Monarch Tower - Case Update

The Federal Court has awarded costs against a liquidator after his lawyers advised him not to serve various voidable transaction applications on the respondents to those proceedings until after the conclusion of public examinations which may shed light on the applications.

The liquidator was appointed in August 2019. In March 2023, the Court extended the time for making voidable transaction applications to 22 January 2024 with respect to “any voidable transaction involving the Company, and including voidable transactions involving each of any of” a named list of persons and entities.

By five separate originating processes filed on 22 January 2024, the liquidator sought to bring applications against some of the persons named in the March 2023 order, and sixteen other persons not named in it. However, the liquidator did not serve a copy of the originating processes and supporting affidavits on any respondent by the first return date on 2 February. The liquidator explained that his lawyers had advised him to wait until after certain public examinations commencing in April 2024 were completed, on the basis that those examinations may reveal facts and documents that are relevant to the voidable transaction proceedings.

The liquidator made an application seeking orders extending the time for service of the materials nunc pro tunc, and the respondents sought to have the proceedings brought against them summarily dismissed. The Court ruled in favour of the respondents and refused to extend the time for service, finding that the liquidator had deliberately arrogated to himself the decision not to serve the respondents within the time provided for by the rules, and could not subsequently resile from that position. The Court then directed the parties to file costs submissions.

Ultimately, the Court awarded indemnity costs against the liquidator. The Court pointed out that the “deliberate and knowing delinquency on the part of the liquidator was done for his own ulterior and strategic purpose, and was so serious as to warrant summary dismissal of the proceedings.” Accordingly, in the Court’s view, the liquidator’s conduct rose to the level of a special or unusual feature which justified indemnity costs.

Read the decision here.