In the matter of Mosaic Brands Ltd (admins apptd) (recs & mgrs apptd)

Medium Neutral Citation: In the matter of Mosaic Brands Ltd (admins apptd) (recs & mgrs apptd) [2025] NSWSC 722

Hearing dates: 30 June 2025

Date of orders: 30 June 2025

Decision date: 30 June 2025

Jurisdiction: Equity - Corporations List

Before: Black J

Decision: Order made fixing date of Plaintiff director’s resignation from company and associated orders made.

Catchwords: CORPORATIONS — directors and officers — appointment, removal and retirement of directors — where director resigned by written notice to company chairman — where company did not provide notice of director’s resignation to the Australian Securities and Investment Commission within 28-day period — where relief sought under s 203AA of the Corporations Act 2001 (Cth) — where orders made fixing director’s resignation date at the time that notice of resignation was provided to company’s chairman

Legislation Cited: - Corporations Act 2001 (Cth), s 203AA(2)
- Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 (Cth)

Cases Cited: - One Tree Agriculture Pty Ltd v Lye [2025] FCA 126
- Re Energy Resources of Australia Ltd [2022] 1 FCA 176

Category: Principal judgment

Parties: Jacqueline Frank (Plaintiff)
Mosaic Brands Ltd (admins apptd) (recs & mgrs apptd) (Defendant)

Representation: Counsel:
D Southwood (Plaintiff)
Solicitors:
Bridges Lawyers (Plaintiff)

File Number(s): 2025/231229

JUDGMENT – EX TEMPORE (Revised 4 July 2025)

1. By Originating Process filed on 17 June 2025, the Plaintiff, Ms Frank, seeks an order that she be granted leave to commence and continue these proceedings against the First Defendant, Mosaic Brands Ltd (admin apptd) (recs and managers apptd) (“Company”) and, substantively, an order under s 203AA(2) of the Corporations Act 2001 (Cth) (“Act”) that the date that she resigned as a director of the company is fixed as 18 June 2024. She accepts that the Court should reserve liberty for any interested party to apply on two business days' notice, although several interested parties have already been given notice of this application and the opportunity to be heard.

2. Dealing with the question of service first, the proceedings have been served on the Company, by its voluntary administrators, and the Company has submitted a submitting appearance, except as to costs. The application has also been served on the receivers and managers appointed to the Company, and they have indicated they have no interest in the application and have not appeared. Rightly, the application has also been served on the Australian Securities and Investments Commission (“ASIC”) which, by letter dated 27 June 2025, notes the policy underlying s 203AA of the Act to which I refer below, and indicates that its preliminary inquiries have not found any indicators of unlawful phoenix activity by Ms Frank, so as to fall within the policy of the section, and that ASIC does not propose to make any comments as to the merits and does not seek to be heard. ASIC nonetheless reserves the right to take any necessary regulatory action, in the usual way.

Scope of s 203AA of the Act

3. Section 203AA of the Act was introduced by the Treasury Laws Amendment (Combating Illegal Phoenixing*) Act* 2019 (Cth) and has been considered in subsequent case law including Re Energy Resources of Australia Ltd [2022] FCA 176 and One Tree Agriculture Pty Ltd v Lye [2025] FCA 126 where Derrington J noted that the purpose of the section is to ensure that persons who deal with a company can rely on ASIC’s register as actively recording those who have control of the company as directors. Relevantly, that section provides that a person's resignation as a director of a company takes effect on the day the person stops being a director, if ASIC is notified of that fact within 28 days, or otherwise the day on which notice is lodged with ASIC stating that the person has stopped being a director of the company unless an application is made to the Court to fix the date of the resignation under s 203AA(2) of the Act. Section 203AA(3) in turn provides that the Court must not fix the resignation day at the day the person's resignation takes effect unless it is satisfied that it is just and equitable to do so, and s 203AA(5) contemplates that any order must be made to the court within twelve months after the date the person ceased being a director of the relevant company, a requirement that is just satisfied here, or otherwise such longer period as the Court allows.

Factual basis of the application

4. Turning now to the factual basis of the application, cl 69.2 of the Company's constitution provides that a director may resign as a director of the Company by giving a written notice of resignation to the Company at its registered office. Here, it appears that Ms Frank sought to resign, by email directed to the Company's chairman, rather than by delivery of the notice to the Company's registered office. However, I proceed, consistent with the authorities to which Mr Southwood, who appears for Ms Frank, draws attention, on the basis that the provision in cl 69.2 of the Company's constitution is facultative and does not prevent Ms Frank giving notice to the Company by any other available means.

5. It is plain enough, from the contemporaneous correspondence, that the Company in fact received such notice. On 15 June 2024, Ms Frank gave notice to the Company's chairman that she tendered her resignation, which was then proposed to be effective from the Company’s next board meeting. That letter of resignation is in evidence and indicated that Ms Frank submitted her resignation from the board effective from the next board meeting on 26 June 2024. It is plain that notice was received, since the Company's chairman responded that he was sorry to see Ms Frank leave, and suggested that she attend the next board meeting on the basis that the board could then accept her resignation. I pause to note that the case law does not require a company’s acceptance of a director's resignation, unless its constitution otherwise provides, which is not the case here.

6. By further email dated 18 June 2024, Ms Frank appeared to have accelerated her proposed resignation from the board, indicating that she was writing to submit her resignation effective "effective immediately 2024". The reference to "2024" there appears to be superfluous, with the intent being that she resigned with immediate effect. A further email dated 18 June 2024 to the chair in turn referred to her belief that it was best to "tender my resignation effective immediately" and indicated that she did not see benefit in attending the next board meeting, which would, I have noted above, take place on 26 June 2024. It seems to me that the better view is that, although Ms Frank had then provided two resignation letters, the second resignation took immediate effect and displaced the operation of the first.

7. The Company then lodged a Final Director's Interest Notice with Australian Securities Exchange (“ASX”), which recorded the date that Ms Frank ceased to be director as 26 June 2024. That plainly reflected a view, contrary to that which I have taken, that the first notice of resignation took effect from the next board meeting, rather than Ms Frank having resigned immediately from 18 June 2024. Notwithstanding that the Company had given notice of Ms Frank's resignation to ASX, and noted that resignation took effect from 26 June 2024, it did not give notice of that resignation to ASIC until 8 August 2024, outside the one-month period contemplated for such notice under s 203AA(1) of the , so as to preserve the effective date of the resignation. In those circumstances, unless the Court now otherwise orders, Ms Frank will not be taken to have resigned until the date that notice was lodged, namely 8 August 2024.

Orders

10. Accordingly, I make the following orders:

11. Order that the Plaintiff, Ms Jacqueline Frank, is, to the extent necessary, granted leave to commence and continue these proceedings against the First Defendant, Mosaic Brands Ltd (admins apptd) (recs and mgrs apptd) pursuant to s 440D of the Corporations Act 2001 (Cth) ("Act").

12. Order that, pursuant to s 203AA(2) of the Act, the day that Ms Frank resigned as director of the company is fixed as 18 June 2024.

13. Reserve liberty for any interested person to apply.

14. Order that there be no order as to costs.

15. Order the exhibits be returned.

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