Federal Court of Australia

Dang, in the matter of JMJ Cosmetic Pty Ltd v Mansfield (Liquidator) [2026] FCA 5

ORDERS

THE COURT ORDERS THAT:

1.    The Deputy Commissioner of Taxation be joined as third defendant to this proceeding.

2.    The plaintiff has leave to proceed on the originating application dated 17 February 2026 instanter.

3.    The time within which to institute a review of the Registrar’s decision to wind up JMJ Cosmetic Pty Ltd in insolvency under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) be extended by a period of 7 days from the date of these orders.

4.    The plaintiff be granted approval under s 198G(3)(b) of the Corporations Act 2001 (Cth) to commence and proceed with a review application as referred to in Order 3 on the condition that the plaintiff indemnify JMJ Cosmetic for all costs that it may incur or be ordered to pay in respect of that application.

5.    Subject to any application being made for costs within 2 days of these orders being made, the originating application otherwise be dismissed with no order as to costs.

6.    The plaintiff is to notify the defendants, including the Deputy Commissioner of Taxation, of these orders forthwith.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

CHEESEMAN J:

1    This is an urgent application for an order pursuant to s 198G(3)(b) of the Corporations Act 2001 (Cth) (the Act) seeking approval for the plaintiff, Huynh Bich Thuy Dang, to cause JMJ Cosmetic Pty Ltd to apply to the Court for review of a Registrar’s decision to wind up the company in insolvency. Ms Dang is the sole director of JMJ Cosmetic. She has commenced this application by originating application with herself as plaintiff and naming JMJ Cosmetic and the liquidator of JMJ Cosmetic, Mr David Mansfield, as the first and second defendants respectively.

2    The application comes before me on an urgent basis in my capacity as Commercial and Corporations Duty Judge. The urgency arises due to Ms Dang’s apprehension that she must obtain leave under s 198G(3)(b) before expiration of the 21 day period within which to bring an application for review of a Registrar’s decision under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (FCA Act). That apprehension is based on the existence of a line of authority to the effect that there is no power for the court to grant approval under s 198G(3)(b) of the Act on a retrospective basis, that is, nunc pro tunc. I will come to this and the conflicting line of authority shortly.

3    Section 35A(5) of the FCA Act allows a party to a proceeding in which a Registrar has exercised any of the powers of the Court under s 35A(1) to apply to the Court to review that exercise of power. A decision by a Registrar to wind up a company under s 459A of the Act is such a power: see s 35A(1)(h) of the FCA Act and r 16.1 and Sch 2 Pt 1 of the Federal Court (Corporations) Rules 2000 (Cth).

4    Ms Dang is not a party to the winding up proceedings. There has been no stay of the Registrar’s orders and the effect of s 198G(1) of the Act is that she is not permitted to perform or exercise any function or power of a director of the company, and thus cannot cause the company to bring the application for review itself.

5    The time to commence an application for review under s 35A(5) of the FCA Act is 21 days unless extended pursuant to s 35A(5) of the FCA Act and r 1.32 of the Federal Court Rules 2011 (Cth). That time expires today.

6    There are conflicting authorities of single judges on whether an approval pursuant to the predecessor of s 198G(3)(b) may be granted nunc pro tunc. In relation to s 471A(1A)(d) (the predecessor of what is now s 198G(3)) it was held that an approval could not be granted nunc pro tunc — “if the approval of the Court to the performance or exercise of a function or power as an officer of a company in liquidation is to be sought by such an officer, that approval must be sought and obtained before the performance or exercise of the relevant function or power is undertaken”: Land Enviro Corp Pty Ltd (in liq) v Hickie [2015] FCA 766; 238 FCR 491 at [15] (Foster J). Land Enviro Corp has subsequently been applied in this Court: Stone (Liquidator), in the matter of RIC Admin Pty Ltd (in liq) v Mandalinic [2022] FCA 1346 at [151]-[154] (Halley J).

7    By contrast, in Brolrik Pty Ltd v Sambah Holdings Pty Ltd [2001] NSWSC 1171; 164 FLR 1, Barrett J (as his Honour then was) held that the Court does have power to grant approval retrospectively: [20]-[25]. If that be correct, there would not be the requisite urgency for this matter to be the subject of an application to the duty judge. The position being uncertain, I considered it appropriate to entertain the application as a duty matter. As this issue may affect the approach adopted in future duty applications in this Court, I will say something about it briefly.

8    In Brolrik, Barrett J framed the issue as follows.

9    First, it is necessary to consider whether the absence of approval is a deficiency which can be cured by an appropriate order nunc pro tunc or alternatively renders the proceeding irretrievably incompetent. At [21] Barrett J observed that the answer to that question always turns on the construction of the statute in issue and permits of the three possibilities identified by Glass JA in National Mutual Fire Insurance Co Ltd v Commonwealth [1981] 1 NSWLR 400 at 408, namely, that:

the proceeding is either a complete nullity or else it remains valid irrespective of whether or not leave is subsequently granted or else it continues in a state of suspended validity which will come to an end if leave is not obtained within an unspecified time.

10    Barrett J went on to say:

22    In the present context, the aim of s.471A(1) must be accepted as being to ensure that the liquidator takes control of the property and affairs of the company free from any possibility of concurrent action by the officers who previously exercised that control. The liquidator displaces those officers in all decisions concerning the company. As the Queensland Court of Appeal recognised in the second Rock Bottom Fashion Market Pty Ltd v H R & C E Griffiths Pty Ltd [1998] QCA 33, questions about pursuit of litigation by a company in liquidation should be decided by the liquidator:

“A court will not lightly interfere in such matters, nor will it generally permit officers of the company to do so.”

23    At the very least, therefore, one might expect that the view of the liquidator should be known before a court makes a decision whether to approve the pursuit of particular litigation by the company at the behest of the directors. This is an indication that the s.471A(1)(d) power is one which should normally be exercised prospectively, with the result that actions taken by directors without prior leave are of no effect.

24    It seems to me, however, that special considerations apply where the matter at hand is a challenge to the winding up order. There, as I have said, the liquidator is in the odd position of having to decide whether to challenge the order which effected his or her appointment. That difficulty was previously resolved by reference to the residual power of directors but is now dealt with through s.471A(1)(d). It follows, in my judgment, that action by directors to have the company appeal against the winding up order or otherwise to seek to have it overturned is not something to which the liquidator’s primary decision making function is intended to apply. The court may therefore proceed to decide whether to approve such action by directors without being concerned that the views of the liquidator are not before it.

25    Whatever may be the effect of s.471A in other contexts, I regard a matter such as the present as within the third class referred to by Glass JA in National Mutual Fire Insurance (above). If the directors cause the company to initiate an appeal against or other challenge to the winding up order, the application is in a state of “suspended validity” which may be resolved by the grant of s.471A(1)(d) approval nunc pro tunc. Indeed, I note that, in Vynotas Pty Ltd v Mystic Crystals Franchises (Australia) Pty Ltd [1999] QCA 473, an application for s.471A(1)(d) approval was entertained after an appeal by the company against the winding up order had reached the Court of Appeal.

11    The conflicting lines of authority were noted by White J in Deputy Commissioner of Taxation v NOPSA Pty Ltd [2015] FCA 1126; 101 ATR 791 at [8]-[10] but in the circumstances of that case it was not necessary to decide the issue.

12    Here the originating application that has been filed is relevantly limited to an application for approval under s 198G(3) of the Act. Ms Dang has not in this proceeding purported to cause JMJ Cosmetic to bring the review application. The relief which Ms Wang seeks is:

(1)    an order pursuant to s 198G(3)(b) of the Act approving the plaintiff causing JMJ Cosmetic to commence and proceed with an application under s 35A(5) of the FCA Act for review of the decision and orders made by Registrar Curnow on 28 January 2026 in proceedings NSD1406/2025; and

(2)    an order that Ms Dang is to indemnify JMJ Cosmetic for all costs that it may be ordered to pay in respect of the review.

13    At the hearing, I confirmed with Ms Dang’s solicitor that in making an order under s 198G(3)(b) of the Act I would expand the scope of the costs condition to include costs incurred by JMJ Cosmetic in bringing the review application.

14    The interim relief sought included that the orders made by the Registrar on 28 January 2026 be stayed pursuant to s 35A(6) of the FCA Act. The plaintiff did not press for that aspect to be determined and intends to file evidence to support any application for a stay. The evidence I had before me suggests that the assertion that the company is in fact solvent will likely be subject to contest. Any such application should be brought on the basis of cogent evidence and on notice and may be brought in the substantive review application. But for the uncertainty attendant on the court’s power to make an order under s 198G(3)(b) nunc pro tunc, it would be more efficient to consider whether to give approval under s 198G(3)(b) at a point in time when the plaintiff director and the parties affected were in a position to address on the existence of a prima facie case.

15    When the matter was called on urgently this morning, the Court was afforded the courtesy of appearances by the liquidator and the Deputy Commissioner of Taxation notwithstanding they had not been served within the time specified in the Rules. The Deputy Commissioner of Taxation had not had time to obtain instructions. Subject to having time to review the matter properly, the Deputy Commissioner of Taxation submitted that there did not appear to be a constraint on the grant of approval being made nunc pro tunc. In that regard, the Deputy Commissioner of Taxation directed my attention to Deputy Commissioner of Taxation v Club Culture Pty Ltd [2017] FCA 338 (White J). In that case, White J granted leave under s 471A(1A) of the Act in a context such as this which was in effect made after the commencement of the s 35A(5) FCA Act review and so was necessarily made nunc pro tunc. In that case, in which Mr K Metlej for the Deputy Commissioner of Taxation appeared, White J recorded that the Deputy Commissioner of Taxation did not object to approval being granted. In the present case, Mr K Metlej for the Deputy Commissioner of Taxation advised he had not had opportunity to obtain instructions.

16    In light of the procedural course adopted by Ms Dang it is not necessary for me to determine whether an order under s 198G(3)(b) of the Act can be made retrospectively. Had it been necessary to do so in this case, with great respect to the contrary view expressed in Land Enviro Corp, I would be inclined to adopt the approach taken to the proper construction of s 471A(1)(d) of the Act in Brolrik as being instructive with respect to s 198G(3)(b) of the Act. To construe the section in that way coheres with the broader statutory context and the intersection between s 198G(3) of the Act and s 35A(5) of the FCA Act: see HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638 at [37]-[42] (French J). In the circumstances of this case, the issue having been raised ahead of seeking to institute a review proceeding, I am satisfied it is appropriate to put the issue to rest by making an order granting leave to Ms Dang to cause JMJ Cosmetic to bring the review application subject to a condition as to costs as I have mentioned. I will also grant a brief extension of time for the bringing of the review application.

Associate:

Dated:    18 February 2026