FEDERAL COURT OF AUSTRALIA

Mansoor (Liquidator), in the matter of Harley Cranes Payroll Pty Ltd (In Liquidation) [2026] FCA 1505

ORDERS

THE COURT ORDERS THAT:

1.    The Liquidator be directed pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) that the Liquidator would be justified in conducting the windings up of Harley Cranes Payroll Pty Ltd (in liquidation), Harley Cranes & Rigging Pty Ltd (in liquidation) and Harley Cranes Group Pty Ltd (in liquidation) (the Companies) in the following manner:

(a)    the Liquidator shall combine the property of each of the Companies into a single fund;

(b)    that fund shall be distributed in accordance with the provisions of Div 6 of Pt 5.6 of the Corporations Act 2011 (Cth) but as though the Companies were a single company in liquidation and the creditors of the Companies were creditors of a single company in liquidation; and

(c)    no amount is to be payable from that fund on account of any liability owing or claimed as between each of the Companies.

2.    The costs of this application be costs in the liquidation of the Companies.

3.    The Amended Originating Process otherwise be dismissed.

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

REASONS FOR JUDGMENT

JACKMAN J:

Introduction

1    The plaintiff, Mr Mansoor (Liquidator), is the Liquidator of Harley Cranes Payroll Pty Ltd (in liq) (HCP), Harley Cranes & Rigging Pty Ltd (in liq) (HCR), and Harley Cranes Group Pty Ltd (in liq) (HCG) (together, the Companies).

2    The Liquidator seeks as primary relief a determination pursuant to s 579E of the Corporations Act 2001 (Cth) (Act) that the Companies are a pooled group for the purposes of s 579E of the Act. As a fall-back, the Liquidator seeks a direction pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) (IPS) that the Liquidator would be justified in conducting the winding up of the Companies in the following manner:

(a)    the Liquidator shall combine the property of each of the Companies into a single fund;

(b)    that fund should be distributed in accordance with the provisions of Div 6 of Pt 5.6 of the Act, but as though the Companies were a single company in liquidation and the creditors of the Companies were creditors of a single company in liquidation; and

(c)    no amount is to be payable from that fund on account of any liability owing or claimed as between each of the Companies.

3    On 11 September 2026, the Liquidator caused notice of the application to be served on all known creditors of the Companies as required by s 579J. No opposition to the pooling order or the s 90-15 direction has been notified by any creditor, and no creditors have sought leave to appear at the hearing of the application.

Background

4    On 17 November 2023, Mr Billingsley and the Liquidator were appointed joint and several liquidators of HCP, and administrators of HCG and HCR. On 20 December 2023, Mr Billingsley and the Liquidator were appointed Deed Administrators of HCG and HCR under interrelated Deeds of Company Arrangement (DOCAs) executed on 20 December 2023. On 14 January 2025, Mr Billingsley and the Liquidator were appointed joint and several liquidators of HCG and HCR following a resolution by creditors to terminate the DOCAs.

5    Harley Cranes is a family-owned business that has operated since about 1994 in the construction and infrastructure industry. Its major service line areas included rigging, machinery relocation, railway maintenance, utility infrastructure, materials handling, road infrastructure, tunnel construction, construction (commercial, industrial and residential) and tilt up panel erection.

6    The business and the assets that were used to undertake the business were originally owned by Harley Cranes Pty Ltd (HC), which entered into voluntary administration on 4 February 2011 and went into liquidation on 13 May 2011. HCG was incorporated on 26 October 2010 and in late October 2011 purchased the business and assets from HC. HCG was the primary operating entity, having purchased the business and assets from HC. HCR was incorporated on 30 November 2010 and owned motor vehicles and some plant and equipment, which was used by HCG to complete jobs it was engaged to complete. HCR did not contract with third parties for jobs or carry on a business in its own right.

7    HCP was incorporated on 16 June 2005 and employed all staff and administered the payroll function until about 30 June 2021 (and appears to have performed this function previously for HC). HCP did not contract with third parties for jobs or carry on a business in its own right. After June 2021, HCG employed all staff and took over and administered the payroll function. HCP’s only creditor (excluding a small shareholder loan) is the Deputy Commissioner of Taxation in the sum of $383,195 in respect of a running balance account as at 17 November 2023 for outstanding PAYG and GST withholdings lodgments for the period up to 30 June 2021.

8    Ms Carol Hughes oversaw the administrative and financial aspects of the business until her death on 19 April 2023. Following her death, control of the financial aspects and operations was assumed by her daughter-in-law, Ms Suzana Hughes, for HCG and her husband, Mr Alan Hughes, for HCR. The Liquidator does not have the ability to obtain information from, or examine, someone with personal knowledge of the transactions prior to the death of Ms Carol Hughes.

9    On 20 December 2023, Mr Billingsley and the Liquidator were appointed Deed Administrators under the DOCAs. Under the terms of the DOCAs:

(a)    the Deed Proponents agreed to make personal contributions, raise external finance and sell the assets of HCG and HCR with any “Recoveries” (the proceeds of realisation of the assets of HCG and HCR) payable to the Deed Administrators in accordance with cl 7 (cl 7(a));

(b)    the Deed Proponents had to pay the Deed Administrators pursuant to the HCG DOCA and the HCR DOCA (the Deed Proponents’ Contribution) (cl 7(c)):

(i)    $250,000 from Recoveries within 5 Business Days of the Commencement Date;

(ii)    $100,000 from the Deed Proponents by 31 March 2024;

(iii)    $350,000 from Recoveries by 31 March 2024;

(iv)    $350,000 from Recoveries by 30 June 2024; and

(v)    $350,000 by 30 June 2024 (the Funding), being a $350,000 debt facility provided by an external financier to the Deed Proponents which had to be provided on a no recourse basis to the Deed Fund or Deed Administrators;

(c)    the “Deed Proponents’ Contribution” was to be paid to the “Olvera Account” and used to pay any “Claim” against HCG and HCR which was admitted in accordance with the HCG DOCA and the HCR DOCA (cl 7(b));

(d)    the property that formed the “Fund” and was available to pay Admitted Claims under the HCA DOCA and the HCR DOCA was comprised of the aggregate of (cl 8(a)):

(i)    $100,000 from the Deed Proponent;

(ii)    Cash at Bank;

(iii)    Unencumbered Debtors;

(iv)    the Funding; and

(v)    any Recoveries, up to the value of $1,055,000, or alternatively (if the Funding was not obtained) up to the value of $1,405,000;

(e)    the “Deed Proponents’ Contribution” and the “Fund” were to be held jointly on behalf of HCG and HCR to pay the Admitted Claims of HCG and HCR (cl 8(c)).

10    Following the execution of the HCG DOCA and the HCR DOCA:

(a)    a new bank account was opened in the name of HCG and HCR and the balance in the administration accounts of HCG and HCR was transferred into the DOCA Account. The opening cash balance of the DOCA Account was $10,213.65 for HCR and $213,375.47 for HCG. Each of the Companies’ previous bank accounts was returned to the control of the directors of HCG and HCR;

(b)    control of HCG and HCR was returned to the directors for the conduct of day-to-day operations. The directors were also permitted, subject to the express written consent of the Deed Administrators, to realise certain assets the proceeds of which formed part of the Fund; and

(c)    the Deed Administrators of HCG received payments of $1,140,694.06 from HCG and $112,796.55 from HCR, including the initial contribution and three payments from asset realisations. The funds received from asset realisations were paid into the HCG Account.

11    HCG and HCR breached the terms of the HCG DOCA and the HCR DOCA by failing to obtain the Funding by 30 June 2024 and only paying $100,000 towards the third Recoveries instalment of $350,000 due on 30 June 2024. On 20 December 2024, the HCG DOCA and the HCR DOCA were terminated, and HCG and HCR went into liquidation. As at the date of liquidation, the funds held in the accounts were $607,673.74 for HCG and $10,213.65 for HCR. The current balance is $495,240.45 for HCG and $157,435.56 for HCR. No funds are held in respect of HCP. Creditors’ claims totalled $4,820,041.06 for HCG, $367,562.19 for HCR and $403,636 for HCP.

Pooling order

12    Section 579E(1) and (2) of the Act provide as follows:

(1)    If it appears to the Court that the following conditions are satisfied in relation to a group of 2 or more companies:

(a)     each company in the group is being wound up;

(b)    any of the following subparagraphs applies:

(i)     each company in the group is a related body corporate of each other company in the group;

(ii)     apart from this section, the companies in the group are jointly liable for one or more debts or claims;

(iii)    the companies in the group jointly own or operate particular property that is or was used, or for use, in connection with a business, a scheme, or an undertaking, carried on jointly by the companies in the group;

(iv)    one or more companies in the group own particular property that is or was used, or for use, by any or all of the companies in the group in connection with a business, a scheme, or an undertaking, carried on jointly by the companies in the group;

the Court may, if the Court is satisfied that it is just and equitable to do so, by order, determine that the group is a pooled group for the purposes of this section.

(2)    If a pooling order comes into force in relation to a group of 2 or more companies:

(a)    each company in the group is taken to be jointly and severally liable for each debt payable by, and each claim against, each other company in the group; and

(b)    each debt payable by a company or companies in the group to any other company or companies in the group is extinguished; and

(c)    each claim that a company or companies in the group has against any other company or companies in the group is extinguished.

13    In Re Lombe [2011] NSWSC 1536; (2011) 87 ACSR 84 (Lombe) at [7], Barrett J adopted the approach to an application for a pooling order advocated by the late Malcolm Oakes SC by reference to six questions. I will adopt the same approach.

Question 1: Is there a group of 2 or more companies (s 579E(1), introductory words)?

14    The expression “group” in the opening words of s 549E(1) means no more than a collection or plurality, and a “group” exists merely through identification of several companies, without any need to find any connection or shared characteristic: Allen v Feather Products Pty Ltd [2008] NSWSC 259; (2008) 72 NSWLR 597 (Feather Products) at [9] (Barrett J); Lombe at [8] (Barrett J); approved in Morgan v McMillan Investment Holdings Pty Ltd [2024] HCA 33; (2024) 283 CLR 211 (Morgan) at [34] (Gageler CJ, Edelman, Steward, Gleeson and Beech-Jones JJ). It thus suffices that the applicant for a pooling order identify two or more companies in existence at the time of the order. The answer to this question is therefore “yes”.

Question 2: Is each company in the group being wound up (s 579E(1)(a))?

15    The answer to this question is also “yes”.

Question 3: Is at least one of the conditions in subparas (i)–(iv) of s 549E(1)(b) satisfied?

16    This question has been referred to as the “gateway requirement” of the section: Morgan at [1]. That is presumably because it establishes the essential underlying rationale for making a pooling order, namely, the necessary connection between the companies in question: Orr (Liquidator) v Redflow Ltd (in liq) [2026] FCA 815 (Redflow) at [19] (Derrington J). The Liquidator in the present case relies on para (iv) of s 549E(1)(b).

17    The definition of “property” in s 9 includes a “thing in action”, and thus the reference to “particular property” in para (iv) includes choses in action.

18    A company may “use” property merely by holding it, where the mere holding can be regarded as the source of some advantage: Lombe at [61]; Morgan at [47]. The identified use must have a sufficient “connection” with carrying on the joint business, scheme or undertaking: Morgan at [46]. With respect to whether the property was used, or was for use, “in connection with the business, scheme or undertaking carried on jointly” by the companies, Barrett J said in Lombe at [26]:

…if several companies, by arrangement with one another, contributed part of what was required to carry on a single business, the business each element of which came from one or more of them might properly be characterised as a business “carried on jointly” by all of them. “Jointly” does not connote merely action in unison but extends also to circumstances in which there is coordinated or cooperative action, with the separate acts of each participant complementing or supplementing acts of the others.

19    That proposition was illustrated by the facts in Feather Products, in which Barrett J held at [19] that three companies were parties to an arrangement under which each contributed part of what was required to carry on a single business. One provided human resources, another provided manufacturing facilities, and another attended to the sale of the manufactured product. The total business of manufacturing and selling the products was held to have been carried on by them jointly, and that those of them that owned relevant physical property caused it to be used in the joint enterprise within the meaning of s 579E(1)(b)(iv).

20    There is an oddity in the drafting of para (iv). The use of the present tense for “own” (as with the use of the present tense for “operate” in para (iii)) requires that ownership (or operation) of the “particular property” by a company in the group be established at the time of judgment: Re Australian Hotel Acquisition (in liq) [2011] NSWSC 1374 (Australian Hotel) at [43] (Windeyer AJ); Lombe at [44]–[47]; Morgan at [39]. The requirement for ownership of the particular property to continue until the date of the judgment is not satisfied where there is property which was owned in the past by a company in the group, but that property has now been realised, producing a fund of money as at the relevant time: Australian Hotel at [44]; Lombe at [37]–[47]; Morgan at [48].

21    In Lombe at [43]–[44], Barrett J dealt with a submission that that construction has the consequence that pooling is denied unless the application is made and dealt with at a time before full realisation of the assets, with the result that the prospects of success in achieving pooling diminish as the process proceeds, whereas there is no reason of policy or logic why the outcome should be different according to the stage the winding up has reached when the application comes before the court. Justice Barrett acknowledged that there was clear merit in that submission, so far as the apparent policy of the legislation was concerned, but held that the plain words are “uncompromising in the message they deliver”. His Honour noted that the language in paras (iii) and (iv) (referring to where property “is or was used, or for use” in connection with a business, scheme or undertaking) extends to both the case in which property is now used (or for use) and a case in which property was at some earlier time used (or for use), but observed that each paragraph makes it perfectly plain that it is concerned only with property that is now owned. His Honour said that the legislature could have referred to property that the companies “own or owned” that “is or was used (or for use)”, and assumed that it consciously chose not to do so: at [45]. His Honour also observed that nothing was said in the relevant part of the explanatory statement about the conditions in paras (i)–(iv) of s 579E(1)(b): at [46].

22    In the present case, as a general matter, HCP and HCR each contributed part of what was required to carry on a single business, being the crane and rigging business in the construction and infrastructure industry. HCP employed all staff and administered the payroll function for HCG and HCR until about 30 June 2021, when HCG took over that function. HCR owned motor vehicles and some plant and equipment which was used by HCG to complete jobs it was engaged to complete. However, as indicated above, para (iv) requires the satisfaction of a condition that one or more companies in the group now own(s) the particular property that is or was used in connection with the business carried on jointly by the companies in the group. The problem confronting the Liquidator is that the physical assets that were used by HCG and HCR have been realised, the Liquidator now holds the proceeds of realisation, and the Liquidator does not currently own any of the physical assets that were used to conduct the business.

23    The Liquidator seeks to surmount that obstacle by reason of the following evidence, recognising the difficulties the Liquidator has faced in seeking to reconstruct the transactions within the group. The Liquidator’s evidence is that the leased premises used by HCG and for which HCG paid the rent also housed the plant and equipment that was owned by HCR. The Liquidator says that it does not appear that HCG recorded amounts that would be payable by HCR for the use of the premises to store its plant and equipment. Further, HCR is the owner of several items of plant and equipment and vehicles, but recorded minimal expenses relating to insurance. The Liquidator says that it does not appear that HCG recorded amounts that would be payable by HCR in respect of insurance premiums paid by HCG in respect of HCR’s plant and equipment and vehicles. Further, the evidence shows that management fees were recorded in the management accounts as having been paid by HCG for services provided by HCR (by way of the provision of storage and equipment) and by HCP (by way of the provision of employee labour) in the financial years ending 30 June 2020 and 30 June 2021, in the amounts of $649,406 and $470,563 respectively. However, in the financial year ended 30 June 2022, management fees were recorded as $1,000, and in the financial year ended 30 June 2024, no management fees were recorded as paid. The Liquidator says that this indicates that HCG and HCR failed to record amounts that would be payable for services provided, including in respect of the hire of plant and equipment, rent, and insurance, and the Liquidator also says that HCR recorded minimal equipment-related expenses in the financial years ended 30 June 2021 to 30 June 2023, which indicates that these expenses would have been paid by HCG (affidavit of Mr Mansoor 25.8.26 at [20(h)]).

24    The Liquidator submits that HCR has a chose in action to recover amounts from HCG for management fees in respect of storage and equipment costs, which is an asset that was available for use in connection with the conduct of the joint business, and which is still owned by HCR. There are two problems with that submission. First, the question whether HCG has a liability to HCR for the use and storage of plant and equipment owned by HCR depends on the terms and nature of the transaction between HCR and HCG, in particular whether there was an agreement between them requiring payment, or a request by HCG to HCR (express or implied) for the services in circumstances indicating an expectation of payment for them by HCG. There is no direct evidence concerning the nature of those dealings, and I am unable to infer on the balance of probabilities what the terms and nature of those dealings may have been, especially in the period from 1 July 2021 when only very minimal payments were made by HCG. Second, even if there were a liability on the part of HCG to HCR, the evidence is not sufficient to establish that HCG has not discharged that liability. Although only $1,000 in management fees is recorded as having been paid by HCG for services provided by HCR and HCP after 30 June 2021, the Liquidator states that HCR recorded minimal equipment-related expenses in the financial years ended 30 June 2021 to 30 June 2023, which he says indicates that these expenses would have been paid by HCG (affidavit of 25.8.26 at [20(h)(iv)]). Those equipment-related expenses appear to have included insurance premiums paid by HCG in respect of HCR’s plant and equipment and vehicles, and may well have included other expenses such as for routine maintenance and servicing, and any necessary repairs. In addition, the Liquidator says that rent would have been payable by HCR to HCG for the use of the premises to store its plant and equipment, but was not recorded. It may well be that the expenses which were paid by HCG in relation to HCR’s equipment exceeded any amount which HCG owed to HCR for the storage and use of that equipment, thereby producing a balance in favour of HCG on an intercompany loan account. If that were the case, HCR would not now have a chose in action against HCG. Further, the financial statements of HCG and HCR as at 30 June 2021 show that HCR owed $300,086.58 to HCG. That balance may either have taken into account any liability by HCG for services provided by HCR, or may have exceeded any such liability (if it had not already been accounted for). There is no evidence to indicate that a net balance in favour of HCR is any more likely than a net balance in favour of HCG. Accordingly, I do not accept that the evidence establishes a chose in action currently held by HCR against HCG on the balance of probabilities.

25    The Liquidator also submits that HCP has a chose in action to recover unpaid amounts from HCG for management fees in respect of employee labour provided by HCP to HCG, which is an asset that was available for use in connection with the conduct of the joint business and remains an item of particular property owned by HCP. The Liquidator draws attention to the HCP Balance Sheet as at 30 June 2021 as showing that management fees of $325,923.61 were receivable by HCP, presumably from HCG, the balance sheet of which as at 30 June 2021 shows management fees payable of $505,223.61. I do not accept that submission. The evidence indicates that HCP employed all staff and administered the payroll function for the business until about 30 June 2021, after which HCG employed all staff and administered the payroll function itself. There is no evidence to indicate that the management fees paid by HCG to HCP up to 30 June 2021 (including $470,563 appearing in the management accounts in relation to the financial year ended 30 June 2021) did not discharge any liability which HCG had to HCP for those services. Although very minimal management fees were recorded as paid by HCG after 30 June 2021, HCP no longer provided employee labour services to HCG after 30 June 2021.

26    Accordingly, in my view, para (iv) is not satisfied, and Question 3 should be answered “no”. Although that is fatal to the application for a determination that the group is a pooled group for the purposes of s 579E, I will deal with the remaining questions, as they are relevant to the consideration of the Liquidator’s fall-back position concerning an order under s 90-15 of the IPS.

Question 4: What does the evidence show with respect to the matters in s 579E(12) as they may affect the answer to Question 5?

27    Section 579E(12) provides as follows:

In determining whether it is just and equitable to make a pooling order, the Court must have regard to all of the following matters:

(a)    the extent to which:

(i)    a company in the group; and

(ii)    the officers or employees of a company in the group;

were involved in the management or operation of any of the other companies in the group;

(b)    the conduct of:

(i)    a company in the group; and

(ii)    the officers or employees of a company in the group;

towards the creditors of any of the other companies in the group;

(c)    the extent to which the circumstances that gave rise to the winding up of any of the companies in the group are directly or indirectly attributable to the acts or omissions of:

(i)    any of the other companies in the group; or

(ii)    the officers or employees of any of the other companies in the group;

(d)    the extent to which the activities and business of the companies in the group have been intermingled;

(e)    the extent to which creditors of any of the companies in the group may be advantaged or disadvantaged by the making of the order;

(f)    any other relevant matters.

28    In Redflow at [32], Derrington J summarised the circumstances which commonly support the making of a pooling order as follows (omitting citations):

(1)    Where the companies and their officers and employees are involved in the operations of the other companies (in essence, the group being managed as a single unit with a central management team responsible for all material decisions relating to strategy).

(2)    Where the companies, by their respective officers and employees, hold out to creditors that they are a group of companies in respect of indebtedness incurred by the group.

(3)    Where the group operates the business collectively and the business fails as a consequence of a number of issues being experienced by it as a whole.

(4)     Where there is an intermingling of the activities and assets of the companies in the group which is revealed by:

(a)    the absence of any intercompany accounts reflecting balances between the entities, or any provisioning of employee entitlements;

(b)    the preparation of consolidated accounts;

(c)    the consolidation of the companies for tax purposes, with a head company of the consolidated group;

(d)    only one company holding bank accounts, borrowing monies and acting as the “treasury company”;

(e)    the inability to assess the independent asset and liability position of each company (including the true liability for some debts); and

(f)    difficulties confronting any attempt to reconstruct the intercompany balances, consequent upon a high degree of intermingling of activities and businesses.

(5)    Where unsecured creditors are advantaged by the pooling order.

(6)    Where the making of a pooling order likely results in significant savings across the administration of the companies (for example due to avoiding the need for the liquidator to engage in the time-consuming and costly exercise of reconstructing individual company accounts, as well as saving administration costs due to being able to complete the windings up more quickly).

29    In the present case, the Liquidator’s evidence establishes the following matters:

(a)    until her death on 19 April 2023, Ms Carol Hughes oversaw the administrative and financial aspects of the business;

(b)    the Companies operated in a collective manner and not as separate and distinct entities, and the financial decline of the Companies arose from the same underlying commercial circumstances;

(c)    the affairs of the Companies were so intermingled that any meaningful separation is unlikely. There is therefore an inability to accurately assess the independent asset and liability position of each company;

(d)    the intercompany transactions were not properly reconciled as at the date of the Liquidator’s appointment, and the Liquidator has been unable to reconcile them due to an absence of books and records. The Liquidator states that it is not possible to accurately disentangle the respective affairs of the Companies or to properly reconcile the intercompany dealings; and

(e)    the making of a pooling order will result in significant savings across the administration of the Companies (including avoiding the costs and delay of reconstructing intercompany loan accounts and intercompany transactions).

30    The evidence also establishes that, if a pooling order is not made, the Liquidator would need to:

(a)    apportion the remaining Fund (which includes realisations of assets of HCG and HCR) between the separate liquidations of HCG and HCR, which will likely require retaining an independent valuation expert to assess the appropriate apportionment and/or seeking directions from the Court that the Liquidator would be justified in adopting a particular methodology for apportioning the Fund between HCG and HCR;

(b)    attempt to reconstruct the intercompany loans and transactions between the Companies which would involve conducting a detailed review of the transactions which have occurred over a period of about 5 to 7 years and would cost about $50,000, and would likely involve the Liquidator making value judgments about the appropriateness of attributions as between HCG and HCR in relation to common costs from uncertain information; and

(c)    engage an independent third party to adjudicate on the claims by each company in respect of intercompany loans as the Liquidator would have a conflict of interest in submitting a proof of debt as Liquidator of one entity and adjudicating on the proof of debt as liquidator of the other entity, and would need to seek directions from the Court: see Re Go Energy Group Ltd [2019] NSWSC 558 at [15] (Black J). However, this process is likely to be extremely difficult given that the intercompany transactions were not properly reconciled as at the date of the Liquidator’s appointment.

Question 5: Is it just and equitable that the order sought be made (s 579E(1)(b), concluding words?

31    The matters identified above in relation to Question 4 demonstrate that it is just and equitable to make a pooling order. This question should therefore be answered “yes”.

Question 6: Does s 579E(10) preclude the making of a pooling order?

32    Section 579E(10) relevantly precludes the making of a pooling order if doing so would “materially disadvantage” an eligible unsecured creditor who has not consented to it.

33    The Liquidator has taken extensive steps to notify the Companies’ creditors and shareholders of the application, and no person has entered an appearance or objected to the orders sought. The absence of any objection by an unsecured creditor materially supports the conclusion that no detriment will be suffered by them: Redflow at [54].

34    The Liquidator gives evidence that:

(a)    pooling the liquidation of the Companies will result in material savings in the administration costs of each liquidation, and the time to finalise the liquidations will be materially shorter; and

(b)    it is not possible to identify with precision the dividend outcomes on an individual basis versus a pooled basis because reconstruction of the Companies’ accounts has not yet occurred. If the liquidations were to be finalised today, there are no assets in the liquidation of HCP and HCR to pay creditor claims, and about 25–32 cents in the dollar to pay HCG’s creditors. However, if the Liquidator needed to incur costs to reconstruct the accounts that dividend is likely to reduce.

35    Accordingly, in my view, a pooling order would not materially disadvantage unsecured creditors. Question 6 should be answered “no”.

Section 90-15 of the IPS

36    Section 90-15(1) of the IPS provides that the Court may make such orders as it thinks fit in relation to the external administration of a company. Sub-section 90-15(3) gives a number of examples of orders which may be made, without limiting subs (1), including in para (a) an order determining any question arising in the external administration of the company. It is well-established that the conferral of power under s 90-15 is broader than its predecessors in ss 479(3) and 511 of the Act, and extends to the determination of substantive rights and liabilities, provided that the necessary and proper parties have been given an opportunity to be heard: One T Development Pty Ltd v Peter Krejci in his capacity as Liquidator of ENA Development Pty Ltd [2023] NSWCA 120 at [33]–[35] (Ward P, Leeming and Mitchelmore JJA).

37    Before the enactment in 2007 of Div 8 of Pt 5.6 of the Act relating to pooling, it was held that the court had no power to authorise a pooling of assets: Re The Black Stump Enterprises Pty Ltd [2005] NSWCA 480; (2005) 228 ALR 591 at [16] (Young CJ in Eq, with whom Santow and Bryson JJA agreed). However, as Young CJ in Eq observed at [15], Barrett J at first instance had identified five procedural possibilities for giving effect to pooling: (1) a scheme of arrangement between each company and its creditors under Pt 5.1; (2) a compromise under s 477(1)(c); (3) an arrangement under s 510 between a company in the course of winding up and its creditors; (4) resort to the extensive jurisdiction created by s 447A, where applicable; and (5) a deed of company arrangement under Div 10 of Pt 5.3A where Pt 5.3A administration is in progress: see Re Tayeh (as joint liquidators of the Black Stump Enterprises Pty Ltd) [2005] NSWSC 475; (2005) 53 ACSR 684 at [10]. Young CJ in Eq at [18] added a further method, namely, to secure the assent of all creditors involved, as Barrett J had also suggested at first instance at [13]. Justice Barrett at [14] was emphatic that the then s 511(1)(a) (by which the Court could determine any question arising in the winding up of a company) was not, and never can be, a source of jurisdiction for the court to alter the incidence of statutory provisions or the rights of creditors or contributories in a winding up. In Re Hunter Valley Gravel Supplies Pty Ltd [2006] NSWSC 1070; (2006) 59 ACSR 559 at [38]–[40], Barrett J gave the Liquidator a direction that he is justified in proceeding in each of several windings up on the pooled basis, in circumstances where there was active and unanimous assent of all relevant persons. I note that the drafting of the direction sought in the present case pursuant to s 90-15 of the IPS appears to have been modelled on the direction given by Barrett J in that case at [44].

38    Since the enactment of Div 8 of Pt 5.6, s 511 has been used to convey the Court’s approval for liquidators to implement resolutions of creditors of 11 companies in favour of pooling: Algeri v Koko Black Group Pty Ltd [2016] VSC 190 (Algeri) at [24] (Sifris J). The resolutions were not all unanimous. Justice Sifris held at [24] that the pooling provisions in Div 8 of Pt 5.6 are not a code, and in any event stated that the procedure adopted in that case did not involve a court order for pooling (under the pooling provisions). His Honour stated that a direction given under the then s 511 protects the liquidator who acts in accordance with it, but does not give rise to a res judicata as between parties who may have competing interests affected by it, citing Meadow Springs Fairway Resort Ltd (in liq) v Balanced Securities Ltd [2007] FCA 1443 at [48] (French J). His Honour stated that the Court does not finally determine the rights and liabilities of parties arising out of the subject-matter of the application for directions, citing Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674 at 679–80 (McLelland J) (a case concerning s 479(3)).

39    In Re Kununurra Panel Beating Works (Holdings) Pty Ltd (in liq) [2025] FCA 593 at [7], O’Bryan J stated by way of obiter dicta that there is real doubt whether s 90-15 of the IPS should be construed as a source of power for the Court to make an order pooling the assets and liabilities of two or more companies in their respective liquidations. The reason given for that doubt was that specific powers have been conferred on the Court for that purpose under Div 8 of Pt 5.6, which are subject to a number of limitations and conditions, and that when a statute confers both a general power, not subject to limitations and qualifications, and a specific power, subject to limitations and qualifications, ordinarily the general power is construed as not authorising that which is the subject of the specific power, citing Anthony Hordern & Sons Ltd v Amalgamated Clothing & Allied Traders Union of Australia (1932) 47 CLR 1 at 7 (Gavan Duffy CJ and Dixon J). However, immediately before expressing that doubt, O’Bryan J distinguished (a) pooling orders, from (b) orders in the nature of directions confirming that the Liquidators were justified in acting upon decisions made by creditors to pool assets and liabilities. Accordingly, I read his Honour’s expression of doubt as relating to the use of s 90-15 for the former, not the latter.

40    In the present case, what is sought pursuant to s 90-15 of the IPS is a direction that the Liquidator would be justified in conducting the winding up of the Companies on a basis akin to the consequences of pooling set out in s 579E(2). The Liquidator does not seek a pooling order, or a determination that the group is a pooled group, as such. Accordingly, it is unnecessary to consider whether (despite O’Bryan J’s doubts) s 90-15 confers power on the Court to make a pooling order in the strict sense, as distinct from a direction that the liquidator would be justified in conducting the winding up in a similar way to the consequences of a pooling order set out in s 579E(2). In my view, the Court has power to give such a direction pursuant to the wide power conferred by s 90-15.

41    As a matter of discretion, the Liquidator has presented a compelling case for the making of the direction sought. I refer to the reasoning set out above in relation to Questions 4 to 6, which provides ample justification for that direction. Unlike Algeri, there is no resolution of creditors favouring pooling, but I do not regard that as necessary in the present circumstances where there is no apparent material disadvantage to any creditors (and none have appeared in order to contend that there is any such disadvantage), and where creditors generally will be better off if the direction is made and followed.

42    Further, the only reason why the statutory power under s 579E is not available is the oddity that para (iv) of s 579E(1)(b) requires that the particular property (which was used for the business in the past) be still owned by one or more of the companies in the group at the time of judgment. I respectfully share what appears to have been the view of Barrett J in Lombe at [43]–[44] that there is no reason of policy as to why the outcome should be different according to the stage the winding up has reached when the application comes before the Court, and specifically whether the liquidator has sold the particular property by the time of the hearing. The use of s 90-15 of the IPS to solve the problem created by the intractable language of s 579E(1)(b)(iv) is not to engage in an impermissible exercise of judicial repair of s 579E, but to pick up and use an alternative method for achieving a similar (although not identical) outcome where there is a compelling basis in reason and justice to do so.

Conclusion

43    Accordingly, I decline to make the order sought pursuant to s 579E of the Act, but I regard it as appropriate to make the direction sought pursuant to s 90-15 of the IPS. The costs of the application should be costs in the Liquidation of the Companies.

Associate:

Dated:    12 October 2026