Liquidators have potential weapons available to them to
"claw back" money and other property from creditors and
others. Such recovery action is subject to time limitations.
So far as potentially voidable transactions against the
liquidator are concerned, such actions must be commenced within
three years after the relevant date (known as the
"Relation-Back Date" - this is usually the date upon
which the winding up application was commenced, or when a voluntary
administrator was appointed) or 12 months after the appointment of
a liquidator in a winding up, whichever is the later ("the
There are provisions in the Corporations Act 2001 (Cth)
which allowed for such applications to be extended beyond the
relevant period and there are rules under state legislation which
have been used, in the past, to vary such orders and allow for
further extensions. However, in Grant Samuel the High
Court decided that if an order is made extending the period, a
court cannot then grant a further extension if that second
application for the further extension is made outside the relevant
Application to set aside variation order dismissed by Supreme
Court and Court of Appeal
The liquidators in Grant Samuel made an application to
extend the period within which they might bring proceedings to
recover funds pursuant to what they identified as voidable
transactions following the collapse of the Octaviar Investment
section 588FF(1) of the Corporations Act.)
section 588FF(3)(a) of the Corporations Act,
liquidators, if they identify a claim within the relevant period,
can apply to the court within that period to extend the time to
The first application was made well within the relevant period,
but the liquidators did not get their claim properly prepared
before the relevant period expired. They consequently sought a
further extension by a variation of the first extension (this time
rule 36.16(2)(b) of the
Uniform Civil Procedure Rules 2005 (NSW) (UCPR)).
The second application was made and Justice Black in the Supreme
Court made a variation order further extending the period under the
rules. Importantly, that application was made outside of the
relevant period which otherwise would have prevailed but before the
first extension order had expired.
Both the first application for an extension and the second were
made on an ex-parte basis, that is, without the defendant being
present. When the defendant learnt of the second extension, it
sought to set aside those orders. Justice Black dismissed the
application to set aside the variation order.
The matter went on appeal and the Court of Appeal, by a
majority, agreed with Justice Black and again dismissed the
Uniform Civil Procedure Rules invoked in High Court appeal
It then went on appeal to the High Court. The principal argument
before the High Court was whether a court, on an application made
outside the relevant period but within the extended period ordered
under section 588FF(3)(b), may exercise power under the general
rules of procedure in the UCPR to further extend time for the
making of an application under section 588FF(1).
The High Court, after hearing argument, held that:
The legal policy which underlies section 588FF(3) is one which
The term "may only" has the effect of defining the
jurisdiction of the court by imposing a requirement as to time as
an essential condition of the right conferred by
The only power given to a court to extend the relevant period
is that given by operation of section 588FF(3)(b) the
Corporations Act. That power may not be supplemented, nor
varied, by rules of procedure of the court to which an application
for extension of time is made.
The variation order should be set aside.
Liquidators must seek extension within the limitation
Careful attention must be paid to the limitation period if an
extension is sought. It must be of such length to enable the
liquidator to commence the claim because the court won't allow
a second bite at the cherry and the fall back of an extension order
under the UCPR is not available.
When determining if a DOCA is to be terminated, public interest can, and often will, outweigh any benefit to creditors.
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