Ansell Ltd v Davies

Octaviar Limited (Receivers and Managers Appointed) (In Liquidation) (Second Plaintiff) Octaviar Administration Pty Limited (in liquidation) (Third Plaintiff) Fortress Credit Corporation (Australia) II Pty Limited and Fortress Investment Group (Australia) Pty Limited (Applicants) Representation: Counsel: B.A. Coles QC/P. Dowdy (Plaintiffs) N. C. Hutley SC/S. Brown SC/R.C.A. Higgins (Applicants) Solicitors: Henry Davis York (Plaintiffs) Baker & McKenzie (Applicants) File Number(s): 11/153330

Judgment 1By Further Amended Interlocutory Process, Fortress Credit Corporation (Australia) II Pty Limited and Fortress Investment Group (Australia) Pty Limited (together, "Fortress") apply for an order that an order previously made by the Court under s 588FF(3)(b) of the Corporations Act 2001 (Cth) ("OA Extension Order") extending the time for the making of applications in respect of Octaviar Administration Pty Limited (in liquidation) ("OA") under s 588FF of the Corporations Act be varied so as to exclude any application to Fortress or alternatively be set aside so far as it applies to Fortress. The Plaintiffs, Mr William Fletcher and Ms Katherine Barnet as joint and several liquidators ("Liquidators") of OA also bring an application, which was heard at the same time, that their original application for an order under s 588FF(3)(b) of the Corporations Act for an extension of time be reheard as against Fortress and to vary the OA Extension Order expressly to grant the extension of time in respect of Fortress. 2Section 588FF of the Corporations Act permits the Court, on the application of the liquidator of a company, to make specified orders if it is satisfied that a transaction is a voidable transaction under s 588FE of the Corporations Act. The voidable transactions specified in s 588FE include unfair preferences (within the meaning of s 588FA of the Corporations Act), uncommercial transactions (within the meaning of s 588FB of the Corporations Act) and insolvent transactions (within the meaning of s 588FC of the Corporations Act). An application for orders under s 588FF of the Corporations Act may only be brought during the period ending on the later of 3 years after the relation-back day or 12 months after the first appointment of a liquidator in respect of the company's winding up, or such longer period as the Court orders on an application brought under s 588FF(3). The 3 year limitation period for the recovery of voidable transactions under s 588FF of the Corporations Act was introduced by the Corporate Law Reform Act 1992 (Cth) and reflects a view expressed by the Australian Law Reform Commission in its General Insolvency Inquiry, Report 45, 1988 at [688] that the previous limitation period of 6 years tended to unnecessarily prolong liquidations. Factual background 3I should first set out a somewhat simplified outline of the relevant facts. The business of the Octaviar Group included management of investment schemes and ownership, operation and management of hotels, resorts and holiday accommodation and aged care facilities and child care facilities. Fortress is a member of the Fortress Investment Group LLC, which is listed on the New York Stock Exchange and, it appears, invests in issuers with "weak financial conditions, poor operating results, substantial financial needs, negative net worth, and/or special competitive problems", adopting what it describes as a "distressed investment strategy". 4Fortress initially entered into a loan agreement with Young Village Estates Pty Limited ("YVE") in May 2007 providing funding up to a maximum of $53.5 million to purchase a number of aged care facilities. YVE was not a subsidiary of the Octaviar Group although its assets were previously held by an entity or entities within the Octaviar Group. Also in May 2007, Octaviar Limited ("OL") granted a guarantee in favour of Fortress in respect of YVE's obligations under that facility. 5On 1 June 2007, Fortress provided a 3 month facility ("Castle Facility") to a special purpose vehicle, Octaviar Castle Pty Limited (in liq) ("Castle") in the amount of $250 million. The Castle Facility was further amended in August 2007 and again in November 2007. The Second Amendment Deed provided, inter alia, for Castle to pay the sum of $100 million to Fortress by 30 November 2007 in respect of the Castle Facility. A payment of $103 million to Fortress on that date ("PIF Payment") was made, or allegedly made, from the assets of a managed investment scheme, the Premium Income Fund. 6In January 2008, Fortress, OL and Castle agreed to extend the charge in favour of Fortress to include OL's liability under the YVE guarantee which had previously been unsecured ("Fortress Charge Extension"). 7On 1 February 2008, OL's board accepted an offer by a third party to acquire a 65% stake in the Stella Group ("Stella") and a Share Sale Agreement was entered into on 3 February 2008. Castle, other Octaviar entities and Fortress entered into a further amendment of the Castle Facility in February 2008 and Castle drew down a further amount under the Castle Facility pursuant to that amendment in February 2008. 8As a condition of its consent under the Castle Facility to the completion of the Stella Group sale, Fortress required entry into a deed dated 29 February 2008 providing for repayment of the Castle Facility in full from the proceeds of sale of the Stella Group ("Stella Proceeds Deed"). By a letter also dated 29 February 2008 ("Allocation Letter"), OA, OL and another entity, Sun Leisure Group Limited, entered into a letter of agreement regarding the allocation of proceeds from the Stella sale. On 29 February 2008, the Stella sale was completed and an amount of approximately $189 million was paid to Fortress from the proceeds of the Stella sale ("February 2008 payment"). 9OL was placed in voluntary administration in September 2008 and Fortress appointed receivers and managers to OL. OA was also placed in voluntary administration on 3 October 2008. The receivers appointed by Fortress to OL subsequently contended that an amount of approximately $19.7 million was held by OA on bare trust for OL and was subject to the Fortress charge. On 23 December 2008, the then administrators of OA transferred an amount of approximately $19.7m to the receivers appointed by Fortress ("December 2008 payment"). On 12 January 2009, the then administrators of OA were appointed as deed administrators pursuant to a deed of company arrangement. In February 2009, the then deed administrators of OA transferred a further amount of $304,331 referrable to interest to the receivers appointed by Fortress ("February 2009 payment"). 10The deed of company arrangement in respect of OA was terminated by the Supreme Court of Queensland on 31 July 2009 and the then deed administrators were appointed as liquidators of OA. They were subsequently removed as liquidators on 9 September 2009, and the Liquidators were appointed as joint and several liquidators of OA and OL on 9 September 2009, by order of the Supreme Court of Queensland. 11On 30 May 2011, Hammerschlag J made an order under s 588FF(3)(b) of the Corporations Act on the application of the Liquidators and OL that the time for making an application in respect of OL under s 588FF(1) of the Corporations Act be extended to 3 October 2011. An application for such an extension of time was not sought at that point in respect of OA, apparently because the three year period in which claims under s 588FF involving voidable transactions including OA might be made did not expire until 3 October 2011. A separate application for extension of time in respect of Fortress was brought in proceedings brought by OL against Fortress in the Supreme Court of Queensland. 12On 19 September 2011, the Liquidators, OL and OA sought orders under s 588FF(3)(b) of the Corporations Act that the time for the making of applications in respect of OA and OL under s 588FF of the Corporations Act be extended further to 3 April 2012. The Liquidators gave notification of that application to certain parties identified as interested parties or which may have been involved in transactions the subject of the proposed recovery proceedings. It is common ground that no such notification was given to Fortress (Hambrett affidavit CB 2, Tab 5, [78]). Ward J made orders extending the time in which such an application might be made on behalf of OA to 3 April 2012 and varying the order previously made by Hammerschlag J to extend the time in which an application under s 588FF of the Corporations Act might be made on behalf of OL to 3 April 2012. 13OL brought proceedings against Fortress in the Supreme Court of Queensland alleging that the entry into the Fortress Charge Extension, the December 2008 payment, the February 2009 payment and other transactions constitute unfair preferences and the entry into the Fortress Charge Extension also constituted an uncommercial transaction for the purposes of Pt 5.7B of the Corporations Act. As I noted above, the relief sought by OL in those proceedings includes an order under s 588FF(3) of the Corporations Act extending the time within which proceedings may be brought against Fortress under Pt 5.7B of the Corporations Act. 14On 3 April 2012, the Liquidators, in their capacity as liquidators of OA, also commenced proceedings in the Supreme Court of Queensland against Fortress. The proper construction of the OA Extension Order 15Fortress identifies the first question for determination as the proper construction and scope of application of the OA Extension Order and whether it is capable of applying to Fortress. Fortress points out that the application brought by the Liquidators sought an order under s 588FF(3)(b) that the time for the making of "an application" in respect of OA under s 588FF(1) of the Corporations Act be extended to 3 April 2012 (CB1, Tabs 11 and 12). The judgment of Ward J indicated that her Honour would make an order in those terms (CB1, Tab 14, [18]). Order 1 as entered is in slightly different form (CB1, Tab 15) and provides that the time for the making of "the application" in respect of OA under s 588FF(1) of the Corporations Act be extended to 3 April 2012. Fortress contends that the use of the definite article in the order made renders it more particular than the order sought and inapplicable to a claim, such as that now brought against Fortress, which was not identified before Ward J as a claim sought to be made. Fortress contends that no application was made pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") r 36.17 contending that this disconformity is a product of a slip and that the OA Extension Order, as made, is incapable of applying to Fortress. 16Mr Hutley SC, who appears with Ms Brown SC and Ms Higgins for Fortress, spent little time in oral submissions seeking to support this submission and I cannot accept it. In my view, the words "the application" in the order cannot be read as referring to a particular application, because there was no application to extend time for any particular application before her Honour, but rather an application for an extension of time in general terms, as to which several parties had been given notice as persons who might be affected by the making of the orders sought. In my view, the reference to "the application" in the orders entered must be read as referring to the application or applications that is or are ultimately brought under s 588FF of the Corporations Act and does not confine the order to any particular application or exclude any other application from it. Court's power to make orders 17Fortress makes a formal submission that the OA Extension Order should have been refused because an order made in "shelf" terms lacks the specificity required by the reference to "a transaction" under s 588FF, which, Fortress contends, limits any application under section 588FF(3) to particular identified transactions involving particular identified parties. This submission is a "formal" submission in the sense that Fortress acknowledges that there is appellate authority that is binding on a first instance judge of this Court that "shelf" orders may be made under s 588FF(3) of the Corporations Act in an appropriate case and such orders have in fact been made in numerous first instance decisions. Mr Hutley SC accepted in oral submissions that there was no room for dispute at first instance as to the Court's power to make a shelf order. 18In BP Australia Ltd v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322; 46 ACSR 677 ("BP v Brown"), Spigelman CJ (with whom Mason P and Handley JA agreed) at [168] approved the conclusion reached by Austin J at first instance that: "an application under s 588FF(3)(b) seeking a general order for an extension of time to make an application under s 588FF(1) against any creditor, is a valid application and an order in those terms is a valid order." His Honour pointed to the justification for a "shelf order", namely that it was not difficult to envisage circumstances where a liquidator was still ascertaining the identify of the recipients of benefits under possible voidable transactions and could not give the Court an indication of the creditors to be targeted, and that the relevant power should be broad enough to allow, in those circumstances, for an order granting an extension of time in general terms. 19A submission that s 588FF(1) contemplates an application for one or more specific orders and s 588FF(3) is directed to an application under that sub-section was considered and rejected in New Cap Reinsurance Corporation v Reaseguros Alianza SA [2004] NSWSC 787; (2004) 186 FLR 175 at [14]-[28] ("New Cap"), where White J expressed the view at [27] that an application under s 588FF(3)(b) may be made in respect of a category of claims as wide as voidable transactions. In Tolcher v Capital Finance Australia Ltd [2005] FCA 108; (2005) 143 FCR 300; 52 ACSR 328, the Full Court of the Federal Court held that a liquidator could seek an extension of time for bringing proceedings to recover voidable transactions in general terms, rather than by reference to a particular transaction or class of transaction. Without seeking to be comprehensive, orders were also made under s 588FF(3)(b) of the Corporations Act extending the time for the commencement of proceedings in general terms or in relation to a class of transactions in Re McGrath and Macintosh (as joint liquidators of the HIH companies) (2004) 205 ALR 643; 48 ACSR 723; Ansell Ltd v Davies [2008] SASC 203; (2008) 219 FLR 329; 67 ACSR 356; Arnautovic v Nichola [2009] NSWSC 233. In Re Clarecastle Pty Ltd (in liq) [2011] NSWSC 857; (2011) 85 ACSR 260, Ward J treated BP v Brown as binding authority that s 588FF(3)(b) of the Corporations Act permits the extension of time for commencement of proceedings to be made in relation to voidable transactions, where the identity of those transactions or the party to them have not been identified or identified in only general terms at the making of that application. I consider that I am bound by the decision in BP v Brown and, even if I were not, would follow the approach adopted in the existing cases both for reasons of comity and because that approach seems to me to be the preferable approach. 20In the alternative, Fortress submits that the application for the OA Extension Order was not an appropriate occasion for the making such a "shelf" order. Fortress submits that any order under s 588FF(3)(b) of the Corporations Act should be crafted to create the minimum amount of uncertainty for creditors while reflecting the sources of uncertainty or need for extension identified by the applicant and that the identified uncertainty in the application made by the Liquidators related to the identity of the proper plaintiff, not the relevant transactions or the potential defendants. Fortress also submits that there were no "exceptional circumstances" warranting an order that extended beyond the potential voidable transactions identified by the Liquidators and the parties notified by the Liquidators' solicitors and, while the order sought was in apparently general terms, the basis of the application was an inability to identify the correct plaintiff as between OA and OL and the order was not sought on the basis that a general investigation to identify potential transactions was necessary or justified in the circumstances. The Liquidators submit that there is no requirement of "exceptional circumstances" needed to justify or authorise the making of an order in general terms. 21Alternatively, Fortress submits that: "it may be accepted that, due to the difficulties of interpreting the accounts of the Octaviar Group, the parties to the relevant transaction were uncertain and thus exceptional circumstances could be found". Fortress further submits that was the limit of the exceptional nature of this application on the evidence before the Court when the OA Extension Order was made. Fortress contends that, if the material placed before the Court only justified an order that in terms would not have the potential to affect Fortress, then the occasion for Fortress intervening in these circumstances is because of an error on the part of the Court. 22In BP v Brown, Spigelman CJ dealt with a submission that the appropriate approach was to ask why the applicant for an extension needed an extension and why the relevant period of 3 years was insufficient by noting at [182] that nothing in s 588FF(3)(b) specifies any criterion to be taken into account when exercising the discretion or any other matter which governs its exercise. In Australian Securities and Investments Commission v Karl Suleman Enterprizes Pty Ltd (in liq) [2004] NSWSC 1244; (2004) 52 ACSR 103 at [6], Barrett J observed that an extension of time in general terms is possible and permissible but "must be regarded as exceptional". I would read Barrett J's observation not as identifying a criterion of "exceptional circumstances" for the making of such an order but rather as observing, plainly correctly, that orders made in general terms are not the norm. In Clarecastle, Ward J considered a submission that a blanket order should only be granted in "exceptional circumstances" but did not express a view as to whether such a criterion applies. 23The concept of "exceptional circumstances" adopted in Fortress' submission finds some support in the decision in Williams (as liquidator of Willahra Pty Ltd) (in liq)) v Kim Management Pty Ltd [2012] QSC 143, where Dalton J observed at [21] that: "Accepting that there is power to make a shelf order, it is clear that it should only be made in extraordinary circumstances, the same type of extraordinary circumstances which might motivate a court to act ex parte on, for example, an application for an interim injunction. Concomitant with that, is the notion that on such an ex parte application the applicant has a duty to make full and proper disclosure to the court of any fact which might tend against granting the application. Also consistent with the nature of the application, in my view, is a necessity to grant orders which create the minimum interference with the rights of persons who are not heard. Care should be taken so that only the minimum extension of time necessary is granted. Consideration ought to be given to conditioning the order extending time so that, for example, leave is necessary before any application made under s 588FF(1) in the extended time period, is filed, or perhaps served. Such a condition would have the advantage of ensuring that before a s 588FF(1) application was brought, the respondent was heard by the court. However, even an order conditioned in this way would adversely affect the rights of a person against whom a s 588FF(1) application was subsequently brought: they would be deprived of a valid and complete defence to the s 588FF(1) claim. To make an order extending time ex parte is a serious matter, for, however the order is conditioned, the time limitation defence is lost; the order has a final effect in this regard, unlike many interim orders." 24In my view, the discretion under s 588FF(3)(b) is a discretion to be exercised judicially in the relevant circumstances, and such an order is no doubt more likely to be made where "exceptional circumstances" exist. However, I would not read that paragraph as circumscribed by any threshold requirement of "extraordinary circumstances" which is not found in its terms, and I also find limited assistance in the application of a discretion created by statute in tests that are adopted at general law in matters such as an application for an interim injunction. While the applicant must satisfy the Court that an extension order should be made, the object of the discretion is otherwise at large, to be exercised by reference to the relevant facts and circumstances relevant to the scope and purpose of the provision: Brisbane South Regional Health Authority v Taylor [1996] HCA 25; (1996) 186 CLR 541 per McHugh J at 554; BP v Brown per Spigelman CJ at [185], [187]. The relevant circumstances will typically include at least the circumstances of the winding up and the fact that a "shelf" order is sought where, by necessity, persons who may be affected by it will not have had the opportunity to be heard. 25As Fortress concedes, and the evidence demonstrates, there were considerable difficulties for the Liquidators in identifying the transactions to which OA as distinct from OL or other entities in the Octaviar Group were party. Ms Barnet's affidavits of 10 May 2011 and 8 September 2011 demonstrate the substantial difficulty in identifying which of the entities within the Octaviar Group was party to particular transactions (CB 2, Tab 3, 10 May affidavit [29], 8 September affidavit [12]-[18], [21], [25] and [26]). In these circumstances, the distinction that OA seeks to draw between identification of, on the one hand, the proper plaintiff and, on the other, the transactions and respondents to which an extension order should have extended is elusive. There seems to me to have been no reliable basis on which the Liquidators could determine the particular transactions to be the subject of an extension order, unless that order was sought for every significant transaction to which OL or any other entity within the Octaviar Group was recorded as party on the basis that that record may be incorrect and OA may in fact be party to that transaction. 26For these reasons, it seems to me that the order in the form previously made by the Court was properly made in the circumstances that the Liquidators then faced. I do not consider that any error has been shown on the basis that the orders were too wide on the basis of the application then before the Court. Whether Fortress is entitled to have the OA Extension Order set aside ex debito justitiae 27Fortress identifies the next issue for determination as whether Fortress was a person identified by the Liquidators as an actual or likely target of an application under s 588FF(1) of the Corporations Act or would have been identified by the Liquidators as a potential target of an application under that section, had the Liquidators acted with reasonable diligence in all the circumstances. Fortress contends that, in that situation, it is entitled to have the OA Extension Order set aside ex debito justitiae. 28The general rule is that persons likely to be adversely affected by orders have a right to be heard: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571 at 589. In the ordinary course, a party whose interests are likely to be adversely affected by an extension of time should be joined as a defendant to an application for an extension of time under s 588FF(3) of the Corporations Act and a person identified as the target of proposed proceedings by the liquidator under s 588FF(1) of the Corporations Act would fall within this class. In BP v Brown above, Spigelman CJ at [134]-[136] (with whom Mason P and Handley JA agreed), observed that: "The obligation to comply with procedural fairness ... requires, in my opinion, that a person likely to be adversely affected by the order of the court is given an opportunity of making submissions to the court before any such order is made or if, exceptionally, an order is made without such an opportunity being given that, upon application, the person must be put in the same position as he or she would have been prior to the order being made. It is the inherent difficulty of achieving the latter that makes an ex parte order a course to be followed only in the case of necessity or other strong reason. The creation of a situation in which a person must apply to vacate or vary an order after the order has been made is an exceptional situation. Nothing on the facts of the present case, as at the time of the first judgment, was such as to justify the exceptional course. Perhaps there will be circumstances in which it is not appropriate to give all who may be affected by an order under s 588FF(3)(b) an opportunity to make submissions prior to the order being made. It is not necessary to determine this question. Here there was a clearly identified party with a substantial interest in the question to be determined. Nothing appeared by way of urgency or otherwise to require an ex parte order to be made. The appellant was unnecessarily placed in the position of applying to the court, pursuant to leave reserved by order of the court, to have the order discharged." 29In Greig v Stramit Corporation Pty Ltd [2003] QCA 298; [2004] 2 Qd R 17 at [109], Jerrard JA observed that that test fixes upon "a person whose rights and interests would be very much capable of being affected adversely by the ex parte order sought". In Williams (as liquidator of Willahra Pty Ltd (in liq)) v Kim Management Pty Ltd above at [22], Dalton J observed that: "Where a person is identified by a liquidator as someone who might be the target of a s 588FF(1) application, but is not given the opportunity to be heard on the s 588FF(3)(b) application, that person is entitled ex debitio justitiae to have the order set aside. It is not necessary to show anything more than that the applicant is affected by the order and was not given an opportunity to be heard before it was made." 30Mr Hutley submits that the concept of "likely to affect" is an objective test, not dependent upon the beliefs of the Liquidators at a particular time. However, it seems to me that the question whether Fortress was likely to be affected by any proceedings brought by the Liquidators necessarily depended upon the Liquidators' belief at the relevant time because, if the Liquidators believed at that time that there was no basis for such proceedings, then no such proceedings were likely to be brought or likely to impact Fortress' interest. I also do not consider that the "likely to affect" test can be applied, as Fortress contended, by reference to matters which were not known to the Liquidators at the relevant time; the contrary view would have the extraordinary result that any extension of time ordered under s 588FF(3) of the Corporations Act would be set aside as of right by any person by reason of matters indicating a basis for proceedings against that person that were then not knowable by the Liquidators (because, for example, they arose from documents which had not yet been made available to them or from evidence in examinations which had not yet occurred) and no step reasonably open to the Liquidators could avoid that result. 31The Liquidators make a formal submission that an application under s 588FF(3)(b) of the Corporations Act is in the nature of an administrative non-adversarial proceeding which is distinct from litigation which results in the determination of legal rights or obligations that a potential target of any claim, whether identified or not at the time of the extension application, is not entitled either to appear at the hearing or to subsequently move to set the extension order aside. I do not understand it to be open to me to accept that submission, given the reasoning in BP v Brown to which I have referred above. 32The Liquidators alternatively submit that Fortress was not, and could not with reasonable diligence have been, identified as party to the relevant transactions at that time. They rely on affidavits of Ms Barnet sworn 29 June 2012 and Mr Gordon Lawson also sworn 29 June 2012. Ms Barnet's evidence is that the Liquidators' initially identified potential claims that could be brought by OL against Fortress under s 588FF of the Corporations Act and that she did not cause Fortress to be notified of the filing of the OA Extension Application because neither she nor Mr Fletcher was aware in September 2011 of any basis upon which OA or the Liquidators might bring proceedings against Fortress seeking orders under s 588FF(1), as distinct from the proceedings which had already been brought by the Liquidators as liquidators of OL. 33In particular, Ms Barnet's evidence in her June 2012 affidavit was that, at the time of the commencement of the proceedings by OL in March 2011, the Liquidators believed that the payments made to Fortress that were sought to be recovered by OL were made utilising funds belonging to OL and she identifies the reasons the Liquidators held the view at that time. She points out that the Allocation Letter appeared to record an agreement between various parties which recognised that OL was entitled to $237,740,000 of the Stella proceeds; another accounting firm had reviewed and supported that allocation of those proceeds and evidence was given in the winding up proceedings to support that allocation; Fortress' solicitors had claimed the amount of approximately $19.7m later paid to Fortress in the December 2008 payment was held on trust by OA for OL on that basis; and the former administrators had advised they had thoroughly investigated the issue and were satisfied as to the appropriateness of the allocation. 34Ms Barnet's evidence in her June affidavit is that, so far as the application for the OA Extension Order was concerned, in September 2011: "... neither Mr Fletcher nor I was aware of any basis upon which OA or the Liquidators might bring proceedings against [Fortress] seeking orders under s 588FF(1)." Ms Barnet also gives evidence that she had no reason not to notify Fortress so far as the application for the OA Extension Order was concerned, other than that reason and that: "If I had any idea that there might be a potential basis upon which Mr Fletcher and I as liquidators of OA might apply to the Court for orders under s 588FF(1) against [Fortress] I would have caused [Fortress] to be notified of the Second Extension Application." 35The Liquidators submit that it was around late October 2011 that they came to suspect, and early November 2011 that they came to believe, that a substantial claim may be available to OA against Fortress in the circumstances set out in Ms Barnet's and Mr Lawson's affidavits. Ms Barnet gives evidence of matters which, from November 2011, led the Liquidators to come to doubt that the source of funds used to make the various payments to Fortress were in fact funds to which OL was entitled and to believe that the relevant funds were funds to which OA had a better entitlement. 36Mr Lawson's evidence is that, in the context of conducting investigations concerning the Stella Proceeds Deed in October 2011, he came to question why Fortress' legal advisers had prepared the Stella Proceeds Deed and also began to question the truth of information set out in the recitals to that deed, and also identified email correspondence referring to Fortress' concerns as to priorities and ensuring that Fortress would be entitled to and receive proceeds from the Stella sale to repay their facility. He indicates that he and a colleague formed the view that the information set out in the recitals to the Stella Proceeds Deed as to the inter-company loan position then in place between the Octaviar entities and Stella entities prior to the Stella sale needed to be critically analysed and investigated, and brought the matter to the attention of Ms Barnet who instructed him to continue that investigation on a priority basis. He gives evidence that further review led to the conclusion that there was real doubt as to the correctness of the facts recited in the Stella Proceeds Deed; that it was OA rather than OL that had made substantial loans to the Stella Group, which were not referred to in the recitals to the Stella Proceeds Deed; and that the quantum of OL loans said to be owed by entities within the Stella Group was overstated so that OA's loans to Stella were disregarded when the proceeds of the Stella sale were applied in reduction of OL's liability to Fortress. Mr Lawson was not cross-examined and it was not suggested that his account of the identification of these matters was incorrect. 37Fortress relies on the fact that examinations of Fortress employees were undertaken in respect of both OA and OL to support an inference that the Liquidators must have then intended to bring claims against OA; however, that matter does not seem to me to provide any real support for an inference that the Liquidators had then identified the basis of claims under s 588FF(1) of the Corporations Act by OA against Fortress, where there would necessarily be uncertainty in advance of the examinations whether the evidence given would relate to either entity or both. The content of the public examinations of officers and employees of the Fortress entities, to which Fortress drew attention, also did not indicate any suggestion that the relevant payments were made by OA. One of the Fortress employees, Mr Kwei, gave evidence in those examinations that he did not know the source of $100m paid to Fortress on 30 November 2007 and did not ask where the funds came from; that evidence plainly could not create any basis for a belief, on the part of the Liquidators, that those funds came from OA. 38Fortress also relies on a letter from the Liquidators to the Committee of Inspection dated 1 September 2011 (Applicants' Tender Bundle, Ex F2, Tab 1), 18 days before the hearing of the OA Extension Application, and 7 days before Ms Barnet swore her affidavit in support of that application (CB2, Tab 3). That letter noted, inter alia, that: "Investigations carried out by us, initially into the affairs of OA, focused on transactions involving OA, OL, Octaviar Castle, PIF, YVE and Fortress. On the basis of our investigations, including by way of public examination conducted by us of Fortress employees, we came to the view that certain payments made in connection with these transactions were recoverable by OL as unfair preferences and recovery should be pursued. This resulted, on 11 March 2011, in us filing a Statement of Claim against Fortress in the Supreme Court of Queensland to recover $35,051,044.67 for the benefit of the creditors of OL. That claim is now proceeding according to a timetable before the Court. It is being defended by Fortress with vigour. ... Our work to reconcile the OA inter company creditor and debtor position vis-a-vis other Octaviar Group entities commenced upon our appointment as liquidators in September 2009. ... We are yet to conclusively reconcile the inter company debtor and creditor position between OA and OL and between OA and some other entities within the Octaviar Group. Despite our extensive investigations to date, in many cases it has been difficult to definitively conclude by whom and on whose behalf certain payments were made, and as a consequence which entity is the proper debtor or creditor in respect of the transaction (and in some cases there may be more than one possible debtor or creditor) (p 27). The period of almost 24 months has elapsed since our appointment as liquidators of OA, OL, and then, subsequently, other entities within the Octaviar Group. It has proven to be an inadequate period to permit an orderly winding-up of those entities. This fact is unsurprising given: the size of the estate, the volume of records, the complexity of transactions, and the number of issues requiring investigation; the structure and affairs of the Octaviar Group which are highly complex and inter-connected. In order to understand and deal with the OA estate our investigations have necessarily ranged across the whole of the group, as opposed to being able to be confined to OA, or to OA and OL; a significant amount of time in the administration of the entities has been occupied by public examinations (in excess of 60 days) [and by the Fortress litigation]; and the OA and OL and other Octaviar Group books and records are voluminous and our experience to date has been that relevant information is often to be found across various records and in numerous locations. This means that utilising the books and records has been a time consuming but important way of ensuring that all transactions worth investigating and pursuing have been identified (pp 12-13)." 39The letter also referred to proceedings which were initially brought by OA and then, in substitution, OL against Fortress seeking to restrain Fortress from dealing with the amounts paid to it by its receiver in the December 2008 payment and the February 2009 payment and observed that: "At the time the proceeding was commenced by OA, and indeed prior to that time when the issues the subject of the proceeding were being investigated, we understood that it was OA who held the cause of action against Fortress. Indeed, the sum of $20,051,044.68 which was paid to Fortress and is now the source of the injunctive orders made against Fortress originated from a bank account maintained by OA. ... Since the proceeding was commenced and the injunctive orders made by the Court, we have continued our investigations into the circumstances surrounding the transactions the subject of the proceeding. In light of our investigations to date, we are presently considering whether OA also has a cause of action against Fortress arising from the same transaction and other associated transactions." 40That letter does not, in terms, refer to a claim to be brought by OA against Fortress under s 588FF of the Corporations Act, which would have required that Fortress be party to the relevant transactions. Ms Barnet was cross-examined at length in respect of this passage of the letter. She accepted that, by 1 September 2011, she had become familiar with various transactions involving or affecting Fortress, including transactions involving the Fortress Charge Extension, the February 2008 payment, the December 2008 payment and the February 2009 payment (T19:20-22:35 and T29:45-30:8). She accepted that the transactions which were referred to in the letter of 1 September included the December 2008 payment and the February 2009 payment (T31:6-32:29) that were the subject of a claim brought by OL against Fortress in the OL Proceedings on the basis they constituted uncommercial transactions and had previously been the subject of injunctive relief originally brought by OA in April 2010 on the basis they were transactions involving OA, as to which the Liquidators for OL were substituted on the basis that the transactions involved OL (T18:34-36; T20:13-16 ). Ms Barnet accepted in cross-examination that, as at 1 September 2011, the Liquidators were considering whether OA had a cause of action against Fortress arising from the December 2008 payment (T33:17-34:19) and that "certainly in our minds we thought that there was some type of breach of the Corporations Act in terms of offences and we were investigating that" (T34:11-15;T35:20-23;T42:38-43:160). 41Fortress criticises aspects of Ms Barnet's evidence, in particular her evidence that she did not know which transaction was referred to by the reference to "transaction" (T33:1-7) and her evidence in respect of the plural use of "other associated transactions" in that letter (T35:39-38:19). I accept, as Fortress points out, that the terms "transaction" and "associated transactions" are together likely to refer to February 2008 payment, the December 2008 payment and the February 2009 payment that were part of the transaction in issue in the OL Proceedings (CB 10 Tab 60, [60], [78]; T21:24-40). Ms Barnet readily accepted in cross-examination that the February 2008 payment was associated with the December 2008 payment (T37:46-49). However, it is not surprising that Ms Barnet would have had difficulty, over two years after the letter was written, in engaging in determining which of the several transactions in issue was described as the "same transaction" and which were the "associated transactions." I do not consider that these criticisms undermine Ms Barnet's evidence that the Liquidators in fact then understood that OL and not OA were party to those transactions. The reference in the letter to the other transactions to which Fortress refers is consistent with Ms Barnet's evidence that claims other than a claim under s 588FF(1) of the Corporations Act, and in particular claims for accessorial liability, were then under consideration in respect of those transactions. 42Fortress also criticises Ms Barnet's evidence to the effect that she was not a lawyer and so could not agree that one of the quickest ways to cut through fraud is to sue for uncommercial transactions (T33:35-50). In my view, Ms Barnet's caution in accepting this proposition was neither surprising nor inappropriate, where one would expect a liquidator to rely on legal advice on the efficacy of particular legal claims in very complex transactions. It is by no means clear that the proposition put to Ms Barnet was necessarily correct in the context of these proceedings, where there were in September 2011 and may still be significant issues as to whether OA or OL was party to the relevant transactions which could cause difficulty for such a claim, and on which Fortress relied in this application to contend that OA's claim against it was doomed to failure, and the speed by which a claim under s 588FF(1) of the Corporations Act could "cut through" a transaction, whatever its character, would also depend on the number and complexity of interlocutory disputes. 43Fortress also notes that the letter dated 1 September was not annexed to any affidavit sworn by Ms Barnet in support of the application for extension of time but was annexed to an affidavit sworn in the Supreme Court of Queensland in support of a freezing order (Applicants' Tender Bundle, Ex F2, Tab 10, at [221], Tab 157 of Exhibit KEB-1 to that affidavit). That proposition is consistent with Ms Barnet's evidence, rather than undermining it, since that letter would have been irrelevant to the application made before the Court in September 2011 if the Liquidators then had in mind the claims against Fortress to which Ms Barnet refers and not claims under s 588FF of the Corporations Act. The fact that the Liquidators may have then contemplated claims which did not require an extension of time under s 588FF(3) against Fortress does not, in my view, have the consequence that Fortress' interests were likely to be affected by an application for such an extension. To the contrary, an application for an extension of time to bring a claim under s 588FF(1) which was not then intended to be brought against Fortress would not affect its interests. Such an effect or potential effect would only arise if that intention later changed. 44Fortress also draws attention to evidence of investigation by the Liquidators into the PIF Payment. Ms Barnet's June affidavit indicates that, in October and November 2011, her staff were investigating the circumstances of the PIF Payment, whether a third party could prove in the estate of OA and/or OL for recovery of that payment and whether Fortress might have any liability for receiving that payment. Fortress refers to further evidence given by Ms Barnett in proceedings in the Supreme Court of Queensland and an affidavit sworn 15 September 2012, which identifies the source of the relevant payment as funds from the Premium Income Fund and points to proceedings brought by the Australian Securities and Investments Commission asserting that that payment was made from funds illegally obtained from that fund. 45Fortress also relies on a proposition put to, and accepted by, Ms Barnet in cross-examination that the Liquidators were, as at 1 September 2011, "thinking ... that potentially a claim would be made" against Fortress alleging involvement in an uncommercial transaction with OA in respect of the PIF Payment (T36:46-50). (Fortress' written submissions significantly overstated that evidence by omitting the word "potentially" when referring to it). Fortress criticises later evidence of Ms Barnet that there may not be a basis for seeking an order under s 588FF of the Corporations Act in respect of that payment and contends that Ms Barnett's evidence regarding legal advice and having a proper basis for bringing such a claim contained temporal and substantive inconsistencies (T41:38-42:16). Fortress also refers to later evidence by Ms Barnett in cross-examination that the Liquidators did not believe they had any claims against Fortress under s 588FF (T46:43-47). I accept Ms Barnet's evidence in that regard, and I do not consider that Fortress' criticisms of that evidence are well-founded. There is an obvious distinction between, on the one hand, investigating a claim which may or may not ultimately be able to be established and, on the other, having evidence to establish it. When Fortress subsequently provided documentary references for the Liquidators' investigation of that claim, those references did not identify any information then known to the Liquidators which would have supported such a claim. In these circumstance, it seems to me that Ms Barnet's later evidence in cross-examination rejecting the proposition that she believed there "might be a basis" of bringing that claim and her further evidence that the Liquidators did not believe there was sufficient evidence for a claim was consistent with her earlier evidence and consistent with the documents to which Fortress draws attention. 46Alternatively, Fortress contends that it ought to have been given notice of the OA Extension Application, because it would have been identified by the Liquidators as a potential target of proceedings under s 588FF of the Corporations Act in respect of OA, had the Liquidators acted with reasonable diligence in all the circumstances, and that this is sufficient basis to set the order aside ex debito justitiae. The Fortress entities contend that there was no urgency surrounding the making of the s 588FF(3)(b) application and that the order sought had the effect of removing a limitation defence to claims under s 588FF(1) against any affected creditors and would have a final effect on the rights of persons who were not given a chance to be heard on the application. They contend that the Liquidators were obliged to give proper consideration to identify persons who may be the target of a s 588FF(1) application; were obliged to make proper enquiries in this respect; that such proper enquiries either did or would have revealed that Fortress was a potential target in respect of Fortress' dealings with OA. 47This submission is founded in the approach adopted by Dalton J in Williams (as liquidator of Willahra Pty Ltd) (in liq)) v Kim Management Pty Ltd above at [33] where her Honour held that, if a person would have been identified by the liquidator as a potential target under s 588FF(1) had the liquidator acted with reasonable diligence in all the circumstances, then he or she is entitled to set aside the relevant order ex debito justitiae. I have reservations as to that approach, which would have the result that applications of this kind will require inquiries as to what liquidators did not, but allegedly should have, known. If such inquiries are to be made, courts will need to be very conscious of the risks of hindsight and of the fact that inquiries made by liquidators may well be affected by resource constraints and the need to prioritise tasks, particularly in complex liquidations. Given the findings which I will make below, it is sufficient in this case for me to assume, without deciding, that the Court has a discretion to set aside an application on the basis identified in Williams (as liquidator of Willahra Pty Ltd) (in liq)) v Kim Management Pty Ltd above. I do not consider that any basis to do so is established in this case. 48Fortress contends that, had the Liquidators acted with reasonable diligence in all the circumstances, they would have identified it as a "potential" target of proceedings under s 588FF of the Corporations Act by September 2011 because: "The Liquidators as liquidators of OA had brought injunction proceedings that subsequently became the OL Proceedings, including a claim that the December 2008 payment and the February 2009 payment were uncommercial transactions; December 2008 payment and the February 2009 payment were the subject of ongoing investigation in relation to OA (T39:35-46) and are now the subject of the OA Proceedings; the transactions the subject of s 588FF claims in the OA Proceedings, namely the February 2008 payment, the December 2008 payment and the February 2009 payment were identified as part of the relevant transactions in the OL Proceedings instituted against Fortress (CB 10, Tab 60 at [60] and [78]; T21:24-40); Fortress had been the subject of considerable investigation on behalf of OA and had been the subject of the OL Proceedings. Extensive public examinations had been held on behalf of the Liquidators as liquidators of OA and OL of, inter alia, Fortress employees (T17:10-20) and 5000 documents had been produced by Fortress to the liquidators of OA and OL (Barnet affidavit, CB 2, Tab 3 at [69]-[72]); extensive public examinations of officers and directors of OA and the OA group had been conducted in 2010 (Barnet affidavit, CB 2, Tab 3, at [69]-[72]; Hambrett affidavit, CB 2, Tab 5, at[51]-[53]); the conduct of those public examinations, together with the Liquidators' substantial remuneration and legal expenses (Hambrett Affidavit, CB 2, Tab 5, at [54]-[57]), demonstrates that any delay by the Liquidators in progressing their investigations of Fortress was not occasioned by lack of funding; the conduct of those public examinations also demonstrates that any delay by the Liquidators in progressing their investigations of Fortress was not occasioned by lack of co-operation by Fortress or the directors of OA in the course of those investigations; the Stella proceeds of sale from which Fortress was paid the February 2008 payment, the December 2008 payment and the February 2009 payment were the subject of the public examinations (Barnet affidavit, CB 2, Tab 3 at [66(c)] and [66(e)]); the Liquidators had spent a significant amount of time and resources in the preparation of the OL Proceedings against Fortress (T27:4-20); the Liquidators knew that OA had acted as the treasurer of the Octaviar Group and the majority of the work carried out by the Liquidators undertaken in winding up the Octaviar Group concentrated on OA (T26:8-24; T28:41-43); and while Mr Lawson deposed, and Fortress accepts, that he started to investigate the correctness of a recital in the "Stella Proceeds Deed" as a result of finding an email when preparing for mediation with Fortress, neither he nor Ms Barnet proffered an explanation as to why that investigation could not have been carried out prior to this time." 49I do not accept this submission, which seems to me to have both narrower and wider difficulties. The narrower difficulties with the submission relate to the particular matters on which Fortress relies. For example, the facts that the Liquidators had initially believed that OA was party to the transactions, or that they investigated the transactions or that OL brought proceedings in respect of them, does not establish any basis for a finding that, after they formed the view that OL was party to the transactions as recorded in the documentation of the transaction, there was any failure by them in not reversing that view prior to September 2011. The fact that examinations were conducted, including of employees of Fortress, similarly does not establish any basis for such a finding, absent any suggestion that any examinee gave cogent evidence, or any evidence, that the documents recording OL's entitlement to the funds as were false or incomplete and that OA was in fact entitled to the funds. I have referred above to the content of the examinations to which Fortress drew attention which did not involve such evidence. The proposition that the investigation that later led Mr Lawson to form the views which he gives unchallenged evidence could have been carried out earlier does not mean that it should have been carried out earlier, where a liquidator within a very complex liquidation will necessarily have to approach that liquidation by prioritising the tasks undertaken. 50The wider difficulty is that the submission depends on an impermissible application of hindsight to assert that a matter should have been discovered with diligence earlier because it was in fact discovered later. The evidence to which Fortress refers suggests that the Liquidators' investigations were detailed and comprehensive and covered a very wide field, in circumstances where they were hampered by the complexity of the Octaviar Group, its dealings and issues as to the accuracy of documentation. The Liquidators have given evidence of the chain of inquiry that led to their forming that view, which Fortress does not contest. Fortress does not seek to lead evidence from any other insolvency practitioner with experience of highly complex liquidations that he or she would, exercising reasonable diligence, have formed the views the Liquidators have now formed at an earlier point. 51Fortress seeks to establish delay by the Liquidators by pointing, in Mr Hambrett's affidavit, to documents now relied upon by OA in the proceedings against Fortress that had been produced by Fortress or its officers at some previous time. In my view, the suggestion that the Liquidators should have identified claims arising from those documents at some earlier point cannot be accepted given the complexity of the liquidation and the volume of the documents needing to be reviewed by the Liquidators, to which I will refer further below. The fact that the significance of the needle may be readily apparent once it is found is no answer to the difficulties of locating it within the haystack. 52It follows that, even if the wider basis for setting aside extensions of time under s 588FF(3) identified in Williams (as liquidator of Willahra Pty Ltd) (in liq)) v Kim Management Pty Ltd above were to be applied, the factual basis for the exercise of that power has not been established in this case. Whether Fortress was likely to be affected by the making of the orders and are entitled to have the orders set aside on that basis 53Fortress identifies the third issue arising in the application as whether Fortress was likely to be adversely affected by the OA Extension Order and contends that, on establishing that matter, they would be entitled to have the OA Extension Order set aside. The Liquidators respond that persons who were not identified targets at the time of the liquidators' application do not have the right to have the extension order set aside ex debito justitiae and have, at best, a right to approach the Court to have the merits of the extension application re-considered so far as it affects them. 54In Greig v Stramit, Williams JA observed that: "With respect to the 'known creditors' the audi alteram partem rule of natural justice applied and they in consequence had a right to be heard ... I do not understand how such a conclusion can be reached without acknowledging that justice would require the same opportunity to be given to all creditors affected by the order extending time ..." at [32]-[34]. His Honour rejected a distinction drawn by the liquidators between recipients of payments who had been sufficiently identified and those who had not, and held that any creditor sued outside the 3 year limitation period must have been made party to the application for an order extending time (at [43]-[44]). 55The question whether a person who was not identified as a possible target of proceedings and was not notified of an application for an extension of time may have such an order set aside was left open in the observations of Spigelman CJ in BP v Brown that I quoted above. His Honour also emphasised that what needs to be made within the 3 year period is the application for extension of time under s 588FF(3) of the Corporations Act and not the application in respect of a particular creditor. His Honour also observed at [133] that an order of a superior court is not a nullity even if there is a breach of a procedural fairness obligation, but a person is entitled as of right to have that order set aside so far as it affects that person. The Court there upheld an extension order made where a valid application for extension of time had been filed within the 3 year period, although the originating process had not joined the particular defendant prior to the expiration of that 3 year period; the original order had been made in breach of an obligation to afford procedural fairness to the defendant, but that error had been remedied. 56That approach was followed by Doyle CJ in Ansell Ltd v Davies above where his Honour observed that requirement was made where an application for an extension of time was made within the 3 year period; an order granting the extension of time was set aside on application by then unidentified and now identified creditors and those creditors were then afforded an opportunity to be heard in respect of the application. Doyle CJ treated the application, so far as it concerned a particular creditor, as not to be treated as made only when it was served on the creditor in respect of whom the order fixing a longer period is sought or only when that creditor is joined as party to the proceedings. 57In Williams (as liquidator of Willahra Pty Ltd (in liq)) v Kim Management Pty Ltd above at [28], [32]-[33], Dalton J noted that she read the reasoning of Williams JA and Fryberg J in Greig v Stramit, not as recognising a right of unidentified targets to set aside an order made under s 588FF(3)(b) ex debito justitiae, but rather as noting that the absence of such a right is a reason militating against the making of a shelf order. Her Honour noted, and I agree that: "There could be little utility in properly making a shelf order if every person affected by it had a right, ex debito justitiae, to set the order aside. The consequence of making such an order, if that were so, would be that only those persons who lacked the means to come to Court to have it set aside would be adversely affected." Her Honour held that a person who was not in fact identified as a potential target may not have such an order set aside as a matter of right (with the qualification, which I have addressed above, if that person would have been identified with reasonable diligence) but rather had a right to have the extension order discharged for reason. In Re Clarecastle at [127], Ward J also appears to have contemplated that, where orders were made in general form which affected the interests of persons who had not been heard, they would have a subsequent entitlement to be heard on the application. 58Fortress also relies on UCPR r 36.16(2)(b) which provides that the Court may set aside or vary an order after it has been entered if it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order. In Savcor Pty Ltd v Cathodic Protection International APS (2005) 12 VR 639 at [20], the Court of Appeal of the Supreme Court of Victoria described the right available, where an order was made ex parte without notice, as a right to "approach the Court and have the application re-heard" ex debito justitiae. In that case, the Court noted that such a hearing was a re-hearing of the whole application, where the judicial officer had the benefit of submissions and any material that the opposing party wishes to place before the Court. The Court distinguished the position in such an application from that where an order was set aside for non-disclosure, where the Court is not concerned whether the order should have been made on the merits on the material before the Court. 59Fortress alternatively relies on UCPR r 36.15 which provides that a judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. Fortress acknowledges that the threshold limitation on the power to set aside a judgment is that its exercise must be based on "sufficient cause" and that the entry of judgment is irregular if it has occurred in contravention of, or without compliance with, the rules, and there is then no further requirement to establish that judgment was entered as a result of misconduct or dishonourable conduct: Roach v B & W Steel Pty Ltd (1991) NSWLR 110 at 113-114. Fortress contends that the irregularity in the current application is the failure to notify them of the application. For the reasons I have indicated above, I do not consider that Fortress was as the time of the application likely to be affected by it, since the Liquidators did not then have any intention to bring a claim under s 588FF(1) of the Corporations Act against it; that there is no sufficient cause shown where the Liquidators did not notify a person who they did not then believe would be affected by the order sought; and that, even if that principle is to be extended to a belief that the Liquidators could have formed after reasonable inquiry, the factual basis to set aside the order on that basis is also not established. 60In the further alternative, Fortress contends that, in circumstances where an application for a shelf order was made by the Liquidators, a failure to disclose the fact that investigations were ongoing in relation to transactions with respect to Fortress which "could" be the subject of a claim pursuant to s 588FF of the Corporations Act, should result in the ex parte order being discharged in any event on the basis of material non-disclosure. The case law relating to the duty of candour on a ex parte application was reviewed by Dalton J in Williams v Kim Management Pty Ltd above and I adopt her Honour's analysis of that issue. If the reference to a claim that "could" be brought against Fortress in this submission is intended to refer to mere possibility, the submission has the difficulty that any investigation of a matter relating to OA by the Liquidators "could" give rise to a claim against Fortress or anyone else if facts emerged which warranted it. I can seen no reason why the Liquidators would be required to advise the Court that, if new facts emerged, new claims might be brought, since that proposition is self-evident when a shelf order is made. If the word "could" is intended to mean that a real prospect of such a claim existed, the findings that I have made above indicate that the Liquidators had no more reason to consider that they, as liquidators for OA, had a claim under s 588FF of the Corporations Act against Fortress than against any other party which had apparently transacted with OL, until the other matters to which they refer subsequently came to their attention. Even if established, a failure to make full disclosure on an ex parte application does not, without more, justify setting aside the ex parte order, and the Court would have a discretion whether or not to set aside the order made: Brink's Mat Ltd v Elcombe [1988] 1 WLR 1350 at 1357; Savcor Pty Ltd v Cathodic Protection International APS above at [24]-[36]; Williams v Kim Management Pty Ltd above at [30], [53]. 61Fortress also makes a formal submission that the Court has no power, on discharging the orders previously made, to re-exercise that discretion. Fortress submits that the view expressed by Williams JA in Greig v Stramit, that, on the discharge of orders obtained ex parte or irregularly, the proceeding is at that point concluded so that a fresh proceeding must be commenced by the Liquidators, which would be outside the period prescribed by s 588FF(3)(b) of the Corporations Act is correct and should be preferred. A contrary view was taken by Fryberg J in Greig v Stramit. In BP v Brown, by which I am bound, Spigelman CJ (with whom Mason P and Handley JA agreed) referred to that contrary view and observed at [207]-[208]: "I see considerable force in the dissenting opinion of Fryberg J that the effect of the subsequent order, which is in identical terms to that of Austin J in the present proceedings, had the consequence that the original proceedings were not finally disposed of. The events in Greig differ in that the original order extending time did not, as the orders made by Austin J did, reserve liberty to persons to apply to set aside or vary the order extending time. However, this express reservation only made clear what would in any event be the legal position: a person affected by an ex parte order may always apply to have the order set aside. (See Owners of the SS Kalibia v Wilson (1910) 11 CLR 689 at 694, per Griffith CJ.) Furthermore, the test of finality is the determination of the rights of the parties in a "principal cause", not the determination of the application before the court. (See Hall v Nominal Defendant (1966) 117 CLR 423 at 443, per Windeyer J. See generally Southern Cross Exploration NL v Fire and All Risks Insurance Co Ltd (No 2) (1990) 21 NSWLR 200.) There may be cases where ancillary proceedings are appropriately characterized as the lis before the court. However, an application for an extension of time is not, in my opinion, able to be so characterised. The "principal cause" is the application under s 588FF(1)." Re-exercise of discretion as to extension of time 62There is, in this case, little practical difference between Fortress being afforded a hearing as to whether the OA Extension Order should be set aside before taking that course, or that order being set aside while Fortress and the Liquidator are heard as to whether it should be reinstated. Mr Coles, who appears with Mr Dowdy for the Liquidators, did not contend that Fortress was not entitled now to have an opportunity to make submissions as to whether the OA Extension Order should have been made, on the basis that it had now become a party affected by the OA Extension Order where it is relied on to support the proceedings against it. Having regard to that concession, it is necessary for me to re-exercise the discretion whether the OA Extension Order should be made, now having heard Fortress' submissions to the contrary. 63Relevant matters to whether the extension of time previously granted under s 588FF(3) should be maintained or set aside include the reason for the delay in bringing proceedings, including the complexity of the company's affairs and any lack of information available to the liquidator: Green v Chiswell Furniture Pty Ltd (in liq) [1999] NSWSC 608. In BP v Brown, Spigelman CJ at [188]-[189] approved following passage from the judgment of Austin J in Brown v DML Resources Pty Ltd (in liq) (No 7) [2002] NSWSC 162; (2002) 41 ACSR 299: "The adequacy of the plaintiffs' explanation for delay is not an independent criterion, but rather it is a factor to be weighed up with all other relevant factors in the exercise of the discretion. The degree of delay in the present case would not necessarily be acceptable in a case where failure to take proceedings has caused prejudice to the prospective defendants, or in a case where the insolvent administration is uncomplicated and fully funded. On the other hand, a greater degree of delay might be acceptable in a case where, for example, there is an indubitable entitlement to recover an unfair preference of a very large amount for the benefit of unsecured creditors, and no prejudice to the potential defendant other than the prejudice of repaying money which he was not entitled to receive." In re-exercising the Court's discretion, the Court will have regard to what was fair and just in all the circumstances of the case and having regard to the relevant factors: BP v Brown above at [187]-[189] per Spigelman CJ, with whom Mason P and Handley JA agreed at [215]-[216]. 64I am conscious that the enactment of time limitations reflects a perception that the quality of justice deteriorates where there is delay and, in some circumstances, there is a need that potential defendants should 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 others who have had dealings with the company: BP v Brown at [112]-[114], [119]; New Cap above at [54]; Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442 at [3]; Re Clarecastle above at [138]. 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 the proceedings and their final determination: Re Clarecastle above at [129]-[143]. The Liquidators bear the onus of demonstrating why it was just and fair that the time limit prescribed by s 588FF(3) of the Corporations Act should not apply: New Cap above at [55]. 65Fortress contends that the only material to which the Court may have regard in exercising its discretion (with the implicit exception of material on which Fortress relies) is that which was before the Court on the original application for the OA Extension Order. I do not accept that submission, which seems to me to be both inconsistent with a re-exercise of the Court's discretion after affording Fortress an opportunity to be heard, and inherently unfair to the Liquidators who would be denied the opportunity to respond to the evidence on which Fortress relies to support its application. Fortress submits that, even if the material to be assessed is that which is now before the Court, the claim brought under s 588FF(3) suffers difficulties that would persuade the Court not to grant the extension sought. 66There was, when the OA Extension Order was made, and is detailed evidence before the Court as to the complexity of the liquidation and the challenges faced by the Liquidators, which was largely not contested by Fortress. Ms Barnet initially outlined the issues which the Liquidators were required to address in her affidavit dated 10 May 2011, which was relied upon both in an application for extension of time in respect of OL heard by Hammerschlag J in May 2011 and in the application in respect of OA Extension Order in September 2011. In her Judgment delivered on 19 September 2011 ([2011] NSWSC 1691), Ward J summarised Ms Barnet's evidence as to the reasons for the delay, primarily arising from the complexity of the affairs of the Octaviar Group. Ward J noted, and I agree, that it was clear that there had been an extensive amount of work performed by the Liquidators since their appointment in seeking to identify potential claims and the position in relation to those claims. Her Honour also summarised the work which had been undertaken since that date, based on Ms Barnet's evidence. 67In broad summary, Ms Barnett's evidence pointed to the size of the insolvency, the volume of records, the complexity of transactions, the number of issues requiring investigation; the complexity and inter-connectedness of the structure and affairs of the Octaviar Group, so that investigations could not be confined to a single entity; and to the amount of time required for public examinations and also lost to litigation between Fortress and the Octaviar entities. The size of the administration is also indicated by the fact that, as at May 2011, proofs of debt in respect of OL exceeded $2.1 billion and proofs of debt in respect of OA exceeded $2.4 billion. Without seeking to be exhaustive, the complexities facing the Liquidators included that, at the date of the Liquidators' appointment, the Octaviar Group comprised over 70 companies, and the Group had at one time comprised more than 400 companies located in numerous jurisdictions. The Liquidators were appointed as liquidators of several companies within the Octaviar Group in addition to OA and OL and also to YVE and receivers and managers had also been appointed to numerous entities within the Group. The Liquidators received little information concerning any investigations undertaken in the 11 months prior to their appointment with respect to potential voidable transactions, which were at a preliminary stage. 68Ms Barnet also pointed to the volume of the books and records of the Octaviar Group and the Liquidators' experience that relevant information was often found in various records and numerous locations. She noted that the Liquidators' investigations had disclosed the transactions that may be susceptible to challenge as voidable transactions often involved more than one Octaviar entity, with OA often involved as the additional entity, and it had been difficult to conclude by whom and on whose behalf payments were made. Ms Barnet also pointed to the complexity of an assessment of solvency of companies within the Octaviar Group, because of inter-company loans, guarantees and group tax arrangements across the Group. Her evidence identified a review of a substantial quantity of books and records and electronic materials and emails. The Liquidators were also involved in other litigation involving Fortress including not only the proceedings filed by OL in the Supreme Court of Queensland but also the monitoring of other proceedings brought by the Public Trustee of Queensland in respect of a challenge to a fixed and floating charge taken by Fortress and involvement in proceedings commenced by Fortress concerning the relation back date for OL. The Liquidators had also undertaken public examinations of former officers and directors of OA and of officers of the Octaviar Group and associated persons, and had undertaken examinations in the Supreme Court of Queensland in respect of the dealings between the Octaviar Group and Fortress. There is evidence that substantial resources were devoted to the conduct of those examinations. 69Ms Barnet's further affidavit sworn 8 September 2012 in support of the application for the OA Extension Order identified the complex inter-company accounting issues which needed to be addressed in order to determine whether OA, OL or both were the proper plaintiff in voidable transaction proceedings and the manner in which such claims were pleaded. Ms Barnett also pointed to work that had been done to prepare an insolvency report in respect of relevant proceedings. 70The Liquidators also point out that, by reason of the relation-back day for OA, some 11 months of the 3 year period contemplated by s 588FF of the Corporations Act had elapsed before their appointment as liquidators to OA on 9 September 2009. Fortress contends that the Liquidators' contention that they have not had the benefit of the full three year period contemplated by s 588FF(3) is not relevant having regard to s 588FF(3)(a)(ii) which provides that an application may be made under that section during the period beginning on the relation-back day and ending 12 months after the first appointment of a liquidator in relation to the winding up of the company. I accept that paragraph will often be sufficient, in a straightforward winding up, to address the position where a liquidator is appointed a significant time after the relation-back date. However, I do not consider that it excludes the relevance of that factor to an application for an extension under s 588FF(3)(b), particularly in a complex winding up, where that section confers a discretion on the Court to extend the time specified in s 588FF(3)(a) (including where s 588FF(3)(a)(ii) applies) in an appropriate case. I consider that the fact that the Liquidators had significantly less than the 3 year period contemplated by s 55FF(3)(a)(i) is a matter supporting the application for an extension of time, and has greater weight given the evidence of the complexity of the winding up to which I have referred. 71Matters relevant to whether an extension of time should be granted also include a preliminary review of the merits of the foreshadowed proceedings directed to determining whether the proceedings are so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit, although such a review may not be necessary if the liquidator's purpose in seeking the extension is to undertake further work to put himself or herself into a position where he or she properly decides whether not to bring the proceedings. That 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) above per Austin J at [15]: Walker v CBA Corporate Services (NSW) Pty Ltd (2012) ACSR 153 at [44] per Nicholas J. An extension should not be allowed if the application appears to be devoid of prospects: Taylor v Woden Constructions Pty Ltd [1998] FCA 1228. 72The Liquidators contend that, if a proceeding has been commenced in circumstances where notice was not required to be given, the fact of the proceeding being brought within the extended period provides no freestanding right to seek vacation of the order and any right of a defendant to contend that it should not be harassed by futile proceedings is readily satisfied by the available avenues of summary disposal within those proceedings themselves. The Liquidators also contend that, if there is to be a preliminary review of the merits to see whether proceedings would be so devoid of prospects as to be unfair, that review should be on the same basis as is applied by the courts in assessing applications for summary dismissal or leave to amend, namely whether the pleading discloses no reasonable cause of action or whether the relevant pleading is futile because it is obviously bad in law. 73Fortress notes that the claims made under section 588FF of the Act are identified in the Amended Second Statement of Claim ("ASSOC") filed by the Liquidators in the Supreme Court of Queensland. The Liquidators rely on ss 588FB and 588FC of the Corporations Act as the bases for seeking to recover the amounts identified in ASSOC paragraphs [80]-[81]. Fortress submits that: "(a) central to the Liquidators' claim, is the allegation at [31] and [32], that at all material times after the entry into a series of agreements, identified as the Stella Restructuring Transaction (as identified at [22] - [30]) OA was the only company within the Octaviar Group that had any substantial loans to companies in the Stella Group; (b) the centrality of the matters in (a) is apparent from ASSOC [50] which impugns the recitals to the Stella Proceeds Deed on the basis of the matters alleged at ASSOC [31]-[32]; (c) the Stella Proceeds Deed was the basis for the payment of monies to Fortress the subject of the Liquidators' claim; (d) accordingly, any tenable claim against Fortress depends upon the cogency of the matters alleged at ASSOC [22] - [30]. Those paragraphs identify a series of loan agreements entered into by OA, being the documents identified at [ASSOC [22(a)-(d)] (CB 11, Tab 77 ([22(a)]; [22(b)]; [22(c)] and [22(d)]); (e) the central loan agreement is that alleged at ASSOC [22(a)] namely the LRH Loan Agreement, the terms of which are pleaded at ASSOC [24]. That agreement recites, at p. 3792, that OA and OL had provided various loans to entities within the Stella Group in amounts and for the purposes set out in the Schedule to the agreement. That schedule identifies loans totalling $465,147,918. Clause 2 of the LRH Loan Agreement is the principal provision, and appears to embody an acknowledgement by OA and LRH that each loan would be treated as an advance from OA to LRH. OL was not a party to that agreement, and no allegation is pleaded that OL was in any way party to, or bound by, or participated in, that agreement; (e) as the recital to the agreement states, the loans had been made by OL. There appears to be no allegation or evidence of any act in law, on the part of OL, which deprived it of its loan entitlements. Thus, Fortress contends, the central contention of the Liquidators' claim is falsified by the very documents said in their pleading to constitute a key element of their cause of action; (f) The loan agreement alleged at ASSOC [22(d)], which is alleged to have been made at ASSOC [26], [27] and [30], was for the purpose of completing the sale of the shares in LRH and Stella Travel Services Pty Ltd as alleged at [20(a)]. The sale price was owed to OL, yet it is not alleged that this obligation was ever discharged; an obligation in the sum of $825,552,699. There must have been an obligation of the Stella Group to OL in this amount, which is inconsistent with the allegations at ASSOC [30] and [31]." 74It is necessary to say something further as to the allegations made in the ASSOC and referred to in these submissions and the evidence on which the Liquidators and OA rely in the proceedings in the Supreme Court of Queensland. 75The Liquidators and OA plead the entry into the OA Stella Loans on 28 June 2007 (ASSOC [22]) and that, from 28 June 2007, OA had loans to MFS Leisure Resorts Holdings Pty Limited ("LRH") in a sum exceeding $373.4 million (ASSOC [24]) and loans to Stella MLR Group Pty Limited ("Stella MLR") of nearly $60 million (ASSOC [25]) and, from the determination or adjustment of the purchase price under the SGH Share Sale Agreement (as defined), OA loaned Stella Group Holdings Pty Limited ("SGH") an amount exceeding $305 million and subsequently $825 million (ASSOC [28]). The Liquidators and OA plead in ASSOC [31]-[32] that, after the Stella Restructuring Transactions (as defined in the ASSOC), OA was the only company that had any, or any substantial, loans to companies in the Stella Group and no company within the Stella Group had any or any substantial indebtedness to OL. 76The Liquidators and OL draw attention to evidence that is capable of supporting the claim that OA rather than OL had made the relevant loans. Several emails prior to the entry into the OA Stella Loans appear to contemplate that the relevant loans would be made by OA. A document setting out the steps of the restructuring dated 28 June 2007 refers to four loan agreements all of which are with OA. Accounts for the Stella Group for the period ended 31 December 2007, including a copy sent to Fortress, show a loan from OA to SGH of in excess of $305 million. In February 2008, the Octaviar Group's solicitors were advised that the loans made to the Stella Group were made by OA and issues were identified as to the "forgiveness" of those loans as part of the sale of the Stella group. Financial statements of Stella group for November and December 2007, sent to Octaviar Group's solicitors in February 2008, recorded OA as having lent in excess of $305 million to SGH as at November 2007 and in excess of $825 million as at December 2007. 77Fortress' claim that the proceedings against it are hopeless faces the threshold difficulty that, on 18 September 2012, the Supreme Court of Queensland made asset preservation orders against the Fortress entities for a substantial amount, which could only be made where OA had demonstrated that it had a "good arguable case on an accrued or prospective cause of action": Uniform Civil Procedure Rules 1999 (Q), r 26D. Fortress contends that it did not fully contest that application because of short notice of it; however, there is no suggestion that Fortress has subsequently brought an application to set aside those orders in the Court that is hearing the substantive proceedings, advancing the arguments that were put before me. 78Mr Hutley contends, in summary, that there is no express discharge of, and OL is not party to, the suggested discharge of a loan previously made by OL and that there is no basis for an assignment of that loan from OL to OA to be inferred. I have referred above to Fortress' submission as to the terms of the LRH Loan Agreement and its submission that the Liquidators' claim is falsified by the terms of that Agreement. I do not think I could properly reach that view, given the issues that appear to exist as to the accuracy of recitals in some of these agreements and the fact that evidence of commercial context may well be relevant to the construction of that agreement. 79Fortress contends that, in these circumstances, the Liquidators cannot establish that there were no obligations owed by the Stella Group to OL, as distinct from OA. The essential point taken by Fortress is that the effect of the relevant agreements, even if they created a loan agreement between OA and the Stella Group, did not extinguish the loan between OL and the Stella Group and it was therefore open to the Octaviar Group to apply the entirety of the Stella sale proceeds to repayment of that loan. In my view, that proposition does not have the result that the claims brought by OA are so weak that it would be unfair to Fortress to permit them to proceed. As I noted above, the questions of construction of the relevant agreements, in their commercial context, are properly matters of evidence. While Mr Hutley contends that no material facts are pleaded which would be relevant to the question of construction, this is a complex commercial claim and further particulars may be sought and provided as to those matters. There is force in the proposition that it will be difficult for OA to establish an agreement for the discharge of a loan made by OL to any company within the Stella Group, where it is not alleged that OL was party to that agreement. However, it may still be open to it to establish that the transaction involving payment to Fortress to discharge OL's debts without regard to OA's debts is properly the subject of orders under s 588FF of the Corporations Act, even if OA cannot establish the allegation that it was the only substantial creditor of the Stella Group. 80Another matter relevant to whether an extension of time should be granted is whether the likely prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting it. The absence of prejudice is not decisive but is a relevant matter to be taken into account in the exercise of the Court's discretion: New Cap at [55]; Re Clarecastle at [209]. Fortress acknowledges that it has not advanced any direct evidence of specific prejudice. Nonetheless, it contends that there remains a "presumptive prejudice" resulting from delay being the deterioration in memory, the likelihood of which increases as the length of the delay increases. There is here no suggestion, to adopt the factors referred to by McHugh J in Brisbane South Regional Health Authority v Taylor above at 550, that evidence is likely to have been lost; that the proceedings are brought "long after" the circumstances which gave rise to them have passed, so as to give rise to any arguable oppression; that Fortress has in fact arranged its affairs on the basis that no proceedings would be brought against it, noting that such proceedings had already been brought by OL against it. 81The Liquidators also draw attention to the fact that Fortress was aware of the risk that payments it received could be reclaimed as a fraudulent conveyance, preferential payment or similar transaction under applicable insolvency laws, given the nature of its particular business, and specifically disclosed that risk when the Fortress Investment Group was listed on the New York Stock Exchange (Barnet 29 June 2012, [10]-[14]). Shortly after the February 2008 Payment was made, it appears that Fortess took the position that it: "... will not be releasing their F&F charge over [Octaviar] because there is a reasonable risk that the repayment of their loan could be regarded as a preferential payment and could be clawed back and they may also incur further costs in defending any such claims/actions." 82I do not consider that any real prejudice has been established in this case, other than that Fortress is deprived of the limitation period otherwise applicable under s 588FF(3) and exposed to the relevant claims. In my view, the proposition that Fortress has been prejudiced by loss of memory, loss of documents or the passage of time is not only unsupported by evidence, but also weakened by the fact that Fortress is already defending proceedings brought by OL which are likely to raise similar issues to those raised by the proceedings brought by OA. I also do not consider that, in all the circumstances which I have reviewed above, it could be said that proceedings brought within the relevant timetable were contrary to the public interest in requiring that disputes be resolved as quickly as possible. The relief sought by the Liquidators 83By Interlocutory Process filed on 8 June 2012, the Liquidators sought orders that, inter alia, Fortress be joined as parties to the Amended Originating Process and Interlocutory Process filed in Court on 19 September 2011. In Ansell v Davies at [59], Doyle CJ noted that each creditor was entitled to be heard in opposition to the making of the order, was entitled to challenge the Liquidators' evidence and was entitled to present its own evidence; that the Court could hear a creditor in opposition to the making of an order without joining the creditor as a defendant; but there was no reason why the Court should refrain from making each of the relevant creditors a defendant to the proceedings (at [59]). In Re Clarecastle at [214], Ward J noted that in the ordinary course a party whose interests may be adversely affected by an extension of time should be joined as a defendant to the application. I consider that, although it is not necessary to make such an order, I should make it in accordance with the ordinary approach where Fortress has been heard as to the re-exercise of the Court's discretion. Fortress also contended that, upon the basis of the formal submission regarding Greig v Stramit and BP v Brown, any such joinder would be out of time. I do not accept that submission, since I am bound by BP v Brown. 84The Liquidators also sought relief that the Plaintiffs were at liberty to have the original application filed on 19 September 2011 for an order under s 588FF(3)(b) of the Corporations Act that the time for the making of an application in respect of OA be extended to 3 April 2012 reheard as against Fortress. Fortress submitted that, if the OA Extension Order was not set aside, the Liquidators required no further relief; and, if Fortress succeeded in setting aside that order, ex debito justitiae or otherwise, the Liquidators must invoke the Court's jurisdiction to have that order restored and in doing so, they do not exercise a liberty, but rather seek an indulgence. I accept that the Liquidators do not require such relief where I have not set aside the OA Extension Order. 85The Liquidators also sought a variation of the OA Extension Order so as to specifically extend the time for the making of an application in respect of OA against parties including Fortress under s 588FF(1) of the Corporations Act to 3 April 2012. Alternatively, the Liquidators sought an order under s 588FF(3)(b) of the Corporations Act that the time for the making of an application in respect of OA against the Fortress entities under s 588FF(1) be extended to 3 April 2012. Fortress contends these orders should be refused on the grounds on which it contends that the OA Extension Order should be set aside. These orders would be justified, on the basis of the findings that I have reached above, if they are necessary where I have not set aside the OA Extension Order. I will hear the parties further as to whether such orders are required in that situation. 86The Liquidators contended that, if the Court were to automatically set aside the extension order without consideration on the merits, then an order nunc pro tunc should be made authorising the relevant part of the Queensland proceedings. Fortress resists such an order on the basis that the failure to notify was known or should have been known to the Liquidators and there was a reasonable opportunity for correction, and that a nunc pro tunc order should not be made where the Court could not extend the time for filing the proceedings under s 1322(4) of the Corporations Act. It is not necessary to make such an order where I have not set aside the OA Extension Order previous made by the Court. I would have made such an order had it been necessary to do so, as Austin J had done at first instance in BP v Brown after affording procedural fairness to the affected party, an approach which the Court of Appeal had endorsed (at [177]). 87I direct the parties to bring in orders to give effect to this judgment within 7 days. I will hear the parties as to costs.

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