Generate Group Pty Ltd v Harris

Background 9 The facts relevant to the approval application are not in dispute. 10 Sea-Tech was incorporated on 19 December 1989. Sea-Tech operated two businesses which provided marine engineering software solutions and hospitality technology services respectively. 11 On 18 December 2015, Generate commenced proceedings against Sea-Tech and Mr Harris in this Court. That proceeding concerned Generate's allegation that Sea-Tech had infringed Generate's copyright in a computer software product known as Generate V6. 12 In April 2018, Jagot J made orders restraining Mr Harris from (among other things) competing with Generate in the supply of beverage monitoring information technology in Australia and being employed by a competitor of Generate in the supply of beverage monitoring information technology in Australia for five years. Her Honour also entered judgment in the sum of $4,368,135 against Sea-Tech, and restrained Sea-Tech from licensing, supplying or offering to supply a beverage monitoring program known as Flow. 13 Generate is by far the largest creditor of Sea-Tech, being a judgment creditor in the sum of $4,368,135. In April 2018, the liabilities of Sea-Tech were estimated to be approximately $5 million. 14 On 16 April 2018, Sea-Tech entered liquidation by way of a creditors' voluntary liquidation. 15 Throughout the course of her appointment, the liquidator has undertaken investigations into Sea-Tech's affairs, including the conduct of public examinations in December 2019. The investigations revealed, amongst other things, that: (1) Sea-Tech has modest readily realisable assets valued at less than $5,000; (2) Sea-Tech may have divested itself of substantially all of its assets prior to the liquidator's appointment - those assets appear to comprise various software products and associated intellectual property, the marine engineering business, and three motor vehicles; and (3) There are various potential claims vesting in Sea-Tech and/or the liquidator against a number of persons including the Sint parties and the Sea-Tech parties (the Claims). 16 In March 2020, the liquidator commenced negotiations with Generate about the potential assignment of the Claims, noting that she had no funding to enable her to pursue the claims herself. 17 In February 2021, the liquidator received advice from senior counsel in respect of the prospects of recovering on the Claims. The liquidator accepted and acted on that advice by "[taking] steps to obtain whatever price [she] could by compromising or selling the causes of action which were identified in the advice". In essence, those steps comprised continuing negotiations with Generate throughout 2021 and 2022 until an agreement was eventually reached in December 2022. 18 The liquidator also caused her solicitors to write on one occasion to Mr Harris and Sint in an attempt to procure offers to settle some of the Claims directly with the liquidator, but that attempt came to nothing. 19 The heads of agreement were concluded on about 5 December 2022 by the liquidator in her capacity as liquidator of Sea-Tech and on behalf of Sea-Tech, and Generate. The heads of agreement provided for the unconditional and irrevocable assignment by Sea-Tech to Generate of all right, title and interest in every cause of action of whatsoever nature available at law, in equity or under statute which Sea-Tech may have against any one or more of a number of people and corporations, including all the parties who were subsequently named as defendants to the Generate proceeding. 20 The heads of agreement were recorded as being immediately binding and enforceable, and the parties to it undertook to do all things reasonably necessary to formalise and more fully set out its terms in a deed of assignment. The heads of agreement contained a clause for the payment to the liquidator of $50,000 plus GST sometime in the future in the event that Generate recovered that amount or more in its then contemplated proceeding in pursuit of the Claims. Given that that was likely to be more than three months away, the clause enlivened the need for approval under s 477(2B). 21 The deed of assignment was concluded between the same parties on 9 December 2022 by the exchange of counterparts. The deed provided for the unconditional and irrevocable assignment by Sea-Tech to Generate of the former's various causes of action in the same wording as had been recorded in the heads of agreement. Also, the liquidator unconditionally and irrevocably then assigned to Generate her right, title and interest in books and records, documents and other materials of Sea-Tech in her possession or control as liquidator, transcripts of public examinations and documents produced under orders for production in those examinations, and legal advice obtained by her relating to the merits of the causes of action against the potential defendants. The assignments were recorded (in cl 2.1) as being in consideration of the payment of the purchase price, which was defined as $110,000 including any applicable GST, and which was payable (by cl 5.1) on exchange of duly executed counterparts of the deed. 22 By cl 3.4 of the deed, the liquidator covenanted to take all reasonable measures to ensure that Sea-Tech filed and proceeded promptly on any application as may be necessary under s 477(2B) of the Corporations Act. In cl 4.1, it was recorded that Generate had paid $22,000 including any applicable GST on a non-refundable basis for costs associated with the liquidator obtaining legal advice and any approval as may be necessary under s 477(2B) of the Corporations Act. 23 By cl 5.3, the purchase price is non-refundable, even in circumstances where the Court does not make orders under s 477(2B). 24 By cl 5.4 of the deed, it was agreed that from the proceeds of a settlement achieved in respect of any claim against the potential defendants, in proceedings against the potential defendants, or the enforcement of a judgment against any such a person which Generate obtained, Generate must pay Sea-Tech the sum of $50,000 plus any applicable GST provided that, relevantly, Generate must have received $55,000 or more from any one or more of those sources. 25 By cl 5.5 of the deed, Sea-Tech and the liquidator agreed to provide reasonable assistance to and cooperation with Generate during the course of any proceedings against one or more of the potential defendants, and Generate agreed to pay reasonable expenses and remuneration at applicable hourly rates for the liquidator's performance of tasks in accordance with that clause. 26 There being no committee of inspection, and the liquidator perceiving that the creditors are stacked in number against her (given the overlap in the identity of Sea-Tech's creditors with the potential defendants), she seeks the approval of the Court. 27 Following the conclusion of the deed of assignment, Generate paid the liquidator the purchase price of $110,000. As mentioned, the legal costs of $22,000 had already been paid. 28 Generate moved quickly to commence proceedings against the Sint parties and the Sea-Tech parties. That was because a six year limitation period was thought to begin to extinguish the claims, or parts of them, from late December 2022 or early January 2023. The Generate proceeding was commenced on 16 December 2022. 29 By then, the liquidator had not yet sought approval for the heads of agreement and the deed of assignment. She explained that she was well aware of the requirement to get approval before she entered into the heads of agreement and the deed of assignment, but did not do so because - amongst other reasons - she did not have funds to instruct solicitors to prepare the necessary papers until she received the purchase price under the deed. On her instructions, preparation of the application for approval commenced in January 2023. That was initially sought to be done by way of interlocutory application in the Generate proceeding, but when that was later thought to be erroneous a separate proceeding was commenced for the purpose of seeking approval. 30 Thus, although the liquidator's supporting affidavit was affirmed on 28 February 2023, the originating application in her proceeding was not filed until 6 March 2023. That was nearly three months after Generate's proceeding had been commenced.

Applicable principles 31 In entering into the heads of agreement and the deed of assignment, the liquidator purported to exercise the power vested in her by s 477(2)(d) of the Corporations Act, ie, to execute deeds and other documents on behalf of the company in liquidation. The powers under s 477 are conferred on a liquidator in a voluntary winding up by virtue of s 506(1)(b), but by s 506(1A)(a) they are qualified by s 477(2B). 32 As Mr Docker for the Sint parties places some emphasis on the statutory language - in particular the words "must not", it is just as well to reproduce the provision: (2B) Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company's behalf (for example, but without limitation, a lease or an agreement under which a security interest arises or is created) if: (a) without limiting paragraph (b), the term of the agreement may end; or (b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance; more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months. 33 In Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 at [26], Gordon J identified a number of relevant principles governing the exercise of the court's discretion to approve the liquidator entering into an agreement caught by s 477(2B), including the following: (1) The court does not simply "rubber stamp" whatever is put forward by a liquidator. (2) The court will not approve an agreement if its terms are unclear. (3) The role of the court is to grant or deny approval to the liquidator's proposal. Its role is not to develop some alternative proposal which might seem preferable. (4) In reviewing the liquidator's proposal the task of the court is not to reconsider all of the issues weighed by the liquidator in developing the proposal, and substitute its determination in a hearing de novo, but to pay due regard to the liquidator's commercial judgment and knowledge of all of the circumstances of the liquidation, satisfying itself there is no error of law or grounds for suspecting bad faith or impropriety, and weighing up whether there is any good reason to intervene in terms of the expeditious and beneficial administration of the winding up. (5) In judging whether or not a liquidator should be given permission to enter into a funding agreement, whether retrospective or not, it is important to ensure, amongst other things, that the entity or person providing the funding is not given a benefit disproportionate to the risk undertaken in light of the funding that is promised or a "grossly excessive profit". (6) Generally the court grants approval under s 477(2B) of the Act only where the transaction relates to the proper realisation of the assets of the company or otherwise assists in the winding up of the company. 34 In addition, the court will have regard to the impact that entering into the agreement will have on the duration of the liquidation and whether that impact is, in all the circumstances, reasonable in the interests of the administration: In the matter of One.Tel Ltd [2014] NSWSC 457; 99 ACSR 247 at [30] per Brereton J. 35 Although s 477(2B) contemplates that approval will be obtained before an agreement is entered into, retroactive approval may be granted in certain circumstances: Newtronics at [25]; Re Ambient Rail Pty Ltd (in liq); Ex parte Tonks [2019] FCA 1556 at [9] per Yates J. 36 In Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liq) [2022] FCA 1216 at [23]-[24], Wigney J explained that the reason that approval is required in respect of agreements which may operate or involve obligations that extend beyond three months is that such agreements tend to cut across the general expectation that the winding up of a company will proceed expeditiously. The requirement to obtain approval of such agreements affords some protection against ill-advised or improper actions on the part of the liquidator, but the court's task is not to second guess the liquidator's commercial judgment; it is rather to determine whether there are grounds for suspecting a lack of good faith, or some error of law or principle, or some other good reasons to intervene. 37 There is ample authority for the proposition that the requirement of approval is concerned with ensuring that liquidators' powers are not exercised in such a way as to be unconducive to an expeditious and beneficial administration: Read, in the matter of Forestview Nominees Pty Ltd [2007] FCA 1985; 164 FCR 237 at [43]-[44] per French J, citing, amongst other authority, Corporate Affairs Commission v ASC Timber Pty Ltd (1998) 29 ACSR 109 at 117 per Austin J. 38 In In the matter of Golden Sands Hospitality Pty Ltd (in liq) (No 2) [2017] NSWSC 450 at [18], Gleeson JA identified that the "controlling consideration" is the interests of creditors concerned in the winding up. 39 In In the matter of Kevin Jacobsen Pty Ltd (in liq) [2016] NSWSC 538 at [74], Black J explained that the jurisdiction under s 477(2B) is directed to promoting the interests of the liquidation and the creditors, not the exercise of disciplinary functions over liquidators who delay in seeking approvals under the section. Thus, even if a liquidator's failure to seek approval prior to an assignment were open to criticism, it does not follow that creditors should be deprived of the potential benefit of the assignment which is otherwise in their interests.

Consideration 40 On the face of it, the case for approval is straight-forward. The delay by the liquidator in seeking approval is modest and it has been explained. Even if one were to take the view that she should have moved more quickly to bring the application once the terms of the assignment had been agreed, the delay is still modest. It would appear to be clearly to the benefit of the liquidation for approval to be given and there is no obvious reason why it should not be given. Although the finalisation of the liquidation will be delayed while the outcome of Generate's proceeding is awaited to see whether the further $55,000 will be paid, that will not create any particular prejudice because there is little else going on in the liquidation. 41 Against that apparently obvious position, Mr Docker makes a number of submissions which address, in particular, why approval should not be granted retrospectively. 42 First, Mr Docker points to the wording of s 477(2B) that a liquidator "must not" enter into the type of agreement in question and submits that that means approval should be sought in advance and that the basis for retrospective approval is very limited. 43 It is of course correct that approval should be sought in advance, but there is ample authority in support of a court being able to give, and giving, retrospective approval. In addition to the authorities cited above, the authorities cited by Mr Docker also support that proposition. For example, in Hayes, in the matter of Dingham Constructions Pty Ltd (in liq) [2018] FCA 2053 at [31], Markovic J reasoned that the liquidator's inaction was not a result of dishonesty and was not sufficient in itself to prevent the Court's exercise of its powers to give the relevant agreements retrospective approval. Her Honour referred to Hamilton, in the matter of ACN 101 634 146 Pty Ltd (in liq) [2014] FCA 687 at [7] where Kerr J reasoned that although the liquidator's conduct might be the subject of legitimate criticism, it displayed no dishonesty and had been explained. It was therefore not something that the Court considered should prevent the exercise of the power to give retrospective approval. The same can be said of the present case. 44 Secondly, Mr Docker submits that although the interests of creditors is the "controlling consideration" when prospective approval is sought, in the case of retrospective approval the interests of third parties might also be affected such that the interests of creditors is not the controlling consideration. He submits that it is the prejudice to other people that must also be considered when retrospective approval is sought. 45 It is not apparent to me that the authority cited by Mr Docker, Hamilton at [8], supports that proposition. Even if that paragraph is taken as authority for the proposition that a meeting of creditors has no power under s 477(2B) to grant retrospective approval, as he submits, that does not mean that the Court does not have such a power, in respect of which there is ample authority to the contrary, or why some other source of power necessarily brings the interests of third parties to the forefront. 46 It seems to me that the interests of debtors of the estate in liquidation are not within the sphere of interests intended to be protected by s 477(2B). As explained in 3 Property Group 13, cited above, the purpose of the requirement for approval is to ensure that the winding up proceeds expeditiously and to protect against ill-advised or improper actions by the liquidator. The overall interests of the proper administration of the liquidation and of creditors are foremost whether approval is sought prospectively or retrospectively. The interests of parties extraneous to those interests have little if any relevance to the exercise of the power. 47 However, even assuming the submission to be correct, I am not satisfied that the prejudice identified by the Sint (and Sea-Tech) parties is relevant prejudice. The prejudice that they rely on is the potential loss to them, if retrospective approval is given, of the ability to defeat the claims against them by succeeding in their summary dismissal applications or to defeat parts of the claims against them in reliance on a limitation period. However, whether or not retrospective approval will cause the summary judgment applications to fail is hotly disputed and will be dealt with after the question of approval is decided - it is not relevant to the approval. Also, Generate's proceeding was commenced within time, so the proper purposes of limitation periods would not be defeated by the proceeding being permitted to go forward: Brisbane South Regional Health Authority v Taylor [1996] HCA 25; 186 CLR 541 at 551-553 per McHugh J. All that retrospective approval would do is formalise the efficacy of the assignment on which Generate relies. The defendants to that proceeding may lose their ability to seize at the liquidator's failure to seek approval in advance, but that is not relevant prejudice. 48 Thirdly, Mr Docker submits that "the upside in this deed is actually illusory", ie, it is doubtful that approval of the deed offers any benefit to creditors. That is because, so he submits, the $110,000 that has already been paid is non-refundable even if approval is not given, or is not given retrospectively, the further payment of $55,000 is highly speculative and in any event Generate would have a basis to resist paying it on account of the liquidator's breaches of the deed, and, to cap it all, the liquidator's expenses far exceed the assets in the estate with the result that the creditors will get none of the proceeds of the deed even if such proceeds are all paid. 49 Even assuming the underlying contentions to be established, which is highly doubtful at least with respect to the liquidator's alleged breaches of the deed, the overall submission overlooks that it is not purely the monetary interests of creditors that is relevant, but the proper administration of the winding up. The liquidator's pursuit of assets of the company in liquidation, even if those assets can only go towards paying the liquidator's expenses, is a legitimate exercise of the liquidator's powers under s 477: Hall v Poolman [2009] NSWCA 64; 75 NSWLR 99 at [149]-[150]; Federal Commissioner of Taxation v Kassem [2012] FCAFC 124; 205 FCR 156 at [83]-[87]. It is also a legitimate pursuit in the interests of the administration. 50 In the result, I am satisfied that the heads of agreement and deed of assignment should be approved, and that that approval should be retrospective, ie, nunc pro tunc. 51 Mr Lloyd for Generate made an application from the Bar table, which had been foreshadowed in his written submissions that were filed several weeks before the hearing, under s 1322(4)(a) of the Corporations Act for a declaration that the deed of assignment was validly entered into and is not invalid by reason of no prior s 477(2B) approval having been sought. That course is opposed by Mr Docker and Mr Kabilafkas. In view of my conclusion on the question of s 477(2B) approval being granted retrospectively, it is not necessary to consider this application. It is also questionable whether such an application can be brought by Generate, as opposed to the liquidator, particularly when Generate did not apply to intervene as a party in the liquidator's proceeding.

The summary dismissal applications 52 It is uncontroversial that all of Generate's claims in its proceeding depend on the assignment, the assignment required approval under s 477(2B), and Generate commenced the proceeding before the liquidator had sought or obtained such approval. The Sint and Sea-Tech parties apply for summary dismissal of the proceeding on the basis that it is bound to fail because at the time that it was commenced Generate did not have any valid assignment of the claims and therefore lacked standing. They advance an alternative case for summary dismissal, being that the proceeding is an abuse of process. 53 The case for summary dismissal on the basis of lack of standing depends on two propositions being correct. (1) The first is that when the proceeding was commenced on 16 December 2022, the assignment was invalid, or ineffective, because the heads of agreement and the deed of assignment required approval under s 477(2B) of the Corporations Act and no such approval had yet been given. (2) The second is that, because the assignment was invalid or ineffective when the proceeding was commenced, the proceeding is a nullity and that approval nunc pro tunc does not cure the defect. 54 Insofar as the defendants use the language of nullity to describe the proceeding, it is to be observed that that language serves more to obscure than elucidate. It has been explained that to the extent that the label of nullity is useful, it can only refer to a proceeding which is defective in a way which the court with its various powers, including those conferred by its particular rules of procedure, cannot cure. If there is an apparent remedial power under the procedural rules, the defect is curable and the proceedings should not be described as a nullity. It is the extent of the remedial power which defines what can be remedied, rather than the remedial powers being qualified by a characterisation of something as a nullity, according to what was said in other contexts and under different procedural rules. See Stone v ACE-IRM Insurance Broking Pty Ltd [2003] QCA 218; [2004] 1 Qd R 173 at [26] per McMurdo J, McPherson JA and Holmes J agreeing; BHP Coal Pty Ltd v Construction, Forestry, Mining and Energy Union [2014] FCAFC 138; 226 FCR 240 at [37] per Dowsett and Flick JJ, Kenny J agreeing. 55 It is to be recalled that the relevant term of the deed of assignment (cl 2.1) is that "[i]n consideration of the payment of the Purchase Price, the Assignor unconditionally and irrevocably assigns to the Assignee the Rights." The purchase price was paid prior to the commencement of Generate's proceeding. Thus, by the terms of the deed of assignment, and leaving aside the question of approval, the assignment was effective prior to the commencement of the proceeding. The assignment was not conditional on approval being granted, although it recognised that approval was necessary.

The validity of the unapproved assignment 56 The question here is whether the effect of the stipulation in s 477(2B) that the liquidator "must not" enter into the type of agreement in question "except with the approval of the Court" is that, if the agreement is (purportedly) concluded prior to approval, the agreement is a nullity until such approval is given. 57 That question was addressed head on by Barrett J in HIH Casualty [2002] NSWSC 1036. His Honour identified (at [7]) that there is a difference between a provision saying that something "may only" be done with a certain kind of permission or leave and one stating that a person "must not" do a thing except with a particular permission or approval. In the former case, capacity and power are arguably denied, whereas the latter involves something more in the nature of a restriction on the exercise of a power. At [8], his Honour held that s 477(2B) is the equivalent of a provision stating that a particular thing may be done with a particular approval, since a provision of that kind obviously carries within it a restriction precluding the doing of the thing without approval. 58 Barrett J cited Lord Corporation Pty Ltd v Green (1991) 22 NSWLR 532 which dealt with the equivalent provision, albeit worded less emphatically, in earlier State legislation. Cohen J held (at 541D) that the transaction in question was not invalidated because of the absence of prior approval. That was held to be consistent with the principle behind the provision in question and its analogues, namely that approval was required in order to give protection to the company, and accordingly to the creditors, by requiring the decision of the liquidator to be reviewed by the court or committee of inspection or the creditors generally. 59 Barrett J also cited Empire (Aust) Nominees Pty Ltd v Vince [2000] VSC 324; 35 ACSR 167 at [12], where Warren J held that the absence of the required approval is a matter that affects only the relationship between the liquidator and the company or its creditors, and cannot be made the subject of objection by a third party. 60 Mr Docker submits that Barrett J was mistaken in categorising s 477(2B) as being a provision with the effect that the relevant thing may be done with approval, rather than that it may not be done except with approval. I do not accept that. His Honour identified the two types of provisions and clearly and logically categorised s 477(2B) as being of the one type, and supported the conclusion with reference to the authorities I have identified. 61 In In the matter of Octaviar Ltd (in liq) [2015] NSWSC 1621; 110 ACSR 72 at [22]-[23], Brereton J referred to the judgment of Barrett J in HIH Casualty as recognising that an agreement entered into without approval may be conditionally valid pending the requisite approval, but expressed doubt as to the correctness of that approach. His Honour said that one reason why such an agreement cannot be treated as conditionally valid is that an application for approval might never be made, so that it can hardly be said that it is conditionally valid until the court declines to give approval. His Honour said (at [24]) that the prevailing, though not the only, view appears to be that absent the requisite approval, the liquidator's act is not binding as between the liquidator and the company, but the circumstance that it is not so binding does not affect third parties - that is to say, the other contracting party - which cannot object that approval has not been obtained. Parties who are further removed, such as the defendants in the present case who are not party to the assignment, would be even less able to object. 62 On that approach, which I accept to be the prevailing view, the assignment was effective as between the company in liquidation and Generate even prior to approval, and the defendants were not in a position to object to the assignment on the basis that no approval had been given. 63 The first proposition on which the summary dismissal applications is based accordingly fails.

The effect of approval nunc pro tunc 64 I consider the second proposition on the assumption that I am mistaken on the first. 65 Mr Docker refers to two cases dealing with the effect of s 44(1) of the Wills, Probate and Administration Act 1898 (NSW) (WPA Act) in support of the proposition that approval nunc pro tunc does not have the effect of validating the assignment retrospectively from the time when it was concluded. They are Byers v Overton Investments Pty Ltd [2001] FCA 760; 109 FCR 554 and Deigan v Fussell [2019] NSWCA 299. 66 Section 44(1) of the WPA Act provided that upon the grant of probate of the will or administration of the estate of any person, all real and personal estate of such person shall as from their death pass to and become vested in the executor to whom probate or administration has been granted. In Byers it was held (at [23] and [28] per Branson, North and Stone JJ, affirming a judgment of Emmett J at first instance) that until probate was granted, the executor had no title to the relevant chose in action, and that s 44(1) did not operate to cure the defect in the proceeding commenced by her prior to the grant of probate. 67 In Deigan, White JA held (at [168]) to the contrary that the executor's authority to deal with the estate can be exercised before grant of probate by virtue of the authority derived from the will, and that on the grant of probate s 44(1) would retrospectively validate a purported disposition of the legal estate. Bathurst CJ (at [5]) and Macfarlan JA (at [7]) preferred not to decide the point because it was unnecessary to do so. On that basis, Mr Docker submits that Byers is still good authority. 68 Be that as it may, any relevant ratio of the Full Court in Byers would be binding on me. However, Byers does not decide anything relevant to the present case. It turns, first, on the authority of an executor to deal with the deceased's estate prior to the issue of probate, which has nothing to do with the authority of a liquidator to deal with the estate of the company in liquidation even where approval is required, and, secondly, on the retrospective effect of s 44(1) of the WPA Act, which says nothing about the effect of granting nunc pro tunc approval under s 477(2B) of the Corporations Act. Byers and Deigan can therefore be put to one side. 69 A more closely analogous example is the case of Stone, referred to above. The plaintiff commenced an action at the time that the chose in action vested in her former trustee in bankruptcy. The defendant sought the dismissal of the proceeding on the basis that it was a nullity, and that any assignment of the chose in action by the trustee to the former bankrupt after the commencement of the action would be too late and ineffective to remedy the defect. McMurdo J, with whom McPherson JA and Holmes J agreed, held (at [29]) that the plaintiff's position could be remedied by an assignment and an appropriate amendment to her pleading. Moreover, the expiration of any limitation period subsequent to the commencement of the proceeding, albeit before the assignment, did not prevent the proceeding being regularised: at [30]. 70 Rolfe v Investec Bank (Aust) Ltd [2014] VSCA 38 at [85]-[92] per Nettle and Beach JJA and McMillan AJA is to the same effect. The point is that an irregularity at the commencement of a proceeding can subsequently be cured by the powers that a court has, even if a limitation period has subsequently intervened. See also Martin Bruce Jones as liquidator of Forge Group Ltd (recs and mgrs. apptd) (in liq) v Sun Engineering (Qld) Pty Ltd [2017] WASC 195 at [81], [84] and [95] per Martin J. 71 In the present case one could postulate that Generate commenced the proceeding before the assignment and then, after approval of the assignment, sought to amend its originating application to rely on the assignment. The fact of the assignment and its approval only coming after the proceeding was commenced would not make the proceeding a nullity, and neither would it be a bar to the amendment. The power to allow such an amendment, even if it is after the expiry of any relevant limitation period, is given by the Court's rules. See rr 16.53 and 16.54 of the Federal Court Rules 2011 (Cth). 72 The real question for the present is whether the granting of approval nunc pro tunc has the effect of requiring the assignment to be treated as being approved from the time it was entered into rather than from the time of the approval. Since it is the very purpose and meaning of such an approval that it should operate retrospectively, it is hard to see why it should not have that effect. In other words, even if Generate was not possessed of the claims (or choses in action) against the defendants at the time it commenced the proceeding against them, on approval under s 477(2B) being granted it is to be regarded as being possessed of the claims from the time of the assignment. Other than Byers and Deigan to which I have referred, which have nothing to say about the present situation, Mr Docker has identified no authority, or reason, why that should not be so. 73 I am therefore satisfied that the proceeding is not a nullity and that this ground for the summary dismissal applications must fail.

Abuse of process 74 The abuse of process ground for summary dismissal, which in any event would better be regarded as justifying a permanent stay rather than dismissal, was faintly pressed. No argument was really developed. Mr Docker submits that the proceeding is an abuse of process because by commencing before it had standing or title, Generate obtained an advantage the law would not offer if it had waited until the assignment was effective. The advantage was to avoid limitation defences that would otherwise be available if it had waited. 75 I am not satisfied that that amounts to any form of abuse of process within the authorities. Generate's ability to have successfully instituted the proceeding must depend on the terms of the assignment, the construction of the requirement for approval in s 477(2B) and the terms of the approval that is granted. There is no manner in which Generate has used the commencement of the proceeding to obtain some advantage for which it was not designed or a collateral advantage beyond what the law offers within the meaning of Williams v Spautz [1992] HCA 34; 174 CLR 509 at 523 as relied on by Mr Docker.

Conclusion on summary dismissal 76 For those reasons, the summary dismissal applications must fail.

Disposition 77 In the result, in the liquidator's proceeding (NSD196/2023) there should be orders that pursuant to s 477(2B) of the Corporations Act the plaintiffs be authorised nunc pro tunc to enter into: (1) the heads of agreement dated 5 December 2022, a copy of which is at tab 5 of exhibit MT-1 to the affidavit of Mali Agnes Kainona Thaggard affirmed on 28 February 2023; and (2) the deed of assignment dated 9 December 2022, a copy of which is at tab 6 of exhibit MT-1 to the affidavit of Mali Agnes Kainona Thaggard affirmed on 28 February 2023. 78 In Generate's proceeding (NSD1124/2022) there should be orders that: (1) the interlocutory application by the third, fourth and sixth defendants lodged for filing on 17 March 2023 be dismissed; (2) the interlocutory application by the first, second and fifth defendants lodged for filing on 29 March 2023 be dismissed; (3) within seven days, Sandra Drew and Secom Technology Pty Ltd ACN 161 035 276 be joined as the seventh and eighth defendants respectively, and that Generate file and serve an amended originating process giving effect to that joinder and a statement of claim. 79 The parties should liaise with my Chambers with a view to arranging a time for further case management, at which time I will hear the parties briefly on costs. I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.

SCHEDULE OF PARTIES NSD 1124 of 2022 Defendants Fourth Defendant: JASON LEWIS DREW Fifth Defendant: SEA-TECH SYSTEMS PTY LTD ACN 614 267 140 Sixth Defendant: SINT GROUP PTY LTD ACN 123 558 045

NSD 196 of 2023 Interested Persons Fourth Interested Person: SINT PTY LTD ACN 135 128 237 Fifth Interested Person: JASON LEWIS DREW Sixth Interested Person: SINT GROUP PTY LTD ACN 123 558 045