Federal Court of Australia

Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in Liq), in the matter of ACN 154 520 199 Pty Ltd (in Liq) (No 6) [2025] FCA 813

ORDERS

THE COURT ORDERS THAT:

Remuneration application

1.    Pursuant to section 473(3)(b)(ii) of the Corporations Act 2001 (Cth), the remuneration of Scott David Harry Langdon and Jennifer Anne Nettleton in their capacity as joint and several Special Purpose Liquidators of ACN 154 520 199 Pty Ltd (in Liquidation) (ACN 154 520 199) (the Company) for the period 30 June 2023 to 28 February 2025 (inclusive) (Relevant Period), be determined in the sum of $228,021.75 (including GST).

2.    Pursuant to section 479(3) of the Corporations Act, the Special Purpose Liquidators are justified in seeking to recover payment of their internal disbursements in the sum of $10,049.33 (including GST) incurred during the Relevant Period.

3.    Pursuant to section 473(3)(b)(ii) of the Corporations Act, the remuneration of the Special Purpose Liquidators for the period 1 March 2025 up to (and including) 15 July 2025, be determined in the sum of $19,371.00 (including GST).

4.    The costs and expenses of the Applicants of and incidental to the Interlocutory Process dated 5 June 2025, be costs in the liquidation of the Company.

Funding Deed Approval Application

5.    Pursuant to section 477(2B) of the Corporations Act, the Court grants approval, nunc pro tunc, to the Special Purpose Liquidators to enter into a Deed of Funding and Indemnity dated 30 June 2023 (Seventh Funding Deed), a copy of which appears at pages 91 to 146 of Exhibit 2 on this application which is subject to the confidentiality order made in order 8 below, on behalf of the Company.

6.    Pursuant to section 477(2B) of the Corporations Act, the Court grants approval, nunc pro tunc, to the Special Purpose Liquidators to enter into a Deed of Variation with respect to the Seventh Funding Deed dated 26 August 2024, a copy of which appears at pages 147 to 158 of Exhibit 2 on this application which is subject to the confidentiality order made in order 8 below, on behalf of the Company.

7.    Pursuant to section 477(2B) of the Corporations Act, the Court grants approval, nunc pro tunc, to the Special Purpose Liquidators to enter into a Deed of Variation with respect to the Deed of Funding and Indemnity between the Commissioner of Taxation of the Commonwealth of Australia and Rahul Goyal and Jennifer Anne Nettleton and the Company dated 29 September 2021 (Sixth Funding Deed) dated 19 August 2024, a copy of which appears at pages 189 to 202 of Exhibit 2 on this application which is subject to the confidentiality order made in order 8 below, on behalf of the Company.

Confidentiality

8.    Subject to order 9 below, pursuant to sections 37AF(1)(b), 37AG(1)(a) and 37AJ of the Federal Court of Australia Act 1976 (Cth), on the ground that the order is necessary to prevent prejudice to the proper administration of justice, the following parts of selected documents (Documents) be marked “confidential” on the electronic Court file and not be published or accessed, except pursuant to an order of the Court, until such time as any litigation (including any appeal) arising out of the winding-up of the Company is concluded:

(a)    paragraphs 71-78 and 80-112 of the affidavit of Scott David Harry Langdon affirmed on 2 May 2025 and described on its face as a “Confidential Affidavit”;

(b)    pages 91-158 and 161-202 of Exhibit SL-2 to the affidavit referred to in subparagraph 8(a), the whole of which exhibit became Exhibit 2 on this application;

(c)    pages 91-158 and 161-202 of Exhibit 2 on this application.

9.    Order 8 above does not prevent the Special Purpose Liquidators, their legal representatives and/or their servants, agents or employees, from disclosing, publishing or accessing the Documents and the information contained therein.

10.    Within seven days of the making of these orders, the Special Purpose Liquidators:

(a)    submit a redacted version of the Special Purpose Liquidators’ written submissions dated 9 July 2025 redacted to mask only those parts of the written submissions that are properly the subject of a confidentiality order of the type made in order 8 above; and

(b)    prepare and provide to the Associate to Cheeseman J redacted versions of the Documents in conformity with the confidentiality determination made in order 8 above.

11.    The making of confidentiality orders in relation to the written submissions be determined on the papers in chambers.

12.    Until determination of the confidentiality orders in relation to the written submissions pursuant to order 11 above, the whole of the written submissions be marked “confidential” on the electronic Court file and not be published or accessed, except pursuant to an order of the Court.

13.    The Special Purpose Liquidators’ costs of and incidental to the second interlocutory process filed on 5 June 2025 be costs in the liquidation of the Company.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    On 15 July 2025, I heard two interlocutory applications each filed on 5 June 2025 by Scott David Harry Langdon and Jennifer Anne Nettleton in their capacity as joint and several Special Purpose Liquidators of ACN 154 520 199 Pty Ltd (in liquidation) (ACN 154 520 199) (the Company) seeking:

(1)    orders pursuant to ss 473(3)(b)(ii) and 479(3) of the Corporations Act 2001 (Cth) and/or ss 60-10 and 90-15 of the Insolvency Practice Schedule (Corporations) (IPSC) being Sch 2 to the Corporations Act approving remuneration and/or internal disbursements in specified sums;

(2)    orders pursuant to s 477(2B) of the Corporations Act approving, nunc pro tunc:

(a)    entry into a funding agreement and the subsequent variation of that agreement; and

(b)    variation of an earlier funding agreement (entry of which was previously approved by the Court);

and

(3)    confidentiality orders pursuant to ss 37AF, 37AG(1)(a), and 37AJ of the Federal Court of Australia Act 1976 (Cth) that the terms of the funding agreements and any material that evidences those terms be marked “confidential” and not be published or accessed, except pursuant to an order of the Court, until such time as any litigation (including any appeal) arising out of the winding-up of the Company is concluded.

2    The funding agreements in substance oblige the Australian Taxation Office (ATO) to indemnify the Special Purpose Liquidators for the funds the subject of the remuneration and disbursement applications.

3    At the conclusion of the hearing, I made orders substantially in accordance with the orders sought by the Special Purpose Liquidators in their interlocutory applications. These are my reasons for making those orders.

SPECIAL PURPOSE LIQUIDATORS’ APPROACH TO BE DISCOURAGED

4    Although in substance the Special Purpose Liquidators succeeded on their applications, there was a concerning aspect to the approach that they took in relation to these applications that is of broader significance to applications of this type, which are typically brought by general liquidators.

5    The Special Purpose Liquidators clearly understood that they were obliged to obtain approval before entering into the agreements that they now seek to be approved pursuant to s 477(2B) of the Corporations Act. That obligation is expressed in clear terms in s 477(2B). Relatedly, the procedural history demonstrates that the Special Purpose Liquidators were well aware of the need to obtain approval under s 477(2B).

6     They did not seek such approval. Instead, they chose to enter the agreements on the basis that the agreements were conditional on approval being obtained but then delayed in seeking approval for about two years after they had caused the company to enter the earliest of the relevant agreements. During that prolonged delay, the Special Purpose Liquidators performed substantial work which is the subject of the related application for, amongst other things, approval of their remuneration.

7    In performing the work over the lengthy period between the time they entered the agreements and when they applied for those agreements to be approved, I infer they expected that they would be recompensed for the work they had done when the relevant agreements were approved. They appear to have assumed that the Court would necessarily make orders approving entry into the agreements nunc pro tunc and conveniently, at that same time, the Court would approve the remuneration claimed on the basis that that cost would be met in accordance with the funding agreements which had been entered into without approval.

8    I am left in the position of making inferences in this regard because the Special Purpose Liquidators have not explained their delay in bringing the application or to explain why they considered it to be appropriate to perform considerable work during the lengthy period after the agreements were executed in the expectation that the conditional agreements would necessarily be approved and take effect nunc pro tunc. While the Special Purpose Liquidators recognised in their submissions that in an appropriate case approval can be given under s 477(2B), nunc pro tunc, but that an explanation is generally required for the failure to seek approval in advance and its absence may result in the application failing. Yet, the Special Purpose Liquidators do not seek to explain their decision. Instead, they submitted that they have obtained approval nunc pro tunc on multiple earlier occasions. The role of the Court in an application such as this is not to “simply ‘rubber stamp’ whatever is put forward” by the liquidator — that approach flies in the face of the plain terms of the provision and of established principle: Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 at [26] (Gordon J). The approach taken by the Special Purpose Liquidators undermines the general objective that s 477(2B) functions to promote — that the winding up of a company be completed in a way that is conducive to expeditious and beneficial administration: In the matter of One.Tel Limited [2014] NSWSC 457; 99 ACSR 247 at [30] (Brereton J); Generate Group Pty Ltd v Harris [2023] FCA 605 at [36]-[39] (Stewart J).

9    In the absence of any explanation from the Special Purpose Liquidators, I am left to conclude that for their own convenience, they have chosen not to seek approval in a timely way on the basis that they regard the approval as but an administrative inconvenience. While I am cognisant of the commercial realities of the Special Purpose Liquidators’ appointment such considerations should not overshadow the object and purpose of the statutory approval process under s 477(2B) of the Corporations Act. Liquidators should act consistently and conscientiously to observe the limits imposed on their powers under the Corporations Act. A prudent liquidator ought not run the risk attendant on bringing the necessary approval application at their leisure. To delay obtaining the approval under s 477(2B) without proper explanation may result in an application being refused.

10    Here, notwithstanding my serious concerns as to the laissez-faire approach evident on this application, I was satisfied that the delay has not occasioned prejudice to the creditors of the Company, although my conclusion in this regard was finely balanced. I was ultimately swayed by two factors. First, the Funding Deeds are each conditional on the Special Purpose Liquidators obtaining approval — had entry into these agreements not been approved, the Special Purpose Liquidators may have been at risk in relation to being paid for the work they performed. The second and more weighty factor to my mind was that the trajectory of the tax dispute litigation (which I describe below) is such that the duration of the administration is unlikely to be prolonged by the approach that has been taken. However, notwithstanding that I was ultimately persuaded to make the orders nunc pro tunc, the Special Purpose Liquidators’ recourse to self-help resulted in there being no anterior consideration as part of approving entry into the transactions as to whether it was appropriate that work be performed at a time when the substantive dispute in relation to the tax liabilities was still making its way through the Tribunal and the Court. The Special Purpose Liquidators’ approach undermines the statutory purpose served by s 477(2B).

EVIDENCE

11    The Special Purpose Liquidators relied on three affidavits sworn by Mr Langdon, who is one of the Special Purpose Liquidators, namely:

(1)    an affidavit of 2 May 2025 and an exhibit thereto marked Exhibit 1 on the application;

(2)    a confidential affidavit of 2 May 2025 and an exhibit thereto marked Exhibit 2 on the application; and

(3)    an affidavit of 4 June 2025 and an exhibit thereto marked Exhibit 3 on the application.

PROCEDURAL CONTEXT

12    The interlocutory applications are the latest of a series of similar applications which have been made over many years, during the course of this proceeding, and related litigation, involving the Special Purpose Liquidators, the Company (through its general purpose liquidator), the ATO, and various other parties. These reasons assume familiarity with the judgments given in respect of those earlier applications: see Deputy Commissioner of Taxation, in the matter of ACN 154 520 199 Pty Ltd (in liq) v ACN 154 520 199 Pty Ltd (in liq) [2017] FCA 444; Deputy Commissioner of Taxation, in the matter of ACN 154 520 199 Pty Ltd (in liq) v ACN 154 520 199 Pty Ltd (in liq) (No 2) [2017] FCA 755; Goyal, in the matter of ACN 154 520 199 Pty Ltd (in liq) [2018] FCA 129; Deputy Commissioner of Taxation, in the matter of ACN 154 520 199 Pty Ltd (in liq) v ACN 154 520 199 Pty Ltd (in liq) (No 3) [2018] FCA 912; Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (In Liq), in the matter of ACN 154 520 199 Pty Ltd (In Liq) [2020] FCA 134 (ACN 154 520 199 Pty Ltd (in liq) (No 4)); Deputy Commissioner of Taxation v ACN 154 520 199 Pty Ltd (In Liq), in the matter of ACN 154 520 199 Pty Ltd (In Liq) [2020] FCA 609.

BACKGROUND

Appointment of Special Purpose Liquidators

13    Rahul Goyal and Ms Nettleton were appointed joint and several special purpose liquidators of the Company on 6 April 2017. Mr Goyal was replaced by Mr Langdon as a joint and several special purpose liquidator of the Company pursuant to orders made on 20 March 2024.

14    The background to the Special Purpose Liquidators’ appointment was set out by Gleeson J in ACN 154 520 199 Pty Ltd (in liq). It is not necessary to repeat those matters here save to highlight the following:

(1)    the Company carried on a business it described to the ATO as acquiring and refining gold, silver and other valuable materials into fine metal and ultimately the production of “precious metal” within the meaning of s 195-1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) for sale to dealers;

(2)    from February 2012 to June 2014, the Company lodged business activity statements claiming input tax credits on the basis that its acquisitions of gold were for the creditable purpose of making GST-free supplies pursuant to s 38-385 of the GST Act;

(3)    on 8 July 2014, the ATO notified the Company of an audit into its tax affairs;

(4)    on about 31 July 2015 and 1 September 2015, there were a series of restructuring transactions by which the Company sold its assets and its business;

(5)    on 8 April 2016, the Deputy Commissioner of Taxation issued notices of assessments and amended assessments of GST net amounts totalling approximately $122 million and assessments of administrative penalties totalling approximately $58 million;

(6)    on 28 April 2016, the Company lodged an objection against the notices of assessments issued. The ATO disallowed that objection on 21 September 2016;

(7)    on 22 September 2016, the Company resolved that it be wound up in a creditors’ voluntary winding up and that Schon Condon be appointed liquidator;

(8)    on 18 November 2016, Mr Condon on behalf of the Company filed an application in the Administrative Appeals Tribunal (AAT) for a review of the ATO’s disallowance of the objection to the notices of assessments; and

(9)    on 15 December 2016, the ATO withdrew an offer to fund Mr Condon to undertake investigations of the restructure transactions.

15    Among other matters, Gleeson J determined that special purpose liquidators should be appointed in order to investigate the restructuring transactions referred to in paragraph [17(4)] above. The scope of the role of the Special Purpose Liquidators at that time was set out in Annexure A to her Honour’s orders.

16    The scope of the Special Purpose Liquidators’ appointment was subsequently expanded to include investigating a subsequent transfer by the company that had acquired the Company’s original assets in September 2015 to another entity in September 2017, referred to broadly as the 2017 restructuring transactions: see Goyal at [22]-[23].

17    In ACN 154 520 199 Pty Ltd (in liq) (No 4) at [17], Jagot J relevantly observed the following with respect to the scope of Special Purpose Liquidators’ appointment:

As the terms of Annexure A to the orders of Gleeson J disclose, unlike most liquidations, in this case the special purpose liquidators have been appointed for the specific purpose of undertaking significant and complex investigations with a view to determining whether causes of action are available to the creditors of the company, and if so, prosecuting those causes of action.

18    On 30 September 2021, the Special Purpose Liquidators commenced proceedings in this Court against current and former directors of the Company for breaches of their directors’ duties including in respect of the restructuring transactions which were the subject of their investigations (Recovery Proceeding).

19    On 27 October 2021, the Recovery Proceeding was stayed by consent, pending determination of the dispute between the Company and the ATO.

Dispute between the Company and the ATO

Objections to the notices of assessments

20    The dispute with respect to the notices of assessments and the ATO’s disallowance of the Company’s objection to the notices of assessments is complex and ongoing. Mr Langdon gave the following evidence in relation to the progress of that dispute:

(1)    on 20 December 2019, the AAT dismissed the Company’s application objecting to the notices of assessment: ACN 154 520 199 Pty Ltd (In Liq) and Commissioner of Taxation (Taxation) [2019] AATA 5981;

(2)    the Company, by its liquidator Mr Condon, appealed from the AAT’s determination and on 6 November 2020 a Full Court of this Court determined that, subject to the issue of whether the Company’s income tax credits could otherwise have been disallowed pursuant to div 165 of the GST Act, the Company was entitled to claim the input tax credits as it had done. The Full Court remitted the matter to the AAT to determine the issue of the application of div 165 of the GST Act: ACN 154 520 199 Pty Ltd (in liquidation) v Commissioner of Taxation [2020] FCAFC 190;

(3)    the ATO applied for special leave to appeal from the Full Court’s decision to the High Court of Australia. Special leave was refused: Commissioner of Taxation v ACN 154 520 199 Pty Ltd (In Liquidation) [2021] HCASL 64 (8 April 2021);

(4)    on 30 November 2023, the AAT determined the issue of the application of div 165 of the GST Act and allowed the Company’s objections to the notices of assessment: HNMF v Federal Commissioner of Taxation [2023] AATA 4067; and

(5)    on 23 December 2023, the ATO filed an appeal from the decision in HNMF. That appeal was heard by a Full Court of this Court on 18 and 19 November 2024. Judgment in that appeal is reserved.

The ATO’s appeal and the Recovery Proceeding

21    The special purpose liquidation is continuing. The Recovery Proceeding brought by the Special Purpose Liquidators is on foot, albeit stayed. It appears to me that if, ultimately, the ATO is not successful in its appeal from the decision in HNMF, then the Special Purpose Liquidators are unlikely to be funded by the ATO to further pursue the Recovery Proceeding in particular as such a ruling is likely to materially reduce or even extinguish the quantum of its debt proved in the winding up of the Company. Conversely, if the ATO is successful, it is likely to be motivated to continue to fund the Special Purpose Liquidators to continue to prosecute the Recovery Proceeding to recover property for the benefit of creditors of the Company, including the ATO.

Previous remuneration applications and associated funding agreements

22    The Special Purpose Liquidators have, concurrently with the progress of the dispute between the Company and the ATO, continued with the work they have been appointed to undertake including by seeking and obtaining approval of their remuneration for the work they have undertaken in the relevant period and to date. The Special Purpose Liquidators have made two previous successful remuneration applications to the Court.

23    On 10 February 2020, Jagot J made orders approving an application made by the Special Purpose Liquidators for approval of their remuneration and (internal) disbursements for the period 6 April 2017 to 30 April 2019 (inclusive): ACN 154 520 199 Pty Ltd (in liq) (No 4). In doing so, her Honour observed at [15]-[16]:

[15]     The matters to which I have been taken in the evidence and in the written submissions for the special purpose liquidators identify that the first two funding agreements provide for the ATO to indemnify the special purpose liquidators for their remuneration and expenses. The third of the agreements provides an indemnity for fees and expenses arising from the application by Mr Cochineas.

[16]     Under the terms of the funding agreements, the special purpose liquidators will be recovering their costs and expenses directly from the ATO and, importantly, the ATO can only recover these payments out of recoveries achieved by the special purpose liquidators through their investigation, and not otherwise from the assets of the company.

24    Mr Langdon gave evidence in relation to the terms of the three funding agreements referred to by her Honour in this extract. The terms of those agreements are confidential. It is sufficient for present purposes to note that Jagot J approved the entry by the Special Purpose Liquidators into those agreements by orders made on 7 July 2017 and 26 October 2018, on the basis that the approval took effect nunc pro tunc.

25    On 18 March 2022, Jagot J made orders approving the Special Purpose Liquidators’ remuneration and (internal) disbursements for the period 1 May 2019 to 17 November 2021 (inclusive) and for their future remuneration from 18 November 2021 to hearing of the remuneration application that was the subject of her Honour’s orders.

Seventh Funding Deed

26    On 30 June 2023, the Special Purpose Liquidators and the Deputy Commissioner entered into a further funding deed (Seventh Funding Deed). The Seventh Funding Deed was amended by a deed of variation on 26 August 2024 (Deed of Variation). The terms of the Seventh Funding Deed and Deed of Variation are confidential.

27    At the time of entry into these agreements, the Special Purpose Liquidators formed the view, rightly as things transpired, that the duration of the obligations to be performed under the agreements was likely to continue for a period of longer than three months. Accordingly, the Special Purpose Liquidators require approval under s 477(2B) of the Corporations Act to enter into these agreements. The agreements are expressed to be conditional on the requisite approval being obtained: Seventh Funding Deed, cl 3. The Special Purpose Liquidators have not consulted with the creditors of the Company (save for the ATO) in relation to the terms of the Seventh Funding Deed and the Deed of Variation.

28    Mr Langdon explained that the purpose of the Seventh Funding Deed was to enable the Special Purpose Liquidators to undertake work in connection with the Recovery Proceeding, the nature of which is the subject of the confidential materials that are before me on this application.

29    Mr Langdon gave evidence in relation to the critical features of the agreements including by reference to the tasks to be undertaken pursuant to the Seventh Funding Deed and Deed of Variation.

Genesis of the Sixth Funding Deed as amended

30    The Special Purpose Liquidators’ entry into a deed of indemnity dated 29 September 2021 (Sixth Funding Deed) was approved pursuant to orders made on 4 November 2021.

31    On 20 December 2023, the Special Purpose Liquidators received a letter from the legal representatives of the defendants in the Recovery Proceeding which relevantly raised the possibility of potential litigation to be commenced against the Special Purpose Liquidators.

32    On 19 August 2024 the Special Purpose Liquidators and the Deputy Commissioner entered into a deed to vary the Sixth Funding Deed. Mr Langdon again gave evidence in relation to the critical features of the Sixth Funding Deed as varied.

33    Again, the terms of the Sixth Funding Deed as varied are confidential. The duration of the obligations to be performed under it are likely to continue for a period of longer than three months and the Special Purpose Liquidators therefore require approval under s 477(2B) of the Corporations Act. The agreement is expressed to be subject to that approval being obtained: Sixth Funding Deed, cl 3.

34    I will hereafter refer to the Seventh Funding Deed as varied pursuant to the Deed of Variation and the Sixth Funding Deed as varied together as the Funding Deeds.

Work performed by the Special Purpose Liquidators

35    The Special Purpose Liquidators sought a determination approving their remuneration and (internal) disbursements for the period from 30 June 2023 to 28 February 2025 (inclusive) totalling $238,071.08 (including GST), comprised of:

(1)    professional fees – $228,021.75 (including GST); and

(2)    disbursements (internal) – $10,049.33 (including GST).

36    The Special Purpose Liquidators also sought a determination approving their future remuneration in the sum of $19,371.00 (including GST), being the Special Purpose Liquidators’ estimate of their professional fees that were expected to be incurred in connection with this remuneration application from 1 March 2025 up to (and including) the hearing of the application.

37    Mr Langon gave evidence of the work undertaken by the Special Purpose Liquidators for the purpose of this application which included:

(1)    investigating assets that may be available to recover from the defendants to the Recovery Proceeding to satisfy a successful outcome in that proceeding (including review of the financial performance and cash generating performance of the refining business);

(2)    assisting their solicitors, Quinn Emanuel Urquhart & Sullivan (Quinn Emanuel), in preparing an updated advice as to prospects in respect to the claims in the Recovery Proceeding;

(3)    providing instructions to Quinn Emanuel in relation to correspondence with the solicitors for the defendants to the Recovery Proceeding;

(4)    preparing proposed settlement parameters and requirements in relation to the Recovery Proceeding;

(5)    preparing the interlocutory applications for hearing; and

(6)    exploration of potential insurance policies in relation to the threat of litigation issued by the defendants in the Recovery Proceeding.

38    The Special Purpose Liquidators sought approval for their remuneration that is the subject of an indemnity given by the Deputy Commissioner pursuant to the Funding Deeds. These costs are to be received from the ATO directly and not from the assets of the Company.

39    Mr Langdon provided timesheets prepared by the Special Purpose Liquidators which set out the work performed by them for the purpose of this application. Those timesheets show (among other things) work that was claimed (because it is covered by one or other of the Funding Deeds), a description of the work performed, how much time was spent on the task, and the hourly rate of the staff member who performed the work.

Notice of the remuneration application

40    The Special Purpose Liquidators provided notice of their remuneration application to each creditor notified of the first and second remuneration applications, Mr Condon (in his capacity as general purpose liquidator of the Company), and the Company’s sole shareholder. Mr Langdon gave evidence that no objections had been received to the remuneration sought by the Special Purpose Liquidators.

41    The attitude of the ATO to this application was significant. That is because in its capacity as funder it is in the main liable for the payments to be made as a result of the orders which I made. Relatedly the ATO is the largest creditor of the Company by claim value (representing approximately 99% of the total creditor claims). The ATO appeared to be supportive of the application. They were on notice of the application and did not seek to be heard against it.

LEGAL PRINCIPLES

Remuneration application

42    Where the now repealed s 473 of the Corporations Act continues to apply, the Court may determine and approve the remuneration of a court appointed liquidator where no creditors’ meeting has first been convened to consider and if appropriate approve the liquidator’s remuneration. That section relevantly provided:

A liquidator is entitled to receive such remuneration by way of percentage or otherwise as is determined:

…

(b)     if there is no committee of inspection or the liquidator and the committee of inspection fail to agree:

(i)     by resolution of the creditors; or

(ii)     if no such resolution is passed—by the Court.

43    In ACN 154 520 199 Pty Ltd (in liq) (No 4) at [2]-[3], Jagot J set out the matters which the Court is required to take into account in determining whether the remuneration sought is reasonable and summarised the relevant principles in respect of the former subsection 473(10).

44    Under former subsection 479(3) of the Corporations Act, the Court was also empowered, upon application by a liquidator, to make orders in relation to the winding up generally.

45    These sections of the Corporations Act have since been repealed and replaced by provisions contained in the IPSC which provide similar supervisory powers to the Court. However, the former provisions continue to apply to appointments made prior to 1 September 2017. As mentioned, the Special Purpose Liquidators were appointed on 6 April 2017.

46    Section 60-5 of the IPSC provides:

An external administrator of a company is entitled to receive remuneration for necessary work properly performed by the external administrator in relation to the external administration, in accordance with the remuneration determinations (if any) for the external administrator.

47    Section 60–10(1) of the IPSC provides:

A determination, specifying remuneration that an external administrator of a company (other than an external administrator in a members’ voluntary winding up) is entitled to receive for necessary work properly performed by the external administrator in relation to the external administration, may be made:

(a)     by resolution of the creditors; or

(b)     if there is a committee of inspection and a determination is not made under paragraph (a)—by the committee of inspection; or

(c)     if a determination is not made under paragraph (a) or (b)—by the Court.

48    Section 60-12 of the IPSC sets out the matters which the Court have regard to in making a remuneration determination under s 60-10(1)(c).

49    Section 90–15(1) of the IPSC provides:

The Court may make such orders as it thinks fit in relation to the external administration of a company.

50    The principles for approval of remuneration pursuant to s 60-10 of the IPSC are well-established: see eg Phoenix Institute of Australia Pty Ltd (in liq), in the matter of Phoenix Institute of Australia Pty Ltd (in liq) [2021] FCA 1203 at [26]-[31] and the authorities referred to therein. I adopt and apply those principles.

51    Although it is not the role of the Court to determine payment of disbursements under s 60-10(1)(c) of the IPSC, it may nonetheless be appropriate for the Court to approve a liquidator’s expenses under s 90-15 of the IPSC or the inherent jurisdiction of the Court: see Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699 at [14]-[21] (Gordon J). See too by way of example orders made in this proceeding by Jagot J on 10 February 2020 and 18 March 2022.

Approval of entry into funding agreements

52    Section 477(2B) of the Corporations Act provides:

Except with the approval of the Court, of the committee of inspection or of a resolution of the creditors, a liquidator of a company must not enter into an agreement on the company’s behalf (for example, but without limitation, a lease or an agreement under which a security interest arises or is created) if:

(a)     without limiting paragraph (b), the term of the agreement may end; or

(b)     obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance;

more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months

53    The principles applicable to an application under s 477(2B) are well-established and have been set out in many cases including Robinson, in the matter of Reed Constructions Australia Pty Ltd (in liq) [2017] FCA 594 at [33]-[39] (Gleeson J); Hughes, in the matters of Sales Express Pty Ltd (in Liq) [2016] FCA 423 at [20] (Edelman J); Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liquidation) (No 2) [2023] FCA 173 at [17]-[24] (Wigney J); Alfonso, in the matter of Pinnacle Fire Protection Pty Ltd (in liq) v Woods [2021] FCA 1402 at [13]-[15]; and Naidenov, in the matter of AJW Interiors and Constructions Pty Ltd (in liq) [2024] FCA 25 at [83]. I adopt and apply those principles.

54    As mentioned, approval under s 477(2B) of the Corporations Act should be obtained prior to entry into a document in relation to which approval is required. In an appropriate case, approval can be given under s 477(2B) nunc pro tunc, although an explanation should be given for the failure to seek approval in advance and the absence of any such explanation may result in the application failing: Naidenov at [88]-[92].

Confidentiality orders

55    Section 37AF of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act) empowers the Court to make a suppression or non-publication order prohibiting or restricting the publication of, among other things, evidence in a proceeding or information about evidence that is filed with the Court. The grounds on which such an order can be made are set out in s 37AG of that Corporations Act and relevantly include where it is “necessary to prevent prejudice to the proper administration of justice”: s 37AG(1)(a). The suppression order should operate for no longer than is reasonably necessary to achieve the purpose for which it is made: see s 37AJ. The Court may make any other order necessary to give effect to the primary order: s 37AF(2).

56    It is well-established that commercial in confidence or commercially sensitive information may form a sufficient basis for the grant of a confidentiality order: Clark v Digital Wallet Pty Ltd [2020] FCA 877 (Abraham J), citing Hogan v Australian Crime Commission [2010] HCA 21 at [38]-[39] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ); Rinehart v Welker [2011] NSWCA 403 at [37] (Bathurst CJ and McColl JA); Australian Competition and Consumer Commission v Air New Zealand Limited (No 3) [2012] FCA 1430 at [35] (Perram J).

57    Further, the clear public interest in the due and beneficial administration of the estates of insolvent companies for the benefit of creditors is a relevant consideration in favour of granting an order under s 37AF: Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; 78 ACSR 163 at 164 [2]-[5] (Barrett J, as his Honour then was).

CONSIDERATION

Remuneration application

58    The Special Purpose Liquidators submitted that the remuneration application should be approved. They submitted that was so for the following reasons.

59    First, the work performed by them and for which they sought approval of their remuneration was in respect of the Recovery Proceeding and therefore within the scope of their functions established in ACN 154 520 199 Pty Ltd (in liq) as expanded in ACN 154 520 199 Pty Ltd (In Liq) (No 4). I accepted that was correct.

60    Secondly, the work performed by them was necessary. The Special Purpose Liquidators submitted that if the stay of the Recovery Proceeding is lifted, then it was critical and in the interests of the creditors of the Company that the tasks they have identified as having performed in relation to the Recovery Proceeding were undertaken before substantive steps are taken in that proceeding. I accepted that the work that has been undertaken was in the interests of the creditors of the Company and that it was prudent for the Special Purpose Liquidators to undertake it before the stay of the Recovery Proceeding is lifted. In reaching that conclusion, I do not in any way wish to detract from what I have said about the Special Purpose Liquidators’ obligation to approach the Court in a timely manner and not to seek permission after the event instead of advance approval.

61    Thirdly, that the work and investigations carried out by them is proportionate to, and is reasonable in respect of:

(1)    the value of the creditors’ claims against the Company including the value of the ATO’s claim;

(2)    the circumstances giving rise to their appointment traversed by Gleeson J in ACN 154 520 199 Pty Ltd (in liq);

(3)    the nature and scope of their appointment as amended;

(4)    the complexity of the transactions with which they are tasked to investigate;

(5)    the work to be undertaken as contemplated under Funding Deeds as varied; and

(6)    the complexity of the claims being pursued by the Company in relation to the notices of assessments.

Again, I accepted that submission.

62    The Special Purpose Liquidators accept that that it is possible that the work the subject of the remuneration application may not actually lead to the recovery of assets. They submitted, and I accepted, that this does not make the work unreasonable or unnecessary. In particular these investigations ensure the Special Purpose Liquidators are well informed as to the best possible chance of recovering assets for the benefit of all creditors of the Company.

63    Fourthly, the use of the time costing method is appropriate. The Special Purpose Liquidators contend that given the significant investigation tasks required of the Special Purpose Liquidators, time costing is most appropriate fee approach because it ensures that the remuneration is more accurately allocated to specific matters or tasks. That method is also consistent with the terms of the Seventh Funding Deed. I was satisfied that in the present circumstances, time costing was the appropriate method.

64    Finally, the Special Purpose Liquidators submitted that the approval of their remuneration did not prejudice any creditors of the Company aside from the ATO. There is considerable force in this submission. As with the first remuneration application approved by Jagot J on 10 February 2020, the remuneration is to be paid by the ATO, and not by the Company. The Special Purpose Liquidators rightly recognise that the ATO is only entitled to recover its payments under the Funding Deeds if the Special Purpose Liquidators are successful in the Recovery Proceeding.

65    I was satisfied that orders should be made approving the remuneration sought by the Special Purpose Liquidators. In particularly, I was satisfied that:

(1)    the evidence provided by the Special Purpose Liquidators comprehensively set out what has been done, who it has been conducted by and the rates charged for such work to satisfy the Court that the amount claimed is fair and reasonable remuneration for that work, including that work was delegated to more junior staff with lower hourly rates where appropriate;

(2)    the method used by the offices of the Special Purpose Liquidators to record and review their time and work undertaken on the special purpose liquidation is appropriate and commensurate with the complexity of the functions conferred on them by their appointment;

(3)    the work undertaken in relation to the Recovery Proceeding was necessary in order for the Special Purpose Liquidators to prepare to prosecute that proceeding and in my view falls within the purview of the Special Purpose Liquidators’ remit, notwithstanding that the Recovery Proceeding is stayed. Relevantly, the work has been undertaken in this regard has been done with the knowledge and presumably the consent, or at worst acquiescence of the ATO in its capacity as funder;

(4)    the work and investigations carried out by the Special Purpose Liquidators is proportionate to the scope and complexity of their appointment; and

(5)    in the event that the funding agreements are approved (as they ultimately were) the remuneration is to be paid by the ATO, and not by the Company. Although the ATO will be entitled to recover amounts paid by it under the Funding Deeds if the Special Purpose Liquidators successfully recover assets for the benefit of Company’s creditors, the Company is in that circumstance likely to be in a more favourable position than it is in presently. If the Special Purpose Liquidators are not successful in the Recovery Proceeding, the ATO, and not any other creditor of the Company, will bear the relevant cost.

Application for approval to enter funding deeds

66    The Special Purpose Liquidators applied for approval pursuant to s 477(2B) of the Corporations Act to enter into the Seventh Funding Deed and the Deed of Variation and the deed of variation in relation to the Sixth Funding Deed. That application was necessary because the terms of those funding agreements will end, and some of the obligations of the parties to the agreements have or may be performed, more than three months after the date on which the Special Purpose Liquidators entered into them.

67    The Special Purpose Liquidators submitted that entry into the Funding Deeds should be approved for the following key reasons.

68    First, the Special Purpose Liquidators submitted, and I accepted, that they have been appropriately advised in relation to the prospects of success in respect of the Recovery Proceeding. They acknowledge that the nature of the indemnity under the Funding Deeds, that is that the ATO is liable for the funding and the Company is not liable to pay for it out of existing assets, dilutes the importance of this submission however I accepted that it is nonetheless a relevant consideration in respect of the application.

69    Secondly, the Funding Deeds are in the interests of creditors as a whole because they fund work which if successful will benefit all creditors of the Company without requiring the use of the Company’s assets.

70    Thirdly, the Funding Deeds do not cause any oppression in that the Company is not at this stage liable to pay for any of the Special Purpose Liquidators fees out of existing assets.

71    Fourthly, the Special Purpose Liquidators contended that it was appropriate that they seek funding to investigate the best possible outcomes for the Company from the Recovery Proceeding, including by way of potential settlement with the defendants in that proceeding.

72    Fifthly, the Special Purpose Liquidators do not presently have alternate funding options available to them in respect of the work performed pursuant to the indemnities the subject of the Funding Deeds without the ATO providing funding.

73    Finally, the Special Purpose Liquidators observed that the terms of the Funding Deeds do not entitle the ATO to payment of any premium on the funding it makes available to them.

74    I was satisfied that orders should be made under s 477(2B) of the Corporations Act approving entry by the Special Purpose Liquidators into the Funding Deeds. This was because:

(1)    in entering into the Funding Deeds, the Special Purpose Liquidators have exercised their commercial judgement and I have no reason to suspect any impropriety or bad faith on their behalf in doing so notwithstanding that their serious sluggishness in seeking to have entry into those agreements approved left much to be desired;

(2)    the evidence before me did not suggest that the Special Purpose Liquidators’ appointment would be unduly prolonged by entry into the Funding Deeds;

(3)    there is good reason to conclude on the evidence before me that the scope of the Special Purpose Liquidators’ appointment and their role will be enhanced by granting approval for their entry into the Funding Deeds;

(4)    the Funding Deeds are the only option available to the Special Purpose Liquidators in respect of their funding;

(5)    the terms of the Funding Deeds are clear and are not oppressive or prejudicial to the creditors of the Company as a whole;

(6)    the Special Purpose Liquidators have received appropriate advice in relation to the prospects of success of the Recovery Proceeding and I am satisfied that it was a proper exercise of power for the Special Purpose Liquidators to enter into the Funding Deeds on the basis of that advice; and

(7)    although the Special Purpose Liquidators did not give notice of the proposal to enter into the Funding Deeds to the creditors of the Company, consultation with the creditors of the Company is not a requirement of such an application: Onefone Australia Pty Ltd v One.Tel Ltd [2010] NSWSC 498; 78 ACSR 163 at [11]-[13] (Barrett J). Although the position of the creditors of a company is a relevant matter, the creditors’ opinion is not determinative of the application: Hall v Poolman [2009] NSWCA 64; 75 NSWLR 99 at [90], [135] (Spigelman CJ, Hodgson JA and Austin J). In any event I was satisfied that the nature of Special Purpose Liquidators’ appointment, the composition of the Company’s creditors (including the position of the ATO in that composition) and the nature of the claims to be pursued by the Special Purpose Liquidators all support the Special Purpose Liquidators’ submission that the orders should be made.

75    Notwithstanding, I pause here to reiterate my concern with respect to the approach taken by the Special Purpose Liquidators to seek approval under s 477(2B) of the Corporations Act which I have outlined above and will not further labour.

76    As I have said, notwithstanding the concerns I had regarding this application, I was satisfied that it was appropriate to exercise the Court’s discretion to approve entry into the Funding Deeds nunc pro tunc.

Confidentiality orders

77    The Special Purpose Liquidators submitted by reference to numerous authorities that confidentiality orders are commonly made by the Court in relation to applications for approval under s 477 of the Corporations Act. They submitted that the rationale for that approach was explained by Barrett J in McGrath & Anor re HIH Insurance Ltd [2005] NSWSC 731 at [10]-[13] and in particular at [12] where his Honour relevantly said:

The administration of justice is, in my view, very likely to be prejudiced in two ways by availability to the potential defendants of (and any public airing of) the information concerning the liquidators’ proceedings that will inevitably be divulged by the adducing of evidence and the making of submissions on the hearing of the s 447(2B) applications. There is a likelihood of a real and negative impact upon the due and orderly conduct of the proposed proceedings themselves, in that the defendants in them will have access to information that, in the ordinary course, a plaintiff is entitled to keep confidential in the plaintiff’s own interests. Any such access would produce an undue distorting effect in relation to the due conduct of those proceedings themselves. …

78    In this case the orders were sought in relation to the Funding Deeds as amended and material which went to and described the nature of those documents. It is in my view material which would, if it was available to the defendants to the Recovery Proceeding, provide them with an unfair forensic advantage and which could well undermine the conduct of the proceeding and the administration of the insolvent estate. In those circumstances it is in the interests of the administration of justice that material of that nature be kept confidential until the conclusion of the winding up of the Company.

79    Accordingly, I was satisfied that the order sought by the Special Purpose Liquidators was appropriate.

CONCLUSION

80    For those reasons I made orders substantially as sought by the Special Purpose Liquidators.

Associate:

Dated:    21 July 2025