Liquidator’s strategic delay backfires

The Full Federal Court has dismissed the liquidator’s appeals in the Monarch Tower matter, largely upholding the earlier decision that voidable transaction proceedings issued by the liquidator were rightly struck out for deliberate non-compliance with the service rules. The ruling reinforces the Court’s strict approach to compliance with service requirements and underscores that liquidators—particularly when seeking to preserve limitation rights under s. 588FF—must act promptly and transparently. Strategic delay, even for investigative reasons, will not be excused.

The appeals arose from five related proceedings filed on the final day of an extended limitation period under s. 588FF(3)(b) of the Corporations Act 2001 (Cth). The liquidator—having obtained an order in March 2023 extending time to 22 January 2024—filed his originating processes on that date but intentionally withheld service until after scheduled public examinations. The primary judge found that this was a conscious, strategic breach of the rules and refused to retrospectively extend the time for service, dismissing the proceedings and later ordering indemnity costs against the liquidator.

On appeal, the Full Court (Derrington, Anderson and McElwaine JJ) clarified two recurring insolvency litigation issues: late service under r 2.7 of the Federal Court (Corporations) Rules and whether an extension granted under s 588FF(3)(b) can be re-heard as against a creditor who did not receive notice. The Court agreed that the primary judge was correct to find that the liquidator’s conduct was a deliberate flouting of the Court’s procedural framework and that such behaviour disentitled him from discretionary relief. The Court rejected the argument that service out of time was service in fact which required respondents to apply to set aside service, since service was not validly effected in this case.

The only exception was the Sinoace (BVI) matter, where the Full Court found that a creditor who had not been served with the original s. 588FF(3) extension application was entitled to have the issue reheard. The Court set aside the primary judge’s decision in that case and remitted the extension application to a different judge for redetermination.

Read the decision HERE.

Professionals involved:

• Christopher Brown KC of Lonsdale Chambers and Harry Hill-Smith of Dever’s List (instructed by HWL Ebsworth) for certain respondents

• Dr Oren Bigos KC and Jordan Schulz of Lonsdale Chambers (instructed by Arch Hanover Lawyers) for certain respondents

• Daniel Bongiorno and Ganesh Jegatheesan of Dever’s List (instructed by Harding Stenning) for certain respondents

• Maryanne Loughnan KC and Peter Agardy of Svenson Chambers (instructed by Khor & Burr) for certain respondents

• Jonathan Evans KC and Patrick Miller (instructed by Mills Oakley and Jason Li) for the liquidator