Federal Court of Australia

Low (Liquidator) v Hughes [2025] FCA 861

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to r 30.01 of the Federal Court Rules 2011 (Cth), the following question arising in the proceeding is to be heard separately from any other questions:

Assuming that the facts alleged in the further amended statement of claim filed on 19 February 2025 are established, could the plaintiffs be granted any of the relief sought against the fifth and sixth defendants in paragraphs 5 to 10 of the amended originating process filed on 1 December 2023 or any relief under section 1324 of the Corporations Act 2001 (Cth) against the fifth and sixth defendants at all?

2.    By 4.00 pm AWST on Friday 1 August 2025 the parties are to:

(a)    file a joint minute of proposed orders for the filing of written submissions and an eBook of Authorities for the hearing of the separate question referred to in order 1; and

(b)    file a list of the parties' mutually available dates for a one day hearing of the separate question referred to in order 1.

3.    The costs of the fifth and sixth defendants' interlocutory application dated 22 April 2025 be reserved.

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

REASONS FOR JUDGMENT

VANDONGEN J:

1    In these proceedings, the plaintiffs seek various forms of relief against the first to fourth defendants, who are former directors of the second plaintiff, Titan Interactive Pty Ltd (Titan directors and Titan, respectively), including damages and equitable compensation, as well as orders for compensation and damages under various provisions of the Corporations Act 2001 (Cth). The first plaintiff was, from 20 December 2018 to 6 February 2019, the voluntary administrator of Titan. From 6 February 2019, the first plaintiff has been the liquidator of Titan.

2    The plaintiffs contend that they are entitled to the relief sought against the Titan directors because the Titan directors contravened s 588G of the Corporations Act by failing to prevent insolvent trading by Titan, and because the Titan directors contravened s 180 of the Corporations Act by failing to exercise their powers and discharge their duties with reasonable care and diligence.

3    The plaintiffs also seek relief against the fifth defendant, Pitcher Partners (WA) Pty Ltd (PPWA) and the sixth defendant, Pitcher Partners Accountants & Advisors WA Pty Ltd (PPAA) (together, the Pitcher Parties). The plaintiffs allege that the Pitcher Parties acted as Titan's external accountants and tax advisors during relevant periods. Specifically, the plaintiffs seek injunctions against the Pitcher Parties pursuant to s 1324(1) of the Corporations Act. In addition to, or in substitution for, those injunctions, the plaintiffs seek damages pursuant to s 1324(10) of the Corporations Act. In that regard, the plaintiffs allege that the Pitcher Parties were, directly or indirectly, knowingly concerned in, or party to, or aided and abetted, the Titan directors' contraventions of s 588G and s 180 of the Corporations Act.

4    The proceedings have been on foot since December 2023. However, trial dates have not yet been fixed.

5    By an interlocutory application dated 22 April 2025, the Pitcher Parties have applied pursuant to r 30.01 of the Federal Court Rules 2011 (Cth) for an order that the following question (the proposed question) arising in these proceedings be heard separately from any other questions:

Assuming that the facts alleged in the further amended statement of claim filed on 19 February 2025 are established, could the Plaintiffs be granted any of the relief sought against the [Pitcher Parties] in paragraphs 5 to 10 of the amended originating process filed on 1 December 2023 or any relief under section 1324 of the Corporations Act 2001 (Cth) against the [Pitcher Parties] at all?

6    Paragraphs 5 to 10 of the amended originating process, which are referred to in the proposed question, are in the following terms:

As against the [Pitcher Parties]

Injunctive Relief

5.    An order pursuant to section 1324 of the Act that [PPWA], by its servants and agents be restrained from negotiating payment arrangements with the Commissioner for and on behalf of [Titan].

6.    An order pursuant to section 1324 of the Act that [PPWA], by its servants and agents, when negotiating payment arrangements with the Commissioner on behalf of its clients or in the course of the provision of its services to its clients in relation to payment arrangements with the Commissioner, disclose to those clients the effect of s 255-15 of the [Tax Administration Act 1953 (Cth)], which is that absent the Commissioner granting a deferral of the date at which a tax-related liability is due and payable (under s 255-10 of the [Tax Administration Act]), entry into a payment arrangement with the Commissioner does not change the date on which the tax-related liability is due and payable.

7.    An order pursuant to section 1324 of the Act that [PPAA], by its servants and agents be restrained from negotiating payment arrangements with the Commissioner for and on behalf of [Titan].

8.    An order pursuant to section 1324 of the Act that [PPAA] by its servants and agents, when negotiating payment arrangements with the Commissioner on behalf of its clients or in the course of the provision of its services to its clients in relation to payment arrangements with the Commissioner, disclose to those clients the effect of s 255-15 of the [Tax Administration Act], which is that absent the Commissioner granting a deferral of the date at which a tax liability is due and payable (under s 255-10 of the [Tax Administration Act]), entry into a payment arrangement with the Commissioner does not change the date on which the tax-related liability is due and payable.

Accessorial Liability

9.    In addition to, or in substitution for, the relief at paragraphs 5 and 6 above, an order that, by reason of being involved indirectly [sic – directly] or indirectly, knowingly concerned in, or party to, alternatively by reason of having aided and abetted, the first, second, third and fourth defendants' contraventions of ss 180 and 588G of the Act (within the meaning of s 1324 of the Act), pursuant to s subsection [sic] 1324(10) of the Act, [PPAA] pay [Titan] an amount equal to the damage suffered by the second plaintiff, that resulted from each of the contraventions of ss 180 and 588G of the Act.

10.    In addition to, or in substitution for, the relief at paragraphs 7 and 8 above, an order that, by reason of being involved indirectly [sic – directly] or indirectly, knowingly concerned in, or party to, alternatively by reason of having aided and abetted, the first, second, third and fourth defendants' contraventions of ss 180 and 588G of the Act (within the meaning of s 1324 of the Act), pursuant to s subsection [sic] 1324(10) of the Act, [PPAA] pay [Titan] an amount equal to the damage suffered by [Titan], that resulted from each of the contraventions of ss 180 and 588G of the Act.

7    Section 1324 of the Corporations Act relevantly provides as follows:

1324    Injunctions

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

…

(c)    aiding, abetting, counselling or procuring a person to contravene this Act; or

…

(e)    being in any way, directly or indirectly, knowingly concerned in, or party to, the contravention by a person of this Act; or

…

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.

…

(6)    The power of the Court to grant an injunction restraining a person from engaging in conduct may be exercised:

(a)    whether or not it appears to the Court that the person intends to engage again, or to continue to engage, in conduct of that kind; and

(b)    whether or not the person has previously engaged in conduct of that kind; and

(c)    whether or not there is an imminent danger of substantial damage to any person if the first‑mentioned person engages in conduct of that kind.

…

(10)    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.

8    For the following reasons, I am of the view that an order should be made in the terms sought by the Pitcher Parties.

9    It is convenient to commence with the principles that guide this Court's discretion in deciding whether to make an order under r 30.01 of the Federal Court Rules.

Applicable principles

10    The applicable principles are well established. A regularly cited summary of those principles can be found in the judgment of Branson J in Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718; (1999) 240 FCR 276 at [8]-[9], where her Honour said the following:

The principles that govern the circumstances in which an order will be made under O 29, r 2 [of the Federal Court Rules] are relatively well established. They may be summarised as follows:

(a)    the term 'question' in O 29, r 1 includes any question or issue of fact or law in a proceeding. The distinction in the rule between an 'issue' and a 'question' is the distinction between that which, when resolved, will result in an adjudication in favour of one party or the other, being an 'issue', and less decisive matters of dispute being 'questions' (Landsal Pty Ltd (in liq) v REI Building Society (1993) 41 FCR 421 at 425);

(b)    a question can be the subject of an order for a separate decision under O 29, r 2 even though a decision on such a question will not determine any of the parties' rights (Landsal Pty Ltd (in liq) v REI Building Society at 425);

(c)    however, the judicial determination of a question under O 29, r 2 must involve a conclusive or final decision based on concrete and established or agreed facts for the purpose of quelling a controversy between the parties (Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334 at [45]);

(d)    where the preliminary question is one of mixed fact and law, it is necessary that the question can be precisely formulated and that all of the facts that are on any fairly arguable view relevant to the determination of the question are ascertainable either as facts assumed to be correct for the purposes of the preliminary determination, or as agreed facts or as facts to be judicially determined (Jacobson v Ross [1995] 1 VR 337 at 341, referring to Attorney General (UK) v Nissan [1970] AC 179 at 242-243 per Lord Pearson; Bass v Perpetual Trustee at [53]);

(e)    care must be taken in utilising the procedure provided for in O 29, r 1 to avoid the determination of issues not 'ripe' for separate and preliminary determination. An issue may not be 'ripe' for separate and preliminary determination in this sense where it is simply one of two or more alternative ways in which an applicant frames its case and determination of the issue would leave significant other issues unresolved (CBS Productions Pty Ltd v O'Neill (1985) 1 NSWLR 601 at 606 per Kirby P);

(f)    factors which tend to support the making of an order under O 29, r 2 include that the separate determination of the question may -

(i)    contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the action; or

(ii)    contribute to the settlement of the litigation (CBS Productions Pty Ltd v O'Neill at 607 per Kirby P);

(g)    factors which tell against the making of an order under O 29, r 2 include that the separate determination of the question may -

(i)    give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of trial (GMB Research & Development Pty Ltd v Commonwealth [1997] FCA 934;

(ii)    result in significant overlap between the evidence adduced on the hearing of the separate question and at trial - possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding (GMB Research & Development Pty Ltd v Commonwealth; Arnold v Attorney-General (Vic) [1995] FCA 727). This factor will be of particular significance if the Court may be required to form a view as to the credibility of witnesses who may give evidence at both stages of the hearing of the proceeding; or

(iii)    prolong rather than shorten the litigation (GMB Research & Development Pty Ltd v Commonwealth).

Ultimately the issue for the Court to determine when consideration is being given to the making of an order under O 29, r 2 is whether it is 'just and convenient' for the order to be made (Arnold v Attorney-General (Vic)). There are classes of proceedings in which it is commonly recognised that it is just and convenient for an order under O 29, r 2 to be made. One such class is proceedings concerning intellectual property rights where an applicant can not be compelled to make an election as between damages and an account of profits at least until all of the evidence has been received so that, if an order has not been made separating the determination of the issues of liability and relief, the parties will have to call evidence to deal with both damages and an account of profits (Dr Martens Australia Pty Ltd v Bata Shoe Company of Australia Pty Ltd (1997) 75 FCR 230). Another class is proceedings in which an application in the nature of a demurrer is appropriately made. An application of this kind assumes the truth of the pleaded facts. In a case in which it is clear that the pleadings contain all of the relevant facts but one party contends that the pleading does not disclose a cause of action, or a defence or a matter of reply, as the case may be, an application in the nature of a demurrer will have obvious utility (Bass v Permanent Trustee at [50]).

11    Her Honour's observation that the ultimate issue for the Court to determine is whether it is 'just and convenient' for an order to be made is consistent with the requirement in s 37M(3) of the Federal Court of Australia Act 1976 (Cth), that the Federal Court Rules be interpreted and applied, and any power conferred by those rules be exercised, in a way that best promotes the overarching purpose of facilitating the just resolution of disputes as expressed in s 37M(1) and s 37M(2).

12    Having identified the applicable principles, it is necessary to say something about the plaintiffs' pleaded case, and the Pitcher Parties' response to that case.

The pleaded cases

13    The most recent iteration of the plaintiffs' statement of claim is 173 pages long, comprising 159 pleaded paragraphs and 20 schedules. Although efforts have clearly been made to structure the statement of claim in such a way as to aid in its comprehension, the plaintiffs' claim remains factually complex and the cross-referencing employed by the pleader tends to give the statement of claim a labyrinthine appearance.

14    According to the statement of claim, at all material times from its incorporation until 20 December 2018, Titan carried on business as a provider of website services and related information technology services such as digital marketing, social media and search engine marketing services, and website hosting services. Titan traded under various trading names and operated through several wholly owned subsidiary companies.

15    The plaintiffs plead that Titan had a practice of not paying some of its tax liabilities as and when they fell due. It is alleged that Titan would instead enter into payment arrangements with the Commissioner of Taxation (CoT) with respect to those liabilities under Sch 1, s 255-15 of the Taxation Administration Act 1953 (Cth). Section 255-15 relevantly provides that the CoT may defer the time at which an amount of a tax-related liability is, or would become, due and payable by a taxpayer. It is alleged that Titan entered into those arrangements with the expectation that the tax refunds that it would receive would be sufficient to discharge any outstanding taxation liabilities that Titan owed from time to time. It is also alleged that Titan relied on the receipt of research and development offsets under the Income Tax Assessment Act 1997 (Cth) and employee share scheme loans to meet its overdue superannuation and tax liabilities and to complete payment arrangements it had entered into with the CoT.

16    The plaintiffs allege that because of the way in which it sought to manage its tax liabilities, Titan was insolvent from at least 30 November 2013. The plaintiffs further allege that between 21 April 2016 and 20 December 2018, whilst it was insolvent, Titan incurred debts totalling over $5.5 million. The plaintiffs' case is that the Titan directors were aware that there were reasonable grounds for suspecting, or a reasonable person in a like position in the circumstances would be aware of reasonable grounds for suspecting, that Titan was insolvent, and that in those circumstances the Titan directors permitted or failed to prevent Titan from incurring debt. On that basis, the plaintiffs claim that the Titan directors engaged in insolvent trading and also breached the duties of care and diligence they owed to Titan, in contravention of s 588G and s 180 of the Corporations Act, respectively. The plaintiffs also allege that the Titan directors breached concurrent tortious and equitable duties they owed to Titan, to exercise their powers and discharge their duties with reasonable care and skill.

17    The plaintiffs contend that in about 2008, Titan retained PPWA to act as its accountant and tax agent, including in relation to various tax payment arrangements it entered into with the CoT. The plaintiffs' case is that on or about 1 July 2017, PPAA took over the provision of those services from PPWA. The plaintiffs say that from at least 1 July 2013, the Pitcher Parties failed to warn Titan of its actual or likely insolvency and failed to properly advise Titan of the legal effect of its entry into tax payment arrangements with the CoT. In particular, the plaintiffs assert that the Pitcher Parties failed to advise Titan that the payment arrangements did not vary the time at which the tax-related liabilities were due and payable. It is on this basis that the plaintiffs claim that the Pitcher Parties breached contractual and tortious duties of care they owed to Titan to provide the relevant services with the level of care, skill and diligence of a competent accountant and tax agent.

18    In addition to the allegations that the Pitcher Parties breached contractual and tortious duties of care, the plaintiffs also allege that the Pitcher Parties were knowingly concerned in, or parties to, or aided and abetted, the breach by the Titan directors of their statutory duties under s 588G and s 180 of the Corporations Act.

19    As against the Titan directors, the plaintiffs seek orders pursuant to s 588M and, in the alternative, s 1317H of the Corporations Act, that the directors pay amounts equal to the damage suffered by Titan resulting from the directors' contraventions of s 588G and s 180 of the Corporations Act, respectively. Further, or alternatively, Titan seeks orders that the Titan directors pay damages, or equitable compensation, with respect to losses incurred by Titan on and from 29 April 2017.

20    The plaintiffs seek orders against the Pitcher Parties pursuant to s 1324(1) of the Corporations Act. In that regard, the plaintiffs seek an injunction restraining the Pitcher Parties from negotiating payment arrangements with the CoT for and on behalf of Titan. A further injunction is also sought requiring the Pitcher Parties to disclose the effect of Sch 1, s 255-15 of the Tax Administration Act to its clients. That injunctive relief is sought based on an allegation that the Pitcher Parties were, directly or indirectly, knowingly concerned in, or party to, or aided and abetted, the Titan directors' contraventions of s 588G and s 180 of the Corporations Act. In addition to, or in substitution for that injunctive relief, the plaintiffs seek damages pursuant to s 1324(10) of the Corporations Act.

21    Finally, the plaintiffs seek damages from the Pitcher Parties for negligence and for breach of contract.

22    It is unnecessary to summarise the pleaded cases of the Titan directors or the Pitcher Parties in detail. It is sufficient to note that the first, second and fourth defendants dispute any liability to the plaintiffs. The third defendant has not filed a defence and has not taken any active part in these proceedings. The Pitcher Parties, in effect, deny that they were knowingly concerned in any of the Titan directors' contraventions of s 588G or s 180 of the Corporations Act, and deny that they breached any contractual or tortious duties owed to Titan.

23    In relation to Titan's claims that the Pitcher Parties breached contractual or tortious duties, the Pitcher Parties plead that the terms of their respective engagements by Titan provided that each of their total aggregate liabilities to Titan were limited to an amount equal to five times the fees paid by Titan. The Pitcher Parties also plead that the terms of their engagements limited their liability to a proportion of the loss or damage suffered by Titan that is ascribed by a court of competent jurisdiction allocating proportionate responsibility, having regard to the contribution to the loss and damage by any other person responsible and/or liable to Titan, or to the extent of Titan's own contribution to the loss. In their reply, the plaintiffs plead that the terms of the Pitcher Parties' engagements by Titan relied on by the Pitcher Parties were void and unenforceable by operation of the Professional Standards Act 2003 (Vic) and/or the Professional Standards Act 1997 (WA).

24    The Pitcher Parties also plead that if Titan suffered any loss and damage, any award of damages should be reduced to account for Titan's proportionate contribution to the loss and damage caused. In their submissions in support of their application for a separate trial under r 30.01, the Pitcher Parties go further, and submit that the proportionate liability regimes in s 24AI of the Wrongs Act 1958 (Vic) or s 5AK of the Civil Liability Act 2002 (WA) would operate to reduce any award of damages against the Pitcher Parties having regard to the extent of the Titan directors' responsibility (and possibly the responsibility of others) for the damage or loss.

25    Having broadly summarised the parties' cases, it is then necessary to consider the merits of the Pitcher Parties' application that the proposed question be heard separately from any other questions arising in these proceedings.

Should the proposed question be heard separately from any other questions arising in these proceedings?

26    It is convenient to commence considering whether the proposed question should be heard separately by reference to the more general submissions made on behalf of the plaintiffs in opposition to that course being taken.

27    As I have already noted, the proposed question proceeds on the assumption that all of the facts alleged in the plaintiffs' statement of claim are established. However, the plaintiffs submit that it is inappropriate to utilise the power in r 30.01 to hear a question arising in these proceedings separately from any other questions based on those assumed facts. In support of that submission, the plaintiffs contend that the proposed question resembles a demurrer plea, or a summary judgment or strike out application. In that regard, the plaintiffs refer to certain observations that were made by Kenny J in Rainsford v State of Victoria [2005] FCAFC 163; (2005) 144 FCR 279 at [39]-[40], that there are differences between the separate question procedure and a strike-out application and a demurrer.

28    The plaintiffs also appear to go so far as to suggest that it is not open to a court exercising federal jurisdiction to utilise the separate question procedure based on assumed facts, relying on the following observation that was also made by Kenny J in Rainsford at [36]:

In order for a court exercising federal jurisdiction to utilise the separate questions procedure, either the parties must agree upon the relevant facts or the court must determine the facts before seeking to decide the question.

29    However, it is well-established that it is open to the Court to decide a separate question based on assumed facts: Bass v Permanent Trustee Co Ltd [1999] HCA 9; (1999) 198 CLR 334 at [50]-[52]; QBE Insurance (Australia) Limited v Tropical Reef Shipyard Pty Limited [2009] FCAFC 161 at [26]; and Zurich Australian Insurance Ltd v FKP Commercial Developments Pty Ltd [2023] FCAFC 188 at [22] (see also Frigger v Professional Services of Australia Pty Ltd (No 3) [2023] FCA 520). As the Full Court noted in Zurich Australian Insurance at [22] (citing Director of Public Prosecutions (Cth) v JM [2013] HCA 30; (2013) 250 CLR 135 at [29]-[34]), if the facts that will be determinative of the legal issue are stated in such a way that they are identified with precision, there is no objection to deciding the legal issue on the basis of assumed facts.

30    The plaintiffs also contend that great care must be taken in formulating separate questions. By reference to AWB Limited v Cole (No 2) [2006] FCA 913; (2006) 253 FCR 288 at [35], and the observation by the majority in Bass at [50] that:

[A] demurrer assumes that the pleadings exhaust the universe of relevant factual material. The utility of demurrers is, however, heavily dependent on the pleadings containing all the relevant facts.

The plaintiffs point out that assumed facts may prove to be incomplete or insufficiently precise, or the parties may also have different views concerning the effect or duration of the assumptions by, for instance, considering that they can depart from the assumptions and re-agitate the facts in another part of the case. However, it is apparent that these potential difficulties do not arise in the circumstances of this case.

31    When referring to the possibility of incomplete or insufficiently precise assumed facts in AWB v Cole, Young J cited Director of Fisheries (Northern Territory) v Arnhem Land Aboriginal Land Trust [2001] FCA 98; (2001) 109 FCR 488 at [139], [163]. That was a case concerning the entitlement of holders of commercial fishing licences in the Northern Territory to fish in tidal waters within the designated boundaries of land granted by deed to the Arnhem Land Aboriginal Land Trust. Orders were made for the separate determination of a series of questions before trial based on a statement of agreed facts. At [139] of Director of Fisheries, Sackville J said that '[t]he difficulties with the [s]eparate [q]uestions stem largely from the attempt to incorporate so many concepts into a single set of questions divorced from agreement on specific facts'. Further, at [163], his Honour said that 'the identification of separate questions for determination on the basis of an incomplete set of assumed facts is fraught with difficulty'.

32    As the proposed question expressly limits the assumed facts to all facts pleaded in the statement of claim and then asks whether the plaintiffs could be granted the relief sought against the Pitcher Parties based on those facts, there is no realistic prospect of there being incomplete or insufficiently precise assumed facts, or of there being any of the sorts of difficulties that bedevilled the proceedings in Director of Fisheries. Further, the possibility that further facts may emerge at trial that may be relevant to the question of whether the relief sought at paragraphs 5 to 10 of the amended originating process is beside the point. The focus of the question is on whether that relief could be granted on the facts pleaded in the statement of claim.

33    When Young J referred in AWB v Cole to the possibility that the parties may have different views concerning the effect or duration of the assumptions, he cited the case of SmithKline Beecham (Australia) Pty Ltd v Chipman [2002] FCA 674. In that case, the parties agreed upon a series of preliminary questions that would be decided separately from any other question and before any trial in the proceeding. However, there was a misunderstanding between the parties. The respondents believed that if the preliminary questions were decided adversely to their interests, they could raise the questions again at the trial by challenging the existence of the assumed facts. On the other hand, the applicant believed that resolution of the preliminary questions would be the definitive resolution of those issues. There is nothing to suggest that there exists any similar misunderstanding between the parties in this case about the effect or duration of the assumptions underpinning the proposed question. If the proposed question is answered adversely to the plaintiffs, then it will be determinative of the relief sought in paragraphs 5 to 10 of the amended originating process, or any relief under s 1324 of the Corporations Act, to the extent that such relief is sought based on the facts pleaded in the statement of claim. On the other hand, if the proposed question is answered adversely to the Pitcher Parties, it will plainly still be open to the Pitcher Parties to contest the factual basis of the plaintiffs' claim for the relief sought in paragraphs 5 to 10 of the amended originating process at trial.

34    Having dealt with the more general submissions made on behalf of the plaintiffs in opposition to the Pitcher Parties' application, it is then necessary to deal with the Pitcher Parties' submissions that the proposed question is suitable for separate determination and the plaintiffs' response to those submissions.

35    The Pitcher Parties accept that even if the proposed question were to be answered 'no', favourably to the Pitcher Parties, that answer would not resolve the entirety of the dispute between the parties. Given that there are also four other defendants, it is clear that any answer to the proposed question will not dispose of the whole of the litigation that is on foot. However, the Pitcher Parties submit that if the proposed question is answered 'no', then the scope of issues to be determined at trial, the quantum of damages, and the length of the trial, would be substantially reduced. The Pitcher Parties also submit that the proposed question will need to be answered in any event, and that if it is dealt with in advance of trial, it will consume no more than one day of court time. Further, the Pitcher Parties contend that regardless of the answer to the proposed question, and regardless of whether any such answer may produce any efficiency gains, a determination of the separate question will nevertheless increase the likelihood of settlement. Accordingly, the Pitcher Parties submit that it is just and convenient for the proposed question to be determined separately.

36    On the other hand, the plaintiffs submit that the critical reason to refuse the Pitcher Parties' application is that even if the proposed question were to be answered 'no', favourably to the Pitcher Parties, the factual basis for the plaintiffs' claims for relief under s 1324 would still need to be resolved in the context of the plaintiffs' claims based on the alleged breaches of the contractual and tortious duties the Pitcher Parties owed to Titan. Accordingly, the plaintiffs submit that there is no real likelihood that the separate determination of the proposed question will deliver any real efficiency or otherwise facilitate the just resolution of the dispute between the parties. The plaintiffs also reject the Pitcher Parties' contention that if the proposed question were to be answered 'no', then it would result in significant reduction in the quantum claimed against them.

37    I do not accept that if the answer to the proposed question is 'no', then there is likely to be a substantial reduction in the scope of the issues to be determined at trial or the length of the trial. It is clear from the most recent iteration of the plaintiffs' statement of claim that even if the proposed question were to be answered 'no', and the plaintiffs' claims for injunctions and damages under s 1324 of the Corporations Act were to fall away, most of the facts pleaded in support of those claims are also relied on in support of the plaintiffs' common law contractual and tortious claims against the Pitcher Parties. In that regard, both the claims based on s 1324 and the common law claims rely on Titan having been insolvent from at least November 2013. All of the claims also rely on proof of the existence of retainers between Titan and each of the Pitcher Parties. More significantly, while some factual issues might fall by the wayside if the proposed question is answered favourably to the plaintiff, I accept what is said at [16] of the plaintiffs' written submissions that the pleas in support of each of the common law claims against the Pitcher Parties repeat and rely, to a very significant extent, on the pleas in support of the plaintiffs' claim for injunctive relief and damages under s 1324. In those circumstances, while it is true that if the proposed question were to be answered 'no', then only the common law claims against the Pitcher Parties would remain, I am far from persuaded that this would result in any significant reduction in the scope of the factual controversies between the parties, or the likely length of a trial that will be needed to resolve those issues.

38    The Pitcher Parties also submit that if the proposed question is answered 'no', leaving only the plaintiffs' common law claims, then the quantum of the claims against the Pitcher Parties may be significantly reduced, which would 'bring the parties closer to a negotiated resolution': Pitcher Parties' written submissions in reply at [22]. In this respect, the Pitcher Parties have pleaded that there are contractual limitations on the Pitcher Parties' liability. Further, the Pitcher Parties also clearly intend arguing that the plaintiffs' common law claims are subject to the proportionate liability regime in s 24AI of the Wrongs Act or s 5AK of the Civil Liability Act, and that the quantum of damages currently sought against the Pitcher Parties should be reduced on account of the responsibilities of at least Titan, and the Titan directors, for any losses suffered by Titan. The Pitcher Parties point out that a 'defence' of apportionment is not available in the context of the plaintiffs' claims for damages under s 1324 of the Corporations Act.

39    The plaintiffs contend, in effect, that the Pitcher Parties' submissions in this respect amount to speculation. The plaintiffs argue that it is insufficient to merely raise the prospect that the proceedings may settle if the answer to the proposed question is 'no'. In that respect, the plaintiffs rely on what was said by Stone J in Novartis Crop Protection Australasia Pty Limited v Orica Australia Pty Limited [2001] FCA 1013 at [7]:

In particular circumstances the separate decision of a question may be appropriate even if it will not bring the proceedings to an end. Examples are where there is a strong prospect that, once the core of their dispute is decided, the parties will settle the remaining issues or where the decision will obviate an unnecessary and expensive hearing of other questions. Such situations must, however, be carefully controlled lest fragmentation of the proceedings should bring delay, expense and hardship, which the making of the order was intended to avoid.

(emphasis added)

40    However, I am of the view that Stone J was not purporting to lay down an immutable rule that the separate decision of a question will only be appropriate if there is a strong prospect of settlement once the core of a dispute is decided. As was made clear by Branson J in her Honour's summary of the applicable principles in Reading Australia, one of the factors tending to support the making of an order for the determination of a separate question is that such a determination may contribute to the settlement of the litigation: at [8].

41    The quantum sought by the plaintiffs in the context of their claims against PPAA and PPWA under s 1324 of the Corporations Act are for amounts that exceed $5 million and $4 million, respectively. However, if the proposed question were to be answered 'no', the plaintiffs will then at least become exposed to a risk that even if they are successful in establishing their common law claims against the Pitcher Parties, the Pitcher Parties' liability to the plaintiffs may be limited. The plaintiffs will also be exposed to the risk that their common law claims may be subject to the proportionate liability regime in the Wrongs Act or the Civil Liability Act.

42    On the other hand, if the proposed question is answered 'yes', the Pitcher Parties will then be on notice that after taking part in a lengthy and complicated trial, they may then be exposed to the risk of being found liable to pay the full amount of the damages sought by the plaintiffs in the context of their claims under s 1324 of the Corporations Act.

43    In those circumstances, I agree with the Pitcher Parties' submission that a separate determination of the proposed question may well contribute to the settlement of the litigation, at least as between the plaintiffs and the Pitcher Parties, and that this is a factor that tends to support the making of the order sought.

44    In my view, it is also important to take into account the fact that in determining the proposed question, the Court would not be required to resolve any contested factual issues, and that a determination of the proposed question would not give rise to any additional factual issues at any trial. Further, the proposed question is likely to only involve one day of court time. Accordingly, a determination of the proposed question will not significantly protract the progress of the litigation, distract the parties from their preparation for trial, or give rise to any unnecessary delays or complications. The parties are currently participating in confidential conferences before a Registrar of this Court to deal with ongoing discovery disputes.

45    Ultimately, the discretion to make an order that a question be determined separately is to be exercised after weighing the factors that are relevant in a particular case to the issue of whether it is just and convenient to take that course. In this case, the answer to the proposed question will not finally resolve the dispute between the plaintiffs and the Pitcher Parties, or the litigation as a whole. It will also not substantially reduce the factual contests that arise on the pleadings. However, having regard to the nature of the proposed question, the current status of these proceedings, the fact that the issue raised by the proposed question will need to be addressed in any event, the relatively limited resources that will need to be invested by the Court and by the parties to determine the proposed question and the fact that a separate determination of the proposed question may well contribute to the settlement of the litigation, I am of the view that it is just and convenient to make the order sought by the Pitcher Parties.

46    Accordingly, I allow the Pitcher Parties' application and will make the order sought.

47    I should note that the parties spent some time in both their written and oral submissions addressing the arguments that they would rely on in support of an answer to the proposed question that favoured their respective cases. However, as the parties acknowledged, it would be inappropriate for me to reach any concluded views about those arguments at this stage, or to even express tentative views about how the proposed question might ultimately be answered. It is enough for me to say that the arguments on which the Pitcher Parties indicated it will ultimately seek to rely are not so obviously devoid of merit so as to render a separate determination of the proposed question inappropriate.

Associate:

Dated:    28 July 2025