Re Petsamo No 14 Pty Ltd

Case •

[2025] NSWSC 899

•

12 August 2025

No judgment structure available for this case.

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Re Petsamo No 14 Pty Ltd [2025] NSWSC 899
Hearing dates: 7 August 2025
Date of orders: 12 August 2025
Decision date: 12 August 2025
Jurisdiction:Equity - Expedition List
Before: McGrath J
Decision:

Directions made

Catchwords:

CORPORATIONS — Winding up — Conduct of liquidation — Application for directions regarding claims to be made in proceedings and assignment of claims

Legislation Cited:

Corporations Act2001 (Cth), ss 9, 9AD, 479 (now repealed), 596A, 596B, 600K, 1274B, Sch 2, s 90-15

Court Suppression and Non-publication Orders Act 2010 (NSW), s 7

Corporations Regulations 2001 (Cth), rr 5.6.65(1), 5.6.69

Federal Court Rules 2011 (Cth), r 9.24

Cases Cited:

Cathro v Thomassian [2022] FCA 399

Glenfyne International Holding Ltd v Glenfyne Farms International AU Pty Ltd (in liq) (2019) 101 NSWLR 358; [2019] NSWCA 304

Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42

One T Development Pty Ltd v Peter Krejci in his capacity as liquidator of ENA Development Pty Ltd [2023] NSWCA 120

Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404; [1994] HCA 54

Re Buradoo Pty Ltd (in liq) [2021] NSWSC 985

Re Courtenay House Capital Trading Group Pty Ltd (in liq) (2020) 147 ACSR 1; [2020] NSWSC 780

Re Force Corp Pty Ltd (in liq) (2020) 149 ACSR 451; [2020] NSWSC 1842

Re Hawden Property Group Pty Ltd (in liq) [2018] NSWSC 481; 125 ACSR 355

Re Montpac Pty Ltd (in liq) and Global Network Link Pty Ltd (in liq) [2020] NSWSC 1237

Re Mudgee Dolomite & Lime Pty Ltd (No. 4) [2021] NSWSC 393

Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556

Sparks, Re IG Energy Holdings (Australia) Pty Ltd (2023) 168 ACSR 104; [2023] FCA 538

Category:Principal judgment
Parties: Petsamo No 14 Pty Ltd (Applicant)
Representation:

Counsel:
M Condon (Applicant)
D Krochmalik (Applicant)

Solicitors:
Holman Webb Lawyers (Applicant)
File Number(s): 2025/00090942
Publication restriction: Nil

Judgment

INTRODUCTION

  1. By interlocutory process filed 1 August 2025, Simon John Cathro as liquidator of Petsamo No 14 Pty Ltd (in liquidation) principally seeks orders pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) (IPSC), being Schedule 2 of the Corporations Act 2001 (Cth) and given effect by s 600K of the Corporations Act, that:

  1. the liquidator would be justified in causing Petsamo to issue proceedings against Alfred Thomassian seeking orders for repayment of monies paid to him as a dividend from, or distribution in the winding up of, Petsamo, but limited to a claim that Petsamo did not authorise (or otherwise ratify) the allotment (or issue) of the share in Petsamo in his favour;

  2. the liquidator would be justified in not causing Petsamo to bring any claim against Alfred alleging fraud (or other improper conduct) on the part of Alfred with respect to the (purported) allotment (or issue) of the share in Petsamo in his favour;

  3. in the event that an order is made in terms of (2) above, the liquidator would be justified in offering to sell to Alfred and the legal personal representative of the estate of the late George Thomassian any right to bring any claim against Alfred alleging fraud (or other improper conduct) on the part of Alfred with respect to the (purported) allotment (or issue) of the share in Petsamo in his favour.

  1. Petsamo was established as a company within the Thomassian family. In this judgment, I will refer to each of the relevant family members by their first names for convenience and without intending any disrespect.

  2. The application before me follows on from an earlier application by the liquidator, which was heard in private by Parker J on 7 March 2025. At the conclusion of the hearing, Parker J delivered an ex tempore judgment making an order pursuant to s 90-15 of the IPSC that the liquidator would be justified in causing Petsamo not to issue proceedings alleging fraud on the part of Alfred until examinations had been conducted under ss 596A and 596B of the Corporations Act.

  3. There is urgency in the application because of a looming expiry of a limitation period. The hearing before me was also conducted in closed court.

  4. The application for determination before me is supported by three confidential joint opinions of senior and junior counsel retained by the liquidator, which are dated 6 March 2025, 1 August 2025 and 7 August 2025, respectively. The confidential joint opinions were only provided to me in the closed court hearing and should be kept from the knowledge of the principal protagonists in relation to the proposed claims and possibles defences to them in the current proceedings. In light of the confidential and privileged nature of the confidential joint opinions, during the hearing I made an order pursuant to s 7 of the Court Suppression and Non-publication Orders Act 2010 (NSW), that publication or other disclosure of the confidential joint opinions be prohibited until further order, and that each of the confidential joint opinions remains in a sealed envelope marked “Suppressed – Not to be opened by anyone other than by a Judge of the Court”.

  5. For the reasons set out below, I have also determined that I should make the orders pursuant to s 90-15 of the IPSC that are sought by the liquidator.

RELEVANT FACTS

Thomassian family members, Petsamo and actions of Robert Miles

  1. Petsamo was incorporated on 13 December 1979.

  2. On 24 April 1980, George and his late father, Haritune Thomassian, were appointed as directors of Petsamo, each holding one of the two shares then on issue. Satenique Thomassian was Haritune’s wife and the mother of George, Alfred and Vartkes Thomassian.

  3. On 1 September 1980, Satenique was appointed as a director of Petsamo.

  4. Between 1979 and 1993, Robert Miles, a former partner of Abbott Tout Creer & Wilkinson (now a solicitor at Equius Legal), provided legal advice and services to Petsamo, Haritune, George, Alfred and Vartkes.

  5. George principally resided in Germany and travelled to Australia periodically. In January 1988, Mr Miles, on George’s instructions, prepared a general power of attorney for George in favour of Alfred, which was registered and stamped on 27 January 1988.

  6. In December 1990, Haritune died.

  7. The records of the Australian Securities and Investments Commission (ASIC) state that Petsamo had three directors in January 1991, being George, Vartkes and Satenique. It is unclear on the evidence before me when Vartkes was appointed as a director and nothing turns on this.

  8. According to Mr Miles, in late January 1991, he met George who instructed him that Alfred was to be allotted one share in Petsamo and be appointed a director of Petsamo in place of Haritune. Mr Miles says that in accordance with those instructions, he then prepared:

  1. a notification of allotment of shares (Form 207), recording the allotment of one share to Alfred on 21 January 1991; and

  2. a notification of change to officeholders (Form 304), recording the appointment of Alfred as a director of Petsamo on 21 January 1991 and George, Vartkes and Satenique as continuing directors.

  1. On 6 May 1991, Mr Miles filed Form 207 and Form 304 at the Australian Securities Commission (the predecessor to ASIC). Each of Form 207 and the Form 304 are purported to be signed by Vartkes.

  2. There was no resolution of the shareholders or directors of Petsamo at any time making the allotment to Alfred or appointing Alfred as director.

  3. In about 1997, the ordinary share held in the name of the late Haritune was transferred into George’s name, meaning that George held two ordinary shares in Petsamo.

Sale of Petsamo’s principal asset

  1. On 29 November 2018, Petsamo sold its principal asset being a property located in Double Bay for $12.5 million.

Update of ASIC’s record for Petsamo

  1. As at 9 August 2019, the records of ASIC recorded that Petsamo’s share capital comprised two fully paid ordinary shares both held by George.

  2. On 10 August 2019, Alfred caused the ASIC records to be updated by lodging ASIC Form 484 to record that Petsamo had three ordinary shares on issue, George held two of those ordinary shares, and Petsamo had issued one ordinary share on about 6 May 1991 to Alfred.

Removal of George as director and payment of dividends to George and Alfred

  1. On 26 August 2019:

  1. Petsamo resolved that George should be removed as a director pursuant to a resolution signed by Alfred in his capacity as a member of Petsamo and on behalf of George pursuant to the power of attorney held by Alfred; and

  2. Petsamo paid a dividend to its shareholders of $1,250,000 with $833,333 being paid to or at the direction of George and $416,667 being paid to or at the direction of Alfred.

Winding up of Petsamo

  1. On 28 August 2019, by resolution of its members signed by Alfred in his capacity as a member of Petsamo and on behalf of George pursuant to the power of attorney held by Alfred, Petsamo resolved to be wound up voluntarily, that the liquidator be appointed and the liquidator be authorised to distribute in specie such assets of Petsamo as he may determine.

  2. There being no creditors of Petsamo, the liquidator then determined that $10,270,259.06 was available for distribution to the members of Petsamo and he proposed to distribute it consistent with the shareholding of Petsamo as recorded in the documents lodged with ASIC being:

  1. $3,423,419.69 to Alfred is a one-third shareholder; and

  2. $6,846,839.37 to George as a two-thirds shareholder.

  1. On 13 September 2019, the liquidator issued a Notice of Intention to Declare Dividend pursuant to rr 5.6.65(1) and 5.6.69 of the Corporations Regulations 2001 (Cth) stating that he would declare a first and final dividend for Petsamo on 9 October 2019.

  2. On 8 October 2019, the liquidator caused to be distributed the sum of $3,423,419.69 to Alfred with respect to his one-third shareholding in Petsamo.

Federal Court proceedings

  1. In late 2020, following extensive correspondence about the conduct of the affairs of Petsamo between George (through his solicitor, Ken Kanjian of Kanjian & Company) and the liquidator, the liquidator commenced proceedings in the Federal Court of Australia (Federal Court proceedings) seeking judicial directions to clarify the issues raised on behalf of George with respect to the true shareholding structure of Petsamo, with Alfred and George joined as first and second defendants respectively.

  2. On 8 January 2022, before the final hearing of the Federal Court proceedings, George died. Notice of the Federal Court proceedings was provided to Alisa Thomassian (George’s widow) and Kanjian & Company but no order was made under r 9.24 of the Federal Court Rules 2011 (Cth) appointing a personal representative of George’s estate or permitting the Federal Court proceedings to continue in the absence of the deceased person’s estate. As a result, George’s estate was not strictly bound by any order made in the Federal Court proceedings.

  3. On 28 March 2022, following the final hearing of the Federal Court proceedings, Markovic J made orders in the Federal Court proceedings: Cathro (in his capacity as liquidator of Petsamo No 14 Pty Ltd) (in liq) v Thomassian [2022] FCA 399. Those orders included that the liquidator:

  1. is entitled pursuant to s 1274B of the Corporations Act to rely upon the accuracy of the company extract for Petsamo prepared by ASIC as prima facie evidence of the facts recorded in it, including that Alfred and George respectively own one-third and two-thirds of the issued share capital of Petsamo and George ceased to be a director of Petsamo on 26 August 2019; and

  2. is justified in not undertaking any further investigations into the affairs of Petsamo.

Supreme Court proceedings

  1. On 7 June 2023, Mr Kanjian as the administrator of George’s estate filed the summons commencing proceedings in this court against Alfred and his son, David Thomassian, seeking various relief, including for the payment by Alfred to George’s estate of the $833,333 dividend declared by Petsamo on or about 26 August 2019 and paid to Alfred (proceedings number 2023/182629) (Supreme Court proceedings).

  2. The Supreme Court proceedings have since proceeded on pleadings.

  3. On 4 February 2025, pursuant to leave granted by Parker J on 3 February 2025, Mr Kanjian filed a further amended statement of claim (FASOC) in the Supreme Court proceedings, which added Petsamo as the third defendant. The amendments contained in the FASOC set out allegations of fraud against Alfred in relation to the allotment of the share in Petsamo and his appointment as a director of Petsamo in January 1991.

Examination Process and aftermath

  1. Following the making of the orders by Parker J in these proceedings on 7 March 2025, the liquidator commenced proceedings, obtained summonses for examination and orders for production directed to various persons and through his legal representatives conducted examinations of Alfred on 22 May 2025, Mr Miles on 23 May 2025, Vartkes on 23 May 2025, Sevan Thomassian on 25 June 2025 and Raffi Zarzavatjian on 25 June 2025 (Examination Process).

  2. Following the Examination Process, the liquidator sent detailed letters to the solicitors for Alfred on 3 July 2025 and Mr Kanjian on 4 July 2025, and received responses from them. Mr Kanjian has proposed that Petsamo file a cross-claim in the Supreme Court proceedings essentially making the fraud allegations against Alfred that Mr Kanjian has made in the FASOC, together with extended allegations of fraud against Alfred in relation to the lodgment of the Form 484 on 10 August 2019.

LEGAL PRINCIPLES

  1. The liquidator seeks directions under s 90-15 of the IPSC which provides as follows:

90‑15  Court may make orders in relation to external administration

Court may make orders  

(1)   The Court may make such orders as it thinks fit in relation to the external administration of a company.

Orders on own initiative or on application  

(2)   The Court may exercise the power under subsection (1):  

(a)   on its own initiative, during proceedings before the Court; or  

(b)   on application under section 90‑20.

Examples of orders that may be made  

(3)   Without limiting subsection (1), those orders may include any one or more of the following:  

(a)   an order determining any question arising in the external administration of the company;  

(b)   an order that a person cease to be the external administrator of the company;  

(c)   an order that another registered liquidator be appointed as the external administrator of the company;  

(d)   an order in relation to the costs of an action (including court action) taken by the external administrator of the company or another person in relation to the external administration of the company;  

(e)   an order in relation to any loss that the company has sustained because of a breach of duty by the external administrator;  

(f)   an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company.

Matters that may be taken into account  

(4)   Without limiting the matters which the Court may take into account when making orders, the Court may take into account:  

(a)   whether the liquidator has faithfully performed, or is faithfully performing, the liquidator’s duties; and  

(b)   whether an action or failure to act by the liquidator is in compliance with this Act and the Insolvency Practice Rules; and  

(c)   whether an action or failure to act by the liquidator is in compliance with an order of the Court; and  

(d)   whether the company or any other person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the liquidator; and  

(e)   the seriousness of the consequences of any action or failure to act by the liquidator, including the effect of that action or failure to act on public confidence in registered liquidators as a group.

…

Section does not limit Court’s powers  

(7)   This section does not limit the Court’s powers under any other provision of this Act, or under any other law.

  1. A liquidator has standing to bring this application as an officer of the company: see s 90-20(1)(d) of the IPSC; ss 9 (definition of “officer”) and 9AD of the Corporations Act.

  2. Section 90-15 of the IPSC confers broad jurisdiction and powers on this court to regulate the external administration of companies. So much is clear from the text of s 90-15(1) of the IPSC that this court “may make such orders as it thinks fit in relation to the external administration of a company”. The balance of the provision is careful not to limit that power.

  3. It follows that s 90-15 of the IPSC should be construed in accordance with the ordinary meaning of the express words used without implied or inferred limitation: Glenfyne International Holding Ltd v Glenfyne Farms International AU Pty Ltd (in liq) (2019) 101 NSWLR 358; [2019] NSWCA 304, Bell P (with whom Bathurst CJ and Macfarlan JA agreed) at [61], citing, inter alia, Owners of the Ship “Shin Kobe Maru” v Empire Shipping Co Inc (1994) 181 CLR 404, Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ at 421; [1994] HCA 54.

  4. In One T Development Pty Ltd v Peter Krejci in his capacity as liquidator of ENA Development Pty Ltd [2023] NSWCA 120, Ward P, Leeming and Mitchelmore JJA at [34] expressly endorsed the following statements made by Gleeson JA in Re Hawden Property Group Pty Ltd (in liq) (2018) 125 ACSR 355; [2018] NSWSC 481 at [6]–[8] regarding the operation of s 90-15(1) of the IPSC:

[6] Section 90-15(1) of Sch 2 of the Corporations Act – Insolvency Practice Schedule (Corporations) – applies to this application, given the repeal of s 479(3) of the Corporations Act by the Insolvency Law Reform Act 2016 (Cth). Section 90-15(1) provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. A company is taken to be under external administration, if, among others, a liquidator has been appointed in relation to the company: s 5-15(c), Sch 2. Among other things, a court can make an order determining any question arising in the external administration of the company: s 90-15(3)(a).

[7] The ambit of s 90-15 has not yet been fully considered in the authorities. In Reidy, In the Matter of eChoice Limited (Admin Apptd) [2017] FCA 1582, Yates J at [27] accepted that an application by an administrator for directions, that formerly would have been made under s 447D(1) of the Corporations Act (now repealed), would fall within the purview of the statutory power in s 90-15 to make an order that determines a question arising in the external administration of a company.

[8]   In Walley, In the Matter of Poles & Underground Pty Ltd (Admin Apptd) [2017] FCA 486 at [41], Gleeson J remarked that the question of whether to exercise the power in s 90-15 was “to be answered by reference to the principles applied to the exercise of the discretions previously contained in s 479(3) and s 511 of the Act”. That may be accepted insofar as the external administrator seeks the directions of the Court, but the power under s 90-15 to “make such orders as it thinks fit in relation to the external administration of a company” (s 90-15(1)) including “an order determining any question arising in the external administration of a company” (s 90-15(3)(a)), is wider and accommodates the determination of substantive rights. Of course, the Court would not do so without affording potentially affected parties an opportunity to be heard: Meadow Springs Fairway Resort Ltd (in liq) v Balance Securities Ltd [2007] FCA 1443, at [49]-[51] (French J, referring to Australian Securities Commission v Melbourne Asset Management Nominees Pty Ltd (1994) 49 FCR 334 at 352; [1994] FCA 1031 (Northrop J)); Re Willmott Forests Ltd (No 2) [2012] VSC 125; 88 ACSR 18 at [45]-[46] (Davies J); In the Matter of ICS Real Estate Pty Ltd (in liq) [2014] NSWSC 479 at [25] (Brereton J).

  1. In Re Force Corp Pty Ltd (in liq) (2020) 149 ACSR 451; [2020] NSWSC 1842, Gleeson J at [18]–[19] made the following additional remarks about the operation of s 90-15 of the IPSC:

[18]   The function of a liquidator’s application for directions is to give the liquidator advice as to the proper course of action for him or her to take in the liquidation: Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 at 117; Re Ansett Australia Ltd (Admins Apptd) and Korda [2002] FCA 90; (2002) 40 ACSR 433 at [46].

[19]   The proper subject matter of an application for directions is to provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion, but not a matter relating to the making or implementation of a business or commercial decision unless there is a particular legal issue raised or an attack on the propriety or reasonableness of the decision: Sanderson v Classic Car Insurances Pty Ltd at 117; Re G B Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 686-687; Re Ansett Australia Ltd at 65; Re M F Global Australia Ltd (in liq) [2012] NSWSC 994; (2012) 267 FLR 27 at [7]. Assuming the liquidator has made full and fair disclosure to the Court of the material facts, he or she will be protected from liability for any alleged breach of duty as liquidator to a creditor or contributory or to the company in respect of anything done by him or her in accordance with the direction: Re G B Nathan & Co at 679.

  1. In Re Montpac Pty Ltd (in liq) and Global Network Link Pty Ltd (in liq) [2020] NSWSC 1237, Black J at [8] considered the powers to give directions under s 90-15 of the IPSC as being wider than those under its statutory predecessor, the former s 479(3) of the Corporations Act, and that they “at least” allow for the court to give directions that inter alia provide guidance on matters of law and the reasonableness of a contemplated exercise of a discretion, stating:

… The Court’s power to give a direction under s 90-15 of the ISPC at least allows the Court to give a liquidator advice as to the proper course of action for him or her to take in a liquidation, and may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion, although it typically will not do so where a matter relates to the making and implementation of a business or commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the decision. The power to give directions under this section is wider than its power to give such directions under former s 479(3) of the Act: Walley; Re Poles & Underground Pty Ltd (admins apptd) [2017] FCA 486 at [41]; Warner (liquidator), Re Sakr Bros Pty Ltd (in liq) [2019] FCA 547 at [18]; Re Go Energy Group Ltd [2019] NSWSC 558 at [16]; Re Plutus Payroll Australia Pty Ltd (in liq) [2019] NSWSC 1171 at [4]; Re RCR Tomlinson Ltd (admins apptd) [2020] NSWSC 735 at [6].

  1. The relevant principles as to an application by a liquidator for directions may also be traced (with gratitude) to earlier consideration of Black J in Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556, at [7]–[9]:

[7] I summarised the scope of the Court’s power to give directions under s 479(3) of the Corporations Act in Re MF Global Australia Ltd (in liq) [2012] NSWSC 994; (2012) 267 FLR 27 at [7] as follows:

“Section 479(3) of the Corporations Act allows a liquidator to apply to the court for directions in relation to a matter arising under a winding up. The function of a liquidator’s application for directions under this section is to give the liquidator advice as to the proper course of action for him or her to take in the liquidation: Sanderson v Classic Car Insurances Pty Ltd (1985) 10 ACLR 115 at 117; (1986) 4 ACLC 114; Re Ansett Australia Ltd (admins apptd) and Korda [2002] FCA 90; (2002) 115 FCR 409; 40 ACSR 433 at [46]. The court may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion but will typically not do so where a matter relates to the making and implementation of a business or commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the decision: Sanderson v Classic Car Insurances Pty Ltd above at 117; Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 686–7; 5 ACSR 673; 9 ACLC 1291; Re Ansett Australia Ltd above at [65]; Re One Tel Networks Holdings Pty Ltd [2001] NSWSC 1065; (2001) 40 ACSR 83 at [32].”

[8] I also referred to the scope of the Court’s powers under s 511 of the Corporations Act in that decision and observed (at [8]) that:

“Section 511 of the Corporations Act provides an alternative source of power to give such a direction and the Liquidators also rely on that section. The principles applicable to an application under that section were recently reviewed by Ward J in Re Purchas [2011] NSWSC 91 … Applications made under this section in a voluntary winding up are determined in a similar manner to applications in a court ordered winding up under s 479(3) of the Corporations Act notwithstanding that section does not expressly require that it be ‘just and beneficial’ to give the relevant direction. The court may give such a direction where it will be ‘of advantage in the liquidation’: Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209 at 212; Handberg v MIG Property Services Pty Ltd (2010) 79 ACSR 373 at [7]. The effect of a determination under the section is to sanction a course of conduct on the part of the liquidator so that he or she may adopt that course free from the risk of personal liability for breach of duty: Handberg v MIG Property Services Pty Ltd at [7].”

[9]   I also recognise that the Court’s powers to give judicial advice and give directions under these sections are intended to facilitate the performance of a liquidator’s functions and should be interpreted widely to give effect to that intention, and the Court may give such advice or give such a direction where it is advantageous to the liquidation to do so: Dean-Willcocks v Soluble Solution Hydroponics Pty Ltd (1997) 42 NSWLR 209 at 212; Handberg v MIG Property Services Pty Ltd [2010] VSC 336; (2010) 79 ACSR 373 at [7]; Re One Tel Networks Holdings Pty Ltd [2001] NSWSC 1065; (2001) 40 ACSR 83; Re One Tel Ltd [2014] NSWSC 457; (2014) 99 ACSR 247 at [32]; Re Octaviar Ltd (in liq) and Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1005. The directions sought in this case do not involve either the GPLs or the SPL seeking a direction as to the making of implementing of a business or commercial decision, which the Court will generally be reluctant to give.

  1. Notably, while expressed in reference to the former s 479(3) of the Corporations Act, these principles have been applied in the context of s 90-15 of the IPSC which, as stated above, confers a broader range of powers in respect of the same subject matter: see Re Buradoo Pty Ltd (in liq) [2021] NSWSC 985, Ward CJ in Eq at [22]; Re Courtenay House Capital Trading Group Pty Ltd (in liq) (2020) 147 ACSR 1; [2020] NSWSC 780, Rees J at [6].

  2. There is a well-established practice of trustees and liquidators seeking judicial advice on whether to institute or defend proceedings: Re Mudgee Dolomite & Lime Pty Ltd (No. 4) [2021] NSWSC 393, Williams J at [23] and the authorities cited there. The practice of trustees and liquidators is to support such an application by providing a confidential opinion of appropriately qualified counsel on whether there are sufficient prospects of success to warrant proceeding with or defending the proceedings, addressing the facts necessary to support the legal conclusions and demonstrating that the propositions of law relied on for those conclusions are properly arguable: see, for example, Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, Gummow ACJ, Kirby, Hayne and Heydon JJ (with whom Kiefel J agreed) at [160]–[164] endorsing the approach of Palmer J at first instance.

  3. In Sparks, Re IG Energy Holdings (Australia) Pty Ltd [2023] FCA 538, Halley J at [21]–[22] considered the extent to which a liquidator can obtain a judicial direction under s 90-15(1) of the IPSC with respect to a “commercial or business decision”, saying:

[21]   The “prevailing principle” to be applied in circumstances where liquidators and administrators request a judicial direction in respect of a business or commercial decision, is that the decision must give rise to an issue requiring the exercise of legal judgment. An issue of this kind includes one of substance or procedure or of power, propriety or reasonableness of the decision: Ansett at [65] (Goldberg J).

[22]   Nevertheless, a Court’s preparedness to issue a judicial direction will depend on the circumstances of each request by the liquidators or administrators. Courts have previously issued such a direction where a decision, substantially commercial in character, is complex, made under time pressure and involved the balancing of competing interests in respect of a large corporate group: Re RCR Tomlinson Ltd [2018] NSWSC 1859 at [14] (Black J). This reflects the “intrinsic unfairness” of exposing an administrator to risk of personal liability where the decision is complex and “where any decision that is made, including making no decision, will have inevitable risks for some or all of the affected constituencies”: RCR at [14].

  1. As emphasised in Sparks at [24], the function of a direction under s 90-15(1) of the IPSC is not to determine rights and liabilities arising out of a particular transaction but to provide liquidators with protection against claims that they have acted unreasonably, inappropriately or in breach of their duty in making the decision of undertaking the conduct.

CONSIDERATION

  1. The confidential joint opinions are lengthy, detailed and carefully considered by appropriately skilled and experienced counsel with thorough knowledge of the legal and factual issues involved. In matters of this sort and given the confidential and privileged nature of the confidential joint opinions and the non-publication order I have made in relation to the confidential joint opinions, I will not reveal any of the detail contained in them. Applying the approach in Macedonian Orthodox Community Church, I am satisfied that the confidential joint opinions have appropriately addressed the facts necessary to support the legal conclusions reached and have demonstrated that the propositions of law relied upon for those conclusions are properly arguable.

  2. It is not my role in this application to form a judgement on whether the advice contained in the confidential joint opinions either as to the facts or the law will ultimately prove to be correct, but simply whether I regard the recommended proposed course for the liquidator to be reasonable in the circumstances. In my consideration, the advice provided in the confidential joint opinions provides a reasonable basis upon which the liquidator should act.

  3. I have given consideration as to whether a judicial direction that the liquidator would be justified in offering to “sell” to Alfred and Mr Kanjian as the administrator of George’s estate any right to bring a claim against Alfred alleging fraud on the part of Alfred would be regarded as a commercial or business decision which should not be the subject of such a direction. In the present circumstances, I consider that it does not involve a commercial or business decision of the type that could not be the subject of a direction under s 90-15(1) of the IPSC. There are only two principal protagonists – Alfred and Mr Kanjian as the legal personal representative of the estate of George – both of whom might subject the liquidator to claims that he has misconducted himself in determining not to bring the fraud claims against Alfred and seeking to assign them. The liquidator is also acting under time pressure to determine his course of action in complex circumstances where one of the primary witnesses (George) is dead, the relevant events took place nearly 35 years ago and it has been necessary for the liquidator to undertake the Examination Process to further investigate the potential claims.

  4. In those circumstances, it is appropriate to provide protection to the liquidator in relation to his proposed course of action.

ORDERS

  1. Accordingly, for the reasons set out above, I propose to make the following orders:

  1. Order pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) (IPSC), being Schedule 2 of the Corporations Act 2001 (Cth), that the plaintiff, Simon John Cathro as liquidator of Petsamo No 14 Pty Ltd (in liquidation) (Petsamo), would be justified in:

  1. causing Petsamo to issue proceedings against Alfred Thomassian seeking orders for repayment of monies paid to him as a dividend from, or distribution in the winding up of, Petsamo, but limited to a claim that Petsamo did not authorise (or otherwise ratify) the allotment (or issue) of the share in Petsamo in his favour; and

  2. not causing Petsamo to bring any claim against Alfred Thomassian alleging fraud (or other improper conduct) on the part of Alfred Thomassian with respect to the (purported) allotment (or issue) of the share in Petsamo in his favour.

  1. Order pursuant to s 90–15 of the IPSC that the plaintiff as liquidator of Petsamo would be justified in offering to sell to:

  1. Alfred Thomassian; and

  2. the legal personal representative of the estate of the late George Thomassian,

any right to bring any claim against Alfred Thomassian alleging fraud (or other improper conduct) on the part of Alfred Thomassian with respect to the (purported) allotment (or issue) of the share in Petsamo in his favour.

  1. Order that the plaintiff’s costs of this application be costs of the liquidation of Petsamo.

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Amendments

13 August 2025 - Typographical correction to catchwords

Decision last updated: 13 August 2025

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