Continuing proceedings against companies in liquidation: the power of public interest
Introduction
On 26 March 2026, in the decision in Secretary, Department of Health, Disability and Ageing v AG Therapeutics Pty Ltd [2026] FCA 333, Justice Younan granted leave for proceedings to continue against Straight Up PR Pty Ltd, which had entered into liquidation.
Her Honour emphasised the significant public interest in having the case heard and resolved against the marketing company, despite its liquidation status.
Background
In 2025, the Secretary of the Department of Health, Disability and Ageing (Secretary) commenced proceedings against AG Therapeutics Pty Ltd, MamaMia.com.au Pty Ltd, News Life Media Pty Ltd and Straight Up PR Pty Ltd for breaches of the Therapeutic Goods Act 1989 (Cth) (Therapeutic Goods Act).
The Secretary alleged that Straight Up PR Pty Ltd contravened restrictions on the advertising of therapeutic goods in ss 42DLB(1) and 42DMA(1) of the Therapeutic Goods Act by publishing three advertisements. Each of the advertisements referred to “medical cannabis products” and contained prohibited or restricted representations in contravention of s 42DLB(1) of the Therapeutic Goods Act.
Further, the Secretary alleged the advertisements contravened sections of the Therapeutic Goods (Therapeutic Goods Advertising Code) Instrument 2021 (Cth), thereby contravening s 42DMA(1) of the Therapeutic Goods Act.
However, on 3 December 2025, the sole member of Straight Up PR Pty Ltd resolved to wind up the company, and a liquidator was appointed.
Under s 500(2) of the Corporations Act 2001 (Cth), a party is prohibited from starting or continuing legal proceedings against a company in voluntary liquidation without leave from the court.
On 13 February 2026, the Secretary filed an interlocutory application seeking leave to continue proceedings against Straight Up PR Pty Ltd.
Issue
The Court was required to determine if the proceedings against Straight Up PR Pty Ltd could continue?
Court Findings
Justice Younan confirmed the power of the Court to grant leave to proceed against a company in liquidation is discretionary, and each application must be determined on its own particular facts. The rationale for this being that a company in liquidation would otherwise be subject to a multiplicity of actions, which would be time-consuming, expensive, and in some cases, completely unnecessary.
Justice Younan identified factors to be considered in whether to grant leave for proceedings to continue such as:
the public interest;
the amount and seriousness of the claim;
the stage of proceedings; and
the degree and complexity of the legal and factual issues involved.
Her Honour provided six reasons for granting the application for leave to proceed against Straight Up PR Pty Ltd (in liq).
These included:
the claims made against Straight Up PR Pty Ltd (in liq) were serious and raised matters of public importance, as the alleged conduct, if established, undermined the public health and safety objectives of the Therapeutic Goods Act. Accordingly, there was a public interest in the proceedings so the Court could mark its disapproval of the contraventions (if necessary) and order appropriate relief. In particular the protective aspect of regulatory proceedings to enforce alleged contraventions that risk harm to the Australian public is a factor strongly weighing in favour of granting leave to continue proceedings;
Straight Up PR Pty Ltd (in liq) was the only defendant in the proceedings that was a marketing company. Accordingly, relief sought against it would have a particular deterrent effect against companies and individuals that market and advertise therapeutic goods. The relief sought against Straight Up PR Pty Ltd (in liq) also served the dual purpose of confirming the legal obligations of marketing companies, and protecting and informing consumers of those services. Justice Younan determined there was significant public interest in imposing penalties in such circumstances to aid deterrence, which was not defeated by the mere fact Straight Up PR Pty Ltd (in liq) may be unable to pay any penalties imposed due to its liquidation;
the relief the Secretary sought could not be claimed via proof of debt. Justice Younan considered this a significant factor in favour of granting leave.
there was minimal risk of prejudice to any of Straight Up PR Pty Ltd (in liq)’s creditors. The liquidator of Straight Up PR Pty Ltd (in liq) did not intend to actively contest the proceeding. In any event, Justice Younan concluded that any prosect of prejudice to creditors was outweighed by the public interest in the proceedings;
the Secretary was prepared to provide an undertaking that he would not seek to enforce any monetary orders against Straight Up PR Pty Ltd (in liq) without leave from the Court, providing further comfort against any prejudice to creditors; and
the application for leave was not contested by the liquidator.
Justice Younan caveated that in the event any monetary orders were made, the Secretary could not enforce them without leave from the Court.
Key Takeaways
Liquidation in itself will not necessarily preclude a claim being able to be litigated against a company in liquidation. Whilst this is usually in the context of allowing access to insurance policies by affected parties as in this case other reasons are also available to justify a continuation of proceedings.
Public interest is a strong factor in favour of a Court ordering leave for a matter to continue against a party in liquidation.
Any prospective prejudice to creditors can be overcome by the agreement of non-enforcement of monetary orders, however if recovery of funds is sought this may weigh against seeking to proceed in the Court is not willing to grant an unrestricted right to proceed.
If you have any queries please contact:
Alicia Hill
Principal
T: +61 3 9611 0180 | M: +61 484 313 865
E:ahill@sladen.com.au
This article was prepared with the assistance of Chris Downes, Law Clerk.
