Davis, in the matter of Sydney Allen Printers Pty Ltd (receivers and managers appointed) (in liq) v Sydney Allen Printers Pty Ltd

Federal Court of Australia|2019-06-14|Before: Gleeson J

Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the publication or disclosure of exhibit GD-2 to the affidavit of Geoffrey Davis sworn 5 April 2019 is prohibited until 28 February 2020.
Pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) (Act), the time for the making of any application in respect of the defendant under s 588FF(1) of the Act be extended to 28 February 2020.
The plaintiffs' costs of the proceeding be paid from the assets of the defendant as a priority within the meaning of s 556(1)(a) of the Act. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GLEESON J: 1 By originating process filed on 5 April 2019, the plaintiffs (liquidators) seek an order pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) (Act) that the time for the making of any application in respect of the defendant (company) under s 588FF(1) of the Act be extended to 28 February 2020. 2 The application was supported by the following affidavits: (1) affidavits of the first plaintiff (Mr Davis) sworn on 5 April 2019 and 24 May 2019, together with two exhibits marked "GAD1" and "GAD2"; (2) affidavit of service of Nicole Blain sworn 15 May 2019; and (3) affidavit of Nabil Mustafiz, solicitor, affirmed 15 May 2019. 3 The affidavit evidence showed that the potential defendants in any proceedings commenced by the liquidators under s 588FF(1) have been notified of this application. There was no attendance at Court today by any of those potential defendants. Consequently, the application was unopposed. 4 The application was also supported by a written outline of submissions filed on 11 June 2019.

Background facts 5 Prior to the commencement of its liquidation, the company operated a full colour printing business from Rydalmere and then from Condell Park, New South Wales. 6 The liquidators were initially appointed as voluntary administrators of the company, following the appointment of receivers and managers, on 7 April 2016. They were appointed as liquidators by way of a creditor's voluntary liquidation on 13 May 2016. 7 Until recently, the liquidation has been unfunded. 8 In about April 2018, the liquidators became aware that the Department of Jobs FEG Recovery Program may have been prepared to provide funding with respect to public examinations. On about 31 May 2018, an application was lodged to seek that funding and, in October of 2018, the funding was approved. The funding agreement was signed by the plaintiffs on 5 April 2019 and the Department signed the agreement recently. The funding agreement extends both to conducting the examinations and, subsequently, obtaining advice on potential claims. 9 With that funding secured, the liquidators filed an originating process in the Supreme Court of New South Wales seeking the issuing of orders for production and summonses for examination and obtained those orders. The examinations have been listed on 12 August 2019 for two days.

Statutory framework 10 By s 588FF(1), where, on the application of a company's liquidator, a court is satisfied that a transaction of the company is voidable because of s 588FE, the court may make orders specified in s 588FF(1). Section 588FF(3) provides that an application under s 588FF(1) may only be made: (a) during the period beginning on the relation-back day and ending: (i) 3 years after the relation-back day; or (ii) 12 months after the first appointment of a liquidator in relation to the winding up of the company; whichever is the later; or (b) within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.

Exercise of discretion under s 588FF(3)(b) 11 In exercising the discretion under s 588FF(3)(b), the Court is required to consider what is fair and just in all the circumstances: BP Australia Ltd v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322 (BP Australia) at [187]. The applicant for the extension must satisfy the Court that it should be granted: BP Australia at [183]. 12 The matters that ordinarily inform the exercise of the Court's discretion are: (1) the liquidator's explanation for the delay in taking action within the three year period provided for by the statute; (2) the merits of the foreshadowed proceeding, assessed by a "preliminary review"; and (3) any likely prejudice that would be suffered if the extension of time is granted: Parker, in the matter of Worldwide Specialty Property Services Pty Limited (in liq) v Worldwide Specialty Property Services Pty Limited (in liq) [2017] FCA 687 at [15]-[16]; Walker and Moloney v CBA Corporate Services (NSW) Pty Limited [2012] FCA 328; (2012) 88 ACSR 153 (Walker) at [43]. 13 The relation back period in this case is 7 April 2016. This means that any application for orders under s 588FF needed to have been brought by 7 April 2019 unless an extension is granted under s 588FF(3). Any such application for an extension of time cannot be made after the three-year time period has expired. As this application was filed on 5 April 2019, it is within time. 14 The present application is not brought with respect to specifically identified transactions but, instead, on the basis that the further investigation of certain transactions can now take place where funding has now been made available to the liquidators. 15 It is settled law that the Court has power to make a "shelf order", granting an extension of time without reference to particular transactions, if the circumstances warrant it: Fortress Credit Corporation (Australia) II Pty Limited v Fletcher [2015] HCA 10; (2015) 254 CLR 489 at [27]. The length of the extension sought is around 10 months from the expiration of the ordinary time limit. It is proposed that, during this time, examinations will occur and advice obtained and, if valid claims are available, further funding will be obtained or assignment of those causes of action will occur to have those claims commenced. Given this period of time will include the summer break, this is not an excessive extension. 16 In relation to the relevant considerations I have earlier identified, (1) the delay has been explained by the liquidator's lack of funding, which has now been secured; (2) as to the merits, the liquidator has identified likely claims which it is appropriate to explore on the basis of its analysis of creditors paid in the six months preceding the commencement of the winding up; and (3) there is no identified prejudice if the extension of time is granted. 17 Accordingly, I make the orders sought. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

Corporations Act 2001(Cth)ss 588FE, 588FF

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