Federal Court of Australia

Lin v One Funds Management Limited (Leave to Appeal) [2025] FCA 1140

ORDERS

THE COURT ORDERS THAT:

1.    The application for an extension of time and leave to appeal be dismissed with costs.

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

REASONS FOR JUDGMENT

CHEESEMAN J:

INTRODUCTION

1    This is an application brought by Enying Lin, a creditor of One Funds Management Limited (OFML), which if allowed will permit her to appeal from orders made by Jackman J under s 411 of the Corporations Act 2001 (Cth) approving a creditors’ scheme of arrangement between OFML and a single class of its creditors (the Scheme): One Funds Management Limited, in the matter of One Funds Management Limited (No 2) [2025] FCA 602 (PJ).

2    At the first court hearing on 6 May 2025, Jackman J made orders to convene a creditors scheme meeting. The scheme meeting was held on 30 May 2025 and a statutory majority of members voted in favour of the Scheme – in absolute terms but also after excluding tagged votes: PJ[3]-[4].

3    Ms Lin was given leave to appear as an interested party at both the first and second court hearings in relation to the Scheme. She availed herself of that leave and was represented by her solicitor, Trevor Hall, at both hearings. She was one of a number of creditors who appeared as interested parties and who were unsuccessful in opposing the relief sought at each hearing.

4    At the conclusion of the second hearing on 5 June 2025, orders were pronounced approving the scheme. Ms Lin’s solicitor did not make an application for a stay or an oral application for leave to appeal. Ms Lin’s solicitor did not seek at that time to enjoin OFML from lodging an office copy of the order made by the Court with ASIC and thereby temporarily delay the order approving the Scheme taking effect. Such lodgement being required under s 411(10) of the Corporations Act for the order to take effect.

5    The order was lodged with the Australian Securities and Investments Commission (ASIC) on the same day that the approval orders were made, that is 5 June 2025. The Scheme became effective under s 411(10) of the Corporations Act on that day. Reasons for judgment were delivered the following day on 6 June 2025.

6    The effect of the Scheme was, amongst other things, to release claims against OFML and its directors and officers in exchange for the creation of a Scheme fund constituted by payments of approximately $9.8 million from OFML’s ultimate holding company and $9.25 million from certain insurers of OFML (Participating Insurers). There are approximately 66 Scheme creditors, some of whom, including Ms Lin, had commenced proceedings against OFML and its directors. A feature of the Scheme is that the Scheme creditors release their rights against OFML and its directors even where a Scheme creditor has a proceeding on foot.

7    In considering whether leave ought be granted, the Court is entitled to have regard to the interests of other scheme creditors and any prejudice that would be suffered by them if leave is granted. Yet, there is no evidence before me to suggest that Ms Lin has notified ASIC or any of the other Scheme creditors of this application.

8    Jurisdiction to hear the appeal is conferred by s 24 of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The present application is framed as an extension of time within which to appeal, and if granted, an application for leave to appeal.

9    It is common ground that the order from which Ms Lin seeks to appeal is a final order, but that Ms Lin requires leave to appeal because she was not a party to the proceeding in which the order was made.

10    It is also common ground that Ms Lin requires an extension of time to appeal. The parties do not agree as to whether the time within which to appeal is set by reference to rule 35.13 (14 days) or rule 36.03 (28 days) of the Federal Court Rules 2011 (Cth). They do agree that under either measure the time within which to seek leave to appeal had elapsed as at the date that Ms Lin filed her application for extension of time and leave to appeal.

11    The application was lodged after hours on 7 July 2025 and accepted for filing on 9 July 2025. By operation of rules 2.25(1) and 2.25(3)(b) of the Rules, the date of filing is taken to be 8 July 2025, being the next business day after the document was lodged with Registry after hours. If the time within which to file is 14 days, the application was filed 19 days late. If the time within which to file is 28 days, the application was filed 5 days late. For reasons which I address below, I am satisfied that the applicable period is 14 days and the present application was out of time by 19 days.

12    There are thus two distinct applications before the Court – an extension of time to appeal and if granted, an application for leave to appeal. The considerations which inform the exercise of the discretion in both instances overlap to some extent.

13    It is convenient to first address the issue of whether Ms Lin should be given leave to appeal, even though strictly it is not necessary to determine this issue unless an extension of time is given. I propose to first approach the question of whether to exercise the discretion to grant leave to appeal on the hypothetical basis that an extension of time is not required. There are additional considerations that are engaged when leave to appeal is sought by a non-party in relation to a scheme which has become effective and where third party rights have been altered in the implementation of the scheme. Those considerations weigh heavily in the exercise of the discretion to grant leave regardless of whether the non-party applicant for leave commences the leave application within the time prescribed by the Rules.

14    If I conclude that even on the hypothesis that Ms Lin commenced within time, that leave should not be granted, it would likely follow that to grant an extension of time would not be in the interests of justice and should be refused in circumstances where the proposed appeal cannot be brought as of right and does not warrant a grant of leave to appeal.

15    If, on the other hand, absent the need for an extension of time, I conclude that the appeal would attract a grant of leave to appeal, that is a relevant but not necessarily decisive consideration in determining whether an extension of time should be granted.

16    For this reason, I will address the issue of an extension of time after I consider the issue of leave to appeal.

EVIDENCE

17    The parties prepared an indexed electronic court book for the purpose of this application, which was marked as Exhibit 1 on this application. The affidavits read on this application are included in the court book, as are the documents annexed or exhibited to the affidavits, at tabs 7 to 35.

18    Ms Lin relies on:

(1)    two affidavits of Simran Kaur, law clerk at Hall Partners, sworn on 7 July 2025 and 12 August 2025; and

(2)    an affidavit of Mr Hall, principal solicitor at Hall Partners, sworn on 22 August 2025.

19    OFML relies on two affidavits of Christopher Michael Prestwich, its solicitor, the first sworn on 23 July 2025 (together with its exhibit CP-1) and the second on 5 August 2025.

CONSIDERATION

Applicable legal framework in context

20    Section 24(1) of the FCA Act relevantly provides that the Court has jurisdiction to hear and determine appeals from judgments of the Court constituted by a single judge exercising the original jurisdiction of the Court.

21    Section 24 of the FCA Act picks up the long established practice that permits non-parties to appeal by leave: Commonwealth v Construction, Forestry, Mining and Energy Union [2000] FCA 453 at [18] (Black CJ, Tamberlin and Sundberg JJ) (Commonwealth v CFMEU); Fortress Credit Corporation (Australia) II Pty Ltd v Fletcher [2011] FCAFC 89; 281 ALR 38 at [32] (Emmett, Nicholas and Robertson JJ).

22    Rule 35.11, situated in division 35.2 of the Rules ⸻ written applications for leave to appeal ⸻ provides:

A party may apply to the Court under this Division for leave to appeal if:

(a)     an Act gives the party a right of appeal to the Court subject to the party obtaining leave to appeal; and

(b)     the party has not made an oral application for leave to appeal from an interlocutory judgment or order of the Court.

23    Rule 1.51 provides that a word or expression defined in the Dictionary (being Schedule 1 to, and forming part of, the Rules) has the meaning given in the Dictionary. The Dictionary defines party as “a party to a proceeding”. The word “proceeding” is in turn defined in the Dictionary by reference to s 4 of the FCA Act which provides that “proceeding” means “a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding, and also includes an appeal.”

24    On this application, Ms Lin submitted that she was not a “party” as that word is used in rule 35.11 and therefore division 35.2 of the Rules does not apply to her application. I reject that submission. Ms Lin is relevantly a party within the meaning of rule 35.11 because as the applicant on this application she is a person who is a party to a relevant incidental proceeding in the course of, or in connexion with, a proceeding. Division 35.2 applies to her application, which is not surprising given it is a written application for leave to appeal, the very subject matter to which the division is addressed.

25    Rule 35.12(1) provides that a person who wants to apply for leave to appeal must file an application, in accordance with Form 117.

26    Rule 35.13 provides that the application must be filed:

(a)    within 14 days after the date on which the judgment was pronounced or the order was made; or

(b)    on or before a date fixed for that purpose by the Court from which leave to appeal is sought.

27    Here the judgment (being the order of the Court) was pronounced on 5 June 2025. Ms Lin’s application for leave to appeal was required to be filed by 19 June 2025. Accordingly, Ms Lin requires an extension of time within which to appeal.

28    Before moving to rule 35.14 which is addressed to applications to extend time to seek leave to appeal, I will briefly address Ms Lin’s submission that the relevant rule which regulated the time within which she had to make her application for leave to appeal was rule 36.03.

29    Rule 36.03 relevantly provides that the time for filing and serving a notice of appeal by an appellant is 28 days from the date on which the judgment appealed from was pronounced or the date on which leave to appeal was granted. It does not apply to Ms Lin’s application.

30    Having not made an application for leave to appeal within 14 days, Ms Lin requires an extension of time under rule 35.14 of the Rules. An application for an extension of time may be made during or after the time within which to make an application for leave to appeal: rule 35.14(2).

31    It is commonplace for applications for an extension of time and for leave to appeal to be determined at the same hearing.

32    Against that outline of the applicable legal framework, I will now turn to the substantive consideration of the two applications brought by Ms Lin. As I have mentioned above, I will first address the exercise of the discretion to grant leave to appeal on the hypothesis that an extension of time is not required. As I have said, my approach is informed by the fact that Ms Lin is seeking leave to appeal the approval of a creditors scheme after the Scheme has become effective and been implemented in ways that affect third party rights.

Leave to appeal

33    As the Full Court in Fortress Credit recognised (at [35]), although the circumstances in which an application by a non-party for leave to appeal may be made may differ widely, there are several matters that are likely to be relevant to the exercise of the discretion. The Full Court identified five such factors, four of which are presently relevant:

(1)    the nature and subject matter of the proceeding, including whether it concerns public rights or private rights and, if the latter, whether only personal remedies or proprietary remedies are involved;

(2)    whether at first instance the applicant could have but did not seek to be made a party or to be heard, and whether the applicant could or should have been made a party;

(3)    the rights, interests, liabilities and duties of the applicant that would be affected, and the nature and extent of the effect on the applicant of the orders appealed from; and

(4)    whether the proposed grounds of appeal are at least arguable, in the sense that there is a reasonable prospect of success.

34    As to the first factor, the present application is for leave to appeal the approval of the Scheme after it has become effective and been implemented so as to affect third party rights. It is well recognised that any appeals from orders approving schemes ought be brought expeditiously: Fowler, in the matter of Opes Prime Stockbroking Limited [2009] FCA 989 at [10] (Gordon J); Snowside Pty Ltd as trustee for Snowside Trust v Boart Longyear Ltd [2017] NSWCA 215; 122 ACSR 291 at [3] (Bathurst CJ, Beazley P and Leeming JA).

35    In the ordinary course, a party wishing to appeal a scheme order will immediately seek interim orders or undertakings to ensure that the scheme is not lodged with ASIC and therefore does not become effective in order to preserve the status quo pending the determination of any appeal: Re Centro Properties Ltd (in its capacity as responsible entity of Centro Property Trust) [2011] NSWSC 1481 at [1]-[5] and [17]-[18] (Barrett J); see also Damian and Rich, Schemes, Takeovers and Himalayan Peaks (4th ed, Herbert Smith Freehills, 2021) at [4.4.3].

36    The procedural speed attendant on applications for leave to appeal orders made at the first and second court hearings in relation to schemes are demonstrated by the decisions in First Pacific Advisors LLC v Boart Longyear Ltd [2017] NSWCA 116; 320 FCR 78 (Bathurst CJ, Beazley P and Leeming JA agreeing) and Snowside.

37    In First Pacific, an application for leave to appeal orders to convene the relevant scheme meetings was heard within a week of the first court hearing and prior to the scheme meetings being convened. The Court of Appeal also identified the alternate approach available to the applicant of seeking a stay or injunction restraining implementation of the scheme at the price of an undertaking as to damages in an indeterminate amount: at [43]. In those circumstances, leave to appeal was granted but the appeal was dismissed.

38    In Snowside, the application was heard and determined within a week of approval of two creditors’ schemes and prior to the schemes’ implementation date. The applicants sought what was styled as a “stay of the operation of the orders”, although in substance it amounted to an interlocutory injunction preventing the taking of the various steps (including issuing of shares) required by the schemes: at [2]. The Court of Appeal was relieved of the need to address the application for interlocutory relief on the assurance of the scheme company that nothing would happen overnight to render the applicants’ claims nugatory: at [3]. See also Link Fund Solutions Ltd, Re (Re Companies Act 2006) [2024] EWHC 250 (Ch) at [125] in which Richards J delayed sealing orders sanctioning the scheme in order to allow sufficient time for any application for leave to appeal to the High Court.

39    In Centro, Barrett J (as his Honour then was) explained the statutory machinery and the means available to a person seeking to appeal a scheme approval by in effect hitting pause after the Court’s pronouncement of the order under s 411(4)(b) of the Corporations Act, but before the lodgement of the office copy of the orders with ASIC (at [3]):

The orders are statutory orders under s 411(4)(b) of the Corporations Act 2001 (Cth). Their existence alone is, as it were, their execution given the statutory scheme. I refer to s 411(10) under which a scheme takes effect when an office copy of the court's order is lodged with ASIC. The order is, as it were, a cog in the statutory machine that eventually produces legal consequences through s 411(10) upon the lodgement of an office copy.

40    The application is in substance an application to enjoin the plaintiff from lodgement: Centro at [4]; see also Snowside at [2] (Bathurst CJ, Beazley P, Leeming JA). The order made in Centro was to embargo for a very short period the lodgement of the requisite copy with ASIC because that “is the thing which, in statutory terms, causes the orders to produce effects and to have legally meaningful consequences”: [20]. In this way, the statutory regime provides a disaffected objector or an unsuccessful objector with a means to test the reasoning of the approving court because it is only at lodgement that the scheme approval takes effect and is binding.

41    Although, as I have said it is generally the case that a party wishing to appeal a scheme order will immediately seek interim orders or undertakings to ensure that the scheme is not lodged with ASIC and therefore does not become effective in order to preserve the status quo pending the determination of any appeal, there is no invariable rule. The exercise of the discretion to grant leave is fact and context specific. The decision of the Full Court in Fowler v Lindholm; Re Opes Prime Stockbroking Ltd [2009] FCAFC 125; 178 FCR 563 is a case where leave to appeal was granted after a scheme had become effective. The circumstances in which leave was granted in that case included that the explanatory statement for the scheme contemplated and provided for the theoretical possibility of an appeal and stipulated that the relevant release date for payments under the scheme was dependent on finalisation of any appeals: at [22].

42    The present circumstances are readily distinguishable from those in Fowler v Lindholm. To demonstrate why that is so, it is necessary to address in more detail the Scheme and its implementation.

43    The Scheme is between OFML and the unitholders of four managed investment funds of which OFML is the trustee: the Glen Waverley Fund, the JY Hotel Fund, the Cornerstone New SIV Bond Fund and the Cornerstone Bond Fund (together, the Funds): see PJ[1].

44    The Scheme resolved claims brought by unitholders of the Funds against OFML and its related entities arising out of the collapse of the iProsperity group of companies: PJ[2]. Each of the Funds was established to service investments made by investors under the Australian Federal Government's “Significant Investor Visa” scheme: PJ[2]. Entities within the iProsperity group were appointed as the investment managers of the Funds and large sums were on-lent to an iProsperity group entity, iProsperity Underwriting Pty Ltd (in liquidation): PJ[2]. That entity was wound up on 19 August 2020, with the monies it received having apparently been dissipated: PJ[2].

45    Various unitholders in each of the Funds brought eight separate proceedings against OFML (in its own capacity and as trustee of the Funds) and against past directors and officers of OFML: PJ [3]. Five of those proceedings settled on confidential terms prior to the approval of the Scheme: PJ[3]. Three remained on foot at the date the Scheme received Court approval and became effective. Of the three extant proceedings, two were in this Court and one, being Ms Lin’s proceeding, was in the Supreme Court of New South Wales.

46    The Scheme approved by the Court provides a Scheme fund which entitles Scheme creditors to a distribution of 15 cents in the dollar in respect of their admitted scheme claim: PJ[7]. In exchange, Scheme creditors released OFML and related parties from claims arising in connection with the loss of investments from the transactions. I will address the releases and related terms of the arrangement below.

47    As mentioned, the Scheme fund has been constituted by payments of approximately $9.8 million from OFML’s ultimate holding company and $9.25 million from certain insurers of OFML (Participating Insurers) who have received releases of claims against them.

48    An independent expert report was prepared by Barry Kogan, Chartered Account and Partner at McGrathNicol, in support of the approval of the Scheme. The report was provided to Scheme creditors. Mr Kogan concluded that the Scheme presented creditors with a more certain and greater return than if OFML was wound up within six months of the application for the Scheme’s approval. Mr Kogan’s conclusion was that the Scheme would provide a return of 15 to 16.7 cents in the dollar as compared with 0.11 to 0.38 cents (excluding any insurance recoveries) in a liquidation.

49    As mentioned, on lodgement with ASIC on 5 June 2025, pursuant to s 411(10) of the Corporations Act the Scheme became effective. To paraphrase Barrett J’s description extracted above at paragraph [39] ⸻ the order being a cog in the statutory machine produced the legal consequence of the Scheme taking effect through s 411(10) upon the lodgement of the office copy. After the Scheme became effective, a number of steps were taken in implementation of the Scheme.

50    OFML submits that these steps are irreversible and that third party rights have fundamentally and irrevocably changed upon the Scheme taking effect. Ms Lin submits that an appellate court could make orders that would reverse these steps.

51    Before considering whether an appellate court would make orders to interfere with third party rights, I will first briefly address the steps taken in implementation of the Scheme. I will move through the chronology of steps thematically. For context, it is important to bear in mind the following matters: Ms Lin was represented at the hearing at which the approval order was made on 5 June 2025; on her own evidence (given through a law clerk) she held an intention at all material times to appeal from the approval order; there is no evidence that she took any steps to inform herself as to what procedural avenues were open to her or the time within which such steps must be taken; the present application was not lodged until 7:37pm on 7 July 2025; and Ms Lin has not given notice of this application to the Scheme creditors or to ASIC.

Deed polls – releases and establishment of Scheme fund

52    On 5 June 2025, the following deed polls were executed (or released from escrow):

(1)    Mr Kogan and Jonathan Henry of McGrathNicol (Scheme Administrators) delivered a deed poll, accepting their appointment as the true and lawful attorney of each Scheme creditor;

(2)    In accordance with cl 2.2(a) of the Scheme, on behalf of each Scheme creditor, the Scheme Administrators executed a deed poll providing irrevocable releases in favour of OFML and its related entities and the Participating Insurers, including releases in respect of extant proceedings (Scheme Creditor Deed Poll of Release); and

(3)    OFML and certain of its officers and related entities delivered a deed poll, providing an irrevocable release in favour of the Participating Insurers and the Scheme Creditors (One Scheme Creditor Deed Poll of Release).

53    Pursuant to the terms of the Scheme Creditor Deed Poll of Release, the Scheme creditors (acting through the Scheme Administrators as their lawfully appointed attorney) gave various releases, including in favour of OFML and certain related entities.

54    On 6 June 2025, the Scheme Administrators opened a bank account for the purposes of receipt of contributions to the Scheme fund from OFML or one of its related entities and the Participating Insurers.

55    On 10 June 2025, the Scheme Administrators issued payment directions to OFML and the Participating Insurers.

56    By 3 July 2025, the Scheme Administrators had received contributions totalling $19.05 million in the Scheme fund. This included $9.8 million contributed by OFML’s ultimate holding company and $9.25 million contributed by the Participating Insurers.

Dismissal of proceedings of Scheme creditors

57    On 17 June 2025 and again on 23 June 2025, OFML’s legal representative Webb Henderson wrote to solicitors for each of the Scheme creditors whose proceedings against OFML remained on foot, inviting those parties to agree orders for the dismissal of the relevant proceedings in accordance with cl 10.1 of the Scheme. That correspondence is not in evidence.

58    Clause 10.1 of the Scheme provides:

10.1 Release by the Scheme Creditors

With effect from the Effective Date, each Scheme Creditor releases:

(a)     the Scheme Company and its Related Entities from any Claim and those Claims are extinguished; and

(b)     the Participating Insurer from any Policy Period Claim and those Policy Period Claims are extinguished.

59    Similarly, clause 2 of the Scheme Creditor Deed Poll of Release provides:

2 Release

The Scheme Administrator in its capacity as the true and lawful attorney and agent for each Scheme Creditor, releases each of:

(a)     the Scheme Company and its Related Entities from any Claim; and

(b)     the Participating Insurers and each of them from any Policy Period Claim and any claim arising directly or indirectly or in connection with any Policy Period Claim.

60    Clause 4 of the Scheme Creditor Deed Poll of Release provides a bar to proceedings:

4 Bar to Proceedings

Each Released Party may plead this Deed Poll as a complete defence to any action, proceeding or suit, which may be brought in respect of a Claim or Policy Period Claim (as applicable) that was released pursuant to clause 2 and/or brought in breach of clause 3.

61    Further, clause 6 of the Scheme Creditor Deed Poll of Release addresses the mechanism for the dismissal of extant proceedings:

6 Disposal of Proceedings

(a)     As soon as practicable after this Deed Poll is executed, each Scheme Creditor who is a party to any open Proceeding must apply within 28 days of the Scheme becoming Effective to the relevant court for an order, or to a similar effect, that:

(i)     the relevant Proceeding (including any counterclaim or cross claim);

(ii)     or any other proceeding concerning a Claim or Policy Period Claim against any Released Party (as applicable) in respect of any matter which is the subject of a release under clause 2,

be dismissed with all existing cost orders and any orders for security for costs vacated and otherwise with no order as to costs, and the relevant Scheme Creditor must consent to that order.

(b)     This Deed Poll may be disclosed by (or on behalf of) any Released Party or by the Scheme Administrator to the relevant court as evidence of the consent of the relevant Scheme Creditor referred to in clause 6(a) above.

62    On 7 July 2025, orders were made by consent for the dismissal of the two proceedings in this Court (proceedings NSD 590/2024 and NSD 533/2024).

63    Ms Lin has not agreed to orders for her proceeding to be dismissed by consent and the proceeding remains on foot. The proceeding that Ms Lin has on foot is of relevance to proposed appeal ground 1. It will be necessary to say more in relation to that proceeding in considering proposed ground 1 for the purpose of considering whether to grant leave.

Assessment of admitted scheme claims

64    The Scheme Administrators have commenced the process of assessing and determining each Scheme creditor’s admitted scheme claim to distribute the Scheme fund.

65    On 16 July 2025, the Scheme Administrators issued an individualised circular to Scheme creditors which set out the details required to make a Scheme Claim and the requirements for foreign Scheme creditors to receive a distribution from the Scheme fund (requiring each to execute a deed poll ratifying the Scheme). A circular translated into the Mandarin language was also provided to all Scheme creditors that same day.

66    The present application for leave to appeal is a powerful illustration of why it is that appeals from orders approving schemes are generally required to be brought expeditiously. The statutory machinery of s 411 allows for a person to seek interim orders or undertakings to ensure that the scheme is not lodged with ASIC and therefore does not become effective in order to preserve the status quo pending the determination of any appeal. Ms Lin’s lackadaisical approach to this application weighs heavily against the grant of leave. Senior counsel for OFML submitted that in the present context it is not just Ms Lin’s delay in bringing this application within 14 days permitted by rule 35.13 that is relevant to the exercise of discretion on the leave to appeal but rather her delay from the “get-go”, that is from the time the orders were pronounced. I agree. In the absence of an application to enjoin lodgement with ASIC, leave would likely have been refused even if the application was made within time having regard to immediate effect of the Scheme once it became effective. That weighs heavily against the grant of leave.

67    The second of the relevant factors identified in Fortress Credit is whether at first instance the applicant could have but did not seek to be made a party or to be heard, and whether the applicant could or should have been made a party.

68    Ms Lin submits that she should be granted leave because she is a person who might properly have been made a party to the appeal. She submits that leave to appeal is given to non-parties who answer this description “as a rule”, relying on Fortress Credit at [32] which in turn cited Cuthbertson v Hobart Corporation [1921] HCA 51; 30 CLR 16 at 25 (Knox CJ and Starke J). The relevant observation in Cuthbertson was that a person not a party to proceedings cannot appeal except by leave, and that leave is given as a rule if the person applying might properly have been a party. While I accept that Ms Lin might properly have been made a party, I do not accept that Ms Lin obtaining leave to appeal as a non-party is a foregone conclusion in the way that she contends. I agree with Heydon JA’s observations in Witness v Marsden [2000] NSWCA 52; 49 NSWLR 429 at 448 in relation to what was said by Knox CJ and Starke J in Cuthbertson:

Their Honours do not appear to have been propounding an exhaustive test for leave to appeal. The test propounded, in any event, must give way to the structure of legislation and rules within which the Court in question works: rights of appeal depend on statute, not common law. The Supreme Court of New South Wales is in part controlled by Part 37 rule 8, as expounded by authority since the time of Cuthbertson’s case. Section 101 of the Supreme Court Act and equivalent provisions in other jurisdictions are construed in the light of more generous standing tests such as whether persons are ‘aggrieved’ or ‘sufficiently interested’.

69    This passage was quoted with approval by the Full Court in Commonwealth v CFMEU at [18].

70    Here, Ms Lin applied for and obtained leave to be heard on the application. Indeed, OFML did not oppose that application. She did not apply to be joined as a party. If she had done so, she may have exercised a right of appeal that was not dependent on obtaining leave, but that right would have been accompanied by the exposure to costs orders that is usually faced by parties. It is telling that Ms Lin does not offer any undertaking as to damages or as to the expeditious prosecution of an appeal if leave is granted. She was heard in opposition to the relief sought at both court hearings. Her proposed grounds of appeal in part seek to reagitate arguments which Jackman J considered and rejected at the first and second court hearings without demonstrating error. Again, these considerations weigh against the grant of leave.

71    As to the third of the relevant factors identified in Fortress Credit, which go the nature and extent of the effect on the applicant of the orders appealed from, those considerations in my view are neutralised, if not outweighed, by the effect that a grant of leave would have on the countervailing interests of the other Scheme creditors and the third parties who have contributed to the Scheme fund.

72    The final relevant factor identified in Fortress Credit is whether the proposed grounds of appeal are at least arguable, in the sense that there is a reasonable prospect of success.

73    Ms Lin relies on the following grounds of appeal in her proposed notice of appeal:

(1)    that the primary judge erred in exercising the discretion under s 411 of the Corporations Act to approve the Scheme where it allowed for the release of claims requiring a trustee to restore trust property to a trust fund and also the release third-party claims, particularly where those third parties face serious allegations of procuring a breach of trust (proposed ground 1);

(2)    that the primary judge erred in concluding that the Scheme creditors could properly be treated as a single class (proposed ground 2);

(3)    that the primary judge erred in approving the Scheme in circumstances where the Scheme creditors were denied procedural fairness and natural justice, including by failing to provide full and fair disclosure to material relevant to the Scheme (proposed grounds 3 and 5);

(4)    that the primary judge erred in approving the Scheme in circumstances in which OFML’s position as both trustee of the Funds and a proponent of a Scheme that releases liability for breach of trust to itself and to its related entities, gave rise to an incurable conflict of interest (proposed ground 4); and

(5)    that the primary judged erred in finding that the Scheme was fair and reasonable in circumstances where an honest and intelligent member of the class, properly informed and acting alone, would not rationally vote to approve a Scheme (proposed ground 6).

74    The focus of the argument was on proposed grounds 1 and 2. If these proposed grounds are of insufficient merit to warrant a grant of leave, it did not appear to be controversial that the remaining grounds would have sufficient merit to support a grant of leave. I say sufficient merit because the merit of the proposed grounds is but one part of a multifactorial exercise of discretion which is not to be considered in the abstract. The merits of the proposed grounds fall to be considered in the context of the other factors relevant to the exercise of the discretion that I have already addressed which weigh against the grant of leave.

Proposed Ground 1

75    Proposed ground 1 proceeds on the basis that the releases effected by the Scheme are broad, final and irrevocable. Ms Lin submits that there is a reasonable argument that proprietary claims requiring the restoration of trust property are not claims in respect of a debt or liability of the company that can be resolved by a creditor’s scheme. OFML accepts that the proposed ground is arguable, but submits that it is not strong and does not shift the balance in favour of granting of leave. I agree. My reasons are as follows.

76    The principal way in which Ms Lin puts this ground relies on overturning the decision of the Full Court in Fowler v Lindholm. Ms Lin is faced with substantial obstacles in overturning the decision in Fowler v Lindholm as the subsequent judicial consideration of that decision demonstrates.

77    Ms Lin points to the doubts raised by the Full Court in City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130 (at [111] (Rares J) and [142]-[144] (Perram J)) in relation to the decision in Fowler v Lindholm. OFML submits that fact that the reservations expressed in City of Swan have not been taken up in any subsequent consideration of Fowler v Lindholm should give me cause to pause. I agree.

78    City of Swan is readily distinguishable in that it arises in a different commercial and statutory context. In City of Swan, the Full Court considered the construction and effect of a deed of company arrangement under Part 5.3A of the Corporations Act and its validity. The consideration of Fowler v Lindholm arose in an attempt to draw an analogy with schemes of arrangement under Part 5.1 of the Corporations Act. As recognised by Rares J at [110], the operation of Part 5.1 is “independent and distinct from” the operation of Part 5.3A.

79    The parties referred to the primary judgment (In the matter of Opes Prime Stockbroking Ltd [2009] FCA 813; 179 FCR 20), which was the subject of the appeal to the Full Court in Fowler v Lindholm. The Full Court delivered its reasons in Fowler v Lindholm in the intervening period between the Full Court in City of Swan reserving judgment and publishing its reasons.

80    In Lehman Brothers Holdings Inc v City of Swan [2010] HCA 11; 240 CLR 509, the High Court did not endorse the criticisms made by the Full Court in City of Swan. As the plurality (French CJ, Gummow, Hayne and Kiefel JJ) observed at [54]: “Nothing in these reasons should be understood as endorsing the criticisms made in this matter in the Full Federal Court of the earlier decision of the Full Federal Court in Fowler v Lindholm.” Similarly, Heydon J said at [73]: “It is unnecessary to decide whether Fowler v Lindholm is incorrect, and it is not here suggested that it is incorrect in any way. That is a question for another appeal specifically directed to the problem.”

81    In Bacnet Pty Ltd v Lift Capital Partners Pty Limited (in liquidation) [2010] FCAFC 36; 183 FCR 384, there was an invitation made for the Full Court to depart from Fowler v Lindholm in reliance on the Full Court in City of Swan. As Keane CJ and Jacobson JJ observed, in obiter dictum, even if it were open to the Court to consider the correctness of Fowler v Lindholm, it would decline to do so (at [136]-[137]):

[136]     There is a short answer to the contention that this Court should depart from the Full Court’s decision in Fowler v Lindholm. The contention relies upon the decision of a differently constituted Full Court in City of Swan v Lehman Brothers Australia Ltd (2009) 179 FCR 243 (City of Swan). However in Lehman Brothers Holdings Inc v City of Swan (2010) 84 ALJR 275; 265 ALR 1 at [54], [73], the High Court did not endorse the criticisms made by the Full Court in City of Swan of the earlier decision of the Full Court in Fowler v Lindholm.

[137]     But even if it were open to us to reconsider the correctness of Fowler v Lindholm, there are a number of reasons why, in the exercise of our discretion we would decline to do so.

82    After addressing a number of case management considerations arising in the particular context of that case, Keane CJ and Jacobson JJ (Finkelstein J agreeing) concluded that the reasoning in Fowler v Lindholm was not clearly wrong (at [144]-[145]):

[144]     Fourthly, the appeal to the interests of justice affords little support to the favourable exercise of the discretion to permit the amendment when the contention sought to be agitated may be raised only if this Court were to conclude that its recent decision in Fowler v Lindholm is clearly wrong. In Fowler v Lindholm 178 FCR 563 at [57]-[69] this Court gave careful consideration to the argument that, when s 411(1) of the Act speaks of a compromise or arrangement between a company and its creditors, it is not speaking of a compromise or arrangement which is also apt incidentally to alter the legal relationships between creditors of the company. …

[145]     We are respectfully unable to accept the contention that these views are clearly wrong. We are fortified in our scepticism in this regard by the views of the Court of Appeal of England and Wales in Re Lehman Brothers International (Europe) (in administration) [2009] EWCA Civ 1161 at [45] - [55] which agreed with the reasons of the Full Court in Fowler v Lindholm.

83    See also Trust Company (Nominees) Limited, in the matter of Angas Securities Limited v Angas Securities Limited (No 5) [2019] FCA 482; 135 ACSR 398 at [58] and [62]-[63], in which Beach J relied on the principles in Fowler v Lindholm and Bacnet, notwithstanding the concerns raised in City of Swan.

84    Ms Lin reframed her argument somewhat in oral address to put an alternative submission which was that the success of proposed ground 1 does not depend on establishing that Fowler v Lindholm is plainly wrong because the issue of whether the Corporations Act permits a court to approve a scheme which releases what were described as proprietary claims was not decided in Fowler v Lindholm. The underlying premise on which Ms Lin relies is that her extant proceeding is a proprietary claim for the restoration of trust property. Alternatively, that the other proceedings which were extant at the time of the Scheme approval (but which have now been dismissed by consent) involved a proprietary claim for the restoration of trust property. She says through her solicitor that she intends to amend her pleading to conform to the claims pleaded in the other proceedings. Based on this premise, she submits that it is beyond the jurisdiction of the court to approve a scheme which has the effect of releasing a claim of this type. Ms Lin relies on the decision in In the matter of Lehman Brothers International (Europe) [2009] EWCA Civ 1161 at [65] and [67].

85    Ms Lin’s alternative argument is misconceived. I do not regard it as providing a reason to exercise the discretion in favour of granting leave to appeal.

86    The starting point is that in approving a scheme a court makes an “implicit determination that the conditions exist upon which its jurisdiction to make that order depends”: Chief Commissioner of Pay-Roll Tax v Group Four Industries Pty Ltd [1984] 1 NSWLR 680 at 684C-F (McLelland J).

87    In this case, the issue as to jurisdiction was expressly raised before Jackman J by the interested persons appearing to oppose the Scheme. His Honour addressed the argument at PJ[43]-[45], concluding that the claims were all personal claims of wrongdoing against OFML, rather than claims against the property of any of the Funds. Similarly, that there was no material to indicate that any claims which OFML has against the directors and officers are themselves trust property. The scheme opponents’ argument relying on Lehman Brothers International was addressed by Jackman J at PJ[45]. His Honour distinguished that decision on the basis that the scheme in issue in that case concerned the release of proprietary rights in assets, held for their benefit by Lehman Brothers as trustee; not personal claims against a trustee based on allegations of wrongdoing.

88    No error is apparent in respect of the analysis undertaken by Jackman J. Indeed, the argument on this application tends to the opposite effect. The argument before me tended to further expose that Ms Lin’s underlying premise is not correct. Included in evidence before me are the pleadings in each of the three claims. None of the claims include a claim for proprietary relief. None of the claims are claims in rem directed to the restoration of trust property. The claims alleged are not predicated on the respondents having received trust property. Rather, the claims allege in various ways that the respondents participated in or knowingly induced breaches of trust but not that they received trust property. As such the claims are personal claims; not proprietary claims. That is reflected in the relief claimed which amongst other things is for equitable compensation.

89    To the extent that Ms Lin contends that all Barnes v Addy claims or all claims for knowingly inducing a breach of trust are necessarily characterised as proprietary claims if brought by a unitholder in one of these Funds, I do not accept that is correct. It may be that it is arguable but in the present context and on the evidence led on this application, it does not present as a strong argument that would weigh against the other factors which I have addressed that favour leave being refused.

90    Ms Lin’s final substantive submission in respect of proposed ground 1 is that the releases given as part of the Scheme do not contain what she describes as the standard carve outs for claims in relation to fraud or wilful misconduct or reckless, grossly negligent or dishonest conduct. Ms Lin contends that there are powerful public policy considerations that tell against the non-consensual release of claims of this kind. Ms Lin seeks to distinguish the third-party releases given as part of this Scheme from “a standard scheme with standard releases”. Ms Lin’s submission was to the effect that it was beyond the court’s power to approve a scheme that provides for releases of fraudulent, wilful or dishonest conduct.

91    Ms Lin was not able to demonstrate by reference to the orthodox principles of statutory construction why in its proper construction s 411 would be confined in this way. Ms Lin did not take me to any authority directly addressing the question of whether the Corporations Act permits the approval of a scheme that provides for releases of fraudulent, wilful or dishonest conduct. The broad appeal to matters of public policy and an asserted market trend in relation the framing of the releases given in creditor schemes so as not to exclude claims for fraud or dishonesty takes the matter no further.

92    I do not regard the argument that the releases included in the Scheme were such as to put the Scheme beyond the Court’s jurisdiction to approve the Scheme under s 411 of the Corporations Act.

93    For these reasons, I do not regard proposed ground 1 as having sufficient merit to outweigh the substantial reasons against exercising the discretion to grant leave.

Proposed Ground 2

94    As to proposed ground 2, Ms Lin submits that the Scheme grouped together the unitholders of each of the Funds into one class of Scheme creditors in circumstances where it is impossible for the creditors in question to consult together with a view to their common interest: see First Pacific at [77]-[81] (Bathurst CJ). Ms Lin relies on two categories of differences between the relevant Scheme creditors. First, that there were fundamental differences in the four trusts which gives rise to materially different issues. The Funds each made different investments, faced different claims against them for breaches of duty and had different assets available to meet those claims. Secondly, that the Scheme did not differentiate between creditors who had commenced proceedings and those who had not. Ms Lin submits that those who had commenced proceedings had accrued claims made within time, in circumstances where much of the relevant conduct occurred over six years ago. Ms Lin has also raised concerns as to the legal costs she has incurred to date, however the Scheme does not provide for any separate payment for legal costs: PJ[35].

95    At the first hearing of the Scheme, the primary judge considered whether the unitholders at each of the Funds are in distinct classes such that separate meetings or schemes were required: PJ[27]-[35]. The primary judge, adopting a “practical business-like approach” as required by First Pacific Advisors at [78] (Bathurst CJ, with whom Beazley P and Leeming JA agreed), concluded that legal rights of the Scheme creditors were not “so different so as to make it impossible for the Scheme to consider them in one class”: PJ[33].

96    None of the matters identified by Ms Lin suggest that the Scheme creditors’ rights (or the treatment of those rights by the Scheme) are so different as to make it impossible for them to consult together.

97    It is accepted that Jackman J applied the correct test. That test sets a high bar for class creation — it must be impossible for the putative classes to caucus. The matters relied on by Ms Lin in the present application fell well short of that bar. Ms Lin has not grappled with the need to demonstrate error in the approach taken or conclusion reached by Jackman J. No error is discernible in respect of the analysis undertaken by Jackman J. Proposed ground 2 does not have sufficient merit to warrant a grant of leave to appeal. The prospects of success on this proposed ground do not mitigate against the factors that heavily weigh against the grant of leave to appeal more generally.

Proposed Grounds 3 and 5

98    Proposed grounds 3 and 5 both concern the adequacy of disclosure to Scheme creditors in advance of the Scheme meeting. They have insufficient prospects to warrant the grant of leave.

99    On 2 June, Ms Lin, through her appointed proxy, requested disclosure of the register of proxies, the register of the proof of debts and the minutes of the Scheme meeting. Ms Lin did not receive any response to that request prior to the second hearing. None of the requested documents were provided, save for the minutes of the Scheme meeting which formed part of the Court Book of the second hearing. Ms Lin asserts a denial of procedural fairness on the basis that she was denied a fair opportunity to raise, investigate and present various issues to the Court below. At the second hearing on 5 June 2025, Ms Lin made an application to adjourn the hearing below so as to investigate those matters. That adjournment was refused. Ms Lin’s solicitor indicated that reasons were not required.

100    Ms Lin submits that the explanatory statement failed to provide an adequate explanation of the relationship between the OFML and certain large creditors, including OIG Advisory Pty Ltd (which was a related entity of OFML by consequence of common officers and shareholders) and Croker Corp Pty Ltd. Croker Corp is an independent third party which took an assignment of units of OIG Advisory in the context of the settlement of one of the Federal Court proceedings against OFML. Both entities were listed with identical estimated scheme claim amounts of approximately $2.51 million. Certain Scheme creditors had reached a confidential settlement with OFML which required them to vote in favour of the Scheme.

101    The position of OIG Advisory and Croker Corp was made plain to Scheme creditors through OFML’s process of “tagging” those entities’ votes. The requisite statutory majorities by number and value would have been achieved even excluding those “tagged” votes: PJ[4], [21]-[22] and [36].

102    I am not satisfied that these proposed grounds have sufficient merit to attract a grant of leave.

Proposed Ground 4

103    Proposed ground 4 is substantially duplicative of proposed ground 1. It was not addressed separately in the applicant’s written submissions, nor was it addressed in oral submissions. It does not warrant a grant of leave for the reasons I have given in relation to proposed ground 1. In addition, the underlying premise that informs the proposed ground is not maintainable having regard to cl 10.2 of the Scheme which clarifies that the release under cl 10.1(a) (extracted at paragraph [58] above) does not release or extinguish the continuing obligations of OFML as trustee of the Funds, which may include any distribution of assets of the Funds to unitholders or winding-up the Funds.

Proposed Ground 6

104    Proposed ground 6 was not the subject of any submissions – written or oral.

Conclusion on leave to appeal

105    I decline to exercise my discretion in favour of granting leave to appeal. The factors that are relevant to the exercise of the discretion are overwhelming against leave being granted.

106    Principal among my reasons for refusing leave is the fact that Ms Lin took no steps to avail herself of the opportunity to apply to enjoin the lodgement of the office copy of the approval orders so as to enable the issues she now seeks to raise in a way that was timely before third parties’ rights and the rights of other Scheme creditors were irrevocably altered. I will not rehearse the other factors that I have addressed which weigh against the grant of leave, but I will specifically address the issue of the prejudice that a grant of leave to appeal would occasion.

107    In addition to the prejudice occasioned by irrevocable changes to third party rights effected by the Scheme, there is additional prejudice in that there is a financial benefit to Scheme creditors in the implementation of the Scheme. The independent expert concluded that the estimated return to scheme creditors is materially greater than the amount that they could expect to receive in a winding up within six months in the absence of the Scheme (notwithstanding the expected return is still a small amount in terms of cents in the dollar). This is in part because of the substantial contributions by third parties to the Scheme fund. To prolong the payment of distributions to Scheme creditors would be unfair to the Scheme creditors who voted overwhelmingly in favour of the Scheme.

108    If leave is granted, the other Scheme creditors will be faced with potential financial burdens. No other Scheme creditor has sought to propound an objection to the Scheme by way of an appeal of the orders approving the Scheme. As mentioned, there are more than 60 Scheme creditors. They have not been notified of this application. They may have wished to be heard against it. If leave is granted, they may seek to be heard after the event in relation to that leave being granted in circumstances where they were not on notice and the order made arguably affects their interests. Ms Lin’s retort that the Court can simply have a second hearing on the issue of leave if it is necessary to do so flies in the face of the overarching purpose embodied in s 37M of the FCA Act. The fact that I am asked on this application to grant leave to appeal from orders approving a scheme that is already substantially implemented and that notice has not been given to other Scheme creditors and the third parties who are affected is a significant reason why I should not grant leave.

109    If leave is granted, Ms Lin submits that the absence of notice to this application may be cured by joining all of the Scheme creditors to the appeal and they could be heard on the appeal. I reject that submission. The practical and cost consequences attendant on such a course are obvious and in no way conducive to the effectuation of the overarching purpose of proceedings in this Court.

110    Finally, on the issue of prejudice, Ms Lin submitted that if leave was granted, the issue of prejudice could be adequately addressed by the appellate court making remedial orders to simply restore the status quo ante. I do not accept that is so. There are a myriad of difficulties with that submission. To take but one example, on the assumption of a successful appeal, the appellate court would have to grapple with the difficulties inherent in quantifying loss in respect of the value of the claim that has been released and dismissed. Such an exercise would require assessing, by reference to evidence, how these claims may have ultimately been determined on a loss of a chance basis, raising the spectre of a trial within a trial. In addition, the practical utility of any orders made on appeal in the form of restitutionary relief must be doubted in the context of a creditors’ scheme where the creditors are projected to get a low return in terms of cents in the dollar. I reject Ms Lin’s submission that the question of leave should be considered through the prism of there being an identifiable form of restitutionary relief that would be capable of being implemented if an appeal was successful.

111    For these reasons, I would decline to grant leave, even if the application had been brought within time.

Extension of time

112    Each of the matters addressed above informing the discretion as to whether to grant leave – the nature of the underlying proceeding as a scheme, the strength of the proposed grounds, the prejudice to other parties including third parties, the absence of notice and the absence of an explanation for delay – inform the question of the extension of time and what the interests of justice require in the present circumstances. They all weigh against an extension being granted. There is nothing presented in support of the extension of time that causes me to revisit my conclusion that leave should be refused.

113    It was incumbent upon Ms Lin to act promptly and to seek orders delaying the effectuation of the Scheme pending determination of any application for leave to appeal. She did not do so. Ms Lin did not take any steps to act on her claimed intention to appeal until this application was filed more than four weeks after the Scheme became effective. In the intervening period, the Scheme had become effective and third-party rights were altered in the implementation of the Scheme. Ms Lin submits that because the Scheme became effective during the 14 day period within which she could have applied for leave pursuant to the Rules, her delay was not “operative”. I reject that submission. It is particularly inapt in the context of the statutory scheme for scheme approvals for the reasons I have given.

114    The explanation proffered by Ms Lin for the delay in seeking leave to appeal was her misunderstanding as to the relevant appeal period and her belief that the appeal could be filed within a longer time period of 28 days. There is no evidence as to the source of Ms Lin’s “misunderstanding”. Ms Lin submits that upon becoming aware that the relevant appeal period had expired, she instructed her solicitors to urgently file the proposed notice of appeal. The evidence is silent as to any steps taken by Ms Lin to bring forward her appeal or to inform herself of when she was required to file her application for leave to appeal.

115    Ms Lin accepts that her explanation as to her delay may not be adequate. Ms Lin apprehends correctly. Her explanation is wholly inadequate. She has not given direct evidence. Instead, she relies on the affidavits of a law clerk in the employ of her solicitor. OFML submits that the practice of allowing law clerks (rather than principal solicitors) to make substantive affidavits is to be deprecated and discouraged. OFML point to the fact that in the present case, the law clerk’s evidence is not supported by identification of the sources of information on which reliance is placed for information outside the law clerk’s personal knowledge and purports to give evidence informed by “work completed on the file”. I accept the force of OFML’s submissions in this regard.

116    As I have said, I reject Ms Lin’s submission that the extension required is for a period of only three days. Ms Lin technically requires an extension of 19 days. But in the present circumstances, for the reasons I have given, I would not have been inclined to grant leave even if the application was made within time. In the circumstances of this case, the reasons for refusing leave (even if the application had been made within time) are fatal to the application to extend time.

CONCLUSION

117    For these reasons, the application will be dismissed with costs.

Associate:

Dated:    17 September 2025