Federal Court allows major expansion of Ralan liquidators’ claims while preserving limitation fight for trial

The Federal Court of Australia has granted leave for sweeping amendments in long-running litigation arising from the collapse of the Ralan Group, allowing liquidators to significantly expand their claims while deferring key limitation issues to trial.

The Ralan Group was a major property developer that collapsed into liquidation in 2019 with over $560 million in debts, impacting over 1,000 investors. The group was later revealed to be operating as a “Deposit Release Scheme” that redirected off-the-plan purchaser deposits across the group. The scheme was run by founder William O'Dwyer, who was later jailed for fraud, and allegedly generated more than $288 million in liabilities.

The proceeding, brought by Said Jahani, Philip Campbell-Wilson and Graham Killer of Grant Thornton, the liquidators of 58 Ralan entities, targets Zhang Fu Qiu and Xiao Hui Liu in connection with an the Deposit Release Scheme. Zhang Fu Qiu was Head of Sales within the Ralan Group and is alleged to have played a central operational role in the Deposit Release Scheme. Xiao Hui Liu, Qiu’s spouse, is not alleged to have played a direct role in the scheme, but is accused of receiving proceeds from the scheme.

At issue were competing interlocutory applications: the liquidators sought to amend their originating process and statement of claim to add six additional corporate plaintiffs and a substantial new compensation claim, while the defendants sought to amend their defence to introduce a limitation argument.

The proposed amendments by the liquidators would materially enlarge the case, including by advancing a new claim for compensation against Qiu tied to his alleged knowing assistance in the deposit scheme and extending the claim across additional special purpose development entities within the group.

The defendants opposed the amendments, arguing they introduced new and time-barred claims by new parties and would prejudice the defence by expanding the factual inquiry and potentially jeopardising the trial timetable. They also challenged the suitability of certain statutory causes of action relied upon by the plaintiffs.

Justice Cheeseman rejected those objections, finding that while the amendments were substantial, they arose out of the same or substantially the same factual matrix already in issue, namely the operation of the Deposit Release Scheme, the role of group entities, and Qiu’s alleged knowledge and involvement.

Critically, the Court held that questions of limitation and the operative date of the amendments should not be resolved at the interlocutory stage. Instead, those issues, including whether newly joined plaintiffs’ claims are time-barred or relate back to the original filing date, were reserved for determination at the final hearing.

The Court also permitted the defendants to amend their defence to plead a limitation defence, despite the late stage at which it was raised, emphasising that any resulting prejudice was forensic rather than procedural and could be managed within the existing timetable.

In exercising its discretion, the Court placed weight on the overarching purpose of facilitating the just and efficient resolution of disputes, concluding that both sets of amendments should be allowed with costs consequences and procedural directions to mitigate any prejudice.

Read the decision here.

Professionals involved:

• Daniel Krochmalik of 3 St James' Hall and Frank Tao of Ninth Floor Selborne Chambers, counsel, and Norton Rose Fulbright, solicitors, for the liquidators, Said Jahani, Philip Campbell-Wilson and Graham Killer of Grant Thornton

• Roger Marshall SC and Michael Wells of Ground Floor Wentworth Chambers, counsel, and Swaab, solicitors, for Zhang Fu Qiu and Xiao Hui Liu