Federal Court of Australia

Spring, in the matter of Goal Group Australia Pty Ltd (in liquidation)
(No 3) [2025] FCA 632

ORDERS

THE COURT ORDERS THAT:

1.    The Liquidators are justified in causing Goal Group Australia Pty Ltd (in liquidation) (the Company) to pay, out of funds held in the Administration Account No 2, the Citizens Funds Entitlements to each respective Citizens Client on the ground that the Citizens Clients are respectively beneficially entitled to their respective Citizens Funds Entitlements.

2.    The Liquidators are justified in treating the Citizens Commission in the Administration Account No 2 as funds beneficially owned by the Company.

3.    The proceedings be listed for further directions on 9 December 2025.

4.    Liberty to the Plaintiffs to apply to the Court on 24 hours’ notice.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J:

1    The Plaintiffs, Mr Spring, Mr Devine and Mr Morelli bring these proceedings in their capacity as the liquidators (Liquidators) of Goal Group Australia Pty Ltd (in liquidation) (GGA or the Company). They are the Applicants with respect to an interlocutory process filed on 20 May 2025 (Interlocutory Process).

2    This application follows previous applications made to the Court by the Liquidators. The first application (made when the Liquidators were the voluntary administrators of the Company) was heard on 6 September 2024: see Spring, in the matter of Goal Group Australia Pty Ltd (Administrators Appointed) [2024] FCA 1043 (First Reasons). The second application was heard on 18 December 2024: Spring, in the matter of Goal Group Australia Pty Ltd (Administrators Appointed) (No 2) [2024] FCA 1494 (Second Reasons).

3    The relief sought in the interlocutory process is for orders, pursuant to s 90–15 of the Insolvency Practice Schedule (Corporations) (IPS), being Sch 2 to the Corporations Act 2001 (Cth) (Corporations Act), and s 63 of the Trustee Act 1925 (NSW) (Trustee Act) that the Liquidators would be justified in:

(a)    causing the Company to pay amounts identified below (at [13]) as “Citizens Funds Entitlements”, which total $186,040.08, to each “Citizens Client” on the ground that the Citizen Clients are respectively beneficially entitled to their respective Citizens Funds Entitlements (para 2); and

(b)    treating the funds (identified below) described as the Citizens Commission amount totalling $6,238.11 as funds beneficially owned by the Company (para 3).

4    The Liquidators were appointed as the voluntary administrators of the Company on 28 June 2024.

5    On 4 October 2024 at the second creditors meeting, the creditors of the Company resolved that the Company be wound up and the Liquidators became the liquidators of the Company. In these reasons, the Liquidators will be referred to as the “Liquidators” or “Administrators” as appropriate.

6    The First Reasons at [3]–[12] set out some background in relation to the administration of the Company and its clients, which includes:

(a)    the Company was part of a group (Goal Group) which identified and managed potential recoveries for its clients (typically financial institutions and investment firms) in securities class actions, by administering the clients’ participation in such claims;

(b)    the services provided by the Goal Group included accepting receipt of settlement funds;

(c)    each client’s relationship with the Company is governed by a client agreement, and in a number of cases clients also provided powers of attorney to the Company; and

(d)    following their appointment as voluntary administrators to the Company, the Administrators opened a bank account known as the Administration Account and arranged for the transfer of the credit balances of those accounts to their Administration Account.

7    The Administrators also established another account known as the Administration Account No 2 in which the Administrators intended to keep any further litigation recoveries received by the Company while they determine which clients are beneficially entitled to those funds.

8    Based on their investigations, it appears that:

(a)    a US currency account in the Company’s name was opened with Citizens Bank in July 2021 (Citizens Account); and

(b)    the Citizens Account received US litigation recoveries.

9    Following their appointment, the Administrators arranged for regular “sweeps” of the Citizens Account to the Administration Account. As a result, from 6 August 2024 to 17 October 2024, funds totalling $328,527.90 (converted to AUD) were received (Citizens Account Funds). That amount was then transferred by the Liquidators to the separate Administration Account No 2 to ensure that those funds were segregated from the general Company money while the Liquidators sought to determine which clients were beneficially entitled to those funds.

10    Based on a reconciliation process undertaken by the Liquidators with the assistance of one of the Company’s directors and a former senior management accountant of the Company’s UK parent:

(a)    it was identified that $136,249.68 of the Citizens Account Funds were in fact funds received for clients of one of the Company’s “sister companies” and not for clients of the Company, and those funds were returned by the Liquidators to the relevant Goal Group company. After those funds were returned, the amount of $192,278.19 remained from the Citizens Account Funds in Administration Account No 2 (Remaining Citizen’s Account Funds); and

(b)    in respect of the Remaining Citizens Account Funds, the specific clients (Citizens Clients), the specific litigation claims and the specific amount referable to each client’s litigation claim which comprise the Remaining Citizens Account Funds were identified as set out in Annexure A to Mr Spring’s affidavit of 20 May 2025.

11    Each of the Citizens Clients had entered into a client agreement (as listed in column B of the table in Mr Spring’s affidavit of 20 May 2025, Annexure A).

12    Each of the Citizens Clients (except for one) entered into a power of attorney with the Company (as listed in column C of the table in Mr Spring’s affidavit of 20 May 2025, Annexure A).

13    The Liquidators have calculated each Citizens Client’s net entitlement (Citizens Funds Entitlement) at column I of the table in Mr Spring’s affidavit of 20 May 2025, Annexure A, which together total $186,040.08. The net entitlement includes a deduction on account of commission of $6,238.11 in total, calculated according to the percentage set out in the relevant client agreement and identified in columns G and H of Annexure A.

14    The Liquidators submit, and I accept, that the amount of each Citizens Funds Entitlement in the Administration Account No 2 is held on express trust for each Citizens Client respectively.

15    In my view, this result follows for the same reasons as set out in the First Reasons at [17]–[18]. The intention to create a trust of the fruits of the class action settlements received by the Company is supported by the following matters:

(a)    The client agreements contemplate the clients being “entitled” to the settlement monies and require those monies to be paid to them directly. A typical clause is as follows:

…all settlement monies to which the Client may be entitled will be paid and payable to the Client directly without any withholding from GGA (except for fees properly due to GGA) unless agreed by the parties in advance in writing.

That language suggests that any money received by the Company is regarded as the relevant client’s money and not the Company’s money (see First Reasons at [18(a)].) One client agreement, for Auscoal Superannuation, does not contain this typical clause, but nonetheless appears to contemplate that net proceeds are “actually received” by the client.

(b)    The terms of the client agreements and powers of attorney contemplate that the Company acts on the clients’ behalf. Here, a typical clause in the client agreements provides:

Where the Client participates in a Case as a Class Member, GGA will request the Client to sign or arrange the signature of the proof of claim forms under guidance from and as per timelines notified to the Client by GGA…GGA will then file all claim forms on the Client’s behalf in a timely manner.

Further, many of the powers of attorney expressly refer to the Company receiving money on the client’s behalf. Thus, six powers of attorney authorise the Company’s “receipt of any amounts from any party related to the Services…in respect of payments made to the Client, or through the Attorney on behalf of the Client”. Three others refer to the Company “reclaiming from any paying agent and/or administrator or any authority in any jurisdiction (as appropriate) amounts in respect of payments made to the [Client], or through GGA on behalf of the [Client]”; and the language of a fourth is similar. Another form of power of attorney refers to “…securing an entitlement from, an Action” (see First Reasons at [18(b)].)

(c)    In the case of one client, QSuper Limited (QSuper), the client agreement expressly provided that the Company must ensure that monies it receives on behalf of QSuper are kept in a separate account. That is a strong indication that a trust is intended (see First Reasons at [18(c)].)

(d)    It is not apparent that there is any basis on which the Company (which was not a participant in any of the claims in respect of the Citizens Funds in its own right) was legally entitled to receive the fruits of any settlement. Those fruits could only have been payable to it as the agent of the respective clients. As has been seen, under the terms of the client agreements, the Company had no entitlement to those monies (beyond the right to deduct its fees). In those circumstances, the following statement from Registrar of Accident Compensation Tribunal v Federal Commissioner of Taxation [1993] HCA 3; (1993) 178 CLR 145 at 165-166 (French CJ, Hayne, Crennan, Kiefel, Bell, Gageler and Keane JJ) (quoted by Bell, Gageler and Keane JJ in Legal Services Board v Gillespie-Jones [2013] HCA 35; (2013) 249 CLR 493 at [113]) is in point:

[U]nless there is something in the circumstances of the case to indicate otherwise, a person who has “the custody and administration of property on behalf of others” or who “has received, as and for the beneficial property of another, something which he is to hold, apply or account for specifically for his benefit” is a trustee in the ordinary sense.

(See First Reasons at [18(d)]).

16    The Citizens Account was an account used for the receipt of settlement money in respect of US litigation claims. It should be noted that the Citizens Account name as appears on bank statements did not specifically contain the description “Client”, unlike the accounts considered in the First Reasons and Second Reasons into which the settlement monies were paid (see First Reasons at [19] and Second Reasons at [19]). In my view, this does not affect the conclusion a trust was intended for the reasons set out above and in paragraph [18] of the First Reasons.

17    Finally, I note that correspondence received by the Administrators from two of the Citizens Clients, New South Wales Treasury Corporation and Colonial First State Investments Limited, records their position that settlement monies received by the Company are held by the Company on trust for them and are not assets of the Company available to be distributed to its creditors: see First Reasons at [20].

18    The Liquidators also seek a direction that they are entitled to treat commission which is payable to the Company in respect of the Citizens Funds as money to which the Company is beneficially entitled. The total amount of the commission is $6,238.11 and has been ascertained by the process described in Mr Spring’s affidavit of 20 May 2025 at [27]–[30]. It is accordingly money to which the Company is entitled.

19    A copy of the Interlocutory Process and Mr Spring’s affidavit of 20.05.25 has been served on ASIC. The Liquidators have also given notice to the Company’s creditors in accordance with the order made on 20 May 2025, by various emails sent on 22, 23 and 27 May.

20    Accordingly, I make orders sought in the interlocutory process.

Associate:

Dated:    13 June 2025