Kogan v Rogulj, in the matter of Rogulj Enterprises Pty Ltd

1. Pursuant to r 8.21 of the Federal Court Rules 2011 (Cth) (the Rules), leave be granted to the plaintiffs to amend the Originating Process in the form of the Amended Originating Process provided to the Court on 16 September 2021.
2. Pursuant to r 9.05 of the Rules, leave be granted nunc pro tunc to the plaintiffs to join, as defendants in this proceeding, each of the parties named as a defendant in the Schedule to the Amended Originating Process.
3. Pursuant to r 1.10 of the Federal Court (Corporations) Rules 2000 (Cth) and r 1.39 of the Rules, the time in which the Amended Originating Process is to be served be extended to 25 November 2021.
4. The proceeding be listed for case management hearing on a date to be fixed after 25 November 2021. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

YATES J: 1 The second plaintiffs, Barry Frederic Kogan and Katherine Sozou (the liquidators), are the joint and several liquidators of the first plaintiff, Rogulj Enterprises Pty Ltd (in liquidation) (the company). The plaintiffs seek, by way of interlocutory relief: (a) an order pursuant to r 9.05 of the Federal Court Rules 2011 (Cth) (FCR) that they have leave nunc pro tunc to join each of the parties named as a defendant in the Schedule to an amended originating process as a defendant in the proceeding; and (b) an order pursuant to r 1.10 of the Federal Court (Corporations) Rules 2000 (Cth) and r 1.39 FCR that the time for service of the amended originating process be extended. 2 The application for this relief is made in the following circumstances. 3 On 18 September 2018, the members of the company, by special resolution, resolved that it be wound up. On 24 December 2018, the liquidators were appointed. They replaced the liquidator appointed on 18 September 2018. 4 For a significant period of time following their appointment, the liquidators were without funds to meet the expenses of the winding up. They were not in a position to conduct an investigation into potential claims which the company may have had. On 6 July 2021, and following various attempts to secure funding, which commenced in early 2019, the liquidators reached an arrangement with a litigation funder. On 23 July 2021, the Court made orders granting approval for the company to enter into a funding agreement with the funder: Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856. 5 Thereafter, with the benefit of the funding provided, the liquidators took steps to investigate potential claims. On 2 August 2021, proceedings were commenced for the issue of examination summonses pursuant to ss 596A and 596B of the Corporations Act 2001 (Cth) (the Corporations Act) and for the making of orders for production. 6 The production of documents has occurred in tranches since 20 August 2021, and is ongoing. To date, in excess of 10,000 pages have been produced. Public examinations of three individuals, including the first defendant, Mr Rogulj, were conducted on 27 and 30 August 2021. The liquidators' investigation into the affairs of the company is ongoing. 7 On the basis of information available to the liquidators at the present time, a draft statement of claim has been prepared which includes voidable transaction claims. The draft is a work in progress because the liquidators' investigation is not complete. However, the commencement of proceedings is now urgent because the relation-back day for the company is 18 September 2018. Consequently, the relevant statutory limitation period to bring claims under Pt 5.7B of the Corporations Act expires on Saturday, 18 September 2021, being the period ending three years after the relation-back day. 8 The liquidators wish to bring a so-called "mother proceeding" (as to which, see Dean-Willcocks v Air Transit International Pty Ltd [2002] NSWSC 525; 55 NSWLR 64 (Dean-Willcocks)) in which multiple transactions entered into by the company are challenged and each party to each transaction is a defendant. The alternative to bringing such a proceeding is to bring separate proceedings against each defendant claiming relief in respect of the transaction(s) in which that defendant is involved. 9 There are obvious advantages in adopting the "mother proceeding" model. As identified in Dean-Willcocks, and accepted in Jahani (liquidator) v Alfabs Mining Equipment Pty Ltd, in the matter of Delta Coal Mining Pty Limited (in liq) [2020] FCA 752 (Jahani), these include efficient case management and the efficient use of court resources in proceedings where common issues of liability are likely to arise, and where common defences might be raised. Another advantage is the avoidance of the potential for inconsistent findings if multiple proceedings are to be heard and determined on questions that are common to all proceedings. 10 In the context of the present case, a common question will be the solvency of the company at the time it entered into the impugned transactions. The liquidators also rely on the likelihood that common defences might be raised by the corporate defendants given that, at the relevant times, Mr Rogulj had directorships and/or shareholding interests in those defendants. 11 Notwithstanding the obvious advantage of bringing the present proceeding in this way, this course is not authorised by r 9.02 FCR, which provides: An application may be made by 2 or more persons, or against 2 or more persons, if: (a) a separate proceeding could be made by or against each person in which the same question of law or fact might arise for decision; and (b) all rights to relief claimed in the proceeding (whether joint, several or alternative) arise out of the same transaction or event or series of transactions or events. 12 For example, in Dudley (Liquidator) v RHG Construction Fitout & Maintenance Pty Ltd [2019] FCA 1355, Jackson J held (at [26]) that r 9.02 does not authorise liquidators to commence a single set of proceedings against multiple defendants where allegedly preferential payments, and the agreement or arrangements with the company under which they were made, were unique to each separate defendant. 13 However, r 9.05(1) FCR provides: (1) A party may apply to the Court for an order that a person be joined as a party to the proceeding if the person: (a) ought to have been joined as a party to the proceeding; or (b) is a person: (i) whose cooperation might be required to enforce a judgment; or (ii) whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; or (iii) who should be joined as a party in order to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings. 14 In the present case, the liquidators rely particularly on r 9.05(1)(b)(iii). 15 On the material before me (which includes the draft statement of claim and an explanation of the claims by reference to facts deposed to by Mr Kogan in an affidavit made on 15 September 2021), I am satisfied that it is appropriate that the power under r 9.05(1) should be exercised to permit the joinder of multiple defendants in this proceeding. I accept that there would appear to be common issues in respect of the claims against the defendants as well as the possibility of common defences being available in respect of those claims. I note that the claims that are made are very similar in nature, save for the amounts transferred or property disposed of. I accept that commencing separate proceedings against each defendant would add unnecessary cost and, inevitably, would be inefficient. 16 As adverted to in Jahani (at [17]), if any particular defendant wishes to contend that the further conduct of the proceeding, as so constituted, is prejudicial to that defendant, then that defendant can apply under r 9.06 FCR for a separate trial. The likelihood, however, is that the benefit of having all defendants in the one proceeding will be advantageous to the defendants themselves. 17 As to the time for service of the amended originating process, the liquidators foreshadow that further claims for relief are likely. These claims are not the subject of any pending limitations which might bar their commencement. As I have noted, the production of documents under the orders for production is ongoing. On the evidence before me, the affairs and transactions of the company to which the proceeding relates are complex and include various associated trust structures. Mr Kogan has deposed that the liquidators require further time to investigate additional claims, including by: reviewing the many documents produced; further tracing the funds relevant to the claims; analysing related party financial and asset arrangements in light of the trust documents produced by the recipients of the orders for production; and, depending on the documents produced, conducting further examinations of individuals in relation to further potential claims. 18 Mr Kogan has deposed that it will take approximately 10 weeks to undertake this further work, which would include finalising the proposed statement of claim. In order to allow them the opportunity to undertake this work, the liquidators seek to extend time for service to 25 November 2021. 19 I am satisfied that it is appropriate to grant that relief, in the circumstances. 20 Finally, I will grant leave to the plaintiffs to amend the originating process to correct various typographical errors and the name of the third defendant. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.