In the matter of ACN 004 410 833 Ltd (formerly Arrium Limited) (in liq) & Ors

By Originating Process filed on 1 August 2022, the Plaintiff (“Atradius”) claims the relief set out in a Statement of Claim (“2022 SoC”) contained in Schedule 3 to the Originating Process, which it has not yet filed where no order for pleadings has been made in the proceedings. I address the structure of the 2022 SoC in greater detail below. The Originating Process indicates that Atradius claims relief under s 90-15 of the Insolvency Practice Schedule (Corporations) (“IPSC”), s 447A of the Corporations Act 2001 (Cth) (“Act”), s 536 of the Act (which has been repealed) and in equity. The Defendants to the proceedings are four persons who were previously the voluntary administrators, deed administrators and then liquidators of companies within the Arrium group (“KM Defendants”) and some sixty or so financiers to the Arrium group (“Financiers”). The Defendants were given notice of the proceedings in the course of this application. However, the Originating Process has not been served on them and the time for service provided by r 6.2(4) of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) and r 2.7 of the Supreme Court (Corporations) Rules 1999 (NSW) (“Corporations Rules”) has now expired.

By Interlocutory Process initially filed on 2 September 2022, before the time for service of the Originating Process under r 6.2(4) of the UCPR had expired, but after a delay that did not comply with r 2.7 of the Corporations Rules, Atradius sought an order under r 1.10 of the Corporations Rules and r 1.12 of the UCPR that it be:

The relief then sought by Atradius was to defer the service of the Originating Process for an indefinite period. Atradius then sought adjournments of the listing of its Originating Process and that Interlocutory Process until the Court expressed a view that the application should be served on the parties that were potentially adversely affected by it. I address the correspondence concerning that matter below. Following service of that application, the KM Defendants and many of the Financiers (“Participating Financiers”) appeared in order to oppose Atradius’ interlocutory application. The solicitors retained by the Participating Financiers have subsequently been retained to act for additional Financiers, but nothing turns on that for the outcome of these proceedings.

By a Further Amended Interlocutory Process filed during the course of the hearing on 5 April 2023, Atradius sought a further order, nunc pro tunc, pursuant to UCPR r 1.12 that the Originating Process was valid for service until the date to which service of its Originating Process and Supporting Affidavits was extended. Atradius also there sought alternative deferrals of the date for service of its Originating Process and Supporting Affidavits to 31 October 2023 or alternatively six weeks from the date of judgment in respect of this application.

I address the interlocutory applications brought by the KM Defendants and the Financers below. I have drawn on helpful “roadmaps” prepared by the parties, at my request, summarising the structure of their submissions in ordering the matters addressed in this judgment.

By way of background, the Arrium Group (as defined at 2022 SoC [1]) carried on a large and complex integrated mining, iron ore export, steel manufacturing, steel recycling and steel distribution business, operating businesses at Whyalla and on the East Coast of Australia. The chronology of events in respect of its financing arrangements, voluntary administration, deed administration and liquidation is largely common ground and I have drawn on Atradius’ 2022 SoC, as cross-referenced in the Originating Process and the affidavit and documentary evidence for the chronology which appears below.

On 7 April 2016, voluntary administrators were appointed to 94 companies within the Arrium Group (“Arrium Administration Companies”) pursuant to s 436A of the Act (2022 SoC [2]). On 12 April 2016, the KM Defendants were appointed joint and several voluntary administrators of the Arrium Administration Companies in place of the persons initially appointed (2022 SoC [4]).

Prior to the commencement of the Arrium Administration, GSO Capital Partners LP had provided a secured facility of US$140 million to two Arrium Group companies, Arrium Finance Pty Limited and Arrium Iron Ore Holdings Pty Limited, by a written secured financing facility dated 22 February 2016 (“GSO Interim Facility”) (2022 SoC [15]). At the commencement of the Arrium Administration (as defined at 2022 SoC [3]), some but not all of the Arrium Administration Companies had executed three separate syndicated facility agreements (“Syndicated Facilities”); six bilateral facility agreements (“Bilateral Facilities”); and two note agreements (“Note Agreements”) (2022 SoC [6]). The unsecured debt due by the Arrium Administration Companies to the Financers was then approximately $2.8 billion (“Financier Debt”) (2022 SoC [17]).

Prior to the commencement of the Arrium Administration, certain Arrium Administration Companies had executed one or both of two written Corporate Deeds of Guarantee (“Group Finance Guarantees”), by which each was liable for debts owed to the Financiers (2022 SoC [14]). These comprised a 2008 Group Guarantee dated 9 July 2008 and amendment dated 30 July 2015 which guaranteed obligations under a 2008 USPP Note Agreement and a 2011 Group Guarantee dated 28 March 2011 and amendment dated 30 July 2015 which was a revolving guarantee in respect of nominated financing facilities. At that time, SSX Holdings Pty Limited and seven Arrium Group entities had also executed a Deed of Cross-Guarantee dated 25 June 1999 (“1999 Cross Guarantee”) and Arrium Limited and twenty-eight of the Arrium Group companies had executed a Deed of Cross-Guarantee dated 10 June 2008 (“2008 Cross Guarantee”) (together, “ASIC DOCGs”) by which each was liable for the debts and liabilities of the Arrium Group on winding up (2022 SoC [13]).

At the commencement of the Arrium Administration, subsidiaries of the Arrium Administration Companies also operated a business providing consumables to mining companies (“Moly-Cop Business”) (2022 SoC [18]). Several Moly-Cop Entities (as defined at 2022 SoC [18]) were parties to the Group Finance Guarantees (“MC Group Finance Guarantors”) (2022 SoC [19]) and certain Moly-Cop Entities were parties to the 1999 Cross Guarantee and/or the 2008 Cross Guarantee (“MC Cross Guarantors”) (2022 SoC [20]). Several Moly-Cop Entities had executed the ASIC DOCGs and had not executed the Group Finance Guarantees or, alternatively, had not executed the Group Finance Guarantees and were subsidiaries of Arrium Administration Companies, were not MC Group Finance Guarantors and were not liable to meet the claims of the Financiers under the Group Finance Guarantees (2022 SoC [21]).

Atradius pleads (2022 SoC [21(e)]) that, by reason that the intermediate holding companies to the Moly-Cop Entities were party to the ASIC DOCGs, their assets were available to meet the claims of creditors of the Arrium Administration Companies. However, Mr Williams, with whom Ms Cowden and Mr Santucci appears for Atradius, fairly accepted in submissions that the ASIC DOCGs only became enforceable if the relevant debtor went into liquidation. That proposition has a significant consequence for the claim brought by Atradius, which Mr Williams also recognised, at least to some extent, in the course of his submissions. That important consequence is that, outside a liquidation of companies within the Arrium Group, neither Atradius nor other unsecured creditors of one company in the Arrium Group could obtain access to the assets of other companies within the group, including the Moly Cop Entities, by reliance on the ASIC DOCGs. Atradius also pleads the value of the Moly-Cop Business and acknowledges it could only be realised by selling the Moly-Cop Business as a going concern; that the Moly-Cop Business could not be sold together as a going concern if the Financiers enforced the Group Finance Guarantees; and could only be sold as a going concern with the consent of the KM Defendants (2022 SoC [24]-[25]).

On or about 21 April 2016, certain of the Arrium Administration Companies entered into a written secured facility (“GSO Replacement Facility”) with National Australia Bank Limited (“NAB”) as security trustee, Australia and New Zealand Banking Group Limited, the Commonwealth Bank of Australia and Westpac Banking Corporation (“GSO Replacement Facility Financiers”), refinancing the GSO Interim Facility (2022 SoC [16]).

On or about 2 August 2016, the KM Defendants (on behalf of the Arrium Administration Companies) and the Financiers executed three written Standstill Deeds (“Standstill Agreements”) (2022 SoC [51]). These included the Lender Standstill Deed dated 2 August 2016 and the Noteholder Standstill Deed dated 2 August 2016 (Ex J1, 2443-2616); Webster [66]). By cl 3.1 of the Standstill Agreements, the Financiers agreed to forbear from enforcing their rights under the Group Finance Guarantees until 15 March 2017, and, by cl 4.3, the KM Defendants in their capacity as administrators of those holding companies, agreed that certain proceeds realised on the sale of the Moly-Cop business would be paid to the Financiers. Atradius pleads these agreements at 2022 SoC [51]-[52]. In proceedings brought in the Federal Court of Australia (“FCA”) in late 2017 (“FCA Proceedings”), the Financiers contended that the Standstill Agreements reflected rights that the Financiers otherwise enjoyed under the Group Finance Guarantees, since by reason of the existence of those guarantees, the trade creditors (which were creditors at the Arrium level and not creditors of Moly-Cop) were structurally subordinated to the Financers in respect of access to the assets of the Moly-Cop Entities. Importantly, Atradius does not identify any factual basis for any contrary contention, outside a liquidation of the companies in the Arrium Group, in the 2022 SoC as cross-referenced in the Originating Process. I will return to the significance of that matter below.

On 30 September 2016, the KM Defendants (on behalf of the Arrium Administration Companies) entered into a deed with the Financiers and the Moly-Cop Entities (“Override Deed”) (2022 SoC [53]). By cl 3.2(d) of the Override Deed (Ex J1, 2668), the parties acknowledged that, despite amendments granted by the Financiers under the document, the total Amount Owing (as defined) remained outstanding until the Financiers had received that amount in full, and each Remaining Obligor (as defined) was liable to pay that amount in accordance with the terms of the Subject Finance Documents (as defined). Schedule 10 (Ex J1, 2714) contained a Proceeds Allocation Schedule, and cl 3 of that schedule provided for allocation of the Offshore Moly-Cop Proceeds (as defined), cl 4 provided for allocation of Australian Moly-Cop Proceeds (as defined), and cl 5 provided for allocation of the non-Moly-Cop Proceeds (as defined). Mr Collinson, with whom Mr Meagher appears for the Participating Financiers, submits that the acknowledgement under cl 3.2(d) of the Override Deed that the total Amount Owing (as defined) remained outstanding until the Financiers had received that amount in full reflected the position arising under the ‘rule’ against double proofs discussed in Westpac Banking Corp v Gollin & Co Ltd [1988] VR 397 and refers to the observations of the Full Court of the FCA in dealing with this matter in Rexel Electrical Supplies Pty Ltd (ACN 000 437 758) v Mentha (in their capacities as joint and several deed administrators of ACN 004 410 833 Ltd (formerly Arrium Ltd) (subject to deed of company arrangement)) (2018) 133 ACSR 236; [2018] FCAFC 229 (“Rexel FCAFC No 1”) at [163] that:

On 25 October 2016, the KM Defendants applied to the FCA for an order under s 477A of the Act modifying Part 5.3A so that the KM Defendants were entitled to prepare a single aggregated report to creditors pursuant to s 439A of the Act (“Aggregated s 439A Report”) and certain directions under s 447D of the Act and Davies J made substantially the orders sought on 25 October 2016 (2022 SoC [28]-[29]).

On or about 26 October 2016, the KM Defendants provided the Aggregated s 439A Report to creditors and convened the second creditors’ meeting of the Arrium Administration Companies (2022 SoC [30]), which were to be held concurrently (“Second Creditors’ Meeting”). The Aggregated s 439A Report attached the proposed deeds of company arrangement (“DOCAs”) and expressed the KM Defendants’ view that the optimal realisation of the majority of Arrium Administration Companies’ assets would occur by way of the sale of shares in at least thirteen key trading companies in administration and set out reasons for that view (Webster [67]; Ex J1, 2825). The KM Defendants expressed their opinion that it would be in creditors’ interests for each of the Arrium Administration Companies to execute DOCAs and expressed the view that it would not be in creditors’ interests to bring the administrations to an end or wind up the Arrium Administration Companies (Ex J1, 2827). Section 1.6.1 of the Aggregated s 439A Report described the key features of the proposed DOCAs and noted that a successful sale or recapitalisation would result in reducing the priority claims of employees for the benefit of other creditors and avoid the disadvantage of placing the companies in liquidation at a critical stage of the administration, sale and recapitalisation process and noted that:

Section 1.10 of the Aggregated s 439A Report advised, consistent with relief granted by the FCA, that:

Section 3.1.1 of the Aggregated s 439A Report referred to the ASIC DOCGs and their effect in an insolvency and section 3.1.2 referred to the two guarantees provided by certain members of the Arrium Administration Companies to the Financiers. Section 3.3.5 referred to the Moly-Cop Group and noted that it was not subject to voluntary administration, section 4 outlined the conduct of the administration at some length, section 4.6 referred to the refinance of the GSO Facility and section 4.8.1 described the Standstill Agreements as follows:

Mr Williams contends that this does not disclose the terms of the Standstill Agreements. He did not, however, explain why those terms were material for disclosure, where Atradius has not identified any impact of them on the distribution of proceeds which would otherwise have occurred in a deed administration and where the Financiers’ retention of the proceeds of the sale of the Moly-Cop business was itself disclosed in the Aggregated s 439A Report.

Section 7 of the Aggregated s 439A Report provided a relatively detailed description of the proposed DOCAs, comprising the Transaction Support DOCAs for 93 of the Arrium Administration Companies (“Transaction Support DOCAs”) and the Arrium Distribution DOCA (“Distribution DOCA”) for Arrium Creditor Distribution Company Pty Ltd (“Arrium Distribution Company”). Section 7.2 again described the substitution of claims under the Distribution DOCA for debts owed by operating companies to creditors as follows:

Section 7.2 of the Aggregated s 439A Report also disclosed that creditors would not share in the proceeds of the Moly-Cop sale and described the process by which that would occur as follows:

Section 7.3.1 of the Aggregated s 439A Report in turn describes creditors’ claims under the DOCAs, as follows:

Section 8 of the Aggregated s 439A Report described the alternatives available to creditors, including liquidation, and explains why the KM Defendants considered that liquidation was not in the best interest of creditors. A corporate structure contained at Appendix 4 to the Aggregated s 439A Report (in relatively small font dictated by its size) disclosed which entitles were subject to guarantees in favour of Financiers, although I recognise that a creditor would have had to undertake a very close analysis of that document to understand its implications. However, the existence or non-existence of those guarantees in respect of particular companies, including the Moly-Cop Entities, does not assist Atradius, where it does not identify any mechanism by which unsecured creditors other than Financiers could have accessed the sale proceeds of the Moly-Cop business in a deed administration, absent the arrangements with the Financiers of which Atradius complains.

An affidavit of Mr Webster dated 21 October 2016 was filed in the FCA Proceedings and then made publicly available on the website of the KM Defendants’ legal representatives (Webster [77]) and also disclosed that the proceeds of the sale of the Moly‑Cop Entities would not be part of the Arrium Distribution Fund (as defined), and would be paid to the Financiers (Webster [77]-[78]).

On 4 November 2016, at the Second Creditors’ Meeting, the creditors of the Arrium Administration Companies resolved that the Arrium Administration Companies execute deeds of company arrangement pursuant to s 439C of the Act (2022 SoC [32]). Over 98% of Arrium Group creditors by number and value voted in favour of the DOCAs (Webster [80]).

Also on 4 November 2016, certain of the KM Defendants executed the Distribution DOCA and the 93 Transaction Support DOCAs for the remaining Arrium Administration Companies (2022 SoC [33]; the Transaction Support DOCA in respect of Arrium Ltd is at Ex J1, 5588 and the Transaction Support DOCA in respect of OneSteel Holdings is at Ex J1, 5781). Mr Collinson helpfully summarises the structure of the DOCAs as follows:

Specifically, Clause 14 of the Distribution DOCA (and also the Transaction Support DOCAs) provided that:

Clause 15 of the Distribution DOCA provided for the Arrium Distribution Fund to be established, consisting of the proceeds generated from Arrium Assets (as defined). The definition of Arrium Assets excluded the Moly-Cop Assets (as defined); shares in the Moly-Cop Entities; and any Moly-Cop Assets novated to an Arrium Administration Company. Clause 18.2 incorporated the rule against double proofs in the deed administration, which is relevant to a priority dispute addressed in the FCA Proceedings and again by Mr Williams in submissions in this application.

Clause 19 of the Distribution DOCA dealt with entitlements from the Arrium Distribution Fund and provided for each Arrium Group Creditor’s (as defined) entitlement to receive a distribution from that Fund. Clause 19.1 provided that:

Clause 19.3(a) and (d) provided that:

Clause 20.2 of the Distribution DOCA provided that all of the creditors’ claims were discharged and extinguished if the KM Defendants had paid to an Arrium Group Creditor its full entitlement under this DOCA, to the extent already extinguished by the Deed Administrators (as defined) pursuant to the DOCA and Other Arrium DOCAs (as defined). I will return to the significance of this clause below.

On 4 November 2016, by operation of s 444B of the Act, the KM Defendants were appointed as joint and several deed administrators of each of the Arrium Administration Companies (2022 SoC [35]).

Also on 4 November 2016, the KM Defendants executed a Sale Agreement providing for the sale of the shares in the Moly-Cop Entities (“Moly-Cop Sale”) and completion of the Moly-Cop Sale occurred on 3 January 2017 (2022 SoC [36]-[37]). Attachment E of the Share Sale Agreement provided that, in conjunction with the Moly-Cop Sale, the Moly-Cop Entity receivables were assigned to Metpol, which was an Arrium Administration Company, a party to the Group Finance Guarantees and not a party to the ASIC DOCGs; loans owing to other members of the Arrium Group by the Moly-Cop Entities were to be assigned to Metpol; and Moly-Cop Entities with cash on hand were to transfer that cash to Metpol (“Metpol Transfer Terms”) (2022 SoC [38-39]). Pursuant to the Metpol Transfer Terms approximately $80 million in cash was paid to Metpol and at least an aggregate of US$175 million of intercompany receivables was assigned, assumed by, novated or transferred to Metpol (2022 SoC [40]). Following completion of the Moly-Cop Sale, the Moly-Cop Proceeds (as defined at 2022 SoC [43]) were distributed by payment of approximately US$108 million to the GSO Replacement Facility Financiers in discharge of the GSO Replacement Facility and approximately US$1.024 billion to the Financiers (2022 SoC [44]).

Between 5 July 2017 and 31 August 2017, the KM Defendants sold further assets of the Arrium Administration Companies and realised net proceeds of approximately $664 million (2022 SoC [45]). In particular, the KM Defendants sold the Arrium Sale Entities (as defined), being the Arrium Administration Companies to which the assets of the Australian business had been transferred (Webster [88]-[92]).

On 17 July 2017, the KM Defendants lodged notices with the Australian Securities & Investments Commission (“ASIC”) inviting proofs of debt to be lodged by the creditors of the Arrium Administration Companies and, between 17 July 2017 and 21 September 2017, the KM Defendants determined whether to admit proofs of debt lodged by creditors (2022 SoC [46]-[47]).

By the Required Consent Report dated 17 November 2016 (Ex J1, 3612), executed as a deed poll in a form required by schedule 11 to the Override Deed, the KM Defendants confirmed matters surrounding the sale of the Moly-Cop business to the Financers. By cl 5.1(a), the KM Defendants, the Appointment Entities (as defined) and the Appointment Obligors (as defined) acknowledged that any proceeds or distributions received by the Financiers in connection with the Proposed Transaction (as defined) would not prejudice their right to prove for the Amount Owing (as defined) as of the Relevant Date or receive distributions under the DOCAs. The “Relevant Date” was 7 April 2016 and “the DOCAs” referred to the Distribution DOCA and the Transaction DOCAs.

By a further Deed Poll dated 30 December 2016 (Ex J1, 3662) (“December 2016 Deed Poll”), each “Remaining Obligor” (as defined) acknowledged (cl 3(a)) that:

By letter dated 11 May 2017, the solicitors now acting for Atradius, who then acted for certain trade creditors and their credit insurers, wrote to the KM Defendants raising complaints of failures to disclose in respect of applications made in the FCA and the Aggregated s 439A Report and contended that the Moly-Cop Proceeds should not be provided solely to the Financers and that the Financers should not be permitted to prove the full amounts claimed in the deed administration, despite their receipt of amounts in respect of the Moly-Cop sale. The solicitors acting for the Deed Administrators responded to that letter on 26 May 2017 (Ex J1, 3683) and by further letter dated 15 August 2017 (Ex J1, 3687) and further correspondence followed.

A first distribution to creditors was made in the amount of 14.7 cents in the dollar on 14 September 2017; a second distribution of 3.9 cents in the dollar was made on or about 15 December 2017; and further distributions were made in September 2018, on or about 11 November 2020, and on or about 24 November 2021, and, after these proceeding were commenced by Atradius but before notice of them was given to the KM Defendants (or the Financiers), on 17 August 2022 (2022 SoC [48]; Webster [98]).

On 15 September 2017, the KM Defendants brought the FCA Proceedings (Ex J1, 3714), which were subsequently determined by Davies J by her judgment delivered on 15 December 2017 in Mentha v Epic Energy South Australia Pty Ltd, in the matter of ACN 004 410 833 Limited (formerly Arrium Limited) [2017] FCA 1530 (“Mentha v Epic Energy No 1”). The first defendant in the FCA Proceedings, Epic Energy South Australia Pty Ltd (“Epic”), was appointed to represent the interests of all unsecured creditors. Epic was a trade creditor insured by a credit insurer other than Atradius, but Atradius fairly takes no point as to that matter (T14); Epic was then represented by the solicitors then and now acting for Atradius; and Atradius fairly accepts that Epic should be treated as its privy (T49).

On 7 November 2017, Epic filed an Interlocutory Process in the FCA Proceedings seeking orders under s 90-5 or s 90-10 of the IPSC (“Epic Interlocutory Application) (Webster [108]; Ex J1, 4086) and, on 22 December 2017, Epic filed a Statement of Claim in the FCA Proceedings in support of the relief sought in the Epic Interlocutory Application (“2017 SoC”) (Ex J1, 4970). As the KM Defendants point out, in the 2017 SoC, Epic claimed substantially the same relief on the same basis as that now sought by Atradius in the 2022 SoC. In particular, the 2017 SoC and the 2022 SoC both plead substantially the same breaches of duties by the KM Defendants, and both plead the Standstill Agreements and the Override Deed (2017 SoC at D.2 and D.3; SoC at V.1 and V.2); the existence of the MC Available Entities (2017 SoC [14](c); 2022 SoC [21]); the alleged Moly‑Cop Proceeds Effect (2017 SoC [56](a)-(b); 2022 SoC [54](a)-(b)), the Metpol Asset Loading Effect (2017 SoC [44]; 2022 SoC [41]) and the No Deduction Effect (2017 SoC [56](c) and (d); 2022 SoC [54](d)); and each plead the alleged “Administrators’ Duties” (2017 SoC [52]; 2022 SoC [57]), “Application Disclosure Duty” (2017 SoC [58]; 2022 SoC [60]), “439A Report Duty” (2017 SoC [61]; 2022 SoC [64]); and “DOCA Execution Duty” (2017 SoC [64] and [78]; 2022 SoC [68]). The 2017 SoC also pleads a “True Up Breach” (at [54] and [76]) and a “Transparency Duty” (at [71]), which are not included in the 2022 SoC, and the 2022 SoC pleads “Uberrimae Fidei Dut[ies]” (at [50]) which are not included in the 2017 SoC. The matters underlying the 2017 SoC were in turn addressed by a lengthy affidavit of Mr Richard Lyne dated 7 November 2017, a solicitor in the firm then acting for Epic and Atradius and now acting for Atradius in these proceedings (Ex J1, 4090) (“Lyne Affidavit”).

By her judgment delivered on 15 December 2017 in Mentha v Epic Energy No 1, Davies J determined a questions as to construction of the Override Deed, the Required Consent Report and the Deed Poll (Ex J1, 4889), namely whether:

Subsequently, on 18 June 2018, Davies J dismissed the Epic Interlocutory Application “without adjudication on the merits” in Mentha v Epic Energy South Australia Pty Ltd, in the matter of ACN 004 410 833 Limited (formerly Arrium Limited) (No. 2) [2018] FCA 925 (“Mentha v Epic Energy No 2”), on the basis it was not appropriate to determine it in the FCA Proceedings. That decision did not address the question whether the claims made in the Epic Interlocutory Process, at least against the Financiers, had by then already been determined by her Honour’s decision in Mentha v Epic Energy No 1. Epic or Atradius did not then, or until these proceedings were filed by Atradius in August 2022, bring a separate proceeding seeking the relief sought in the 2017 SoC.

On or about 5 April 2022, Atradius entered into a Deed of Assignment of Debt dated 5 April 2022 (“Stirling Assignment”) with one of its insured trade creditors, Stirling Holdings Pty Ltd as trustee of the Stirling Metals Unit Trust (“Stirling”) (SoC [9], Ex J1, 5552). Recital E provided that Stirling has agreed to “assign to [Atradius] all of its rights, titles and interests in the Debt including all amounts owing pursuant to the Debt on the terms set out in this Deed.” Clause 1.4 defines “Debt” to mean “the total sum owed to [Stirling] as at the date of this Deed for the goods it supplied to the Arrium Group in the invoices as identified in Schedule 1 of this Deed” and Schedule 1 lists invoices which were issued to OneSteel Trading Pty Ltd (“OneSteel Trading”). By an undated Notice of Assignment (Ex KM2), Atradius then gave notice to the KM Defendants that, by the Stirling Assignment, Stirling had assigned to Atradius “all their rights, title and interest, legal and equitable in the debts due and owing… to [Stirling]” arising out or in connection with certain invoices and directed that the KM Defendants pay the “debt” to Atradius. The deed administrators did not then seek to address the question whether what Stirling had assigned to Atradius was not a debt, but a right to claim under the Distribution DOCA.

As I noted above, by its Originating Process filed on 1 August 2022, Atradius claims the relief set out in the 2022 SoC. By letter dated 17 August 2022, Mr Webster, one of the KM Defendants, advised “Atradius as the creditor in place of Stirling” of the declaration of the sixth and final dividend under the Distribution DOCA, recording a payment of the sum of $209.65 and total dividend payments in the sum of $10,945.86 against an amount claimed of $64,684.77 and an amount allowed of $58,667.77 in respect of OneSteel Trading. Importantly, that dividend was paid after the Originating Process was filed by Atradius but before it notified the KM Defendants of the existence of the proceedings or served this application. I return to the significance of that matter below.

As I noted above, by Interlocutory Process initially filed on 2 September 2022, Atradius sought an order under r 1.10 of the Corporations Rules and UCPR r 1.12 that it be relieved from the obligation to serve the Originating Process and Supporting Affidavits until further order of the Court. On 23 September 2022, Atradius’ solicitors wrote to the Court indicating that the Defendants had not yet been served with the Originating Process and Supporting Affidavit, or the Interlocutory Process and Supporting Affidavit and that Atradius sought to proceed with a hearing of its Interlocutory Process on 26 September 2022 on an ex parte basis. By email dated 25 September 2022, my Associate advised Atradius’ solicitors, at my request, that:

By an email dated 26 September 2022, Atradius’ solicitors responded that they proposed that the proceedings be adjourned for two weeks to 10 October 2022 to enable them to affect service of the Interlocutory Process and Supporting Affidavits on the Defendants and provided short minutes of order to that effect, which were then made. By a further email dated 26 September 2022, Atradius’ solicitors advised that they did not seek specific orders for service at that stage and would engage with the representatives for Defendants to ascertain whether agreement could be reached as to the appropriate method of service of this application. A further month then elapsed before Atradius’ solicitors contacted the solicitors who had acted for many of the Financiers to ask whether they were instructed to accept service of this application and supporting documents. Atradius provides no explanation for that delay. It appears that several of the Financiers were not served with this application until late February and early March 2023 and one was not effectively served with this application until 3 April 2023.

By an Originating Process filed in separate proceedings on 1 November 2022, Atradius sought an order issuing examination summonses to numerous persons and orders for the production of documents, in its capacity as a person authorised by ASIC to conduct such examinations. Those examination summonses have not yet been issued, pending the determination of these proceedings, although I was advised in the course of the application that time had been set aside for examinations in September 2023. It is common ground that the KM Defendants have now sought administrative review of ASIC’s decision to authorise Atradius to conduct such examinations. Having regard to that application, it is likely to be a considerable time before examination summonses and orders for production are issued by the Court and there is little likelihood that examinations would proceed in September 2023.

Atradius reads the affidavit dated 1 August 2022 of its solicitor, Mr Polczynski, filed at the same time as the Originating Process. That affidavit exhibited a copy of the 2022 SoC, and numerous company searches for the Arrium Administration Companies in compliance with a requirement of the Corporations Rules. Atradius also read the affidavit dated 11 August 2022 of Ms Carter, also a solicitor acting for it in the proceedings, which exhibited a number of facility agreements, other financing documents in respect of the Arrium Group and documents relating to the deed administration. I have referred to several of those documents in the chronology which appears above.

Atradius reads the affidavit dated 1 September 2022 of Mr Polczynski in support of its application to extend the time for service of the Originating Process. Mr Polczynski refers to his causing the Originating Process attaching the Statement of Claim at Schedule 3 (“2022 SoC”) to be filed on behalf of Atradius. His evidence (Polczynski 1.9.22 [4]) is that:

Several matters should be noted here as to that observation. First, neither Atradius nor any other party identified how the limitations issue would arise under a claim under s 90-15 of the IPSC or s 447A of the Act, although it is at least possible that such an issue might arise in respect of a claim in equity. Second, Atradius expressly did not accept in this application that any limitation issue would defeat its claim, if the relief sought in this application was not granted, and the Defendants equally reserved their position as to limitation defences. Third, although Mr Polczynski refers to a claim by “aggrieved creditors” and foreshadows an intent by Atradius to bring a representative action, Atradius has not presently sought to establish any basis on which it would be permitted to do so. I address that matter further below.

Mr Polczynski referred (Polczynski 1.9.22 [9]ff) to the conduct of the FCA Proceedings and to the judgment of the Full Court of the FCA delivered on 20 December 2018 in Rexel FCAFC No 1. He indicated (Polczynski 1.9.22 [10]-[11]) that, since that time (I interpolate, for nearly four years):

This evidence is notable for its lack of detail. Mr Polczynski does not explain what steps were taken to explore those funding opportunities in those four years. He also does not identify which funders were approached in that period, or when they were approached, or what was done to progress funding applications, or when funding applications were accepted or refused. He does not indicate the nature or identity of any funder that is now funding the proceedings or disclose whether that funder is a third party litigation funder or associated with Atradius or its related companies.

Mr Polczynski also referred to the fact that the Originating Process and affidavits filed in support of it had not then been served on any of the Defendants and properly recognised that such service was required by rule 2.7 of the Corporations Rules, but indicated that Atradius sought an order relieving it from the obligation to serve the Originating Process and supporting affidavits. He indicated the Originating Process and supporting affidavits were served on ASIC on 1 September 2022. He also referred to a letter dated 7 June 2022 by which ASIC granted Atradius “eligible applicant” status to seek to conduct examinations under Pt 5.9 of the Act and he referred to Atradius’ intention to commence separate proceedings seeking the issue of numerous examination summonses and orders for production. The KM Defendants have now sought to set aside ASIC’s grant of eligible applicant status to Atradius and the Court has not yet issued for examination summonses or orders for production. Mr Polczynski indicated his then expectation that public examinations may not be completed by the end of 2022. As I noted above, they are now unlikely to be completed in the short term.

Mr Polczynski’ s evidence, in support of the application to dispense with service of the Originating Process, was that Atradius “requires further time to investigate additional claims and assess whether there needs to be refinement to the existing claims in the [2022 SoC]”. He sought to “adjourn” the proceeding “sine die” or alternatively to March or April 2023, deferring further service of the proceedings, to allow the examinations and the review of documents produced in them to take place. He recognised a possibility that, after the public examination proceedings were concluded, there would be “no utility in this proceeding” and that Atradius would seek to have it dismissed.

Atradius also reads the affidavit dated 23 September 2022 of Ms Malnersic, also a solicitor acting for Atradius, which confirmed that the Defendants had not then been served with the Originating Process, the affidavits of Mr Polczynski dated 1 August 2022 or Ms Carter dated 11 August 2022, or the Interlocutory Process filed 2 September 2022 and Mr Polczynski’s affidavit dated 1 September 2022. She also updated the position as to Atradius’ application for orders for public examinations and indicated that she expected that applications for such examinations would be filed by 30 September 2022.

Atradius reads the affidavit dated 29 March 2023 of Ms Tate, another solicitor acting for Atradius, which exhibits a copy of Atradius’ policy for trade credit insurance and a schedule of claims that Atradius paid to its insureds in relation to the Arrium Group. I accept that that evidence establishes that Atradius has suffered an economic loss, in indemnifying its trade creditor insureds, as a result of the administration and subsequent liquidation of the Arrium Group, or at least those companies within it that owed debts to its insured trade creditors. I address the question whether that is sufficient to establish standing under s 90-15 of the IPSC below.

Atradius also reads a second affidavit dated 4 April 2023 of Ms Malnersic, who refers to correspondence with the Court in respect of the earlier stages of this application and correspondence between Atradius’ solicitors and the solicitors acting for the Participating Financiers. Ms Malnersic noted that, on 29 March 2023, several of the Financiers were not represented by the firm that acts for the majority of those Defendants, and notes that the majority of these Financiers were located overseas. She refers to service of the Interlocutory Application on these overseas Financiers. By an affidavit dated 5 April 2023, Mr Dobb, a solicitor also acting for Atradius, advises steps taken towards scheduling examinations in the matter. Atradius also reads the affidavits dealing with service of this application on the overseas Financiers, in Singapore, the United States and the Cayman Islands.

The KM Defendants rely on the affidavit dated 30 January 2023 of Mr Webster, who is one of the KM Defendants and was one of the voluntary administrators and subsequently deed administrators and liquidators of companies within the Arrium Group. Mr Webster’s evidence is that many of the Arrium Administration Companies were sold or deregistered and that all monies payable from the administration and liquidation of the Arrium Administration Companies have been distributed to creditors, with the final dividend paid to creditors on 17 August 2022 (Webster [3]). As I noted above, that occurred after the commencement of these proceedings by Atradius, but before Atradius gave notice of the proceedings to the KM Defendants or served this application upon them. I will return to the significance of that matter below.

Mr Webster also exhibited several affidavits that had been relied on in the FCA Proceedings. He outlined the structure of the Arrium Group and the nature of its business to which I have referred above. He also referred to the structure of the Moly-Cop Entities, which were not subject to insolvency proceedings, were mostly domiciled in foreign jurisdictions and were trading profitably when the Arrium Group entered administration (Webster [21]). I address the significance of matters concerning those companies to Atradius’ claims below. Mr Webster also outlined the Arrium Group’s external financing arrangements and the position in respect of the Arrium Group Guarantees (as defined) and the ASIC DOCGs, to which I referred above. Mr Webster also referred to the GSO Interim Facility and the substantial debts of the Arrium Group companies, including debts owed to the Financiers.

Mr Webster provided a detailed account of the conduct of the administration of the Arrium Group, referring to the first creditors meeting in April 2016, the entry into the GSO Replacement Facility with several Financiers in April 2016, the extension of the convening period for the Second Creditors Meeting and the application made to the FCA on 25 October 2016, seeking relief to permit the voluntary administrators to provide the Aggregated s 439A Report to creditors. Mr Webster also outlined the steps taken by the voluntary administrators to sell the Moly-Cop Entities and the Arrium Sale Entities and the process adopted to secure the Financiers’ consent to the Moly-Cop Sale, including the entry into the Standstill Deeds to which I referred above. Mr Webster observed in that regard (Webster [62]-[65]) that:

Mr Webster then addresses the Aggregated s 439A Report prepared by the KM Defendants in late October 2016, which contained two forms of deed of company arrangement, being the Transaction Support DOCAs executed by 93 of the Arrium Administration Companies and the Distribution DOCA executed by the Arrium Distribution Company. Mr Webster also outlined the process by which claims were to be made under the Distribution DOCA. He addressed the conduct of the Second Creditors Meeting and approval of the Distribution DOCA and the Transaction Support DOCAs at that meeting and records that 98% of creditors of each and every one of the Arrium Administration Companies voted in favour of the Distribution DOCA and the Transaction Support DOCAs, by value and by number, and Stirling did not vote at that meeting.

Mr Webster also refers to the execution of a contract for sale of the Moly-Cop business to a third party for US $1.23 billion on 4 November 2016, which was completed on 3 January 2017, and to the payment of the net proceeds of that sale to the Financiers. He outlined the subsequent sale of the Arrium Sale Entities and referred to subsequent reports and distributions to unsecured creditors. He also outlined, at some length, the conduct of proceedings in the FCA in the second half of 2017, addressing issues raised by Epic and subsequently by Rexel, which were trade creditors insured by Atradius. Atradius accepts that it had conduct of those companies’ role in the FCA proceedings and that they should be treated in privity with it for the purposes of this application. Mr Webster also outlines the history of payment of dividends to Stirling in respect of the administration, and, not surprisingly, points to Atradius’ delay in commencing these proceedings. Mr Webster also notes that the DOCAs for each of the Arrium Sale Entitles were terminated on 31 August 2017 and the proceeds of the sale of the Arrium Sale Entities were paid into the Arrium Distribution Fund for distribution under the Distribution DOCA (Webster [92]).

The Participating Financiers read two affidavits, both dated 23 January 2023, of Mr Troiani, a solicitor acting for them, and Mr Gavrilos, the Global Head of Corporate Services in the Corporate Finance Division at NAB. Mr Troiani refers to the FCA Proceedings, the interlocutory application brought by Epic in those proceedings and the appeal brought by Epic to the Full Court of the Federal Court, which was dismissed in December 2018. These matters are relevant to the submissions put by the Participating Financiers as to estoppel which I address below. Mr Troiani also refers to the 2021 annual report for Atradius N.V., the ultimate parent company of Atradius, which establishes that it has substantial assets and plainly had the capacity to fund the conduct of these proceedings by Atradius at relevant times. Mr Gavrilos refers to NAB’s role as “Agent” and “Global Agent” in financing and restructuring documents in respect of Arrium Ltd and the Arrium Group and in distributing repayments to Financers. He notes that NAB as Agent currently holds funds on behalf of the Financiers, and was in the process of paying a final dividend to Financers, which has been held back following notification of Atradius’ commencement of the proceedings. No doubt, NAB was fortunate in having that opportunity to hold back a dividend which, as I noted above, was lost to the KM Defendants by Atradius’ failure to give notice of or serve the proceedings on the KM Defendants promptly after they were commenced.

I first address Atradius’ application for an order nunc pro tunc under UCPR r 1.12 that its Originating Process is valid for service until the later dates to which it seeks to extend service. As I noted above, this order is necessary because Atradius has not complied with the requirements of UCPR r 6.2(4) or, in my view, the requirements of r 2.7 of the Corporations Rules in respect of the service of the Originating Process. Unless this order is made, no question of further extending the time for service of the Originating Process arises, because that Originating Process would already be stale and could not now be served. I am not persuaded that the time for service of the Originating Process should be extended, and, indeed, I am affirmatively satisfied that it should not be extended, for the reasons noted below.

Rule 6.2(4)-(5) of the UCPR relevantly provide that an originating process is valid for service, in the case of proceedings in this Court, for 6 months after the date on which it is filed; and a failure to serve an originating process within the time limited by these rules does not prevent a plaintiff from commencing fresh proceedings by filing another originating process. Rule 2.7 of the Corporations Rules provides that:

Rule 1.12 of the UCPR (as applied by r 1.10 of the Corporations Rules) authorises the Court to extend the time fixed by r 2.7 of the Corporations Rules for service of an originating process, even after the relevant time expires. Mr Williams submits, by reference to authority, that r 1.12 confers a discretion which is not in terms fettered, but a plaintiff seeking an extension of time must establish a proper reason for it being granted; the plaintiff has the burden of satisfying the Court that good reasons exist for exercising the discretion to extend time; and a defendant has no right to retain the benefit of expiry of the limitation period, but this is a “relevant factor” where a plaintiff is seeking an extension of time. Rule 12.11 of the UCPR in turn permits the Court to set aside an originating process that is stale, in the sense of being incapable of valid service, and s 63(3) of the Civil Procedure Act 2005 (NSW) ("CPA”) authorises the Court to set aside a proceeding or an originating process where there has been a failure to comply with the rules of the Court.

In its “roadmap” of its submissions, Atradius submits that the Court would grant orders nunc pro tunc extending the time for service of its stale Originating Process. It submits, uncontroversially, that the Court has a discretion to extend time for service otherwise required by r 2.7 of the Corporations Rules and UCPR r 6.2(4). It summarises its position as that it has demonstrated a proper basis for the exercise of the discretion in its favour because:

I address each of these matters below. As will emerge below, I do not accept several of these submissions. In particular, the proposition that Atradius’ failure to serve the Originating Process was intended to promote efficiency does not address the fact that Atradius identified its proposed claims long ago and has had a long period in which to seek authorised applicant status for examinations and conduct them and does not explain its delay in doing so; there was no “unanticipated” delay in hearing Atradius’ application, but Atradius instead sought its adjournment on several occasions before the Interlocutory Process was served on the Defendants at the Court’s request, and the application could readily have been heard in late 2022 had Atradius sought to have that occur; Atradius’ submission as to prejudice assumes the existence of a limitation period which it does not accept applies, although I accept it will suffer some prejudice by way of wasted costs and a risk that a limitation period in fact applies if the application does not proceed; and Atradius has not sought to show that it should be permitted to conduct the proceedings for creditors other than itself and no issue as to other creditors arises. I also address the issues as to standing and whether Atradius has identified an arguable case below.

In their “roadmap” of submissions, the KM Defendants in turn point to several factors which they contend have the result that the Court not exercise its discretion in Atradius’ favour to extend the time for service of the Originating Process, as follows:

In their “roadmap” of submissions, the KM Defendants also emphasise that:

In their “roadmap” of submissions, the Participating Financiers summarise their similar position that:

The Participating Financiers also highlight their submissions that the limitations period applicable to Atradius’ claims against the Financiers (by statute or by analogy) have likely expired or, alternatively, if it has not expired, then Atradius would not suffer any prejudice if the relief it seeks is not granted; Atradius has made no attempt at formal service upon any Defendant; notice of the intended proceeding was not given to any Financiers prior to the likely expiration of the applicable limitations period; the Defendants will suffer prejudice if an extension of time for service is granted; Atradius has not led evidence of any prejudice it will suffer if an extension of time for service is not granted; the grant of an extension of time for service in the circumstances of this case would be inconsistent with the overarching purpose in s 56 of the CPA and the dictates of justice as set out in s 58 of the CPA; and, importantly:

I address the question of delay and Atradius’ explanation for the delay at this point and address issues as to the scope of the claims identified in the 2022 SoC below. I should first note several of the cases to which Counsel referred, before turning to the application of relevant factors in this case. Ms Whittaker, with whom Ms King and Mr Di Stefano appear for the KM Defendants, draws attention to the observations of Handley AJA (with whom Tobias JA and Basten JA agreed in Pell v Hodges [2007] NSWCA 234 at [44] that:

Mr Williams in turn refers to the Court of Appeal’s observation in Arthur Anderson Corporate Finance Pty Ltd v Buzzle Operations Pty Ltd (in liq) [2009] NSWCA 104 (“Buzzle”) at [43] that:

That summary was approved by Tobias JA (Macfarlan JA and Sackville AJA agreeing) in Agricultural & Rural Finance Pty Ltd v Kirk [2011] NSWCA 67 (“Kirk”) at [62], [94]-[112]. Mr Williams fairly accepts that the Court must take into account the policy considerations underlying the relevant limitations statute, and that defendants or potential defendants should be made aware of claims against them within a reasonable time and parties who do not commence proceedings until just before expiry of the limitation period should be especially diligent in pursuing prompt service: Buzzle at [37]-[39], cited with approval in Kirk at [98]-[99].

Mr Williams also points to Weston in his capacity as Special Purpose Liquidator of One.Tel Ltd (in liq) v Publishing and Broadcasting Ltd (2012) 88 ACSR 80; [2012] NSWCA 79 at [20] and to the relevance of ss 56-59 of the CPA and whether the relevant party has diligently pursued the object of disposing of the proceedings in a timely way; used, or could reasonably have used, available opportunities under the rules or otherwise, to avoid delay; and reasonably implemented the practice and procedure of the court with the object of eliminating any lapse of time between the commencement of the proceedings and their final determination.

In Hastie Group Ltd (in liq) v Moore [2016] NSWSC 1682 (“Hastie”), Ball J considered a somewhat similar case where statements of claim were valid for service for six months after the date on which each was filed under UCPR r 6.2(4), and a plaintiff sought and a registrar allowed (ex parte) an extension of time for service under UCPR r 1.12, and the defendants applied to discharge the orders granting that extension of time and set aside service of the statements of claim made pursuant to those orders. His Honour observed (at [45]-[47]) that:

His Honour also pointed to relevant prejudice which the defendant in that case would suffer, as a consequence of the delay arising from the extension of time for which the originating process was valid for service, and observed (at [49]) that:

His Honour there found that the extensions of time should be discharged, and the proceedings dismissed, where there was insufficient reason for the liquidators in that case to have delayed service of the proceedings, and the work for which the extensions were required could have been undertaken before the extensions became necessary and no reasonable explanation had been given for why that did not occur. The liquidators had there done very little to investigate or progress the claims between their identification at the end of 2012 and when it was necessary to apply to extend the period in which the statement of claim remained valid for service (at [65]). His Honour also there observed (at [68]) that the plaintiffs had a duty to act promptly in serving the proceedings once they were issued. The position is a fortiori here where that duty was express under r 2.7 of the Corporations Rules.

Mr Williams also refers to my first instance decision in Re Tiaro Coal Ltd (in liq) [2018] NSWSC 828 (“Tiaro Coal”), and to the Court of Appeal’s decision declining leave to appeal from that decision in Choy v Tiaro Coal Ltd (in liq) [2018] NSWCA 205 (“Choy”). He points out that a liquidator had there not served an originating process “as soon as practicable after filing” in accordance with r 2.7 of the Corporations Rules. The defendants there contended that the originating process should be set aside by reason of the delay in service under s 63(3)(a) of the CPA. I declined that application, where I had found that the liquidator had delayed serving the originating process to enable it to first secure litigation funding where it did not have the capacity to fund the proceedings (at [53] and [57]). It seems to me that the position in this application is quite different from that considered in Tiaro Coal. The liquidator had there led comprehensive evidence of his need for litigation funding and his efforts to obtain it, by contrast with the perfunctory evidence led by Atradius in this application. There was no suggestion in that case that the liquidator had not adequately articulated his and the company’s claims, by contrast with my findings below in this application. By contrast, there is also no adequate explanation here, in Mr Polczynski’s affidavit evidence, of the matters which have led Atradius to consider that it needs to undertake the public examinations or the matters to which those public examinations will be directed, and neither Atradius nor Mr Polczynski provides any explanation of how those public examinations will be capable of addressing the difficulties with the articulation of its claim which I address below. Ms Whittaker also addresses the effect of UCPR r 6.2(4), by reference to the decision in Tiaro Coal and rightly notes that, on appeal in Choy, Leeming JA noted a significant difference between exercising the power under CPA s 63 as a result of an irregularity resulting merely from the contravention of r 2.7, and exercising the power for the contravention of both rules 2.7 and 6.2(4). The latter position is the case here.

Mr Collinson also addresses the application of UCPR r 6.2(4) and r 2.7 of the Corporations Rules and the Court of Appeal’s decision in Choy, in helpful submissions, as follows:

In Liquor National Pty Ltd (in liq) v Australia and New Zealand Banking Group Limited [2020] NSWSC 122 (“Liquor National”) at [26], Beech-Jones J in turn observed that “[i]n the case where [the plaintiff] has not been seeking to serve the statement of claim, the question is perhaps better directed to what were the reasons for their conduct in waiting until the end of the extension period”. His Honour also noted (at [28]) that prejudice to a plaintiff as a result of refusing an application for an extension to serve the originating process is a relevant matter and (at [30]) that the fact that creditors were given notice of the application, by service of the application, was a relevant matter. Mr Williams refers to the extension of time for service that was allowed in Liquor National, and points to relevant factors in that application. The position here is quite different from Liquor National, where the liquidator in that case led evidence of its diligent efforts to obtain funding to pursue an investigation and to investigate the matters necessary to obtain a final opinion in relation to the conduct of the litigation. Mr Williams also refers to Kogan v Rogulj, in the matter of Rogulj Pty Ltd (in liq) [2021] FCA 1137 (“Kogan”), which was a liquidator’s application to extend the time for service of an originating process under r 1.10 of the Federal Court (Corporations) Rules 2000 (Cth). By contrast, Atradius has not here established that diligent efforts were undertaken to find litigation funding or undertake compulsory examinations at an earlier point, or that litigation funding was necessary to bring the claims.

In its “roadmap” of its submissions, Atradius points to its submission that any relevant delay is between the time when its Originating Process was filed and when notice of it was provided to the Defendants, relying on Hastie at [44] - [46]. It seems to me that the length of the delay in service was significant, particularly where it occurs in respect of events that occurred many years before the proceedings were commenced. Mr Williams submits that Atradius has not engaged in any deliberate or unreasonable delay in filing the Originating Process, pointing to Mr Polczynski’s evidence that it had sought legal advice in relation to the Arrium Group in January 2017; it had instructed solicitors in the FCA Proceedings from 2017 to March 2019 and it sought litigation funding from December 2018 “until on or around the date that the Originating Process was filed”. That submission has the difficulty that, first, it demonstrates the lengthy delay in bringing these proceedings, rather than explaining it. Second, it emphasises the extent to which the issues raised in these proceedings were already known, at the time they were agitated in the FCA Proceedings. Third, it does not explain the delay in obtaining litigation funding, or why such funding was required where Atradius or its parent company plainly has substantial resources available to fund the proceedings for itself. Fourth, that submission does not explain why the proceedings were not promptly served or notice of them was not promptly given to the Defendants after they were filed, where that would not have prevented Atradius pursuing its application to conduct examinations and would likely have avoided the real detriment to the KM Defendants that has resulted from their payment of the final distribution under the Distribution DOCA after the proceedings were commenced but before they were informed of them, a matter to which I return below.

Mr Williams also submits that Atradius spent a significant amount of time prior to the filing of the Originating Process in securing litigation funding; however, there is no evidence as to when Atradius commenced seeking such funding or that Atradius devoted any significant time or resources to doing so. Mr Williams also submits that Atradius commenced the proceedings at “the earliest opportunity after litigation funding was secured”. However, Mr Polczynski’s affidavit does not, as I have noted above, provide any explanation of the steps taken to obtain such funding, or identify when such funding was secured, so as to establish that proposition. In oral submissions, Mr Williams also contended that it was desirable for examinations to take place before substantial costs were incurred in the conduct of the case; I would have generally accepted that proposition, if Atradius had presently articulated a proper claim and persuaded the Court to exercise its discretion to extend the time for service of it. Mr Williams also submits that, in practical terms, this delay has not long delayed the proceedings, where it would have been necessary to serve overseas Defendants in any case. I do not accept that submission, where the proceedings will be delayed by at least six months, beyond the time which would have been required to serve overseas Defendants in any event and that delay occurs where already the proceedings were commenced long after events that are in issue.

Ms Whittaker in turn points to matters which are not addressed by Mr Polczynski’s evidence and Atradius’ submissions as to

Ms Whittaker submits, and I accept, that the position of Atradius, as the subsidiary of an apparently well-capitalised trade insurer, is very different from that of a funded liquidator or administrator, where the later considers it cannot responsibly commence proceedings without external third party funding, which was the position addressed in Tiaro Coal.

Mr Collinson also addresses the factors relevant to the exercise of the Court’s discretion to extend the time for service of the Originating Process and submits, by reference to authority, that:

Mr Collinson also submits that no extension of time for service should be granted, with the result that the Originating Process, which is now stale, should be set aside and the proceeding dismissed, for reasons including that:

Mr Collinson addresses the first and second of these matters at some length. He submits and I accept that:

Mr Collinson also points to the limited explanation offered by Atradius of its delay in obtaining litigation funding, and submits that the evidence does not allow the Court to conclude that Atradius made reasonable attempts to obtain litigation funding prior to August 2022. He points out that, as I have also noted above, Atradius does not lead evidence of any specificity as to what attempts were made to obtain funding; when those attempts were made; the results of those attempts, including whether funding was in fact offered to, but declined by, Atradius, and the terms upon which any such funding was offered; the date on which funding was in fact “secured”; or the reasons why the funding that was ultimately secured was not, or could not have been, secured earlier.

Mr Collinson also submits that:

I accept that submission, with the qualification that there is an open question as to the application of any limitation period, as distinct from discretionary factors arising from delay, to Atradius’ claims under s 90-15 of the IPSC and s 447A of the Act. I also accept Mr Collinson’s submission that, here, as in Hastie at [65], the extension sought by Atradius is directed to seeking to allow it to do work that could and should have been done before it became necessary to seek that extension, and that here provides a strong discretionary ground for refusing the extension sought. I also accept that there is further reason not to grant an indefinite extension of time for service where, as Mr Collinson points out, the delay in advancing proceedings inevitably has the result that the quality of justice is diminished: Brisbane South Regional Health Authority v Taylor (2006) 186 CLR 541 at 551-553.

It is not necessary to reach a finding as to the third of Mr Collinson’s submissions given the findings that I reach on other grounds. I do not accept Mr Collinson’s fourth submission, where there is at least an open question whether a limitations period applies to applications under s 90-15 of the IPSC (if Atradius had standing to maintain that application, which it does not) or s 447A of the Act (if Atradius had adequately articulated such a claim, which it has not), although I recognise that the question of delay would be relevant in determining such claims. I also accept Mr Collinson’s submission that this decision does not affect creditors other than Atradius. To the extent that any limitation period has already expired, the commencement of these proceedings does not avoid that result, where the proceeding is not a representative proceeding under Part 10 of the CPA and s 182 of the CPA does not apply.

I recognise that the prejudice to Atradius of denying an extension is a relevant matter, and should be weighed against the prejudice to the Defendants of allowing that extension. Mr Williams identified (T26) the prejudice which he contends that Atradius would suffer in a denial of an extension of time for service, as follows:

Mr Collinson also submits that Atradius does not contend that it will suffer any prejudice if the extension of time for service is not granted. Atradius does put that submission as I noted above, although not contending that a limitation period would not prevent the commencement of further proceedings. I accept that Atradius will at least suffer wasted costs and a likely adverse costs order if the application fails, and a possible exposure to future limitations points being taken by the Defendants against it. It is not necessary to address the question whether that prejudice is self-inflicted given the other findings that I have reached.

The prejudice to the Defendants of allowing the extension is also a relevant matter. In its “roadmap” of its submissions, Atradius summarises its position as to prejudice to the Defendants as follows:

I address these matters below. I note, here, that Atradius does not here confront a critical difficulty in its position, namely that a substantial distribution was made by the KM Defendants to claimants, including Atradius, of a size that would have likely met the KM Defendants’ costs of defending the proceedings, after Atradius had commenced the proceedings but before it gave notice of them to the Defendants. There can be no real doubt that would not have occurred had Atradius complied with the requirements of r 2.7 of the Corporations Rules, or at least given prompt notice of the commencement of the proceedings to the KM Defendants. I return to the significance of that matter below.

Mr Williams submits and I accept that, if a defendant knows that claims have been made against him or her and understands the nature of the claims that have been made, that may mitigate the prejudice the defendant might otherwise suffer by reason of a delay in service: Kirk at [123]. Mr Williams also submits that:

Ms Whittaker identifies several aspects of prejudice to the KM Defendants arising from the delay in service of the Originating Process. It is sufficient that I note one of them, as follows:

It seems to me that, as Ms Whittaker points out, Atradius’ delay in service has here caused real prejudice to the KM Defendants, where it deprived them of the opportunity to hold back a sixth distribution payable to claimants including Atradius, to fund their costs of defence of the proceedings and any damages to which they might potentially be exposed to in them, which I readily infer that they would likely have done had they been given prompt notice of the application, immediately after it was filed. This application is, in that respect, entirely different to the position which I considered in Tiaro at [58]. It also seems to me that it is no answer to that detriment that the KM Defendants had made that distribution before the six month period within which Atradius could have served the 2022 SoC under UCPR r 6.2(4) had expired. First, Atradius was subject to a more demanding service obligation under UCPR r 2.7 and the obligations under CPA ss 56-58, recognised by Ball J in this context in Hastie. Second, that detriment is relevant once Atradius needs the Court’s exercise of a discretion in its favour, in order now to serve the 2022 SoC, and it is no answer that the delay may have been less significant had Atradius acted differently. Third, it seems here to me that the prejudice to the KM Defendants is real and irremediable and provides a strong reason not to grant the relief now sought by Atradius.

Mr Collinson submits that Atradius failed to notify any Defendant of the claims brought against them prior to the expiration of the limitations period and the Defendants will suffer prejudice if the extension of time for service is granted. I accept that submission in respect of prejudice to the KM Defendants, where they paid out the final distribution without notice of Atradius’ claims, and in respect of prejudice to the Financiers where the claim against them is not properly brought for the reasons noted below. Mr Collinson also submits that

The parties also addressed the fact that the Originating Process had not been served in the time required under UCPR r 6.2(4)(a), as well as not served in compliance with r 2.7 of the Corporations Rules. I recognise that the fact that Atradius did not serve these proceedings within the six months contemplated under UCPR r 6.2(4) or as required by r 2.7 of the Originating Process partly reflects its application for the relief sought in this application, where Atradius seeks to avoid the need to serve the proceedings. However, that delay was not the inevitable consequence of the application, which could readily have been determined in that six month period. The delay arose because, after Atradius filed the proceedings and later its interlocutory application to defer service, it sought multiple adjournments of the application, on 12 August, 2 September, 9 September, 26 September, 7 October, 31 October and 11 November 2022 before the KM Defendants and Participating Financiers first appeared on 28 November 2022, after they were given notice of the application at the Court’s request. By that time, Atradius had already failed to comply with r 2.7 of the Corporations Rules; the KM Defendants had already made the sixth distribution under the Distribution Deed, as I noted above; and Atradius had not yet failed to comply with the six month period for service of the Originating Process under UCPR r 6.2(4). That occurred after Atradius, the KM Defendants and the Participating Financiers agreed between themselves that this application will not be listed for hearing until April 2023, and Atradius did not serve the Originating Process in the interim.

Ms Whittaker also identifies several other matters on which the KM Defendants rely to resist the application for an extension of time to serve the Originating Process. Ms Whittaker submits, first, that Atradius failed to ventilate its complaints through the dispute mechanisms or proof of debt processes provided in the DOCAs. I accept that proposition, as a matter of fact, while I also recognise that overlapping disputes were raised in the FCA Proceedings and aspects of them were determined by the FCA. To the extent that other aspects of them were raised, but the FCA did not permit them to be pursued, Atradius then took no steps to pursue them in other proceedings. That, plainly, does not assist Atradius in this application.

For the reasons I have set out above in addressing the parties’ submissions, and irrespective of the difficulties which I note below with the manner in which Atradius puts its substantive claims, it does not seem to me that Atradius has identified sufficient reason to warrant an order validating the Originating Process, after the time for service has expired, or extending the time for service for any of the alternative periods sought after that has occurred.

I now turn to Atradius’ identification of the basis of its claims in the Originating Process and the 2022 SoC. In its “roadmap” of submissions, Atradius identifies its submission that the “O[riginating] P[rocess] invokes this Court’s jurisdiction pursuant to s 90-15 of the IPS[C], s 447A, and equity”. That proposition requires the substantial qualification that Atradius only seeks substantive relief under IPSC s 90-15, and I address the question of its standing to seek that relief below.

Atradius summarises its submission as to the basis of its claims as follows:

Ms Whittaker in turn submits that Atradius’ Originating Process and the 2022 SoC to which it refers discloses no reasonable cause of action. In developing that submission, she focused on the nature of Atradius’ case as disclosed by the 2022 SoC. I will also address the structure of that claim although I recognise that, where Atradius has not been successful in obtaining an extension of time to serve the Originating Process, no order for pleadings will be made and no question of striking out the 2022 SoC or summary dismissal of it arises.

In support of her criticisms of the disclosure of Atradius’ case in the 2022 SoC, Ms Whittaker refers to my description of the role of pleadings in Iacullo v Iacullo [2013] NSWSC 1517 at [53]-[59]. I also addressed these issues in Re Graziers Pastoral Pty Ltd [2021] NSWSC 1680 at [51] to similar effect. I recognise that, here, I am not determining an application for summary dismissal or a strike out application, because Atradius has not filed its 2022 SoC, but cross-refers to it in the Originating Process to identify, and implicitly support, its claim for relief. I approach the question whether the Originating Process and 2022 SoC identify a tenable claim, not from the perspective of assessing their technical adequacy as pleadings, but as relevant to the Court’s exercise of its discretion whether to extend the time for service of a stale Originating Process and grant the other relief sought by Atradius.

I now turn to the manner in which Atradius formulates its claim. In Section A of the 2022 SoC, Atradius refers to the companies that compromise the Arrium Group, the appointment of administrators to the Arrium Administration Companies in April 2016, and the appointment of the KM Defendants as administrators of the Arrium Administration Companies. Atradius identifies facility agreements executed by some of the Arrium Administration Companies (2022 SoC [6]). In Section B of the 2022 SoC, Atradius contends that, on 5 April 2022, Stirling assigned to Atradius the right, title and interest in a debt owing to it by the Arrium Group together with any interest that it accrued or may accrue in the future on the debt, and relies on the Stirling Assignment in that respect. That debt was originally owed by one company within the Arrium Group, OneSteel Trading, to Stirling and I will address the question whether it is still owed below.

In Sections C and D of the 2022 SoC, Atradius identifies cross-guarantees given by serval of the Arrium Administration Companies and Group Finance Guarantees given by some of the Arrium Administration Companies respectively. In Section E, Atradius refers to the GSO Interim Facility following the commencement of the administration, and the subsequent refinance of that facility through the GSO Replacement Facility by certain of the Financiers on 21 April 2016. Section F refers to unsecured debts payable by the Arrium Administration Companies of approximately $2.8 billion at the commencement of the Arrium administration. Sections G-I of the 2022 SoC refers to the Moly-Cop Entities, which underpin a substantial part of Atradius’ claims and (as I noted above) Atradius there acknowledges (2022 SoC [25]) that the Moly-Cop Business could not be sold together as a going concern if the Financiers enforce the Group Finance Guarantees. Section J of the 2022 SoC then acknowledges the fact of default under several finance facilities and Section K identifies a proposal to sell the Moly-Cop Business developed by the KM Defendants after their appointment as voluntary administrators.

Section L of the 2022 SoC pleads the KM Defendants’ application to the FCA in October 2016, which successfully sought relief to allow them to provide a single aggregated report to creditors of the Arrium Group under s 439A of the Act, and relief as to voting by the Arrium Administration Companies in their capacities as creditors of other Arrium Administration Companies at the Second Creditors’ Meeting. Section M of the 2022 SoC pleads the contents of the Aggregated s 439A Report provided to creditors at the second meeting of creditors; section N pleads the conduct of the Second Creditors’ Meeting; sections O and P plead the entry into a Distribution DOCA relating to Arrium Distribution Company and Transaction DOCAs relating to the 93 other Arrium Administration Companies; and section P of the 2022 SoC pleads the appointment of the KM Defendants as deed administrators.

Section Q of the 2022 SoC pleads the manner in which the Moly-Cop share sale was effected to a third party, and the proceeds of that sale were applied to discharge the GSO Replacement Facility and otherwise made available to the Financiers. There is no suggestion that the proceeds of sale made available to the Financiers exceeded the amount owed to them in respect of the Moly-Cop Entities. Section R pleads the sale of the remaining assets of the Arrium Administration Companies, realising net proceeds of approximately $664 million and section S pleads the payments of dividends to creditors from the Arrium Distribution Fund under the Distribution DOCA.

In sections T-V of the 2022 SoC, Atradius pleads an “uberrimae fidei” duty against the KM Defendants and also the Financiers. Paragraph 49 of the 2022 SoC pleads that the KM Defendants, as administrators of the Arrium Administration Companies, owed duties to creditors of the Arrium Administration Companies to conduct themselves with “utmost good faith” and:

Section V of the 2022 SoC in turn pleads a breach of the KM Uberrimae Fidei Duty by the KM Defendants, as follows:

I pause to note that Atradius here identifies its claim as extending beyond its position as assignee of Stirling’s “debt” or as trade insurer, to “Aggrieved Creditors”, and that approach is reflected in further aspects of its claim to which I refer below. Atradius’ claim for the “Aggrieved Creditors” is not lacking in ambition, where that term is defined in 2022 SoC [8(b)] to mean “approximately 4,000 creditors in the Arrium Administration who are not Financiers …whose aggregate claims in the Arrium Administration total approximately $500 million”. As Ms Whittaker points out, although Atradius purports to bring its claims for the “Aggrieved Creditors”, there is no evidence that they are on notice of this application and it does not address the extinguishment of their claims and releases granted by them under the DOCAs. Mr Collinson also rightly points out that:

In section V.2 of the 2022 SoC, Atradius contends that, on 30 September 2016, without the knowledge of the Aggrieved Creditors, the KM Defendants on behalf of the Arrium Administration Companies entered into the Override Deed with the Financiers and the Moly-Cop Entities and pleads that the effect of that Override Deed was that the KM Defendants were required to pay the whole of the net proceeds of any sale of the Moly-Copy Business to the Financiers, and the Aggrieved Creditors not be paid any part of the Moly-Cop Proceeds (“Moly-Cop Proceeds Exclusion Effect”) and the Financiers were entitled to prove in the Arrium Distribution Fund on the basis that they were entitled to the whole of the Financier Debt (as defined) and not required to deduct any amount from their proofs to reflect the payment to them of the Moly-Cop Proceeds (“No Deduction Effect”).

In paragraph 56 of the 2022 SoC, Atradius in turn pleads that, by executing the Standstill Agreements and/or the Override Deed, the KM Defendants breached the KM Uberrimae Fidei Duty. Section X.1 of the 2022 SoC (paragraphs 58-59) then pleads further breaches of the KM Defendants’ duties based on the alleged breach of the KM Uberrimae Fidei Duty. Atradius again does not identify the material facts supporting the premise of the alleged breach or that the Standstill Agreements and Override Deed adversely impacted on the position that would otherwise exist in the deed administration on the sale of the Moly-Cop Business.

I turn now to Atradius’ similar claim against the Financiers in respect of the alleged uberrimae fidei duty. Paragraph 50 of the 2022 SoC pleads a “Financier Uberrimae Fidei Duty” as follows:

That allegation substantially corresponds with the duty pleaded in paragraph 49 of the 2022 SoC against the KM Defendants. Atradius again alleges that this arrangement was “undisclosed” (2022 SoC [50]) and entered into “without the knowledge” (2022 SoC [51], [53]) of the other creditors. Atradius alleges, at 2022 SoC [51]-[55], that the Financiers breached that duty by entering into the Standstill Agreements and/or the Override Deed, which are alleged to have had the “Moly-Cop Proceeds Exclusion Effect” and the “No Deduction Effect” to which I referred above. That claim corresponds to paragraph 56 of the 2022 SoC pleaded against the KM Defendants.

Unsurprisingly, the parties gave substantial attention to the alleged uberrimae fidei duties in submissions, and it is helpful to start with their respective summaries of their positions in their “roadmap” documents.

In its “roadmap” of submissions, Atradius submits that “[m]aterial before the Court discloses an arguable case that the Financiers and KM Defendants breached the [uberrimae fidei d]uty”, as follows:

Atradius goes on to contend, in support of this submission, that the material before the Court discloses an arguable claim based on breach of the uberrimae fidei duty on the basis that a benefit was given to the Financiers that amounted to unequal treatment between the same class of creditors, and Atradius has an arguable case that a benefit was conferred upon the Financiers by receiving proceeds of the Moly-Cop sale. Atradius also contends that “[t]he material before the Court discloses an arguable breach of the [uberrimae fidei d]uty (taken together with the inequality between creditors referred to above) on the basis that KM did not disclose the nature and extent of the deal done with the Financiers.” It also identifies a submission that relief in respect of a breach of the uberrimae fidei duty does not depend on proof of “but for” causation leading to identifiable loss, as in a common law claim for damages; that that relief is not of a compensatory character, but rather requires disgorgement of gains, akin to a defaulting trustee; and that the relief given by the Court would be to set aside the DOCA and/or the agreement by which the preferred creditor obtained a benefit. I return to aspects of those matters below.

Atradius also submits that, if a demonstration of loss arising from the uberrimae fidei breach is required to sustain a remedy, that loss would be measured as the difference between what would have been available to unsecured creditors in a liquidation, or the difference with what would have been obtained in an alternative DOCA in which no party breached its uberrimae fidei duty to other creditors. I pause to note that Atradius does not now identify any basis on which it could properly allege that such a difference exists, or the terms of an alternative DOCA or any factual basis to allow it properly to contend that it could have existed.

Atradius also submits that:

I address the issues raised by this submission below. I also proceed on the basis that I am not determining a strike out or summary dismissal application, but instead whether Atradius should be permitted to proceed with an Originating Process that is now stale, which it cannot pursue without the Court’s exercise of a judicial discretion in its favour. It is also not apparent why, and Atradius does not lead evidence that explains why, it should now be permitted to undertake investigations, rather than having done so in the several years after it identified and articulated its claim. That proposition raises issues addressed in Hastie to which I have referred above.

The KM Defendants also address aspects of this issue, in the context of their submissions relying on Honest Remark Pty Ltd v Allstate Explorations NL (2006) 234 ALR 765; (2006) 58 ACSR 234; [2006] NSWSC 735 (“Honest Remark”) which I address below, as follows:

It seems to me that Atradius’ allegations of breach of a uberrimae fidei duty by the KM Defendants necessarily depend on the premise, unsupported by any identification of material facts in the 2022 SoC, and which Mr Williams could not explain in submissions, that, but for the Standstill Agreements and the Override Deed, the Aggrieved Creditors would have been paid the Moly-Cop Proceeds from the sale of the Moly-Cop Business outside a liquidation. For all the ingenuity deployed in Atradius’ submissions noted above, that seems to me to be a necessary premise of that allegation because Atradius does not and cannot explain how a breach of the alleged uberrimae fidei duty could arise from agreements between the Financers and the KM Defendants that did no more than recognise the position that already existed as a matter of law and fact. The 2022 SoC does not identify the material facts that could support that premise, where Atradius accepts the need for the Financiers’ consent to such a sale and does not identify how any sale proceeds could otherwise have been distributed without being caught by the guarantees held by the Financiers.

This difficulty also arose throughout Mr Williams’ oral submissions. I asked Mr Williams to explain how unsecured creditors could have accessed funds from a sale of the Moly-Cop Entities during the course of the deed administration (T41ff). He explained that dividends could have been paid up from those companies to OneSteel America Holdings Ltd and would have become available to unsecured creditors through the ASIC DOCGs; however, that proposition had the fundamental difficulty that it is common ground that the ASIC DOCGs would only be available in a liquidation, rather than in the deed administration. His further submission that those assets could have been distributed further to Arrium Ltd as the ultimate holding company, and then made available to unsecured creditors, did not explain how that possibility was available where the Financiers’ guarantees existed in intermediate companies in the Arrium Group, or how those proceeds would have existed had the Financiers not consented to the Moly-Cop Sale in the first place.

In oral submissions, Mr Williams also drew attention to an email dated 10 July 2020 from a representative of the Financiers (J1, 5361) which indicated that the Deed Administrators had at one point identified a possible claim by unsecured creditors to a part of the Moly-Cop Proceeds as follows:

Mr Williams accepted in oral submissions that Atradius sought to establish “impropriety” on the part of the KM Defendants but had considerable difficulty identifying what that impropriety was (T45). He pointed to the pleaded allegations of non-disclosure (T45-46) but then had difficulty in identifying any disadvantage to the unsecured creditors that was said not to have been disclosed. He suggested that unsecured creditors ought to have shared equally in the Moly-Cop Proceeds, again without identifying the factual basis of that premise (T47) as follows:

That submission plainly assumed that the Moly-Cop Proceeds could have been obtained without the KM Defendants reaching the agreement with the Financiers which Atradius now attacks, so as to obtain their consent to the sale of the Moly-Cop Business, without addressing how that could occur. Mr Williams then submitted (T47) that the proceeds could have “gone up the chain” and reached OneSteel America Holdings and “there seems no reason why it could not have and should not have formed part of the general body of assets that was available to satisfy all creditor claims”. That proposition begs the question of any means by which that may have occurred, which Atradius does not identify in the 2022 SoC or in submissions. Mr Williams then pointed to the possibility that a winding up might have occurred (T47). However, the obvious difficulty with that proposition is that Atradius also does not identify, in the 2022 SoC or in submissions, any basis to contend that unsecured creditors would have been in a better position, in sharing equally in the lesser proceeds of a winding up, than sharing unequally in the greater proceeds that were likely available in the deed administration. I do not neglect Mr Williams’ submission that the Override Deed would have impacted on a liquidation, but that does not assist Atradius, where a liquidation did not occur so as to give rise to any such impact.

Ms Whittaker pointed to the significance of this issue in opening submissions, as follows:

Ms Whittaker then addresses Atradius’ articulation of its claim for breach of a uberrimae fide duty as follows:.

Atradius does not here identify the basis of any contention that any effect of the Standstill Agreements or the Override Deed (as distinct from their specific terms) was “undisclosed” so as to breach the duty for which it contends in 2022 SoC [49], where the exclusion of the Moly-Cop Proceeds from the amounts available to unsecured creditors in the deed administration was disclosed in the Aggregated s 439A Report and in the proceedings before the FCA or how it could establish that it would “benefit” the Financiers without benefiting other creditors, where it does not identify any basis on which it altered the Financiers’ position in the deed administration.

Mr Collinson also submits that the Atradius’ claim for a breach of the uberrimae fidei duty against the Financiers does not disclose any reasonable cause of action. On balance, I do not think I should determine this question where it is not necessary to do so to determine the application. Mr Collinson relies on the decision of the Court of Appeal of the Supreme Court of Victoria in Scuderi v Morris (2001) 4 VR 125; [2001] VSCA 190 (“Scuderi”). He observes that, in Scuderi at [58], Chernov JA (with whom Ormiston JA and Buchanan JA largely agreed) summarised the basis on which a composition between creditors could be set aside as follows:

Mr Collinson submits, with substantial force, that the essence of an action founded upon this principle is a fraud by one creditor upon the other creditors (referring to Scuderi at [4], [5], [21], [32], [60], [61], [71], [77]) and that such a fraud arises from the “secrecy” of the arrangement between the creditor and the debtor (Scuderi at [15], [24], [30], [58] [69], [70], [77]). He points out that, in Scuderi, Chernov JA recognised at [69] that:

Mr Collinson also submits that a claim on this basis is only available where the arrangement between the creditor and the debtor is secret in terms (in that a term of the arrangement is that it be kept secret from other creditors) (referring to Scuderi at [42] and [77]) and secret in fact (in that the creditors must not know of it at the time the relevant contract of composition is entered into) (referring to Re Milner; ex parte Milner (1885) 15 QBD 605 and Scuderi). Mr Williams responds, perhaps ambitiously, that secrecy is not an essential element of the claim to set aside a composition, at least where an inducement given to a particular creditor to secure its vote, referring to Paton v Campbell Capital Ltd (1993) 46 FCR 30.

Mr Collinson also rightly emphasises that caution is required in applying this principle to deeds of company arrangement under Pt 5.3A of the Act. He refers to Ormiston JA’s observation In Scuderi at [20]-[21]:

Mr Collinson points out that Campbell J (as his Honour then was) similarly observed in Bidald Consulting Pty Ltd v Miles Special Builders (2005) 226 ALR 510 (“Bidald”) at [239]-[240] that:

Mr Collinson submits that this claim against the Financiers is not reasonably arguable, because the arrangement said to constitute the “undisclosed bargain” giving rise to the alleged breach of duty was neither secret by its terms nor secret in fact. He submits that the Standstill Agreements and Override Deed did not require the arrangement embodied in those agreements to be kept secret from other creditors, and seeks to read down a generic confidentiality provision in the Standstill Agreements to support that contention, and points to the disclosure of the Standstill Agreements (I interpolate, in general terms) in the Aggregated s 439A report. He points out that the Override Deed did not contain a confidentiality clause, and submits that a restriction upon disclosure of certain price-sensitive information in cl 11 did not impose any obligation upon the parties to keep the terms of the agreement a secret. He submits that the arrangement was not in fact kept secret from creditors, and refers to the disclosure in the Aggregated s 439A Report, specifically that the proceeds of the sale of the Moly-Cop Entities would be paid to the Financiers and would not form part of the Arrium Distribution Fund, and in the terms of the DOCAs. He submits that, on the case law, the relevant time at which to assess whether the arrangement embodied in the Standstill Agreements and the Override Deed was “disclosed” is not the time at which those agreements were entered into, but the time at which creditors agreed to bind themselves to the composition contract, here by approving the relevant DOCAs. He also submits that no fraud upon the creditors arises if the prescribed majority of creditors are aware of the allegedly “secret” arrangement before voting upon the DOCAs: Scuderi at [20]-[21], [70]; Bidald at [239]-[240].

In summary, Mr Collinson submits that Atradius has no reasonably arguable claims as to this matter where:

I accept that these submissions have real force, and that Atradius may have faced formidable obstacles to succeeding in this claim at a final hearing, had Atradius either served the proceedings within time or established a proper basis for the Court to extend the time for service; or adequately articulated that claim and had it not been estopped from bringing that claim against the Financers. In that situation, I am inclined to think that I would likely have not struck out that claim or summarily dismissed the proceedings, given the caution with which the Court must exercise those powers and the need for a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way, as emphasised in the appellate authorities: Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 at [57]; Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27 at [46]; Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 at [24]; Shaw v New South Wales [2012] NSWCA 102 at [30]–[32]; Ren v Jiang (2014) 104 ACSR 149; [2014] NSWCA 388 at [49]. It is not necessary to determine that question, where Atradius has here not adequately articulated that claim, is estopped from bringing it against the Financiers for the reasons noted below, and has neither served the proceedings within time nor established a proper basis for the Court to extend the time for service.

Turning now to the relief sought by Atradius against the Financiers, Atradius seeks orders (2022 SoC [77]) that the Financiers disgorge and pay to an account in the name of an Arrium Distribution Company as directed by the Court in an amount equivalent to the Moly-Cop Unsecured Payment (as defined) and all amounts which have bene paid to the Financiers as distributions pursuant to the DOCAs, together with interest.

The Participating Financiers address the relief sought by Atradius against the Financiers in the 2022 SoC (at [77]). These claims at least have the same difficulties as the claims against the KM Defendants, most fundamentally Atradius’ failure to identify the material facts underlying their premise that, but for the Standstill Agreements, Override Deed or other arrangements with the Financiers, the Financiers would not have received the Moly-Cop Proceeds in the deed administration. In the absence of any identified basis for that claim, Atradius has not shown the basis of any claim that the Financiers benefited by reasons of the relevant arrangements, still less that they received the alleged undisclosed benefit or acted other than in good faith in that regard. I also accept Mr Collinson’s further submission that the final relief sought against the Financiers plainly could not be ordered, where no attempt is made to set aside the contractual arrangements between the several Arrium Administration Companies and the Financiers and those contractual arrangements entitle the Financiers to obtain the amounts that Atradius seeks to have them return to the Arrium Distribution Company.

In their “roadmap” of submissions, the Financiers highlight their contention that:

Mr Collinson emphasises in submissions that Atradius does not contend, inter alia, expressly that the Standstill Agreements and Override Deed were or are void or that the Required Consent Report and December 2016 Deed Poll were or are void. Mr Collinson submits and I accept that, absent an application for declaratory or other relief to that effect in the Originating Process and an identification of its basis in the 2022 SoC, Atradius’ claim does not disclose any basis for the final relief sought against the Financiers in the 2022 SoC (at [77]), namely disgorgement of the Moly-Cop Unsecured Payment, where that was paid to the Financers in accordance with the terms of DOCAs and by reference to their contractual rights under the Group Finance Guarantees, Standstill Agreements, the Override Deed, the Required Consent Report and the December 2016 Deed Poll; and disgorgement of the distributions paid to the Financiers pursuant to the DOCAs. Mr Collinson also submits and I also accept that, even it is a necessary premise of Atradius’ claims that the Standstill Agreements and Override Deed are void, Atradius does not contend that the Required Consent Report and December 2016 Deed Poll are void and each of those deeds gives the Financiers a contractual right, independent of the Standstill Agreements and the Override Deed, to receive the Moly-Cop Unsecured Payment and to prove for the full amount of the Financier Debt in the administration, without deducting the amount of that payment (or any part of it). Mr Collinson submits and I accept that the causes of action identified by Atradius do not support the relief claimed against the Financiers, and I find below that they could not do so given the issue estoppel arising from the FCA Proceedings.

Mr Collinson goes further to contend that Atradius not only does not but cannot pursue such relief against the Financiers, by reason of matters that were previously determined in the FCA Proceedings. In their “roadmap” of submissions, the Financiers summarise that contention as follows:

In its “roadmap” of submissions, Atradius identifies its response to this issue as follows:

Mr Collinson submits that an issue estoppel operates to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination made in the earlier judgment: Blair v Curran (1939) 62 CLR 464 (“Blair v Curran”) at 531-533; Jackson v Goldsmith (1950) 81 CLR 446 at 466-467; Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 (“Tomlinson”) at [22]. He refers to the operation of that principle such that a “judicial determination directly involving an issue of fact or of law disposes once for all of the issues, so that it cannot afterwards be raised between the same parties or their privies”: Blair v Curran at 531, approved in Tomlinson at [22].

Mr Collinson also submits and I accept that the appellate authorities indicate that an issue estoppel can arise not only in respect of questions decided expressly in the earlier judgment but also where an assumption was fundamental to the earlier decision in the sense that, if the assumption had not been made, the decision must have been different. He refers to Hoysted v Commissioner of Taxation [1926] AC 155 (“Hoysted”), where the High Court had held in an earlier decision (Hoysted v Federal Commissioner of Taxation (1925) 37 CLR 290) that trustees were held entitled to six deductions in their land tax assessment because the life tenants were joint owners. In assessing tax for a later year, the Commissioner of Taxation allowed only one deduction. The Privy Council determined (at 165-166) that an issue estoppel had arisen that required the Commissioner to allow the deductions, although the High Court had not expressly decided the question of joint ownership in the earlier decision:

That decision was in turn considered by the High Court in Brewer v Brewer (1953) 88 CLR 1 at 15, where Fullagar J (with whom Dixon J concurred) observed that:

In Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665; [2014] NSWCA 336, Bathurst CJ in turn observed (at [112]) that

Mr Collinson submits that when Davies J decided the construction question in the FCA Proceedings, Epic (then representing the trade creditors, and a privy of Atradius as Mr Williams accepts) allowed it to be assumed against them that at least the Standstill Agreements and the Override Deed were valid and operative legal instruments, which the Court proceeded to construe on that basis. Mr Williams responded by detailed reference to the circumstances in which the FCA Proceedings arose and continued, and I have had regard to his submissions in that respect. They do not seem to me to assist Atradius where the FCA determined the construction of at least the Standstill Agreements and the Override Deed in the FCA proceedings, on the necessary basis that they were operative and effective and that is, in my view, sufficient to give rise to an issue estoppel. The determination of that question, as a separate question, is no less determinative than any other determination of that question on a final basis, and Atradius (as privy to Epic and Rexel) is bound by the outcome.

It seems to me that the FCA plainly determined the FCA Proceedings on the basis that at least the Standstill Agreements and the Override Deed were valid and operative legal instruments, and construed those agreements on that basis. That basis or assumption was fundamental to the FCA’s decision in the sense described in Hoysted because, if not for that assumption, the FCA’s decision must have been different. Conversely, if the operative effect of those agreements was left open by the FCA, then its decision would have been no more than an advisory opinion directed to the contingency that those agreements might mor might not one day be found to have operative effect. The FCA did not qualify its decision in that manner. Had the FCA decided that matter on so fragile a basis, third parties could not have relied on that decision because its fundamental premise could later be challenged, including, as here, in proceedings brought long after the event. Mr Collinson submits and I accept that an issue estoppel and not merely an Anshun estoppel (Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589) arises from the FCA Proceedings.

I recognise that there is some earlier authority, although the parties did not refer to it, that, where the basis for “issue estoppel” has been made out, the Court retains an overriding discretion to permit the proceedings to continue, although this discretion is likely to be exercised only in exceptional circumstances: Arnold v National Westminster Bank plc [1991] 2 AC 93; [1991] 3 All ER 41 (“Arnold”); Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1 at 30; [2001] 1 All ER 481 at 498 per Bingham LJ. In O’Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 258; [1991] HCA 14, Brennan J characterised the decision in Arnold which identified such a discretion as resting on an “uncertain foundation”, and the Court of Appeal arguably left the existence of such a discretion open in Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322. In Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International (2021) 389 ALR 612; [2021] FCAFC 77 at [339], the Full Court of the Federal Court rejected that principle, observing that:

In State of New South Wales v Hardy (Final) [2021] NSWSC 900 at [177]-[178], Johnson J noted, by reference to Counsel’s submissions, that:

If the discretion or exception identified in Arnold was available here, it does not seem to me that it could properly be exercised in Atradius’ favour, given the stark inconsistency between the basis on which the FCA proceeded and the position for which Atradius would now have to contend; its long delay in seeking to challenge the effectiveness of the Standstill Agreements and the Override Deed, if it now seeks to do so; and the lack of utility in that challenge where it does not seek to avoid the Required Consent Form and December 2016 Deed Poll.

In submissions in chief, Mr Collinson also addresses the principles of Anshun estoppel, in support of a claim that the proceedings against the Financiers should now be dismissed or stayed. Atradius summarises its position in its “roadmap” of submissions, namely that Anshun estoppel is not established; the Financiers cannot demonstrate that it was unreasonable not to bring this claim in the FCA Proceedings; the evidence demonstrates that some claims made in this proceeding were attempted to be prosecuted in the FCA Proceeding and were dismissed without determination on the merits for procedural reasons; and the additional claims now advanced (in particular the claims made against the Financiers) would have met the same fate. It is not necessary to address these submissions, or Mr Collinson’s response to them, given the conclusions which I have reached on other grounds.

Atradius also pleads other duties and advances other claims against the KM Defendants which are not put against the Financiers. Section W of the 2022 SoC pleads several duties owed by the KM Defendants to the Arrium Administration Companies, including general law and statutory duties. I proceed on the basis that those pleadings are not, strictly, in the nature of a derivative claim, because Atradius does not seek relief under those sections, but invokes them in support of a claim under s 90-15 of the IPSC (if it had standing to maintain that claim, which I find below that it does not) or under s 447A of the Act (if it had articulated such a claim, which it largely has not).

Section X.2 of the 2022 SoC pleads a breach by the KM Defendants of a “legal and ethical duty” to disclose material facts in respect of the October Application (as defined). In their “roadmap” of submissions, the KM Defendants contend that:

Ms Whittaker in turn submits that:

Atradius’ formulation of this claim does not identify to whom this duty is said to have been owed, although it is implicit that it was at least owed to the FCA. Atradius contends that certain “material” facts were not disclosed to the Court, but the allegation of the materiality of the relevant facts largely depends upon the impact of the Standstill Agreements and terms of the Moly-Cop Sale, and Atradius again does not identify the material facts supporting any claim that they had any material impact in the deed administration. Atradius there pleads (at 2022 SoC [61(l)]) that the Override Deed would have had an impact on a winding up of the Arrium Administration Companies, but that has the difficulty noted above, that winding up did not occur. Atradius also identifies (at 2022 SoC [61(n)]) other material facts that the KM Defendants are alleged not to have disclosed, including that, “by reason of the Override Deed”, the Moly-Cop Proceeds Exclusion Effect and the No Deduction Effect there was “likely to be a significant difference in the rateable returns achieved by the KM Defendants for the Financiers and the Aggrieved Creditors”. Atradius also contends the “Application Omitted Disclosure Conduct” breached the “Application Disclosure Duty” (as defined in a manner that gave rise to breach of statutory duties (2022 SoC [62]-[63]).

The alleged breach of the duties pleaded in section X.2 of the 2022 SoC all have the premise, again unsupported by any identification of material facts in the 2022 SoC, that the Moly-Cop Proceeds would have been distributed differently in the deed administration but for the Standstill Agreements or the Override Deed. That difficulty arises in respect of the alleged non-disclosure of the material fact that the return to Financiers had been improved by reason of these matters, which turns on an assumption not supported by any identification of material facts that the Financiers did not have a right to access those funds in any event. The allegation as to breach of the Application Disclosure Duty also depends upon the assumed materiality of the matters alleged to have been not disclosed, which largely or entirely depend on the premise that the Standstill Agreements or the Override Deed altered the position which would otherwise have occurred in the deed administration. As I have noted above, Atradius does not seek to identify the material facts supporting that premise.

In section X.3 of the 2022 SoC, Atradius identifies (2022 SoC [64]) an alleged “duty” owed by the KM Defendants, presumably alleged to be owed to creditors, in respect of the Aggregated s 439A Report. A number of allegations of non-disclosure are made as to the contents of that report, which turn, substantially if not entirely, on the premise that the agreements with the Financiers had an impact on the position that would otherwise have existed in respect of a sale of the Moly-Cop Business in the course of the deed administration, had those agreements not existed.

In section X.4 of the 2022 SoC, Atradius pleads that the KM Defendants breached a duty, presumably alleged to be owed to creditors, to execute DOCAs that would give effect to the Sale and Recapitalisation Strategy (as defined) reported and recommended to creditors in the Aggregated s 439A Report. Atradius then contends that the DOCA failed to do so, but this also appears to assume that the relevant agreements either altered the Financiers’ position that would have otherwise existed in the deed administration, or the position as to the Financiers’ ability to prove in a liquidation, and the material facts underlying those assumptions are not identified in the 2022 SoC.

The alleged breach of the duties pleaded in sections X.2, X.3 and X.4 are all pleaded by reference to an allegation that the deed administration brought about an “outcome for the Financiers [that] was materially better than the outcome for the Aggrieved Creditors”, which is particularised by reference to Section Y below. I now turn to that section. In section Y of the 2022 SoC, Atradius contends (2022 SoC [73]) that:

Ms Whittaker submits that:

Ms Whittaker goes further, to submit not only that Atradius’ claim at 2022 SoC [73] disclosed the case that the KM Defendants have to meet, but also that that case is untenable. She observes that:

Mr Williams’ responds by emphasising the unequal distribution between the Financiers and other unsecured creditors as pleaded in this paragraph. In submissions in reply, he observes that:

It is not necessary to decide whether a duty of that width exists, as a matter of law, having regard to the case law dealing with compositions or the statutory basis on which a deed of company arrangement can be set aside, including Bidald at [235] and [237], on which Mr Williams places particular emphasis. For the reasons noted above, it seems to me that Atradius has not identified the material facts necessary to support any claim that the “inequality” in the distribution as between the Financiers on the one hand and other unsecured creditors involved any breach of a duty of good faith or any more specific duty applicable to compositions between creditors.

Mr Williams also submits that the “prejudicial” effect of the Standstill Agreements and the Override Deed is “explained” as the “Metpol Asset Loading Effect” (as pleaded at 2022 SoC [41]) and by the Moly-Cop Proceeds Exclusion Effect and the No Deduction Effect (as explained at 2022 SoC [54]). The difficulty with that proposition is again that Atradius identifies no material facts to explain how or why the entry into the Standstill Agreements and the Override Deed had any impact on the distribution of proceeds which would not have existed had those agreements not been executed, as I have observed above. Mr Williams also submits that the assets obtained by the Metpol entities, and through them the Financiers, came from Moly-Cop Entities but were not subject to the Finance Debt (as defined) and “therefore would not have been available to meet claims by the Financiers if they had called upon the Group Finance Guarantees”, referring to 2022 SoC [40]. That proposition also depends upon undisclosed material facts supporting an assumption that, in a deed administration rather than a liquidation, the proceeds of sale of the Moly-Cop Business could have been distributed from the Moly-Cop Entities to Arrium Ltd or an intermediate subsidiary in a manner that would have allowed unsecured creditors to take the benefit of them without the Financiers having access to them under their guarantees.

It seems to me that this contention, which is in turn adopted to support other claims in Sections X.2-X.4 of the 2022 SoC to which I referred above, depends on the premise that the Financiers recovered more in the deed administration than the “Aggrieved Creditors” by reason of the sale of the Moly-Cop Entities. However, as will be apparent from my observations above, the 2022 SoC does not identify the basis of its fundamental premise, that the Aggrieved Creditors could, but for the entry into the Standstill Agreements or the Override Deed, or the conduct of the Arrium administration and the DOCAs, have received an equal distribution to the Financiers in the deed administration, given the Financiers existing rights in respect of the Moly-Cop Entities and the fact that the ASIC DOCGs did not allow any benefit to the unsecured creditors outside a liquidation. The 2022 SoC also does not identify the basis of any allegation of any disadvantage to Aggrieved Creditors by comparison with the likely outcome in a liquidation, where it does not plead any material facts indicating that the amount of Aggrieved Creditors’ share of the liquidation proceeds, even on a pro rata basis with the Financiers, would have exceeded the amount of their lesser share in the (likely greater) proceeds achieved under the DOCAs.

The KM Defendants also contend that the Court should not extend the time for service of the Originating Process because a reasonable decision maker would not grant the relief that is sought under s 90-15 of the IPSC on the basis of the allegations identified by Atradius. This submission invokes the approach taken by Brereton J (as his Honour then was) in Honest Remark, in dealing with an application for summary dismissal of an application to appoint a mutual purpose administrator to investigate certain transactions. His Honour there reviewed (at [4]) the circumstances which an order for summary dismissal would be made and then observed (at [5]-[6]) that:

In their “roadmap” of submissions, the KM Defendants summarise the matters on which they rely for this submission as follows:

They also contend that the 2022 SoC does not disclose a reasonable cause of action, referring to Honest Remark at [6], and refer to matters which I have addressed above in respect of the alleged breach of an uberrimae fidei duty and of the other duties alleged against the KM Defendants.

I have addressed several of the matters relied on in these submissions above. I largely accept this submission, although I do not accept any proposition that the mere size of a claim is a reason that a reasonable decision-maker would not allow it. The difficulty here is, instead, that Atradius pursues the purported claim for US$1.024 billion, after a long delay, although it was not and is not a creditor of OneSteel Trading, still less of other companies within the Arrium Group, and quantifies the amount claimed by reference to claims of other creditors whose claims have been extinguished under the Distribution DOCA, without making any attempt to establish that it should be permitted to pursue these proceedings on behalf of those other creditors. It also seems to me that, on the findings that I have reached above, no reasonable decision maker could make the orders sought by Atradius on the case that it presently articulates in the 2022 SoC, where there is no apparent basis for a claim that unsecured creditors could have had the benefit of the disposal of the Moly-Cop Proceeds, which could only occur with the Financiers’ consent, without complying with the Financiers’ requirements for giving such consent; nor for a claim that unsecured creditors could have obtained access to the Moly-Cop Proceeds in a deed administration (as distinct from a liquidation); nor for a claim that a liquidation in which unsecured creditors would have had access to such proceeds under the ASIC DOCGs would have allowed a better financial return for unsecured creditors than a deed administration.

Ms Whittaker also submits (T91) that, in exercising a discretion whether to grant relief under ISPC s 90-15 (if Atradius had standing to seek that relief) or under s 447A of the Act, a reasonable decision maker would have regard to the fact that all of the relevant funds had already been distributed by the KM Defendants to creditors and, I would add, the last of those distributions had taken place after Atradius had commenced the proceedings but before it gave notice of them to the KM Defendants. The final distribution paid by the KM Defendants was approximately $16m (Ex J1,5573), and that is plainly a significant amount which would have been available to them for the defence of the proceedings, which has now been lost to them. As Ms Whittaker points out, that amount would also have been sufficient, had it been available to the KM Defendants, to meet a large part of the claim by Atradius concerning the distribution of the proceeds of the sale of assets of Moly-Cop Peru, approximately $18 million, on which Mr Williams put some weight in the submissions, to which I referred above (T99). I accept that a reasonable decision maker would also treat that matter as a significant obstacle to the making of the orders now sought by Atradius. In oral submissions, Ms Whittaker puts that proposition simply enough, that:

Ms Whittaker also submits that the deficiencies in the pleading have the result that Atradius cannot meet the test articulated by Brereton J in Honest Remark, because no reasonable decision maker could grant the relief that Atradius seeks (T105). I accept that these several matters would also support a denial of the relief now sought by Atradius.

I should also identify a further issue which became increasingly apparent as oral submissions in this matter proceeded. In their “roadmap” of submissions, the Participating Financiers point to their submission that Atradius’ Originating Process (which states that “[Atradius] claims… [t]he relief sought in the [2022 SoC]”) and the 2022 SoC do not in fact reflect the claims that Atradius now seeks to put. There is substantial force in this submission. As Mr Williams developed his oral submissions, those submissions and Atradius’ case as formulated in the 2022 SoC increasingly diverged, as Mr Williams identified claims and bases for relief that were not put in the 2022 SoC. That is a troubling matter, where Atradius seeks the Court’s intervention to allow it to serve a stale Originating Process, including on Financiers situated outside Australia which were not represented at the hearing. The Financiers who were not represented at the hearing could reasonably understand that the 2022 SoC, to which reference is made in the Originating Process that Atradius seeks to serve on them, identifies the case they have to meet, rather than being only a starting point from which Atradius’ case (as articulated in Mr Williams’ submissions or to be developed after further investigations) will depart. That matter also tends against the grant of the relief that Atradius seeks.

In Section Z of the 2022 SoC, Atradius identifies the relief which it seeks against the KM Defendants, as sought under s 90-15 of the IPSC rather than on any other basis. The KM Defendants’ contend that Atradius does not have standing to seek that relief. In order to determine whether Atradius has an arguable case that it has standing under IPSC s 90-15, I must first address the standing requirements under s 90-15 of the IPSC; second, the effect of the Stirling Assignment on which Atradius relies; and, third, the question whether Atradius can establish standing on a wider basis, if it is not a creditor of OneSteel Trading.

Turning first to the question of the standing requirement under IPSC s 90-15, in their “roadmap” of submissions, the KM Defendants point to their submission that Atradius’ standing under IPSC s 90-15 depends on it being a “creditor”, since standing under s 90-15 is extended to those who have a “financial interest” within the meaning of s 90-20, as exclusively defined by s 5-30; and submit that Atradius is not a creditor of OneSteel Trading or any other Arrium Administration Company and does not have standing under IPSC s 90-15. In its “roadmap” of submissions, Atradius in turn relies on the Stirling Assignment, which I will address below, to contend that “Atradius is a creditor and has standing to seek relief pursuant to 90-15 of the IPSC pursuant to 90-20(1)(a) of the IPS[C]… ” [emphasis added]. I pause to note that, at its highest, Atradius’ reliance on the Stirling Assignment would establish that it was previously but is no longer a creditor of a single company in the Arrium Group, OneSteel Trading.

Relevantly, s 90-20 of the IPSC provides that specified persons may bring an application for an order under s 90-15 of the IPSC and notes that two categories in that list could be relevant, namely a person with a “financial interest” in the external administration of the company; and, if the committee of inspection (if any) so resolves, a creditor, on behalf of the committee. The second category is not relevant here, since there has been no resolution of a committee of inspection for Atradius (or Stirling) to make any application. As to the first category, s 5-30 of the IPSC provides that:

The term “creditor” is in turn defined in 5-5 of the IPSC, when used in relation to a company under external administration, as “a creditor of the company”, which plainly adopts the meaning of that term at general law. The parties approach the question whether Atradius is a creditor, not by reference to any question of the scope of that concept at general law, but by reference to the question whether OneSteel Trading owed a debt to Atradius by reason of the Stirling Assignment. The KM Defendants contend that Atradius is not a creditor of OneSteel Trading because it was not assigned any debt by Stirling under the Stirling Assignment, and is not a creditor of any Arrium Administration Company entity and therefore falls outside of 5-30(a)(ii). There is no suggestion that any other relevant circumstances prescribed for the purposes of 5-30 apply.

Whether Atradius was a creditor of OneSteel Trading at an earlier point in time depends on the operation of the Stirling Assignment, to which I now turn. In their “roadmap” of submissions, the KM Defendants point to their submission that Atradius did not become a creditor of OneSteel Trading as a result of the Stirling Assignment, as:

Atradius summarises its response to this submission in its “roadmap” of submissions as follows:

I address these issues below. It is important to note that, at the highest, Atradius’ submission supports the proposition that Atradius was previously owed a debt, by reason of the Stirling Assignment, for the short period between the Stirling Assignment and the payment of the sixth dividend shortly after these proceedings were commenced, but before Atradius gave notice of them to the KM Defendants. No attempt is made, or could be made, to establish that Atradius is now owed a debt, at the time it seeks the Court’s exercise of a discretion to extend the date for service of the stale Originating Process in its favour.

Ms Whittaker submits that Atradius did not obtain the status of a “creditor” of the Arrium Group by reason of the Stirling Assignment. It is, of course, self-evident that Atradius was not a creditor of a company group, since Australian law does not generally recognise that concept, and the real question is whether it became a creditor of a single company in that group, OneSteel Trading, by reason of the Stirling Assignment. Ms Whittaker submits that, on the KM Defendants’ adjudication of Stirling’s proof of debt, any “Claim” under the DOCAs was exchanged for a right to an “Entitlement” under the DOCAs, and Stirling then had no “Debt” to assign. Ms Whittaker here distinguishes between Stirling’s contractual right to claim a debt, acquired by performing services or supplying goods to OneSteel Trading as reflected in the invoices annexed to the Deed of Assignment (“Debt Claim”); and the rights that Stirling acquired under the statutory contract formed by the Transaction Support DOCA entered into by OneSteel Trading under which it was a “Creditor” (“Creditor Rights”).

Ms Whittaker also refers to the terms of the Stirling Assignment, which I addressed in the chronology set out above. She submits and I accept that the assignment effected under the Stirling Assignment was of the Debt Claim arising from the supply of goods by Stirling to OneSteel Trading, and that assignment was not directed to the Creditors’ Rights arising under the DOCAs. Ms Whittaker rightly notes that the 2022 SoC proceeds on that basis, by pleading Stirling’s debt and then that Atradius was transferred Stirling’s right title and interest (both legal and beneficial) in that debt, by reference to the Stirling Assignment, but not seeking to advance any claim that Atradius was a party to the DOCAs or had rights as a creditor under the DOCAs. For most practical purposes, the difference would not matter, since one would expect an insolvency administrator to treat the claims in the external administration as following any assignment of a debt that existed when the external administration commenced, and the KM Defendants took that pragmatic approach in making distributions to Atradius after they received notice of the Stirling Assignment. It is not necessary to address the KM Defendant’s further submissions that Stirling’s rights under the Distribution DOCA could not be assigned, because the Stirling Assignment did not purport to assign those rights, as distinct from any debt that was owed by OneSteel Trading to Stirling at the date of the assignment.

Ms Whittaker submits, and I accept, that Stirling’s Debt Claim against OneSteel Trading is a “Claim” as defined in the Transaction Support DOCA entered into by OneSteel Trading and that Stirling was a “Creditor” and an “Arrium Group Creditor” under that DOCA and the Distribution DOCA. That term is defined to mean “any person who has a Claim against the Company, being a Claim the circumstances giving rise to which arose on or before the Appointment Date”. Ms Whittaker points out that Stirling lodged a proof in respect of its Debt Claim against OneSteel Trading on 10 November 2016 and cll 18 and 19 of the DOCAs provided for the process of adjudication on that proof. Following that adjudication, cl 19.2 of the DOCAs provided for an “Entitlement” to a Creditor (as defined) to payment out of the Arrium Distribution Fund for their accepted proofs of debt in accordance with the order of priority. The term “Entitlement” is defined in cl 19.1 of the DOCAs as the distributions to be received by the Creditor as declared under the DOCAs by the KM Defendants, which is contingent on the amount in the Arrium Distribution Fund and the order of priority for payments. Ms Whittaker notes that, on 20 August 2017, Stirling’s proof was adjudicated and the KM Defendants determined that $58,667.77 was owing, so that Stirling had an Entitlement to that amount from the Arrium Distribution Fund in accordance with the order of priority.

Ms Whittaker then draws attention to cl 20.1 of the Distribution DOCA and cl 21.1 of the Transaction Support DOCA which provide:

In oral submissions, Mr Williams responded that cl 21 of the Transaction Support DOCA had the consequence that a release, discharge and extinguishment of Stirling’s debt did not take place until after the relevant distribution was made (T166). He accepted that that proposition would have the consequence that, immediately after the approval of the Transaction Support DOCAs and the Distribution DOCA, Stirling and other creditors each had two overlapping entitlements, the first being the entitlement to be paid its original debt, and the second being an entitlement to be paid the distribution under the Distribution DOCA calculated by reference to the amount of the amount of that original debt (T166). He also accepted that it also had the consequence that, at the time the operating companies were sold to third parties, their debts to former trade creditors had not been extinguished, as was the apparent intent of the Transaction DOCAs (T166). Obviously, these are very odd consequences indeed and I do not accept that clause had that effect.

It seems to me that the effect of this clause was to release or discharge Stirling’s debt owed by OneSteel Trading in “exchange” for the “Entitlement” that Stirling obtained to be paid the amount admitted to proof from the Arrium Distribution Fund. As Ms Whittaker points out, s 444H(a) of the Act in turn provides that a DOCA releases the company from a debt only in so far as the deed provides for the “release” of the debt. I also accept that the release and discharge in this clause is not deferred to the point that Stirling received a dividend from the Arrium Distribution Fund, as a matter of construction of the clause in its commercial context. The contrary view would have the untenable result that, at least until a creditor (relevantly, Stirling) received its dividend, or the last of its dividends, it was owed both its original debt by the Arrium trading company (relevantly, OneSteel Trading) and also had its Entitlement against the Arrium Distribution Fund for the same amount. Ms Whittaker puts a similar point in a wider and more colourful way as follows:

Ms Whittaker submits, and I accept, that cl 20.1 of the Distribution DOCA and cl 21.1 of the Transaction Support DOCA, consistently with s 444H(a) of the Act, converted the Debt Claim that Stirling had against OneSteel Trading into an Entitlement under the Distribution DOCA, when its proof of debt was adjudicated on 20 August 2017, and Stirling then ceased to have the Debt Claim and ceased to be a creditor of OneSteel Trading.

Ms Whittaker also submits that, on the termination of the OneSteel Trading Transaction Support DOCA, any “claim” against OneSteel Trading was no longer a claim against an Arrium Administration Company and, on payment of the Final Dividend on 17 August 2022, Stirling (and Atradius) lost any rights that it had. It is not necessary to deal with the first of those contentions, given the conclusions that I reach on other grounds. The second depends on cll 20.2(a) and (c) of the Distribution DOCA and 21.2(a) and (c) of the Transaction Support DOCA which provide that:

These clauses seem to me to reinforce the operation of cl 20.1 of the Distribution DOCA and cl 21.1 of the Transaction Support DOCA, but operate at a later point, when the Entitlement is paid rather than when it arises. I accept that these clauses have the effect for which Ms Whittaker contends. Mr Collinson also relies on the release, discharge or extinguishment of claims, at least from when a final dividend was paid under the Distribution DOCA on 17 August 2022.

For these reasons, Stirling had no debt to assign at the date of the Stirling Assignment, and Atradius is not a creditor of any Arrium Administration Company by reason of that assignment. First, as I noted above, Stirling ceased to have the Debt Claim and ceased to be a creditor of OneSteel Trading when its proof of debt was adjudicated on 20 August 2017 and it obtained its Entitlement as against the Arrium Distribution Fund. Second, even if I were incorrect in that finding, and Atradius was arguably a creditor of OneSteel Trading at the time that it commenced these proceedings, the release, discharge and extinguishment of that debt under cl 20.2 of the Distribution DOCA took effect when Stirling (and Atradius as its assignee) had received its final distribution from the Arrium Distribution Fund, which occurred after the Stirling Assignment and shortly after the proceedings were commenced, but before they were served. There is no suggestion that Atradius could be in a better position than Stirling in that respect. Neither Stirling nor Atradius is now a creditor of OneSteel Trading and the fact that Stirling and Atradius (as its assignee) is no longer a creditor means that it no longer has standing to seek relief under s 90-15 of the IPSC. There is nothing surprising or unreasonable about that result, where there is no reason to think that Stirling or Atradius as its assignee should have such standing after its debt and its claims under the Distribution DOCA have been converted to an Entitlement against the Arrium Distribution Fund and then discharged. Since Atradius is not a creditor of any Arrium Administration Company, it does not have standing to maintain its claim for relief under s 90-15 of the IPSC on that basis.

The third question is whether Atradius has standing under s 90-15 of the IPSC on a wider basis, that does not depend on its being a creditor of OneSteel Trading. In its “roadmap” of submissions, Atradius identifies its further submission that:

Mr Williams submits that s 90-20 of the IPSC does not exhaustively define the persons who have a “financial interest” in the external administration of a company, but simply identifies a number of persons who have such an interest and does not prevent a claim by another person who falls within the ordinary meaning of the words “a person with a financial interest in the external administration of the company”. Mr Williams submits that Atradius, as the trade credit insurer of several creditors of the Arrium Administration Companies, is plainly such a person. In oral submissions, Mr Williams points out that Atradius is at least a party with a financial interest in the external administration, where it has paid out claims of its insureds in respect of the administration (Ex J1, 5567; T158-159).

I accept that Atradius was at least indirectly affected by the conduct of the administration, deed administration and liquidation, in its capacity as a credit insurer of trade creditors of Arrium Administration Companies, but not that it has a “financial interest” in the administration, deed administration and liquidation, in the sense required for standing under s 90-15 of the IPSC. First, it seems to me that the legislature has sought to limit the persons who have standing to bring or maintain an application under s 90-15 of the IPSC, by s 90-20 of the IPSC and Atradius is not a creditor of any relevant Arrium Administration Company, particularly where the final distributions under the Distribution DOCA have been completed. Second, it seems to me that there is no reason to give that section wider application, particularly so as to extend to persons whose commercial interests may be indirectly affected by the conduct of an external administration, which would extend to a large class of persons, including lenders and employees of creditors and persons who have other commercial relationships with creditors of a company in external administration. Third, even if an extended basis for standing was available under s 90-15 or s 90-20 to such persons, it does not seem to me that Atradius has such standing, after the final distribution has been completed and the claims of former creditors of the Arrium Administration Companies under the Distribution DOCA have been satisfied and discharged. I am comfortably satisfied that Atradius does not have standing to seek the relief sought under s 90-15 of the IPSC and that defect in its Originating Process and claim is incurable.

I now turn to the nature of the relief sought by Atradius under s 90-15 of the IPSC. Paragraph 74(b) of the 2022 SoC seeks an order that the KM Defendants pay to an account in the name of Arrium Distribution Company as directed by the Court an amount equivalent to the Moly-Cop Unsecured Payment which it appears is a claim for approximately US$1.024 billion. Ms Whittaker submits that:

Paragraph 74(c) of the 2022 SoC seeks an order that the DOCAs be modified in accordance with directions to be made by the Court, but does not address how that is to be done where the DOCAs have now been effectuated and the relevant companies are now deregistered or in liquidation. No attempt is made in that paragraph to identify what modification to the DOCA is sought or what directions are to be sought from the Court, or any factual basis for making such directions. Mr Collinson speculates that:

Paragraph 74(d) of the 2022 SoC seeks an order the KM Defendants be replaced as administrators of the DOCAs, notwithstanding that the companies are now in liquidation rather than in deed administration. Ms Whittaker submits, in respect of an application to replace the KM Defendants as liquidators which Atradius has not brought, that:

Ms Whittaker also submits that Atradius has also not demonstrated that there is “sufficient utility to the external administration” to justify the use of 90-15, where the final distribution has been made and the vast majority of companies are either sold, or wound up and deregistered. It is not necessary to address these further submissions where I have found that Atradius is not a creditor of any Arrium Administration Company for the reasons noted above.

For completeness, the Participating Financiers also contend that the Court lacks power to grant the relief claimed by Atradius, because the relief claimed in SoC [76], which they contend is integral to the claim for relief against the Financiers, is sought under s 90-15 of the IPSC; s 90-15 does not empower the Court to make orders in respect of a company that is not in external administration, and of the 94 companies in respect of which Atradius seeks relief under s 90-15, only 12 are in external administration, where the remainder having been fully wound up and deregistered or sold; s 90-15 does not empower the Court to vary the terms of a DOCA; and the exercise of the power under s 90-15 to vary the terms of the DOCAs in the manner sought by Atradius would be antithetical (and therefore extraneous) to the objects of the IPSC, and as such the relief sought is outside the scope of s 90-15. These submissions raise important issues, but it seems to me that it is preferable that those questions be deferred to a case in which it is necessary to decide them.

The KM Defendants contend that Atradius also lacks standing to seek relief under s 447A of the Act. In their “roadmap” of submissions, the KM Defendants point to their submission that:

In its “roadmap” of submissions, Atradius in turn points to its response that it has standing under s 447A(4)(f) of the Act as “any other interested person”, because it has paid out to insureds who were creditors, relying on Allatech Pty Ltd v Construction Management Group Pty Ltd (2002) 41 ACSR 587 (Allatech”) at 591 and Commonwealth v Rocklea Spinning Mills (2005) 145 FCR 220 at [20]. Atradius also relies on a submission that:

Ms Whittaker here points out that s 447A(4) prescribes the list of persons who may apply for relief under the section and that Atradius is not a “creditor” of any Arrium Administration Company and does not satisfy 447A(4)(b). I accept that submission for the reasons noted above. She also submits that Atradius is also not an “interested person” for the purposes of s 447A(4)(f). She rightly acknowledges that that expression “is of wide scope and should be construed liberally”: Allatech at 591; Re Nillumbik Community Church Inc (in admin) [2010] VSC 136 at [30]. However, she submits that Atradius is a “legal stranger” to the administration, the Arrium Group, the KM Defendants and the Financiers and that, by contrast with Habrok (Dalgaranga) Pty Ltd v Gascoyne [Resources Ltd (subject to Deed of Company arrangement) (2020) 149 ACSR 1; [2020] FCA 1395 (“Habrok”) at [401]-[403], Atradius does not have any economic interest in the operation of the DOCA as it was not assigned Stirling’s debt and lacks any financial interest in the outcome of the DOCA. She also submits, relying on Hoath v Comcen Pty Limited (2005) 53 ACSR 708 that, even if Atradius is an “interested person” or “creditor”, as it was not as such at the time of the conduct complained of, it was not within the class of creditors or interested persons to which s 447A is directed.

As I noted above, Mr Williams submits that Atradius has standing to bring an application under s 447A of the Act, and relies on Allatech at 591 for that proposition. Mr Williams notes that Austin J there drew upon the test for standing in administrative law cases, where a person must demonstrate an interest beyond a mere member of the public and observed at [21] that:

I will assume, without deciding, that such an interest might be established on that basis, even where the claims of creditors under the DOCAs have been discharged and the DOCAs effectuated. I therefore leave open the possibility that Atradius is arguably an interested person because of its economic interest as the credit insurer of several trade creditors of Arrium Administration Companies, and it had that role at all relevant times. That does not advance Atradius’ position, where it does not adequately identify the factual basis for any claim under s 447A of the Act that supports the relief sought.

Paragraphs 75 and 76 of the proposed 2022 SoC are the only point at which Atradius invokes s 447A of the Act, in seeking to modify Pt 5.3A of the Act so that the IPSC applies or the former s 536 of the Act applies, if the IPSC would otherwise not apply. No party presently suggests that the IPSC does not apply. It became increasingly apparent in Mr Williams’ oral submissions that Atradius would put greater weight on that section, as its lack of standing under s 90-15 of the IPSC emerged, and Mr Williams identified the possibility that the Court would have jurisdiction to grant relief under s 447A by reference to the case law. Mr Williams also submits that the Court has power to invalidate the DOCAs under s 447A of the Act, rather than modifying the DOCAs. The submission does not assist Atradius, where it has presently not sought such relief and, even if it did so, makes no claim that the documents which allow the Financiers the right to the Moly-Cop Proceeds should be set aside.

It seems to me that the 2022 SoC does not connect the identified facts to, or provide any indication how the very broad remedies sought would be supported by, an exercise of the Court’s jurisdiction under s 447A of the Act. The only claims under s 447A of the Act that are identified in the 2022 SoC do not support the relief sought in the 2022 SoC and incorporated in the Originating Process. Even if Atradius has standing to pursue a claim under that section, the fact that it has not identified its factual basis and how it supports the relief sought is a further reason not to extend the time for service of the Originating Process, referring to the relief sought in the 2022 SoC, in its present form.

It is not necessary to address Mr Collinson’s further submission that s 90-15 of the IPSC does not confer a power on the Court to grant relief adverse to the Financers, given the narrow relief that Atradius presently seeks under that section and the conclusions I have reached on other grounds.

The Originating Process also seeks relief under s 536 of the Act. That section has been repealed and Mr Williams did not contend that it had any transitional application in the present facts. I need not address the claim under that section further.

Atradius identifies a claim for relief in equity in the Originating Process. Mr Williams also suggests, possibly, that the Court may have power to set aside the arrangements with the Financiers in equity, although Atradius does not seek to have the Court do so or identify any factual basis on which it could do so in the Originating Process or the 2022 SoC to which it refers.

Ms Whittaker responds that the 2002 SoC pleads that the KM Defendants owed the KM Uberrimae Fidei Duty to creditors (with the duty pleaded at 2022 SoC [49], with the alleged breach pleaded at 2022 SoC [55]-[56]); the “Diligence”, “Good Faith” and “No Advantage” duties owed to the Arrium Administration Companies (with the duty pleaded at 2022 SoC [57] and the alleged breach pleaded at 2022 SoC [58] and [59], and also relied on at 2022 SoC [63], [67], and [72]); and an alleged “Application Disclosure Duty”, implicitly owed to the Court (with the duty pleaded at 2022 SoC [60] and the alleged breach pleaded at [62]); a “439A Report Duty” to the creditors (with the duty pleaded at [64] and the alleged breach at [66]); and a “DOCA Execution Duty” which does not specify to whom it is owed (with the duty pleaded at [68] and the alleged breach at [71]). I have noted several difficulties with the form of those claims above.

Ms Whittaker submits that Atradius lacks standing to bring those causes of action, presumably on the assumption that they are properly characterised as claim to relief in equity rather than matters relied on to support the claim under IPSC s 90-15 which I have addressed above. Ms Whittaker submits and I accept that the KM Uberrimae Fidei Duty and 439A Report Duty are pleaded to be owed to creditors and, as Atradius is not a creditor, it does not have standing to bring such a claim against the KM Defendants, assuming such a claim could properly be treated as a claim in equity. She submits that the Diligence, Good Faith, and No Advantage Duties would be owed to the Arrium Administration Companies, and that Atradius does not explain how it has standing to pursue a claim on behalf of one or more of those entities, all of which have been sold or deregistered, other than for nine that are in liquidation and controlled by the KM Defendants as their liquidators. I bear in mind that a derivative claim may be available in equity, although Atradius has not presently sought to establish that it should be permitted to pursue it.

Ms Whittaker also submits that the Application Disclosure Duty is pleaded to be owed to the Court and, if anyone has standing to bring an action for breach of that duty, it would be a party to the proceeding in which that duty applied. She accepts that a creditor or other party to the DOCAs might fall in that category but submits that Atradius is neither, and no right to such a claim was assigned by the Stirling Assignment. Ms Whittaker also submits that the DOCA Execution Duty is not pleaded to be owed to any group in particular and is not maintainable on that basis, and that Atradius is not a party to the DOCAs and therefore has no standing in respect of any right or interest arising under their terms. She submits that Atradius lacks standing to seek any relief “in equity”, and that that head of relief in the Originating Process should be “struck out and summarily dismissed”.

It seems to me preferable not to decide the question of Atradius’ standing to bring claims “in equity”, where it is not apparent that any of these claims, with the possible exception of the claim referable to the uberrimae fidei duties, are properly characterised as equitable in nature. It seems to me that, for the reasons noted above, Atradius largely does not adequately identify the factual basis for such claims in the 2022 SoC, or how they support the relief sought, and that is a further reason why the Court should not now permit the Originating Process to be served out of time.

Ms Whittaker also submits that these proceedings are barred by the DOCAs as they are in breach of the releases and exclusion of personal liability clauses.

In its “roadmap” of submissions, Atradius identifies its several responses to this submission, namely:

Mr Williams in turn submits that, so far as the KM Defendants and the Financiers rely on releases under the DOCAs, the Court could grant relief under s 447A of the Act to ensure that the terms of the DOCAs do not provide an obstacle to relief, and refers to QBI Corp Pty Ltd v Plantation Rise Pty Ltd (2010) 77 ACSR 573 in that respect. I will assume, without deciding, that such a claim may be available and that Atradius may have standing to advance it, although it is not presently advanced in the Originating Process or the 2022 SoC to which it refers. Mr Williams also raises the possibility that the terms of the releases might be read down by principles of construction or in equity, referring to cases including Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112; [1954] HCA 23 and the decision of the Court of Appeal in Reid v Commonwealth Bank of Australia [2022] NSWCA 134.

It is not necessary to address the release provisions of the Distribution DOCA and the Transactional Support DOCAs, to which the KM Defendants refer, having regard to the conclusions which I have reached above on other grounds.

The Participating Financiers also contend that the proceedings, or alternatively the claim for relief against the Financiers, is an abuse of process. They provide in their “roadmap” of submissions that:

I have addressed that issue in dealing with Atradius’ formulation of its claim for breach of that duty above.

The Participating Financiers also contend that Atradius lacks standing to seek the relief it claims in the Originating Process (by reference to the 2022 SoC), in that it is not “a person with a financial interest in the external administration of” the 94 companies in respect of which it seeks orders under s 90-15 of the IPSC; Atradius claims relief “on behalf of the Aggrieved Creditors”, but the proceeding is not a representative proceeding, and Atradius has no authority to commence or pursue claims on behalf of other persons; and Atradius is not a person to whom the ‘uberrimae fidei’ duty allegedly breached by the Financiers was owed, because it was not a creditor who participated in “negotiating a composition of the debts of the Arrium Administration Companies” (SOC [50]), and the claim for relief for breach of such duty was not validly assigned to it by Sterling.

Atradius summarises its response in its “roadmap” of submissions, namely that the proceeding should not be stayed as an abuse of process, because Atradius has not engaged in forensic manoeuvring for its advantage; and nothing about the prosecution of the claim would bring the administration of justice into disrepute, but rather litigation of an important and serious matter in respect of substantial financial impact on a large body of creditors warrants determination on the merits.

I have addressed these issues in dealing with the exercise of the Court’s discretion to extend the time for service of the Originating Process above; and they would also have been relevant to whether the SoC would be struck out, had it been filed. Another relevant factor may have been the arguable unfairness involved in Atradius commencing the proceedings, not giving notice of them to the KM Defendants until after it and other participants to the Distribution DOCA received the sixth distribution, and then seeking to proceed with them without returning the KM Defendants to the position which would have existed had it given prompt notice of the proceedings give rises to an abuse of process. It is not necessary to decide the question of abuse of process given the findings that I have reached above, including as to the relevance of those matters to the Court’s discretion whether to extend the time for service of the proceedings.

The KM Defendants initially relied on exclusive jurisdiction clauses under the DOCAs. Mr Collinson, for the Participating Financiers, joined in a submission that the proceedings should be dismissed or permanently stayed as it has been commenced in breach of exclusive jurisdiction clauses in the DOCAs. Atradius summarised its response in its “roadmap” of submissions, namely that is entitled to bring the proceeding in this Court; the DOCAs have been terminated and the exclusive jurisdiction clauses do not survive termination; and, in any event, ss 1337H and 1337L of the Act provides a mechanism for the transfer of the proceeding, if necessary. It seems to me that these clauses are unlikely to have assisted the KM Defendants or the Financiers, where it appears that they do not have any continued operation after termination of the DOCAs. However, it is not necessary to determine that question, given the findings that I reached above on other grounds.

In summary, it seems to me that the Court should not extend the time to serve Atradius’ Originating Process and should dismiss the proceedings for reasons that include at least five matters. First, Atradius has not provided a sufficient explanation of its delay in seeking litigation funding (to the extent that it wished, as distinct from needed, to obtain such funding) or seeking to undertake examinations, where it identified the large part of the claims it sought to bring several years ago, at least by the point it formulated substantially the same claims in the 2017 SoC. Second, the KM Defendants would suffer substantial and irremediable detriment from Atradius’ delay in serving the Originating Process (or at least notifying the KM Defendants of the commencement of the proceedings) when they paid out the final dividend under the Distribution DOCA, including to Atradius, after Atradius had commenced the proceedings but before it gave notice of them or served them, where that amount would otherwise have been available to fund its defence and possibly any order for compensation sought against it in respect of the Metpol transaction.

Third, Atradius has failed to identify, in the 2022 SoC to which the Originating Process refers, either the factual basis of any contention that unsecured creditors would have access to the Moly-Cop Proceeds or other monies paid to the Financiers in a deed administration (as distinct from a liquidation), apart from the Standstill Agreements and Override Deed, or that unsecured creditors received a lesser distribution in the deed administration than they would have received in a liquidation in which they would have had the benefit of the ASIC DOCGs. I recognise that an order for pleadings has not been made and Atradius has not sought to file the 2022 SoC. Nonetheless, the Originating Process identifies the relief that is sought by Atradius as set out in the 2022 SoC, and necessarily implies that relief is sought on the basis set out in the 2022 SoC. Although Mr Williams departed from the 2022 SoC in submissions, as I noted above, I did not understand him to contend that the Court and the Defendants on which the Originating Process and 2022 SoC is to be served should not treat the 2022 SoC as genuinely indicating the case that Atradius seeks to put, but instead as surplusage or a distraction from that case. It seems to me that the Originating Process and the 2022 SoC as incorporated by cross-reference in it would not allow the Defendants to identify the case put against them and does not identify a basis for the large part of the relief claimed. I do not neglect Mr Williams’ submission that the 2022 SoC may be “imperfect” but could be amended at some later point. The issues that I have addressed above seem to me to be too substantial to allow that course, and are an additional reason that the Court should not exercise a discretion to extend the time for service of the Originating Process in its present form.

Fourth, Atradius does not have standing to seek the relief it seeks under s 90-15 of the IPSC, and does not identify the basis on which the wide relief that it seeks could be justified on other bases, including under s 447A of the Act and in equity.

Fifth, Atradius seeks relief against numerous Financiers, which it could not obtain without setting aside contractual arrangements which it does not seek to set aside and which it could not properly set aside, because of the issue estoppel that arises from the FCA Proceedings as to the operation and effect of those arrangements. I should not extend the time for service of the Originating Process where it seeks to commence proceedings against the Financiers which cannot properly be commenced.

These matters individually would likely be sufficient to have the result that the orders sought by Atradius should not be made and the proceedings should be dismissed, but the proper result is clear where all these matters and the other issues I have addressed above in this judgment arise. I will therefore not make the second order sought by Atradius in the Further Amended Interlocutory Process under UCPR r 1.12, that the Originating Process be valid for service for a further period, where it has not been served within the time limits specified in UCPR r 6.2(4) and r 2.7 of the Corporations Rules. For these reasons, I will also not make the first order sought by Atradius by its Further Amended Interlocutory Process filed during the course of the hearing, in alternative forms, to extend the time for service of the Originating Process indefinitely, or to 31 October 2023 or alternatively to six weeks from the date of this judgment. There is also force in the KM Defendants’ further submissions in that respect that an indefinite extension is “completely untenable”; there is no certainty that examinations will be conducted by 31 October 2023, and that date is therefore speculative.

I should, for completeness, identify two other issues, which I need not determine. There was reference in this hearing to the fact that ASIC had authorised Atradius to conduct examinations and that Atradius had then brought an application for the issues of examination summonses and orders for production in this Court, which had been deferred pending the determination of these proceedings, and that time had been “reserved” for its proposed examinations in September 2023. No evidence was lead in this hearing as to whether, first, Atradius had drawn ASIC’s attention to the issues that I have addressed above as relevant to the question whether it should be authorised to conduct the examinations; or, second, it had drawn those issues to the Registrar’s attention as relevant to an ex parte application for the issue of examination summonses and orders for production by this Court. I do note that Atradius did not draw these matters to my attention in its evidence or correspondence in support of its initial ex parte application for orders deferring service of these proceedings, which I did not hear on an ex parte basis. I need not address these issues further, where I was informed that the KM Defendants have brought other proceedings challenging the authorisation granted by ASIC to Atradius and the first of them can properly be determined in those proceedings. The second, which may be relevant to whether this Court should authorise the numerous examinations that Atradius wishes to conduct or require production of documents or continue to “reserve” time for Atradius’ proposed examinations in September 2023, is, at least in the first instance, a matter for the Registrar who is dealing with that application in this Court.

By Amended Interlocutory Process filed on 3 February 2023, the KM Defendants sought an order discharging any order extending the validity for service of the Originating Process. No such order was previously made and this question does not arise. Second, the KM Defendants sought an order refusing leave to file the proposed Statement of Claim. Atradius does not seek leave to file that Statement of Claim, as distinct from cross-referring to the relief sought in it in its Originating Process, so this question also does not arise. Third, the KM Defendants seek an order setting aside the Originating Process and/or the proceedings, an order dismissing the proceedings or alternatively an order that the proceedings be permanently stayed in the Court’s inherent jurisdiction.

Ms Whittaker recognised that application is largely the converse of Atradius’ application. I am satisfied that orders should be made setting aside the Originating Process and dismissing the proceedings, consequential upon my finding that the time for service of the Originating Process should not be extended. For completeness, I note that the KM Defendants submit that the public interest favours dismissal of the proceeding, on the basis that the proceedings are antithetical to policy and principle underlying Part 5.3A of the Act. It is not necessary to address that submission in order to determine the application.

By their Further Amended Interlocutory Process filed, by leave, on 4 April 2023, the Participating Financiers sought an order that the proceedings be dismissed under UCPR r 13.4, or alternatively in the Court’s inherent jurisdiction, or that they permanently be stayed under s 67 of the CPA or in the Court’s inherent jurisdiction; or that the proceedings and Originating Process be set aside under UCPR r 12.11 (1) or under s 63(3) of the CPA. Mr Collinson submits, and I accept that where the Court does not grant the interlocutory relief that Atradius requires, in order to allow it to proceed with the Originating Process that is now stale, then the Originating Process and the proceedings should be dismissed.

For the reasons noted above, I am satisfied that the proceedings should be dismissed where they were not served within the times required by UCPR r 6.2(4) and r 2.7 of the Corporations Rules and I have found that those times should not be extended.

I direct the parties to bring in agreed orders to give effect to this judgment, including as to costs, within 7 days or, if there is no agreement between them as to those orders, their respective draft minutes of order and submissions not exceeding 6 pages in Arial font 12 and one and a half spacing as to the differences between them.