Consideration
61 In this case the order sought for an extension of time under s 588FF(3) of the Act should be made. My reasons for coming to that conclusion, having regard to the factors relevant to the exercise of the discretion under s 588FF(3) of the Act, follow.
62 First, I turn to the question of delay.
63 In this case the Liquidator did not make a deliberate decision to delay his investigations. The evidence shows that he has attempted to pursue enquiries into MCF Group, including by making enquiries of both its former and current director, but that, for the most part, those enquiries have not borne fruit. At best, the Liquidator has only received limited information. As explained by the Liquidator, the reasons why he has been unable to progress his investigations are because:
(1) only very limited information has been provided by the current and former director;
(2) there is an absence of the provision of the sort of information that would usually be expected to assist a liquidator in investigations;
(3) there has been a lack of funding, including an absence of realised assets and no funding offered by creditors, despite requests and the fact that until recently, the liquidator did not know about the Ireland Property and the potential for recoverability out of that asset for the benefit of creditors.
64 Relatedly, as soon as the Liquidator became aware of the Ireland Property, he sought both funding and advice and then filed the present application.
65 As submitted by the plaintiffs and contrary to Mr Coleman's submissions, these facts, when considered together, do not suggest that the Liquidator has deliberately chosen not to, or neglected, to act in a timely and appropriate manner in pursuing claims. The Liquidator has not been sitting on his hands, as Mr Coleman suggests. He has, in the past three years, attempted to obtain information about MCF Group and pursue investigations but has been hampered in his efforts to do so.
66 The second matter to consider is the merits of any foreshadowed proceedings.
67 That said, here the purpose of the extension sought is to permit the Liquidator time in which to undertake investigations so as to identify any causes of action, consider their merits and, armed with that information, decide whether to bring proceedings. Based on the evidence before me it is apparent that the Liquidator has not yet been able to undertake those steps because of a combination of a lack of cooperation and a lack of funding leading, in turn, to a lack of information. The Liquidator has identified certain potential defendants, namely the former and current director of MCF Group and entities associated with its former director. However, he is, for the same reasons, not in a position to provide any detail in relation to any proposed claim which would permit its merits to be assessed.
68 Given the purpose for which the extension is sought, the limited information presently available and the nascent stage of any investigations, it is unnecessary to conduct a review of the merits of any foreshadowed proceeding. Mr Coleman contends that there are no claims warranting investigation and no available voidable transaction claims. That is a mere assertion, not supported by any evidence and contrary to the Liquidator's considered view. The Liquidator's clear position is that there is sufficient for him to form the view that he has "reason to inquire" whether there may be meritorious claims that can be brought for the benefit of MCF Group's creditors.
69 The final question is that of prejudice.
70 The plaintiffs accept that an extension of time if granted will cause prejudice insofar as potential defendants will remain, for longer than the prescribed statutory timeframe, subject to the possibility of the commencement of proceedings. However, as the plaintiffs also observe, insofar as potential prospective claims have been identified they are against related entities of MCF Group, including its current and former director.
71 In Vaughan v Catanzariti, in the matter of Italian Prestige Jewellery Pty Limited (In Liq) [2018] FCA 1403 at [41] I accepted a submission that where the claims that are the subject of a liquidator's proposed investigations were against related entities, the possibility of actual prejudice diminishes. I said at [41]:
…The persons most likely to be affected by the claims were in charge of the Companies, or closely related to those who were in charge, at the time of the alleged transactions. One would ordinarily expect them to have knowledge or access to knowledge of the operation of the Companies at the time of the alleged transactions. If an explanation is available for those transactions they are well placed to provide it. Further, since March 2017 the directors of the Companies have been on notice of the possibility of claims being made, at least in relation to insolvent trading.
72 Mr Coleman, who is the only person who opposes the application under s 588FF(3)(b) of the Act, is a former director of MCF Group. He is also one of the identified subjects of the Liquidator's proposed investigations and potential proceedings. As a person related to MCF Group, he is in the same position as the persons identified at [41] of Italian Prestige. Namely he is likely to have knowledge of the operation of MCF Group at the time of any alleged transactions and able to provide an explanation, if available.
73 Mr Coleman says he has already incurred costs in the liquidation which has caused him prejudice and allowing an extension of time will cause him to incur further costs and, I infer, ongoing prejudice. There is no evidence relied on by Mr Coleman to support his contention that he has incurred $110,000 in costs in connection with the liquidation. Putting that to one side, I accept that Mr Coleman may incur costs if the order sought is made, particularly in circumstances where he is likely to be the subject of examination. While that may cause him to suffer some prejudice, that is outweighed by the evidence before me which suggests that permitting the Liquidator further time to undertake investigations is likely to be of benefit to the creditors of MCF Group.
74 Further, as the plaintiffs submit, Mr Coleman, a putative examinee, is a related party who is likely to have some knowledge of the circumstances in which certain transactions took place. He has not suggested that any evidence that would have been available to him, or any entity controlled by him, has been lost or destroyed or, other than further costs that might be incurred, that he will be in a worse position because of the proposed extension of time causing any prejudice. In any event, in the first instance the Liquidator intends to conduct examinations and inquiries with a view to assessing whether to bring proceedings. It may be that no proceeding affecting Mr Coleman or any related entity ultimately transpires. That is a position which, once the extension is granted, will be crystallised in the near future.
75 Finally, the extension of time is sought for a period of 12 months from the proposed date of the orders. Thus, to the extent that any person suffers prejudice by reason of the further time allowed to the Liquidator, it will be for a finite and relatively short period.
76 Having regard to the above, in my view the risk of any prejudice is minimal and is outweighed by the interests of creditors in receiving a possible recovery from the potential claims and the public interest in ensuring that the affairs of an insolvent entity are able to be investigated in line with the overarching purpose of the Act in preserving and promoting the interests of creditors: see Brown v DML Resources Pty Ltd (in liquidation) (2001) 52 NSWLR 685 at [36].