Federal Court of Australia

Realtek Semiconductor Corporation v Jones (Administrator), in the matter of Nuheara Limited (Administrators Appointed) [2025] FCAFC 178

ORDERS

THE COURT ORDERS THAT:

1.    The appeal is dismissed.

2.    The appellant must pay the respondents’ costs of the appeal, including the costs of the interlocutory application filed on 11 August 2025, to be assessed if not agreed.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

1    The appellant’s appeal from orders made by the primary judge, the pertinent effect of which was to permit the sale of property of Nuheara Ltd over which the appellant had a security interest, was listed for hearing on 26 November 2025. Before that appeal was called on for hearing, however, we heard an interlocutory application of the first respondents, seeking orders dismissing, or in the alternative permanently staying, the appeal on the ground that it was futile. At the conclusion of argument on the interlocutory application, we made orders dismissing the appeal. These are our reasons for doing so.

BACKGROUND

2    Nuheara was a company engaged in activities including research and development in relation to headphones and other products requiring integrated circuits, or microchips. The appellant is a Taiwanese company that manufactures integrated circuits. Before Nuheara was placed into administration, the appellant had supplied it with integrated circuits. The appellant was also a significant investor in Nuheara: it was the company’s largest shareholder, largest creditor, and only secured creditor.

3    The first respondents were appointed as administrators of Nuheara on 7 August 2024. They proceeded to investigate the potential to realise value for Nuheara’s business or assets. As the date for the second meeting of creditors, being 25 February 2025, approached, those efforts had yielded only one alternative to liquidation: a syndicate of investors, using a special purpose vehicle named Orecchio Pty Ltd (which is the fourth respondent), had proposed a deed of company arrangement pursuant to which they would acquire all of Nuheara’s property on certain terms. The first respondents considered that the proposed DoCA would provide a superior outcome to a liquidation and, accordingly, subject to one qualification, it was their intention to recommend to creditors that they vote in favour of it.

4    The qualification to which we have just referred concerns the fact that, before being placed into administration, Nuheara had granted a security interest over all of its present and future property to the appellant, as security for the payment of amounts owing under a convertible note subscription agreement. The appellant would not consent to the sale of property over which it held the security interest. The viability of the proposed DoCA thus depended on the first respondents’ ability to sell Nuheara’s property free of the appellant’s charge.

5    It was in those circumstances that the first respondents approached the primary judge on an urgent basis seeking the leave of the Court, pursuant to s 442C(2)(c) of the Corporations Act 2001 (Cth), to dispose of property of Nuheara that was subject to the appellant’s security interest. On 21 February 2025, the primary judge granted that leave: Jones (Administrator) v Realtek Semiconductor Corporation; in the matter of Nuheara Limited (administrators appointed) (No 1) [2025] FCA 267.

6    Shortly after that grant of leave, the appellant proposed its own DoCA. In response, the Orecchio syndicate made changes to the terms of its proposed DoCA. This developing situation led to the second meeting of creditors being adjourned. The revisions to the Orecchio proposal also meant that the terms in which the leave granted by the primary judge on 21 February 2025 were expressed were no longer apt to authorise a sale of Nuheara’s property under the Orecchio DoCA. The first respondents thus approached the primary judge seeking to have the original order varied so that it would apply to a sale pursuant to the revised Orecchio DoCA, in the event that Nuheara’s creditors voted in favour of it.

7    That application was heard by the primary judge on 13 March 2025. At the same time, the appellant sought an injunction, pursuant to s 1324(1) of the Corporations Act, restraining the first respondents from selling Nuheara’s property. Later that same day, for the reasons given in Jones (Administrator) v Realtek Semiconductor Corporation; in the matter of Nuheara Limited (administrators appointed) (No 2) [2025] FCA 276, the primary judge:

(a)    varied his earlier order, so that it would apply to permit a sale pursuant to the revised Orecchio DoCA;

(b)    refused the appellant’s application for an injunction; and

(c)    ordered the appellant to pay certain of the first respondents’ costs.

8    The appellant did not apply for a stay of the primary judge’s orders, and, on 17 March 2025, at the resumed second meeting, Nuheara’s creditors voted in favour of the revised Orecchio DoCA. That deed was executed on 20 March 2025, as was an agreement pursuant to which the property of Nuheara was sold to Orecchio. On 24 March 2025, Orecchio paid the purchase price, and the transfer of the secured property completed. By force of s 442C(7) of the Corporations Act, Realtek’s security interest in the property was extinguished. Orecchio has gone on to operate Nuheara’s business, and in the course of doing so has, amongst other things, granted security over its assets in favour of its shareholders (the fifth and sixth respondents).

9    The DoCA is now fully effectuated, and the first respondents are the liquidators of Nuheara.

THE APPEAL

10    By its Amended Notice of Appeal, the relief sought by the appellant was:

(a)    the setting aside of those orders made by the primary judge granting leave to the first respondents to sell property of Nuheara over which the appellant held a security interest;

(b)    the setting aside of those orders made by the primary judge dealing with costs and related matters;

(c)    the setting aside of the order dismissing the appellant’s application for an injunction;

(d)    an order that the respondents pay the appellant’s costs of the appeal; and

(e)    “such further or other orders as this Honourable Court deems fit”.

11    It may thus be observed that, by its Amended Notice of Appeal, the appellant did not in terms seek orders that would have the effect of restoring its security interest, or compensating it for the loss of that security interest, or indeed requiring the respondents to do (or not do) anything at all (save in relation to costs). Rather, on its face, the ultimate objective of the appeal as expressed in the Amended Notice of Appeal was simply to set aside the orders that the appellant contended should not have been made (and obtain costs orders in its favour). Other than in relation to costs, therefore, the orders sought would have produced no practical or real-world consequence for the parties.

12    When the utility of the appeal was queried, however, the appellant contended that success would entitle it to damages in an amount necessary to restore it to the position it would have been in but for the orders made by the primary judge. Such an order, or orders designed to lead to that ultimate result, were said to fall within the scope of the prayer for “such further or other orders” as the Court deemed fit.

13    It did not seem to us to be appropriate for the precise form of the orders sought by the appellant, nor the basis upon which the Court was said to have power to make them, to be given no greater definition than a generic prayer for “further or other orders”. In those circumstances, we required the appellant to identify in advance of the hearing the precise orders it was seeking. In response, the appellant filed short minutes of order which included, insofar as is relevant for present purposes, the following:

3    Orders 3, 4, 9, 10 and 11 of the orders made by the Honourable Justice O’Sullivan in proceedings WAD 41 of 2025 on 13 March 2025 be set aside.

4    Order 1 of the orders made by the Honourable Justice O’Sullivan in proceedings WAD 41 of 2025 on 21 February 2025 be set aside.

5    It is declared that the disposal of the property of Nuheara Limited ACN 125 167 133 (Subject to Deed of Company Arrangement) (Administrators Appointed) (Nuheara), the subject of a security interest in favour of the Appellant, to the Fourth Respondent did not protect adequately the interests of the Appellant.

6    Pursuant to section 1324(10) of the Corporations Act 2001 (Cth), the First to Third Respondents pay the Appellant damages representing the difference between the amount of the secured debt owed by Nuheara to the Appellant as at the date of the Orders (namely, the amount of $2,685,861.81) and the aggregate of $500,000 already paid to Realtek on 24 March 2025 and sums actually received by the Appellant from the Creditors Trust established on 19 June 2025.

7    The assessment of the damages payable to the Appellant by the First to Third Respondents be referred to a Registrar of this Court pursuant to rule 30.41 of the Federal Court Rules 2011 (Cth).

14    In that way, and as was confirmed in oral argument, the appellant made clear that the sole basis upon which it claimed to be entitled to damages was pursuant to an order under s 1324(10) of the Corporations Act. In particular, despite passages in its written submissions that might have suggested otherwise, the appellant disavowed any broader restitutionary claim, or claim for damages (as to which see, e.g., Kipoi Holdings Mauritius Ltd v Kirman [No 4] [2024] WASCA 145; National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386).

15    Ultimately, therefore, the practical utility of the appeal was said to be justified by:

(a)    the potential for the respondents to be made liable in damages pursuant to s 1324(10) of the Corporations Act; and

(b)    the potential for the appellant to obtain relief from the costs orders made below.

THE INTERLOCUTORY APPLICATION

16    Although in their written submissions the first respondents (supported by the fourth to sixth respondents) advanced a number of different bases upon which the relief sought in the interlocutory application might be granted, at the hearing only one argument was pressed: that the appeal should be dismissed (or permanently stayed) in the exercise of the Court’s discretion, on the ground that it lacked utility.

17    The reason the appeal was said to lack utility was because the claim for damages was hopeless, and without it the question of whether the primary judge erred in granting leave was entirely academic. Insofar as costs were concerned, it was submitted that they were insignificant, that the appellant had not taken reasonable steps to protect its own position, and in those circumstances, costs did not provide an independent justification to hear the appeal.

18    There was no dispute between the parties that the general position is as stated by the Full Court in Bonan v Hadgkiss (2007) 160 FCR 29; [2007] FCAFC 113 at [8] and [10]-[11] (Tamberlin, Stone and Siopis JJ):

As a general principle a Court should refuse to address an advisory opinion in respect of issues of which there is no longer a controversy between the parties (Bass v Permanent Trustee Company Ltd (1999) 198 CLR 334 at [47]). However, the Court retains discretion to continue to hear an appeal in circumstances where the subject-matter of the appeal has been rendered moot by reason of a change in circumstances or otherwise (Long v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 438 (Long); Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri (2003) 126 FCR 54 (Al Masri); Hope Downs Management Services Pty Ltd v Hamersley Iron Pty Ltd [2000] ATPR 40,501 (41-733) (Hope Downs)).

…

There is no limit on the considerations which may be taken into account in determining whether to exercise the discretion to continue to hear and determine the appeal where the only live issue between the parties is the costs order made below. However, the authorities show that the courts have had regard to the following factors in determining whether to exercise the discretion: whether the decision under appeal has ramifications which extend beyond the facts of the case in question and it is in the public interest that the issue be resolved (Al Masri 126 FCR 54); whether the decision under appeal reflects adversely upon the reputation of one of the parties and the determination of the appeal may serve to vindicate that party’s reputation (Vanstone v Clark (2005) 147 FCR 299); whether a finding of bad faith by the decision-maker has been made (Minister for Immigration and Multicultural and Indigenous Affairs v SBAN [2002] FCAFC 431); whether there is doubt over the correctness of the decision under appeal (Federal Commissioner of Taxation v Industrial Equity Ltd (2000) 98 FCR 573 (IEL); Al Masri 126 FCR 54); the amount of judicial resources which would be taken in hearing and determining the appeal (IEL 98 FCR 573); and the costs issue (Long [2002] FCAFC 438; Al Masri 126 FCR 54; IEL 98 FCR 573).

However, the presence of one or more of those factors does not mean that the discretion will be exercised in favour of hearing and determining the appeal. Each case must be considered on its own facts. …

CONSIDERATION

Is the appellant’s claim for damages claim hopeless?

19    Logically, the first issue to be decided was whether the appellant’s claim for damages is truly hopeless. It was only if that claim could fairly be described as unarguable that the premise of the first respondents’ application might then be established.

20    We have already observed that the sole basis for that claim was s 1324(10) of the Corporations Act, which states:

Where the Court has power under this section to grant an injunction restraining a person from engaging in particular conduct, or requiring a person to do a particular act or thing, the Court may, either in addition to or in substitution for the grant of the injunction, order that person to pay damages to any other person.

21    The availability of the power to order damages under that section thus in turn depends on the existence of the power to grant an injunction under the same section. That power is found in sub-section (1), which relevantly provides as follows:

Where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute:

(a)    a contravention of this Act

…

the Court may, on the application of ASIC, or of a person whose interests have been, are or would be affected by the conduct, grant an injunction, on such terms as the Court thinks appropriate, restraining the first-mentioned person from engaging in the conduct and, if in the opinion of the Court it is desirable to do so, requiring that person to do any act or thing.

22    The appellant identified only one provision of the Corporations Act the breach, or proposed breach, of which, it was submitted, enlivened the injunction power in s 1324(1) (and thus the power to award damages under sub-s (10)). That was s 442C(1), which prohibits an administrator from disposing of property of a company that is subject to a security interest, unless one of the exceptions in sub-s (2) applies. One such exception, of course, is that the disposal is made with the leave of the Court (s 442C(2)(c)).

23    The appellant accepted that when the first respondents sold Nuheara’s property, they did so with the leave of the Court (granted by the primary judge). It also accepted that, even if this Court set aside the primary judge’s orders granting that leave ab initio, that fact would not convert what was at the time a non-contravention of the Corporations Act into a contravention. As the appellant’s counsel put it: “even if the words ‘ab initio’ are inserted [in the Court’s order], that doesn’t overcome the Drury principle”. That was a reference to Dr Drury’s Case (1610) 8 Co Rep 141; 77 ER 688, the relevant aspect of which was summarised in Commissioner for Railways (New South Wales) v Cavanough (1935) 53 CLR 220; [1935] HCA 45 at 225 (Rich, Dixon, Evatt and McTiernan JJ) as follows:

Acts done according to the exigency of a judicial order afterwards reversed are protected: they are ‘acts done in the execution of justice, which are compulsive’ (Dr. Drury’s Case [(1610) 8 Co. Rep., at 143; 77 E.R., at p. 691].

24    It followed that the appellant accepted that, whatever the outcome of the appeal, the first respondents had not “engaged … in conduct that constituted … a contravention” of the Corporations Act. Nor, because the sale of Nuheara’s property occurred in the past, did it contend that the first respondents were “engaging … in conduct that … constitutes … a contravention” of the Corporations Act.

25    Rather, the appellant sought to anchor its entitlement to damages to the application for an injunction that it made before the primary judge. It was necessary that it do so, because damages pursuant to s 1324(10) can only be awarded in substitution for (or supplemental to) an injunction that is in fact sought under s 1324(1): Dungowan Manly Pty Ltd v McLaughlin [2012] NSWCA 180 at [5] (Bathurst CJ); McCracken v Phoenix Constructions (QLD) Pty Ltd [2013] 2 Qd R 27; [2012] QCA 129 at [30] (Fraser JA); Sutherland v Pascoe; in the matter of Matrix Group Limited as Trustee for the Matrix Group Unit Trust (in liq) (No 2) [2012] FCA 1361 at [39] (Jacobson J). The submission on the appellant’s behalf was expressed as follows:

The application before the Court for injunctive relief under [section] 1324 was a threatened contravention of the Act by a disposition of secured property without leave. If, ultimately, an order is made erroneously then in our respectful submission, that can’t be undone as an order. And we’re entitled to say not that there was a contravention now, but at the time we applied for injunctive relief, we had open to us a remedy under section 1324(10) that isn’t extinguished by an erroneous order that’s made granting leave. Otherwise we’re without a single remedy.

26    In other words, as we understood it, the argument proceeded by the following steps:

(a)    Before the primary judge, the appellant sought an injunction under s 1324(1) to restrain a threatened breach of s 442C of the Corporations Act.

(b)    Section 1324(10) empowers the Court to award damages in substitution for the grant of an injunction under s 1324(1).

(c)    If this Court were to find that the primary judge erred in granting leave pursuant to s 442C(2)(c) to the first respondents, then, while acts done pursuant to the primary judge’s orders are valid and lawful, viewed prospectively as at the time of the application for the injunction, the correct analysis is that leave should not be given, with the result that any transfer would involve a breach of s 442C.

(d)    It follows that the power to order an injunction pursuant to s 1324(1) was enlivened (because the first respondents were proposing to “engage in conduct that … would constitute a contravention of” the Corporations Act), and as a result so too was the power to award damages pursuant to s 1324(10).

(e)    Because there would be no utility in ordering an injunction at this point in time, an award of damages pursuant to s 1324(10) is properly made in substitution for it.

27    Because the asserted entitlement of the appellant to damages arises by way of substitution for the injunction that it sought, it was necessary to examine more closely the application that it had in fact made before the primary judge.

28    The injunction application was filed because the appellant took the view that the leave granted to the first respondents by the primary judge in Realtek (No 1) did not extend to a sale of Nuheara’s property pursuant to the revised DoCAs proposed by Orecchio, and it was concerned that the first respondents would proceed with a sale without obtaining fresh leave from the Court. In other words, the basis upon which the injunction was sought was that the first respondents were “proposing to engage in conduct that … would constitute” a contravention of s 442C of the Corporations Act (being a disposition of Nuheara’s property pursuant to a revised Orecchio DoCA, without leave having been obtained).

29    Whether or not there was at any point any prospect that the first respondents would proceed, without obtaining fresh leave, with a sale on terms other than those contained in the version of the Orecchio DoCA in respect of which the primary judge granted leave in Realtek (No 1), was not a question that we needed to determine. That is because, by no later than the time the application came on for hearing, it had been made pellucid that they had no intention of doing so. Indeed, an affidavit was sworn on behalf of the first respondents undertaking that they would not dispose of Nuheara’s secured property pursuant to any revised DoCA without obtaining leave from the Court: see Realtek (No 2) at [35]. The appellant did not cavil with the undertaking, at first instance or on appeal. It followed, as the appellant’s counsel accepted in oral argument before us, that at the time the primary judge came to determine the application for an injunction, there was no conduct in which the first respondents proposed to engage that would have constituted a contravention of the Corporations Act.

30    In other words, at all relevant times, there was never any issue between the parties about whether the first respondents could or would dispose of Nuheara’s property without leave of the Court. The only question was whether they should be granted leave to do so. As counsel for the appellants put it to the primary judge below, the question of whether leave should be granted was “the A side of the record, and the injunction was the B side, and no one devoted time to the B side”. The same point was made less evocatively by counsel for the first respondents below as follows:

If the 442C order is made, the injunction would have no work to do. If a 442C order is not made or amended, no injunction is necessary because the administrators have made it very clear that they won’t dispose of the property, absent some clarification of their ability to do so.

31    Ultimately, there was simply no demonstrated prospect of the first respondents engaging in the conduct that the appellant sought to restrain (that is, a disposal of Nuheara’s property without the leave of the Court). Perhaps more significantly for present purposes, however, the first respondents, to this day, have not engaged in the conduct that the appellant sought to restrain. In circumstances where the damages claimed by the appellant flowed from conduct other than that which was sought to be restrained, it simply could not be said that those damages would be awarded in substitution for the injunction that was sought. Indeed, the basis upon which damages were claimed was inconsistent with the basis upon which the injunction might have been granted (that is, a disposal with leave of the Court as opposed to a disposal absent leave). Viewed from another perspective, it is not unfair to characterise the appellant’s claim as one for damages for a breach of the Corporations Act that has not occurred, in substitution for an injunction that there was no basis to grant.

32    The appellant submitted that its argument was supported by the decision of Stevenson J in THC Holding Pty Ltd v CMA Recycling Pty Ltd [2014] NSWSC 1136. Counsel for the appellant invoked that decision in support of his argument in this way:

The validity of the act that’s done pursuant to the order isn’t undone by this Court. Effectively what this Court would do in setting aside the order is recognise that the interim acts done pursuant to the otherwise erroneous order remain valid. And that forces this Court to consider alternative remedy. The same way the Court in THC couldn’t undo the sale of the property that was properly sold by the administrators, but was the property of THC. It gave a substitution remedy. And that’s the purpose and effect of s 1324(10), to provide a remedy in those circumstances.

33    The relevant facts of that case can be summarised shortly. THC owned some scrap metal. It sought, and obtained, an ex parte injunction to restrain the administrators of CMA from dealing with that property. In fact, the administrators had already sold the scrap metal eight days earlier. The sale was, at the time it was made, in breach of s 442C of the Corporations Act. In circumstances where the property had already been sold, the injunction was dissolved, but Stevenson J held that THC was entitled to damages in substitution for the claim for injunctive relief (at [165]).

34    It may thus be seen that the award of damages in that case was, truly, in substitution for the grant of an injunction. THC sought an injunction to restrain conduct that would be in breach of s 442C of the Corporations Act. The Court’s inability to restrain that conduct meant that it was appropriate to award damages as a substitute remedy. The damages were awarded for loss caused by a contravention that had in fact occurred. Here, however, there was never any conduct, either threatened or actual, that would constitute a breach of s 442C. THC does not sanction awarding damages on the basis of a fiction, or a hypothetical state of affairs. Yet in seeking damages on the basis of a situation that ceased to exist when the first respondents gave their undertaking, that is what the appellant urged this Court to do.

35    For these reasons, we were satisfied that the appellant’s claim for damages was hopeless.

Is the controversy in relation to costs sufficient to avoid futility?

36    There was no evidence before us in relation to the quantum of the costs liability at stake on the appeal. While the hearings before the primary judge had not been extensive, it was certainly not possible to conclude that the costs that the appellant had been ordered to pay would be de minimis. Equally, while we did not understand it to be in dispute that the appellant is a large multi-national company of considerable means, and thus there was no suggestion that the liability in issue would have any material impact on its finances or operations, we proceeded on the basis that the appellant had a real and genuine interest in overturning the costs orders made by the primary judge.

37    Ultimately, however, we were not persuaded that there was any injustice in precluding the appellant from challenging the primary judge’s costs orders: cf. Bonan at [18]. That is because the appellant failed to take steps reasonably open to it to preserve the utility of its appeal. In particular:

(a)    On 13 March 2025 the primary judge made the order granting leave to the first respondents pursuant to s 442C(2)(c) upon which they relied in disposing of Nuheara’s property notwithstanding the appellant’s security interest.

(b)    The appellant did not seek a stay of that order, nor request any undertaking from the first respondents that they would not take any action in reliance on it (or in furtherance of the proposal contained in the revised Orecchio DoCA) pending the outcome of an appeal (or application for a stay). It did not do so either:

(i)    before the second meeting of Nuheara’s creditors at which the revised Orecchio DoCA was voted upon was held on 17 March 2025; or

(ii)    after that meeting, at which point it was known that the creditors had voted in favour of the revised Orecchio DoCA, but before that DoCA, and the sale agreement, was executed on 20 March 2025.

38    The appellant submitted, in response, that it was unable to apply for a stay because the primary judge did not publish his reasons in Realtek (No 1) and Realtek (No 2) until 27 March 2025. That inability was said to flow from the fact that the principles in accordance with which the discretion to grant a stay falls to be exercised require consideration of the prospects of success of the proposed grounds of appeal.

39    To obtain a stay pending an appeal it is “sufficient that the applicant for the stay demonstrates a reason or an appropriate case to warrant the exercise of discretion in his favour”: Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 694; Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 at 66. The range of considerations that may be relevant to the exercise of that discretion, and the weight to be accorded to any individual consideration, will plainly vary according to the circumstances of the particular case.

40    Thus, it may be accepted, as the appellant submitted in reliance on Henderson v Amadio Pty Ltd (No 3) (1996) 65 FCR 66 at 69 (Heerey J) that a “relevant consideration is whether the proposed appeal is genuine and based on reasonably arguable grounds”. But, as the decision in Henderson itself shows, that does not mean that a stay may not be granted in the absence of a notice of appeal (even in draft), or even the formulation of grounds of appeal. It may be possible, for example, to demonstrate that a proposed appeal is genuine and based on reasonably arguable grounds by reference solely to the nature and quality of the arguments presented at first instance. By parity of reasoning, it may not always be necessary to have regard to the reasons for judgment in order to demonstrate that an appeal (which is, of course, against orders) is genuine and based on reasonable grounds.

41    More than that, however, the proper exercise of the discretion to grant a stay will necessarily be required to be tailored to the particular circumstances in which the application is made. An applicant for a stay cannot be expected to articulate the substance of an appeal at a level of precision greater than that which is possible in the circumstances. If the primary judge’s reasons are not available, then that factor must be taken into account.

42    In this case, we considered that it was open to the appellant to approach the Court for a stay of the primary judge’s orders in the absence of his published reasons. It might have been expected that, on such an application, the appellant would have emphasised the potential for the very situation that has now materialised; namely, the possibility that the property would be disposed of with no ability to unwind the transaction in the event the appeal were to be successful. In the circumstances, the risk that the appeal would lack utility in the absence of a stay would no doubt have been argued to be a powerful consideration in support of the application, sufficient to outweigh the inability of the appellant to propound, at that point in time, the grounds upon which it would appeal.

43    But in any event, we did not accept that the appellant would have been unable to articulate, at a level of precision appropriate to the circumstance that it did not yet have the primary judge’s reasons, why it contended that its appeal was genuine and based upon reasonable grounds. If nothing else, it would have been open to the appellant, in light of the submissions that were put on its behalf to the primary judge, to submit that the making of the orders necessarily involved error. That conclusion is strengthened when regard is had to the fact that the primary judge made a brief statement accompanying the orders made orders on 13 March 2025, in the following terms:

I will make this observation before I make the orders in relation to the section 442C application. In Re Holdco, O’Bryan J observed at paragraph 47 that the words in section 442C that arrangements ‘to protect adequately the interests of the secured party owner or lessor’ would ordinarily contemplate arrangements – and I stress the word ‘ordinarily’ – seeking to obtain the best available return for the property being disposed of and the payment of such amounts to the security interest holder, owner or lessor in manner – and again, I stress these words – that is consistent with the principles found in Part 5.3A of the Act recognising the prior interest of the security interest holder, owner or lessor, as the case may be.

This is an unusual situation, and in my view, one cannot consider section 442C in a vacuum, particularly in circumstances where it is not the role of the Court to second guess what the creditors may or may not do. In this matter, it’s a question of two competing deeds of company arrangement. Viewed against the objectives of Part 5.3A, there is necessarily two alternatives in the particular circumstances of this case. Which alternative is a matter for the creditors. Against that background … I will make the order in paragraph 1 of the draft orders.

44    Accepting that those comments did not comprise the primary judge’s reasons for judgment, they nonetheless provided some indication of the basis upon which his Honour had arrived at his decision. They revealed a rejection of one of the fundamental points of principle that had been advanced on behalf of the appellant below (and which the appellant sought to advance on the appeal to this Court): that it was the primary judge, and not the creditors, who was required to choose between the competing DoCAs.

45    It follows that we did not accept the appellant’s submission that it had “no ability to meet the criteria by which this Court would evaluate whether or not to exercise the discretion to stay the order”.

46    For all of those reasons, we considered that the failure of the appellant to take reasonably available steps to protect its position and preserve the utility of the appeal meant that the existence of a dispute about the costs below did not provide (either alone, or in combination with those other considerations to which we will turn next) a sufficient reason to hear an otherwise moot appeal.

Other Considerations

47    The focus of the parties’ written and oral submissions was on the two points we have addressed above. We did not understand any party to submit that any other relevant consideration would provide a reason to hear the appeal independently of the conclusions we have reached in relation to those two dominant considerations. In particular:

(a)    It was not suggested, for example, that the decisions below had any direct ramifications beyond the present proceedings such that it would be in the public interest to hear and determine the appeal. Ultimately, the primary judge’s decisions involved the exercise of a discretion on the particular and unusual facts of this case. To the extent that the appeal raised any general questions of principle, it is appropriate that, to the extent that they may arise in future cases, they be addressed in the particular context in which that occurs.

(b)    While all parties proceeded on the basis that the appeal was arguable, it was not submitted that doubt about the correctness of the primary judge’s decisions was a factor that was relevant to the Court’s discretion.

(c)    There was no suggestion that the decisions under appeal reflected adversely upon the reputation of any person or entity, such that that provided a justification for determining the appeal.

CONCLUSION

48    Overall, it was for those reasons that we dismissed the appeal. We considered that to be the appropriate order, as opposed to a permanent stay, in circumstances where there was no conceivable basis upon which a live controversy in relation to the subject matter of the appeal could ever be revived.

Associate:

Dated:    4 December 2025

SCHEDULE OF PARTIES