Marlu Transport Solutions Pty Ltd v Bishdun Pty Ltd (No 2)

This case sits inside a broader commercial fight about the sale of a transport business called Nighthawk Transport. MTS, the buyer, had already sued over the deal. Its case, as summarised by the Court, was that representations were made about the condition of plant and equipment and about repairs and maintenance being completed before the sale was finalised. MTS said those representations mattered because they influenced both the purchase itself and the finance arrangements used to fund it.

The deal included vendor finance. When the repayment terms were not met, four respondents brought a cross-claim against MTS and other related companies and individuals who had effectively guaranteed repayment obligations. That meant the litigation was no longer only about whether the sale involved misleading conduct. It also involved claims under the finance documents.

The position then changed when MTS entered voluntary administration on 9 February 2026 and liquidation on 17 March 2026. The cross-claim against MTS itself was stayed by s 500(2) of the Corporations Act, and the Court noted that the liquidators were not intending to have MTS actively pursue its own claim. But the cross-claim against the other Marlu parties remained on foot and was still heading to trial in May 2026.

At that point, MRG, another company in the same group, tried to add its own claim. MRG said that after the acquisition, MTS was operating at a loss and did not have enough revenue to cover operating expenses. MRG alleged that its controllers caused it to lend just over $2.049 million to MTS between July 2024 and February 2026 so MTS could continue trading. MRG said those advances were made only because of the allegedly misleading acquisition and had become irrecoverable once MTS went into administration and liquidation.

The Court was not deciding the final merits of the sale dispute. It was deciding an interlocutory application by MRG for leave to file a cross-claim out of time. The judgment expressly notes that MRG was well out of time to file the new cross-claim without leave under r 15.04 of the Federal Court Rules 2011 (Cth).

The trial of the existing claim and cross-claim was already listed for a two-week hearing commencing on 11 May 2026. MRG did not seek to vacate those trial dates, and the parties accepted that the trial should not be adjourned. That timing was central to the Court's reasoning.

Jackson J referred to the usual discretionary considerations for allowing a late cross-claim, drawing on earlier authority. Those considerations included whether the proposed claim was within jurisdiction, the extent of delay, whether there was an acceptable explanation for delay, prejudice to other parties, the apparent merits of the proposed cross-claim, the degree of connection between the proposed cross-claim and the existing proceeding, and the desirability of having all connected disputes dealt with in the one trial. The Court also considered the overarching purpose in s 37M of the Federal Court of Australia Act, which focuses on resolving disputes justly, quickly, inexpensively and efficiently.

So the real question was not simply whether MRG's claim had some merit or arose from the same commercial background. The question was whether allowing it to be added so close to trial would advance or undermine a fair, orderly and efficient hearing.

The most important part of the judgment for business readers is the Court's focus on evidence about the intercompany advances. MRG relied on affidavit material saying that MTS was not generating enough revenue to cover essential ongoing expenses and that MRG loaned about $2 million to keep MTS operating. The evidence referred to wages, fuel, vehicle parts, maintenance and services as examples of the kinds of expenses involved.

But the Court looked beyond the broad description and examined the accounting material said to record the advances. That material was a report extracted from accounting records, documenting advances and credits over the period from 10 July 2024 to 9 February 2026. The report contained close to 500 entries. For each entry there was a date, description, debit or credit amount, and running balance.

The judgment gives examples showing why this mattered. Some entries appeared straightforward, such as a large advance described simply by reference to MTS. Others referred to airlines such as Qantas and Virgin, with only limited further detail. There were car hire expenses, American Express payments without explanation, legal fees to the Marlu parties' solicitors, payments to Capricorn Society, and some entries that more clearly referred to truck repairs. On the face of the records, not every item obviously showed a payment necessary to keep MTS operating.

That evidentiary detail drove the Court's concern. MRG's proposed claim depended not only on proving that money moved from one group company to another, but on proving why each payment was made and whether it was advanced for the pleaded purpose. The Court considered that the Bishdun parties would be entitled to test the purpose of each payment and likely seek discovery about them. The judge was concerned that this could open up thousands of documents, despite an estimate from the Marlu side that only about 50 documents would need to be discovered.

The judgment gives a practical example. If a payment to Qantas was said to be necessary because staff needed to travel to a regional job site, the opposing parties could reasonably seek not just the travel record but also documents about the job itself to test whether the expense was truly necessary to keep MTS operating. That is a useful reminder that causation and purpose often require surrounding business records, not just ledger entries.

Jackson J dismissed MRG's interlocutory application for leave to pursue the proposed cross-claim and ordered MRG to pay the costs of the first to third cross-claimants in relation to that application. The Court also made varied case management orders for preparation of the existing trial.

The Court accepted some points in MRG's favour. There was no issue about jurisdiction. The delay, while significant, was adequately explained. The judge said it was sensible not to press the delay point heavily because the winding up of MTS was an obvious point at which MRG's alleged loss crystallised. The Court also accepted that the proposed cross-claim was closely connected to the existing claim and cross-claim because all of them relied in some way on the alleged misleading or deceptive and unconscionable conduct surrounding the sale of Nighthawk Transport.

But that was not enough. The overlap was not complete. The proposed cross-claim introduced a distinct case on causation and quantum. It required proof of why MRG advanced the funds, whether each advance was made for the pleaded purpose of keeping MTS operating, and whether the alleged loss was legally caused by the misconduct said to have induced the acquisition.

The decisive concern was that this would open a significant field of forensic dispute only a little over four weeks before trial. The Court considered that the Bishdun parties would be prejudiced in defending the new claim and that the Court would struggle to supervise a fair and efficient trial if the claim were added at that stage. Because all parties were rightly against adjourning the trial, the timing problem carried substantial weight.

The Court also considered the consequences of refusing leave. It accepted that hearing all issues together would ordinarily be desirable, but concluded that any duplication and inefficiency from a separate later proceeding would not be excessive. The judge considered it likely that if the existing trial produced findings favourable to the Marlu parties on the misleading conduct issues, MRG might be able to take the benefit of those findings in a later proceeding, even though its distinct case on causation and loss would still remain to be proved.

The judgment is also useful for what it did not decide. The Bishdun parties raised concerns about MRG's solvency, relying on evidence that MRG owed more than $2.27 million to the Australian Taxation Office. The Court accepted that the debt was owing, but did not give the solvency issue weight in deciding the application. The judge said it had not been explained how MRG's insolvency, if any, would provide a defence to the proposed cross-claim or sever the causal connection alleged by MRG.

The Court also did not place weight on submissions that allowing MRG to recover would somehow bypass the liquidation of MTS. Again, the judgment says it was not explained how that would amount to a defence to the proposed claim.

Similarly, the Court did not treat reflective loss arguments as decisive. The judgment discusses the general principle that where a company suffers loss, the company is ordinarily the proper plaintiff rather than a shareholder whose share value falls as a result. It also notes that the principle may sometimes extend to creditors, but may not apply where the losses are separate and distinct. Jackson J regarded those issues as matters for legal argument depending on factual findings, not as central reasons to refuse leave on this interlocutory application.

That means business readers should be careful not to overread the case. It is not authority that insolvency concerns, reflective loss arguments or similar objections will always fail. It simply shows that, on this application, those points were not the reason the Court refused leave. The real issue was the likely expansion of the factual and documentary contest shortly before trial.

There are two practical layers to this decision. The first is transactional. If you are buying a business, especially one that depends on vehicles, plant or equipment, statements about asset condition, defects, servicing and repairs can become central later. If the acquisition is funded through vendor finance and backed by guarantees or indemnities from related entities, the fallout from a disputed sale can spread well beyond the buyer itself.

The second layer is evidentiary. If a related company later says it suffered loss because it funded the acquired business, that claim needs a clear documentary foundation. It is not enough to say in general terms that money was advanced to keep the business afloat. The purpose of each advance, the surrounding approvals, the invoices or contracts it related to, and the legal character of the payment may all matter. Courts are likely to allow the other side to test those matters closely.

This is particularly important in group structures where funds move frequently between entities. If accounting descriptions are brief or generic, proving causation later can become expensive and slow. A court may conclude that the claim cannot be added late without unfairness, even if the commercial story is plausible and closely connected to the existing dispute.

The case also shows that timing decisions in litigation are strategic, not merely administrative. Once a trial is close, courts become much less willing to permit amendments or new claims that would require fresh discovery, additional witness preparation and issue narrowing. Businesses should therefore identify all potential claimants and all categories of loss early, especially where insolvency, administration or liquidation may later affect who can actively pursue the original claim.

The judgment is Marlu Transport Solutions Pty Ltd v Bishdun Pty Ltd (No 2) [2026] FCA 420, decided by Jackson J in the Federal Court of Australia. The date of judgment was 9 April 2026 and the reasons were published on 10 April 2026. The existing claim and cross-claim had been listed for a two-week trial commencing on 11 May 2026.

The judgment records that MRG filed its interlocutory application on 26 March 2026, seeking leave to pursue its own cross-claim. The Court dismissed that application and ordered MRG to pay the costs of the first to third cross-claimants in respect of it. The Court also vacated some earlier case management orders and replaced them with detailed directions about the trial bundle, objections to evidence and opening submissions for the existing trial.

Readers should keep in mind that this decision is procedural. It does not finally determine the underlying Australian Consumer Law allegations or the finance dispute. It explains why a late cross-claim was not allowed to be added in the lead-up to trial.