FEDERAL COURT OF AUSTRALIA

EVP Opportunities Master Pty Ltd as trustee for the EVP Opportunities Master Fund v Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) (No 2) [2026] FCA 772

ORDERS

THE COURT ORDERS THAT:

A.     LEAVE TO PROCEED AGAINST THE SEVENTH DEFENDANT

1.    Pursuant to section 58(3)(b) of the Bankruptcy Act 1966 (Cth), the plaintiff be granted leave to proceed against the seventh defendant in this proceeding up until the making of final orders with respect to the plaintiff’s claims against the seventh defendant but that the plaintiff not be permitted to enforce any final orders or judgment against the seventh defendant without a further grant of leave by the Court.

B.     DISCOVERY REQUESTED BY THE PLAINTIFF

…

Seventh Defendant

3.    The seventh defendant give verified discovery, within 42 days of these Orders and in accordance with rr 20.17 and 20.22 of the Rules, of documents which fall within the categories of documents set out in Schedule B to these Orders, noting that the seventh defendant:

(a)    is only required to give discovery of documents within his possession, custody or control; and

(b)    may separately identify in his List of Documents (and withhold from production subject to any further order of the Court) any documents which he considers may be subject to a claim of client legal privilege on the basis the document records a confidential communication between the seventh defendant and a lawyer engaged by him which document was prepared for the dominant purpose of him obtaining legal advice or being provided with legal services in connection with current or anticipated legal proceedings.

…

C.    DISCOVERY REQUESTED BY THE SIXTH DEFENDANT

…

Seventh defendant

8.    Within 42 days of these Orders, the seventh defendant give verified discovery in accordance with rr 20.17 and 20.22 of the Rules of all documents within the categories in Schedule G to these Orders, noting that the seventh defendant:

(a)    is only required to give discovery of documents within his possession, custody or control; and

(b)    may separately identify in his List of Documents (and withhold from production subject to any further order of the Court) any documents which he considers may be subject to a claim of client legal privilege on the basis the document records a confidential communication between the seventh defendant and a lawyer engaged by him which document was prepared for the dominant purpose of him obtaining legal advice or being provided with legal services in connection with current or anticipated legal proceedings.

…

F.    COSTS

13.    The costs of the:

…;

(b)    interlocutory application filed by the plaintiff on 15 April 2026; and

(c)    interlocutory application filed by the sixth defendant on 22 May 2026,

be reserved.

…

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

REASONS FOR JUDGMENT

GOODMAN J:

A.    INTRODUCTION

1    On 10 June 2026, I made orders:

(1)    granting leave to the plaintiff under s 58(3)(b) of the Bankruptcy Act 1966 (Cth) to proceed against the seventh defendant, Mr Durre; and

(2)    requiring various parties, including Mr Durre, to provide discovery of documents in particular categories.

2    I also ordered that any party requiring written reasons for the orders which affect them to notify my Associate within seven days.

3    Mr Durre requested such reasons, and these reasons for judgment address the orders affecting him. Those orders are extracted above.

B.    LEAVE TO PROCEED UNDER SECTION 58(3) OF THE BANKRUPTY ACT

4    This proceeding was commenced on 31 March 2025.

5    In broad terms, and without attempting to be exhaustive, the allegations made by the plaintiff in its statement of claim, relevant to Mr Durre are as follows:

(1)    in about mid-November 2024, the plaintiff was introduced to the first defendant, Strong Room Technology Pty Ltd (Receiver and Manager Appointed) (Administrators Appointed) (SRT) in connection with a possible investment by the plaintiff in SRT;

(2)    between about 18 November and 18 December 2024, SRT and the sixth defendant, Mr Mito Jr – a co-founder, director and chief executive officer of SRT – provided information (DD Information) to the plaintiff;

(3)    SRT’s purpose in providing the DD Information was to induce the plaintiff to acquire shares in SRT;

(4)    Mr Durre – who was a co-founder of SRT and one of its directors – acted with reckless indifference as to the accuracy, or otherwise acquiesced in the provision, of the DD Information, and shared SRT’s purpose in providing that information to the plaintiff;

(5)    through the provision of the DD Information, SRT, Mr Mito Jr and Mr Durre made a series of representations as to the financial position and financial performance of SRT (Financial Representations);

(6)    in reliance upon the accuracy and completeness of the documents and information provided to it and upon the accuracy and truthfulness of the Financial Representations, the plaintiff, SRT, Mr Mito Jr and Mr Durre entered into a non-binding Term Sheet; and those parties and others entered into a Subscription Deed on 7 February 2025 and a Secondary Share Sale Agreement on 12 February 2025;

(7)    pursuant to the Subscription Deed, SRT, Mr Mito Jr and Mr Durre gave a series of warranties including as to SRT’s financial position and financial performance;

(8)    by 20 February 2025 and pursuant to the Subscription Deed and the Secondary Share Sale Agreement, the plaintiff had paid an amount of $10,440,969.06 in return for shares in SRT;

(9)    on 24 March 2025, and following access by the plaintiff to further financial information within SRT, the plaintiff issued a notice stating that the warranties had been breached;

(10)    on 28 March 2025, SRT was placed into voluntary administration;

(11)    the information provided to the plaintiff prior to its entry into the Subscription Deed and the Secondary Share Sale Agreement was false and misleading or deceptive;

(12)    Mr Durre is liable:

(a)    directly to the plaintiff for his conduct in making the Financial Representations and the warranties, which conduct was fraudulent, deceitful and misleading or deceptive;

(b)    as an accessory to such conduct engaged in by SRT;

(c)    in contract for breach of the warranties; and

(13)    Mr Durre ought be ordered to pay damages to the plaintiff including the amount of $10,440,969.06 and the costs of obtaining legal advice in relation to the external administration of SRT.

6    On 18 September 2025, Mr Durre filed a defence to the plaintiff’s statement of claim. In broad terms, Mr Durre denies having engaged in the misconduct alleged by the plaintiff. He also pleads that if he is liable to the plaintiff in any amount then he relies upon the proportionate liability defences available with respect to several of the claims against him; and that he ought be relieved from liability under ss 1317S and 1318 of the Corporations Act 2001 (Cth). In this regard, Mr Durre pleads that he had little to no involvement in the provision of information to the plaintiff and that he was reliant upon Mr Mito Jr to provide accurate and true information to the plaintiff.

7    On 24 March 2026, Mr Durre filed a debtor’s petition and became bankrupt.

8    Section 58(3)(b) of the Bankruptcy Act provides:

58      Vesting of property upon bankruptcy—general rule

…

(3)     Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:

…

(b)     except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.

(bold emphasis in original)

9    As is plain from s 58(3)(b), the proceeding must be in respect of a “provable debt”. In this regard, s 82(1) of the Bankruptcy Act provides:

82     Debts provable in bankruptcy

(1)     Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.

(bold emphasis in original)

10    Relevantly, s 82(2) provides:

(2)    Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.

11    To the extent that the plaintiff’s claim against Mr Durre might be considered to be a statutory claim for unliquidated damages, as such a claim is a claim that the bankrupt, by misleading or deceptive conduct, induced the plaintiff to enter into a contract with the bankrupt, it is a demand in the nature of unliquidated damages arising by reason of a contract or promise and thus provable in the bankruptcy: Coventry v Charter Pacific Corporation Limited [2005] HCA 67; (2005) 227 CLR 234 at 238 to 239 [5] (Gleeson CJ, Gummow, Hayne and Callinan JJ). Similarly, the statutory claim that Mr Durre is accessorily liable for the conduct of SRT which induced the plaintiff to enter into a contract with SRT.

12    Turning to the principles which inform the exercise of the discretion conferred by s 58(3)(b) of the Bankruptcy Act, in Hillig, in the matter of Battaglia [2019] FCA 2191, Justice Wigney explained at [6] to [8]:

6    The principles concerning leave under s 58(3)(b) of the Bankruptcy Act are well settled. The purpose of the requirement for leave is to ensure that a bankrupt is not subjected to a multiplicity of actions which would be both expensive and time-consuming, and in some cases unnecessary: see Zervas v Burkitt [2019] NSWCA 112 at [15].

7    The requirement for leave focusses attention on the choice between litigation and the proof of debt procedure in a bankruptcy. It will generally be appropriate for leave to be granted in cases where the issues would be better and more comprehensively dealt with by a contested trial of the action in a court proceeding than would be the case if the creditor was required to lodge a proof of debt in the debtor’s bankruptcy: Allanson v Midland Credit Ltd (1977) 30 FLR 108; [1977] FCA 66. That would particularly be the case where the creditor's claims involve other parties.

8    The relevant factors to be taken into account cannot be stated exhaustively and will vary from case to case: see Burkitt at [15]. Nevertheless, the factors generally considered to be relevant to such applications include: the amount and seriousness of the claims; the degree and complexity of the legal and factual issues involved; the stage to which the proceedings have progressed; the risk that the same issues would be re-litigated if the claims were to be the subject of a proof of debt; whether the claim has arguable merit; whether proceedings are already in motion at the time of the bankruptcy; whether the proceedings will result in prejudice to creditors; whether the claim is in the nature of a test case for the interest or large class of potential claimants; whether the grant of leave will result in further litigation; whether the cost of the hearing will be disproportionate to the size of the bankrupt estate; the risk of delay; and whether pre-trial procedures such as discovery and interrogatories are likely to be required or beneficial: see Cassegrain v Gerard Cassegrain & Co Pty Limited (in liq) [2012] NSWCA 435 at [33].

(bold and italic emphasis in original)

13    I made the order granting leave to the plaintiff to proceed against Mr Durre, for the following reasons.

14    First, the plaintiff’s claims against Mr Durre appear to be sufficiently arguable. In this regard, I note Mr Durre’s denials of any misconduct and I have not formed, and express, no view as to whether the case against him is likely to succeed. Rather, I note that it is not a case that is so weak that it ought not to go to trial in the usual way.

15    Secondly, the proceeding as against Mr Durre (and more generally) will involve some complexity. It may well be necessary to determine, for example:

(1)    the extent to which the alleged conduct occurred;

(2)    the true financial position and performance of SRT;

(3)    the extent to which Mr Durre and other parties are proportionately liable to the plaintiff; and

(4)    whether the defences under ss 1317S and 1318 of the Corporations Act are made out.

16    These questions are inherently unsuitable for determination as part of a process of proof of debts in Mr Durre’s bankruptcy. Such questions should be determined in this proceeding: see Hillig at [7].

17    Thirdly, the proceeding had been on foot for almost one year before Mr Durre became bankrupt, and he became bankrupt on his own application.

18    Fourthly, the proceeding is unlikely to have a negative effect on the creditors of Mr Durre’s bankrupt estate in circumstances where the orders sought by the plaintiff on the leave application included an order preventing enforcement of any judgment against Mr Durre without the further leave of the Court.

19    Finally, although I took into account Mr Durre’s evidence of the difficulties he will have in defending this proceeding because of his financial position, this did not outweigh the factors set out above.

C.    DISCOVERY

20    I turn now to the discovery orders made as against Mr Durre.

21    Those orders require Mr Durre to provide discovery of documents in categories specified by the plaintiff and the sixth defendant.

22    I made those orders because:

(1)    I considered the categories to be appropriate; and

(2)    Mr Durre’s concern – that he would be required to discover documents outside of his control (including documents that were, but are no longer, in his control – cf. r 20.17(2)(b) of the Federal Court Rules 2011 (Cth)) – had been met by the plaintiff and the sixth defendant proffering a form of orders which limited the discovery required to documents within Mr Durre’s control. Those orders, which were ultimately made, also make explicit Mr Durre’s ability to make a claim of legal professional privilege over any of the documents to be discovered by him (cf. r 20.02 of the Rules).

Associate:

Dated:    18 June 2026

SCHEDULE OF PARTIES