Background
Murray William Mansell filed an “Application – Human Rights” and accompanying Points of Claim in the Federal Circuit and Family Court of Australia (Division 2) on 26 September 2025, bringing a discrimination claim against the Australian Healthcare and Hospitals Association Limited (AHHA) and a second individual respondent. Three days after that filing, on 29 September 2025, AHHA entered voluntary administration, which automatically stayed the proceedings against it under s 440D of the Corporations Act 2001 (Cth). AHHA then passed a resolution for voluntary liquidation on 4 November 2025, continuing the statutory stay under s 500(2).
Because the Federal Circuit and Family Court is not a “Court” prescribed for the purpose of granting leave to proceed against a company in liquidation under s 500(2) (read with ss 9 and 58AA of the Corporations Act), the entire proceeding was transferred by consent to the Federal Court on 16 March 2026. Chief Justice Mortimer confirmed the transfer the following day. On 14 May 2026, Mansell filed an interlocutory application seeking leave to proceed, supported by an affidavit from his solicitor Angela Allison Backhouse.
Neither the first nor second respondent consented to or opposed the leave application. The liquidators of AHHA had not indicated they would resolve Mansell’s Proof of Debt in his favour; indications at the time pointed the other way. The matter was determined on the papers, with the scheduled hearing of 25 June 2026 vacated.
The Court’s Holding
Perry J granted leave to Mansell under s 500(2) of the Corporations Act to proceed against AHHA in liquidation, including the right to seek all relief and advance all contentions set out in his original Federal Circuit and Family Court filing. The judge applied the well-settled principles governing the s 500(2) discretion, including that leave requires a solid foundation for the claim and a serious question to be tried, and that the court must weigh the risk of dissipating the company’s assets against the interests of the plaintiff.
A decisive factor was that AHHA was insured in respect of the causes of action brought by Mansell. Perry J was satisfied that any compensation awarded and any legal costs payable would be met by the relevant insurer, making it unlikely that the litigation would deplete the assets available for creditors in the liquidation. The fact that the liquidators had engaged their own legal representation—indicating they were already engaged with the proceeding—further supported the conclusion that the liquidation would not be unduly distracted by allowing the case to continue.
Key Takeaways
- A plaintiff seeking leave under s 500(2) must show a serious question to be tried and a solid foundation for the claim; the presence of insurance covering the defendant company is a weighty factor in favour of granting leave because it shields the liquidation estate from liability.
- The Federal Circuit and Family Court of Australia is not a prescribed “Court” under ss 9 and 58AA of the Corporations Act for the purpose of granting leave to proceed against a company in liquidation, requiring transfer to the Federal Court for that relief.
- Where liquidators have not indicated they will adjudicate a Proof of Debt favourably and have engaged separate legal representation in the proceeding, those circumstances support granting leave rather than requiring the claimant to rely solely on the proof-of-debt process.
- Leave applications under s 500(2) may be determined on the papers without an oral hearing where the parties consent or do not oppose.
Why It Matters
This decision is a practical illustration of the intersection between insolvency law and human rights or discrimination claims. It confirms that a plaintiff who files a discrimination proceeding on the eve of a respondent’s insolvency is not left without remedy: provided the claim has a solid foundation and—critically—the company carries relevant insurance, courts will generally grant leave to proceed rather than forcing the claimant into the proof-of-debt regime, which is ill-suited to claims requiring injunctive or declaratory relief.
For practitioners, the case underscores the importance of identifying insurance coverage early when advising clients on whether to seek leave to proceed against a company in liquidation. It also highlights a jurisdictional gap: human rights and anti-discrimination applicants who begin proceedings in the Federal Circuit and Family Court must be alive to the risk that a respondent’s insolvency will require the entire matter to be re-litigated in the Federal Court, adding cost and delay before the substantive issues can be reached.