Tonks (Liquidator), in the matter of Vaucluse 29 Pty Ltd (in liq)

This case arose from the liquidation of three property companies operating in New South Wales: Vaucluse 29 Pty Ltd, Bayview 66 Pty Ltd and One Lake Macquarie Pty Ltd. The liquidators had first been appointed as provisional liquidators in December 2022 and then as liquidators in June 2023. The companies were described as being in the business of buying, renovating and selling prestige real property.

The liquidators' evidence, as summarised by Owens J, suggested that the companies were controlled by Mr Changjin Li and that the funds used to acquire properties appeared to have come from Mr Li's former wife, Ms Changren Cheng, and a company she controlled, Athena Rose Capital Pty Ltd. That background mattered because the liquidators were trying to work out whether there were assets, claims or recoveries available for creditors.

The available reasons describe several transactions that gave the liquidators concern. Vaucluse 29 had mortgaged a Point Piper property to Athena Rose Capital. After the provisional liquidators were appointed, Athena Rose Capital took possession and sold that property for $8.6 million. Because the claimed secured debt exceeded $9.9 million, the sale produced no surplus for the company. Vaucluse 29 had also sold another property at a considerable capital gain, but nearly all sale proceeds were said to have been paid to Ms Cheng, potentially leaving the company with a capital gains tax liability and no funds to meet it.

Bayview was in a similar position. It had sold a property for a profit, had not yet been assessed for capital gains tax, and nearly all sale proceeds were again said to have been paid to Ms Cheng. She also claimed Bayview still owed her more than $1 million. One Lake Macquarie still owned two mortgaged properties, and there was already Supreme Court litigation about the amount secured under those mortgages. The outcome of that dispute was likely to determine whether unsecured creditors would receive anything.

So the commercial story was not about a single clean debt claim. It was about a group of property companies, related-party funding, mortgage enforcement, disputed secured debt, possible tax exposure, and incomplete investigations. The liquidators needed lawyers and funding to continue that work, including Supreme Court litigation, document production and public examinations.

The liquidators sought three main forms of relief. First, they asked for approval under s 477(2B) of the Corporations Act 2001 (Cth) for a legal services retainer with Piper Alderman made on 15 December 2022 and later varied on 21 March 2025 and 22 October 2025. Secondly, they asked for approval under the same section for a litigation funding agreement with Pretium Funding Pty Ltd signed on 22 May 2025. Both approvals were sought nunc pro tunc, meaning retrospectively, because the agreements had already been entered into before approval was obtained.

Thirdly, they sought an extension of time under s 588FF(3)(b) for making any application under s 588FF(1). The available reasons describe this as a shelf order. The liquidators said they had not yet conducted public examinations and had not yet identified potential claims against third parties. They needed more time because they lacked funding to progress the examinations and related investigations.

The orders also included a confidentiality order over part of an exhibit under s 37AF of the Federal Court of Australia Act 1976 (Cth), on the ground that confidentiality was necessary to prevent prejudice to the proper administration of justice.

The first issue was how the court should approach approval under s 477(2B). Owens J summarised the established approach from earlier authorities. The court's role is not to take over the liquidator's commercial decision-making. Instead, it reviews the proposed course, gives due regard to the liquidator's commercial judgment and knowledge of the liquidation, and asks whether there is any error of law, bad faith, impropriety or other good reason to intervene in the expeditious and beneficial administration of the winding up.

The reasons also set out the usual practical considerations. The court looks at the purposes for which liquidators' powers exist, including proper realisation of company assets and the interests of those concerned in the winding up. A primary consideration is the impact of the agreement on the duration of the liquidation and whether that is reasonable in the circumstances. The court does not simply rubber-stamp what is proposed, but it also does not redesign the liquidator's proposal into something else.

A more specific issue was whether the solicitor retainer was the kind of agreement that required approval at all. Owens J noted that there has been some uncertainty in earlier cases about whether retainers and costs agreements between solicitors and liquidators always fall within s 477(2B). The judgment referred to more recent reasoning that approval is required where the liquidator enters into the agreement as agent for or representative of the company, as distinct from entering into it purely in the liquidator's own name. The substance of the arrangement matters, including whether the company appears to have the status of a party and who receives the benefit of the services.

The court also had to consider retrospective approval. Owens J made clear that the power to grant approval nunc pro tunc exists, but that should not obscure the statutory expectation that approval be sought before entering into a long-term agreement. If approval is sought later, the liquidator should provide a candid explanation for the delay. The nature and quality of that explanation are relevant. Other relevant factors include whether the agreement was expressed to be conditional on approval, whether there is prejudice to the company or creditors, the length of the delay, and whether the liquidator acted honestly.

Finally, the court had to decide whether to extend time under s 588FF(3)(b) even though the liquidators had not yet identified specific claims. The available text shows that the extension was sought because examinations had not yet been conducted and funding was needed to progress them. That is the practical setting in which shelf orders are commonly sought.

The court granted all substantive relief sought. Owens J approved, nunc pro tunc, the litigation funding agreement with Pretium Funding Pty Ltd and the legal services agreement with Piper Alderman, including the later variations. The court also extended the period for making any application under s 588FF(1) to 24 April 2026 and made the confidentiality order requested.

The visible reasons are especially useful on the retainer. The original 15 December 2022 letter was addressed to the liquidators' firm, PKF(NS) BRI Holdings Pty Ltd, rather than directly to the companies. Evidence from the solicitor explained that this was his usual administrative practice when issuing a retainer to an insolvency practitioner or a company in external administration. But the court looked at substance rather than form. The scope of work was broad, covering assistance with issues arising from the provisional liquidations and the appointments. The parties had plainly treated the retainer as extending to work after the liquidators' appointment and to work performed for and on behalf of the companies.

The later letters of 21 March 2025 and 22 October 2025 modified the retainer. They confirmed that the engagement was on a speculative basis, increased standard rates by 25%, and set out a more precise charging basis including a waterfall for payment when funds became available. Owens J considered that, although the companies were not expressly named as parties to the retainer, the liquidators had entered into it on behalf of the companies as well as on their own behalf. On that basis, approval under s 477(2B) was required.

Subject to the retrospective timing issue, Owens J considered it appropriate to approve the retainer because it enabled litigation to be prosecuted or defended for the benefit of the companies and their creditors. The judge said the existing Supreme Court proceedings being carried on by One Lake Macquarie had reasonable prospects of success and that there were reasonable prospects that at least some value would be realised if they succeeded. The reasons also state that even if any recovery were sufficient only to pay the liquidators' fees, lawyers' fees and the funder's return, that was not itself a reason to refuse approval. The judge further accepted that if public examinations identified other claims, it was plainly in the interests of the companies and creditors that the companies have legal representation in relation to those claims.

The court also accepted that the litigation and investigations would prolong the liquidation, but held that such delay was reasonable if it was necessary for proper realisation of the companies' assets. The visible text states that the terms of the engagement were clear and reasonable and that Piper Alderman was plainly qualified to carry out the work.

On timing, however, the judge was critical. The matter was listed urgently because the liquidators said a decision was needed by 24 October 2025. Owens J said the urgency had been generated entirely by the plaintiffs themselves. The judge referred to the risks of waiting until the eleventh hour and said applications of this kind should be prepared and made at the earliest realistic opportunity. That criticism matters because it shows the court will not treat delay as harmless, even where approval is ultimately granted.

For insolvency practitioners and advisers, this case gives a practical set of trigger points for when court approval and extension applications should be considered.

For s 477(2B), the first question is whether the agreement is being entered into on the company's behalf. If the company is effectively receiving the benefit of the services, is treated as a party in substance, or the liquidator is acting as the company's representative, approval may be needed. The second question is whether the agreement may continue beyond 3 months or obligations may be discharged by performance more than 3 months after entry. If yes, approval should be considered before signing, not after.

For s 588FF(3)(b), the practical trigger is usually an approaching deadline combined with incomplete investigations. If public examinations, document production or funding arrangements are not yet in place and potential claims cannot yet be identified properly, an extension application may be necessary. The available reasons show that lack of funding to progress examinations was central here.

For directors and business owners, the practical checklist is different but just as important. If a company is under financial stress, keep records of who funded acquisitions, what security was granted, where sale proceeds went, and whether tax liabilities were left behind. Related-party transactions are not automatically improper, but poor records and informal arrangements can become a major problem once liquidators start tracing funds and testing claims.

This case is most directly relevant to liquidators, insolvency lawyers and funders, but ordinary business owners can still learn a lot from it. The background shows how quickly a distressed business can become a dispute about records, priorities and payment flows. A property may be sold for millions, but if secured debt absorbs the proceeds, related parties have already been repaid, and tax liabilities remain, unsecured creditors may still recover little or nothing.

The case also shows that courts generally respect a liquidator's commercial judgment if the arrangement appears honest, clear and directed to creditor interests. But that respect has limits. The court will not simply approve a long-term arrangement because it sounds commercially sensible. Timing, clarity of terms and the explanation for delay all matter.

If you are a director or owner using family funding, private lenders or related entities, this case is a reminder to document those arrangements properly while the business is still operating. If a company later fails, liquidators may need to reconstruct who funded what, who was repaid, whether security was validly granted, and whether sale proceeds should have been available for tax or other creditors. Informal arrangements that seemed workable at the time can become expensive and contentious later.

If you are an insolvency practitioner, the case is a process warning. Do not assume that because the court can grant nunc pro tunc approval, it will be relaxed about delay. Owens J expressly criticised the plaintiffs for creating their own urgency. The safer course is to identify approval issues early, prepare the evidence properly, and apply before the deadline pressure becomes self-inflicted.

The judgment is a Federal Court of Australia decision of Owens J dated 24 October 2025. The hearing took place on 14 October 2025 and 23 October 2025, after the matter was adjourned to allow the plaintiffs to supplement their evidence and consider whether to augment the relief sought.

The available text clearly records the orders made. It also provides substantial reasoning on the approach to s 477(2B), retrospective approval, and the retainer agreement. However, the text available for this page ends before the reasons finish. That means the page can confidently explain the orders and the visible reasoning, but it should not be treated as a complete substitute for reading the full judgment.