Federal Court of Australia

Sozou (liquidator) v Touchline Pty Ltd, in the matter of Touchline Pty Ltd [2025] FCA 1516

ORDERS

THE COURT ORDERS THAT:

1.    With respect to the first and second plaintiffs (Touchline Pty Ltd (in liquidation) and its liquidators), pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth), the time for the making of an application under s 588FF(1) of the Corporations Act be extended to 29 April 2028.

2.    With respect to the third and fourth plaintiffs (Highpoint Pty Ltd (in liquidation) and its liquidators), pursuant to s 588FF(3)(b) of the Corporations Act, the time for the making of an application under s 588FF(1) of the Corporations Act be extended to 29 April 2028.

3.    With respect to the fifth and sixth plaintiffs (Grow Surge Pty Ltd (in liquidation) and its liquidators), pursuant to s 588FF(3)(b) of the Corporations Act:

(a)    the time for the making of an application under s 588FF(1) of the Corporations Act against Commercial TC Pty Ltd in respect of the transactions identified at paragraphs 61-64 of the affidavit of Katherine Sozou sworn 28 August 2025 be extended to 1 March 2027; and

(b)    the time for the making of an application under s 588FF(1) of the Corporations Act (other than the application identified in Order 3(a) above) be extended to 29 April 2028.

4.    The costs of this proceeding are to be the costs in the winding up of the plaintiff companies.

THE COURT DIRECTS THAT:

5.    Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) being Sch 2 to the Corporations Act, the first plaintiffs are entitled to use funds contained within the bank account BSB: 082 057 Account number ending 0270 belonging to the second plaintiff, for the purpose of paying for the costs associated with this proceeding.

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

REASONS FOR JUDGMENT

MARKOVIC J:

1    Touchline Pty Ltd (in liquidation), Highpoint Pty Ltd (in liquidation) and Grow Surge Pty Ltd (in liquidation) (together Companies) and their joint and several liquidators in each case, Katherine Sozou, Anthony Norman Connelly and William James Harris (Liquidators) bring this application for, among other things, orders pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) to extend the time for making an application under s 588FF(1) of the Corporations Act in respect of each of the Companies and a direction under s 90-15 of the Insolvency Practice Schedule (Corporations) which is Sch 2 to the Corporations Act (IPSC).

2    The Companies and the Liquidators served a copy of the originating process and supporting affidavit on each of the Australian Securities and Investments Commission, Empryl Pty Ltd, Videriva Pty Ltd, Commercial TC Pty Ltd and Auswide Operations Pty Ltd. I will refer to Empryl, Videriva, Commercial TC and Auswide together as the Potential Defendants. Only Commercial TC filed a notice of appearance and appeared at the hearing to oppose the application.

3    The particular orders sought by the Companies and the Liquidators pursuant to s 588FF(3)(b) of the Corporations Act vary in one respect as between the order sought by Highpoint and the Liquidators and Touchline and the Liquidators, on the one hand, and Grow Surge and the Liquidators, on the other, as explained below. This variation in orders sought is to respond in part to the concerns raised by Commercial TC in opposing the application.

Background

4    The Companies and the Liquidators relied on detailed evidence given by Ms Sozou and Laura Jane Johns, their solicitor and a partner of Norton Rose Fulbright, and evidence of service. Some of Ms Sozou’s evidence is confidential and subject to an order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act). That evidence was not relied on insofar as Grow Surge and the Liquidators (in their capacity as joint and several liquidators of Grow Surge only) sought orders pursuant to s 588FF(3)(b) of the Corporations Act which affect Commercial TC.

5    Commercial TC relied on evidence given by Arthur Mitsoulis, its sole director.

6    I set out below a summary of the relevant evidence. In doing so I do not refer to any of the evidence which is subject to the order made pursuant to s 37AF of the FCA Act.

The appointment of the Liquidators

7    Jason Bing-Fai Tang and Ozem Azzam Kassem (Former Liquidators) were appointed liquidators to each of the Companies on 4 October 2022 following their initial appointments as voluntary administrators on 9 September 2022.

8    Prior to the appointment of the Former Liquidators as voluntary administrators, on 29 August 2022 the Australian Taxation Office (ATO) commenced applications to wind up each of the Companies. The relation back day for each of the Companies is therefore 29 August 2022 and the date by which a claim under s 588FF(1) of the Corporations Act can or could be brought by the Liquidators is 29 August 2025, being the date that is three years after the relation back day (Expiry Date).

9    The Former Liquidators were removed, and the Liquidators were appointed as liquidators: of Touchline and Grow Surge on 29 April 2025; and of Highpoint on 10 July 2025. That is, the Liquidators were appointed to Touchline and Grow Surge four months prior to the Expiry Date and were appointed to Highpoint approximately seven weeks prior to the Expiry Date.

Investigations undertaken by the Former Liquidators

10    The Former Liquidators lodged a statutory report for each of the Companies dated 22 December 2022. Those reports include information about the Former Liquidators’ view of the date of insolvency for each of the Companies, which in each case was at or closely aligned to their date of registration, and the result of investigations undertaken by the Former Liquidators as at the date of the report. As to their investigations, in each case, among other things, the Former Liquidators identified potential voidable transactions and uncommercial transactions, which required further investigation.

11    Ms Sozou’s understanding based on the reports lodged by the Former Liquidators and the Liquidators’ investigations as at 28 August 2025 is that:

(1)    the Former Liquidators were provided insufficient books and records of the Companies;

(2)    the Former Liquidators had limited cooperation from the former directors and other persons concerned with the business of the Companies;

(3)    notwithstanding (1) and (2) above, the Former Liquidators were able to identify significant concerns about the manner in which the business of the Companies operated which were grounded by the Former Liquidators’ assessment that:

(a)    the Companies were insolvent shortly following their incorporation and remained insolvent at all times to the date of appointment of the Former Liquidators in their capacity as voluntary administrators of the Companies on 9 September 2022;

(b)    the Companies made a number of large payments which do not appear to have a genuine commercial rationale and may be subject to potential claims;

(c)    the whole or a substantial part of the business of the Companies appeared to involve providing labour hire services to only one customer. These engagements were identified as potentially uncommercial transactions on the basis that:

(i)    there was no mark up under the labour hire agreement for the relevant company (i.e. there was no profit); and

(ii)    the customers of the labour hire agreement made insufficient payments to the Companies, compared to amounts that ought to have been paid pursuant to the labour hire agreements, all of which were in identical terms, leaving a significant shortfall between the amounts received by the Companies and the amounts they were required to pay associated with the employment of their personnel;

(4)    because of a lack of information and cooperation from the former directors and related parties to the Companies, a significant amount of further work remained to be undertaken to develop these general concerns to the point that a claim could be made that had reasonable prospects of a recovery for the Companies; and

(5)    in order to achieve a recovery for the creditors of the Companies, the Former Liquidators required additional creditor funding, at least with respect to Highpoint and Grow Surge, and funding was not received. For Touchline, the balance of funds held by the Former Liquidators was in the amount of $386,735.

12    Ms Sozou is of the view that, given the limitations faced by the Former Liquidators, the primary reason for their lack of progress, including in the period following the issuing of their reports up to the dates of the appointment of the Liquidators to the Companies, was that, at least with respect to Highpoint and Grow Surge, they did not receive the required funding to undertake further investigations and, with respect to each of the Companies, they did not have sufficient books and records or information to hand. Without receiving additional funding and without being provided the required information from the directors and/or related parties of the Companies, the Former Liquidators, at least with respect to Highpoint and Grow Surge, were seriously constrained and hampered in progressing the external administrations.

Potential claims identified by the Liquidators

13    Since their appointment the Liquidators have progressed the investigation including by gathering and reviewing books and records of each of the Companies, conducting forensic analyses of transactions, commencing work to identify claims and potential avenues of recovery, engaging legal advisors, preparing for public examinations and commencing work to identify potential voidable transaction claims under Pt 5.7B of the Corporations Act.

14    In terms of identifying potential claims, the Liquidators have identified potential voidable transaction claims against each of the Potential Defendants and the possibility of other potential claims which are yet to be identified but may nonetheless be available.

15    As to the potential voidable transaction claims against the Potential Defendants:

(1)    the Liquidators have identified a potential claim to be brought by Highpoint against Auswide in connection with a labour hire agreement dated 1 July 2020 and have issued a demand to Auswide setting out the claim. Ms Sozou deposes to the Liquidators’ calculation of a possible underpayment of $2,197,088 based on what has been paid by Auswide to Highpoint under the arrangement, and what in fact ought to have been paid;

(2)    the Liquidators have identified a potential claim to be brought by Grow Surge against Commercial TC in connection with invoicing under a labour hire agreement on the same terms as the labour hire agreement between Auswide and Highpoint. The Liquidators have formed a preliminary view that there may have been a practice of under-invoicing for services resulting in an uncommercial transaction with Commercial TC, which is further explained below; and

(3)    the Liquidators have identified potential claims by each of the Companies against Empryl and Videriva for payments made for no apparent consideration in relation to which to date the Liquidators have not identified any books or records which explain the reason for those payments.

16    Ms Sozou gives the following further evidence in relation to the potential voidable transaction claim by Grow Surge against Commercial TC:

(1)    Commercial TC entered into contracts with third parties for Commercial TC to provide construction site traffic management services;

(2)    Commercial TC and Comm TC Pty Ltd (in liquidation) entered into a labour hire agreement dated 1 July 2019 which, according to its terms, was for Comm TC to provide workers to Commercial TC (Commercial TC LHA);

(3)    the Liquidators are also liquidators of Comm TC and have identified that Comm TC opened a bank account on or about 13 September 2019. Based on their initial review of the bank statements of Comm TC, payments from Commercial TC to Comm TC appear to have been made in large, rounded sums, rather than specific amounts reconcilable to particular invoices. Ms Sozou deposes that, based on her experience, payment in this manner may be an indicium of the parties to the transactions not having an ordinary commercial relationship;

(4)    Comm TC and Grow Surge also entered into a labour hire agreement dated 1 July 2020 which provided that it was for Grow Surge to supply workers to Comm TC (Grow Surge LHA);

(5)    the Commercial TC LHA provided for Commercial TC to pay to Comm TC a fee in exchange for the workers supplied which was defined in Sch A as follows:

The calculation of the fee payable by the Company to the Labour Hire Agency will be based on the amount payable to the Worker (including all costs such as payroll tax, insurances etc)

(6)    the Grow Surge LHA provided for Comm TC to pay to Grow Surge a fee in exchange for the workers supplied which was also defined in Sch A as follows:

The calculation of the fee payable by the Company to the Labour Hire Agency will be based on the amount payable to the Worker (including all on costs such as payroll tax, insurances etc)

(7)    the Former Liquidators identified that the Grow Surge LHA did not provide any form of mark up on the cost of workers supplied (i.e. profit) for Grow Surge “and therefore may represent an uncommercial transaction”. Ms Sozou agrees with this interpretation of the definition of the fee payable in Sch A of the Grow Surge LHA and notes that it is in almost identical terms to the definition of the fee payable in Sch A of the Commercial TC LHA;

(8)    based on their investigations to date, the Liquidators have formed the preliminary view that the practice between Grow Surge, Comm TC and Commercial TC included arrangements by which Comm TC acted as intermediary between Grow Surge and Commercial TC. The Liquidators’ investigations to date indicate that labour hire arrangements were provided on an aggregated basis and, under this arrangement, Grow Surge appears to have supplied workers directly to Commercial TC, and invoiced Comm TC, which in turn invoiced Commercial TC for those same amounts. The question of the adequacy of the amounts claimed in the invoices raises concerns about the commerciality of the transactions, and the overall arrangements between the parties; and

(9)    based on their preliminary review of the limited available books and records of Grow Surge and Comm TC, the Liquidators have formed an initial view that there may be a shortfall between the amounts contractually due from Commercial TC to Comm TC or Grow Surge of potentially as much as $4 million (although this amount may differ given other complexities identified by Ms Sozou as to which company was actually supplying the workers which were in turn supplied by Comm TC). The Liquidators have attempted to estimate the amounts that were payable to the workers engaged under the Commercial TC LHA by reference to the definition of the fees payable under that agreement and have compared that estimate to the amounts actually paid by Commercial TC to Comm TC. They have identified that Comm TC may have been paid up to $4 million less than it ought to have been paid.

17    In relation to each category of identified voidable transaction claim, Ms Sozou sets out the further work that needs to be undertaken to investigate the payments and thus the claims before proceedings can be commenced. This includes, but is not limited to, conducting public examinations, undertaking further inquiries of various parties and assessing the merits of the proposed claims.

18    As to the unidentified claims, Ms Sozou’s evidence is that the purpose of this application is not only to preserve the status-quo so that the Liquidators are able to progress their investigations and pursue the potential identified claims but, subject to further investigation, preserve their ability to make future claims in relation to other yet to be identified claims that may be available to the Liquidators and the Companies under Pt 5.7B of the Corporations Act for other voidable transactions that are liable for relief under s 588FF of that Act.

19    Despite the need for further investigation, Ms Sozou says that the Liquidators have formed a preliminary view that that there is a real and not merely speculative prospect that the transactions the subject of the potential claims summarised at [16] above are voidable transactions and liable for relief under s 588FF of the Corporations Act.

20    More specifically in relation to the potential claim by Grow Surge against Commercial TC, Ms Sozou deposes that, despite the complexity with calculation of the quantum of the potential claim, the Liquidators have formed the preliminary view that Grow Surge may have under invoiced for services provided to Commercial TC under either or both of the Grow Surge LHA and the Commercial TC LHA, that the shortfall or discrepancy identified may constitute, either in whole or in part, a voidable transaction and that their further investigations may uncover the availability of other voidable transactions involving Commercial TC of which they are currently unaware.

Further time required to investigate the potential claims

21    Ms Sozou deposes that if the extensions sought are not granted the limitation period to bring any actions for relief under s 588FF will expire before the Liquidators’ investigations can be sufficiently progressed, the public examinations can be conducted, and the claims can be pursued for the benefit of creditors.

22    Based on their experience and given the complexity of the external administrations of the Companies, the Liquidators consider that the time necessary to properly undertake the further steps and investigations required to enable them to determine if there is a reasonable basis to bring any claims, other than the claim that may be brought against Commercial TC, is approximately 32 months from 29 August 2025. This is based on a calculation of three years from the earliest date of the Liquidators’ appointment to the Companies. In the case of the potential claims by Grow Surge against Commercial TC, the Liquidators have revised their estimate and say that the time required to undertake the necessary steps can be reduced such that they seek an extension of time in relation to that category of claim to 1 March 2027.

Commercial TC’s position

23    Mr Mitsoulis believes that the extension of time sought by the Liquidators, if granted, will unfairly prejudice Commercial TC because:

(1)    Commercial TC is a trading traffic control company;

(2)    any extension of the limitation period will create commercial uncertainty for Commercial TC in the upcoming few years which will affect the day-to-day operation of the business, impacting on the usual commercial life of Commercial TC;

(3)    the effluxion of time will cause prejudice to Commercial TC in meeting the potential claim amount; and

(4)    given the nature of Commercial TC’s operations, it does not maintain a substantial cash reserve. Commercial TC currently employs approximately 120 employees. The possible incurrence of a $4 million dollar debt would pose a serious threat to the viability of its operations and significantly compromise its ability to meet ongoing financial obligations.

24    Mr Mitosulis also gives evidence about Commercial TC’s practice in paying labour hire invoices. He notes that Commercial TC entered into the Commercial TC LHA on 1 July 2020 (rather than 1 July 2019) pursuant to the terms of which:

(1)    Comm TC provided labour to Commercial TC in exchange for a fee; and

(2)    Comm TC issued invoices to Commercial TC from time to time. Mr Mitsoulis understands that the invoice amounts included all associated employee entitlements in respect of labour hire personnel including wages, public liability insurance, payroll tax, pay as you go and iCare workers compensation. Subject to the matters set out at [26] below, Mr Mitsoulis believes that Commercial TC paid all the invoices issued by Comm TC pursuant to the Commercial TC LHA.

25    Mr Mtisoulis deposes that it was important for Commercial TC to pay all the invoices issued by Comm TC pursuant to the Commercial TC LHA including because:

(1)    Commercial TC provides traffic control services to major corporate clients such as the Mirvac Group and Lendlease Corporation Limited. These clients typically require Commercial TC to provide proof of payment of all wages and entitlements to the labour hire agencies prior to releasing payment to Commercial TC for its services;

(2)    on or about 20 December 2016, Commercial TC entered into an enterprise agreement with the Construction, Forestry, Mining and Energy Union (CFMEU). As part of compliance with the enterprise agreement, the CFMEU conducted periodic audits of Commercial TC’s records, to ensure that its members were receiving their full entitlements. These audits are conducted with the company engaging the labour hire services, namely Commercial TC, and not the labour hire agency, ie Comm TC; and

(3)    if Commercial TC’s records reflect any outstanding entitlements owed to labour hire personnel, there is significant reputational risk to Commercial TC within the industry which may adversely affect its ability to secure future contracts.

26    Mr Mitsoulis also gives evidence about an invoice dated 11 September 2022 issued by Comm TC to Commercial TC. The effect of this evidence, which I do not intend to set out, is that Commercial TC has no record of receipt of the invoice and, based on his inquiries and analysis, he suggests that it may not be a genuine invoice.

27    Finally, Mr Mitsoulis gives evidence that, based on a reconciliation undertaken by an accountant he engaged, Commercial TC paid all of the invoices issued by Comm TC to it in the period from 12 July 2020 to 11 September 2022 and it has never received an invoice from Grow Surge.

The claim for an extension of time

Statutory framework and legal principles

28    Section 588FF(3) of the Corporations Act provides that:

An application under subsection (1) may only be made:

(a)    during the period beginning on the relation-back day and ending:

(i)    3 years after the relation-back day; or

(ii)    12 months after the first appointment of a liquidator in relation to the winding up of the company;

whichever is the later; or

(b)    within such longer period as the Court orders on an application under this paragraph made by the liquidator during the paragraph (a) period.

29    The phrase “relation-back day” is defined in s 9 of the Corporations Act which, in turn, refers to the meaning in s 91 which relevantly provides that such date is the date upon which applications for winding up orders under s 459A of the Corporations Act were filed.

30    Counsel appearing for the plaintiffs provided a comprehensive summary of the principles which apply to an application under s 588FF(3) of the Corporations Act. Those principles, which were not in dispute, were also recently summarised in Mansfield, in the matter of NR Complex Pty Ltd (in liquidation) (receiver and manager appointed) [2025] FCA 1349 where Jackman J relevantly said at [8]-[10]:

8    In Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2015] HCA 10; (2015) 254 CLR 489, the High Court accepted the availability of what were there described as “shelf orders”: at [1] and [27].. The High Court emphasised that the function of section 588FF(3)(b) was to confer a discretion on the Court to mitigate, in an appropriate case, the rigours of the time limits imposed by the section and recognised the value of certainty for those who entered transactions during the period in respect of which the transactions may be voidable, but also noted that the policy behind the Act of avoiding transactions by which an insolvent company has disposed of property in circumstances regarded as unfair to the general body of creditors: at [24]. The High Court did not prescribe considerations that are relevant to the exercise of the discretion, but it is clear that it involves a balancing of the requirement of commercial certainty for those who had past dealings with the corporation against the conflicting interest of the creditors of the company: at [8].

9    In Re Octaviar Ltd (recs and mgrs appted) (in liq) [2012] NSWSC 1460; (2012) 271 FLR 413 at [64], Black J referred to the relevant considerations arising upon an application for an extension order under s 588FF(3):

I am conscious that the enactment of time limitations reflects a perception that the quality of justice deteriorates where there is delay and, in some circumstances, there is a need that potential defendants should be made aware of claims against them within a reasonable time and the loss of the ability to make a relevant claim can be justified as providing commercial certainty to others who have had dealings with the company: BP v Brown at [112]–[114], [119]; New Cap above at [54]; Tolcher v Gordon [2005] NSWCA 135; (2005) 53 ACSR 442 at [3]; Re Clarecastle above at [138]. The court should consider whether the Liquidators’ have diligently pursued the object of disposing of the proceedings in a timely way; used, or could reasonably have used, available opportunities under the rules or otherwise to avoid delay; and reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination: Re Clarecastle above at [129]–[143]. The Liquidators bear the onus of demonstrating why it was just and fair that the time limit prescribed by s 588FF(3) of the Corporations Act should not apply: New Cap above at [55].

10    The relevant factors to be considered by the Court in the exercise of the discretion were considered in the earlier decision of New Cap Reinsurance Corp v Reaseguros Alianza SA [2004] NSWSC 787; (2004) 186 FLR 175 (White J) (see also, to like effect, Walker v CBA Corporate Services (NSW) Pty Ltd [2012] FCA 328; (2012) 88 ACSR 153 at [43]–[44]):

(a)    delay and the explanation for that delay;

(b)    the merits of the proposed proceedings, unless the Liquidators’ purpose is to investigate whether or not to bring the proceedings; and

(c)    prejudice arising from the grant of an extension.

31    The matters that might be taken into account in considering each of these factors have also been the subject of judicial consideration which, to the extent relevant, I set out below in considering whether to make the orders sought by the Companies and the Liquidators pursuant to s 588FF(3)(b) of the Corporations Act.

Consideration

32    The relation back day for each of the Companies is 29 August 2022, being the date on which the ATO commenced applications to wind up each of the Companies. As Ms Sozou explains, in the absence of an extension of time under s 588FF(3)(b), the time by which the Liquidators were required to bring claims under s 588FF(1) of the Corporations Act expired on 29 August 2025. It was not in dispute that the Liquidators and the Companies filed their application for an extension of time under s 588FF(3)(b) within three years of the relation back day.

Delay and the explanation for the delay

33    In NR Complex Jackman J explained that “[d]elay takes into consideration the amount of time that the liquidators (and perhaps any previous liquidators) have had to perform investigations. When considering the explanation for delay, the Court should consider whether the liquidators have diligently endeavoured to dispose of the proceedings in a timely way or could have used reasonably available opportunities to avoid the delay” referring to Re Clarecastle [2011] NSWSC 857; (2011) 85 ACSR 260 at [137]. His Honour also noted that delay is more acceptable where it is unlikely to prejudice the defendant, referring to BP Australia Ltd v Brown [2003] NSWCA 216; (2003) 58 NSWLR 322 at [188]-[189].

34    As set out above, Ms Sozou explained the various obstacles faced by the Former Liquidators in progressing their investigations including issues concerning access to books and records, limited cooperation from the Companies’ former officers and funding difficulties. Ms Sozou has also explained that, since their appointments replacing the Former Liquidators, the Liquidators have undertaken substantial work in a short period of time and have sought to overcome the various obstacles faced by the Former Liquidators. As the plaintiffs submit, it has been accepted that explanations for delay can include the lack of available information or cooperation (see New Cap Reinsurance Corp v Reaseguros Alianza SA (2004) 186 FLR 175; [2004] NSWSC 787 at [70]) as can uncertainty about funding (see McCann v Mawson Restructures and Workouts, in the matter of Walton Construction (Qld) Pty Ltd (In Liq) [2016] FCA 1152 at [47]).

35    The Liquidators’ further work has identified potential voidable transaction claims against the Potential Defendants and a concern that there may be other unidentified claims available.

36    Commercial TC submits that the delay cannot be found in a lack of books or cooperation as those matters existed from the beginning and, to the extent those problems have been overcome, they should have been overcome earlier. But the fact is that the Former Liquidators were met with the obstacles identified in the reports and the subject of Ms Sozou’s evidence, they had little or no funds to assist in taking steps to overcome those problems and, indeed, Ms Sozou’s evidence is that some of those problems still plague the Liquidators, in particular access to the books and records of the Companies.

37    I accept the plaintiffs’ submission that there can be no suggestion, and the evidence does not suggest, that the Liquidators (or the Former Liquidators) have been dilatory in their conduct of the external administrations. It follows that I accept Ms Sozou’s explanation about the delay as both reasonable and satisfactory.

Merits of the proposed claim

38    In Re Australian Resources Ltd (in liq) [2002] NSWSC 135; (2002) 41 ACSR 69 (at [6]) Barrett J summarised the principles relating to an application under s 588FF(3)(b) of the Corporations Act by quoting from Green v Chiswell Furniture Pty Ltd [1999] NSWSC 608. Relevantly, in relation to the question of merit, insofar as a preliminary review of the merits is required it involves “an investigation as to whether such proceedings would be so devoid of prospects that it would be unfair, by granting an extension, to expose the other party to the continuing prospect of suit” but where the liquidator’s purpose in seeking an extension of time is “simply to put himself into a position where he can properly decide whether or not to bring proceedings, a preliminary inquiry into the merits of any consequent proceedings may not always be necessary.”

39    Insofar as claims that are yet to be identified by the Liquidators are concerned, they fall within the latter category and a preliminary inquiry into their merits is not required.

40    In relation to the identified potential voidable preference claims against the Potential Defendants, as the plaintiffs submit, the proposed claims give rise to the prospect of uncommercial transaction claims under s 588FB of the Corporations Act and, in respect of Empryl and Videriva, uncommercial transaction claims, unfair preference claims and other voidable transaction claims under the Corporations Act.

41    Those claims could not be regarded as being so “devoid of prospects” that it would be pointless to allow the Liquidators to pursue them any further. Based on the Liquidators’ investigations to date, the potential claims appear to have sufficient apparent substance to permit the Liquidators to continue with their investigations to ascertain whether they have sufficient merit, and prospects of recovery, so as to warrant litigation.

42    In relation to the proposed claim against Commercial TC, that Commercial TC may have paid all of the invoices issued to it by Comm TC is not to the point. The potential claim arises out of an allegation that Commercial TC paid less than full value for the services it received. Contrary to Commercial TC’s submission, there is no requirement for the Liquidators or Grow Surge to identify a particular transaction. They have identified the nature of the claim and how it arises in sufficient detail.

43    Nor is there any requirement for Grow Surge to seek an order under s 588FF(3)(b) of the Corporations Act in relation to any claims it might have against Comm TC. While Grow Surge is in any event protected by the more general “shelf order” it seeks in that regard, to do so would be futile in circumstances where Comm TC is in liquidation with the Liquidators appointed as its liquidators. The Liquidators acknowledge that they will need to investigate and better understand the relationship between Commercial TC, Comm TC and Grow Surge.

Prejudice arising from the grant of an extension of time

44    The question to be addressed is whether the likely or actual prejudice resulting from the grant of an extension is sufficiently substantial to outweigh the case for granting an extension: see New Cap at [52]. The plaintiffs accept that there is a presumptive prejudice that arises from the delay, although specific prejudice is of more weight: see NR Complex at [20].

45    It is in relation to this factor that much of TC Commercial’s evidence is focussed.

46    In NR Complex Jackman J said in relation the evaluative nature of the discretion and the length of any extension in other cases at [21]:

The evaluative nature of the discretion is necessarily fact sensitive, such that the length of extensions granted in other cases may not be of significant utility to the determination of the present application. However, the following examples illustrate the wide range of periods of extension that emerge from the authorities:

(a)    In BP Australia, the Court affirmed the decision to grant an extension of 18 months, and although there was no substantial analysis of the length of time, lack of prejudice to BP appeared significant: at [188]-[189].

(b)    In McGrath, Re HIH Insurance Ltd [2004] NSWSC 165, the Court granted an extension of 12 months. The liquidators were uncertain about whether they had identified all the voidable transactions because the HIH Group was complex and had two hundred and seventy-four corporate entities located in several countries: at [13]. The liquidators identified the complexity of the work they had to engage in: at [14]. The Court accepted that there were gaps in corporate records and that “the ongoing process of indexing some 100,000 boxes of documents is, of itself, a telling indication of the extraordinary circumstances of these windings up”: at [15]. The Court concluded that the extension should be granted because of the size and complexity of the business, the need for continual liaison with regulatory and investigatory bodies and the difficulty in obtaining access to relevant information and documents: at [19].

(c)    Justice Lee granted an extension of 12 months in Parker, in the matter of Worldwide Speciality Property Services Pty Limited (in liq) v Worldwide Speciality Property Services Pty Limited (in liq) [2017] FCA 687. His Honour found that there were merits and as such the Court should exercise its discretion to avoid prejudice to creditors: at [29]. The extension was granted even though the delay had not been adequately explained (at [53]-[54]) as there was no particular prejudice to the parties in granting a short extension: at [56]).

(d)    In Chin, in the matter of Agatha Trading Pty Ltd (in liq) [2020] FCA 991, the Court granted an extension of some 19 months, in circumstances where the liquidator there encountered difficulties in connection with the adequacy of books and records, an absence of assistance from the director or other relevant persons, and an absence of funding.

47    As set out above, the Potential Defendants were notified of this application. Only Commercial TC has appeared and seeks to oppose the grant of an extension of time insofar as it affects it. The remaining Potential Defendants have not raised any objection to the orders sought.

48    Ms Sozou has given evidence that the Potential Defendants are on notice of the potential claims being considered against them by reason of the publication of the Liquidators’ reports, correspondence or document requests. She also says, based on her experience, that if an extension is not granted under s 588FF(3)(b) of the Corporations Act the unsecured creditors of the Companies will be significantly prejudiced because the Liquidators have had insufficient time to complete their investigations, the quantum of the potential claims is such that, if pursued and successful, they will significantly increase the returns to creditors and the main creditors of the Companies are the ATO and Revenue NSW so that increased returns are of public benefit.

49    While there is presumptive prejudice in favour of the Potential Defendants, in the absence of any objection by Empryl, Videriva and Auswide, I am satisfied that it does not outweigh the case for granting an extension in relation to claims against those Companies.

50    Commercial TC objects to the making of an order under s 588FF(3)(b) insofar as it may affect it. Mr Mitsoulis’ evidence about the prejudice such an order will cause to Commercial TC is set out above.

51    In relation to those concerns, the plaintiffs accept that an extension will cause a degree of uncertainty for Commercial TC going forward, and some prejudice. However, they submit that this factor alone should contribute limited weight to the assessment. I accept that is so. The uncertainty that is posed by the possibility of litigation is not sufficient to outweigh the factors in favour of granting an extension. In any event, as the plaintiffs point out, that uncertainty is limited to a degree by the Liquidators’ proposal, in relation to any voidable transaction claim that may be brought against Commercial TC, to limit the extension to 1 March 2027.

52    I do not regard the fact that Commercial TC may not have funds to meet a judgment in the amount currently identified by the Liquidators as the quantum of the potential claim as a matter which causes it prejudice. Mr Mitsoulis does not say that the lack of funds to meet such a judgment is a matter of timing, eg it had the funds but believing that the threat of litigation had passed, it committed them elsewhere. The question of availability of funds to meet a judgment, should it be obtained, is a question for the Liquidators in weighing up whether a proceeding should be brought and, ultimately a question for another day, should the Liquidators obtain a judgment against Commercial TC.

53    As to the more substantive matters raised by Mr Mitsoulis about payment of all invoices issued, those are matters which, as the Liquidators say, they will continue to investigate although they do not, as I have already observed, affect the assessment of the possibility of a voidable transaction claim against Commercial TC.

54    Commercial TC also submits that the lack of funding is also a reason to dismiss the application as against it, noting that Grow Surge has $322 in its bank account. However, there was evidence before me that the liquidators have now secured funding that will permit them to further investigate claims on behalf of each of the Companies including the potential claim against Commercial TC. While understandably the details of that funding were not provided, there is no reason for me to doubt that it is in place and available to the Liqudiators for the stated purpose.

55    I am satisfied that the factors raised by Commercial TC do not outweigh the case for granting an extension in relation to the potential identified claim against it.

The orders under s 588FF(3)(b) should be made

56    It follows that I am satisfied that a consideration of the above factors weighs in favour of making the orders sought by the Liquidators pursuant to s 588FF(3)(b) of the Corporations Act in the draft orders provided to me by counsel for the plaintiffs both in relation to the potential claims identified against the Potential Defendants and more generally.

The direction sought under s 90-15(1) of the IPSC

57    Section 90-15(1) of the IPSC provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. This includes orders in relation to the costs of an application: see s 90-15(3) IPSC.

58    The Liquidators seek a direction under s 90-15 of the IPSC permitting them to use funds held in an account of Touchline to satisfy the costs of this application which would be to the benefit of that company, but also to the benefit of Highpoint and Grow Surge.

59    Ms Sozou’s evidence is that the following funds are held in the Companies’ liquidation accounts:

(1)    Touchline - approximately $388,354;

(2)    Highpoint has no funds; and

(3)    Grow Surge - approximately $322.

60    Ms Sozou notes that only Touchline has sufficient funds to meet the costs of this application, the ATO and Revenue NSW are creditors of Touchline in an estimated sum of $13,772,260 and $2,347,812 respectively and the total liabilities of Touchline are estimated to be $15,525,571. Accordingly, Ms Sozou points out that only the ATO and Revenue NSW might theoretically be prejudiced by the direction sought.

61    Both the ATO and Revenue were notified of the application and the direction sought by the Liquidators and neither objected to the plaintiffs seeking the orders sought in the originating process and consented to all orders including the direction sought pursuant to s 90-15(1) of the IPSC.

62    In light of the evidence before me, including that the largest and potentially only creditors of Touchline have provided their consent, I am satisfied that I can make the direction sought by the Liquidators in relation to use of the funds in Touchline’s liquidation account to meet the costs of all of the Companies of this application.

Conclusion

63    I will make orders in accordance with paragraphs 1 to 3 and 5 and a direction in accordance with paragraph 6 of the draft orders provided to me by counsel for the plaintiffs at the hearing of the originating process.

Associate:

Dated:    4 December 2025

Schedule

No: NSD 1519 of 2025

Federal Court of Australia

District Registry: New South Wales Registry

Division: General