Orel, in the matter of an application by Orel [2025] FCA 590 | Case summary

Federal Court of Australia|2025-06-04|Before: Derrington J

The applicant accepted that the main consideration on this application is the interests of third parties who would be affected by granting Mr Orel the relief he requires to manage the Company. In this regard, the Company's main interaction with third parties is its leasing of three parcels of commercial property. Counsel submitted that there was minimal risk to third-party interests in circumstances where: those parcels are all leased to a single tenant pursuant to a single instrument of lease (Exhibit TO8 to the First Orel Affidavit); and that lease commenced on 7 December 2022 for an initial three-year period with a further three-year option which, if taken up, would extend the tenancy beyond Mr Orel's current disqualification period. The Company's interactions with third parties are otherwise limited to depositing funds with a single ADI and engaging a compliance auditor. I accept the submission that any risk to third parties in granting the relief sought is minimal.
Mr Orel's disqualification occurred in the context of his bankruptcy. It is therefore also relevant to look to the circumstances of the relevant unpaid debts. In this regard, the evidence discloses that Oracle's liquidators have explained that the underlying cause of those debts was financial difficulties arising from industry-wide trends, including increased operating costs and delays resulting from market forces in the wake of the COVID-19 pandemic. Their report does not indicate that the debts were caused by any conduct lacking probity on Mr Orel's part (First Orel Affidavit at Exhibit TO7, page 266). Mr Orel has also cooperated with his trustee in bankruptcy as he is required to do by law, including by providing a statement of his affairs and by participating in an interview process (First Orel Affidavit at [17]-[19]).
I have had regard to Mr Orel's character and good conduct since his disqualification; the nature, purpose and size of the Fund; and to the unlikelihood that there will be any further contraventions by Mr Orel if he is to manage the Company. All of those matters speak to the appropriateness of granting the relief sought.

I am satisfied that Mr Orel should be given leave to manage the Company to facilitate his participation as a member of the Fund, and that it should be ordered that he is not a disqualified person in respect of the Company and the Fund for this limited purpose.
For these reasons, I made the orders sought by the applicant at the conclusion of the hearing on 2 June 2025.

I certify that the preceding twenty-seven (27) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Sarah C Derrington.

Industry (Supervision) Act 1993

Frigger, in the matter of an application by Frigger [2019] FCA 1730; 139 ACSR 329

Macalister, in the matter of an application by Macalister [2021] FCA 1455

Nenna v Australian Securities and Investments Commission [2011] FCA 1193; 198 FCR 32

Stokes, in the matter of Padbury Mining Limited [2016] FCA 1000

The section under which this application is made proceeds upon the basis that a person who is an undischarged bankrupt is prima facie not to be permitted to act as a director or to take part in the management of a company. The Court is given jurisdiction to grant leave for such activities to be carried on, but an applicant who comes to the Court seeking leave must bear the onus of establishing that the general policy of the Legislature laid down in this section ought to be made the subject of an exception in his case. It should be borne in mind that the section is not in any sense a punishment of the bankrupt. Nor should a refusal to grant leave under the section be regarded as punitive. The prohibition is entirely protective, and the power of the Court to grant leave is to be exercised with this consideration in the forefront.

Even in the absence of a contradictor it is for the applicants for leave to place before the court evidence in appropriate form that is capable of satisfying the court that, in the given case, an exception should be made to the legislative policy underlying the prohibition in the Act. ASIC's absence is not necessarily to be given significant weight: Watts, in the matter of Watts [2011] FCA 1185; (2011) 284 ALR 403 at [18] (Yates J).

Generally, before it can lift the disqualification the court needs to know what the applicants propose to do by way of corporate management, although this may not be necessary if the application is for leave to take part in the management of a specified corporation or corporations: Re Shneide (1996) 71 FCR 69 at 73 (Drummond J). In those cases the court will consider the structure of the companies, the nature of their businesses and the interests of their shareholders, creditors and employees, and any risks to those persons or to the public which may be involved in the applicants assuming positions on the board or in management: Adams v Australian Securities & Investments Commission ; at (Lindgren J)

Orel, in the matter of an application by Orel [2025] FCA 590 (4 June 2025)

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