Leave to Proceed Granted in Corporations Act Liquidation Case

Original Word Document (85.1 KB) Federal Court of Australia

Secretary, Department of Health, Disability and Ageing v AG Therapeutics Pty Ltd [2026] FCA 333

| File number(s): | NSD 982 of 2025 |
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| Judgment of: | YOUNAN J |
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| Date of judgment: | 26 March 2026 |
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| Catchwords: | CORPORATIONS – application for leave to proceed against fourth respondent (in liquidation) pursuant to s 500(2) of the Corporations Act 2001 (Cth) – exercise of discretion – alleged contraventions of the Therapeutic Goods Act 1989 (Cth) – civil penalty proceeding – role of fourth respondent vis-à-vis other respondents – public interest considerations – application granted |
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| Legislation: | Corporations Act 2001 (Cth) ss 440D(1)(b), 444E(3)(c), 471B(a), 491(1), 500(2)

Therapeutic Goods Act 1989 (Cth) ss 4, 42DLB(1), 42DLB(7), 42DMA(1), 42YC(1)

Therapeutic Goods (Therapeutic Goods Advertising Code) Instrument 2021 (Cth) |
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| Cases cited: | Australian Competition and Consumer Commission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521

Australian Competition and Consumer Commission v Mosaic Brands Ltd [2025] FCA 99

Australian Competition and Consumer Commission v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) [2016] FCA 1246

Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2022] FCA 871

Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd [2023] FCA 1082

Commissioner of the NDIS Quality and Safeguards Commission v Irabina Autism Services (in liq) [2024] FCA 1468

Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liquidation) [2020] FCA 718

Rushleigh Services Pty Ltd v Forge Group Ltd (in liq) (receivers and managers appointed); In the Matter of Forge Group Ltd (in liq) (receivers and managers appointed) [2016] FCA 1471

Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liq) [2010] FCA 597 |
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| Division: | General Division |
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| Registry: | New South Wales |
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| National Practice Area: | Commercial and Corporations |
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| Sub-area: | Regulator and Consumer Protection |
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| Number of paragraphs: | 28 |
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| Date of hearing: | Determined on the papers |
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| Counsel for the Applicant: | A Poukchanski |
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| Solicitor for the Applicant: | Australian Government Solicitor |
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| Solicitor for the First and Fifth Respondents: | J Farr and D Davis of Barry Nilsson Lawyers |
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| Solicitor for the Second Respondent: | C Spain of Wotton Kearney |
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| Solicitor for the Third Respondent: | G McAvaney of News Corp Australia |
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| Solicitor for the Fourth Respondent: | The Fourth Respondent is not represented |
ORDERS

| | | NSD 982 of 2025 |
| | | |
| BETWEEN: | SECRETARY, DEPARTMENT OF HEALTH, DISABILITY AND AGEING

Applicant | |
| AND: | AG THERAPEUTICS PTY LTD

First Respondent

MAMAMIA.COM.AU PTY LTD

Second Respondent

NEWS LIFE MEDIA PTY LTD (and others named in the Schedule)

Third Respondent | |

| order made by: | YOUNAN J |
| DATE OF ORDER: | 26 MARCH 2026 |
THE COURT ORDERS THAT:

1. The application for leave to proceed against the fourth respondent (in liquidation) pursuant to s 500(2) of the Corporations Act 2001 (Cth) be granted.

2. Order 1 is made on the condition that, in the event that the Court makes any financial or monetary order(s) against the fourth respondent (in liquidation), the applicant is not to seek to enforce any such order(s) without first obtaining the leave of the Court.

3. Costs of the application be costs in the cause.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YOUNAN J:

1 Since the commencement of this proceeding, the fourth respondent has entered liquidation. On or about 3 December 2025, the sole member of the fourth respondent resolved to wind up the company pursuant s 491(1) of the Corporations Act 2001 (Cth) and appoint Joanne Keating of Worrells as liquidator.

2 By way of interlocutory application filed on 13 February 2026, the applicant (Secretary, Department of Health, Disability and Ageing) seeks leave to continue this proceeding as against the fourth respondent (in liquidation) pursuant to s 500(2) of the Corporations Act. The Secretary relies on written submissions and the affidavit of Matthew Richard Garey sworn on 13 February 2026, each filed on 13 February 2026, in support of the application.

3 The liquidator of the fourth respondent does not consent to or oppose a grant of leave, except as to costs. Th e application is not contested by the other respondents.

4 On 23 February 2026, the Court ordered that the interlocutory application be determined on the papers.

ALLEGED CONTRAVENTIONS

5 In the substantive proceeding, which was commenced b y originating application and concise statement filed on 19 June 2025, the Secretary alleges contravention of ss 42DLB(1) and 42DMA(1) of the Therapeutic Goods Act 1989 (Cth) by the first, second, third and fourth respondents, and contravention of s 42YC(1) of the Therapeutic Goods Act by the fifth respondent.

6 Sections 42DLB(1) and 42DMA(1) of the Therapeutic Goods Act are civil penalty provisions. The Secretary seeks declarations and the imposition of pecuniary penalties as against the fourth respondent, a company incorporated in Australia that provides marketing services.

7 The Secretary alleges that the fourth respondent contravened restrictions on the advertising of therapeutic goods in ss 42DLB(1) and 42DMA(1) of the Therapeutic Goods Act, by facilitating the preparation and publication of three media items. The Secretary alleges that each of the impugned media items referred to “ medical cannabis products ” (which relevantly satisfied the requirements of s 42DLB(7), such that s 42DLB(1) applie d), and contained “prohibited representations” and/or “restricted representations” in contravention of s 42DLB(1) of the Therapeutic Goods Act. The Secretary also contends that the media items contravened various sections of the Therapeutic Goods (Therapeutic Goods Advertising Code) Instrument 2021 (Cth), thereby contravening s 42DMA(1) of the Therapeutic Goods Act.

8 The relevant media items comprise: a n article published on the “ Body + Soul ” website titled “ 5 health conditions you didn’t know medical cannabis could help with ” (Body +Soul a rticle); an article published on the Mamamia website titled “ Georgia takes CBD oil daily for her anxiety. Here’s what she wants people to know ” (Mamamia article); and a Facebook post on Mamamia’s Facebook page (which contained the title and a link to the Mamamia article) (Mamamia Facebook post).

9 The preparation and publication of the media items is alleged to have occurred pursuant to a “ Public Relations Campaign Agreement ” as between the fourth respondent and the first respondent, an online medicinal cannabis clinic in Australia. The fifth responden t is t he sole director and secretary of the first res pondent. The second and third respondents operate news and /or lifestyle web sites.

10 The Secretary contends that the alleged contraventions carr y a significant risk to health and safety in circumstances where the quality, safety and efficacy of the medicinal cannabis products have not undergone a full pre-market evaluation; there is a risk that persons using such products may cease, delay or avoid conventional treatments (and thereby suffer adverse clinical outcomes); and there is a risk of adverse drug interactions between the products and other prescribed treatments.

RELEVANT PRINCIPLES

11 Section 500(2) of the Corporations Act relevantly provides:

500 Execution and civil proceedings

…

(2) After the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

12 There is a similar restriction in s 44 4 E(3)(c) of the Corporations Act, which prohibits proceedings being commenced or continued against a company which is bound by a deed of company arrangement. Section 471B (a) of the Corporations Act also prohibits the commencement o r continuation of proceedings against a company after a winding-up order is made (or whilst a provision al liquidator is acting). Section 440D (1)(b) of the Corporations Act prohibits the commencement o r continuation of proceedings against a company to which administrators have been appointed. The principles governing the exercise of discretion to grant leave under these provisions may also be relevant to the exercise of the discretion under s 500(2) of the Corporations Act.

13 The power of the Court to grant leave to proceed against a corporation in liquidation is discretionary, and each application must be approached on its own particular facts: A ustralian C ompetition and C onsumer C ommission v Phoenix Institute of Australia Pty Ltd (subject to deed of company arrangement) [2016 ] FCA 1246 at 86; Rushleigh Services Pty Ltd v Forge Group Ltd (in liq) (rec eiver s and m ana gers app oin ted); In the Matter of Forge Group Ltd (i n l iq) (r eceivers and m anagers a ppointed) [2016] FCA 1471 at [15 (a) ].

14 The rationale underlying the relevant restriction is that a corporation in liquidation would otherwise be subjected to a multiplicity of actions, which would be both expensive and time - consuming, as well as in some cases completely unnecessary: Rushleigh at [15 (c)].

15 It is for the claimant to provide “good reason” to justify departure from the usual procedure of lodging a verified proof of debt with the liquidator: Rushleigh at [15(d)-(e)].

16 C ircumstances in which leave to proceed may be appropriate have been said to include factors such as the amount and seriousness of the claim, the degree of complexity of the legal and factual issues involved and the stage to which the proceedings, if already commenced, may be progressed: Rushleigh at [15(f)].

17 In circumstances where leave is sought by a regulator to commence or proceed with civil penalty proceedings, the Court may give weight to public interest considerations in exercising its discretion: A ustralian C ompetition and C onsumer C ommission v Australian Institute of Professional Education Pty Ltd (in liq) [2017] FCA 521 at [26], [47]; Pho e nix at [98]-[99]; Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2022] FCA 871 at [13], [14(2)]; Fair Work Ombudsman v Blue Sky Kids Land Pty Ltd (in liq) [2020] FCA 718 at [11], [17]-[18].

EXERCISE OF DISCRETION

18 I grant leave to the Secretary to continue this proceeding as against the fourth respondent (in liquidation) pursuant to s 500(2) of the Corporations Act, for the following reasons.

19 First, I accept that the claims made by t he Secretary against the fourth respondent are serious and raise matters of public importance, in that they allege multiple contraventions of the Therapeutic Goods Act that undermine the public health and safety objectives of the regime: s 4 of the Therapeutic Goods Act; Secretary, Department of Health and Ageing v Prime Nature Prize Pty Ltd (in liq) [2010] FCA 597 at [22]. There is a public interest in the proceeding continuing as against the fourth respondent, so that the Court can order the appropriate relief and (if relevant) mark its disapproval of the contraventions: Pho e ni x at [89].

20 The protective aspect of regulatory proceedings to enforce alleged contraventions that pose a risk of harm to a sector of the community is a matter that strongly weighs in favour of the Court exercising its discretion to grant leave: Australian Institute of Professional Education at [26(1)]; Commissioner of the NDIS Quality and Safeguards Commission v Irabina Autism Services (in liq) [2024] FCA 1468 at [28].

21 Second, the fourth respondent as a company providing marketing services is in a unique position vis-à-vis the other respondents. I accept that the relief sought as against the fourth respondent will have a general deterr ence effect on persons that provide advertising and marketing services in relation to therapeutic goods. In that regard, the relief sought against the fourth respondent is “more direct” in its deterrent effect on these persons than relief sought against other respondents.

22 The relief sought against the fourth respondent also serve s the dual purpose of clarifying the legal obligations of companies that provide such marketing services, and informing and protect ing consumers of those services: Irabina at [2 8 ]. There is a significant public interest in declarations of contravening conduct and imposition of penalties being on the public record in aid of deterrence, which is not defeated by the fact that the company is in liquidation and unable to pay the penalties: Australian Institute of Professional Education at [26 (2), (3), (5) ]; Prime Nature Prize at [22]-[23]).

23 Third, I accept that the relief sought cannot be claimed by way of proof of debt (Australian Institute of Professional Education at [21 (1) ]). This is a significant factor in favour of the exercise of the discretion to grant leave to proceed against the fourth respondent (in liquidation): Clean Energy Regulator v E Connect Solar & Electrical Pty Ltd [2023] FCA 1082 at 17(b); Australian Competition and Consumer Commission v Mosaic Brands L t d [2025] FCA 99 at 8.

24 Fourth, while it is difficult to augur any prejudice to creditors if leave is granted, I am comforted by the liquidator’s indication that she does not intend to actively contest the proceeding. Furthermore, I accept that the Secretary has an especial interest in ensuring compliance with, and accountability for, contraventions of the Therapeutic Goods Act: Australian Institute of Professional Education at [26(4)]; Phoenix at [105] - [106]. In any event, in my view, the prospect of any prejudice to (other) creditors is outweighed by the public interest considerations outlined above.

25 Fi fth, the Secretary is prepared to provide an undertaking that he will not seek to enforce any financial or monetary orders that may be obtained against the fourth respondent (in liquidation) without leave of the Court. This provides further comfort in the event of any prejudice to creditors.

26 Finally, the application to continue proceedings as against the fourth respondent (in liquidation) is not contested. In particular, the liquidator does not oppose the application.

CONCLUSION

27 I grant the application on the condition (proposed by the Secretary) that, in the event that the Court makes any financial or monetary orders against the fourth respondent (in liquidation), the applicant is not to seek to enforce any such orders without first obtaining the leave of the Court.

28 Costs of the application will be costs in the cause.

| I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Younan. |
Associate:

Dated:    26 March 2026

SCHEDULE OF PARTIES

| | NSD 982 of 2025 |
| Respondents | |
| Fourth Respondent: | STRAIGHT UP PR PTY LTD (IN LIQUIDATION) |
| Fifth Respondent: | DR SHIMAL JOBANPUTRA |
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