Federal Court of Australia

Hogan (liquidator) v McCorkell, in the matter of McCorkell & Associates Pty Ltd (in liq) (No 2) [2025] FCA 1115

ORDERS

THE COURT ORDERS THAT:

1.    Subject to Order 2 below, pursuant to ss 37AF(1)(b), 37AG(1)(a) and 37AJ of the Federal Court of Australia Act 1976 (Cth), on the ground that it is necessary to prevent prejudice to the proper administration of justice, the following documents (Documents) be marked “Confidential” on the Court file and not be published, disclosed or accessed by any person, except pursuant to an order of the Court, until the conclusion of the liquidation of the second plaintiff (Company):

(a)    paragraphs [25] to [46] of the Affidavit of Michael Andrew Hogan sworn 18 August 2025 (the Affidavit); and

(b)    pages 52 to 126 of Exhibit MH-3 and Exhibit MH-4 to the Affidavit.

2.    Order 1 above does not prevent the plaintiffs, the plaintiffs’ legal representatives or the first plaintiff’s (Liquidator) servants, agents or employees, from disclosing, publishing or accessing the Documents and the information contained therein.

3.    Pursuant to ss 477(2B) and 506(1A) of the Corporations Act 2001 (Cth), leave be granted nunc pro tunc to the Liquidator to enter into the following documents on behalf of the Company:

(a)    First Amendment Deed dated 13 June 2025, which appears at pages 115 to 121 of Exhibit MH-3 of the Affidavit; and

(b)    Second Amendment Deed dated 11 August 2025, which appears at pages 122 to 126 of Exhibit MH-3 of the Affidavit.

4.    The plaintiffs’ costs in respect of the Interlocutory Process 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

Delivered ex tempore, revised from transcript

SHARIFF J:

1.    INTRODUCTION

1    These proceedings were commenced on 27 July 2023, seeking, inter alia, orders that the first plaintiff (Mr Hogan), be given approval to enter into a funding agreement and deed of indemnity relating to the liquidation of the second plaintiff, McCorkell & Associates Pty Ltd, as well as seeking orders for the issue of examination summonses and orders for production and the making of asset preservation orders under s 1323(3) of the Corporations Act 2001 (Cth) (Corporations Act).

2    The orders sought by Mr Hogan were granted by Lee J in Hogan (liquidator) v McCorkell, in the matter of McCorkell & Associates Pty Ltd (in liq) [2023] FCA 863. At that time, his Honour also made orders under s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act), in respect of certain evidentiary material relating to the contents of the funding documents: see McCorkell at [49]–[54].

3    Following those orders having been made and examinations having taken place, Mr Hogan commenced recovery proceedings against Mr McCorkell, a director of McCorkell & Associates, the former liquidator of McCorkell & Associates and an external adviser (Recovery Proceedings). For present purposes, it is unnecessary to detail the nature of the claims there brought, other than to note that they involve allegations that Mr McCorkell breached his statutory and fiduciary duties, that the former liquidator and external adviser were liable as accessories, and that a transaction involving the disposal of the business of McCorkell & Associates was a voidable transaction. The Recovery Proceedings are being case managed by me. There is presently an ongoing timetable by which the parties are engaged in the process of filing and serving their evidence, including expert evidence.

4    By an interlocutory process filed on 19 August 2025, Mr Hogan now seeks orders, inter alia, approving entry into amended funding agreements pursuant to ss 477(2B) and 506(1A) of the Corporations Act, and orders under s 37AF of the FCA Act in relation to certain of the evidentiary material that has been called in support of that application including as to the contents of those agreements. That interlocutory process is supported by an affidavit of Mr Hogan sworn on 18 August 2025 and Exhibits MH-3 and MH-4. It is in relation to some of the contents of this supporting affidavit and its Exhibits that the orders under s 37AF of the FCA Act are directed.

5    I have read the materials and the short written submissions that were filed in support of the application which include the amended funding agreement, being those which are recorded in the First Amendment Deed dated 13 June 2025 and the Second Amendment Deed dated 11 August 2025, each of which are amendments to the original funding agreement and deed of indemnity, which were the subject of earlier approval by the Court. These amendments contain obligations which will, or at least may, remain in effect for more than three months after the date of entry of those amendments, such that their approval under s 477(2B) of the Corporations Act is necessary. It should be observed at the outset that this is not an application for orders under s 90-15 of the Insolvency Practice Schedule (Corporations) or for judicial advice.

6    No interested party appeared or sought to be heard on the application.

2.    CONSIDERATION

7    The principles applicable to such applications are well settled. In Hundy (liquidator), in the matter of 3 Property Group 13 Pty Ltd (in liquidation) (No 2) [2023] FCA 173, Wigney J observed as follows at [18]–[20].

18     The reason that approval is required in respect of agreements which may operate or involve obligations that extend beyond three months is that such agreements tend to cut across the general expectation that the winding up of a company will proceed expeditiously: Re HIH Insurance Ltd [2004] NSWSC 5 at [15]; Re Golden Sands Hospitality Pty Ltd (in liq) (No 2) [2017] NSWSC 450 at [15], [17].

19    The requirement to obtain approval of such agreements affords some protection against ill-advised or improper actions on the part of the liquidator: Empire (Aust) Nominees Pty Ltd v Vince (2000) 35 ACSR 167; [2000] VSC 324 at [12]. The Court’s task is not to second guess the liquidator’s commercial judgment, but rather to determine whether there are grounds for suspecting a lack of good faith, some error of law or principle, or some other good reasons to intervene: Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85-86; Leigh, re AP and PJ King Pty Ltd (in liq) [2006] NSWSC 315 at [23]; Stewart, re Newtronics Pty Ltd [2007] FCA 1375 at [26]; Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher & Barnet (2015) 89 NSWLR 110; [2015] NSWCA 85 at [125] (Bathurst CJ, with Beazley P, Macfarlan, Meagher and Barrett JJA agreeing).

20    In respect of funding agreements that require approval pursuant to s 477(2B) of the Corporations Act, the factors that may be relevant to assessing whether approval should be granted include: the manner in which the funding or indemnity will be provided under the agreement; the prospects of success of the proposed litigation; the risks involved in the claim; the interests of creditors other than the proposed defendant or respondent; possible oppression; the nature and complexity of the cause of action; the extent to which the liquidator has canvassed other funding options; the level of the funder’s premium, if any; and the extent to which the liquidator has consulted with creditors: Leigh at [25]; Re ACN 076 673 875 Ltd (rec and mgr apptd) (in liq) (2002) 42 ACSR 296; [2002] NSWSC 578 at [16]-[34]; Hughes, in the matter of Sales Express Pty Ltd (in Liq) [2016] FCA 423 at [20].

21    The Court may give retrospective approval under s 477(2B) in appropriate circumstances: Hutchison v Hillcrest Litigation Services Ltd [2010] NSWSC 934 at [25]; Newtronics at [25]; Vickers, in the matter of York Street Mezzanine Pty Ltd (in liq) (2011) 196 FCR 479; [2011] FCA 1028 at [27]; Hird (Liquidator), in the matter of Allmine Group Limited (in liq) [2018] FCA 781 at [33].

22    A liquidator is not necessarily required to give creditors, or the defendant or respondent in proceedings that are to be funded by the agreement in respect of which approval is sought, notice of an application for approval of an agreement pursuant to s 477(2B): Re Bell Group Ltd (in liq) ACN 008 666 993 [2009] WASC 235 at [58]; Jones, Saker, Weaver and Stewart (Liquidators), in the matter of Great Southern Limited (in liq) (Receivers and Managers Appointed) [2012] FCA 1072 at [50]; Onefone Australia Pty Ltd v One.Tel Pty Ltd (2010) 78 ACSR 163; [2010] NSWSC 498 at [11]-[13], upheld on appeal in Deloughery & Ors v Weston (2010) 79 ACSR 180; [2010] NSWCA 148 at [36] (Giles JA and Handley AJA, with Spigelman CJ agreeing); Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856 at [35]; Thorn (liquidator), in the matter of South Townsville Developments Pty Ltd (in liq) [2022] FCA 143 at [52]-[57].

8    Having regard to these principles and the evidence before me, I am satisfied that it would be in the interests of the creditors that the amendments to the original funding agreements be approved.

9    I am satisfied that Mr Hogan, who is an experienced insolvency practitioner, has addressed the reasons why the Recovery Proceedings, at least in his opinion, have reasonable prospects of success (without me needing to descend into that debate, given approval is not being sought under s 90-15 of the Insolvency Practice Schedule). I am also satisfied that if Mr Hogan’s views prove to be correct, it will be to the benefit of creditors. Without going into the details of the nature of the amendments, I am satisfied that they are appropriate ones to enter into, having regard to the subject matter of the Recovery Proceedings, and Mr Hogan’s opinions seeking to justify entry into those amendments. I am satisfied that Mr Hogan has arrived at the views that he has expressed in good faith.

10    Accordingly, I am satisfied that as these amendments have already been entered into, approval should be given to them nunc pro tunc.

11    In relation to the application for suppression and non-publication orders under s 37AF of the FCA Act, the principles again are well-settled and were addressed in respect of these very proceedings by Lee J in McCorkell at [49]–[54]. I gratefully adopt his Honour’s articulation of the principles and their application to matters of this type. To that end, I also gratefully adopt the reasons of Stewart J in Livingstone, in the matter of NewSat Ltd (in liq) [2022] FCA 1559 at [68]–[69] in relation to the general approach that has been taken to the making of such orders in applications of this type: see also Hodgson (Liquidator), in the matter of ACN 009 068 473 Pty Ltd (in liq) [2025] FCA 410 at [22] (Banks-Smith J).

12    I am satisfied on the evidence before me that the relevant portions of the affidavit evidence of Mr Hogan, and Exhibits MH-3 and MH-4 to his affidavit, be confidential, and not published or disclosed until the conclusion of these proceedings and the Recovery Proceedings, and any related appeals, given that they pertain to matters relating to the content of the amendments to the funding agreements. By reason of the orders made by Lee J, the primary funding agreements themselves are already subject to orders under s 37AF of the FCA Act. In view of those circumstances, I am satisfied that it is necessary that any amendment to the relevant parts of those funding agreements also be suppressed on the ground set out in s 37AG(1)(a) of the FCA Act, being that such an order is necessary to prevent prejudice to the proper administration of justice.

13    For the above reasons, I will make the orders that are sought.

Associate:

Dated:    10 September 2025