Federal Court of Australia

Toyota Jidosha Kabushiki Kaisha v Ozi4x4 Pty Ltd (Leave to proceed) [2025] FCA 981

ORDERS

THE COURT ORDERS THAT:

1.    The name of the first respondent be amended to “OZI4X4 Pty Ltd (in liquidation) (ACN 636 996 417)”.

2.    Pursuant to s 471B of the Corporations Act 2001 (Cth), the applicants have leave to proceed with this proceeding against the first respondent.

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

REASONS FOR JUDGMENT

(Ex tempore)

WHEELAHAN J:

1    The applicants commenced this proceeding against the respondents in November 2023. By their statement of claim the applicants allege trademark infringement, passing off, and contraventions of the Australian Consumer Law in relation to vehicle parts and accessories which the applicants allege the first respondent imported, advertised, promoted, offered for sale, sold, and supplied from physical premises and online. The second respondent was the sole director, principal, and responsible for the operations of the first respondent. He is alleged to be liable as an accessory in relation to trade mark infringements and contraventions of the Australian Consumer Law, and is alleged to be a joint tortfeasor with the first respondent in relation to the claims of passing off. In addition, the applicants allege that the conduct which is the subject of the applicants’ allegations constituted breach by the respondents of a settlement agreement entered into by the parties in October 2021 to give effect to the compromise of an earlier proceeding brought by the applicants against the respondents alleging trade mark infringement, misleading and deceptive conduct and passing off.

2    On 16 May 2025, by which time the affidavit evidence prepared by the parties was substantially complete, I fixed the proceeding for hearing commencing today, 19 August 2025, on an estimate of three days. At that point in time, the respondents were represented by solicitors.

3    On 27 June 2025, the respondents’ then solicitors filed a notice of intention to cease to act, and thereafter on 9 July 2025 filed a notice of ceasing to act. The second respondent is now self-represented. The second respondent did not appear when the proceeding was called on for hearing this morning.

4    On 16 July 2025, the Supreme Court of Victoria ordered that the first respondent be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth), and Mr Christian Sprowles was appointed liquidator. The effect of the winding up order is that the applicants are unable to proceed with this proceeding against the first respondent except with leave of the Court: Corporations Act, s 471B. Leave to proceed may be given by this Court notwithstanding that the winding up order was made by the Supreme Court of Victoria: Acton Engineering Pty Ltd v Campbell (1991) 31 FCR 1 (Lockhart J, Black CJ and Davies J agreeing).

5    At a case management hearing on 6 August 2025, the applicants foreshadowed an application for leave to proceed against the first respondent to be heard on the first day of the hearing, which was a course taken by Tracey J in similar circumstances in Deckers Outdoor Corp Inc v Farley (No 5) [2009] FCA 1298; 83 IPR 245. The applicants have now filed an interlocutory application, supported by an affidavit, which is returnable today by which they seek leave to proceed against the first respondent. The liquidator has been served with the interlocutory application and did not appear to oppose the application, having previously stated through correspondence that he is unfunded, does not have access to the books and records of the first respondent, and that he does not intend to engage legal representation or actively participate in the application or subsequent proceedings.

6    Section 471B of the Corporations Act provides –

Stay of proceedings and suspension of enforcement process

While a company is being wound up in insolvency or by the Court, or a provisional liquidator of a company is acting, a person cannot begin or proceed with:

(a)    a proceeding in a court against the company or in relation to property of the company; or

(b)    enforcement process in relation to such property;

except with the leave of the Court and in accordance with such terms (if any) as the Court imposes.

7    Section 471B of the Corporations Act has its antecedents in The Companies Act 1862 of the United Kingdom (25 & 26 Vict. c. 89, s. 87). The section confers a judicial discretion, but itself gives no direct indication of the circumstances in which leave should be granted: see Re Gordon Grant and Grant Pty Ltd [1983] 2 Qd R 314 at 317 (McPherson J, W B Campbell CJ and Sheahan J agreeing). In this Court, guidance to the exercise of the discretion has been given by Gilmour J in Swaby v Lift Capital Partners Pty Ltd [2009] FCA 749 at [29], and more recently by Wigney J in Fair Work Ombudsman v Sushi Bay Pty Ltd [2023] FCA 548 at [11]–[17]. At the heart of much of the guidance is the choice that exists between having a claim against a company in liquidation determined by a court, as opposed to leaving an applicant to the proof of debt procedure provided for by the Corporations Act. The proof of debt procedure is calculated to allow a liquidator to consider claims in an orderly fashion at less expense and without the distraction and cost of litigation which might ultimately have to be borne by other creditors.

8    In this instance, it is appropriate to give leave to the applicants to proceed against the first respondent for the following reasons –

(1)    The liquidator does not oppose the application.

(2)    There are serious and substantive issues to be tried against the first respondent. That is borne out by the admissions as to certain facts made by the respondents in their defence and by their responses or absence thereof to the applicants’ notices to admit, by the affidavit evidence that has been filed in the proceeding, and by the written opening that has been prepared by the applicants.

(3)    There are several respects in which the first respondent and the second respondent are alleged to have a concurrent liability to the applicants. Concurrent liability arises from the alleged breaches of the settlement agreement, the allegations of accessorial liability for the statutory claims, and the allegation that the respondents are liable as joint tortfeasors in passing off. It is undesirable that questions of liability be fragmented. It is in the interests of justice that all claims against both respondents be heard and determined together.

(4)    It is not apparent that the first respondent will likely incur any further costs in defending the proceeding, because the liquidator has stated that he has no funds, and will not be participating in the proceeding. Therefore, the depletion of resources at the expense of other creditors, which may be a relevant consideration in other circumstances, appears not to be relevant here.

(5)    There is a degree of complexity in this matter which makes the applicants’ claims against the first respondent more suitable for determination by the Court, especially when the matter has been prepared for trial and will proceed immediately.

(6)    Some of the relief sought by the applicants is not available to them through the proof of debt process. In addition to the injunctive relief that the applicants seek, the applicants seek additional damages for trade mark infringement, and exemplary damages for passing off. Damages of these types, if awarded, serve a deterrent effect, and are a mark of the Court’s disapproval of any conduct to which they relate. The situation bears some similarities to proceedings brought by regulators where penalties are sought and obtained against companies in liquidation in furtherance of the object of general deterrence.

9    I will make orders accordingly.

Associate:

Dated:    19 August 2025