Federal Court confirms s 237 of the Corporations Act does not apply when a company is in liquidation

Recently, in Secretary, Department of Health and Aged Care v Prefixx Pty Ltd [2024] FCA 153, Perry J confirmed that s 237 of the Corporations Act 2001 (Cth) does not apply to a company in liquidation.

The Secretary of the Department of Health and Aged Care brought proceedings under the Therapeutic Goods Act 1989 (Cth) seeking declarations and pecuniary penalties against the respondents in relation to them allegedly advertising, or causing to be advertised, nicotine vaping products on websites operated and/or controlled by them.

The first respondent, Prefixx Pty Ltd (in liq), was placed in liquidation after the commencement of the proceedings. Subsequently, the Court granted the Secretary leave to proceed against Prefixx pursuant to s 500(2) of the Corporations Act. The second respondent was at all material times, the sole director and shareholder of Prefixx.

The second respondent brought an application pursuant to s 237 of the Corporations Act to represent Prefixx in the proceedings.

Perry J considered it settled that s 237 does not apply to a company in liquidation, following the NSW Court of Appeal’s decision in Chahwan v Euphoric Pty Ltd trading as Clay & Michel [2008] NSWCA 52; (2008) 245 ALR 780.

Additionally, while her Honour accepted that r 1.32 of the Federal Court Rules 2011 (Cth) may provide a basis for making a similar order (in the exercise of the Court’s implied power), she declined to exercise her discretion in this case.  In doing so, her Honour agreed with, and adopted the Secretary’s submission that it was not in the best interests of Prefixx to be represented by the second respondent.

Trent Glover appeared for the Secretary at the hearing of the application and is briefed generally in the proceedings.

The decision is available here – https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2024/2024fca0153


Justice Robert Beech-Jones appointed to the High Court of Australia