Federal Court of Australia

Tonks (Liquidator), in the matter of Vaucluse 29 Pty Ltd (in liq) [2025] FCA 1306

ORDERS

THE COURT ORDERS THAT:

1. Pursuant to s 477(2B) of the Corporations Act 2001 (Cth) (Act), approval is granted for the plaintiffs, on behalf of Vaucluse 29 Pty Ltd, Bayview 66 Pty Ltd, and One Lake Macquarie Pty Ltd (Companies), to enter, nunc pro tunc, into the Litigation Funding Agreement with Pretium Funding Pty Ltd, which is contained at pages 78-92 of Exhibit MR-1.

2. Pursuant to s 477(2B) of the Act, approval is granted for the plaintiffs, on behalf of the Companies, to enter, nunc pro tunc, into the agreement for the provision of legal services with Piper Alderman Lawyers made on 15 December 2022, and as varied on 21 March 2025 and 22 October 2025.

3. Pursuant to s 588FF(3)(b) of the Act, the period during which the plaintiffs may make any application under s 588FF(1) of the Act is extended to 24 April 2026.

4. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, pages 6 to 25 inclusive of Exhibit MR-2 be marked as confidential on the court file and not be published or accessed other than by duly authorised staff of the Court for the purpose of their work for the Court, until such time as any litigation, including any appeal, arising out of the winding up and affairs of the Companies is concluded, or until otherwise ordered.

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

REASONS FOR JUDGMENT

OWENS J:

1 This matter was listed for hearing before me as Duty Judge on 14 October 2025. Shortly after the hearing commenced the plaintiffs applied for an adjournment to supplement the evidence upon which they relied, and to consider whether they wished to augment the relief that they sought. I adjourned the hearing to 17 October 2025. The plaintiffs subsequently contacted my chambers, however, requesting further time, and I agreed to adjourn the matter to 23 October 2025.

2 The proceedings were dealt with as a Duty matter because the plaintiffs submitted that they were urgent (a decision was said to be required by 24 October 2025). As will emerge, the circumstances of urgency were generated entirely by the plaintiffs themselves. I have recently observed in another context that awaiting the eleventh hour to bring an application capable of being made much sooner is a practice to be deprecated for reasons that go well beyond a judicial preference for quietude: Albarran, in the matter of Chala Metals Limited [2025] FCA 984 at [4]-[7]. In cases, such as the present, where the quality of the explanation for delay is a consideration relevant to whether or not the relief claimed should be granted, self-interest might have been thought to be a sufficient motivation for alacrity. If nothing else, the fact that the plaintiffs here requested an adjournment of over a week when the matter was first called for hearing demonstrates that leaving things to the last minute carries with it significant risk that the required relief will not be obtained in time. Applications of this kind should be prepared and made at the earliest realistic opportunity.

Introduction

3 The plaintiffs are the liquidators of One Lake Macquarie Pty Ltd, Vaucluse 29 Pty Ltd, and Bayview 66 Pty Ltd. They were appointed liquidators of those companies by the Supreme Court of New South Wales on 8 June 2023, having previously been provisional liquidators following their appointment by that same Court on 12 December 2022.

4 The companies were engaged in the business of buying, renovating, and selling prestige real property in New South Wales. It appears to the plaintiffs that the companies were controlled by Mr Changjin Li. The funds used to purchase properties were, it would seem, obtained from Mr Li’s former wife, Ms Changren Cheng and a company she controls, called Athena Rose Capital Pty Ltd.

5 Vaucluse 29 had mortgaged a property it owned in Point Piper to Athena Rose Capital. After the plaintiffs were appointed provisional liquidators, but before their appointment as liquidators, Athena Rose Capital took possession of that property, and sold it for $8,600,000. The sale settled shortly after the plaintiffs were appointed as liquidators. The amount of the debt that Athena Rose Capital claimed was owing to it and secured by the mortgage was in excess of $9,900,000, and so the sale of the property has not resulted in any surplus funds for the company. It has no other significant assets.

6 Vaucluse 29 had previously sold another property, making a considerable capital gain in the process. Ms Cheng claims to have funded the purchase price for that property, and was paid nearly the full amount of the proceeds from its sale. In those circumstances, the liquidators consider that it is likely that the company has a significant liability for capital gains tax. Because nearly the whole of the proceeds of the sale were disbursed to Ms Cheng, and because the company has no other substantial assets, the company appears to have been left without funds to pay any such tax liability.

7 Bayview does not presently own any property. It had entered into a contract to purchase land, but the company did not have the funds to complete that purchase. It had previously sold another property for a profit, but has not yet been assessed for any capital gains tax payable on that sale. Ms Cheng claims to have funded the purchase of that property, and, once again, nearly all of the proceeds from the sale were paid to her, leaving the company unable to pay any tax liability. Ms Cheng claims that she is still owed over $1,000,000 by Bayview.

8 One Lake Macquarie owns two properties. Both are mortgaged to Athena Rose Capital. There is a dispute about the amount of the debt secured under those mortgages. That dispute forms the subject matter of ongoing proceedings in the Supreme Court of New South Wales, and its resolution is likely to determine whether there is any amount available for the payment of unsecured creditors. Contracts for the sale of the two properties have been exchanged with parties associated with Mr Li, but have not yet settled.

9 At the time the plaintiffs were appointed provisional liquidators of the companies, construction work was being carried out on one of those properties. The plaintiffs issued a notice to cease work to the builder, and it had claimed to be owed nearly $1,800,000. That debt, however, has now been assigned to Athena Rose Capital.

10 One Lake Macquarie’s other unsecured creditors include Revenue NSW (in the amount of about $130,000), and various other relatively small creditors. The plaintiffs have also identified references, however, to Vaucluse 29 paying over $10,000,000 in respect of debts of One Lake Macquarie. It is thus possible that Vaucluse 29 will also be a creditor.

11 It is not necessary for the purposes of this introduction to describe the activities of the plaintiffs thus far, save to observe that:

(a) they retained their solicitors shortly after their appointment as provisional liquidators of the companies (on 15 December 2022). Those solicitors have provided ongoing advice and assistance to the plaintiffs in relation to the discharge of their duties as liquidators of the companies, and have represented One Lake Macquarie in the Supreme Court proceedings to which I have already referred. Those solicitors are also acting for the plaintiffs in proceedings commenced in this Court in which they have obtained orders for the production of documents, and for the public examination of various individuals, in connection with the affairs of the companies;

(b) they signed a litigation funding agreement with Pretium Funding Pty Ltd on 22 May 2025. Under that funding agreement, the funder is obliged, amongst other things, to (a) provide security for costs that has been ordered in the Supreme Court proceedings, (b) fund the fees of counsel and other disbursements in relation to those proceedings, the upcoming public examinations, and other proceedings that may be brought in the future, and (c) meet any adverse costs order that may be made against the liquidators or the companies; and

(c) they have not yet conducted any public examinations in respect of the affairs of the companies, nor, as a result, have they yet identified any potential claims that they or the companies may have against third parties (much less commenced proceedings seeking to vindicate such claims).

12 In those circumstances, the relief ultimately sought by the plaintiffs was for orders:

(a) pursuant to s 477(2B) of the Corporations Act 2001 (Cth) that the plaintiffs, on behalf of the companies, be granted approval, nunc pro tunc, to enter into the retainer agreement they made with their solicitors on 15 December 2022;

(b) pursuant to s 477(2B) of the Corporations Act that the plaintiffs, on behalf of the companies, be granted approval, nunc pro tunc, to enter into the litigation funding agreement with Pretium Funding Pty Ltd they signed on 22 May 2025; and

(c) pursuant to s 588FF(3)(b) of the Corporations Act that the period within which the plaintiffs may make an application under s 588FF(1) be extended to the date that is six months from the date that this application is determined.

13 When the application first came on for hearing, the plaintiffs relied on:

(a) An affidavit of Mark Roufeil (one of the plaintiffs), sworn on 2 October 2025;

(b) Exhibit MR-1 to that affidavit; and

(c) An affidavit of Thomas Russell (solicitor for the plaintiffs) sworn on 2 October 2025.

14 When the hearing resumed, the plaintiffs relied, in addition to the above, on:

(a) An affidavit of Mark Roufeil, sworn on 22 October 2025;

(b) Exhibit MR-2 to Mr Roufeil’s 2 October 2025 affidavit;

(c) Exhibit MR-3 to Mr Roufeil’s 22 October 2025 affidavit;

(d) An affidavit of Bradley Tonks (the other plaintiff), sworn on 21 October 2025;

(e) An affidavit of Thomas Russell, sworn on 22 October 2025;

(f) Exhibit TR-1 to Mr Russell’s affidavit; and

(g) Exhibit A (being an email from the solicitor for Athena Rose Capital and Ms Cheng).

The Applications for Approval under section 447(2B)

15 Section 477(2B) governs Court approval of a liquidator’s entry into agreements on a company’s behalf and states as follows:

Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company’s behalf (for example, but without limitation, a lease or an agreement under which a security interest arises or is created) if:

(a)     without limiting paragraph (b), the term of the agreement may end; or

(b)    obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;

more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months.

16 The rationale for s 477(2B) and the requirement for approval of long-term agreements it imposes has been explained on many occasions: see, by way of example only, In the matter of One.Tel Limited (in liq) [2014] NSWSC 457 at [30] (Brereton J); Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liq) [2022] FCA 1216 at [23]-[24] (Wigney J), Naidenov, in the matter of AJW Interiors and Constructions Pty Ltd (in liq) [2024] FCA 25 at [85]-[86] (Cheeseman J).

17 The Court’s role in considering an application under s 477(2B) is to review the course of action proposed by the liquidator, paying due regard to his or her commercial judgment and knowledge of all the circumstances of the liquidation, and satisfy itself that there is no error of law or ground for suspecting bad faith or impropriety, and weigh up whether there is any good reason to intervene in terms of the “expeditious and beneficial administration” of the winding up: Corporate Affairs Commission v ASC Timber Pty Ltd (1998) 29 ACSR 109 at 118 (Austin J).

18 In Lewis (liquidator), in the matter of Concrete Supply Pty Ltd (in liq) [2020] FCA 841, White J outlined (at [16]) the following principles which the Court applies when considering an application for approval:

(a) the Court makes its assessment having regard to the purposes for which liquidators’ powers exist, including the serving of the interests of those concerned in the winding up, the achievement of what is necessary for the proper realisation of the assets of the company, and assisting in its winding up: Re HIH Insurance Ltd [2004] NSWSC 5 at [15]; Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 at [26(6)];

(b) a primary consideration is the impact of the agreement on the duration of the liquidation and whether that is, in all of the circumstances, reasonable in the interests of the liquidation: In the matter of Opel Networks Pty Limited [2013] NSWSC 1245 at [7]; One.Tel Limited at [30];

(c) the Court’s approval is not an endorsement of the proposed agreement but merely constitutes permission for liquidators to exercise their commercial judgment: Re Bell Group Ltd (in liq) [2009] WASC 235 at [58];

(d) again, generally, the Court does not refuse an approval unless there can be seen to be some lack of good faith, some error in law or principle or some real and substantial grounds for doubting the prudence of the liquidator’s conduct: Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85;

(e) a court may also refuse approval if the terms of the proposed agreement are unclear: Re United Medical Protection Ltd (No 4) [2002] NSWSC 516 at [45];

(f) the role of the Court is to grant or deny approval to the liquidator’s proposal. It is not to develop some alternative proposal which might seem preferable: ASC Timber at 117; and

(g) nevertheless, the Court does not simply “rubber stamp” whatever is put forward by a liquidator: Newtronics at [26(1)].

19 There exists the potential for uncertainty as to whether s 477(2B) applies to require approval of retainer and costs agreements between solicitors and liquidators in some circumstances. For some time, the prevailing approach in cases of doubt was to err on the side of caution and grant approval without formally determining whether it was necessary: see, e.g., Frigger v Kitay (in his capacity as liquidator of Computer Accounting and Tax Pty Ltd (ACN 009 470 491 (in liq) (No 2) [2020] FCA 497 at [51] (Charlesworth J); Re Concrete Supply Pty Ltd at [20]; Re Mudgee Dolomite & Lime Pty Ltd (in liq) (No 4) [2021] NSWSC 393 at [51] (Williams J); Re Ralan Property Services Pty Ltd (Receivers and Managers Appointed) (in liq) [2023] FCA 738 at [37] (Stewart J); Re AJW Interiors and Constructions Pty Ltd at [93] (Cheeseman J). In Kitay v Frigger (No 2) [2024] WASC 113 at [79]-[91], however, Hill J analysed the topic in some detail, and concluded, at [91]:

…I consider that approval under s 477(2B) of the Act is required for agreements entered into by the liquidator as agent for or representative of the company, as well as agreements in the name of the company. However, approval is not required for entry into agreements by the liquidator in their own name. In determining whether the agreement has been entered into by the liquidator as agent for or representative of the company or in their own name, it is necessary to consider the substance of the agreement, whether the company is a party to the agreement or appears to have the status of a party under the agreement, and who receives the benefit of the services provided under the agreement.

20 I will return to the significance of this particular issue for the present application in due course.

21 Finally, there is no doubt that the Court’s power under s 477(2B) extends to granting approval nunc pro tunc: see, e.g., Empire (Aust) Nominees Pty Ltd v Vince [2000] VSC 324 at [10] (Warren J); Newtronics at [25] (Gordon J); Chamberlain v RG&H Investments Pty Ltd, in the matter of Hardy Bros (Earthmoving) Pty Limited (in liq) (No 2) [2009] FCA 1531 at [23] (Lindgren J). That fact should not be permitted, though, to obscure the fact that “[a]s the express words of s 477(2B) make clear and consistent with the policy underlying the section, a liquidator should seek the Court’s approval before entering into a long term agreement”: Newtronics at [25].

22 It follows that, if a liquidator has failed to obtain approval in advance, it is important that a candid explanation of the reasons why should be provided to the Court: see, e.g., Chamberlain at [78] (Lindgren J); Hamilton, in the matter of ACN 101 634 146 Pty Ltd (in liq) [2014] FCA 687 at [7] (Kerr J); Re Dudley (as liquidator of Freshwater Bay Investments Pty Ltd (in liq) (ACN 105 274 226) [2021] FCA 608 at [8] (McKerracher J); Generate Group Pty Ltd v Harris [2023] FCA 605 at [29], [40] (Stewart J); Re AJW Interiors and Constructions Pty Ltd at [128] (Cheeseman J); Kitay v Frigger (No 2) at [149] (Hill J); Heesh, in the matter of Australian Bullion Company (Jewellery) Pty Ltd (in liq) [2025] FCA 571 at [36] (Cheeseman J); Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liq), in the matter of ACN 154 520 199 Pty Ltd (in liq) (No 6) [2025] FCA 813 at [8] (Cheeseman J). The nature and quality of that explanation will be relevant to the question whether approval should be granted nunc pro tunc.

23 Other relevant considerations may include matters such as:

(a) Whether or not the agreement is expressed to be conditional upon Court approval: see, e.g., Re AJW Interiors and Constructions Pty Ltd at [123] (Cheeseman J); Re ACN 154 520 199 Pty Ltd (in liq) (No 6) at [10] (Cheeseman J); Bredenkamp (Liquidator), in the matter of Coolgardie Minerals Limited (in liq) [2025] FCA 404 at [15] (Jackson J).

(b) The presence or absence of prejudice to the company or its creditors: see Re ACN 101 634 146 Pty Ltd at [11] (Kerr J); Generate Group at [40] (Stewart J).

(c) The length of the delay: see, e.g., Generate Group at [40] (Stewart J).

(d) Absence of dishonesty (or, put another way, that the liquidator acted honestly): Hayes, in the matter of Denham Constructions Pty Limited (in liq) [2018] FCA 2053 at [31] (Markovic J); Hamilton at [11] (Kerr J).

24 Overall, though, it is important to bear in mind that, as Black J observed in In the matter of Kevin Jacobsen Pty Ltd (in liquidation) [2016] NSWSC 538 at [74]:

[T]he jurisdiction under s 477(2B) of the Corporations Act is directed to promoting the interests of the liquidation and the creditors, not the exercise of disciplinary functions over liquidators who delay in seeking approvals under the section. Even if the liquidators not having sought approval prior to the assignment were open to criticism, it does not follow that creditors should be deprived of the potential benefit of an assignment which is otherwise in their interests.

25 See also Re Freshwater Bay Investments Pty Ltd at [8] (McKerracher J) and Re Australian Bullion Company at [33] (Cheeseman J).

26 The critical factor, in other words, is fidelity to the policy and purpose of s 477(2B). As Cheeseman J observed in Re AJW Interiors and Constructions Pty Ltd at [118]:

The court must be assiduous to guard against the potential for its capacity to grant approval nunc pro tunc to be used, whether wittingly or not, to circumvent the statutory purpose.

27 Provided that the Court can be satisfied of that fact then, assuming it otherwise to be appropriate to grant approval, it is likely also to be appropriate to do so nunc pro tunc.

The Retainer Agreement

28 The terms of the plaintiffs’ retainer of their solicitors were submitted to be contained in three items of correspondence:

(a) First, a letter dated 15 December 2022, addressed to PKF(NS) BRI Holdings Pty Ltd, from Piper Alderman. A few matters might be noted in relation to that letter:

(i) The addressee company is the firm from which the plaintiffs practice. Mr Russell, the partner of Piper Alderman responsible for the matter, gave evidence that it was his usual practice when issuing a retainer agreement to an insolvency practitioner or a company in external administration to address it to the firm of which the insolvency practitioner is a member. He identified a range of what might be described as matters of internal administrative convenience as explaining that practice. Nevertheless, Mr Russell understood the retainer to cover work for the liquidators and the companies.

(ii) The scope of the work to be performed under the retainer was specified as being “to assist [the plaintiffs] with issues arising in the provisional liquidations and otherwise from your appointment”. It is apparent that the intended scope of the retainer was both broad and general. By their conduct, the parties have plainly regarded it as extending to work following the appointment of the plaintiffs as liquidators, and also to work performed for and on behalf of the companies.

(iii) The letter was framed as an offer, acceptance of which (including by conduct such as giving Piper Alderman instructions) would be taken as agreement to the terms of an enclosed costs agreement. The terms of that costs agreement included cl 7, which said (in part):

Unless we have advised you otherwise in writing, the payment of our fees and disbursements in full is not conditional upon the completion of your matter or upon the happening of any other event or thing.

It was not in dispute that, at least initially, Piper Alderman did not notify the plaintiffs in writing that the retainer would be performed on a conditional fee basis. Mr Russell gave evidence, however, that by reason of his professional history of work for the plaintiffs, he considered there to be a shared understanding that Piper Alderman would not demand payment of its fees save to the extent that there were sufficient funds available to them from the companies. Mr Roufeil gave evidence to a broadly similar effect. Mr Russell said that the reason it was not specifically recorded at the time whether the work would be performed on what he called a “spec” basis, was that to begin with it was unclear whether or not there would be funds sufficient to pay fees from the outset. The file was not, therefore, marked as a “spec” matter in Piper Alderman’s internal file until September 2023. Even then, in November 2023, the Piper Alderman accounts department sought payment for work performed pursuant to the retainer from the plaintiffs. When that fact was drawn to the attention of Mr Russell, however, he made explicit that the plaintiffs would not be asked to pay Piper Alderman’s fees otherwise than in accordance with the understanding just described.

(b) Secondly, a letter from Piper Alderman dated 21 March 2025, addressed to “The Liquidators, One Lake Macquarie Pty Ltd (in liquidation)”. The letter began by stating that it “modifies our firm’s retainer to act on your behalf in connection with the winding up of One Lake Macquarie Pty Ltd” including in relation to the Supreme Court proceedings, acting in connection with proposed public examinations, and undertaking any other work which may arise out of the windings-up, including pursuing claims against third parties. The letter was thus consistent with the understanding that the retainer was a broad retainer to perform work for both the plaintiffs and One Lake Macquarie in connection with its winding up. The letter went on to identify the respects in which the terms of the retainer were being modified, including:

(i) reflecting the fact that the engagement was now definitively acknowledged to be on a speculative basis, Piper Alderman’s standard rates were increased by 25%; and

(ii) the precise basis upon which fees would be charged, including the specification of a waterfall identifying the order in which obligations would be met when funds were available.

(c) Thirdly, a letter from Piper Alderman dated 22 October 2025, addressed to PKF(NS) BRI Holdings Pty Ltd. The letter began by referring to the plaintiffs’ appointment as liquidators of all three companies, and then provided that the terms of the engagement would be modified in respect of all three windings-up. The modifications were to the same effect as those notified to the plaintiffs in respect of One Lake Macquarie in the letter of 21 March 2025. The purpose of the letter, in other words, appears to have been to bring the terms upon which work under the retainer in relation to Vaucluse 29 and Bayview 66 would be performed into line with the modified arrangements previously notified in relation to One Lake Macquarie.

29 The evidence was to the effect that the plaintiffs (and other members of their firm) have a longstanding professional relationship with Piper Alderman, and have worked together on numerous occasions in respect of a range of external administrations of companies. The terms of the retainer are Piper Alderman’s standard terms.

30 While the companies are not expressed to be parties to the retainer, I do not think that there can be any doubt that the plaintiffs have entered into the retainer on behalf of the companies as well as on their own behalf. The parties have certainly treated the retainer as extending to acting for the companies in litigation to which they are parties (and consider that it will apply to any future such litigation that may be commenced). In those circumstances, I think that the effect of the decision of Hill J in Kitay v Frigger (No 2) is that approval was required pursuant to s 477(2B).

31 Subject to the question of whether approval should be granted nunc pro tunc, I consider that it is appropriate to approve the entry into of the retainer agreement. That is because:

(a) To the extent that the retainer is entered into on behalf of the companies, it is to enable them to prosecute (or if necessary defend) litigation for the purpose of benefitting the companies and their creditors.

(b) I am satisfied that the existing Supreme Court proceedings being carried on by One Lake Macquarie have reasonable prospects of success, and that there are reasonable prospects that at least some value will be realised in the event that they do succeed. Even if the amount that were to be recovered was sufficient only to permit payment of fees and expenses incurred by the plaintiffs, their lawyers, and the funder, that is not a reason not to grant approval: Hall v Poolman (2009) 75 NSWLR 99; [2009] NSWCA 64 at [150]-[151], [157] (Spigelman CJ, Hodgson JA and Austin J); Re AJW Interiors and Constructions Pty Ltd at [87] (Cheeseman J).

(c) Equally, to the extent that the plaintiffs, following the conduct of the public examinations that are shortly to commence, identify other potential claims that the companies may bring, then it is plainly in the interests of the companies and their creditors that the companies have the benefit of legal representation in relation to those claims. While the existing, and any future, litigation will necessarily prolong the liquidation, I am satisfied that in all the circumstances, such a delay is reasonable for the proper realisation of the assets of the companies. The prosecution of the claims of the companies allows for the possibility of a dividend to creditors, which otherwise appears unlikely.

(d) The terms of the engagement are clear and reasonable. Piper Alderman is plainly qualified to carry out the engagement.

(e) There is nothing in the evidence to suggest that entry into the retainer is something other than a proper exercise of the plaintiffs’ powers. There is no evidence of an error in law or principle, a lack of good faith, or any ground for doubting the prudence of the plaintiffs’ proposal.

32 The real question, then, is whether approval should be granted nunc pro tunc. I am satisfied that it should.

33 The plaintiffs’ explanation for why they had not earlier sought approval for entry into the retainer agreement was simple:  they did not think that it was required. It is certainly the case that the question whether liquidators require approval to enter into an agreement in their own names to retain solicitors under which work would be performed on behalf of the company (as opposed to for the liquidators) had not, until quite recently, been definitively settled. The plaintiffs gave evidence, which I accept, that they believed that the effect of s 477(2)(a) and (b) was that they did not require approval. The possibility that that belief may have been wrong only occurred to them as a result of exchanges between myself and counsel on 14 October 2025 in connection with their application for approval of the funding agreement. They then moved promptly to seek approval. In those circumstances, the failure to seek approval before entry into the agreement was honest, and has been explained.

34 Work has been carried out, in good faith, and for the benefit of the companies and their creditors, under the retainer for nearly three years. I can discern no prejudice to the companies or their creditors that might flow from a grant of retrospective approval. Nor do I see that the statutory purpose of requiring prior approval would, in these circumstances, be circumvented by granting retrospective approval to an agreement that I consider would have been given approval had it been sought.

35 I should also record that the interested parties (Athena Rose Capital and Ms Cheng) informed the Court that they neither consented to nor opposed the relief sought.

The Funding Agreement

36 There is no dispute that the plaintiffs required approval to enter into the funding agreement.

37 The critical terms of that agreement are as follows:

(a) The funder will make available to the plaintiffs a facility that may be drawn down so as to, inter alia:

(i) pay all disbursements including counsel’s fees, court fees, and expert witness fees, but not including solicitors’ fees, in connection with:

(A) the existing Supreme Court proceedings;

(B) the upcoming public examinations to be held in relation to the companies’ affairs;

(C) any claims that may be identified in consequence of the public examinations; and

(D) the application for approval under s 477(2B) to enter into the funding agreement;

(ii) pay any adverse costs orders that may be made in relation to the litigation just described (or settle claims for costs); and

(iii) provide any security for costs that may be ordered.

(b) Responsibility for all legal proceedings remains with the plaintiffs, who are solely responsible for providing instructions; and

(c) In addition to repayment of any amounts advanced, the funder is entitled to be paid, in most circumstances, an amount equal to 35% of the net amount recovered.

38 The agreement is expressed to be “subject to a condition precedent to the terms of this agreement being legally binding more than three months from the date of execution”; namely, that Court approval pursuant to s 477(2B) be obtained.

39 I have already mentioned that Piper Alderman has been retained to act on the basis that they will not require payment of their fees unless the companies have funds sufficient to do so. The funding agreement, by excluding solicitors’ fees from the purposes for which funding is provided, leaves that arrangement unchanged.

40 The benefit to be obtained by the funding agreement is, therefore, essentially twofold. First, it permits the provision of security for costs. Secondly, it facilitates the incurring of necessary disbursements for the benefit of litigation, and provides adverse costs protection in relation to it. Both of those benefits are of particular value to the companies. That is because:

(a) The companies have been ordered to provide security for costs in the Supreme Court proceedings. The final tranche of security is required to be provided by 27 October 2025, failing which the proceedings will be dismissed (it was this circumstance that was the primary basis upon which this application was said to be particularly urgent).

(b) The public examinations in relation to the affairs of the company are listed to commence in early November. Those examinations are regarded as critical to the plaintiffs’ ability to accurately determine the affairs of the companies, in circumstances where they have not been provided with proper or complete books and records. That in turn will enable a proper assessment of any claims that may be available to the plaintiffs or the companies, for the benefit of creditors. The ability to obtain the paid services of counsel will enable the proper preparation, and thus the more effective conduct of, those examinations.

(c) More generally, it is to the advantage of the companies and their creditors that the fees of counsel and experts, along with other necessary expenses required to identify, consider and prosecute any available claims, be able to be incurred.

41 The evidence was that there is no creditor or other alternative source of funding. The plaintiffs also gave evidence that the funding agreement was agreed following a general expression of interest campaign involving multiple different funders. The terms were said to be the best commercially available, and within the range that the plaintiffs regard as standard for funding of this type.

42 I have already mentioned, in connection with the approval of the retainer, that I regard the prolongation of the winding up by reason of the pursuit of the Supreme Court proceedings (and any other proceedings that may be identified) as justified in order to achieve the proper realisation of the assets of the companies (and creates the potential for a dividend to creditors which would otherwise be unlikely to exist). It follows that entry into the funding agreement, without which pursuit of that litigation would not be possible, is consistent with the statutory purpose.

43 The funding agreement can only reasonably be regarded as to the benefit of creditors. It enables potentially valuable recoveries in circumstances where no dividend is otherwise to be paid, does not involve any trade-off between the earlier receipt of some money and the later prospect of more, and cannot leave the creditors worse off.

44 There is nothing in the evidence to suggest that entry into the retainer is something other than a proper exercise of the plaintiffs’ powers. There is no evidence of an error in law or principle, a lack of good faith, or any ground for doubting the prudence of the plaintiffs’ proposal.

45 Having regard to the commercial judgment of the plaintiffs and the reasons they have given for having formed that judgment, though without independently appraising the commercial desirability of the funding agreement or its terms, I am satisfied that it would be appropriate to grant approval for the plaintiffs to enter into the agreement.

46 The real question is whether that approval should be granted nunc pro tunc.

47 I was not impressed by the plaintiffs’ explanation for their delay in seeking approval of their entry into the funding agreement.

48 The funding agreement was signed by the plaintiffs on 22 May 2025. The application seeking approval was not filed until 2 October 2025, and only came before me as Duty Judge on 14 October 2025, at which point there was an almost immediate application for an adjournment to enable further evidence to be obtained.

49 The plaintiffs knew that they needed approval. One of the documents that Mr Roufeil exhibited to his first affidavit was the judgment of Kunc J in One Lake Macquarie Pty Ltd (in liq) v Athena Rose Capital Pty Ltd [2025] NSWSC 177, in which his Honour ordered One Lake Macquarie to provide security for costs in the Supreme Court proceedings. In that judgment, his Honour quoted (at [41]) from an affidavit that Mr Roufeil had sworn in those proceedings in which he described the, then ongoing, efforts that the plaintiffs were making to obtain funding. In that affidavit, which was sworn on 15 November 2024, Mr Roufeil said:

[I]f a commercially acceptable offer for funding is received, I will need to obtain the consent of One Lake Macquarie’s creditors or the Court to enter into the funding agreement. That is because I anticipate that it is likely to be an agreement with a term which could extend more than three months into the future.

50 In circumstances where the hearing of this application proceeded ex parte, I queried with junior counsel who appeared for the plaintiffs on 14 October 2025, how that statement could be reconciled with the explanation then being advanced to me, which was that the plaintiffs believed that they only needed to obtain approval after the agreement had been on foot for more than three months.

51 When the matter resumed on 23 October 2025, a different explanation was offered. It was as follows:

(a) The critical prompt for entry into the funding agreement was the fact that the Supreme Court ordered One Lake Macquarie to provide security for costs. Those orders required One Lake Macquarie to provide security by way of cash. The funder, however, would only agree to provide security by way of bank guarantee.

(b) The plaintiffs thus set about seeking a variation to the orders of the Supreme Court, that would permit One Lake Macquarie to provide security by way of bank guarantee. Such a variation was obtained from Hmelnitsky J on 18 July 2025: One Lake Macquarie Pty Ltd (in liq) v Athena Rose Capital Pty Ltd (No 2) [2025] NSWSC 780.

(c) If that variation of the orders had not been obtained, then, it was said, a substantial part of the reason why the plaintiffs wished to enter into the funding agreement would no longer apply. In those circumstances, it was submitted that it would have been problematic to seek approval for the funding agreement (although I note that it would still have provided real value to the plaintiffs and the companies in terms of facilitating the public examinations, and any proceedings that may flow from them.)

(d) In any event, the submission was that the plaintiffs determined to await the variation in the Supreme Court’s orders concerning security before progressing the question of approval. This was submitted to be a “commercial and practical” approach.

(e) The plaintiffs then determined first to seek approval from the companies’ creditors. Notices for meetings to obtain such approval were sent on 7 August 2025, with the meetings scheduled for 22 August 2025. On 22 August 2025, the One Lake Macquarie creditors (recalling, of course, that they are comprised almost exclusively of the persons the target of the existing and prospective litigation) voted not to approve entry into the agreement. There was no quorum at the meetings of the other two companies, and so they were adjourned for a week. No quorum was present at the resumed meetings either.

(f) It was thus clear by 22 August 2025 that Court approval would be required in respect of One Lake Macquarie at the very least. I have already mentioned, though, that the application was not filed until 2 October 2025 (almost six weeks later).

(g) The explanation for that six-week delay was that “time, care and effort was required and implemented in preparing evidence before the application could be brought”. Particular reliance was placed on the fact that the exhibit to Mr Roufeil’s first affidavit comprises over 1,500 pages. I did not find this a particularly satisfying explanation. In circumstances where the need for approval was now long-overdue, things should have moved much more quickly. While the exhibit to Mr Roufeil’s affidavit was long, it does not follow that it was a complex application to assemble (indeed, as may be expected, a significant part of the exhibit was bulky documents such as ASIC company extracts, agreements, judgments, reports to creditors and the like). The explanation was all the more unsatisfactory by reason of the fact that, when the application was first called on for hearing, it had to be adjourned for reasons including that the evidence in support of the explanation for the delay appeared insufficient.

52 While I do not accept that that is a good explanation for the delay in seeking approval, I accept that it is the explanation for why the plaintiffs did not do so. The reasons why it is not a good explanation include:

(a) The statutory obligation is to obtain approval before entering into an agreement that may operate for more than three months. This was not a case where there were genuine reasons why a liquidator needed to enter into an agreement urgently, in circumstances where it was not practicable to obtain approval in advance. The “commercial and practical” reasons why the plaintiffs chose not to obtain approval amount to little more than suiting their own convenience.

(b) There is no reason to think that an approval application could not have been usefully or practically made before the security for costs orders were varied by the Supreme Court. A substantial part of the rationale for entry into the agreement had nothing to do with the provision of security for costs. To the extent that the utility of the agreement in light of uncertainty about the companies’ ability to vary the orders for security was in issue, there is no reason why that uncertainty could not have been identified and dealt with as part of the application.

(c) The existence of a provision making an agreement conditional upon the obtaining of Court approval does not remove the need to obtain approval prior to entry. It certainly does not mean that liquidators can allow three months to pass by, during which an agreement is being performed, before they turn their mind to obtaining approval. Again, the obligation is to obtain approval before entry into an agreement which may operate for more than three months.

(d) The approach of seeking approval from creditors, certainly in relation to One Lake Macquarie, must always have been unlikely to succeed given the composition of the creditors. In any event, having failed to obtain that approval, the further delay of six weeks was simply unacceptable.

53 So what is the relevance of the fact that the plaintiffs had no good excuse for delaying seeking approval? At the end of the day, in the circumstances of this case, I think it is of no ultimate significance. It was important that the plaintiffs fully explain why they delayed, even if the explanation was a poor one. That is because, if for no other reason, it is necessary that the Court be satisfied that approval nunc pro tunc is not being sought in circumstances that would circumvent the statutory purpose. The statutory purpose is fundamentally directed to promoting the interests of the liquidation and the creditors (and not the exercise of disciplinary functions over liquidators).

54 Here, I can discern no circumstance that would suggest that the protective function of the Court in granting approval is being circumvented. It is not a case like Re AJW Interiors and Constructions Pty Ltd where the delay in seeking approval meant that the company had been committed to a course of action that would not have been permitted had approval been sought in advance. Here, for the reasons I have given, I am satisfied that approval would have been appropriate to be granted prospectively. It follows that I am satisfied that it is appropriate to grant approval nunc pro tunc.

55 Once again, I should also record that the interested parties were on notice of this application, and communicated that they neither consented to nor opposed the relief sought. I think that is a factor of some significance in circumstances where the primary objective of the funding agreement is to facilitate the bringing of claims against them.

56 That result should not be allowed to detract in any way from the firm admonishment of the plaintiffs that these reasons supply, and the corresponding caution to other liquidators who may find themselves in a similar position. Retrospective approval under s 477(2B) should be regarded as exceptional, and will always need to be justified. Unless there are good reasons why it is not possible to do so, Court approval should always be obtained, as the statute contemplates, in advance of entry into an agreement that may operate for more than three months.

The Application for An Extension Pursuant to section 588FF

57 The plaintiffs have also sought what is known as a “shelf order”, to permit them to make applications under s 588FF(1) of the Corporations Act beyond the statutory period.

58 I summarised the principles governing such applications in Brereton, in the matter of ICT Century Pty Ltd (In Liquidation) [2025] FCA 107 at [3] in the following terms:

The scope of the power to grant extensions of this kind, and the principles in accordance with which applications to exercise it are to be determined, are settled, such that there is no issue that:

(a)     An order extending time may be made after the expiry of the period calculated in accordance with s 588FF(3)(a), provided that the application for an extension was filed within that period: McGrath v National Indemnity Company [2004] NSWSC 391; 182 FLR 309 at [18], per Barrett J.

(b)    Section 588FF(3)(b) authorises the making of a shelf order: Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 at [24], per French CJ, Hayne, Kiefel, Gageler and Keane JJ.

(c)    Because an order extending time is capable of adversely affecting the interests of third parties, ordinarily they should be given an opportunity to make submissions before the order is made: John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1 at [131], per French CJ, Gummow, Hayne, Heydon and Kiefel JJ.  If that is not possible (and in the context of an application for a shelf order there will be obvious limitations on the ability to provide such an opportunity to all persons who may ultimately be affected by the order), then, upon application, the third party must be put in the same position as he or she would have been in had such an opportunity been provided: BP Australia Ltd v Brown (2003) 58 NSWLR 322 at [133]-[134], per Spigelman CJ (Mason P and Handley JA agreeing); see generally John Alexander v White City at [137].

(d)    The discretion conferred by s 588FF(3)(b) is to be exercised having regard to the scope and purposes of Pt 5.7B (Fortress Credit v Fletcher at [24]), and the fundamental question is whether it is “fair and just in all the circumstances” to grant the extension: BP v Brown at [187]. Another way of viewing the question, is to ask whether the extension would represent an unreasonable prolongation of the state of uncertainty faced by those who entered into transactions with the company during the periods in respect of which designated transactions may be voidable: Fortress Credit v Fletcher at [24]; Parker, in the matter of Worldwide Specialty Property Services Pty Limited (in liq) v Worldwide Specialty Property Services Pty Limited (in liq) [2017] FCA 687 at [15], per Lee J.

(e)    In most cases, the centrally relevant considerations will be (see, eg, Taylor v Woden Constructions Pty Ltd [1998] FCA 1228, per Finn J, synthesised and crystallised in many later cases, including Green v Chiswell Furniture Pty Ltd [1999] NSWSC 608 at [15], per Austin J):

(i)    the liquidator’s explanation for the delay in commencing proceedings;

(ii)    a preliminary assessment of the merits of the foreshadowed proceedings, directed to determining the fairness of prolonging the exposure of third parties to the uncertainty of possible litigation (although, where the purpose of the extension of time is simply to put the liquidator in a position to decide whether or not to bring a proceeding, a preliminary inquiry into the merits may not always be necessary);

(iii)    whether the likely prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting an extension.

(f)    The particular nature of shelf orders may give rise to a number of additional considerations, including (Fortress Credit v Fletcher at [25]-[26]):

(i)    disadvantage to potential defendants not identified in the shelf order;

(ii)    the encouragement to liquidators not to identify potential defendants, thereby reducing the prospect of opposition at initial application;

(iii)    the risk of a multiplicity of litigation by successive defendants applying to reagitate extension applications of which they had not been given initial notice;

(iv)    the risk of inconsistent outcomes on applications to set aside extension orders by respective defendants;

(v)    no finality, as claims by defendants that they were identifiable, but not identified, might cause ongoing challenges to any extension granted;

(vi)    want of certainty for liquidators and prospective defendants who might seek to have leave revoked after it had been granted and after proceedings had commenced;

(vii)    the potential for wasted costs to be incurred contrary to the interests of creditors; and

(viii)    the determination of applications by reference only to evidence that the liquidator elected to put before the court.

59 Here, the date by which either a claim under s 588FF(1) must be brought, or an extension of time under s 588F(3) obtained, is 1 December 2025 (the relation-back day being 1 December 2022).

60 The plaintiffs say that the only persons they are presently able to foresee might have claims made against them are Athena Rose Capital and Ms Cheng. They were both given notice of the application, and informed the Court that they neither consented to nor opposed it.

61 The plaintiffs candidly admit, however, that the reason they seek a shelf order (i.e., one that does not limit the grant of an extension to specific claims, or claims against specified persons) is because they do not know what they might discover during the upcoming public examinations.

62 The real issue on this application is the plaintiffs’ explanation for their delay.

63 In substance, the plaintiffs submit that they need more time because they cannot identify and formulate the claims that might be available to them under s 588FF(1) unless and until they have carried out public examinations in relation to the companies’ affairs. (Those examinations are said to be indispensable because the state of the books and records available to them has not permitted them to assess properly the existence of claims.) The examinations are scheduled to commence in early November. It follows that there is a real chance that insufficient time will be available to the plaintiffs to assimilate the information obtained, conduct any further investigations that may be required, consider and obtain advice in relation to the claims that may be available, and commence proceedings, all before 1 December 2025.

64 All of that can be accepted. The real question is perhaps: why are the public examinations only being held in November 2025, less than a month before the statutory period expires?

65 The plaintiffs’ immediate response to that question is: because the significant work required to be done to commence the examination proceedings, and to conduct them, was only possible once funding was obtained. (A lack of funding, in appropriate cases, is a relevant consideration in explaining delay: Chin, in the matter of Agatha Trading Pty Ltd (in liq) [2020] FCA 991 at [34]-[35] (Markovic J).) In fact, on 31 March 2025, before the funding agreement was signed on 22 May 2025, but when it was sufficiently clear that funding was likely, Piper Alderman started preparatory work. Once funding was confirmed, they moved with reasonable dispatch to prepare a proper application (which was filed on 4 August 2025). Exhibit MR-2, which included a confidential affidavit, was relied upon to show the detailed and careful work that went in to progressing the application for public examinations.

66 Again, I am prepared to accept all of that. But another question then presents itself: why were attempts not made to obtain funding any earlier? The response to that question is more complicated.

67 The plaintiffs gave evidence that their original plan was to use surplus funds from the sale of One Lake Macquarie’s properties (i.e., surplus to that required to pay out Athena Rose Capital’s secured debt) to fund the public examinations process.

68 Mr Roufeil’s evidence was that it was in March 2024 that it became clear that Athena Rose Capital and Ms Cheng were taking a position that, if vindicated, would mean that the sale of One Lake Macquarie’s properties would not be sufficient to discharge Athena Rose Capital’s secured debt. He then determined to commence the Supreme Court proceedings, which occurred on 18 March 2024.

69 The focus of the next few months was on progressing those proceedings. Amongst other things, a defence was filed in May, an amended statement of claim in August, in September there was an application before a registrar for security for costs (in relation to which One Lake Macquarie was successful), and then in October the defendant sought review of the registrar’s decision (which ultimately led to the decision of Kunc J granting security).

70 Initially, the plaintiffs considered that they did not require funding for the purposes of the Supreme Court proceedings. Principally, that was because Piper Alderman was acting on a “speculative” basis. It was in October, when the defendant sought review of the registrar’s decision in relation to security for costs that the plaintiffs commenced their attempts to identify a funder.

71 At the very latest, once it became clear that the Supreme Court proceedings would involve a serious contest with Athena Rose Capital, it must have been clear to the plaintiffs that they could not rely on their original strategy (that is, of obtaining prompt access to substantial surplus funds following the sale of One Lake Macquarie’s properties) to fund the public examinations that they regarded as necessary. It follows that they ought to have appreciated a need for funding by no later than May 2024 (and in all probability by March 2024 when they commenced the Supreme Court proceedings).

72 The question is thus whether it was unreasonable for them to delay attempting to obtain funding until October 2024. Particularly with the benefit of hindsight, I think it is clear that attempts should have been made earlier. But I accept that, at the time, the focus was on the Supreme Court proceedings and what was required to prosecute them, rather than the public examinations lying further down the road. There was significant activity in relation to the Supreme Court proceedings, and significant work done in relation to them, between March and October 2024. I am satisfied that it was understandable that the plaintiffs were focussed on, and prioritised, that work over progressing the public examinations. It follows that the need to begin in earnest the search for funding for that latter purpose was not appreciated at the time.

73 In those circumstances, I am satisfied that the plaintiffs have satisfactorily explained why they did not begin to look for funding until October 2024. From that point onwards, the evidence shows that they progressed that search, and negotiations with potential funders, with reasonable diligence. And once funding was obtained, I am satisfied that they carried out the work necessary to progress the public examinations efficiently and effectively.

74 Turning then to the question of the merits of the proceedings in respect of which the extension is sought, I agree with the plaintiffs that the present is a case where a preliminary assessment of merit is not required. That is because, the purpose of the extension is to put the plaintiffs in a position to decide whether or not to bring proceedings, and not to grant an extension in relation to a particular, identified, claim. As Finn J observed in Taylor v Woden Constructions:

[A] merits inquiry, even of a preliminary character, may not always be necessary. Where the liquidator is not in the position to consider the merits but has proper grounds for inquiring into the matter because of suspicion it invites (or that is cast on it) or of the explanation it requires, then provided he can satisfactorily explain his delay in inquiring sufficiently into the matter, he should not be closed out from an extension because he is unable to say he has a meritorious claim. In some instances, as here, it will be sufficient if he can say “I do not know if I do, but there is reason to inquire”.

75 I consider that the summary of the various real-estate transactions, and associated movements of money described at the outset of these reasons, disclose a sufficient basis upon which the plaintiffs are justified in pursuing their investigations.

76 Finally, there is the question of prejudice. As I observed in Re ICT Century Pty Ltd at [46]-[47]:

It is always relevant to take into account the presumptive prejudice (by which I mean the general prejudice that arises from the passage of time, and in particular the passage of time once a statutory limitation period has passed) that potential defendants will suffer by reason of the grant of an extension: see generally Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541 at 551-553, per McHugh J and, in connection with extensions of time under s 588FF(3)(b) in particular, New Cap Reinsurance Corp v Reaseguros Alianza SA [2004] NSWSC 787; 186 FLR 175 at [71], per White J.

Consideration of the nature and extent of specific prejudice presents obvious difficulties in the context of an application for a shelf order. Where the prejudice arises by reason of some known event or circumstance (the death of a witness who would be central to any likely claim, or the loss of certain company records, for example) it may be possible to weigh it in the balance. But the possibility will always remain that individual issues may exist in relation to an unascertained potential defendant, or a claim that has not yet been formulated. That difficulty is, to some extent, capable of being overcome by the ability of a person affected by the making of the order who was not afforded procedural fairness seeking to set it aside: Re Harris Scarfe Ltd (in liq) (No 3) [2008] SASC 74; 216 FLR 242 at [17], per Debelle J.

Inherent in that solution, of course, is the creation of a state of uncertainty, which is itself a relevant consideration in the exercise of the discretion. The relevant dimensions of the issue are elucidated in the list of considerations identified in Fortress Credit v Fletcher at [25]-[26], and set out at [3(f)] above.

77 In relation to Athena Rose Capital and Ms Cheng, I think it is significant that, having been informed of this application (and provided with the evidence in support of it), they have said that they neither consent nor oppose the extension of time. If there were any specific prejudice that they might suffer, then in the ordinary course it would be expected that they would draw it to the Court’s attention. In any event, given the close involvement that those two persons had in the conduct of the business of the companies and their real-estate transactions, I am satisfied that the potential for prejudice is substantially lessened: see, e.g., Vaughan v Catanzariti, in the matter of Italian Prestige Jewellery Pty Ltd (in liq) [2018] FCA 1403 at [41] (Markovic J); Re ICT Century Pty Ltd at [49] (Owens J).

78 In relation to other potential defendants, the difficulty in assessing prejudice, to which I referred in the quotation above, is acute precisely because their identity, and the nature of any such claim, is presently unknown. I have considered the matters identified in Fortress Credit at [25]-[26] but do not consider that they provide a reason not to grant the extension sought.

79 It is also relevant, I think, that the requested extension is relatively short (being about five months). I am satisfied that that is a period that is no longer than is required to enable the plaintiffs, working efficiently, to identify and commence any available proceedings under s 588FF(1).

80 For all these reasons, I am satisfied that it is appropriate to grant the extension requested.

Associate:

Dated:    24 October 2025