Federal Court of Australia

Australian Securities and Investments Commission v M101 Nominees Pty Ltd (in liq) (No 10) [2025] FCA 1159

ORDERS

THE COURT NOTES THAT:

The Full Court made orders on 15 September 2022 remitting the matter for hearing and determination (remitter): Mawhinney v Australian Securities and Investments Commission [2022] FCAFC 159; (2022) 294 FCR 375.

THE COURT ORDERS THAT:

1.    The Second Defendant pay 90% of the Plaintiff’s costs of and in connection with the proceeding following the remitter.

2.    Paragraph 1 above does not vary or set aside any order previously made in respect of any costs of the proceeding following the remitter.

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

REASONS FOR JUDGMENT

BUTTON J:

1    These reasons address the costs orders to be made following orders for final relief, which were made on 5 September 2025, with reasons given in Australian Securities and Investments Commission v M101 Nominees Pty Ltd (in liq) (No 9) [2025] FCA 1070 (Relief Reasons). The Relief Reasons followed my judgment in Australian Securities and Investments Commission v M101 Nominees Pty Ltd (in liq) (No 8) [2025] FCA 741 (Contravention Reasons) which made detailed findings regarding the contraventions alleged by ASIC as the basis for enlivening the power under s 1101B of the Corporations Act 2011 (Cth) (Corporations Act), and findings regarding Mr Mawhinney’s role in relation to those contraventions. These reasons, on costs, are to be read with, and in light of the findings made in, the Contravention Reasons and the Relief Reasons. Defined terms, as set out in those reasons, are used in these reasons.

2    In making submissions on final relief, Mr Mawhinney sought the opportunity to make submissions on costs following the determination of final relief. He was afforded that opportunity. Both Mr Mawhinney and ASIC put on initial and responsive written submissions concerning costs. Neither sought to make oral submissions. Mr Mawhinney also relied on an affidavit of his solicitor, Rhys Roberts, dated 12 September 2025 (Roberts Affidavit). The Roberts Affidavit details matters in respect of which Mr Mawhinney considers ASIC’s conduct of the case has been unmeritorious in ways that ought to affect the exercise of the Court’s discretion on costs. Each of these matters is addressed below.

3    Mr Mawhinney submitted that ASIC should only be awarded 50% of the costs of the proceeding. That position was put on the basis that ASIC failed on issues to an extent warranting a discount of a costs order to 75%, which figure should be further discounted to 50% on account of ASIC’s allegedly unmeritorious and oppressive conduct of the litigation.

4    ASIC submitted that it should have its costs on a party and party basis. It submitted that if, contrary to its primary position, some apportionment should occur to reflect the fact that ASIC was not successful on all of its allegations of contravention, that should be done by way of a reduction in the costs awarded to ASIC (eg by an order that Mr Mawhinney pay 90% of ASIC’s costs) rather than by ordering ASIC to pay any of Mr Mawhinney’s costs.

5    Accordingly, the issues to be addressed fall into two categories. First, whether there should be any discount from a full costs order in ASIC’s favour, on account of the fact that ASIC did not succeed in establishing all the allegations it advanced. Secondly, whether ASIC’s conduct of the litigation was such as to warrant a discount on the costs order in its favour and, if so, by what amount.

6    Before turning to those matters, I address the costs orders made to date, and the principles to be applied.

Costs orders to date

7    The costs consequences of this proceeding prior to the remitter are already the subject of orders of the Court. The orders the Court is making in dealing with the present costs controversy are not intended to disturb those earlier orders. Nor are they intended to disturb the cost orders that were made following the remitter, but in relation to specific interlocutory applications (orders of 10 November 2023 and 19 April 2024).

8    When Anderson J made orders on 19 April 2021, those orders included (as order 4) an order that Mr Mawhinney pay ASIC’s costs of the application for the injunction (being the injunction restraining Mr Mawhinney in various respects). Following Mr Mawhinney’s appeal, which was successful on procedural fairness grounds, the Full Court made orders on 15 September 2022: Mawhinney v Australian Securities and Investments Commission [2022] FCAFC 159; (2022) 294 FCR 375 (Mawhinney Full Court). Those orders included an order (order 5), which set aside Anderson J’s costs order (and other orders). The Full Court made a further order (order 6(2)) that ASIC pay Mr Mawhinney’s “costs of and in connection with the hearing before the primary judge on 16 February 2021 and 9 March 2021 on an indemnity basis”. After the initial ex parte hearing on 13 August 2020, there were three further short hearings before the hearing on 16 February 2021 (which was directly referred to in the orders of the Full Court).

9    Accordingly, subject to the following matters, Mr Mawhinney was, by the orders of the Full Court, granted his costs, on an indemnity basis, referable to the relief ASIC sought against him in this proceeding, prior to the remitter.

10    The two possible exceptions to that position are as follows. First, before the Full Court delivered its judgment on Mr Mawhinney’s appeal on 15 September 2022, ASIC applied for orders, alleging contempt of court by Mr Mawhinney. That contempt allegation was advanced by an application dated 15 November 2021. Mr Mawhinney then applied, by an interlocutory application filed on 9 February 2022, for orders staying ASIC’s interlocutory application for contempt. On 4 May 2022, the previous first instance docket judge (O’Callaghan J) stayed the proceeding pending determination of the appeal, and reserved the costs of the two interlocutory applications just mentioned. It is not apparent from the court file that any further order was made in relation to these reserved costs. Secondly, it is not clear whether (and if so, to what extent) costs prior to the 16 February 2021 hearing were treated as coming within the indemnity costs order made by the Full Court.

11    Accordingly, there are two respects in which the Full Court’s orders may not cover all costs in the first instance (cf appeal) prior to the remitter on 15 September 2022.

12    ASIC’s submissions on costs were put on the basis that the “costs pre-remitter have already been dealt with”. Accordingly, I proceed on the basis that ASIC is only seeking its costs following the remitter, and is not seeking any first instance costs prior to the remitter, even if there are costs that were not addressed by the costs orders made by the Full Court. Similarly, Mr Mawhinney has not sought any costs order in his favour, but only made submissions concerning discounts he contended should be applied to a costs order in ASIC’s favour.

13    For completeness, and as would be expected, the costs of the appeal have been dealt with. On 15 September 2022, the Full Court also made orders for the costs of the appeal, including the costs of “interested parties”. Those orders were later set aside, and substituted with varied orders, by a Full Court on 22 December 2022.

Principles

14    The Court has a broad discretion in awarding costs under s 43(2) of the Federal Court of Australia Act 1976 (Cth). The exercise of the discretion is guided by the principle that costs usually follow the event. As the Full Court (Burley, Jackson and Downes JJ) recently observed in Fanatics, LLC v FanFirm Pty Ltd (Costs) [2025] FCAFC 111 at [9], the “event” in litigation relates to the overall result in the sense of a party’s substantive success or failure; and “success” in the overall result does not necessarily entail success on all issues.

15    However, where there has been mixed success on different issues, the Court can, in the exercise of its discretion, make an award that discounts the costs order made in favour of the overall victor to reflect that mixed success: eg Zonia Holdings Pty Ltd v Commonwealth Bank of Australia Ltd (No 2) [2025] FCAFC 123 at [39] (Murphy, Moshinsky and Button JJ) (note also at [38] quoting from Sandvik Intellectual Property AB v Quarry Mining & Construction Equipment Pty Ltd (No 2) [2017] FCAFC 158 at [9]–[11] (Greenwood, Rares and Moshinsky JJ) which referred to Queensland North Australia Pty Ltd v Takeovers Panel (No 2) [2015] FCAFC 128; (2015) 236 FCR 370 at [11] (Dowsett, Middleton and Gilmour JJ) setting out the situations in which a successful party might be deprived of costs, or even ordered to pay the costs of the other side).

ASIC’s relative success versus its failure

16    ASIC’s case was directed to obtaining orders restraining Mr Mawhinney from operating in the financial services sector for a further 15 years. It obtained the relief it sought: see the Relief Reasons. In that context, the allegations of contraventions were allegations that were advanced so as to enliven the Court’s power under s 1101B and support its case that the Court should make the orders ASIC sought. As I explained in the Relief Reasons, the relief ordered was informed by the Court’s assessment of the risks exposed by the established contraventions and Mr Mawhinney’s conduct in relation to them; the relief was not a function of the raw number of contraventions established. This puts in context the significance, or otherwise, of ASIC’s failure to make out some of its pleaded contraventions.

17    Similarly, I do not consider it productive to tally up the extent to which each discrete form of marketing material relied on by ASIC was found to convey each relevant representation.

18    That said, ASIC did not establish the Bank Term Deposit Representation, or the contraventions associated with the allegations of on-lending to family. Although the evidence concerning the Bank Term Deposit Representation allegations overlapped very substantially — if not entirely — with the evidence concerning other representations, it was the subject of focused submissions. The evidence and argument concerning the on-lending to family allegations was discrete, as were the arguments and submissions on that topic. Where ASIC established a contravention over some, but not all, of a pleaded period (for example, as occurred in respect of the Australian Property Bonds) I do not consider that the periods pleaded being longer in some instances than the periods over which contraventions were established resulted in the trial taking longer than it otherwise would have.

19    ASIC submitted that much of the trial time was occupied by Mr Mawhinney pursuing his theory — which I rejected — that investor losses and the failure of the broader enterprise can be attributed to a combination of ASIC having taken action in April 2020, Mr Jahani, and the COVID-19 pandemic (see Contravention Reasons at [263]–[265], [314]–[317], [1025], [1174]–[1175], [1185]). While there is substance to ASIC’s contention, substantial trial time (almost three days) was also occupied by reason of ASIC having called multiple lay witnesses (many of whom were cross-examined) when their evidence was not central to the determination of the issues.

20    ASIC also ran a document-heavy case, which is a circumstance no doubt driven by its “kitchen sink” approach to pleading and running the case, pleading numerous representations, across multiple different forms of marketing material, many of which changed in some respects over time, each of which had to be considered. This made the proceeding burdensome for all concerned, including the Court. While this approach was likely a response to the procedural background by which Mr Mawhinney succeeded in his appeal against judgment following the first trial on procedural fairness grounds (as to which see the Contravention Reasons at [6] and [257]), leading to ASIC pleading the case in minute detail, it still would have been preferable to see greater focus in the issues taken to trial on the remitter. The point, for present purposes, however, is that both sides made forensic choices that contributed to the length of the trial, and the costs — no doubt substantial — incurred by both sides.

21    For completeness, I note that, although I did not order final relief in the form of a freezing order restraining Mr Mawhinney dealing with any assets acquired with funds received in connection with a financial product (Relief Reasons at [54]–[57]) that relief — albeit not abandoned by ASIC — was not the subject of any submissions and occupied no hearing time. It does not figure in the disposition on costs.

22    I also note that, while Mr Mawhinney raised the fact that ASIC did not make out two of the bases upon which it contended IPO Capital operated a financial services business, it succeeded on its principal basis; the other bases — unregistered managed investment scheme (s 764A(1)(ba) of the Corporations Act) and “financial investment” (ss 763A(1)(a) and 763B of the Corporations Act) — were dealt with in the Contravention Reasons for completeness, given the parties’ mutual anticipation of an appeal.

23    Taking all of these matters into account, I consider that a discount of 10% to an order that Mr Mawhinney pay ASIC’s costs following the remitter fairly reflects the extent to which ASIC’s case against Mr Mawhinney was rejected. With that discount applied, there is no occasion to make an order that ASIC pay any portion of Mr Mawhinney’s costs (nor did he seek any such order).

ASIC’s conduct of the litigation

24    I am not satisfied that ASIC conducted the litigation in an “oppressive and unmeritorious” manner, as Mr Mawhinney contended. I address below each of the matters raised by Mr Mawhinney in his submissions on costs.

25    Volume of documents: Mr Mawhinney’s submissions contended that ASIC “swamped the trial with a huge volume of documents”, including about 4,500 on its tender list, but only ultimately relied on approximately 2,500 documents. These contentions were said to be established by the Roberts Affidavit, but that affidavit only says that ASIC’s written closing submissions only referred to 2,582 documents. As the documents referred to in the Roberts Affidavit do not present the totality of the documents tendered, the factual foundation for the submission has not been established. I have otherwise addressed ASIC’s reliance on large numbers of documents above.

26    Personal details included in WhatsApp documents: A related complaint arose from ASIC’s inclusion, on its tender list, of documents comprising extensive threads from Mr Mawhinney’s WhatsApp messages. When Mr Mawhinney raised that these documents included highly personal WhatsApp messages, ASIC agreed to, and subsequently did, extract the relevant messages so that the balance were not tendered. While it is regrettable that that step was not taken at the outset, and it really should not have fallen to Mr Mawhinney to have to raise it in court, I do not infer that the personal messages could “only have been included to embarrass Mr Mawhinney”, as he submitted.

27    Making baseless allegations: Mr Mawhinney contended that ASIC repeatedly made serious, but baseless, allegations against Mr Mawhinney, specifically that: he conducted a Ponzi scheme; devised the Australian Property Bonds product to circumvent Court orders; transferred investor funds to the British Virgin Islands; and conducted a business that was insolvent since inception.

28    The first three of these matters were the subject of the Roberts Affidavit. As detailed there, those matters were variously raised in the first trial and in the Mayfair proceeding (which is a different proceeding). As to the final matter — being the allegation as to insolvency since inception — that allegation was raised in the reasons following judgment in the initial trial, and in ASIC’s submissions in the trial on remitter.

29    To the extent that these matters were raised in the first trial, Mr Mawhinney already has the benefit of a costs order against ASIC on an indemnity basis, pursuant to the orders of the Full Court in his appeal following the initial trial: see Mawhinney Full Court. To the extent the conduct complained of occurred in the running of the Mayfair proceeding, that is a different proceeding and any costs consequences that should flow from that case would need to be addressed in costs orders made in that proceeding. Further, ASIC’s advancing of the allegation of insolvency since inception was supported by the opinion expressed by Mr Jahani, the provisional liquidator of M101 Nominees. While, as addressed in the Contravention Reasons, it was not ultimately necessary to form a concluded view on that specific issue — the real issue being the risk posed to investors (Contravention Reasons at [274]) — given Mr Jahani’s opinion, there was nothing untoward in ASIC advancing that proposition. I also reject Mr Mawhinney’s suggestion (in his responsive submissions on costs) that the Court implicitly rejected the mismatch between assets and liabilities that underpinned Mr Jahani’s views.

30    Accordingly, it is not necessary to address (or further address) the merit of Mr Mawhinney’s contentions as to the falseness of those allegations. I also note that the three media articles exhibited to the Roberts Affidavit date from August 2020, September 2020 and April 2021, and so related to the period leading up to and following the initial trial, whereas I am concerned with the costs of the proceeding following the remitter.

31    Maintenance of allegations regarding transfer of noteholder funds to family members: Mr Mawhinney contended that this allegation (addressed as the “on-lending to family” allegations in the Contravention Reasons from [986]) was maintained despite senior counsel for ASIC conceding in opening that it could not be proved. I do not consider that the transcript cited by Mr Mawhinney supports the suggestion that any such concession was made. Rather ASIC (at different points) accepted that its case on the on-lending to family allegations relied on some inferences being drawn.

32    Mr Mawhinney also took issue with ASIC’s written opening foreshadowing evidence of “money washing” in circumstances where no such evidence was adduced at trial. However, the section of ASIC’s opening submissions, on which Mr Mawhinney relied to support this contention, referred to “money washing through different company bank accounts”. The submissions did not refer to “money washing” simpliciter, as in something akin to “money laundering”, which seemed to be the contention advanced by Mr Mawhinney in his submissions on costs.

33    Access to privileged documents: Mr Mawhinney’s complaint here is twofold. First, he says that the team within ASIC that had access to documents over which Mr Mawhinney claimed legal professional privilege, made unilateral decisions about when Mr Mawhinney had waived privilege, and refused to give Mr Mawhinney a complete list of the documents provided to the litigation team in, and representing, ASIC, and when they were provided. Secondly, Mr Mawhinney suggested that it has now emerged that ASIC adduced evidence that was contradicted by privileged documents in ASIC’s possession.

34    As to the first matter, when the provision of documents to ASIC’s litigation team following a waiver of privilege emerged in the course of the trial on 12 November 2024, senior counsel for Mr Mawhinney said that he may pursue it out of court. Yet, it appears Mr Mawhinney’s team did nothing more about it until the end of March 2025. There was then an exchange of correspondence. If Mr Mawhinney considered the process was unfair to him, or affected the conduct of the trial, the time to raise it was during the running of the trial.

35    As to the second matter, Mr Mawhinney submitted that ASIC was in possession of privileged documents that contradicted the opinion expressed in a report from Mr Meredith that the securities over the units in the land holding trusts were worthless because of the debt funding of the trusts. The documents it appears Mr Mawhinney is referring to are a set of documents from December 2019, when documents to effect the debt to equity swap were first circulated, and from March 2020, when those on Mr Mawhinney’s side decided to get on with signing documents to effect the debt to equity swap: see Contravention Reasons at [122]–[123]. Mr Mawhinney’s submissions ignore the fact that the Contravention Reasons concluded (at [129]) that the debt to equity swap was not effective until late March 2020 (and therefore for most of the period covered by Mr Meredith’s opinion on that point), and that Mr Meredith’s opinion also addressed accounting treatments with which he disagreed.

36    Mr Mawhinney also contended that another privileged document “which may have been in ASIC’s possession (but which was not retrieved by Mr Mawhinney until after the trial)” showed that Mr Mawhinney did seek advice from Mr King (solicitor) about the Liquidity Prudency Policy in March 2020. The Roberts Affidavit exhibits a text message exchange between Mr Mawhinney and Mr King on 12 March 2020, and says that Mr Mawhinney located this message exchange in “late July 2025”. However, the correspondence exhibited to the Roberts Affidavit does not make good the contention that the text message exchange was held by any part of ASIC following a search of Mr Mawhinney’s telephone (let alone the litigation team). The documents exhibited to the Roberts Affidavit record that Mr Mawhinney asked the forensic IT professionals concerned whether a document provided to him to identify documents whose release he objected to covered only WhatsApp messages, or also included text messages. The IT professionals replied that it only concerned WhatsApp messages. Mr Mawhinney did not contest that response.

37    In any event, the text message exchange between Mr Mawhinney and Mr King does not show that Mr Mawhinney asked for legal advice regarding the Liquidity Prudency Policy on 12 March 2020. Rather, it shows that, on 12 March 2020, Mr Mawhinney asked Mr King to let him know when he was “available to chat re the policy and also a product we would like to launch”. As set out in the Contravention Reasons at [145], Mr Mawhinney had emailed Mr King on 12 March 2020 forwarding the Liquidity Prudency Policy and saying he would “call to discuss”. That email was sent in answer to an email from Mr King forwarding a letter of demand from an investor’s solicitor, and was forwarded by way of explanation of why the investor’s redemption had not been honoured. There is nothing in the text message to suggest that Mr Mawhinney was seeking legal advice on the Liquidity Prudency Policy per se, or its disclosure to investors or potential investors.

38    Having regard to the foregoing in addressing the matters raised by Mr Mawhinney concerning ASIC’s conduct of the litigation, I do not consider that any discount is warranted so as to reduce the percentage of ASIC’s costs to be paid by Mr Mawhinney to a figure below 90%.

Conclusion

39    The orders the Court will make are that Mr Mawhinney pay 90% of ASIC’s costs on the remitter, but without disturbing any costs orders made to date on discrete interlocutory issues post-dating the remitter.

Associate:

Dated:    19 September 2025