Yesterday, the High Court handed down its decision in the
Octaviar litigation concerning the time limits imposed by
the Corporations Act for the commencement of proceedings
for voidable transactions (Grant Samuel Corporate Finance Pty
Limited v Fletcher & Ors and JP Morgan Chase Bank,
National Association & Anor v Fletcher & Ors 
Section 588FF(3) of the Corporations Act provides that a
liquidator may only commence voidable transaction proceedings:
within 3 years of the relation-back day or 12 months after the
appointment of the liquidator, whichever is the latest (section
within such time as the Court otherwise orders pursuant to an
application made by the liquidator within the period specified in
(a) above (section 588FF(3)(b)).
In this case the liquidators of Octaviar had obtained an order
from the Supreme Court of New South Wales to extend the time for
the commencement of voidable transaction proceedings. That
application was made within the period specified in section
After the expiry of the time prescribed by section 588FF(3)(a),
but before the extension period expired, the liquidators made a
further application to extend the period in which to bring voidable
transactions proceedings. The Supreme Court granted the
The liquidators of Octaviar then commenced voidable transaction
proceedings against a number of parties who in response applied to
set aside the claims on the basis that the second extension of time
was invalid and that the time for commencing voidable transaction
proceedings had expired.
The Supreme Court dismissed the defendants' challenge,
accepting the liquidators' argument that Rule 36.16(2)(b) of
the Uniform Civil Procedure Rules (which provides the
Court with power to vary existing orders) permitted the Court to
vary the original extension order by changing the date.
The defendants' appeal to the Court of Appeal was dismissed.
The defendants then appealed to the High Court.
Yesterday the High Court overturned the Court of Appeal decision
finding that the second extension order made by the Supreme Court
was invalid and thus the proceedings against the defendants were
commenced out of time. The High Court held that Rule 36.16(2)(b) of
the Uniform Civil Procedure Rules did not permit the Court
to make an order extending the time for bringing voidable
transaction proceedings if that application for extension was made
after the time limit prescribed by section 588FF(3)(b) of the
The High Court also handed down its judgment yesterday in the
related proceedings of Fortress Credit Corporation (Australia)
II Pty Ltd & Anor v William John Fletcher and Katherine Barnet
as Liquidators of Octaviar Limited (Receiver and Managers
Appointed) (In Liquidation) and Octaviar Administration Pty Ltd
& Ors  HCA 10. In that decision the High Court found
that a court may make an extension order pursuant to section
588FF(3)(b) without identifying particular transactions to which
the extension order is to apply, thus allowing transactions that
were unidentified at the time of the making of the extension order
to be the subject of subsequent voidable transaction
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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