Written by Joseph Scarcella (Partner), Pravin Aathreya (Partner) and Edwin Fah (Special Counsel)
Commissioner of Taxation v Iannuzzi (No 3)  FCA 45
Within the statutory three-year limitation period for the recovery of voidable transactions, liquidators must either:
This requirement will be applied strictly. Failure to do either of the above will preclude any action for the recovery of voidable transactions.
An “end run” around these time limitations will not be permitted. That is, the law does not permit a liquidator to circumvent the limitation period by alternative means.
In 2014, liquidators (Liquidators) were appointed to a number of companies (Companies) which were deregistered in 2015 and 2016.
At about this same time, an intergovernmental taskforce (the Phoenix Taskforce) was established (Taskforce) involving the Australian Taxation Office, the Australian Securities and Investments Commission, as well as other governmental agencies. The purpose of the Taskforce was to detect, deter and disrupt certain undesirable conduct, including tax evasion, phoenixing activity and money laundering.
The Liquidators came to the attention of the Taskforce, and in 2017, the Commissioner of Taxation (Commissioner) commenced proceedings seeking, pursuant to ss 90-10 and 90-15 of the Insolvency Practice Schedule (Corporations) or alternatively, (the now repealed) s 536(1) of the Corporations Act 2001 (Cth) (Act):
The Liquidators resisted the Commissioner’s proceedings, but on 2 September 2019, consented to the following orders (which were made by the court):
In 2021, and in reliance on the Limitations Order, the New Liquidators commenced legal proceedings against various third parties (Applicants) alleging they were parties to voidable transactions pursuant to s 588FE of the Act.
Shortly thereafter, the Applicants filed an application seeking to have the Limitations Order set aside.
The Applicants contended that the effect of the Limitations Order was to extend the time period in which the New Liquidators could commence proceedings for clawback of voidable transactions against them, and that the only way this extension could be achieved was by an application made pursuant to s 588FF(3) within three years of the relation-back date.
Given that the Limitations Order was made pursuant to s 601AH(3)(d) and not pursuant to s 588FF(3), and that it was not made within three years from the relation-back dates for each of the Companies, the Applicants contended that the court did not have the power to make the Limitations Order.
Accordingly, absent the Limitations Order, the New Liquidators could not maintain their actions against the Applicants for clawback of voidable transactions.
The court agreed with the Applicants, finding that the court did not have the power to make the Limitations Order because:
This decision is a blunt reminder that the statutory limitation period in s 588FF(3) needs to be adhered to strictly, and in the absence of a “shelf order” obtained under s 588FF(3)(b), cannot be extended after it has expired. Other general Corporations Act provisions (such as s 601AH(3)(d)) are unavailable to assist a liquidator who fails to meet this strict time limit.
Be the first to receive the latest articles, news and publications.
A recent Federal Court decision provides a useful distillation of the key principles that apply to unreasonable director-related transactions under s 588FDA of the Corporations Act.
Leading independent law firm Johnson Winter Slattery is advising Brookfield on the sale of certain businesses within LINX Cargo Care Group. As a part of that transaction, JWS is advising on the...
Treasury has released an exposure draft of its CRFD legislation for public comment. This is the next step towards introducing mandatory and standardised CRFD for medium and large listed and...