Federal Court of Australia

Park v Privium Pty Ltd (in liq), in the matter of Privium Pty Ltd (in liq) [2025] FCA 500

ORDERS

IN THIS ORDER:

A.    The Wormwell Parties means:

(a)    Neil Wormwell;

(b)    Donald Wormwell;

(c)    Bendee Investments Pty Ltd;

(d)    Emerald Sky Investments Pty Ltd as trustee for the DK & AC Wormwell Family Trust;

(e)    Random Super Pty Ltd as trustee for the Random Super Fund; and

(f)    Ironbark Investments Pty Ltd.

THE COURT ORDERS THAT:

2.    Subject to order 2, the period during which the plaintiffs are to make any application pursuant to s 588FF(1) of the Corporations Act 2001 (Cth) in relation to the first, second, third, fourth, fifth and sixth defendants is extended until 13 May 2026.

3.    The period during which the plaintiffs are to make any application pursuant to s 588FF(1) of the Corporations Act 2001 (Cth) in relation to the first, second, third, fourth, fifth and sixth defendants as against the Wormwell Parties is extended until 17 November 2025.

4.    The plaintiffs’ costs of and incidental to the application be costs in the winding up.

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

REASONS FOR JUDGMENT

(Revised from transcript)

DOWNES J:

1    This is an application brought pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) to extend the time within which the liquidators of Privium Pty Ltd and five other related companies (the defendants), which were part of a group of companies known as the Privium Group, may commence proceedings seeking orders under s 588FF(1) of the Corporations Act.

2    There were 22 persons or companies named as interested persons and identified in the affidavit material as being potential defendants to such proceedings.

Background

3    The Privium Group was a group of companies, the operations of which focused upon (inter alia) the design and construction of homes and townhouses, land development, project management and speculative construction projects. Privium Pty Ltd (the first defendant) was the main construction entity and held building licences in Queensland, New South Wales and Victoria. It operated under the names “Impact Homes” and “Privium Homes”.

4    On 17 November 2021, the defendants entered into voluntary administration, and the plaintiffs were appointed administrators. At a second meeting of creditors on 22 December 2021, it was resolved to wind up the defendants with the plaintiffs to carry on as liquidators.

5    The companies that made up the Privium Group were managed as one organisation, and it was a large and complicated undertaking. As best as the liquidators can identify, there were at least 41 companies that comprised the Privium Group from time to time. At the time of their appointment, there were 2,100 construction contracts underway across Queensland, Victoria and New South Wales, 477 trade creditors and suppliers, 2,523 creditors, and a debtors’ balance of more than $5 million across 147 debtors’ claims.

6    The Privium Group was also closely connected to what was described in the material as the Property Alternative Group, which also carried on property developments, adopted a similar structure to the Privium Group and employed the same personnel in its activities.

Relevant factors

7    In McCann v Mawson Restructures and Workouts Pty Ltd, in the matter of Walton Construction (Qld) Pty Ltd (in liq) [2016] FCA 1152 at [43], Edelman J observed that an approach commonly applied is to ask what is “fair and just in all of the circumstances” and identified three matters which will usually be considered in an application brought under s 588FF(3)(b) of the Corporations Act as follows:

… (1) the explanation for the delay in commencing the proposed proceedings within the period provided for by the statute; (2) any prejudice likely to be suffered in the event the extension sought is granted; and (3) a preliminary view of the merits of the proposed proceeding. …

See also Lucas, in the matter of Filestock Pty Ltd (in liq) [2017] FCA 1425 at [4] (Derrington J) and Carter (Liquidator), in the matter of Australian Vocational Learning Institute Pty Ltd (in liq) [2019] FCA 2076 at [13]–[14] (Gleeson J).

Consideration

Explanation for delay

8    The plaintiffs have undertaken a significant amount of work since their appointment as administrators in November 2021. Such work includes obtaining and reviewing the defendants’ books and records, interviewing the officers of the defendants, having dealings with ASIC, seeking funding from Bank of New York Mellon (BNY) (a major secured creditor), and conducting public examinations. The liquidators have also had extensive dealings with over 2,000 clients, third parties to secure construction sites, holders of retention moneys, building regulators and secured creditors.

9    The liquidators have been faced with a number of obstacles which have delayed the commencement of proceedings.

10    For example, they had difficulties in obtaining the books and records of the defendants. After production, investigations indicated that the data was sanitised and records deleted prior to production, and there were significant discrepancies and inconsistencies in the documents that were provided.

11    There were also issues with the content and organisation of documents and data provided to the liquidators. In particular, the documents were not saved or compiled in a way that, in the liquidators’ experience, would ordinarily occur; that is, records of various companies were intermingled and delivered in a large data tranche without any obvious or apparent file structure.

12    Further, responses to requests for information made to the defendants’ directors and senior employees were inadequate and, even now, multiple requests by the liquidators for clarification on various transactions have not been addressed adequately.

13    The plaintiffs sought funding from ASIC to conduct public examinations, which was declined by ASIC, but which funding was then provided by BNY. Once that funding had been secured, work was undertaken to prepare material for public examinations from March to June 2024. Summonses for production of documents were returnable in late 2024, with the documents produced in response to those summonses being voluminous. Further orders for production were made, and public examinations were conducted.

14    Mr Somers of counsel drew my attention to a GANTT chart in the affidavit material which identified the sequence of works undertaken by the liquidators. It is apparent from the face of that GANTT chart that the liquidators have been working on a continuous basis to attempt to unravel the complicated affairs of the Privium Group, and there has been no dilatory conduct on the part of the liquidators.

15    For these reasons, I am satisfied that there is an adequate explanation for the delay in commencing the proposed proceedings.

Preliminary view of the merits

16    The proposed causes of action sought to be pursued by the liquidators relate to various transactions involving the interested persons as well as other potential defendants who have been unable to be identified to date. Having regard to the obstacles which the liquidators have faced and continue to face in obtaining the information needed to decide whether to commence proceedings, they have not been able to identify all potential causes of action or potential defendants. This is understandable.

17    These transactions include (inter alia):

(1)    the validity of the declaration of a dividend by Privium Group Pty Ltd (the second defendant) in circumstances where financial statements identify that the Privium Group was making substantial losses and did not have cash available to declare and pay that dividend;

(2)    payments made by Privium Pty Ltd to companies associated with a director and his relatives, which were not recorded in its MYOB records and are not explained;

(3)    share acquisitions in return for the forgiveness of “bad debts” in circumstances where there was no evidence of any loan debts to be forgiven or that, if such a debt existed, it was a “bad debt”.

18    The liquidators contend that the transactions identified to date may be voidable because they are uncommercial transactions or unreasonable director-related transactions. These are potential causes of action within the ambit of s 588FF(1) of the Corporations Act: see ss 588FE(3) and 588FE(6A). They relate to multiple transactions which appear to be questionable, including because of their timing, and in the absence of a proper explanation to either the liquidators or this Court on this application by the interested persons, I am persuaded that the potential causes of action have merit, at least on a preliminary basis.

Prejudice if extension granted

19    The form of the application, which was served on the interested persons, sought an extension of time of one year from today’s date. Subject to below, the interested persons have neither objected to the extension nor appeared today and adduced evidence identifying any particular prejudice which would be suffered by them if the extension is granted. Of course, it may be accepted that there is prejudice to them if proceedings are commenced outside of the statutory time limit, but more than this is needed.

20    Further, not all potential defendants have yet been identified by the liquidators, and so it follows that not all potential defendants have been served with this application. I also accept that there may be prejudice to those parties if an extension order is made, but that is not fatal to the application.

21    One group of potential defendants, which I will define in the Order as the “Wormwell Parties”, objected in correspondence sent by their solicitors as to the length of time sought by the liquidators in their application. When the liquidators indicated that the extension of time sought against those parties would be until 17 November 2025 (being one year from the date of filing of the application), the Wormwell Parties indicated that the extension would not be opposed. For that reason, the liquidators sought an extension of time in relation to the Wormwell Parties until 17 November 2025.

22    In all of the circumstances and having particular regard to the suspicious nature of the transactions which are likely to be the subject of the proposed proceedings, I am satisfied that it is fair and just that the orders sought by the liquidators should be made.

Associate:

Dated:    16 May 2025

SCHEDULE OF PARTIES