Australia, July 30 -- New South Wales Land and Environment Court issued text of the following judgement on June 30:

1. By Originating Process filed on 17 June 2025, the Plaintiff, Ms Frank, seeks an order that she be granted leave to commence and continue these proceedings against the First Defendant, Mosaic Brands Ltd (admin apptd) (recs and managers apptd) ("Company") and, substantively, an order under s 203AA(2) of the Corporations Act 2001 (Cth) ("Act") that the date that she resigned as a director of the company is fixed as 18 June 2024. She accepts that the Court should reserve liberty for any interested party to apply on two business days' notice, although several interested parties have already been given notice of this application and the opportunity to be heard.

2. Dealing with the question of service first, the proceedings have been served on the Company, by its voluntary administrators, and the Company has submitted a submitting appearance, except as to costs. The application has also been served on the receivers and managers appointed to the Company, and they have indicated they have no interest in the application and have not appeared. Rightly, the application has also been served on the Australian Securities and Investments Commission ("ASIC") which, by letter dated 27 June 2025, notes the policy underlying s 203AA of the Act to which I refer below, and indicates that its preliminary inquiries have not found any indicators of unlawful phoenix activity by Ms Frank, so as to fall within the policy of the section, and that ASIC does not propose to make any comments as to the merits and does not seek to be heard. ASIC nonetheless reserves the right to take any necessary regulatory action, in the usual way.

Scope of s 203AA of the Act

3. Section 203AA of the Act was introduced by the Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 (Cth) and has been considered in subsequent case law including Re Energy Resources of Australia Ltd [2022] FCA 176 and One Tree Agriculture Pty Ltd v Lye [2025] FCA 126 where Derrington J noted that the purpose of the section is to ensure that persons who deal with a company can rely on ASIC's register as actively recording those who have control of the company as directors. Relevantly, that section provides that a person's resignation as a director of a company takes effect on the day the person stops being a director, if ASIC is notified of that fact within 28 days, or otherwise the day on which notice is lodged with ASIC stating that the person has stopped being a director of the company unless an application is made to the Court to fix the date of the resignation under s 203AA(2) of the Act. Section 203AA(3) in turn provides that the Court must not fix the resignation day at the day the person's resignation takes effect unless it is satisfied that it is just and equitable to do so, and s 203AA(5) contemplates that any order must be made to the court within twelve months after the date the person ceased being a director of the relevant company, a requirement that is just satisfied here, or otherwise such longer period as the Court allows.

Factual basis of the application

4. Turning now to the factual basis of the application, cl 69.2 of the Company's constitution provides that a director may resign as a director of the Company by giving a written notice of resignation to the Company at its registered office. Here, it appears that Ms Frank sought to resign, by email directed to the Company's chairman, rather than by delivery of the notice to the Company's registered office. However, I proceed, consistent with the authorities to which Mr Southwood, who appears for Ms Frank, draws attention, on the basis that the provision in cl 69.2 of the Company's constitution is facultative and does not prevent Ms Frank giving notice to the Company by any other available means.

5. It is plain enough, from the contemporaneous correspondence, that the Company in fact received such notice. On 15 June 2024, Ms Frank gave notice to the Company's chairman that she tendered her resignation, which was then proposed to be effective from the Company's next board meeting. That letter of resignation is in evidence and indicated that Ms Frank submitted her resignation from the board effective from the next board meeting on 26 June 2024. It is plain that notice was received, since the Company's chairman responded that he was sorry to see Ms Frank leave, and suggested that she attend the next board meeting on the basis that the board could then accept her resignation. I pause to note that the case law does not require a company's acceptance of a director's resignation, unless its constitution otherwise provides, which is not the case here.

*Rest of the document can be viewed at: (https://www.caselaw.nsw.gov.au/decision/197e3a47f0423f388c0a9403)

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