sufficient evidence of prospects to warrant the making of an order pursuant to s 588FF(3)(b) of the Act. Without examination of those individuals, best or only placed to speak to the affairs of NATSIC, the applicants cannot conclusively determine whether proceedings for voidable transactions claims are warranted. I am therefore satisfied that on a preliminary basis there is sufficient merit in this proceeding.
The third factor to consider in determining whether the Court should exercise its discretion under s 588FF(3)(b) of the Act to order an extension of time is “prejudice”, being “any likely prejudice that would be suffered if the extension of time is granted” as referred to in Krejci at [19], citing Vaughan at [31], which cited Marsden at [55]. Austin J in Green at [15] phrased it as “whether the likely actual prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting an extension”.
The applicants acknowledged the “inherent prejudice” of delay in their submissions. In Re Clarecastle Pty Ltd, Ward J set out relevant principles at [200], referring to the statements of McHugh J in Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541; [1996] HCA 25 as follows:
On the question of the prejudice arising from delay, McHugh J in the Brisbane case, noted that:
The effect of delay on the quality of justice is no doubt one of the most important influences motivating a legislature to enact limitation periods for commencing actions. … A limitation provision is the general rule; an extension provision is the exception to it. The extension provision is a legislative recognition that general conceptions of what justice requires in particular categories of cases may sometimes be overridden by the facts of an individual case. The purpose of a provision such as s 31 is “to eliminate the injustice a prospective plaintiff might suffer by reason of the imposition of a rigid time limit within which an action was to be commenced.” But whether injustice has occurred must be evaluated by reference to the rationales of the limitation period that has barred the action. The discretion to extend should therefore be seen as requiring the applicant to show that his or her case is a justifiable exception to the rule that the welfare of the State is best served by the limitation period in question. Accordingly, when an applicant seeks an extension of time to commence an action after a limitation period has expired, he or she has the positive burden of demonstrating that the justice of the case requires that extension. [My emphasis.]
In this case the applicants submitted that they have been unable to identify any “specific prejudice” which may affect any of the potential respondents, which is understandable, given the nature of the proceedings. Conversely, the applicants identified prejudice that they may suffer should an extension of time not be granted, namely that they will be impeded in bringing voidable transactions claims. This will prejudice NATSIC’s unsecured creditors. Further, the applicants pointed to there being a “public interest” in the prosecution of established voidable transactions claims, due to NATSIC’s funding being almost entirely comprised of public money. Both these factors are relevant to the potential prejudice the applicants may face if an extension of time is not granted.
For those reasons, I am satisfied that any likely prejudice, including inherent prejudice, suffered by the potential respondents cannot outweigh the clear prejudice the applicants face if an extension of time is not granted.
On the whole then, an order granting an extension of time under s 588FF(3)(b) of the Act, allowing the applicants a further 12 months to bring voidable transactions claims under s 588FF(1) of the Act is fair and just in these circumstances: Krejci at [19]; Vaughan at [31]; Marsden at [55].
Suppression Orders
Pursuant to r 1.32 of the FCR, the applicants sought additional orders, not contained within the originating process. Rule 1.32 of the FCR states as follows:
1.32 Court may make any order it considers appropriate in the interests of justice
The Court may make any order that the Court considers appropriate in the interests of justice.
Note: See sections 23 and 28 of the Act.
The applicants’ orders sought were:
(1)An order which would relieve them of the consequences of the suppression order for “the limited purpose of enabling them to serve Schedule A of the Substantive Orders on Mr Ian Mye” in alignment with order 4 of the substantive orders; and
(2)An order which would fix the time for Mr Mye’s compliance with order 4 of the substantive orders, being one month before the commencement of the public examination.
The applicants sought these orders to alleviate an “unintended consequence” of the suppression order made by Derrington SC J in the earlier proceedings referred to above. The relevant order is as follows:
Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), Schedule A to the Order of 22 November 2024 is not to be published, accessed, or made available to any person until further Order of the Court.
The relevant substantive order in respect of which it was made was:
Pursuant to s 597A of the Corporations Act 2001 (Cth), Mr Ian Mye is to file an affidavit deposing to the matters set out in Schedule A to this order at a time and date to be fixed, prior to the return of the summons referred to in the summonses to the individuals identified in orders 3 and 5 of this order.
In its current form the relevant part of the suppression order does not permit service of Schedule A of the substantive orders on Mr Mye, thus preventing him from complying with those orders in so far as they are relevant to him.
In my view, the orders sought should be granted in the “interests of justice”: r 1.32 of the FCR. The orders will uphold the integrity of the suppression order, confined to a narrow and limited purpose of enabling compliance with the substantive orders.
CONCLUSION
For the above reasons, I conclude that an order of deemed service as per r 10.23 of the FCR is appropriate in these circumstances. I conclude that an extension of time should be granted for the applicants to bring voidable transactions claims as per s 588FF(1) in the Court’s discretion under s 588FF(3)(b) of the Act. I also conclude that the orders sought by the applicants with respect to the suppression order and substantive orders should be made in accordance with the Court’s powers under r 1.32 of the FCR.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Meagher. Associate:
Dated: 20 March 2025
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