[2025] FCA 1291
General information, not legal advice.
Federal Court of Australia
2025-10-24
Neskovcin J
Original judgment source is linked above.
Choon v Chen [2019] FCA 1643
Federal Commissioner of Taxation v Warner (2015) 244 FCR 479; [2015] FCA 659
First Provincial Building Society Ltd v Commissioner of Taxation (Cth) (1995) 56 FCR 320
Hewson v Gothard; Re Allco Finance Group Ltd (rcvrs and mgrs apptd) (in liq) (2014) 222 FCR 59; [2014] FCA 320
Matrix Group Ltd (in liq) (Trustee) v Oates; Re Matrix Group Ltd (in liq) (Trustee) (No 3) [2017] FCA 417
Milicevic v Capital Scaffolding Pty Ltd (in liq) (2007) 65 ACSR 71; [2007] FCA 1579
Nut Trading Co (Aust) Pty Ltd v KKL (Kangaroo Line) Pty Limited (1997) 25 ACSR 580
Re 1st Fleet [2019] NSWSC 6
Re Addstone Pty Ltd (in liq); Ex parte Macks (1998) 30 ACSR 177
Re Pats Consulting Pty Ltd [2015] NSWSC 497
Secatore; Re Last Lap Pty Ltd (in liq) (2020) 144 ACSR 648; [2020] FCA 627
Wadren Pty Ltd v Algeri [2024] QSC 109
Watson & Co Superannuation Pty Ltd v Dixon Advisory and Superannuation Services Ltd [2022] FCA 1273
DEPARTMENT OF EMPLOYMENT AND WORKPLACE RELATIONS
GIDEON RATHNER IN HIS CAPACITY AS THE LIQUIDATOR OF MENTOR EDUCATION PTY LTD (IN LIQUIDATION) (ACN 106 065 847)
MENTOR EDUCATION PTY LTD (IN LIQUIDATION) (ACN 106 065 847)
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
(a) certain pre-appointment communications;
(b) documents associated with securities relied upon by secured creditors;
(c) a consulting services agreement with, and information about payments to, the sole shareholder's related entities; and
(d) information about the Company's cashflow and transactions.
486 Inspection of books by creditors and contributories
The Court may make such order for inspection of the books of the company by creditors and contributories as the Court thinks just, and any books in the possession of the company may be inspected by creditors or contributories accordingly, but not further or otherwise.
books includes:
(a) a register; and
(b) any other record of information; and
(c) financial reports or financial records, however compiled, recorded or stored; and
(ca) sustainability reports or sustainability records, however compiled, recorded or stored; and
(d) a document;
but does not include an index or recording made under Subdivision D of Division 5 of Part 6.5.
Part 3 - General rules relating to external administrations
Division 55 - Introduction
55-1 Simplified outline of this Part
This Part sets out requirements for conducting the external administration of a company.
The main provisions deal with:
(a) the remuneration of the external administrator; and
(b) the duties of the external administrator in handling the money and other property of the company; and
(c) conflicts of interest; and
(d) the duties of the external administrator to keep appropriate records, to report to ASIC and to give information, documents and reports to creditors, members of the company and others; and
(e) creditor and company meetings; and
(f) the creation and conduct of a committee to monitor the external administration (called a committee of inspection); and
(g) the rights of creditors to review the external administration; and
(h) the rights of creditors to remove the external administrator and appoint another; and
(i) the review of the external administration by the Court.
There are additional rules that apply to companies under external administration in Chapter 5 (for example, about appointment of external administrators) of this Act.
Companies in receivership are not covered in this Part (see generally Part 5.2 of this Act).
Division 70 - Information
Subdivision A - Introduction
70‑1 Simplified outline of this Division
(a) give annual reports of the administration (called annual administrative returns) to ASIC; and
(b) give a report of the administration to ASIC when the administration ends; and
(c) keep books of meetings and other company affairs; and
(d) allow those books to be audited if required to do so; and
(e) allow access to those books by creditors; and
(f) give creditors, members and others requested information, documents and reports relating to the administration.
The committee of inspection (if there is one) may also request information, documents and reports from the external administrator under Division 80.
If the external administrator does not comply with a request, ASIC may direct the external administrator to do so. If the external administrator does not comply with the direction, ASIC may ask the Court to order compliance. Alternatively, the person who requested the information may ask the Court to order compliance with the request.
70-45 Rights of individual creditor to request information etc from external administrator
(1) A creditor may request the external administrator of a company to:
(a) give information; or
(b) provide a report; or
(c) produce a document;
to the creditor.
(2) The external administrator must comply with the request unless:
(a) the information, report or document is not relevant to the external administration of the company; or
(b) the external administrator would breach his or her duties in relation to the external administration of the company if the external administrator complied with the request; or
(c) it is otherwise not reasonable for the external administrator to comply with the request.
(3) The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for an external administrator of a company to comply with a request of a kind mentioned in subsection (1).
70-55 Commonwealth may request information
Application of this section
(1) This section applies if either:
(a) a former employee of a company under external administration has made a claim for financial assistance from the Commonwealth in relation to unpaid employment entitlements; or
(b) the Commonwealth considers that such a claim is likely to be made.
Commonwealth may request information etc.
(2) The Commonwealth may request the external administrator of the company to provide specified information, reports or documents in relation to the external administration.
(3) The external administrator must comply with the request.
(4) The Insolvency Practice Rules may provide for and in relation to who is to bear the cost of providing the information, reports or documents.
70-90 Court may order relevant material to be given
(1) The person or persons who made the request for the relevant material may apply to the Court for an order that the external administrator give the person or persons all or part of the relevant material.
...
(3) On application under subsection (1) or (2), the Court may:
(a) order the external administrator to give the person, or any or all of the persons, who made the request for the relevant material all or part of that material; and
(b) make such other orders, including orders as to costs, as it thinks fit.
513 Application of Part
Except so far as the contrary intention appears, the provisions of this Act about winding up apply in relation to the winding up of a company whether in insolvency, by the Court or voluntarily.
After the winding up, the court's power to authorise access to the books of the company under s 486 is extended, first because creditors are eligible to apply for such access, and second because the conditions upon which such access may be given either to creditors or contributories is only limited by the court being satisfied that the access sought is "just". The court may permit access only to the extent that it is just to do so. Any such order could, no doubt, contain express conditions as to the use to which that material may be put: Re BPTC Ltd (in liq) (1992) 7 ACSR 291; 10 ACLC 271. There are obvious reasons why, following the liquidation of a company, a creditor may have a legitimate interest in the operation of the affairs of the company prior to its winding up but which did not exist prior to the winding up. Section 486 relates to an application made after the winding up of a company, but in relation to the books of the company concerning its affairs, created and maintained up to the time of the liquidation, rather than in relation to the liquidator's books. Section 531 then takes the further step, in the case of the liquidator's books, of providing that they should be generally available, unless the court otherwise orders.
(1) to vest power in the Court to permit inspection by creditors and contributories; and
(2) to preclude any inspection of the company books by creditors and contributories save where, and to the extent, that any such inspection is authorised by an order of the court: IACS Pty Ltd v Australian Flower Exports Pty Ltd (1993) 10 ACSR 769 at 771-2 (Australian Flower Exports) per Rowland J.
In short, s 486 vests exclusive power in the court in the case of a compulsory winding up to permit the inspection of the company's books by creditors and contributories, so that the court not only determines whether those persons may inspect the company's books, but the conditions on which any such inspection is permitted. By these means, the court can ensure that access by creditors or contributories is not permitted otherwise than in the pursuit of their legitimate interests in the winding up, as opposed to some other agenda.
Context of amendments
6.5 Representations made to the 2010 Senate Inquiry regarding the high cost of external administrations and the feeling of general creditor powerlessness during them, reflected deeper concerns about the efficiency and effectiveness of corporate insolvency administration governance...
6.11 Personal and corporate insolvency laws contain a number of mechanisms designed to ensure that creditors and other stakeholders are appropriately informed of debtors' affairs and the process of insolvency administrations. These mechanisms impose obligations on practitioners to provide specified types of information and provides rights for stakeholders to make ad hoc requests for information.
6.12 Information asymmetry interferes with the efficiency of the insolvency market and contributes to the risk of misconduct by market participants. The current regulatory barriers to creditors obtaining information entrenches the inherent problems creditors face in assessing the quality of the insolvency services provided.
...
Summary of new law
...
6.18 Creditors will be able to request information from a corporate insolvency practitioner and request that a creditors' meeting be held during an external administration. Creditors and members with a financial interest will be able to make reasonable requests for information that practitioners would be obliged to meet provided there is funds available to meet the request. Reporting obligations during an administration will be prescribed by the Insolvency Practice Rules.
...
Comparison of key features of new law and current law
Creditors may by resolution, or an individual, may request the external administrator of a company to give information, or provide a report or produce a document to the creditors.
Members of a company in a members' voluntary winding up, or an individual member have similar powers to request information from an external administrator.
The external administrator must comply with such a request unless the information is not relevant, the external administrator would breach his or her duties if the information was provided or if it would be otherwise not reasonable to comply with the request.
There is no corresponding law to enable creditors or members in a members' voluntary winding up to make ad hoc requests for information from an external administrator.
The Commonwealth may request an external administrator to provide specified information, reports or documents in relation to an external administration.
...
(Explanatory Memorandum, Insolvency Law Reform Bill 2015 (Cth), pp 164-167, 169, 170.)
45 Under s 70-55(2) of the Insolvency Practice Schedule, the Commonwealth may request the external administrator of the company to provide specified information, reports or documents "in relation to" the external administration and, under s 70-55(3), the external administrator must comply with the request. There is nothing in the provisions of the Insolvency Practice Schedule that suggest any limits were to be placed on what information or documents may be requested or must be provided to the Commonwealth under ss 70-55(2) and 70-55(3) beyond the requirement that the information or documents are "in relation to" the external administration, which is a term of wide import: First Provincial Building Society Ltd v Commissioner of Taxation (Cth) (1995) 56 FCR 320 at 333 (Hill J, with Black CJ and Carr J agreeing).
(a) the information, report or document requested is "not relevant to the external administration of the company": s 70-45(2)(a);
(b) the external administrator would breach their duties in relation to the external administration if they complied with the request: s 70-45(2)(b); or
(c) it is otherwise not reasonable for the external administrator to comply with the request: s 70-45(2)(c).
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Neskovcin.
Department of Employment and Workplace Relations
Rathner as liquidator of Mentor Education Pty Ltd
(2015) 244 FCR 479
(1995) 56 FCR 320
(2014) 222 FCR 59