Federal Court of Australia

Nipps, in the matter of i-Prosperity Pty Ltd (in liq) [2023] FCA 1446

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) (the Act), the time for making an application under s 588FF(1) of the Act in respect of the transactions listed in Annexure A be extended until 15 March 2025.

2.    Pursuant to s 588FF(3)(b) of the Act, the time for making an application under s 588FF(1) of the Act in respect of the transactions listed in Annexure B be extended until 15 July 2025.

3.    Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), the unredacted version of the affidavit sworn by Jeremy Joseph Nipps on 13 June 2023 and marked on its face as “confidential” and the annexures thereto are to be marked “confidential” and not made available for inspection until the termination of the liquidations of those companies the subject of this application and to which the applicants are appointed as liquidators (Companies), or until further order, on the ground that they contain confidential information the disclosure of which may prejudice the proper administration of justice.

4.    The applicants’ costs of this application be costs in the windings up of the Companies.

ANNEXURE A

(1)    Any payments made in the period 15 July 2018 to 15 July 2020 from i-Prosperity Pty Ltd (IPP) to investors/individuals recorded in the books and records of the IPP as a payment to an investor/individual.

(2)    Any payments made by IPG Chats SPV Pty Ltd (IPG Chats SPV) in the period 10 March 2020 to17 September 2020.

(3)    The entry into of a Deed of Settlement and Release dated 30 March 2020 between, amongst others, IPP and Forte Sydney Construction Pty Ltd, HNB Group Pty Ltd and Forte Sydney Management Pty Ltd.

(4)    Payments from IPP to Mrs Peng Yi, as follows:

(a)    a payment of $300,000 made on or around 10 January 2020 and

(b)    a payment of $100,000 made on or around 20 April 2020;

(5)    Payments made by IPP to Mingzhe (Jason) Zhang, as follows:

(a)    a payment of $700,000 made on or around 20 September 2019 and

(b)    a payment of $500,000 made on or around 7 February 2020;

(6)    The transfer on or about 21 February 2019 of 59,428,000 shares in Top Education, a company listed on the Hong Kong Stock exchange, from G&H Partners Co Pty Ltd (G&H Partners) to JY (Hong Kong) Holdings Limited, a Hong Kong entity.

(7)    The delivery on or about 29 February 2020 by Menghong (Michael) Gu to Mr Hua Zhong of:

(a)    $400,000 worth of casino chips which were redeemable at the casino operated in Melbourne by Crown Melbourne Ltd (Crown); and

(b)    $100,000 in cash.

(8)    The deposit on or about 2 March 2020 of $100,000 made by Mr Gu into Mr Zhong's account with Crown.

ANNEXURE B

(1)    The payment of $17 million made by IPP to David Hetao Gong (Mr Gong) on or about 2 March 2020.

(2)    Payments totalling $1 million made by IPP to Mr Gong on or about 11 and 12 February 2020.

(3)    A payment of $16,509.24 made by IPP to Mr Gong on or about 26 May 2020.

(4)    The alleged assignment of a loan owed to IPP by Regina Equities Pty Ltd (Regina Equities) from IPP to Mr Gong, which Mr Gong asserts took place on or about 17 January 2020.

(5)    Any payments made to facilitate the acquisition by Gong Capital Pty Ltd (formerly known as Lotus Capital Management Pty Ltd) (Gong Capital) as trustee for the IPG Sino Chatswood Central Fund of the leasehold for the Chatswood Central Shopping Centre, including:

(6)    The payment of $21,177.59 made by IPP to Sino PT Pty Ltd (Sino PT) on or about 26 May 2020.

(7)    The apparent “conversion” in or about 2020 in the books and records of IPP of amounts paid by IPP or IPU towards the acquisition of the Chatswood Central Shopping Centre into a loan from IPP to Regina Equities.

(8)    Any payments made by IPP to either Mr Menghong (Michael) Gu or Mr Zhou Xiao (Harry) Huang which were then on-paid to Crown Melbourne Ltd (Crown) in the period 15 July 2016 to 15 July 2020.

(9)    Any payments made by IPP directly to Crown on behalf of Mr Gu and Mr Huang in the period 15 July 2016 to 15 July 2020.

(10)    Any payments made by IPP to either Mr Gu or Mr Huang which were then on-paid to The Star Pty Ltd (Star) in the period 15 July 2018 to 15 July 2020.

(11)    Any payments made by IPG Chats SPV to either Mr Gu or Mr Huang which were then on-paid to Star in the period 15 July 2018 to 15 July 2020 (Star Claims).

(12)    Any payments made by iProsperity Australia Pty Ltd to either Mr Gu or Mr Huang which were then on-paid to Crown or Star in the period 15 July 2018 to 15 July 2020.

(13)    Any payments received by the online bookmaker known as “BetEasy” and operated by either BetEasy Pty Ltd or Sportsbet Pty Ltd, from IPP or from Mr Gu in the period October 2016 to January 2020.

(14)    The payment of $233,000 in March 2020 from IPP to Landerer & Co Legal Services Pty Ltd operating as Landerer & Co.

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

REASONS FOR JUDGMENT

BUTTON J:

1    The applicants are the liquidators of i-Prosperity Pty Ltd (i-Prosperity) and a further 11 companies of the “i-Prosperity” group (the Liquidators). The i-Prosperity group was a fund management enterprise, whose activities related primarily to investment in Australian real estate for high net worth foreign investors, some of whom invested via the “Significant Investor Visa” program. The Liquidators were initially appointed as joint and several administrators of many of the relevant entities on 15 July 2020, and were appointed liquidators on 19 August 2020. Different liquidators were appointed to two of the companies to which the applicants were initially appointed administrators. The Liquidators were also appointed to another i-Prosperity group company (IPG Chats SPV) on 17 September 2020.

2    The directors of the broader i-Prosperity group of companies (a total of 38 key entities) were Mr Menghong (Michael) Gu (Mr Gu) and/or Mr Zhou Zhang (Harry) Huang (Mr Huang). Mr Nipps, one of the Liquidators, gave evidence that both of these individuals left Australia in late July to August 2020 and have not been heard from since.

3    The Liquidators seek orders under s 588FF(3)(b) extending the time for making an application under s 588FF(1) of the Corporations Act 2001 (Cth) (the Act) in respect of two groups of claims. They seek an extension to:

(a)    the later of 15 January 2025 and the date that is 18 months from the date of the order in respect of the Annexure A claims; and

(b)    the later of 15 July 2025 and the date that is 24 months from the date of the order in respect of claims that are not already covered by Annexure A, but including specified Annexure B claims (ie a “shelf order” but including specified claims).

4    The Annexure A and Annexure B claims are set out in annexures to the Liquidators’ originating process.

5    Without any extension, the date by which the Liquidators would have been required to bring claims for relief in respect of voidable transactions was 15 July 2023 and, in the case of IPG Chats SPV, 17 September 2023: s 588FF(3)(a). The Liquidators’ application was made on 15 June 2023, prior to the expiration of the “paragraph (a) period”, as is required by s 588FF(3)(b). The originating process was amended after the hearing, on 20 November 2023, to remove reference to two applicants included in error.

6    Eighteen “interested parties” were given notice of the application. In addition to the seventeen named interested parties, notice was also given to an individual (Mr Zhong) who was accidentally omitted from the list of interested persons.

7    Six of those interested parties, constituting two groups — the Gong parties and the Landerer parties — ultimately filed affidavits and submissions opposing the relief sought by the Liquidators. I say “ultimately”, because their participation failed to adhere to the court-ordered timetable. The failure of the Gong and Landerer parties to meet numerous court-ordered deadlines necessitated vacating the original hearing date fixed for 20 September 2023, as well as the subsequent hearing date fixed for 31 October 2023. An email was sent by the Gong parties’ solicitors at one point regarding delays having been caused by health troubles, and an affidavit was also sworn by Mr Landerer concerning health troubles having caused delays (although that affidavit was not read on the hearing of the application). The Liquidators did not oppose extensions being granted to the Gong and Landerer parties although, as noted, two hearing dates had to be vacated as a result.

8    While the written submissions of the Gong parties and the Landerer parties opposed the application generally, their position was refined on the hearing of the application, at which they submitted that claims against them should be “carved out” from any extensions the Court may be persuaded to grant.

9    Mr Gong has also lodged proofs of debt to the tune of $43 million.

10    The other interested parties included Crown Melbourne Ltd, The Star Pty Ltd, BetEasy Pty Ltd and Sportsbet Pty Ltd. The two casinos advised the Liquidators they neither consented to, nor opposed, the extensions sought, and did not appear to make any submissions. The two betting entities (and several other interested parties) did not respond at all to material provided to them by the Liquidators concerning this application. A few other interested parties appeared at early case management hearings, but did not file any material in opposition to the application.

11    The parties relied on the following affidavits:

(a)    the Liquidators relied on three affidavits of one of the Liquidators, Jeremy Joseph Nipps, two sworn on 13 June 2023, and one sworn on 13 November 2023, and an affidavit of their solicitor, Stephanie Hogarty affirmed on 15 November 2023.

(b)    the Gong parties relied on two affidavits of their solicitor, David Greenberg, sworn on 11 October 2023 and 13 November 2023, and an affidavit of David Hetao Gong sworn on 17 October 2023; and

(c)    the Landerer parties relied on two affidavits of John Landerer sworn on 17 October 2023 and 15 November 2023.

12    Mr Nipps was cross-examined by counsel for the Gong parties.

13    Of the two affidavits sworn by Mr Nipps on 13 June 2023, one was an “open” affidavit which was made available to all the interested parties, and the other was an affidavit over which the Liquidators sought confidentiality orders. The confidential affidavit set out, in detail, the efforts made by the Liquidators to obtain funding, and amounts of funding received. The confidential affidavit was not initially made available to the interested parties. After the Gong parties sought access to the confidential affidavit, I brought the matter on for case management. The Liquidators subsequently engaged with the Gong parties, the outcome being that a redacted version of the confidential affidavit was provided to all interested parties who sought such a copy. During the hearing, counsel for the Liquidators confirmed that the application for a confidentiality order in respect of the unredacted version of the confidential affidavit was pressed, and counsel for the Gong and Landerer parties respectively confirmed that they did not wish to make submissions in opposition to that application.

14    As the Liquidators submitted, information concerning liquidators’ funding agreements and attempts by the liquidators to secure funding “is routinely the subject of a court ordered confidentiality regime”, albeit generally in the context of applications by liquidators under s 477(2B) of the Act for approval of entry into funding agreements: Kogan, Re Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856 at [30]–[31] (Cheeseman J); see also Hird, Re Allmine Group Ltd (in liq) [2018] FCA 781 at [47]–[48] (Gleeson J). Having regard to the fact that liquidators’ funding has been described as information of a “commercially confidential and sensitive kind” (see Onefone Australia Pty Ltd v One Tel Ltd (2010) 78 ACSR 163; [2010] NSWSC 498 at [2] (Barrett J)), I am satisfied that a confidentiality order in respect of the unredacted version of Mr Nipps’ confidential affidavit is appropriate to avoid prejudice to the proper administration of justice and in circumstances where a modestly redacted version has been made available to interested parties.

Legislative Provisions and Principles

15    Section 588FF(1) empowers the Court to make various orders in respect of voidable transactions, on the application of a company’s liquidator. The range of available orders includes an order that money be repaid to the company, the transfer of property back to the company, and disgorgement of benefits received under the voidable transaction. Section 588FF(3) provides as follows:

(3)     An application under subsection (1) may only be made:

(a)     during the period beginning on the relation-back day and ending:

(i)     3 years after the relation-back day; or

(ii)     12 months after the first appointment of a liquidator in relation to the winding up of the company;

whichever is the later; or

(b)     within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.

16    In Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at [24], French CJ, Hayne, Kiefel, Gageler and Keane JJ described the purpose of s 588FF(3) as follows (emphasis added, citations omitted):

The function of s 588FF(3), which reflects its immediate purpose, is to confer a discretion on the court to mitigate, in an appropriate case, the rigours of the time limits imposed by para (a). That is a discretion to be exercised having regard to the scope and purpose of Pt 5.7B, characterised in the Harmer Report as the continuing “policy” which underpinned its recommendations. That policy included the avoidance of transactions by which an insolvent company has disposed of property in circumstances that are regarded by the legislature as unfair to the general body of unsecured creditors. It is, however, a policy qualified in its application by the requirement that liquidators be placed under a reasonable time limitation for taking action under the voidable transaction provisions. A purpose of that qualification, expressed in “clear and emphatic” terms, is to favour certainty for those who have entered into transactions with the company during the periods in respect of which designated transactions may be voidable. There is, however, no independent basis for the assertion that any extension of time which does not identify a particular transaction or transactions must be an unreasonable prolongation of uncertainty militating against a construction which would allow such an order to be made. The section provides for the exercise of discretion by the court. Questions of what is a reasonable or an unreasonable prolongation of uncertainty and the scope of such uncertainty are more appropriately considered case-by-case in the exercise of judicial discretion than globally in judicial interpretation of the provision.

17    As the High Court made clear, certainty in commercial transactions is an important consideration underpinning the default limitation period Parliament selected. However, and as Spigelman CJ (with whom Mason P and Handley JA agreed) detailed at length in BP Australia Ltd v Brown (2003) 58 NSWLR 322 at [93]ff, pt 5.7B of the Act is concerned with fairness. As his Honour detailed, the regime is concerned with the unfairness arising from certain creditors “jumping the queue”, but recognises that the passage of time affects the balance of fairness.

18    There is now a considerable body of case law establishing the general principles to which regard is to be had in exercising the Court’s discretion to grant orders of the kind sought in this proceeding: see, eg, Marsden v CVS Lane PV Pty Ltd (2018) 124 ACSR 100; [2018] FCA 102 at [55], [59]–[60] (Gleeson J); Walker v CBA Corporate Services (NSW) Pty Ltd (2012) 88 ACSR 153; [2012] FCA 328 (Walker) at [43]–[44] (Nicholas J); Re Clarecastle Pty Ltd (in liq) (2011) 255 FLR 435; [2011] NSWSC 857 (Re Clarecastle) at [22], [132] (Ward J, as her Honour then was).

19    Ordinarily three issues are raised on an extension application:

(a)    the explanation for the delay in bringing proceedings;

(b)    a preliminary review of the merits of the foreshadowed proceedings, which involves considering whether the proposed proceedings would be so devoid of merit that it would be unfair to grant an extension and therefore expose the other party to the continuing prospect of suit; and

(c)    whether the likely actual prejudice resulting from an extension is sufficiently substantial to outweigh the case for granting an extension.

20    Some further points should be made about each of these three issues.

21    Matters such as the complexity of a company’s affairs and records (or lack thereof), the financial resources available to a liquidator, as well as the complexity of the investigations required (including the need to obtain advice and conduct examinations) are all relevant to the examination of the explanation for delay.

22    Where the liquidator’s purpose in seeking the extension is to have time to assess whether or not to bring proceedings, a preliminary inquiry into the merits may not always be necessary.

23    Further, prejudice may exist in a general sense without specific identification, eg through the natural impact of the passage of time on recollections.

24    The overarching question is what is fair and just in all the circumstances. Matters including the extent and reasons for delay, and prejudice, are factors to be taken into account. In this context, deliberately allowing a writ to “go stale” is likely to be regarded as “self-inflicted” and a deliberate decision by a liquidator not to pursue investigations in a timely manner may similarly be regarded as “self-inflicted” such that no extension ought be granted: Re Clarecastle at [141] (Ward J, as her Honour then was). However, it is recognised and accepted that liquidators may need to appropriately prioritise their work: see, eg, Arnautovic v Nichola [2009] NSWSC 233 at [12] (Barrett J); Krejci, Re Half Price Enterprises Pty Ltd (in liq) [2021] FCA 805 at [11], [25] (Markovic J); Parker, Re Worldwide Specialty Property Services Pty Ltd (in liq) v Worldwide Specialty Property Services Pty Ltd (in liq) [2017] FCA 687 at [25(a)] (Lee J).

Consideration

Explanation for delay

25    Mr Nipps’ evidence detailed, at great length, the challenges he and Mr Wight (the other liquidator) and their staff have experienced in untangling the affairs of the i-Prosperity group. According to Mr Nipps’ affidavits, the companies’ books and records were not organised in any logical manner, were incomplete, and untrustworthy (eg in relation to transactions being misdescribed in narrations). It is difficult, in any summary, to do justice to the extent of the difficulties encountered by the Liquidators. Since their appointment, the Liquidators have also been engaged in various pieces of litigation. Some of that litigation was initiated by the Liquidators — to avoid prejudicing interests in assets and to put another set of i-Prosperity companies (the Telco companies) into liquidation — but most of it was initiated by other parties, but required the involvement of the Liquidators for various reasons.

26    The Liquidators have also been engaged in time-consuming tasks relating to engagement with creditors, providing information to creditors, other liquidators and some government regulators, as well as progressing statutory document requests, generally seeking information and progressing public examinations and related document request procedures. The Liquidators’ activities have been further hampered by live access to the relevant server having become unavailable after that server was seized by the Financial Crimes Squad of the New South Wales police force around 14 August 2020, and vast amounts of email data only becoming effectively searchable after being loaded into “Relativity” in June 2021.

27    The Liquidators’ submissions summarised the ways in which their investigations have been hampered as follows:

(a)    The Companies’ affairs are very complex. Mr Nipps’ evidence is that some of the projects in which the Companies were involved entailed “extremely complicated structures”. The difficulties associated with obtaining an understanding of these commercial arrangements has been exacerbated by the counter-parties to the transactions being unco-operative in their responses to requests by the Liquidators for information and documentation.

(b)    The books and records of the Companies are intermingled and incomplete, requiring that the Liquidators reconstruct records in order to be in a position to review them. The Companies did not deploy an adequate or consistent document management system. The characterisation of transactions in the Companies’ books and records is unreliable and requires independent verification. Particular difficulties have been encountered with the Companies’ recording of transactions denoted as “loans”, where the Liquidators are continuing to review 368 transactions (purportedly relating to different parties) processed through a “Director Loan Ledger” and 614 transactions processed through an “Investor Loan Ledger” for the two year period immediately prior to the Liquidators’ appointment as administrators. The Liquidators have obtained documents from third parties relating to the affairs of the Companies, via subpoenas issued in proceedings in the Supreme Court of New South Wales, and have sought and obtained orders releasing the Liquidators from the implied undertaking that would otherwise inhibit the use that could be made of those documents.

(c)    The format in which electronic data of the Companies is stored has made review of that data time-consuming. In addition, the server of IPP was confiscated by the Financial Crimes Squad of the New South Wales police force so that the Liquidators lost access (albeit remote access) to the server and could only access the information saved on it by requesting documents from a third party consultant who had imaged the server data at the appointment date.

(d)    The directors of the Companies have not been forthcoming with information that may have assisted or expedited the Liquidators’ investigations. Save for some preliminary communications immediately prior to, and following, the Liquidators’ appointment, Mr Gu and Mr Huang have not been available to speak with the Liquidators or the Liquidators’ staff. The Liquidators understand that both men left Australia in July or August 2020, following which neither has been contactable.

(e)    To assist with their investigation of the affairs of IPP and IPG Chats SPV, the Liquidators are conducting public examinations in the Supreme Court of Victoria. Examination summonses have resulted in the production of a large volume of documents to the Liquidators, the contents of which require review. The public examinations of the examinees is still pending, and the dates fixed for the examinations have been adjourned to a date to be fixed, but not before 29 September 2023.

(f)    Investigations into the Companies’ affairs have been delayed on account of the Liquidators needing to address the Companies’ ongoing involvement in various Court proceedings. As detailed in the Nipps Affidavit, one or other of the Companies was, or is, involved in three separate proceedings in the Supreme Court of New South Wales, applications for the appointment of receivers (in the Supreme Court of New South Wales and in this Court), a proceeding in the Supreme Court of Victoria and three other proceedings issued in this Court.

(g)    The Liquidators have undertaken the vast majority of their investigations with very limited funding. The Companies had very limited cash reserves at the time of the Liquidators’ appointment. Extensive efforts by the Liquidators to obtain funding which are detailed in the Nipps Confidential Affidavit, have diverted the Liquidators from investigative work.

28    I accept those submissions as an accurate reflection of the evidence, and accept Mr Nipps’ evidence as to the material extent to which those impediments have hampered the Liquidators’ investigations.

29    I also accept, based on Mr Nipps’ evidence, that the Liquidators and their staff have been diligently pursuing a range of tasks concerning the liquidations with which they are charged. The Liquidators have been, and are, faced with very difficult circumstances and it is in no way surprising that they have not been able to finalise their investigations and initiate claims without obtaining extensions. They have had to, and have, prioritised their work.

30    In his first affidavit, Mr Nipps gave the following overview of the steps taken in the overall conduct of the administration and winding up of the Companies:

(a)     Undertaken a detailed review of the books and records of the Companies as produced to us on the date of our appointment;

(b)     Interviewed Michael Gu, the chief executive and director of the Companies;

(c)     Interviewed Harry Huang, the chief finance officer of the Companies and a former director of some of the Companies;

(d)     Undertaken interviews with a number of former employees and creditors of the Companies;

(e)     Prepared a detailed report to creditors for the purposes of s 439A of the Act and the second meeting of creditors;

(f)     Reviewed court documents relating to litigation that was on foot as against the Companies on the date of our appointment to the Companies;

(g)     Responded to subpoenas served on a number of the Companies;

(h)     Responded to a number of applications for leave under s 500(2) of the Act for proceedings to be commenced against one or more of the Companies;

(i)     Identified, preserved and realised a number of interests in assets available to one or more of the Companies, focusing in particular on possible proprietary interests held by the Companies and particularly those that were at risk if the Liquidators did not act swiftly;

(j)     Engaged with a number of potential funders on the possibility of those funders providing funding for the Liquidators to undertake further investigations and if warranted, litigation;

(k)     Engaged with creditors in response to queries made by them;

(l)     Served notices on a number of parties requiring the delivery of documents to the Liquidators;

(m)     Engaged in correspondence and attended meetings with creditors and the former advisors to the Companies to understand better the Companies’ affairs and to determine if there are any assets or claims to pursue;

(n)     Engaged in correspondence with Mr Gu’s trustee in bankruptcy, including submitting a proof of debt in the bankruptcy;

(o)     Provided regular written reports to the Committee of Inspection for IPP, convened a number of meetings of the Committee of Inspection for IPP and engaged with the other Committees of Inspection for the Companies as required;

(p)     Responded to numerous detailed requests for information from creditors both formally and informally, including pursuant to requests made under section 70-45 of the Insolvency Practice Schedule (Corporations). This required undertaking the following general steps for each request:

i.     engaging with creditors in respect of the request, including to address its scope, reasonableness and any funding we required to locate and provide the requested documents;

ii.     undertaking searches, and reviewing books and records, of the Companies to identify information responsive to the request, including where required, obtaining legal advice for matters such as privilege (by referring to this advice I do not waive any privilege attaching to such advice);

iii.     preparing various flow of funds analyses (for example, the flow of funds between the Companies and/or the Companies and investors or investments) to assist creditors;

iv.     collating documents responsive to requests and providing them to creditors;

v.     preparing briefs to creditors; and

vi.     attending meetings with creditors and, on occasions, their legal representatives;

(q)     Responded to a Notice to Produce issued by an Inspector appointed under section 20 of the Gaming and Liquor Administration Act 2007 (NSW) and a summons issued by Adam Bell SC appointed under the Casino Control Act 1992 (NSW) to provide information under section 8 of the Royal Commissions Act 1923 (NSW) to Mr Bell as part of his review of The Star and its Sydney Casino;

(r)     Responding to numerous requests made by, and otherwise engaging with, New South Wales (NSW) Police to provide information and otherwise deliver up books, records and equipment in the possession of the Liquidators relating to the NSW Police’s ongoing investigations into persons associated with the Companies, and specifically Mr Gu and Mr Huang;

(s)     Responding to, and producing documents in accordance with a notification of review by the Australian Taxation Office (ATO) dated 28 May 2021 for the five financial years ending 30 June 2016 to 30 June 2020 in respect of the following entities: [list of entities omitted]

(t)     Responding to various requests made by other regulators and government bodies for information and/or to deliver up book and records of the Companies;

(u)     Undertaken recovery activities to recover funds relating to:

i.     a property registered in the name of Moli Ventures Pty Ltd (Moli Ventures) which had been purchased by G&H Partners Co. Pty Ltd using funds from IPP and was transferred to Moli Ventures without Moli Ventures paying sufficient consideration;

ii.     payments made by IPP and IPG Asset Services to repay part of a $17 million loan from Tor Asia Master Fund to IPG Chats SPV, which loan was guaranteed by a member of co-sureties;

iii.     the payment by IPP of Stamp Duty for the acquisition of a development property in Rhodes, Sydney, which was registered to i-Prosperity Waterside Rhodes Pty Ltd;

iv.     a property purchased off the plan by the company Elite Opera Holdings Pty Ltd, for which the deposit and FIRB fees were paid using IPP’s funds;

v.     a property purchased in the name of LZYH Pty Ltd for which IPP paid loan repayments to the registered mortgagee, National Australia Bank Ltd (NAB);

vi.     units held by IPP in the IPG Mortgage fund;

vii.     a voidable transaction against the ATO to recover preference payments made to the ATO;

viii.     funds held in bank accounts in the name of various Companies that were subject to freezing orders made by the Supreme Court of New South Wales prior to the Administrators’ appointment;

ix.     a loan advanced to John Landerer by IPP or IPG;

x.    a loan from IPP to Beef Life Burwood NSW Pty Ltd; and

xi.     realising units held by IPA in managed investment funds.

31    In addition, the Liquidators have pursued public examinations in relation to their claims against Crown and Star. Those proceedings resulted in both casino entities producing substantial volumes of documents in response to orders for document production, an issue which is discussed further below.

Funding

32    Mr Nipps’ evidence was that the liquidations were largely “unfunded”, by which he meant not funded by assets of the companies in question. To a large extent, the liquidations have been “self-funded”, by the Liquidators’ firm accruing work in progress, and bearing the salary costs of the staff. The total remuneration bill to date is in excess of $7.5 million, and recoveries to date in the order of $3.75 million have all been absorbed by being applied to outstanding costs.

33    The Liquidators have, however, secured some third party funding. Mr Nipps detailed the extensive efforts undertaken to attempt to secure third party funding on acceptable terms. I will return to one body of funding that has been secured, as it featured prominently in the Gong parties’ submissions. In terms of future funding, Mr Nipps’ evidence was not detailed, but was to the effect that the Liquidators continued in discussions with third party funders (litigation funders and creditors) and remained hopeful that further funding would be secured to pursue the identified claims. Mr Nipps referred to having offers in the next few months for consideration by the Committee of Creditors, or to be the subject of a potential application to the Court. Nevertheless, it must be acknowledged that it is not clear that the Liquidators will certainly have funds to pursue all of the investigations and such claims as it may be thought worth prosecuting once those investigations are completed. That said, the Liquidators have self-funded much of the work to date, and it was not suggested by Mr Nipps in his evidence (nor was it put to him in cross-examination) that no more self-funding would occur, such that any extension would prove futile in the absence of third party funding being secured.

FEG funding, delay and engagement with the Gong and Landerer parties

34    One success that the Liquidators did enjoy was “Fair Entitlements Guarantee” (FEG) funding that was secured in June 2022; the initial request for FEG funding was made in October 2021. As was stressed by the Gong parties, that funding was sought and obtained to conduct public examinations of Mr Gong, Mr Landerer, Crown and Star, but the Liquidators only proceeded to make public examination applications in respect of Star and Crown. In cross-examination, Mr Nipps explained that, as the work involved in the Star and Crown public examinations was more extensive than had been anticipated initially, the Liquidators made a “strategic decision” to pause on the Landerer and Gong public examinations and redirect all the funding to Crown and Star. Mr Nipps accepted that the work on the Landerer and Gong public examinations had been paused before it turned out that Crown and Star produced significant quantities of documents, putting pressure on the budget. Mr Nipps explained that the Liquidators focused on the Crown and Star investigations as the Gong and Landerer claims involved very complex transactions, whereas the casino claims involved a clearer forensic tracing exercise, which could be progressed more quickly.

35    Mr Nipps’ evidence was that the Liquidators had continued to intend to proceed with public examination proceedings in respect of Mr Gong and Mr Landerer, while noting that, if sufficient documentation was produced, it may not be necessary to proceed with oral examinations. He rejected the suggestion that the Liquidators remained undecided about whether any public examination proceedings were necessary in respect of the Gong and Landerer parties. It appears from Mr Nipps’ evidence that the Liquidators’ solicitors were presently reviewing a package of material with a view to formulating public examination applications. Mr Nipps was otherwise not across the detail of the exact investigatory steps to be undertaken, as senior staff handled such matters.

36    Mr Nipps rejected the suggestion that, with funding in mid-2022, public examination proceedings could have been initiated straight away. He pointed to the level of work needed to get to the point of actually issuing proceedings. Mr Nipps did not accept that the decision to focus on the casino claims was taken in July 2022:

Is it correct that in July of 2022 you made the decision to concentrate on the casinos and leave Mr Gong and Mr Landerer for the time being?---That’s not correct. It wasn’t July, and like I said I don’t recall specifically when between June and making that call — when Barry and I — Mr [Wight] and I had a discussion in consultation with our solicitors to focus on the casino claims. I don’t recall specifically when that decision was made.

37    Returning to the funding in relation to the Star and Crown public examinations: while further funding was sought from the Attorney General’s Department (which administers FEG) in late October 2022, some further funding was not secured until February 2023. There was a lot of back and forth.

38    I accept Mr Nipps’ evidence that the Liquidators have undertaken a great deal of work to secure third party funding (albeit they have so far enjoyed relatively modest success). I also accept that their lack of external funding has hampered the progress of the Liquidators’ investigations, although the degree to which that has slowed things down is hard to judge in view of the significant extent to which the Liquidators have self-funded.

39    In relation to the pausing of work on the Gong and Landerer investigations, the Liquidators ought not be criticised for devoting their FEG funding to seeing through the making of public examination applications in relation to Crown and Star, and reviewing the significant volume of material received from those entities. Accordingly, I do not accept that, as counsel for the Gong parties, urged, there was a decisive “fork in the road” in July 2022 and that the Liquidators’ election to focus their energies on the Crown and Landerer investigations was a strategic choice that should result in no extension being allowed. While the decision to focus on the Crown and Star investigations was indeed a strategic decision, it is one that has been satisfactorily explained. There was no decision to effectively abandon those investigations, which decision is sought to be reversed by an extension application late in the piece.

40    Mr Nipps also explained the Liquidators’ view that the Gong and Landerer investigations would need to be progressed by compulsory court processes on the basis that they had seen how uncooperative Mr Gong and Mr Landerer were. The Gong parties drew out that much of the basis for this view of Mr Gong, as it was set out in Mr Nipps’ initial affidavit, concerned interactions with Mr Gong concerning his claims as a creditor in the liquidations, when the Liquidators had had only one written exchange with him in relation to claims against the Gong parties over the period of the liquidation. In addressing this matter, Mr Nipps also observed that the Liquidators had had significant interactions with Mr Gong through litigation in which they were both involved.

41    Having regard to these matters, the very limited attempts to engage with Mr Gong regarding potential claims against the Gong parties over the course of the liquidations is concerning. That said, given there was a great deal of interaction with Mr Gong in relation to other matters, there is a rational explanation for the Liquidators’ assessment that engagement needed to be pursued through compulsory processes.

42    Counsel for the Landerer parties resisted the suggestion that Mr Landerer had been unhelpful in his dealings with the Liquidators. While, as counsel for the Landerer parties pointed out, Mr Landerer did provide some information and documents, some of his responses were decidedly unhelpful and flippant. For example, the Liquidators repeatedly asked Mr Landerer for details of amounts advanced in respect of the Regina Equities loan (which is further explained below). Instead of providing the details requested, Mr Landerer, a practising solicitor, said:

I am puzzled by your repeated request for a schedule of amounts advanced. If you do not have evidence of the advances, then perhaps I should get my money back and the balance credited.

43    Mr Landerer was no more forthcoming when the Liquidators renewed their request in answer to this correspondence. Counsel for the Landerer parties suggested that, if the Liquidators were unhappy with Mr Landerer’s response, they could, and should, have commenced at that stage (first quarter of 2022) a public examination procedure to obtain the documents and information Mr Landerer was not providing. I do not accept that the Liquidators’ explanation for their delay in this case can be swept away on the basis that they should have commenced proceedings to obtain each discrete piece of information or documentation that the Landerer parties (or any other person, including the Gong parties) had not provided. That would be a deeply inefficient course to take and one that, not surprisingly, did not recommend itself to the Liquidators.

The potential claims

Evidence regarding potential claims

44    It is important to note that many of the potential claims that the Liquidators have identified involve very substantial sums, most involving multiple millions of dollars. The potential claims against Crown total about $50 million, and the claims against Star exceed $12.5 million. The sum of the potential claims exceeds $122 million.

45    The quantum of the potential claims is, in my view, relevant for two reasons. First, the unfairness associated with certain creditors “jumping the queue” is obviously greater the larger the sums involved. Secondly, while the Liquidators have made it clear that they are investigating a range of identified claims — and have not ruled out further claims still being uncovered, hence the “shelf order” — the investigation and potential pursuit of these claims constitutes the only prospect of the body of creditors seeing any dividend. The Court is not being asked to extend the time frame for pursuit of trivial or low-value claims.

46    Mr Nipps’ evidence detailed the potential claims that have been identified against defendants whose identity has been ascertained, referred to as claims concerning the “Ascertained Counterparties”. These claims cover a range of kinds of voidable transactions (unfair preferences, and uncommercial or unreasonable director-related transactions). All of these potential claims are still under investigation and the Liquidators are not yet in a position where they can assess the prospects of success of this group of claims.

47    Mr Nipps also identified a second group of claims in respect of which the Liquidators have not been able to finally determine the necessary defendants. The investigations that the Liquidators still need to take in respect of this group of claims is more extensive.

48    In addition, Mr Nipps stated in his evidence that there remained the prospect of the Liquidators obtaining material that would support hitherto unidentified claims, which may be voidable. Some of these potential claims may be significant, as some such claims related to major acquisitions in which the companies were involved (such as the Chatswood Central Shopping Centre).

49    The Liquidators sought the longer extension period in relation to potential claims against the two casinos (Crown and Star) and the Gong and Landerer parties, as well as the two betting companies (EasyBet and SportsBet). The Liquidators sought the somewhat shorter extension of 18 months in respect of other claims against Ascertained Counterparties, as well as two categories of claims against unascertained counterparties. Those two categories of claim are described as follows in Annexure A to the originating application:

1.    Any payments made in the period 15 July 2018 to 15 July 2020 from i-Prosperity Pty Ltd (IPP) to investors / individuals recorded in the books and records of the IPP as a payment to an investor / individual.

2.    Any payments made by IPG Chats SPV Pty Ltd (IPG Chats SPV) in the period 10 March 2020 – 17 September 2020.

50    The different extension periods sought by the Liquidators reflect the extent to which their investigations are advanced in respect of the different groups of claims and whether (as is the case in respect of most of the Annexure B claims), the Liquidators anticipate conducting public examinations (or at least commencing such proceedings to obtain documents).

51    Mr Nipps deposed that, in order to confidently determine whether to bring applications under s 588FE of the Act for some or all of the potential claims, the Liquidators need to undertake the following steps:

(1)    obtain further books and records from the companies;

(2)    conduct a review of any further recovered books and records from the companies;

(3)    complete the review of the documents that have been produced and are still to be produced in the Examination Proceedings for the Crown and Star claims;

(4)    consider whether there is a need to undertake any further public examinations of persons that may have information in relation to the examinable affairs of the companies and complete such examinations;

(5)    conduct a detailed investigation into a number of potential claims to substantiate the claims prior to taking any steps towards making the necessary application(s);

(6)    identify any further potential claims;

(7)    obtain advice as to the merits of any claims and the potential benefit to the companies in prosecuting the claim — including assessing the “risk-reward” ratio of the claim to determine whether the potential recovery (and the likelihood of succeeding in the prosecutions) warrants the time and cost of prosecuting the claim;

(8)    prepare court documents required for the commencement of proceedings to seek relief in respect of the impugned transactions; and

(9)    brief counsel in regards to prosecuting one or more of the potential claims.

The Gong and Landerer-related claims

52    The potential claims concerning the Gong and Landerer-related parties are the subject of the Liquidator’s application for an extension of 24 months. Those claims are set out in items 1–7 and 14 of Annexure B to the originating process.

53    Payments to Mr Gong: these payments exceed $18 million and were paid in the months prior to i-Prosperity entering administration (and shortly thereafter, liquidation). To the extent that Mr Gong has sought to explain the payments, his explanation was that he had a lot of dealings with i-Prosperity group companies and amounts owed to him were paid down piecemeal. The Liquidators wish to continue to investigate these very substantial payments.

54    The Liquidators also noted that neither Mr Gong nor Mr Landerer is a detached third party trade creditor. Rather, their engagement with the i-Prosperity group was much deeper. In his first affidavit, Mr Nipps identified the following matters in respect of Mr Gong’s level of involvement in the affairs of the i-Prosperity group:

(a)    the i-Prosperity email database revealed that Mr Gong was recorded as having the role of “General Manager” from mid-2017 to January 2018;

(b)    Mr Gong’s wife, Daisy Li, was an employee of the i-Prosperity group companies from 1 April 2019 to the commencement of the administration;

(c)    Mr Gong also held directorships and shareholding interests in several entities which formed part of the broader i-Prosperity group of companies.

55    Mr Nipps also detailed the ways in which Mr Landerer was similarly involved in the affairs of the i-Prosperity group. Mr Landerer’s firm, Landerer & Co, was regularly involved in transactions concerning companies in the group and he regularly exchanged emails with Mr Gu and Mr Huang about business matters. From September 2018, Mr Landerer was described on the i-Prosperity website and on its social media as the Chairman of the i-Prosperity group of companies. Mr Landerer explained the video, in which he introduced himself as Chairman and which was posted to Twitter on 12 February 2019, as having been “made by mistake” and subsequently removed. Mr Gu’s sister also worked in Mr Landerer’s firm for 18 months. Although Mr Landerer said he had not had much contact with her (to explain why he initially denied knowing who she was), he was sufficiently annoyed by her resignation at the time to send an email of complaint directly to Mr Gu.

56    The Regina Equities loan (item 4 of Annexure B) concerns both the Gong parties and the Landerer parties. It appears that there was originally a loan made by i-Prosperity to Regina Equities Pty Ltd (a Landerer-related company). Mr Landerer and Mr Gong say the loan was assigned by i-Prosperity to Mr Gong in January 2020, but the Liquidators do not accept either the date or the effectiveness of the assignment. They also question whether the loan was assigned to Mr Gong at an undervalue (being a set-off of debt of $1 million). The Gong parties and the Landerer parties stressed that the Liquidators have known of the loan, and the purported assignment, since at least August 2020 when Mr Landerer addressed a letter to the Liquidators to which he attached a Loan Agreement between i-Prosperity Pty Ltd and Regina Equities Pty Ltd and a document said to evidence the assignment of the debt to Mr Gong.

57    Two of the claims (items 5 and 7 of Annexure B) relate to the Chatswood Central Shopping Centre. In his affidavit, Mr Gong set out some of the rather complex history concerning the acquisition of the leasehold and the role of companies and trusts associated with him, with Mr Landerer, and i-Prosperity, as well as steps taken by Mr Gong to later buy out i-Prosperity’s interest. As the Liquidators emphasised, this was a complex transaction. Mr Nipps deposed to the Liquidators intending to conduct further investigations into this transaction, including into how the acquisition of the shopping centre and the later re-structure were funded, and whether there are any other uncommercial transactions arising from payments made by three i-Prosperity group companies to assist Gong Capital to acquire the shopping centre leasehold. These further claims are covered by item 5 of Annexure B.

58    Counsel for Mr Gong submitted that the claims set out in item 5 of Annexure B obviously have no merit as the Liquidators have identified July 2019 as the date of insolvency. However, as counsel for the Liquidators pointed out, this overlooks that the Liquidators stated their opinion was that the companies were insolvent by that date, or “possibly much earlier”. Clearly enough, the precise date of insolvency and the Liquidators’ capacity to prove that in contested litigation is a matter that would require attention in determining whether to ultimately commence proceedings. Suffice it to say that, at the level of preliminary assessment (to the extent it is even appropriate to engage in such analysis when the Liquidators’ application for an extension seeks time to pursue investigations (see Walker at [43] (Nicholas J) and Green v Chiswell Furniture Pty Ltd (in liq) [1999] NSWSC 608 (Green) at [15] (Austin J))), I do not accept that a “latest date” for insolvency specified by Mr Nipps renders the claims hopeless. In addition, I note that the claims specified in item 5 of Annexure B are not limited to the two specific payments that are identified in that item.

59    In relation to the claim referred to in item 14 of Annexure B, counsel for the Landerer parties noted that, in response to a request from the Liquidators in October 2020 regarding a payment of $233,000 to Landerer & Co, Landerer & Co promptly provided details of the firm’s invoices that those funds were credited against. That was more helpful, and it is correct to say that that the Liquidators have had that information for a long time. Yet the Liquidators remain of the view that the payment (made on 3 March 2020) may be voidable as an unfair preference. In essence, it appears that completing their investigation of that matter has been wrapped up in the overall decision to prioritise work on the Crown and Star claims, and pause work on the Gong and Landerer-related claims.

Assessment of potential claims

60    In my view, the identified claims have sufficient apparent substance to warrant the Liquidators continuing to investigate them in order to ascertain whether they have sufficient merit, and prospects of recovery, to warrant litigation.

Prejudice

61    Other than the presumptive prejudice arising from delay, none of the interested parties claimed specific prejudice, other than the Gong and the Landerer parties.

62    Mr Landerer claimed specific prejudice. He claimed that the ongoing spectre of litigation by the Liquidators involving his firm was responsible for his inability to obtain top up insurance (other than very limited top up insurance at a very high premium). He also said that his association with i-Prosperity has been raised with him whenever he has applied for personal credit, although he has not been refused credit. Given that matter, and the lack of detail concerning any such applications for credit, I do not accept Mr Landerer has, or would, suffer personal prejudice in that regard.

63    In relation to the matter of top up insurance, an email to Mr Landerer from Lawcover stated that some panel members had concerns about offering top up insurance in light of “the size of the payment in claim [reference number given] and the recent media coverage of potential liquidators’ examinations arising from your practice’s dealings with i-Prosperity”. I accept that the public association of Mr Landerer and his firm, and the ongoing risk of public examinations, appears to have hampered Mr Landerer’s prospects of obtaining top up insurance at a reasonable cost. However, such prejudice is one factor to be considered; it is not determinative. Further, even if claims concerning the Landerer parties were (as was submitted should occur) “carved out” of the extensions, Mr Landerer would remain at risk of being the subject of a public examination either in connection with other claims, or in connection with claims other than voidable transaction claims.

64    Mr Gong claimed specific prejudice on a number of bases. First, he said that, in December 2022 he accepted a global settlement offer from Mr Landerer, which included the Regina Equities loan. Mr Gong deposed that, in deciding to settle with Mr Landerer, he took into account that the Liquidators had not, to that point, pursued a claim in respect of the Regina Equities loan, even though they had pursued another loan claim with some success. Mr Gong said he believed that there were “reasonable prospects” that the Liquidators had by then abandoned the Regina Equities loan, although he said in his evidence that he did appreciate the risk that the Liquidators may seek to challenge the loan.

65    In my assessment, Mr Gong made a commercial decision to settle with Mr Landerer and was prepared to take the chance that the Liquidators would yet pursue the Regina Equities loan. He settled with Mr Landerer in December 2022, eight months before the expiry of the default period provided for in s 588FF(3)(a) of the Act. This was not a deal agreed to as the final days of that period ran down. I do not consider that the extension of the period during which Mr Gong remains exposed to a risk he had already decided to run constitutes a material prejudice on the facts of this case.

66    Mr Gong also said that Mr Huang had stopped responding to his messages in February 2022 and he was of the view that, if the Liquidators obtained an extension of time, he will not be able to have Mr Huang assist him with any proceedings brought against him. Mr Gong thought that Mr Huang might have been more willing to assist him if proceedings had been commenced by the Liquidators earlier. It appears from Mr Gong’s evidence that Mr Huang stayed in touch with him until Mr Gong made it clear he would not be providing any more loans to Mr Huang. I do not consider the fact of Mr Gong’s continued lack of access to Mr Huang, who ceased contact for apparently commercial reasons — viz, Mr Gong making it clear that no more loans would be forthcoming — constitutes a material prejudice that ought to be taken into account.

67    The third and final form of prejudice raised by Mr Gong was that his records are stored at two locations in Australia, but he now spends much of the year in China to attend to business concerns, which would make it more difficult to access documents and provide prompt instructions to his solicitors. Mr Gong’s living arrangements are a matter for him. If he wished to, no doubt he could arrange for such hard copy records as are presently in Australia, to be delivered to him in China. I do not accept this is a material form of prejudice that ought to be taken into account.

68    Accordingly, with the exception of the access of Mr Landerer’s firm to top up insurance being compromised to some degree, I do not accept that any specific prejudice has been established.

Resolution

69    The Liquidators accept that there has been significant delay, and that the extensions they seek are at the outer edges, if not beyond, the length of extensions that have previously been granted by this Court. It cannot be gainsaid that the Liquidators have been aware of a number of the claims they wish to continue to investigate, with a view to potential prosecution, for some time. But being aware of the existence of a potential claim is one thing; such claims had to be investigated, and their prospects assessed, before the Liquidators could responsibly commence proceedings. I also accept that the Liquidators have been faced with a momentous and complicated task, the magnitude and difficulty of which has only been compounded by the directors disappearing (and therefore offering no assistance in untangling the companies’ complicated affairs). While aware of many potential claims, they have not been able to complete their investigations due to the need to respond to the vast range of matters and enquiries to which Mr Nipps deposed. The Liquidators have not been sitting on their hands, which is a significant point of distinction from the circumstances addressed by Ward J (as her Honour then was) in Re Clarecastle.

70    As the Liquidators are seeking an extension to put themselves in a position where they can properly decide whether or not to bring proceedings, it is not necessary to conduct a preliminary enquiry into the merits: see, eg, Green at [15] (Austin J); Chin, Re Agatha Trading Pty Ltd (in liq) [2020] FCA 991 at [35] (Markovic J); Langdon, Re Phoenix Institute of Australia Pty Ltd [2021] FCA 180 at [33] (Markovic J); Walker at [44] (Nicholas J). The question is whether the Liquidators should be granted an extension in which to pursue potential claims. The Liquidators have set out, in some detail, the potential claims they have identified, and have detailed the enquiries they consider they need to make, and the advice they will require, in order to finalise their views on whether or not particular claims should be pursued.

71    With the exception of some specific prejudice being experienced by Mr Landerer’s firm, extending the time for the pursuit of voidable transactions will not occasion specific prejudice, although I accept that any extension necessarily occasions presumptive, or general, prejudice through the passage of time.

72    I am mindful that Parliament has set a limitation period of three years. That limit was set for the policy reasons I have referred to above. Nevertheless, Parliament also saw fit to provide for Liquidators to have the capacity to obtain a single extension from the Court. In my view, while mindful of purposes which limitations serve and the fact that the statutory regime anticipates that sometimes the best course is for loss to lie where it falls, the Court should not shy away from exercising the power to extend the period in appropriate cases. The default three year limit may well be sufficient in most liquidations, but these liquidations involve the affairs of multiple companies and have been beset by difficulties arising on numerous fronts. In my view, interests of justice do not lie in foreclosing the possibility of further investigations, and potential litigation of claims.

73    Ultimately, I must consider what is fair and just in all the circumstances. In my view, the time period for commencing voidable transaction proceedings should be extended for the potential claims that the Liquidators have identified. I include in this the potential claims against the Gong and the Landerer parties. While the Liquidators did pause their preparations in respect of the intended public examinations of Mr Landerer and Mr Gong, the need to prioritise work and the allocation of funding was a feature of the circumstances they faced; it was not tantamount to a decision to simply let the clock run down on a limitation period. Moreover, Mr Gong and Mr Landerer were both, as referred to above, involved in the affairs of the i-Prosperity group in ways that set them apart from the general body of persons dealing with a company that subsequently enters liquidation.

74    The potential claims involve a significant aggregate quantum. With the exception of some claims — which are of such a modest quantum that it would not make sense to pursue them independently of other claims against the same entities — most of the claims identified by the Liquidators are also each of significant quantum. Of course, it must be recognised that the claims are, at this stage, merely potential claims, but in my view the Liquidators ought to have time in which to pursue their investigations of those claims, to see if they have merit and ought to be pursued. Pursuit of substantial claims presents the only prospect of unsecured creditors receiving any dividend.

75    For these reasons, I consider that it is appropriate to grant the Liquidators extensions in respect of the claims identified in Annexure A and Annexure B to the originating application. I am not, however, satisfied that there should be a general “shelf order” for two reasons. First, the evidence of Mr Nipps shows that, over the last three years, the Liquidators have obtained an extensive knowledge of the affairs of the i-Prosperity group. While the Liquidators have been unable to pursue and finalise the investigation of numerous identified potential claims, they have identified a large number of potential claims. In my view, it is unlikely that the Liquidators have, in the course of all their work over the past three years, simply failed to notice a significant potential claim.

76    Secondly, with the exception of those who may face the claims specified in items 1 and 2 of Annexure A to the originating application (and potentially claims in relation to the Chatswood Central Shopping Centre claims specified in item 5 of Annexure B), other potentially affected persons have been notified of the Liquidators’ application, which was made prior to the expiration of the original three year period. The objective of certainty in commercial affairs is more powerful in respect of this group of potential defendants; unlike Mr Gong, Mr Landerer and the other interested parties, they know nothing of any potential that claims may be advanced beyond the default three year time frame. Nor, in the absence of any compelling reason to think that significant claims have remained unidentified, are there any strong countervailing factors.

77    While counsel for the Liquidators noted that, if some presently unknown claim were uncovered, it cannot be pursued for the benefit of creditors of the companies if there is no shelf order, that is a function of the statutory regime; it is not, of itself, a factor that warrants extending the time limit when there is nothing to suggest that there is a real chance that material claims have, in all the work done to date, simply been overlooked.

78    The final question is how long the extensions should be. The present application was filed in June 2023. At that stage, the extension sought in respect of the claims in Annexure A was the later of 15 January 2025, or 18 months from the date of orders being made. In the case of the claims in Annexure B, it was the later of 15 July 2025 or the date that is 24 months from the date of orders being made. In submissions, counsel for the Liquidators accepted that the passage of time since the application was filed is relevant, but submitted that the Liquidators have been in a state of uncertainty since the Gong parties, and then the Landerer parties, indicated they wished to oppose the application. Counsel also noted that the hearing of the application has been significantly delayed by the inability of the Gong and the Landerer parties to comply with the court ordered timetables.

79    I accept that the time that has passed since the application was filed should not simply “come off the top” of the extensions sought. However, to allow 24 months (in the case of the Annexure B claims) would extend the period until late November 2025, which is an exceptionally long period. As a benchmark, doubling the statutory three year period would take the date to 15 July 2026 (or 17 September 2026 in the case of IPG Chats SPV). In my view, balancing the competing considerations, the appropriate course is to:

(a)    limit the extension in respect of the claims in Annexure A to 15 March 2025, which allows for two end of year periods being encompassed in the period of the extension;

(b)    limit the extension to the specific date sought by the Liquidators in respect of the Annexure B claims, being 15 July 2025, which is just short of 20 months from the date of my orders.

Associate:

Dated:    22 November 2023

SCHEDULE OF PARTIES