Re Meares Nominees Pty Ltd (In Liq) (2013) 98 ACSR 1
[2013] FCA 631
- BP Australia Ltd v Brown (2003) 58 NSWLR 322
[2003] NSWCA 216
- New Cap Reinsurance Corp v Reaseguros Alianza SA (2004) 186 FLR 175
Source
Original judgment source is linked above.
Catchwords
[2011] NSWCA 67
- Arnautovic v Nichola [2009] NSWSC 233
Bowcher (Liquidator)Re Meares Nominees Pty Ltd (In Liq) (2013) 98 ACSR 1[2013] FCA 631
- BP Australia Ltd v Brown (2003) 58 NSWLR 322[2003] NSWCA 216
- New Cap Reinsurance Corp v Reaseguros Alianza SA (2004) 186 FLR 175[2004] NSWSC 787
- Re Clarecastle Pty Ltd (in liq) (2011) 85 ACSR 260[2011] NSWSC 857
- Re Octaviar Ltd (recs and mgrs apptd) (in liq) (2012) 271 FLR 413
Judgment (5 paragraphs)
[1]
Solicitors:
William James (Plaintiffs)
Kardos Scanlan (Defendant)
File Number(s): 2021/82697
[2]
Background
By Originating Process filed on 24 March 2021, Messrs Gammel and Taylor as liquidators of ACN 130 590 957 Pty Ltd (in liq) (formerly known as All Filtration Technologies Australia Pty Ltd ("Company") and the Company apply, under s 588FF(3)(b) of the Corporations Act 2001 (Cth) for an extension of time under s 588FF(3)(b) of the Corporations Act to bring voidable transaction claims under s 588FF of the Act. Several potential defendants in the proceedings were given notice of the application; one of them, Mr Gallagher foreshadowed that he would oppose the application but ultimately did not do so; a second potential defendant, a company associated with Mr Gallagher, Enviro Technologies Pty Ltd (formerly known as All Filtration Technologies Investments Pty Ltd) ("ETPL") was joined as a Defendant in this application, at its request, and opposed the application. At the conclusion of submissions, I made the orders sought by the liquidators, and indicated that I would deliver my reasons for doing so. These are my reasons for that decision.
[3]
Affidavit evidence
The Plaintiffs rely on Mr Gammel's affidavit dated 23 March 2021, which sets out his experience and refers to his and Mr Taylor's appointment as joint and several administrators and subsequently liquidators of the Company. He notes that Mr Gallagher was the sole director of the Company and Ms Sayers was its secretary, and that the relation-back day is 18 April 2018, being the date of appointment of voluntary administrators to the Company and the three year period from the relation-back day would expire on 18 April 2021.
Mr Gammel notes that the Company was part of a group of companies comprising international and Australian entities, to which he refers as the AFTI Group, which carried on the manufacture and distribution of filtration products in Australia and internationally. ETPL is the ultimate parent company of that group of companies and had five wholly owned subsidiaries, including the Company, at the time voluntary administrators were appointed to the Company.
Mr Gammel refers to a restructuring or restructurings of the subsidiaries within the AFTI Group including the Company during the 2014 and 2016 years. Mr Gammel treats those events as constituting parts of the same restructuring, although I need not form a view as to that matter for the purposes of this application. Mr Gammel expresses the view that the effect of the restructuring was to increase the cost of goods for the Company and erode its gross profit margins as a percentage of sales, giving rise to a significant loss to its revenue; cause the Company to cease to accept new business and incur significant inter-company management fees; and to move the Company's assets to other entities within the AFTI Group with the result that it ultimately held minimal assets and incurred significant trading losses from the 2015 financial year on, due to the shift of revenue to other companies within the AFTI Group. Mr Gammel also notes that significant employee entitlements were left within the Company on the restructuring(s) and, at the date of the voluntary administrators' appointment, the value of those employee entitlements was in excess of $4.483 million which the Company did not have sufficient funds to satisfy. Mr Gammel expresses the view that the effect of the restructuring(s) was also to allow other companies within the AFTI Group to trade, mostly profitably, while the Company suffered a loss of revenue and gross profit.
Mr Gammel identifies the possibility that the restructuring(s) and events associated with it or them may have contravened s 596AB of the Corporations Act, introduced in its present form by the Corporations Amendment (Strengthening Protections for Employment Entitlements) Act 2019, which creates offences in respect of relevant agreements or transactions that avoid employee entitlements. A person contravenes that section if the person enters into a relevant agreement or a transaction with the intention of, or with intentions that include the intention of, avoiding or preventing the recovery of the entitlements of employees of a company or significantly reducing the amount of the entitlements of employees of a company that can be recovered, and that contravention is an offence. The parties did not address the question how that section applies in respect of the steps taken in the restructuring(s), where the amendments apply to a relevant agreement or transaction entered into at or after the commencement of the Part, on 6 April 2019: s 1647. Little may turn on that, since the liquidators claims could likely be brought under the other provisions dealing with uncommercial transactions or for breach of directors' duties. Mr Gammel expresses the view that:
"The Company entered into a number of transactions which may have been entered into with the intention of avoiding or preventing recovery of employee entitlements, or significantly reduced the amount of the employee entitlements that can be recovered."
Mr Gammel notes that the liquidators wish to investigate that matter further, and his affidavit refers to the steps which are being taken to do so. He acknowledges that, in April and May 2018, the voluntary administrators formed the view that there may be grounds for bringing claims against Mr Gallagher and other officers of the Company in relation to the restructuring, and subsequently determined that further investigations were required. He refers to a report provided to the Australian Securities and Investments Commission on 8 July 2019, under s 533 of the Act, and the liquidators had already then formed the view that there may be grounds for bringing proceedings against Mr Gallagher and others in relation to misconduct, breach of directors' duties and breach of s 596AB of the Act. Mr Gammel also points to information which was not then available to the liquidators to allow them to form a concluded view as to the availability of recovery actions, including agreements entered into in 2014 and a sub-distribution agreement entered into in 2016 in the course of the restructuring(s), minutes of the board and directors meetings, and other information and documents relating to the restructuring. He also points to constraints in the liquidators' funding which existed until funding was obtained from the Attorney General's Department in October 2020 and notes that orders for examination have now been obtained under Part 5.9 of the Act and are listed for hearing in April 2021.
Mr Gammel also refers to a deficiency in the books and records that were made available to the liquidators at the time of their appointment and to steps which were subsequently taken to seek to obtain information from the Company's directors and third parties; steps which were taken to secure payment of employee entitlements from the Fair Entitlements Guarantee ("FEG") Scheme, which took a considerable period; steps taken to realise the Company's assets, including inventory and plant and equipment, and the manner in which those funds were applied, and he notes that the winding up of the Company has been without funds from June 2019 onwards. He refers to investigations undertaken from April 2018, the engagement of external legal advisers in November 2018 and negotiations between the liquidators and FEG to obtain funding, which took a long period, from September 2019 until September 2020, and involved the exchange of some six drafts of a proposed funding agreement in that period. Mr Gammel also notes that there were delays in those negotiations as a result of the COVID-19 pandemic and several changes in the persons with carriage of the matter at the Attorney-General's Department in that period. Mr Gammel also refers to the steps which have now been taken in respect of the issue of examination summonses and outlines, in evidence admitted with a limiting order under s 136 of the Evidence Act 1995 (Cth) as reflecting his understanding, the matters which have resulted in delay in the liquidation; his confidence that the deficiency in the Company's books and records will be overcome by the examination process, including orders for production; and his belief that the examinations will allow the liquidators to complete their investigations, determine whether further examinations should be conducted, and identify the claims available to them against officers and related entities of the Company. He also indicates, in evidence again admitted with a limiting order, his view that there would be no identifiable prejudice to any party if an extension of time was granted and that any such prejudice would be outweighed by the benefits accruing to creditors of the Company pursuing voidable transaction claims. He points, in this respect, to the very substantial amount paid out by FEG in respect of employee entitlements that were due to be paid by the Company.
By a second affidavit dated 8 April 2021, Mr Gammel elaborates on the books and records which had not been provided in the course of the liquidation and confirmed that, although information as to some matters was provided, the liquidators were not provided with a final dated sub-distribution agreement from May 2015 or the sub-distribution agreement dated 29 October 2014, which comprised aspects of the restructuring; with minutes of board and director meetings, particularly for a meeting on 13 May 2014; with details in relation to the movement of assets and responsibilities from the Company to other entities within the AFTI Group; or with emails, file notes, correspondence, advices and evidence of the directors' decision-making process in relation to the restructure. Plainly, documents of this character would be significant to assessing the prospects of claims arising from the restructuring.
Mr Gammel also elaborates on the extent to which information was sought from Mr Gallagher and Ms Sayers in the course of the liquidation and acknowledged that some information was provided in May 2018 and subsequently by Mr Gallagher after meetings in May and December 2018. Mr Gammel also points out, however, that no response was provided to certain questions raised at a meeting in May 2018, notwithstanding representations by Mr Gallagher that further information would be provided. The agenda for that meeting referred to information which the liquidators sought in respect of the restructure as follows:
"Outline the reasons and strategy for undertaking the restructure including expectations for AFT post the process;
Supporting documentation to justify the restructure (forecasts, business plans etc);
Any advice regarding the restructure; and
Advise if any customers were lost, or if they were moved to a different jurisdiction/entity through the process."
Mr Gammel's evidence is that the information provided by Mr Gallagher did not address issues relating to the position of the Company after the restructuring(s), or supporting documents for the restructurings(s), including advice received or business plans, and the information provided largely related to Mr Gallagher's views. Mr Gammel also refers to information provided by other persons, including a response to a request for information from a Mr Graziotto, to which he had not referred in his earlier affidavit. Mr Gammel there confirms the extent to which information had not been provided in relation to the restructure.
Mr Gammel also there outlines the process which had been adopted to confirm employee entitlements under the FEG, and the time which had been involved in that process, and outlined the work done by Mr Taylor and Mr Gammel as voluntary administrators of the Company from April 2018 until the third quarter of 2019. Mr Gammel outlines further issues as to information which was not available to the liquidators following the issue of orders for production in respect of the examination, and expressed the view (in evidence admitted with a limiting order under s 136 of the Evidence Act as evidence of his understanding) that examinations of Mr Gallagher and other senior employees of the AFTI Group would be important to the liquidators' understanding of the relevant matters. Mr Gammel also identified the possibility that further orders for production and further rounds of examination may be required following the examinations which are due to take place between 8 and 16 April 2021, although there will plainly be limited time for such additional investigations given the relatively short extension of time which is sought in respect of the commencement of proceedings under s 588FF of the Act.
Mr Gammel also notes that the liquidators would need to provide further information to FEG, through the Attorney-General's Department, in respect of funding of identified claims following the investigation and public examination process, and expresses the view that process can take a number of months. Plainly, it will be a matter for FEG and the Attorney-General's Department whether it addresses that process promptly, or does not, if a six month extension of time to commence proceedings is granted. If it does not address that process promptly, then the opportunity to commence proceedings will be lost. Mr Gammel was cross-examined, at some length, by Mr Gee who appears for ETPL in the application, and I have had regard to that cross-examination although it is not necessary to outline its content at any length in order to determine this application.
The Plaintiffs also relied on the affidavit dated 24 March 2021 of their solicitor, Mr Hilton, which identifies possible defendants in potential claims brought by the Company under s 588FF of the Act, and outlines the manner in which notice of the application would be given to those persons. By an affidavit dated 26 March 2021, Ms Hearn, a solicitor also acting for the Plaintiffs, outlined the steps that were taken to give such notice. The Plaintiffs also provided an outline of the AFTI Group's structure, prior to the 29 October 2014 restructure agreement, after that restructuring and after the further steps taken by the 8 September 2016 restructure agreement. The Plaintiffs also tendered, subject to a limiting order which restricted access to legal representatives of ETPL, their report provided to ASIC under s 533 of the Corporations Act.
[4]
The parties' submissions and determination
Mr Somerville, who appears for the liquidators, addresses the circumstances of the Company and the AFTI Group, the events comprising the restructuring(s), the initial investigations by the liquidators, difficulties arising in those investigations and subsequent events in his submissions. I have referred to the relevant evidence above. Mr Somerville accepts that the liquidators have the onus of establishing that it is just and fair that the three year time stipulation prescribed by s 588FF(3)(a) should not apply, and refers to my decision in Re Octaviar Ltd (recs and mgrs apptd) (in liq) (2012) 271 FLR 413; [2012] NSWSC 1460 for the proposition that the Court's discretion should be exercised by reference to the relevant facts and circumstances relevant to the scope and purpose of the provision, and to my summary of relevant matters in that case. He refers to the relevance of the complexity of the liquidation and the need for a liquidator to approach a liquidation by prioritising the tasks undertaken, and refers to authority that a review of the merits of the proposed litigation will not always be necessary, particularly where a liquidator seeks an extension to put himself or herself in a position properly to decide whether or not to bring the relevant proceedings.
Mr Somerville notes a number of the matters to which I referred in dealing with the evidence above, including the liquidators limited access to information; the fact that they were unfunded, at least for a significant period until October 2020; the fact that the extension sought to put the liquidators in a position properly to decide whether to bring the foreshadowed proceedings, in circumstances that the transactions in issue left a substantial asset deficiency to meet the claims of the employees. Mr Somerville contends that the liquidators acted with diligence and there is sufficient explanation for the delay, where they have also undertaken other tasks including realising the Company's available assets, investigating its affairs, securing the payment of employee entitlements through FEG and negotiating funding from FEG; and he also points to the complexity of the liquidation, arising primarily from the Company's dealings with other members of the AFTI Group and the effect of the restructuring(s) on those dealings. Mr Somerville acknowledges the relevance of presumptive prejudice, and submits that there is no specific evidence supporting a finding that an extension of six months would be unfair to any party, and summarises the steps which will be taken in that period, including public examinations, obtaining advice as to the prospects of the proceedings, confirming funding arrangements and preparing pleadings and evidence as necessary.
Mr Gee in turn submits that the delay in finalising the liquidation of the Company causes material prejudice to ETPL, because "certain commercial opportunities" will be delayed until certainty is reached in respect of the potential claims identified by the liquidators. While I recognise that it may be a happy consequence for ETPL and any potential purchaser of its business that such certainty were achieved by excluding such claims, I otherwise give little weight to this submission where the risk of such claims could readily be addressed by the means I have noted above. Mr Gee submits that any prejudice to the liquidators (and, implicitly, creditors of the Company including the Commonwealth of Australia in right of FEG) is "self-inflicted" as they delayed the pursuit of funding and have not acted with "the appropriate degree of urgency to complete their investigations". That submission is not supported by the evidence to which I have referred above, although I recognise that the negotiation of funding arrangements with FEG appears to have been drawn out for reasons that do not involve any fault on the part of the liquidators. Mr Gee also refers to applicable principles, including the authorities that I address below.
Mr Gee submits that there was a "deliberate decision", or one made as part of the liquidators' prioritisation of work, not to pursue investigations for which an extension is now sought, in as timely a fashion as possible, and I have had regard to the detailed chronology of events provided by Mr Gee in that regard. I accept that the evidence indicates that the liquidators did not prioritise their investigations over, for example, their seeking to secure payment of employee entitlements through FEG, nor does it seem to me that they should have done so, and they devoted resources to, inter alia, seeking information from the AFTI Group with only partial success and seeking funding from FEG. While Mr Gee points to time gaps in the chronology, which he contends demonstrated "extended periods of delay by the liquidators", it seems to me that there is a significant degree of artificiality in that analysis, where it disregards the other steps which were taken in the liquidation and the limitations on funding available to the liquidators for a significant period. Mr Gee also submits that Mr Gallagher and the AFTI Group were not responsible for any part of the delay, referring to Mr Gallagher having provided an "explanation for the rationale of the alleged restructure". I give little weight to that submission, where it seems to me that the provision of Mr Gallagher's explanation of that rationale would be of much less utility to the liquidators than the production of the contemporaneous documentation by which the accuracy of that explanation could be tested. Mr Gee also returns to the submission as to material prejudice faced by ETPL, which I have addressed above.
Turning now to the applicable principles, the Court has power under s 588FF(3)(b) of the Corporations Act to extend the period within which a relevant claim may be brought, to such longer period as the Court orders in an application brought by the liquidators during the period specified in s 588FF(3)(a) of the Act. In BP Australia Ltd v Brown; (2003) 58 NSWLR 322 at 356-358; (2003) 46 ACSR 677; [2003] NSWCA 216, the Court of Appeal identified the need to determine, in such an application, whether it is "fair and just in all of the circumstances" to grant the relevant extension, having regard to, on the one hand, the liquidator's explanation for delay and, on the other, the prejudice the defendant would suffer as a result of the extension.
In New Cap Reinsurance Corp v Reaseguros Alianza SA (2004) 186 FLR 175; [2004] NSWSC 787 at [52], White J observed that the matters raised in such an application would ordinarily include any explanation for the delay in bringing the proceedings; a preliminary review of the merits of the foreshadowed proceedings, directed to whether they were so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit; and whether the likely or actual prejudice resulting from the grant of the extension was sufficiently substantial to outweigh the case for granting an extension. His Honour also noted that, where the liquidator's purpose in seeking the extension of time was to further investigate to determine whether or not to bring proceedings, a preliminary enquiry into the merits of any consequent proceedings may not always be necessary. That factor is not relevant in the present case, where the liquidator's investigations appear to be well advanced and the nature of the possible proceedings is tolerably clear. His Honour's reference to those factors was approved by Barrett J in Arnautovic v Nichola [2009] NSWSC 233 and the relevant factors were again summarised, in similar terms, by Ward J (as her Honour then was) in Re Clarecastle Pty Ltd (in liq) (2011) 85 ACSR 260; [2011] NSWSC 857 at [22], where her Honour noted the relevance of delay in bringing proceedings and the explanation for that delay; the merits of the proposed proceedings, except to the extent that the liquidators' purpose is to investigate whether or not to bring the proceedings and the question of prejudice arising from the grant of an extension. Her Honour also referred, and I have had regard to, the fact that in some circumstances the eventual loss of the ability to make a relevant claim for a voidable transaction may be justified, in order to provide certainty to others who have dealings with a company in liquidation. The relevance of these factors was also recognised by Nicholas J in Walker v CBA Corporate Services (NSW) Pty Ltd (2012) 88 ACSR 153; [2012] FCA 328 and by Foster J in Bowcher (liquidator); Re Meares Nominees Pty Ltd (in liq) (2013) 98 ACSR 1; [2013] FCA 631 and in my judgment in Re Waterfront Investments Group Pty Ltd (in liq) [2013] NSWSC 1999 at [11]ff.
In Re Octaviar Ltd (recs and mgrs apptd) (in liq) (2012) 271 FLR 413; [2012] NSWSC 1460 at [64], I also observed that the time limitations in the section reflect a recognition that the quality of justice may deteriorate where there is delay and, in some circumstances, there will be a need that potential defendants be made aware of claims against them within a reasonable time and the loss of the ability to make a relevant claim can be justified as providing commercial certainty to persons who have had dealings with the company. At the same time, I there noted cases where extensions of time had been granted and observed that:
"The Court should consider whether the liquidators have diligently pursued the object of disposing of the proceedings in a timely way; used, or could reasonably have used, available opportunities under the rules or otherwise to avoid delay, and reasonably implemented the practice and procedure of the Court with the object of eliminating any lapse of time between the commencement of proceedings and their final determination... the liquidators bear the onus of demonstrating why it is just and fair that the time limit prescribed by s 588FF(3) of the Corporations Act should not apply."
In Re Plutus Payroll Australia Pty Ltd (in liq) [2020] NSWSC 1438, I referred to the relevance of the extent of the delay and the explanation for it; the merits of the proposed proceedings, unless the liquidators' purpose is to investigate whether or not to bring proceedings; and prejudice arising from the grant of an extension, and held that an extension of time was warranted in that case by reason of matters including lack of cooperation with the liquidator, complexity, issues as to funding, and the difficulty in obtaining relevant documents, combined with further difficulties arising from the COVID-19 pandemic.
I have referred above to the liquidators' explanation for the delay in commencing proceedings, and I recognise that liquidators, particularly of companies with limited funds, will inevitably face challenges in balancing, on the one hand, the need for investigation and, on the other hand, their ability to fund that investigation and that those challenges will be exacerbated where, as here, the liquidators face difficulty in obtaining access to a company's financial and other records: Re Waterfront Investments Group Pty Ltd (in liq) above at [13]. I have not accepted Mr Gee's criticisms of the liquidators' conduct in this respect. I also have regard to the merits of the relevant proceedings, although less weight should be given to that matter where the extension of time is sought for further investigations by the liquidators and their obtaining advice as to the prospects of the proceedings, having regard to the outcome of those investigations. It is sufficient to note that the restructuring(s) appear to have reduced the Company's assets and profitability and contributed to the result that employee entitlements could not be met and there seems to me to be no reason to think that the prospects of the potential proceedings are so poor that it would be unfair to expose the potential defendants to the continuing prospect of suit, within the language of White J in New Cap Reinsurance Corp above at [52].
There is, obviously, in any application for an extension, at least a degree of prejudice, so far as proceedings may be brought later, or in the present case may be brought in circumstances where they otherwise could not be brought within time; in Agricultural and Rural Finance Pty Ltd v Kirk (2011) 82 ACSR 390; [2011] NSWCA 67, Tobias JA referred to a concept of "presumptive prejudice" arising from delay but also noted that it was a matter which should be given limited weight in balancing the various factors to which the Court should have regard. However, as in Bowcher (liquidator); Re Meares Nominees Pty Ltd (in liq) above, ETPL was a related party which is likely to have some knowledge of the circumstances in which the transaction took place; there is no suggestion that evidence which would have been available to it has been lost or destroyed, and no real basis for a submission that its position in respect of available evidence will be worsened by the relatively short extension of time that is sought; the difference between proceedings commenced prior in April 2021 and proceedings commenced by October 2021 is not substantial; and the possibility that proceedings may be brought at all, so that the liquidators have the opportunity to vindicate the Company's rights, should not be treated as a relevant form of prejudice. While I recognise that delay likely gives rise to a degree of prejudice, it seems to me that the prejudice to ETPL by the relatively short extension that is sought would be outweighed by the factors supporting the grant of an extension.
The application is here made for an order extending the time for such proceedings to allow them to be brought against such other persons as may be identified by the liquidators in their investigations of the financial affairs of the Company. The Court's power to grant such an extension, extending to persons who have not been specifically identified and named, is well-established on the authorities. The factors to which I have referred above also support an extension of time in respect of such other persons.
For these reasons, I made the orders sought by the liquidators at the conclusion of the hearing on 12 April 2021.
[5]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 09 May 2021
ETPL in turn relies on Mr Gallagher's affidavit dated 8 April 2021 in opposition to the orders sought. Mr Gallagher's evidence is that ETPL intends to sell its business and operations and that, in December 2020, it was approached by an unidentified potential purchaser, described only as a wholly owned subsidiary of a listed Chinese business that is partly State owned. Mr Gallagher refers to ongoing negotiations since December 2020, described in the broadest way by reference to the matters which were discussed, and to an indicative valuation of ETPL's business of greater than $50 million. His evidence is that, notwithstanding some 12 meetings or substantive discussions, an offer for the business has not yet been received although he indicates (in evidence admitted with a limiting order under s 136 of the Evidence Act as his belief) that ETPL "is anticipating" receiving an "indicative offer" for the purchase of that business within the period to 23 April 2021. I pause to note that, if that anticipation is correct, it will still not be a binding offer to acquire that business.
Mr Gallagher indicates that, after an "indicative offer" was "accepted" (which is not, strictly, possible) then formal due diligence would commence by early June 2021. Mr Gallagher's evidence (again admitted with a limiting order under s 136 of the Evidence Act as limited to his belief) is that:
"I am concerned that if an extension is granted in the form sought (or at all) it will jeopardise the sale process (particularly once due diligence is underway) and may ultimately lead to the potential purchaser not proceeding with the proposed transaction. I am also concerned that if an extension is granted Enviro will not be in a position to provide to the potential proposed purchaser its true financial position due to potential contingent liabilities."
I am not persuaded that I should give significant weight to this evidence, although I recognise that Mr Gallagher was not cross-examined to contest it. First, it seems to me highly unlikely that a purchaser of a business with an asserted value of greater than $50 million would not proceed with a purchase of that business because of a potential claim quantified by the liquidators as in the order of $5 million, being the amount of employee entitlements not met, where that could ordinarily be addressed by a reduction in the purchase price; or the giving of warranties by the vendors, potentially supported by a holding back of part of the purchase price; or by the payment of an amount into escrow pending the resolution of the liquidators' claim. Mr Gallagher does not explain why any of those ordinary commercial practices would not be available.
Mr Gallagher also responds to the liquidators' evidence, and rejects an assertion, which the liquidators did not make, that he "intentionally" failed to provide documents and information to the liquidators in response to specific requests. The substance of the liquidators' evidence does not depend upon Mr Gammel's intention, but on the fact that such documents were not provided when requested and are still not in the liquidators' possession. Mr Gallagher also gives evidence of instructions to the AFTI Group's staff to cooperate with the administrators and provide them with information that was requested, but an instruction of that kind is not a substitute for the provision of the information.
Mr Gallagher's evidence is that Mr Gammel did not advise him of any deficiency in the production of documents, information or company books and records and did not seek further documents from Mr Gallagher or his staff since 2018. Mr Gammel was also cross-examined by Mr Gee at some length in respect of that proposition. It is not apparent to me why the liquidators' not following up previous requests for information would be any more culpable, if that were a relevant matter, than the AFTI Group's failure to provide that information in the first place. It also does not appear to me that the nature of the information sought was such that it was likely that Mr Gallagher or his staff had merely forgotten that they had not responded to the liquidators' inquiries, particularly after representing on several occasions that they would do so. It is also not apparent to me that, where Mr Gallagher or ETPL was legally represented throughout the process, he or it would not have a good understanding of the information requests to which the AFTI Group had responded and those to which they had not, and Mr Gallagher does not suggest that he was in any doubt as to those matters. Mr Gallagher also asserts, by way of bare assertion (admitted with a limiting order under s 136 of the Evidence Act limited to his belief) that the documents produced by the AFTI Group in answer to the orders for production had either already been provided to the liquidators or were available to them from the date of their appointment. I give little weight to such an assertion, which is not supported by reference to particular documents, and it does not address the liquidators' evidence that documents which have been sought under the orders for production have also not been produced.
Mr Gallagher's evidence is also that the memories of relevant persons will have faded, although they will be examined in April 2021, and he refers to his having been the director of a number of entities who are involved in multiple transactions. However, I expect that Mr Gallagher, and entities with which he is involved, does not regularly undertake transactions which create shortfalls of employee entitlements in the order of $5 million, and he and other relevant persons are more likely to remember a transaction that was out of the ordinary course. Mr Gallagher also referred to a suggestion made by his solicitors that the time for commencement of the proceedings could be extended for a two month period, but I see no utility in that suggestion, where there is little likelihood that the steps which the liquidators need to take, including completing the liquidators' examinations and negotiations with FEG could be completed in that period.