Liquidators clear service hurdle in Binetter release fight

The Federal Court has dismissed applications by Andrew Binetter and Samantha Kelliher to set aside a series of ex parte orders permitting overseas and substituted service in proceedings brought by multiple Binetter-related companies in liquidation, clearing the way for a substantive challenge to a 2018 global settlement deed.

The decision arises from long-running fallout from a tax audit that began in 2006 and culminated in a 2018 global settlement between the Commissioner of Taxation, Mr Binetter, Ms Kelliher and various entities. The settlement included a Deed of Release and Discharge dated 5 October 2018. Several companies now in liquidation, represented by liquidator John Sheahan of Sheahan Lock Partners, commenced fresh Federal Court proceedings in October 2024 seeking declarations that aspects of the release are void or unenforceable, including on public policy grounds and under s 37A of the Conveyancing Act 1919 (NSW), along with equitable and statutory compensation.

Mr Binetter and Ms Kelliher were served outside Australia pursuant to ex parte orders authorising substituted service by email on them in Puerto Rico, where they reside. They sought to set aside the ex parte orders under r 39.05(a) of the Federal Court Rules and to have service set aside or the proceedings dismissed under r 10.43A. They argued that the liquidators had delayed service, failed to act with the alacrity required where limitation periods were expiring, breached their duty of candour on ex parte applications, and that the claims were bound to fail given the covenant not to sue in clause 4.2 of the Deed of Release.

Justice O’Sullivan rejected these submissions. The Court accepted that the companies, acting through their liquidators, acted promptly in filing proceedings before the relevant limitation date and moving within days for an extension, in circumstances complicated by related contested proceedings to reinstate and wind up Shield Holdings Australia Pty Ltd. The Court distinguished authorities such as Horne v Retirement Guide Management and held that, on the facts, the liquidators had acted with “alacrity” and that no reasonably arguable basis had been shown to justify setting aside the orders.

Attempts at personal service under the Hague Convention in Puerto Rico were unsuccessful. The Court held that this engaged r 10.49, permitting substituted service, and rejected arguments that service was unauthorised because of alleged defects concerning Form 26A. The judge found no breach of candour and emphasised the principle of finality in case management under s 37M of the Federal Court of Australia Act.

On the substantive jurisdictional challenge under r 10.43A, Mr Binetter and Ms Kelliher contended that the covenant not to sue in the Deed of Release provided a complete defence and that the claims had insufficient prospects of success to justify putting overseas defendants to the burden of defending them. Applying the General Steel test, the Court held it could not be said that the liquidators’ case was so untenable that it could not possibly succeed. The liquidators contended that fiduciary duty and Corporations Act claims were excluded from the release and that aspects of the covenant were void as contrary to public policy; those arguments were at least arguable and properly to be determined at trial.

The Court also rejected submissions that failure to join all parties to the 2018 deed warranted dismissal or a stay, holding that any joinder issues could be addressed later and did not justify summary termination of the proceeding.

Mr Binetter and Ms Kelliher were ordered to pay costs of the interlocutory applications, with liberty to apply as to variation.

Read the decision here.

Brendon Roberts KC and Lloyd Wicks of Bar Chambers (instructed by Illes Selley Lawyers) acted for certain companies now in liquidation, represented by their liquidator.

Jeremy Stoljar SC of Eight Selborne and Louise Coleman of Sixth Floor Selborne Wentworth Chambers (instructed by Speed and Stracey Lawyers) represented Mr Binetter, while Melanie Cairns of Alinea Chambers (also instructed by Speed and Stracey Lawyers) represented Ms Kelliher.

Stephen Puttick of 7 Wentworth Selborne (instructed by Ashurst Australia) represented the company formerly known as Shield Holdings, represented by its liquidator.

Julie Granger of 7 Wentworth Selborne Chambers (instructed by the Australian Government Solicitors) acted for the Commissioner of Taxation.