An important new precedent for R&I practitioners: In the matter of Hudson Global Resources (Aust) Pty Limited [2026] NSWSC 535
The recent Supreme Court of New South Wales decision of Brereton J provides a new roadmap for relief under s 447A of the Corporations Act to restrain the Deputy Commissioner of Taxation (Commissioner) from enforcing a notice issued under s 260-5 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (s 260-5 Notice). The precedent also has broader application for other forms of statutory charges and garnishee notices in voluntary administration.
Natalie Tatasciore, Alex Gorovtsov and Peter Dougherty acted for Glenn Livingstone, Benjamin Ho and Nick Charlwood of WLP Restructuring as the Voluntary Administrators of Hudson Global Resources (Hudson) in the application.
Relevant background
Hudson is a national recruitment agency and labour hire company employing over 1,500 employees and PAYG contractors, with around 350 customers across the public and private sectors. In the weeks prior to the commencement of the Voluntary Administration, the Commissioner issued a s 260-5 Notice to ScotPac (who provides a bulk invoice factoring facility to Hudson) to recover a circa $19,640,966 tax debt. The garnishee operated to redirect 20% of all the company’s receivables to the Commissioner, resulting in a persistent trading loss.
The Voluntary Administrators entered into an amended facility with ScotPac on 29 April 2026 to fund the trade on in administration, but ScotPac continued to remit 20% of drawdowns to the Commissioner in compliance with the s 260-5 Notice.
Despite requests by the Voluntary Administrators to the Commissioner to withdraw or suspend the s 260-5 Notice, the Commissioner declined to do so. This jeopardised the Administrators’ ability to trade the business until the conclusion of the expressions of interest process for a DOCA or sale, or the second creditors’ meeting. A winding down or closure of the business would have had obvious value implications for the DOCA and sale process, and crystallised up to ~$12m in employee entitlements.
Novel issues arising on the application
- First, whether the s 260-5 Notice created a "security interest" such that the Commissioner was a "secured party in relation to property of the company" within the meaning of s 440B of the Corporations Act, thereby engaging the statutory moratorium on enforcement during the administration.
- Second, whether the Commissioner had taken any step to "enforce" that security interest in contravention of s 440B.
- Third, whether the Court had power under s 447A of the Corporations Act to make orders suspending the operation of the s 260-5 Notice, and if so, whether that power should be exercised in the circumstances.
Key findings
- Relief under s 440B: while Brereton J held that the s 260-5 Notice gave rise to a statutory charge in favour of the Commissioner which made it a “secured party” in relation to the property of Hudson within the meaning of s 440B, His Honour held that the Commissioner was not “enforcing” its security interest as it was merely the “passive recipient” of payments made by ScotPac in accordance with the s 260-5 Notice (see [26]-[39]). Brereton J accepted the Commissioner’s submission that s 440B required “positive action” of enforcement (such as the commencement of legal proceedings to compel payment) and that the Commissioner’s refusal to withdraw the notice did not, in itself, amount to enforcement (notwithstanding that any failure by ScotPac to comply constituted an offence). In the absence of enforcement, His Honour held that s 440B had not been contravened.
- Relief under s 447A: Brereton J granted relief under s 447A to suspend the operation of the s 260-5 Notice as it redirected property otherwise available to the Administrators to maximise the chances of Hudson continuing in existence and providing a better return to creditors (at [40]-[59]). Brereton J rejected the Commissioner's submission that s 447A could not be used to interfere with a Commonwealth taxation statute, holding that any alteration to the Commissioner's statutory rights was incidental to the purpose of promoting the objects of Part 5.3A (see [57]). This is the first time such an order has been made under s 447A.
Conclusion
In relation to the s 440B relief sought, the judgment leaves open the possibility that something more than the passive receipt of funds may contravene s 440B. The question of whether there is sufficient action to amount to enforcement will turn on the facts of the administration. Further, the judgment did not include detailed consideration of whether the continuation of the s 260-5 Notice’s operation (as distinct from its issuance, which was considered at [36]) had the effect of ongoing enforcement until the debt was satisfied or the notice was withdrawn. In our view, that question remains to be fully considered.
In relation to the 447A relief, the judgment provides a roadmap for other administrators to obtain relief under s 447A in similar circumstances (in particular, see [48]), both for s 260-5 notices and other forms of statutory charge or garnishee notice. As s 447A relief only operates prospectively, administrators should obtain relief as soon as possible following appointment.
As at the time of writing, the ATO has issued a notice of intention to appeal. However, no appeal has been commenced and the intended scope of appeal remains unknown.
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