Federal Court of Australia

Woods, in the matter of Gold Merchants International (Aust) Pty Ltd (in liq) [2026] FCA 684

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 588FF(3)(b) of the Corporations Act 2001 (Cth) (the Act) the time for the making of any applications by the first plaintiff under s 588FF(1) of the Act in respect of the second plaintiff (Gold Merchants International (Aust) Pty Ltd (In Liquidation)) be extended to and including 31 March 2027.

2.    The first plaintiff’s costs of and incidental to these proceedings be costs in the winding up of the second plaintiff.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

Introduction

1    Gold Merchants International (Aust) Pty Ltd (In Liquidation) (the Company) was incorporated in July 2008. It carried on a wholesale business trading in scrap gold, gold bullion and other precious metals.

2    Between December 2014 and May 2017, the Deputy Commissioner of Taxation undertook an audit of the Company’s activity statements and income tax returns lodged in the period 1 July 2012 to 31 August 2016. The Commissioner made assessments of net amounts and penalties totalling almost $144 million. The Company ceased trading on 3 May 2017.

3    On 12 December 2022, the Company was wound up following a special resolution passed by members of the Company. Adrian Warry and Shane Dean were appointed joint and several liquidators. On 30 January 2024, they convened a meeting of the Company’s creditors at which the creditors resolved to remove the liquidators and to appoint the first plaintiff (the Liquidator or Mr Woods) instead.

4    The Commissioner is a creditor of the Company and has lodged a proof of debt with the Liquidator in the sum of $226,500,343.71, which accounts for 98% of the Company’s unsecured debts so far identified by the Liquidator.

5    By originating process filed 11 December 2025, the Liquidator now seeks a shelf order under s 588FF(3)(b) of the Corporations Act 2001 (Cth) to extend the period in which he may make any application under s 588FF(1). The plaintiffs also sought certain confidentiality orders, which I made at the hearing last Thursday.

6    Mr Peter August has been the sole director of the Company since 11 July 2008. He opposed the making of the, or any, shelf order.

The evidence

7    The Liquidator read five affidavits of Mr Woods.

8    Mr August read two affidavits sworn by him and one by Ms Melissa Kincaid.

9    It is not necessary to refer to the evidence, other than to the extent to which it is mentioned below.

Applicable principles

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

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.

11    The relation-back day in this case is 12 December 2022.

12    The Liquidator filed his application on 10 December 2025, within 3 years after the relation-back day.

13    The Court’s power to make the orders sought is thus enlivened.

14    Section 588FF(3)(b) confers on the Court a discretionary power to extend time.

15    There are no specific criteria for the Court to address as a condition of its exercise of power. The overriding consideration in determining whether to grant an extension of time is what is fair and just in all the circumstances. See, eg BP Australia Ltd v Brown (2003) 58 NSWLR 322 at 365 [182]–[189] (Spiegelman CJ, Mason P agreeing at [215] and Handley JA agreeing at [216]).

16    Section 588FF(1) “is intended to be restitutionary in nature, in the sense that its purpose is to recover company property, or the value thereof, that is or has been in the hands of a defendant”. See Weaver v Harburn (2014) 103 ACSR 416; [2014] WASCA 227 at [114] (McLure P, Buss JA agreeing at [141] and Murphy JA agreeing at [142]).

17    In this case, the Liquidator has not yet identified any potential claims for the Court to scrutinise, because, as he deposed, he is not yet in a position to do so. As he deposed:

The purpose for which I am seeking the extension is to allow further investigations to be undertaken so as to put myself in a position so I can properly decide whether to commence proceedings. In particular, and for the reasons given above at [47]-[51], the documents in my possession are insufficient to permit me to have a full understanding of the nature and purpose of the transactions entered into by the Company.

18    But that is no barrier to the making of a shelf order. See Brown at 354 [170] (“It is not difficult to envisage a circumstance in which a liquidator is still ascertaining the identity of the recipients of benefits under possible voidable transactions and cannot give the court an indication of the creditors to be targeted. The power should be broad enough to allow … for an order granting an extension of time in general terms”). See too Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher (2015) 254 CLR 489 where the High Court (French CJ, Hayne, Kiefel, Gageler and Keane JJ) held, approving Brown, that s 588FF(3)(b) authorises the making of an order that extends the time for making an application in respect of voidable transactions in circumstances where no particular transaction or transactions was or were identified at the time of making the extension order.

19    And as Anderson J said in Giasoumi and Deane, in the matter of SLKALT Pty Ltd (in liq) [2024] FCA 403 at [85]:

The documents which the Liquidators have been prevented from inspecting go to the advice sought and provided in respect of the restructuring of the Company’s business. It is in this context that the pre-appointment transactions were conducted, and in this context that the Liquidators may identify further claims or transactions that are available. There exists the possibility that further voidable transactions may be discovered during the course of the public examinations or further investigations which have not yet been completed by the Liquidators. This is a factor supporting the grant of a shelf-order: Lucas in the matter of Filestock Pty Ltd (in liq) [2017] FCA 1425 at [17] (Derrington J).

20    The Court will generally consider the following matters in deciding whether to make such an order:

(a)    the liquidator’s explanation for the delay in taking action within the three-year period provided for by the statute;

(b)    a preliminary view of the merits of the proposed proceeding; and

(c)    a balancing of the case for granting the extension against any actual prejudice to the respondent that is likely to arise from granting the extension.

21    To the extent that the merits of anticipated or possible claims may be relevant, what is required is “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.” See Parker, in the matter of Worldwide Specialty Property Services Pty Ltd (in liq) v Worldwide Specialty Property Services Pty Ltd (in liq) [2017] FCA 687 at [16(b)] (Lee J).

The merits and Mr August’s opposition to the shelf order

22    It was submitted on behalf of Mr August that the tax-related liabilities that are the subject of the Commissioner’s proofs of debt, do not arise until on or after 3 May 2017 on the issuing of amended assessments of “net amounts” and that there could therefore have been no insolvent trading prior to 3 May 2017.

23    Mr August submitted that the Liquidator will not be able to establish on the balance of probabilities that any dispositions made by the Company prior to 3 May 2017 were insolvent transactions and that the shelf order sought has no purpose. During the course of his oral submissions, Mr MD Wyles KC, who appeared with Ms S Hooper of counsel for Mr August, submitted that there was no debt due and payable within the meaning of s 95A of the Corporations Act until 3 May 2017, and “that until 3 May the only assessment for tax liability were the assessments which had been lodged and treated as the assessments of the Commissioner prior to 3 May. So the purposes of s 95A the only debts due and payable were those assessed debts …”

24    The effect of that submission is that the words “Payment for this notice [of amended assessment] is due by the original due date” cannot mean what they say, which would be a surprising result, to say the least.

25    As senior counsel for the Liquidator put it in his oral submissions:

It would be a very odd result if a company could lodge fraudulent monthly GST returns on an ongoing basis for several years and then turn around after the event and say, “I wasn’t trading while insolvent, because of the fact that the returns that we lodged showed credits payable to the company instead of amounts payable to the Commissioner.”

26    I do not accept the submission made on behalf of Mr August that any claims the Liquidator may bring for insolvent trading are bound to fail because the amended assessments post-date the date upon which the Company ceased to trade.

27    If there is an original assessment, followed by an amended assessment (here, all of the amended assessments were made on 3 May 2017), the amended assessment alters the original assessment, such that there is following the amended ascertainment of the taxpayer’s net amount only one assessment. See Commissioner of Taxation v S Hoffnung & Company Ltd (1928) 42 CLR 39 (Isaacs J), Bosanac v Commissioner of Taxation (2019) 374 ALR 425; [2019] HCA 41 at [18] (Nettle J) (“there can never be more than one assessment of income tax operative at any one time in respect of a year of income. In that sense, an amended assessment has no existence separate from the assessment whence it derives: it is an amended version of the original assessment, not a “new assessment”), Commissioner of Taxation v Stokes (1996) 72 FCR 160 at 166 (Spender, Burchett and Hill JJ) (“[a]n amended assessment will not operate as an alternative to an original assessment, for it operates to alter the original assessment by amending it.”)

28    Here, the Company had one month tax periods.

29    Section 33-5(1) of the New Tax System (Goods and Services Tax) Act 1999 (Cth) provides that “[i]f the *assessed net amount for a tax period (other than a *quarterly tax period) applying to you is greater than zero, you must pay the assessed net amount to the Commissioner on or before the 21st day of the month following the end of that tax period”.

30    Thus, each of the amounts due and payable pursuant to the ascertainment of the net amounts undertaken by the amended assessments, were in fact due and payable in the month following the end of each of the Company’s monthly tax periods.

31    And that liability is a debt for the purposes of the insolvent trading provisions of the Corporations Act.

32    In any event, even absent an assessment, a debt may arise where the taxpayer has performed transactions to generate a tax liability and when the tax in question is capable of calculation (as is the case here). See Walsh Engineering Services Pty Ltd (in Liq) v Walsh Group (Aust) Pty Ltd [2021] VSC 206 at [38] and the cases there cited (Hetyey AsJ).

33    The contention that there was no tax-related liability until 3 May 2017, and that no cause of action for insolvent trading can possibly arise until after that date, must therefore be rejected. In any event, as I have explained, in the circumstances of anticipated or possible claims I need only be satisfied, which I am, that the prospects of the claim are not so devoid of prospects that an extension would be unfair to other parties, being primarily in this case, Mr August.

34    I turn now to consider the other two factors – the explanation for delay and potential prejudice.

Delay

35    Mr Woods deposed that the reasons for the delay in commencing proceedings are:

(1)    the Liquidator was appointed on 30 January 2024 and prior to that time no fulsome investigation had been undertaken in relation to the affairs of the Company;

(2)    at the time of the Liquidator’s appointment, there was insufficient property available to conduct investigations, such that it has been necessary for the Liquidator to request and obtain funding to conduct those investigations;

(3)    in circumstances where creditors of the Company did not vote in favour of a resolution for approval of the Liquidator’s remuneration and disbursements as liquidator, it was necessary for him to make an application to the Court to determine and approve his remuneration and disbursements;

(4)    the Liquidator’s investigations into the affairs of the Company have been hampered by a lack of books and records having been provided and otherwise difficulties in obtaining books and records of the Company. In this regard, the Liquidator has said in the Fifth Woods Affidavit that:

(a)    due to Mr August’s non-compliance with requests for information made by the Liquidator pursuant to the provisions of the Corporations Act he submitted an application to ASIC for its assistance;

(b)    the Liquidator was informed of Mr August’s response to ASIC’s correspondence. The response was that Mr August had provided “all books and records in his possession, including financial documents, to the previous [l]iquidator”. This does not seem to be correct in circumstances where the first time the Liquidator was provided with a copy of:

(i)    the correspondence sent by the Company’s solicitor, Meyer Vanderberg to the Commissioner regarding the assessments on 3 July 2017 and 21 December 2017 was when he reviewed the First August Affidavit. The Liquidator at the time of swearing the Fifth Affidavit had not been provided with unredacted copies of these letters;

(ii)    the letter from the Commissioner to the Company (care of Meyer Vanderberg Lawyers) dated 25 August 2017 was when he reviewed the First August Affidavit;

(iii)    the Application for Review of Decision lodged on behalf of the Company was when he reviewed the First August Affidavit; and

(iv)    the KPMG report titled “Reconciliation of Business Activity Statements dated 21 December 2017” was when he reviewed the Second August Affidavit on 22 May 2026.

(5)    the affairs of the Company are complex, and the books and records the Liquidator has been provided are insufficient to allow a full understanding of the nature and purpose of the transactions entered into by the Company.

36    Mr Woods also deposed that “a significant reason for the delay in commencing proceedings … is due to the failure of Mr August and other third parties to produce the books and records of the Company. I have been severely restricted by the limited information I have available to me, and gathering information from numerous third parties has been a time-consuming task”.

37    In Mr August’s written submissions it was asserted that the Liquidator’s explanations for delay are “vague, expressed at a level of inscrutable abstraction, and materially incomplete”. But it was never explained why that might be so, and Mr Woods was not challenged about his evidence, which I accept.

38    I am thus satisfied as to the explanations given for the delay in bringing proceedings.

Prejudice

39    The only prejudice that Mr August could point to is that “by reason of the significant passage of time, the prejudice of any extension to affected persons, is great”. That may, or may not, be so, but as the Commissioner submitted, and I entirely agree:

In any event, in assessing prejudice, the Court ought to have regard to the interests of the creditors (i.e., the tax payer) in receiving a possible recovery from any potential claims the Liquidator might identify, and the public interest in ensuring that the affairs of an insolvent entity are investigated in line with the overarching purpose of the [Corporations] Act in preserving and promoting the interests of creditors.

Any prejudice should also be given little weight in this case by reason of the nature of the Company’s brazen scheme to avoid paying taxes. The public interest would be best served by allowing the Liquidator time to undertake careful and deliberative investigation of the Company’s activities.

Disposition

40    In those circumstances, I am satisfied that the justice of the case favours the making of orders for the extension of time sought and that it is appropriate to exercise the discretion under s 588FF(3) of the Corporations Act in favour of the extension in time sought, and to make the orders in the form sought by the Liquidator.

Associate:

Dated:    3 June 2026