Federal Court of Australia

Hurst, in the matter of Lloyds Curry Shop Pty Ltd (in liq) v Prasad (No 4) [2025] FCA 576

ORDERS

THE COURT ORDERS THAT:

1.    The applicants be granted leave nunc pro tunc to proceed in this proceeding against the fourth respondent in provisional liquidation pursuant to s 471B of the Corporations Act 2001 (Cth).

2.    Costs of this application be costs in the proceeding.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

CHEESEMAN J:

1    By interlocutory application dated 19 March 2025, the Applicants, David Hurst in his capacity as liquidator of Lloyds Curry Shop Pty Ltd (in liquidation) and Lloyds Curry Shop Pty Ltd (in liquidation), seek leave to proceed against the Fourth Respondent, Reliance Financial Services Pty Ltd, pursuant to s 471B of the Corporations Act 2001 (Cth).

2    Reliance has been an active respondent in the present proceeding since it was commenced. In February 2025, provisional liquidators were appointed to Reliance.

3    On 28 February 2025, in my capacity as commercial and corporations duty judge, I dismissed an application to set aside the appointment of the provisional liquidators to Reliance, amongst others: Krejci (liquidator) v Panella, in the matter of Richmond Lifts Pty Ltd (in liq) [2025] FCA 151.

4    I heard the present application on 3 June 2025. Two affidavits of Gavin Mitchell Parsons were read in support of the application.

5    The provisional liquidators of Reliance attended the hearing and made brief submissions. The provisional liquidators’ position was that they neither supported nor opposed the grant of leave to proceed against Reliance. Counsel appearing for the provisional liquidators raised a number of matters which I will summarise briefly.

6    The first issue raised by the provisional liquidators was that the proprietary nature of the relief sought in this proceeding was a factor that weighs in favour of the grant of leave under s 471B of the Act. That is a matter which is common ground between the Applicants and the provisional liquidators. To presage what follows, in the circumstances of this application, that issue weighs strongly in favour of the grant of leave.

7    The provisional liquidators next made a number of submissions that they maintained were relevant to the exercise of the discretion on this application and which in the provisional liquidator’s submission weighed against the grant of leave.

8    As I apprehended the provisional liquidators’ submissions, the main emphasis was placed on the contended overlap between this proceeding and a proceeding that was commenced in this Court in February 2025 by the liquidator of various corporate entities against Mr Sam Cassaniti and others including Reliance in relation to various alleged tax evasion schemes (the NSD194/2025 Proceeding). The provisional liquidators, while maintaining a neutral position on this application, drew this to my attention as a matter weighing against the grant of leave.

9    The provisional liquidators submit that the NSD194/2025 Proceeding involves similar conduct and issues as will arise in the determination this proceeding. They point to the fact that the relief sought in the NSD194/2025 Proceeding includes declaratory relief in respect of alleged breaches of director’s duties, knowing receipt of funds and the winding up of various entities including Reliance. I do not accept the underlying premise that informs the provisional liquidators’ submissions. The issues that fall for determination in the present proceeding are quite distinct, both temporally and in terms of the underlying factual matrix from those in the NSD194/2025 Proceeding. On the basis of the evidence before me on this application, the overlap appears to be limited to a confluence of the parties to the proceedings and the nature of the relief sought. I do not consider that the matters raised by the provisional liquidators in this respect weigh against the exercise of the discretion to grant leave.

10    The provisional liquidators also submitted that they have a limited ability to properly defend the claims made against Reliance in this proceeding because they submit (without reference to any supporting evidence) that they have had limited access to the books and records of Reliance despite making multiple requests. They further submit that whereas in the NSD194/2025 Proceeding they have the support of a funding creditor, they have no such support in this proceeding. I have taken these matters into account as relevant to the exercise of the discretion under s 471B of the Act.

11    Finally, the provisional liquidators submitted that the Court should take into account as a contextual matter that in the NSD194/2025 Proceeding there is presently an application by Mr Andrew Bruce Miller in his capacity as director of Reliance (among others) seeking to replace the present provisional liquidators of Reliance which has been heard and is presently reserved before the docket judge. While I appreciate that this was a proper matter for the provisional liquidators to raise on this application, I regard it as at best neutral to the exercise of the discretion in this application.

12    The relevant principles to be applied in determining an application for leave under s 471B of the Act are well established. They are neatly summarised in Fair Work Ombudsman v Sushi Bay Pty Ltd [2023] FCA 548 at [9] to [17]. I gratefully adopt and apply those principles in so far as they are relevant to the present application.

13    I am satisfied in the circumstances of this application that I should exercise my discretion in favour of granting leave to proceed against Reliance in provisional liquidation pursuant to s 471B of the Act. My reasons are as follows.

14    I am satisfied for the purpose of this application that on the material before the Court, the Applicants’ claims against Reliance have the requisite foundation necessary to weigh in favour of the grant of leave and the claims raise a serious dispute. The relevant facts and procedural history are set out in a number of interlocutory judgments given in the present proceeding: Hurst, in the matter of Lloyds Curry Shop Pty Ltd (in liq) v Prasad [2021] FCA 1562 and Hurst, in the matter of Lloyds Curry Shop Pty Ltd (in liq) v Prasad (No 3) [2023] FCA 1174.

15    The relief sought against Reliance in the present proceeding is in the nature of proprietary relief relying on the principles in Black v S Freedman & Co (1910) 12 CLR 105 and also pursuant to the accessorial claims recognised under both limbs of Barnes v Addy (1874) LR 9 Ch App 244. Taking into account the nature of the relief sought, I am satisfied that the present proceeding has a utility in that the Applicants cannot obtain comparable relief via the proof of debt process. That is a factor that weighs heavily in favour of the grant of leave.

16    As mentioned, the provisional liquidators have raised a number of matters which they submit weigh against the grant of leave. Having considered those matters, I do not regard them to outweigh the nature of the relief sought in the present proceeding in terms of the grant of leave. In addition, also favouring the grant of leave is the stage the present proceeding has reached, which after being mired in interlocutory disputes, is now approaching readiness for allocation of a hearing date, subject to disclosure and case preparation orders being met.

17    As I have indicated, the claims brought against Reliance, and relevantly Mr Sam Cassaniti in his capacity as a director of Reliance at the relevant time, support the grant of leave. Accordingly, I am satisfied it is appropriate to exercise my discretion in favour of granting leave to proceed against Reliance in provisional liquidation. The costs of this application will be costs in the proceeding.

Associate:

Dated:    3 June 2025

SCHEDULE OF PARTIES