//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2026] NSWSC 535
Supreme Court of NSW
2026-05-15
Brereton J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: In the matter of Hudson Global Resources (Aust) Pty Limited [2026] NSWSC 535
Hearing dates: 13 May 2026
Date of orders: 13 May 2026, 15 May 2026
Decision date: 15 May 2026
Jurisdiction: Equity - Corporations List
Before: Brereton J
Decision: Parties to provide proposed orders to give effect to these reasons
Catchwords: CORPORATIONS – voluntary administration – whether Corporations Act 2001 (Cth) s 440B applies – whether notice under s 260‑5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) creates security interest – whether passive receipt constitutes enforcement – statutory charge – no enforcement – power under s 447A to modify operation of Pt 5.3A – relief to be granted under s 447A
Legislation Cited: Corporations Act 2001 (Cth)
Corporations Law
Explanatory Memorandum, 3 November 1992 to Corporate Law Reform Bill 1992
Income Tax Assessment Act 1936 (Cth)
Insolvency Practice Schedule (Corporations)
Personal Property Securities (Corporations and Other Amendments) Act 2010 (Cth)
Taxation Administration Act 1953 (Cth)
Cases Cited: 400 Lonsdale Nominees Pty Ltd v Southern Cross Airlines Ltd (in liq) (1993) 10 ACSR 739
Australian Innovation Ltd v Dean‑Willcocks [2001] NSWSC 1204; 40 ACSR 521
Boz One Pty Ltd v McLellan [2015] VSCA 68; 105 ACSR 325
Brutun Holdings Pty Ltd (In Liquidation) v Commissioner of Taxation of the Commonwealth of Australia (2009) 239 CLR 346; [2009] HCA 32
Cain v Aero Marine Consulting Pty Ltd (2003) 133 FCR 1; [2003] FCA 1016
Commissioner of Taxation v Donnelly (1989) 25 FCR 432
Correa v Whittingham [2013] NSWCA 263; 278 FLR 310
Hansen Yunken Pty Ltd v Ian James Ericson Trading as Flea’s Concreting [2012] QSC 51; 260 FLR 151
Macquarie Health Corp Ltd v Commissioner of Taxation (1999) 96 FCR 238; [1999] FCA 1819
Queensland Maintenance Services Pty Ltd v Commissioner of Taxation [2012] FCAFC 152; 91 ATR 125
Re Scandees Danish Home Ice Cream Pty Ltd [1995] 2 Qd R 678
Re The 21st Century Sign Co Pty Ltd [1994] 1 Qd R 93
Secatore, in the matter of Fletcher Jones and Staff Pty Ltd (Admins Apptd) [2011] FCA 1493
Strawbridge, in the matter of Virgin Australia Holdings Ltd (Admins Apptd) (No 2) [2020] FCA 717; 144 ACSR 347
Tucker v Mongbwalu Goldfields Investments Limited [2021] FCA 135
Tucker (Administrator), in the matter of True North Copper Ltd (Admins Apptd) [2024] FCA 1329
Tucker, in the matter of Vector Resources Limited [2021] FCA 112
Texts Cited: Austin & Black’s Annotations to the Corporations Act (LexisNexis, looseleaf)
Category: Principal judgment
Parties: Glenn Ian Livingstone, Nick Charlwood and Benjamin Ho in their capacity as joint and several administrators of Hudson Global Resources (Aust) Pty Limited (Administrators Appointed) (plaintiff)
Deputy Commissioner of Taxation (first defendant)
Scottish Pacific Business Finance Pty Limited (second defendant)
Representation: Counsel:
D Sulan SC / B Smith (plaintiff)
S Golledge SC / S Scott (first defendant)
C Bloch (solicitor) (second defendant)
Solicitors:
Mallesons (plaintiff)
Craddock Murray Neumann (first defendant)
Clayton Utz (second defendant)
File Number(s): 2026/186462
Publication restriction: N.A.
The joint and several administrators of Hudson Global Resources (Aust) Pty Limited (Administrators Appointed) (Hudson) commenced these proceedings against the Deputy Commissioner of Taxation on 6 May 2026. By an Amended Originating Process filed on 8 May 2026, Scottish Pacific Business Finance Pty Ltd (ScotPac) was joined as a defendant. For reasons that will become apparent, the proceedings came on for an urgent final hearing on 13 May 2026.
The substantive dispute that was agitated at the hearing concerned the effect and operation of a notice dated 30 March 2026, issued to ScotPac under s 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (ATO Notice). That notice had the effect of requiring ScotPac to remit to the Commissioner of Taxation 20% of all drawdowns by Hudson under a funding agreement between Hudson and ScotPac, up to the value of $19,640,965.92. By various means the administrators seek, in effect, to suspend the operation of the ATO Notice. If successful, ScotPac will not be required to remit the 20% of all drawdowns to the Commissioner of Taxation. The administrators also seek orders that will compel the Deputy Commissioner of Taxation to return payments that ScotPac has made pursuant to the ATO Notice in the period after the appointment of the administrators.
The pleadings refer variously to the Australian Taxation Office and to the Deputy Commissioner of Taxation. I have made reference to the Commissioner of Taxation. For simplicity’s sake, I will simply refer in these reasons to the Commissioner on the basis that it will cover the relevant office or officer.
Hudson is a national recruitment agency and labour hire company. It has approximately 350 customers in both the public and private sectors across various professions. It employs approximately 1,209 employees and has 353 contractors across Australia.
As part of Hudson’s business arrangements, in 2021 it entered into an invoice financing facility with ScotPac. Under that financing facility, ScotPac offered to advance a percentage of the face value of Hudson’s receivables shortly after invoices were issued to customers, in exchange for certain fees and charges and the assignment of rights and titles to all of Hudson’s receivables. Hudson had the ability to draw down an amount of up to 85% of eligible invoices once issued to the customer, with an entitlement to the remaining 15%, less charges, once the debtor made payment to ScotPac.
On 22 April 2026, the administrators were appointed as joint and several voluntary administrators of Hudson pursuant to s 436A of the Corporations Act. At the time of appointment, Hudson was in urgent need of significant external funding. Hudson had $948,877.31 in cash and was indebted to ScotPac for approximately 4 weeks of receivables. ScotPac was not prepared to permit any further drawdowns under the facility agreement while Hudson was in voluntary administration. In order for Hudson’s business to continue to trade, the administrators needed to: (a) make weekly payments of approximately $3.2 million in net wages and $900,000 in PAYG instalments; (b) pay $1.8 million per month in GST on sales; and (c) make quarterly superannuation payments, which were accruing at $300,000 per week.
On 23 April 2026, the administrators sent a letter to the Commissioner requesting that the ATO Notice be withdrawn, given that Hudson was in administration. There was correspondence between the administrators and the Commissioner, the result of which is that the Commissioner has not withdrawn the notice.
On 29 April 2026, in the absence of other funding options, the administrators entered into a funding agreement with ScotPac. The funding agreement was expressed as taking the form of an amendment to the existing facility agreement. The changes in the new agreement included: (a) a reduced facility limit; (b) an arrangement fee of $500,000 plus GST payable in instalments; (c) an increase in management fees from $15,000 to $20,000; and (d) an increase in the prevailing rate (margin) from 0.90% to 1.50%.
Amounts of $636,068.92 and $168,133 were remitted by ScotPac to the Commissioner pursuant to the ATO Notice, as a result of the administrators drawing down on the funding agreement on 29 and 30 April 2026. The administrators understand that approximately $4 million was remitted by ScotPac to the Commissioner pursuant to the ATO Notice in the period prior to the administration.
On 30 April 2026, the administrators received a draft deed of company arrangement proposal from a consortium of four pre-administration beneficial owners of Hudson and certain other advisers and senior management employees. The administrators also engaged a corporate advisor to run a competitive expression of interest process for the sale of the business as a going concern.
The first meeting of creditors was held on 5 May 2026. Notice of the application now before the Court was given to the creditors present. The second meeting of creditors is to be held between 15 and 29 May 2026.
The first issue that arises is whether the administrators are entitled to relief under s 440B of the Corporations Act. In general terms, the administrators seek:
an order restraining the Commissioner from enforcing the ATO Notice; and
a declaration that ScotPac is not required to comply with the ATO Notice.
For the reasons set out below, I do not propose to grant that relief.
General rule
(1) During the administration of a company, the restrictions set out in the table at the end of this section apply in relation to the exercise of the rights of a person (the third party) in property of the company, or other property used or occupied by, or in the possession of, the company, as set out in the table…
| Restrictions on exercise of third party property rights | | Item | If the third party is… | then… | | 1 | a secured party in relation to property of the company, and is not otherwise covered by this table | the third party cannot enforce the security interest. |
The Commissioner submits that s 440B does not apply in this case because the Commissioner is not “a secured party in relation to property” of Hudson and it has no “security interest”. For the following reasons, I do not accept that submission.
It is necessary to start with several defined expressions. Section 9 of the Corporations Act includes the following definitions:
secured party, in relation to a security interest, means:…
(b) if the security interest is not a PPSA security interest, but consists of a charge, lien or pledge in relation to the property—a chargee…
security interest means:…
(b) a charge, lien or pledge…
charge means a charge created in any way…
property means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action…
These definitions inform how s 440B is to be construed and applied in the context of a notice given under s 260-5 of Schedule 1 to the Taxation Administration Act.
260**‑5** Commissioner may collect amounts from third party
Amount recoverable under this Subdivision
(1) This Subdivision applies if any of the following amounts (the debt) is payable to the Commonwealth by an entity (the debtor) (whether or not the debt has become due and payable):
(a) an amount of a tax‑related liability;…
Commissioner may give notice to an entity
(2) The Commissioner may give a written notice to an entity (the third party) under this section if the third party owes or may later owe money to the debtor.
Third party regarded as owing money in these circumstances
(3) The third party is taken to owe money (the available money) to the debtor if the third party:
(a) is an entity by whom the money is due or accruing to the debtor; or…
The third party is so taken to owe the money to the debtor even if:
(e) the money is not due, or is not so held, or payable under the authority, unless a condition is fulfilled; and
(f) the condition has not been fulfilled.
How much is payable under the notice
(4) A notice under this section must:
(a) require the third party to pay to the Commissioner the lesser of, or a specified amount not exceeding the lesser of:
(i) the debt; or
(ii) the available money; or
(b) if there will be amounts of the available money from time to time—require the third party to pay to the Commissioner a specified amount, or a specified percentage, of each amount of the available money, until the debt is satisfied.
When amount must be paid
(5) The notice must require the third party to pay an amount under paragraph (4)(a), or each amount under paragraph (4)(b):
(a) immediately after; or
(b) at or within a specified time after;
the amount of the available money concerned becomes an amount owing to the debtor…
260**‑15** Indemnity
An amount that the third party pays to the Commissioner under this Subdivision is taken to have been authorised by:
(a) the debtor; and
(b) any other person who is entitled to all or a part of the amount;
and the third party is indemnified for the payment.
260**‑20** Offence
(1) The third party must not fail to comply with the Commissioner’s notice.
Penalty: 20 penalty units
(i) The service of the s 218 Notices on the Debtors created an interest in the nature of a statutory charge over any debts then due by the Debtors to the Taxpayer. The charge was created notwithstanding that the amounts due to the Taxpayer were not payable until a future date.
(ii) The Notices were also effective to create a statutory charge over any debts coming into existence (whether or not payable immediately) after the date of service, but before commencement of the winding-up.
(iii) To the extent the Commissioner was entitled to a statutory charge over debts due by the Debtors to the Taxpayer, s471C of the Corporations Law preserves the Commissioner's right to realise or enforce the charge notwithstanding the winding-up of the Taxpayer…
See also Queensland Maintenance Services Pty Ltd v Commissioner of Taxation [2012] FCAFC 152; 91 ATR 125 at [26] (Lander, Jessup and Foster JJ).
It must be accepted then that the service of a s 260–5 notice confers upon the Commissioner what has been described as a statutory charge over the relevant debt. But that is not sufficient to dispose of the present contest, because it is a charge in a limited sense and, in particular, it is not a charge which provides the Commissioner with a proprietary interest in the subject debt.
The issue of whether or not there was a proprietary interest was relevant in that case because the proceedings concerned claims for payment out of funds that had been paid into Court, which turned on whether the Commissioner had a proprietary interest in those funds.
The issue of whether the Commissioner has a proprietary interest does not arise in the same way in the present case. What is significant is that the Commissioner has a charge that was created by statute. That is a “charge” within the meaning of s 9 of the Corporations Act. As a person holding a charge, the Commissioner has a “security interest” within the meaning of s 440B of the Corporations Act. As a chargee, the Commissioner is a “secured party”. A key question for present purposes is whether the Commissioner is a secured party “in relation to property of the company”, i.e. Hudson, within the meaning of s 440B.
The Commissioner submits that if it is a secured party, it is not a secured party in relation to the property of Hudson. The Commissioner submits that this conclusion follows from the following passage in the reasons of Hill J in Donnelly (at 459):
In my view the argument for the Commissioner is to be preferred. For the trustee's argument to be correct it must be possible to say for the purposes of the doctrine of relation back that there was a moment of time where the debt in question was property of Dr Edelsten, that is to say a debt payable by the Health Commission to him. If the Commissioner's charge operates, as I believe it does, immediately upon the debt coming into existence so that there is no gap of time, then it must follow that at no time will the debts owed by the Health Commission fall within the description of debts owed to Dr Edelsten. Rather the debts will (to the relevant extent) be debts payable to the Commissioner of Taxation by force of s 218. Thus the doctrine of relation back will have no application to them.
The submission is that, in the present case, at no time did the relevant debts owed by ScotPac fall within the description of a debt owed to Hudson.
The submission advanced by the Commissioner is that immediately upon a debt becoming due from ScotPac to Hudson, as to 20% of the amount otherwise due there is a debt that is not owed to Hudson but instead to the Commissioner. The submission is that this debt, being property, is property of the Commissioner and not of Hudson. This would have the striking consequence that the charge that arises by the ATO Notice is a charge in favour of the Commissioner in respect of the Commissioner’s own property. That is, the Commissioner is a secured party in relation to the Commissioner’s own property.
The reasons of Hill J in Donnelly do not, properly read, lead to that conclusion. One of the critical issues in that case was whether the Commissioner was a secured creditor of the taxpayer, Dr Edelsten, in circumstances where the Commissioner had served a s 218 notice upon the Health Insurance Commission, requiring the Health Insurance Commission to pay to the Commissioner 45 cents in every dollar due by it to Dr Edelsten. On that question, Hill J concluded (at 457):
In my view the effect of a s 218 notice is to charge the debt owed to the taxpayer preventing the debtor from paying it and obliging him to pay it to the Commissioner. To adopt the words of Lord Esher, it charges the debt in the hands of the debtor (here the Health Commission) who has to pay it. It has, therefore the effect of making the Commissioner a secured creditor.
This passage is consistent with the conclusions in Macquarie Health that I set out earlier.
Hill J proceeded to deal with an argument by Dr Edelsten’s trustee in bankruptcy in relation to the doctrine of relation back, which was that as and from the commencement of the bankruptcy, the debts owing by the Health Insurance Commission were owed to the trustee and not to Dr Edelsten, with the consequence that the s 218 notice did not apply. The passage from the reasons of Hill J on which the Commissioner relies in this case (which is extracted above) is part of his Honour’s reasons for rejecting the argument that the s 218 notice did not apply to the debts that were owing by the Health Insurance Commission. It cannot be supposed that Hill J was seeking to depart from or say anything inconsistent with his earlier reasons. In dealing with relation back, Hill J was principally concerned to point out that immediately upon the debt to Dr Edelsten coming into existence, the charge operated so that part of the debt must be paid the Commissioner rather than to Dr Edelsten.
As applied to the present case, the reasons of Hill J in Donnelly give rise to the following analysis. At the moment ScotPac comes to owe an amount of money to Hudson under the funding agreement, which (but for the ATO Notice) is a debt due and payable to Hudson, ScotPac is obliged to pay 20% of that amount to the Commissioner. There is a charge in favour of the Commissioner over the contractual obligation resting upon ScotPac to pay the whole of the debt to Hudson. ScotPac is, by virtue of the ATO Notice, prohibited from paying 20% of the debt to Hudson (Taxation Administration Act s 260-20) and must pay that amount instead to the Commissioner (Taxation Administration Act s 260-5(5)). A payment by ScotPac to the Commissioner is taken by s 260-15 to have been authorised by Hudson. The Commissioner is a secured party in relation to the property of Hudson, that property being the contractual obligation upon ScotPac to pay the whole amount to Hudson.
For these reasons, from the time of the appointment of the administrators, s 440B has the effect that the Commissioner could not enforce its security interest. The security interest is the charge that the Commissioner holds in relation to amounts that become owing to Hudson by ScotPac under the funding agreement.
The Commissioner also contends that even if there is a “security interest”, there has been no violation of s 440B because no step has been taken to “enforce” it, and there is no threat it will do so. For the following reasons, I accept this contention.
The Commissioner relied on the decision of Hayne J in 400 Lonsdale Nominees Pty Ltd v Southern Cross Airlines Ltd (in liq*)* (1993) 10 ACSR 739. That case involved a floating charge. A receiver had been appointed to the chargor company. The chargee wrote letters to the receiver warning that the chargor should comply with its obligations under the terms of the charge and threatened that if the chargor acted contrary to the terms of the charge, the chargee would take action. At the time, s 267 of the Corporations Law relevantly provided:
(1) Where—
(a) company creates a charge on property of the company in favour of a person who is, or in favour of persons at least one of whom is, a relevant person in relation to the charge; and
(b) within six months after the creation of the charge, the chargee purports to take a step in the enforcement of the charge without the court having, under subsection (3), given leave for the charge to be enforced;
the charge, and any powers purported to be conferred by an instrument creating or evidencing the charge, are, and shall be deemed always to have been, void.
The issue was whether the chargee had purported to take a step in the enforcement of the charge, with the consequence that the charge is deemed to be void.
There is no doubt that as a matter of ordinary English usage the “enforcement” of a charge refers to compelling the observance of the rights asserted. Thus mere passive receipt of property the subject of the claimed right would not amount to what ordinary usage would describe as an “enforcement” of that right by the person having the benefit of the right.
His Honour also observed (also at 746):
However, while doing nothing may represent the counsel of prudence to a chargee who may be subject to s 267, I do not consider that the distinction between action of any kind and total inaction represents a satisfactory identification of the content of the legislative criterion for the application of s 267 – taking a step in the enforcement of a charge. No doubt it may be said that a chargee who does absolutely nothing has not taken a step in enforcement but I do not consider that the fact that some positive action by the chargee is capable of identification, of itself means that that action is properly characterised as taking a step in the enforcement of the charge…
His Honour concluded that the letters sent by the chargee were not steps in the enforcement of the charge.
The case law indicates that a chargee will not have purported to take a step in the enforcement of a charge merely by threatening to exercise its rights as chargee or by taking a preparatory step to exercise those rights. To fall within s 267(1)(b) of the Act, the chargee’s actions must have an element of immediate invocation or exercise of compulsive power under the charge. Appointing a receiver or taking possession of the charged property will clearly constitute taking a step in the enforcement of a charge for the purposes of s 267(1)(b).
See also Australian Innovation Limited v Ronald John Dean-Willcocks [2001] NSWSC 1204; 40 ACSR 521 at [26].
The Commissioner submits that, consistently with these authorities, no step has been taken to enforce any security interest merely by receiving payments remitted by ScotPac or by writing letters by which the Commissioner declined to withdraw the ATO Notice. The submission is that if the ATO Notice gave rise to a security interest (which it did), no steps have been taken at any time to enforce that security interest.
The administrators rely on the definition of the word “enforce” in s 9 of the Corporations Act. The definition is as follows:
enforce, in relation to a security interest in property of a company under administration, includes:
(a) appoint a receiver of property of the company under a power contained in an instrument relating to the security interest; or
(b) obtain an order for the appointment of a receiver of such property for the purpose of enforcing the security interest; or
(c) enter into possession, or assume control, of such property for that purpose; or
(d) appoint a person so to enter into possession or assume control (whether as agent for the secured party or for the company); or
(e) exercise, in relation to property including PPSA retention of title property, as the secured party or as a receiver or person so appointed, a right, power or remedy existing because of the security interest, arising:
(i) under an agreement or instrument relating to the security interest; or
(ii) in the case of a PPSA security interest—under an agreement or instrument relating to a transaction or dealing giving rise to the security interest; or
(iii) under a written or unwritten law; or
(iv) in any other way.
The administrators rely on (c) and (e). They submit that the Commissioner had “assumed control” of the property of Hudson and had exercised a right, power or remedy existing because of the security interest, under a written law or in some other way.
(e) exercise, as chargee or as a receiver or person so appointed, a right, power or remedy existing because of the charge, whether arising under an instrument relating to the charge, under a written or unwritten law, or otherwise.
The amendment did not make any change that would suggest that 400 Lonsdale ceases to be relevant.
I consider that the effect of the letter was that the chargee entered into possession or assumed control of the property of the company for the purpose of enforcing a charge created by the company.
In Boz One, the Court (at [257]) distinguished that decision from cases such as 400 Lonsdale on the basis that, in 21**st Century Sign:
…the notice letter did not merely set out the actions that the chargee proposed to take under the charge. Rather, it purported to immediately assume control over the charged assets as mortgagee in possession and to deprive the chargor of the power to deal with those assets.
See also In the matter of Scandees Danish Home Ice Cream Pty Ltd [1995] 2 Qd R 678 at 680 (Moynihan J).
I consider that the concept of “enforcing” a right, power or remedy existing because of a charge involves the taking of a step, or the commencement of a process, contemplated, allowed or provided for by the charge without which the enjoyment or benefits of the charge cannot be obtained by the chargee. If the chargee wishes to obtain the benefit of a provision contained in the charge which will enable the chargee to protect in some way the purpose for which the charge was given, and the deed of charge requires the chargee to do an act or take a step as a prelude to obtaining that benefit, or without which that benefit cannot be obtained, then the doing of that act or the taking of that step is properly described, for the purposes of s 9(e) of the Act, as the exercise of a “right, power or remedy existing because of the charge”. A distinction needs to be drawn between the taking of such a step which is the exercise of a right, power or remedy existing because of the charge and merely notifying or informing the company burdened by the charge that the chargee has rights under the charge which it is considering enforcing or which it may enforce.
This passage helps to frame the proper approach to be taken in the present case.
The administrators drew my attention to the decisions of McKerracher J in Tucker, in the matter of Vector Resources Limited [2021] FCA 112 at [2]-[3] and [30]-[33] and Tucker v Mongbwalu Goldfields Investments Limited [2021] FCA 135 at [4] and [26]. Relevantly, in the first of those two cases, his Honour considered a notice by one company to another company asserting that it was in breach of certain agreements and stating that the first company intended to effect a transfer of shares. His Honour observed (at 32]) that the first company “would appear to be seeking to enforce its Security Interest by way of assuming control of the Shares”. This conclusion was reached on an ex parte application for leave to serve a proposed originating process. His Honour did not have to come to a concluded view on the issue of enforcement and the reasons do not suggest that his Honour was taken to cases such as 400 Lonsdale. In any event, the letter in Tucker might be seen as closer to the letter considered in 21**st Century Sign than those in 400 Lonsdale. The Tucker decisions do not bear upon the analysis in this case.
The difficulty with the administrators’ submission is that it fails properly to distinguish the creation of the security interest from acts taken to enforce that interest. I have addressed the way that s 260-5 of Schedule 1 to the Taxation Administration Act intersects with s 440B of the Corporations Act. The service of the ATO Notice gave rise to a statutory charge. In respect of debts that accrued from ScotPac to Hudson after the issue of the notice, at the moment ScotPac becomes liable to pay money to Hudson a charge affixes to that debt by force of law, and ScotPac becomes obliged to pay 20% of the amount to the Commissioner. This is the creation of the security interest in respect of property. None of this involves a step to enforce that security interest. In the event that ScotPac failed (or fails) to pay, the Commissioner can take steps, including legal proceedings, that force ScotPac to pay. That is what is meant by enforcing the security interest. The secured interest, being a statutory charge, is the right to receive 20% of the amount due to Hudson. The creation of the security interest in the property is not, relevantly, to “assume control” of the property or to “exercise any “right, power or remedy existing because of the security interest”. To enforce the charge, the Commissioner must take steps to force ScotPac to make payment to the Commissioner, most obviously by formal legal proceedings.
The administrators relied on two matters in support of their contention that the Commissioner is enforcing the security interest. The first is that it is a criminal offence if ScotPac fails to comply with the ATO Notice. I accept that this feature of Schedule 1 to the Taxation Administration Act means that ScotPac may consider that, in practical terms, it has little choice but to make the payments to the Commissioner. However, this says nothing about whether the Commissioner is enforcing the charge. It means that that the Commissioner may, in practice, be unlikely to have to take steps to enforce the charge.
The second matter is the express refusal by the Commissioner, on two occasions, to withdraw the notice. This is said by the administrators to constitute positive acts by the Commissioner. Writing a letter is a positive act. However, writing a letter stating that the ATO Notice will not be withdrawn is not a positive step that can be described as something done to enforce the charge. It merely confirms that there is a charge.
It follows that the Commissioner has not enforced the security interest and is not threatening to do so. Section 440B is not engaged.
(1) The Court may make such order as it thinks appropriate about how this Part is to operate in relation to a particular company.
The key principles in the application of s 447A are well-known and have been often stated. They are conveniently set out in Austin & Black’s Annotations to the Corporations Act at [5.447A].
The Commissioner acknowledged that the Court’s power conferred by s 447A is wide but, correctly, submitted that the power is not unfettered. It can only be exercised for the purpose for which it was granted. As Barrett JA observed in Correa v Whittingham [2013] NSWCA 263; 278 FLR 310 at [4], the principal source of constraint and limitation upon the power is the statement of the object of Part 5.3A in s 435A, coupled with the nature, incidents and aims of the particular form of external administration as gathered from the provisions of Part 5.3A as a whole.
Central to the operation of s 447A is the object of Part 5.3A, which is expressed in s 435A as follows:
The object of this Part, and Schedule 2 to the extent that it relates to this Part, is to provide for the business, property and affairs of an insolvent company to be administered in a way that:
(a) maximises the chances of the company, or as much as possible of its business, continuing in existence; or
(b) if it is not possible for the company or its business to continue in existence—results in a better return for the company’s creditors and members than would result from an immediate winding up of the company.
Further or in the alternative, an order pursuant to section 447A of the Corporations Act and section 90-15 of the IPSC, Part 5.3A of the Corporations Act is to operate such that section 440B, Item 1 be varied for the period of the voluntary administration of the Company as follows:
| Restrictions on exercise of third party rights | | Item | If the third party is | then | | 1 | a secured party in relation to property of the company, or a party who has issued a notice under s 260-5 of Schedule 1 of the Tax Administration Act 1953 (Cth) (a statutory charge) and is not otherwise covered by this table | The third party cannot enforce the security interest or statutory charge and the recipient of the statutory charge is not to comply with the terms of the statutory charge and is not subject to any liability under s 260-20 of the Tax Administration Act 1953 (Cth) for non-compliance with the statutory charge. |
The Commissioner submits that the relief sought by the administrators is beyond the power conferred by s 447A, because the administrators seek an order that would alter the operation of a Commonwealth taxation collection power by rendering the ATO Notice ineffective during the administration of Hudson. The Commissioner submits that this would be to use s 447A to alter the legal effect of a Commonwealth statute, and would be a use of the power that exceeds the purpose for which it was granted. The Commissioner submits that this would not be an order as to how Part 5.3A is to operate in relation to a particular company, rather it would be an order directed to an entirely different subject – namely, the operation of a Commonwealth taxation statute.
The Commissioner relies on Correa v Whittingham. In that case, the Court was concerned with an application made under s 447A to validate the appointment of an administrator in circumstances where the proposed appointee had not obtained the necessary approval under s 41 of the Registered Clubs Act 1976 (NSW) from the then-empowered Casino Control and Gaming Authority, and so was not capable of being appointed as administrator. The Court concluded that s 447A did not confer power to cure the invalid appointment. Gleeson JA (Barrett JA and Tobias AJA relevantly agreeing) held (at [104]):
…[Section] 447A(1) speaks of orders about how “this Part” is to operate in relation to a particular company. The reference “this Part” is to be understood as a reference to each of the provisions in it: see Australasian Memory Pty Ltd v Brien at 279 [18]. Clearly, s 41 of the Registered Clubs Act is not a provision contained in Pt 5.3 A. Thus, there is no power under s 447A of the Corporations Act to validate the invalidity of an administrator’s appointment arising under s 41 since the former section is directed to how Pt 5.3A of the Corporations Act operates in relation to a company, not the operation of separate State or Territory legislation.
See also at [2]-[8] per Barrett JA.
The Commissioner’s submissions are best addressed by reference to the relief that administrators actually seek in this case.
One of the administrators, Mr Livingstone, gave evidence about why the administrators considered it necessary to obtain relief. A summary of the relevant reasons concerning s 447A is as follows:
The administrators have formed the view, based upon the available information, that it is in the best interests of Hudson’s creditors that the administrators continue to trade the business of Hudson with a view to preserving and maximising its realisable value as part of any deed of company arrangement or, in the alternative, sale of the business as a going concern. They consider that either of those outcomes will maximise returns for creditors and present a better prospective return to creditors than any realisation of Hudson’s assets following closure of the business or an immediate winding up.
If funds are drawn under the funding agreement with ScotPac, the deductions and remittances to the Commissioner presently being made by ScotPac in accordance with the ATO Notice (20% of all amounts payable to Hudson) are so significant that the administrators estimate that, on or before 12 May 2026, they will run out of immediately available cash to trade the business or continue with current operations and staffing levels without accruing additional liabilities which may not be able to be repaid. Should the administrators form the view that they do not intend to assume the risk of those liabilities, they will be left with little alternative other than to commence the wind down of Hudson’s operations and/or terminate all employees and PAYG contractors. Either scenario would involve significant value destruction and the crystallisation of significant employee entitlements which they presently estimate may be as high as $11,342,271, should all employees and contractors be terminated.
There is no immediate alternative funding available to the administrators to meet the significant ongoing trading costs of the business, including significant employee entitlements, contractor payments, rental obligations, tax and insurance costs.
If the ATO Notice is unenforceable, the administrators estimate that they will be able to trade the business and retain sufficient funds to meet accrued liabilities until at least the second creditors' meeting which must be held between 15 and 29 May 2026, and until the execution of any available deed of company arrangement thereafter. This means that any viable restructuring plan will be capable of being put to creditors at the second meeting and, if approved by creditors, will be capable of implementation.
Having considered the books and records of Hudson, Mr Livingstone believes that a successful deed of company arrangement or going concern sale would result in a superior return to all creditors, including the Commissioner (who is, by some margin, the largest creditor).
The Commissioner’s position is that as things stand, the Commissioner will receive 20% of any payments ScotPac makes under the funding agreement and that if s 447A relief is granted, payments will still be made to Hudson but none of that amount will be applied towards discharging Hudson’s tax debt. The result would be that the Commissioner loses the privilege conferred by statute and receives nothing in return.
The administrators respond by submitting that, without the relief, it is likely that they will cease to make use of the funding agreement, with the consequence that the Commissioner in reality will not lose anything. Further, they contend that what the Commissioner receives in return is the prospect of a superior return arising from a successful deed of company arrangement or sale of Hudson as a going concern.
In considering whether the Court has power to grant relief under s 447A in this case and whether, if so, that power should be exercised, it is appropriate to consider various relevant aspects of Part 5.3A.
I have concluded that the Commissioner does hold a security interest, conferred by way of a statutory charge, and that s 440B restricts the rights of the Commissioner to enforce that security interest. The reason I concluded that the administrators are not entitled to relief under s 440B is because the Commissioner has not taken, and does not threaten to take, steps to enforce the security. However, the practical reality is that the Commissioner will almost certainly enjoy the benefit of the security interest without having to resort to enforcement, because the character of the security interest is such that, absent relief from this Court, it may reasonably be expected that ScotPac will comply with the ATO Notice. That is because the potential criminal sanctions that may arise from non-compliance may be expected to ensure that there is compliance.
The obvious policy intention lying behind s 440B is that the administration of a company is not impeded by steps taken by persons with security interests to obtain possession of the company’s property: see the Explanatory Memorandum of the Corporate Law Reform Bill 1992 at [518]. While s 440B is not engaged in this case, it can be said that the ongoing operation of the ATO Notice offends the policy of the section as well as Part 5.3A more generally. The effect of the ATO Notice is to syphon to the benefit of the Commissioner (who is otherwise an unsecured creditor with no particular priority under s 556), property that would otherwise be available to the administrators in their efforts to maximise the chances of Hudson continuing in existence or providing a better return to creditors and members than would result from an immediate winding up.
Similar policy considerations lie behind s 440F. That section provides:
During the administration of a company, no enforcement process in relation to property of the company can be begun or proceeded with, except:
(a) with the leave of the Court; and
(b) in accordance with such terms (if any) as the Court imposes.
The expression “enforcement process” is defined in s 9. It includes an enforcement process in relation to property that involves a court or a sheriff. The Explanatory Memorandum explains (at [524]) that the purpose of s 440F is to “ensure that the financial position of the company is as nearly as possible preserved throughout the moratorium period”.
The provisions in s 260-5 and following have an ancestry beginning with s 50A of the Income Tax Assessment Act 1915 (Cth) and including s 218 of the Income Tax Assessment Act 1936 (Cth) (the 1936 Act). In Bluebottle UK Ltd v DCT the court described s 218 of the 1936 Act as containing “statutory garnishee provisions”. Earlier, in FJ Bloemen Pty Ltd v FCT, Mason and Wilson JJ spoke of “the garnishee power in s 218”, and in Clyne v DCT, Mason J remarked upon the “quite striking” similarity between s 218 and the rules of court respecting garnishee orders.
The ATO Notice might be described as strikingly similar to a garnishee order. If it was an actual garnishee order, enforcement of the order would be suspended. The policy grounds for suspending the operation of a garnishee order also suggest that the operation of Part 5.3A may be advanced by the suspension of the ATO Notice.
The administrators seek to invoke s 447A in this case to assist them to maximise the chances of Hudson continuing in existence, or to provide a better return for the company’s creditors and members than would result from a closure of the business and an immediate winding up. That is consistent with the object of s 435A. The evidence establishes that the object is more likely to be achieved if the effect of the ATO Notice is suspended. That suspension would be consistent with the policy intention behind Part 5.3A, seen most pointedly in this case in the application of ss 440B and 440F. The case in favour of relief under s 447A is powerful.
I reject the Commissioner’s submission that s 447A does not confer power in this case. The circumstances in this case are far removed from those in Correa v Whittingham. It is true that a Commonwealth statute conferred power on the Commissioner to issue the ATO Notice, and the notice has force by statute. The same is true of any taxation debt owed to the Commissioner. So long as power under s 447A is exercised in to promote an object for which Part 5.3A exists in relation to a particular company, power is not excluded merely because it affects collection of a taxation debt by the Commissioner pursuant to statutory powers conferred upon the Commissioner. It might be said that s 440B affects collection of a taxation debt because it would prevent the Commissioner from enforcing a notice issued s 260-5. The fact that relief under s 447A affects the collection of taxation is relatively unremarkable.
The relief sought in this case directly concerns how Part 5.3A is to operate in relation to Hudson. It seeks to achieve an end in relation to the administration of Hudson by suspending the operation of the ATO Notice, with the consequence that amounts that would otherwise be paid to the Commissioner come instead to Hudson, facilitating the administrators’ efforts to achieve the objects of Parts 5.3A. I do not accept the Commissioner’s submission that the relief in this case is being sought for the foreign purpose of seeking to alter the operation of a Commonwealth taxation statute. The alteration that would occur in respect of the Commissioner’s statutory rights is incidental to the purpose of promoting the objects of Part 5.3A.
For these reasons, the administrators’ case for relief under s 447A has been made out.
There is a difficulty, however, with the form of relief as framed by the administrators (which is set out above). The additional words sought to be added under the heading “If the third party is” are not required, because the Commissioner is a secured party in relation to property of the company. On the other hand, the words sought to be added under the heading “then” do not achieve what the administrators seek because they are directed to what a third party can enforce, and I have concluded that s 440B is not engaged in this case because the Commissioner is not taking a step to enforce the security interest.
The possibility that there may need to be some changes to the wording of the form of relief was raised by the administrators at the hearing. It is best if the parties seek to formulate some wording that gives effect to these reasons. One possibility the parties should consider is whether a better way to achieve this end is by orders that provide something along the lines that s 440F is to operate as if the words “or notice given under s 260-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth)” were added after the words “enforcement process”.
In view of my conclusion about the application for relief under s 447A as set out above, it is unnecessary for me to address the administrators’ alternative claim for an order pursuant to s 441D(2) of the Corporations Act.
Nor do I need to address the administrators’ application for a declaration that the payments already made by ScotPac to the Commissioner pursuant to the ATO Notice during the course of the administration are void and for orders that those amounts be paid to the administrators by way of restitution. That relief was dependent upon success under s 440B. I have rejected that claim. The relief that was sought under s 447A was forward-looking.
The results of this application have been mixed. I anticipate that the parties should be able to come to an agreement about appropriate orders as to costs. If not, I will fix a date for oral argument about costs.
I made the following orders at the hearing on 13 May 2026:
1. Pursuant to section 90-15 of the Insolvency Practice Schedule (Corporations), the Administrators are justified in carrying out their duties as Administrators of the company, being Hudson Global Resources (Aust) Pty Limited (Administrators Appointed) (ACN 002 888 762) (Company), by entering into and utilising the funding agreement substantially in the form described in the Affidavit of Glenn Ian Livingstone sworn and filed on 6 May 2026 (Funding Agreement).
2. An order pursuant to section 447A of the Corporations Act 2001 (Cth) (Act) and section 90-15 of the Insolvency Practice Schedule (Corporations), that Part 5.3A of the Act is to operate such that, if the indemnity of the Plaintiff under section 443D of the Act is insufficient to meet any liability or amount for which the Plaintiff may be liable arising out of or in connection with the Funding Agreement, then the Plaintiff will not be personally liable to repay any such amount to the extent of that insufficiency.
3. The Administrators must take all reasonable steps to cause notice of these orders to be given, within 2 business days of the making of these orders, to:
a. ASIC; and
b. The creditors (including persons or entities known by the Administrators to be claiming to be creditors) of the Company.
The direction concerning the funding agreement was made with regard to the principles summarised by Banks-Smith J in Tucker (Administrator), in the matter of True North Copper Limited (Admins Apptd*)* [2024] FCA 1329 at [34]-[36]. The funding agreement was entered into in circumstances of urgency and the evidence supported the conclusion that the administrators acted reasonably and properly in doing so. There was adequate notice given to the creditors of the application.
The order made concerning the personal liability of the administrators was made having regard to well-established considerations: see, for example, Secatore*, in the matter of Fletcher Jones and Staff Pty Ltd (Administrators Appointed)* [2011] FCA 1493 at [23]-[26] (Gordon J) and Strawbridge*, in the matter of Virgin Australia Holdings Ltd (Administrators Appointed)* (No 2) [2020] FCA 717; 144 ACSR 347 at [87]-[91] (Middleton J). Once again, the urgency of the steps taken is an important consideration. The only creditor who could have been prejudiced by this particular order was ScotPac and it consented to the order being made. Other creditors were given due notice of this application.
**********
27 July 2026 - Typographical amendment.
[2015] VSCA 68
(2009) 239 CLR 346
(2003) 133 FCR 1
(1989) 25 FCR 432
(1999) 96 FCR 238