Commercial litigation update - October 2026

The Queensland Court of Appeal recently found that a security interest over all present and “after-acquired” property takes priority over a later outright assignment of that property, and can be enforced after a Deed of Company Arrangement (DOCA) has released the secured debt.

The respondent, Moreton Resources, was seeking to recover two tax refunds from the Federal Commissioner of Taxation. A secured creditor of Moreton Resources, Melgear, claimed that any refunds should be subject to its security as "after-acquired" property. However, after Melgear’s security was granted, Moreton Resources assigned the refunds to a company (Elks Co) controlled by a director of Moreton Resources (Elks), who claimed the refunds must be paid to Elks Co, unaffected by Melgear’s security. The case was complicated by a DOCA, executed after both the security and the deed of assignment, which Elks and Elks Co said released Melgear’s claims. 

The Court of Appeal ultimately held that any refund would be “after-acquired” property to which the security attached automatically under the Personal Property Securities Act 2009 (Cth), taking priority over the later assignment. While the DOCA released Melgear’s personal claim for debt, it did not release the underlying security interest, which was preserved under section 444D(2) of the Corporations Act 2001 (Cth) and could attach to property acquired after the DOCA took effect.
 

See: Kirk v Moreton Resources Pty Ltd [2026] QCA 186

The New South Wales Supreme Court recently permanently stayed claims against a robotics company because they fell within the scope of a dispute resolution clause in an Exclusive Distribution Agreement (EDA), while claims against its directors were temporarily stayed pending the outcome of proceedings in Sweden.

The plaintiff and first defendant entered into the EDA for the sale of “Pizzabot” machines. The plaintiff alleged breaches of the ACL, undertakings and the EDA concerning the Pizzabot. The defendants sought a stay on the basis that the EDA gave Swedish courts “exclusive jurisdiction” over disputes “arising out of or in relation to or in connection with” the EDA and required such disputes to be referred to arbitration. The plaintiff accepted that EDA breach claims belonged in Sweden but argued its remaining claims fell outside the dispute resolution clause.

The Court rejected the plaintiff’s submission, finding that the dispute resolution clause was broad enough to capture all claims against the first defendant. The directors were not parties to the EDA, so their entitlement to a mandatory arbitration stay remained unresolved. However, the Court temporarily stayed claims against them, having regard to the controversy as a whole.
 

See:  Robot X Limited v Placer Robotics Pty Ltd & Anor [2026] NSWSC 1208

The Supreme Court of Western Australia has recently granted pre-action discovery under O 26A r 4 of the Rules of the Supreme Court 1971 (WA), finding that reasons to doubt the veracity of information available to a plaintiff are relevant to whether the plaintiff has “sufficient information” to decide whether to commence proceedings.

The plaintiff, Techteryx, owns and administers TrueUSD. Techteryx considered that US$456 million of its funds had been fraudulently transferred to Aria Commodities DMCC. Techteryx had commenced proceedings in Hong Kong and Dubai against that entity. In the WASC proceedings, the defendant argued that the plaintiff already had “sufficient information” to decide whether to commence proceedings and therefore was not entitled to pre-action discovery. In particular, it relied on evidence given in the Dubai proceedings by the managing director of Aria Commodities DMCC, that part of the US$456 million had been used to fund a loan facility to the defendant.

The Court rejected the defendant’s submissions, finding that it was reasonable for the plaintiff to seek pre-action discovery to “better assess” the accuracy of the evidence given in the Dubai proceedings, particularly as that evidence had been described as “internally inconsistent” and seemingly “calculated to obfuscate and confuse”.
 

See:  Techteryx Ltd v Aria AAAX Australia Pty Ltd [2026] WASC 427

The Federal Court of Australia has recently upheld the Commissioner’s assessment under Part IVA of the Income Tax Assessment Act 1936 (Cth) that a scheme entered into by Hilton International Australia relating to the sale of its sole share in Admirable Holdings Australia Pty Ltd was for the dominant purpose of obtaining a tax benefit.

At first instance, the ATO considered the sale a scheme as defined in section 177A of the ITAA 1936. It stated that the scheme’s dominant purpose was to enable Hilton International Australia to obtain the tax benefit, applying the factors in section 177D of the ITAA 1936.

Younan J upheld the Commissioner’s finding, relevantly observing that Hilton International had not demonstrated that its commercial objectives for implementing the scheme could only have been achieved through the particular scheme it adopted. This weighed against Hilton International in assessing whether the scheme was entered into for the dominant purpose of obtaining a tax benefit.
 

See: Hilton International Australia Pty Ltd v Commissioner of Taxation (No 2) [2026] FCA 1325

The Federal Court of Australia has recently noted that, while the responsible use of generative AI to manage large volumes of documents may advance the conduct of litigation, parties using such tools must ensure that the scale and timing of their use do not prejudice another party’s ability to prepare for trial.

In Jahani, the plaintiffs used generative AI to assist in preparing summaries of more than 7,500 documents for an application under s 50 of the Evidence Act 1995 (Cth). The summaries were repeatedly revised in the weeks before the trial. The defendants sought to vacate the hearing on procedural fairness grounds, arguing that they had insufficient time to verify the summaries before trial. The Court vacated the hearing and later ordered the plaintiffs to pay the defendants’ costs thrown away. 

However, the Court rejected the defendants’ argument that the plaintiffs’ use of generative AI provided a separate basis for an adverse costs order under the Federal Court’s Use of Generative Artificial Intelligence Practice Note (GPN-AI). Citing Lee J in Rogers v McDonald’s Australia Ltd (AI-use) [2026] FCA 1264 at [11]-[13], Cheeseman J said that the use of AI for collation and synthesis may further the overarching purpose where adequate verification, human supervision, and traceability to source material are maintained.
 

See: Jahani v Qiu, in the matter of Ralan Property Services Pty Ltd (receivers and managers appointed) (in liq) (costs) [2026] FCA 1419