FEDERAL COURT OF AUSTRALIA

Australian Securities and Investments Commission v Brite Advisors Pty Ltd (Receivers and Managers Appointed) (in liq) (No 4) [2025] FCA 1698

ORDERS

For the purposes of this order:

A.    “Beneficiaries” or “Beneficiary” means those people or any person with a beneficial interest in the Trust Assets, either directly or through a Corporate Trustee.

B.    “Corporate Trustee” means any trustee or pension administrator who itself holds its interest in the Trust Assets on trust for underlying beneficiaries.

C.    “Deficient Mixed Fund” means the pooled fund defined in order 2 below.
“Excluded Assets” means the cash identified in orders 8 and 9 below, and the Moventum Assets.

D.    “IB Accounts” means the following accounts held in the name of Brite Advisors with Interactive Brokers Australia Pty Ltd and containing the Trust Assets:

(a)    I5876295

(b)    UL3311311

(c)    UL3311312

(d)    I6075976

(e)    UL6060948

(f)    UL6060949

(g)    I3214939

(h)    U3214940

(i)    I12469256

(j)    UL9224189

(k)    US9224190

E.    “Interim Funds Manager” means BML Funds Management Pty Ltd in its role as interim fund manager appointed pursuant to orders in this matter dated 6 March 2024.

F.    “Minerva Notes” means the financial notes held by Brite Advisors and which were issued by Minerva Lending Plc.

G.    “Moventum Assets” means the financial notes held by Brite Advisors on trust for certain Beneficiaries which are held on the platform provided by Moventum S.C.A.

H.    “Receivers” means Linda Methven Smith and Robert Michael Kirman in their capacity as joint and several court-appointed receivers and managers of the Trust Assets.

I.    “Structured Notes” means the financial notes held by Brite Advisors on trust for certain Beneficiaries, not being the Minerva Notes or the Moventum Assets.

J.    “Trust Assets” means the property, assets and undertakings held by the Defendant on trust for another to which the Receivers have been appointed, jointly and severally, as receivers and managers.

K.    “Verified Entitlement” means the entitlement of each Beneficiary as calculated and verified in accordance with the orders in this matter dated 2 September 2024.

L.    “Westpac Client Accounts” means the following accounts held in the name of Brite Advisors with Westpac Banking Corporation:

(a)    AUD – 036-237 450549

(b)    CHF – 034-770 001769

(c)    ZAR – 034-762 003019

(d)    EUR – 034-705 036500

(e)    USD – 034-702 136274

(f)    GBP – 034-703 011086

(g)    NZD – 034-748 032163

M.    “Westpac Operating Accounts” means the following accounts held in the name of Brite Advisors with Westpac Banking Corporation:

(a)    AUD – 036-230 149905

(b)    CHF – 034-770 001857

(c)    ZAR – 034-762 002649

(d)    EUR – 034-705 040737

(e)    USD – 034-702 241939

(f)    GBP – 034-703 025840

THE COURT ORDERS THAT:

1.    The Receivers would be acting properly and are justified in adopting the following approach to determining and making a distribution from the Trust Assets to Corporate Trustees or Beneficiaries.

Deficient Mixed Fund

2.    The Receivers can treat:

(a)    the assets and cash contained in the IB Accounts;

(b)    the cash contained in the Westpac Client Accounts which does not form a part of the Excluded Assets;

(c)    the cash contained in the Westpac Operating Accounts;

(d)    the proceeds of any assets in the IB Accounts that have, pursuant to orders of the Court, been liquidated and transferred out of the IB Accounts;

(e)    the assets and cash contained in the EU Moventum Account;

(f)    any future recoveries as contemplated by orders 6 and 38 below; and

(g)    any interest accrued on (b), (c), (d), (e) or (f),

as a pooled fund (together the Deficient Mixed Fund), with each Beneficiary having an equitable charge over the entire pooled fund to the value of their Verified Entitlement (to the extent it includes assets and cash which Brite Advisors held or purported to hold in the IB Accounts), but without any traceable interest to specific assets or cash in the Deficient Mixed Fund.

3.    In respect of Beneficiaries whose Verified Entitlement includes an entitlement to the Deficient Mixed Fund, the Receivers can calculate the amount of their distribution relating to such assets (Beneficiary’s Deficient Mixed Fund Distribution) on a pari passu basis as follows.

Where:

BE (Beneficiary Entitlement) is the total value of an individual Beneficiary’s Verified Entitlement relating to assets and cash which Brite Advisors held or purported to hold in the IB Accounts.

TE (Total Entitlements) is the sum of each and every BE.

TL (Total Loans) is the sum of each and every Loan.

Final Total Value is the total value of the Deficient Mixed Fund, less any amount representing the value of the Retained Funds identified in order 20 and the IB Margin Loan Security Assets identified in order 17 below, plus any pension withdrawals paid to Beneficiaries after 13 December 2023 as required by order 27 and any Tax that has been paid by the Receivers before the Valuation Date. The Final Value is to be determined as at the Valuation Date, as defined in order 27. For clarity, the Deficient Mixed Fund does not include the Excluded Assets.

Withdrawals are post-appointment pension/hardship withdrawals paid to that Beneficiary. This represents a set-off against the Beneficiary’s distribution.

Loans are any funds provided by Brite Advisors to that Beneficiary pursuant to a loan agreement and which have not been repaid. This represents a reduction of the Beneficiary’s Verified Entitlement.

Tax is any tax liability which the Receivers or Brite Advisors must pay or has paid on behalf of a Corporate Trustee or Beneficiary or an amount that must be withheld or has been withheld in respect of a Corporate Trustee or Beneficiary’s tax liability. This represents a deduction against the Beneficiary’s distribution.

ID (Interim Distribution) is any distribution already paid for the benefit of that Beneficiary pursuant to an order made by this Court in this matter and as contemplated by order 24A.

4.    For the purposes of the calculation of each Beneficiary’s Deficient Mixed Fund Distribution in accordance with the above paragraph, the Receivers can treat the following matters as having no impact on that calculation:

(a)    whether Brite Advisors held or purported to hold model portfolio assets, bespoke portfolio assets or both for the Beneficiary;

(b)    the “Master Account” in which Brite Advisors held or purported to hold that Beneficiary’s assets in;

(c)    the business unit designation or financial advisor appointed (or any other jurisdictional identifier) for that Beneficiary, as reflected in Brite Advisors’ systems;

(d)    any reassurance provided by Brite Advisors or a related or third party that the Beneficiary’s assets were segregated; and

(e)    any representation by Brite Advisors or a related or third party that the Beneficiary held certain identifiable assets in the IB Accounts.

Minerva Notes

5.    The Receivers can treat Beneficiaries who held Minerva Notes through Brite Advisors as at 13 December 2023 as having an entitlement to the Deficient Mixed Fund equal to the price paid by the Beneficiaries for the notes.

6.    To the extent Brite Advisors is able to recover any funds linked with the Minerva Notes, such recoveries are to form a part of the Deficient Mixed Fund and are to be distributed in accordance with the Deficient Mixed Fund Distribution formula.

Structured Notes

7.    The Receivers can treat Beneficiaries on whose behalf Brite Advisors should have held Structured Notes as at 13 December 2023, but where those Structured Notes are not actually held, as having an entitlement to the Deficient Mixed Fund equal to the estimated market value of the Structured Notes as at 13 December 2023.

Excluded Assets

Cash held in Westpac Client Accounts

8.    The Receivers can distribute the cash held in Brite Advisors’ Westpac Client Accounts as follows.

9.    In respect of any cash deposited in these accounts by a Beneficiary on or after 16 October 2023 and where that cash remained in the relevant Westpac Account until the appointment of the Receivers on 13 December 2023, the Receivers can distribute such deposits along with any associated interest accrued back to the depositing Beneficiaries in full.

10.    Prior to making the transfer contemplated in the previous order, the Receivers can require that the Beneficary who is to receive this distribution pay to the Receivers a fee representing a proportionate share of fees and expenses of the Receivers concerning their work in relation to the cash (including investigation, administration and realisation) as approved by the Court. The Receivers can allow a Beneficiary to offset the fee against the cash to be transferred.

11.    In respect of any cash deposited in these accounts which represent the proceeds of matured structured notes which were held on the Moventum platform, these funds are to be distributed to Beneficiaries who hold a proprietary right to those notes in accordance with order 13 below.

12.    In respect of the remaining cash in the Westpac Client Accounts (excluding amounts withheld in respect of potential tax liabilities), the Receivers are to treat this as part of the Deficient Mixed Fund.

Moventum Assets

13.    The Receivers can transfer the structured notes held on the Moventum platform in the USD and GBP accounts, and any proceeds deposited into the Westpac Client Accounts, which are the subject of a Beneficiary’s Verified Entitlement, back to the Beneficiary or the Corporate Trustee for the benefit of the Beneficiary entitled to those notes in specie. Where notes have matured, the Receivers can transfer the cash received upon maturity along with any interest received to the Beneficiary or the Corporate Trustee for the Beneficiary entitled to that cash.

14.    Prior to making the transfer contemplated in the previous order, the Receivers can require that the Beneficiary who is to receive this distribution pay to the Receivers a fee representing a proportionate share of fees and expenses of the Receivers concerning their work in relation to the Moventum Assets (including investigation, administration and transfer) as approved by the Court. The Receivers can allow a Beneficiary who is entitled to a distribution from the Deficient Mixed Fund to offset the fee against their Deficient Mixed Fund Distribution.

Retention of tax estimate

15.    In making the distributions referred to in orders 9, 11, and 13 the Receivers can retain from each such distribution an amount reflecting a conservative estimate of any related tax liability, including any withholding tax liability, of the Receivers, Brite Advisors or of Corporate Trustees / Beneficiaries required to be satisfied from the Client AuM.

16.    The Receivers can use those retained amounts to satisfy those tax liabilities and any amount not needed for that purpose will be distributed in accordance with orders 9, 11, and 13 as appropriate.

IB Margin Loan Security Assets

17.    The Receivers will not distribute the cash held in the IB Accounts I5876295, I6075976, and I12469256 and will retain assets adequate to comply with the orders made in this matter dated 5 June 2024 (IB Margin Loan Security Assets).

18.    Nothing in these orders affects the ongoing operation and effect of the agreements and undertakings recorded in order 3 of the orders made in this matter on 5 June 2024.

19.    Until the determination of the Retained Funds as referred to in orders 20 and 21 below, and without limiting or affecting orders 17 and 18 above,

(a)    the Receivers agree and undertake to the Court that nothing in these orders:

(i)    has the effect of in any way prejudicing any of the rights of Interactive Brokers Australia Pty Ltd (IBA) with respect to the Margin Loan (as that term is defined in the orders made in this matter on 5 June 2024), IBA’s contractual arrangements with the Defendant or the Receivers or otherwise relating to or arising out of or in connection with its relationship with Brite Advisors, including without limitation any security interest or set-off rights it has over any assets affected by these orders; or

(ii)    amounts to a concession or agreement by IBA that it is not entitled to interest and dividend amounts earned on the Brite Assets whilst any short cash balance remains on any of the IB Accounts, nor does it constitute any waiver of any such entitlement, and the Receivers will not make any argument to the contrary; and

(b)    IBA agrees and undertakes to the Court that nothing in these orders:

(i)    has the effect of in any way prejudicing any of the rights of the Defendant or the Receivers with respect to the Margin Loan, the contractual arrangements with IBA, or otherwise relating to or arising out of or in connection with the relationship with IBA;

(ii)    amounts to a concession or agreement by the Defendant or the Receivers that it is not entitled to challenge the right of IBA to interest and dividend amounts earned on the Brite Assets, and IBA will not make any argument to the contrary; and

(c)    the Receivers agree and undertake to the Court that they will not transfer or cause to be transferred in specie assets held in the IB Accounts from IBA’s trading platform to a third party trading platform without giving 14 days’ notice to IBA.

Retention of Funds

20.    The Receivers must deduct from the Final Total Value, referred to above in order 3, an amount to be determined and approved by the Court. These funds are to be deducted prior to the Valuation Date and retained by the Receivers (Retained Funds).

21.    The quantum of the Retained Fund is to be comprised of the following amounts, each to be specified on application to the Court and supported with evidence:

(a)    An amount reflecting a conservative estimate of the potential tax liabilities of the Receivers, Brite Advisors or of Corporate Trustees / Beneficiaries to be satisfied from the Client AuM, including any interest or penalties, where there are unresolved tax issues at the time of determining the amount of any distribution;

(b)    An amount reflecting the Receivers’ reasonable remuneration, costs and expenses in investigating and pursuing claims against third parties;

(c)    An amount reflecting the Receivers’ reasonable remuneration, costs and expenses to resolve any other outstanding matter and a conservative estimate of any other potential liability identified at the time of determining the amount of any distribution, including without limitation, any potential adverse costs order that may be made against the Receivers or Brite Advisors; and

(d)    An amount reflecting the Receivers’ reasonable remuneration, costs and expenses in managing the Retained Funds for the anticipated remaining length of the Receivership.

22.    The Retained Funds are to be managed by the Interim Funds Manager and are to remain held on trust for the Beneficiaries who receive a distribution from the Deficient Mixed Fund pursuant to these orders in proportion to their Beneficiary Entilement – Loans (as defined in order 3 above).

23.    The Retained Funds remain subject to prior orders of this Court relating to Trust Assets, including orders 9 and 10 of the orders made in this matter on 6 February 2024 (as amended).

24.    Following any distribution in accordance with orders 25 to 31 and retention of the Retained Funds, the Receivers are to:

(a)    retain the Retained Funds until further order of the Court; and

(b)    before any further distribution but no later than four months from the completion of the interim distribution contemplated by these orders, report to the Court on the progress of the outstanding matters and on any proposed further distribution.

Interim Distribution

24A.    Any application for an interim distribution is to be supported by evidence relating to:

(a)    the value of the interim distribution;

(b)    the timing of the liquidation; and

(c)    the timing of the distribution.

Final Distribution Payment

25.    Once the Retained Funds have been determined and approved by the Court in accordance with orders 20 and 21 above, the Receivers can, with the assistance of the Interim Funds Manager, liquidate the assets in the IB Accounts (except the IB Margin Loan Security Assets) over such period as is necessary in their opinion to achieve a fair price for those assets.

26.    The proceeds of this liquidation, less the Retained Funds, will be available for distribution (Distributable Amount).

27.    The Distributable Amount will be valued for the purposes of a distribution on a single date to be set by the Receivers (Valuation Date) and in US dollars, applying the prevailing exchange rates on that date as identified by the Receivers to the extent any cash is held in another currency. The total amount of pension withdrawals (or the USD equivalent calculated as at the date of each payment) paid to Beneficiaries after 13 December 2023 will be added to this value (Final Total Value).

28.    The distribution owing to each Beneficiary will be calculated by reference to the formula in order 3 applied to the Final Total Value at the Valuation Date.

(a)    Where a Beneficiary has received a pension withdrawal, this will be deducted from the amount to be distributed to them or to their Corporate Trustee.

(b)    Where Brite Advisors is liable to pay any tax on behalf of a Corporate Trustee or Beneficiary or withhold an amount in respect of a Corporate Trustee or Beneficiary’s tax liability, that amount will be deducted from the amount to be distributed.

29.    Where a Corporate Trustee or Beneficiary is to be paid a distribution or part thereof in a currency other than US dollars, the Receivers will convert such funds to that currency as required on or shortly after the Valuation Date at the prevailing exchange rate where necessary.

30.    A cash payment will be made to each Corporate Trustee or Beneficiary, the recipient to be determined by orders 31 to 35 below, in the currency or currencies nominated in accordance with a process to be established by the Receivers.

31.    The Receivers are to make payment to any Beneficiary who does not have a Corporate Trustee and to the relevant trustee entities controlled by the following Corporate Trustees:

(a)    STM Malta Pension Services Limited - Company number C 51028;

(b)    Corinthian Pension Trustees Limited (Administrators Appointed) - Company number 110658;

(c)    Pantheon Pension Trustees Limited (Administrators Appointed) - Company number 112310;

(d)    IFG Pensions Limited - Company number 04826217;

(e)    The Pensioneer Trustee Company (Guernsey) Limited - Company number CMP27891;

(f)    Pathlines Pensions UK Limited (formerly London & Colonial Services Limited) - Company number 2966313;

(g)    Praxis Pes Malta Limited (formerly known as Trireme Pension Services (Malta) Limited) - Company number C 58492;

(h)    Sovereign Trust (Guernsey) Limited - Company number CMP51015;

(i)    Sovereign Trust International Limited - Company number 44491;

(j)    Sovereign Pension Services Limited - Company number C 56627;

(k)    Concept Group Limited - Company number CMP41012;

(l)    Boal and Co (Pensions) Limited - Company number 104242C;

(m)    Mattioli Woods Limited - Company number 03140521; and

(n)    iPensions Group Limited - Company number 03683070.

32.    Any amount of the Distributable Amount that is not distributed in accordance with order 31 because the Corporate Trustee is not listed in that order will continue to be held on trust.

Distribution Recipient

33.    Where a Beneficiary has a Corporate Trustee in respect of an account with Brite Advisors in relation to which their entitlement arises, the Receivers are to make the distribution payment or transfer the asset, as applicable, to that Corporate Trustee or Substituted Corporate Trustee, subject to any notice received as contemplated in order 35 below, provided that Corporate Trustee or Substituted Corporate Trustee is listed in order 31 above.

34.    Where a Beneficiary has an account with Brite Advisors without an intermediary Corporate Trustee, the Receivers are to make the distribution payment or transfer the asset, as applicable, to that Beneficiary.

35.    Where a Beneficiary has changed their trustee, from a Corporate Trustee to a new trustee (the Substituted Corporate Trustee), and the Beneficiary, Corporate Trustee and Substituted Corporate Trustee have, in accordance with a procedure to be established by the Receivers, jointly advised the Receivers of this change and jointly instructed the Receivers that they wish for the payment of any distribution relating to that Beneficiary’s entitlement to be made to the Substituted Corporate Trustee, the Receivers can make such payment to the Substituted Corporate Trustee, provided the Substituted Corporate Trustee is listed in order 31 above.

Pension Withdrawals

36.    The Receivers may cease assessing and processing pension withdrawals if the Receivers anticipate making a distribution payment to that Beneficiary in accordance with the above orders within 60 calendar days.

37.    Once the Receivers have made a distribution payment to a Beneficiary, even if the Receivers have retained Client AuM and anticipate making a further payment to that Beneficiary in future, the Receivers may cease assessing and processing withdrawal requests from that Beneficiary.

Future Recoveries

38.    Any recoveries that Brite Advisors may obtain which are related to the losses incurred by the trust will form a part of the Deficient Mixed Fund and will be distributed in accordance with the formula in order 3 and the approach specified in orders 28 – 35 above.

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

REASONS FOR JUDGMENT

O’SULLIVAN J:

1    These reasons should be read in conjunction with:

    Australian Securities and Investments Commission v Brite Advisors Pty Ltd [2024] FCA 69;

    Australian Securities and Investments Commission v Brite Advisors Pty Ltd (Receivers and Managers Appointed) (in liq) [2025] FCA 1242; and

    Australian Securities and Investments Commission v Brite Advisors Pty Ltd (No 3) [2025] FCA 1635.

2    On 6 February 2024, the Court ordered that Brite Advisors Pty Ltd be wound up on just and equitable grounds. Linda Methven Smith and Robert Kirman of McGrathNicol were appointed joint and several liquidators.

3    Since there were significant funds held on trust by Brite Advisors, when ordering that Brite Advisors be wound up, the Court also ordered that Ms Smith and Mr Kirman be appointed jointly and severally as Receivers and Managers over the property, assets and undertakings held on trust for others.

4    Brite Advisors is one of a series of related companies spread throughout the world engaged in the management of investor funds. In Brite Advisors (No 3), I observed that Brite Advisors operated within an extensive international corporate structure comprising multiple affiliated entities incorporated across a range of countries. Through these entities, Brite Advisors provided pension administration and investment management services to clients situated in a variety of legal and regulatory environments. Its client base includes a mix of individuals and institutions, however a majority of its investors are corporate trustees or administrators of foreign pension schemes. A substantial number of investors are Australian self-managed superannuation funds, many of which hold assets rolled over from United Kingdom pension arrangements.

5    There are also a significant number of self-managed funds which contain retirement savings or involve pension schemes with investors or the trustees of investors’ pension funds being based in numerous jurisdictions. Those jurisdictions include: the United Kingdom; the United States of America; South Africa; Gibraltar and Malta.

6    In these reasons, the investors are referred to as ‘Beneficiaries’.

7    A chart showing the extent of the group of which Brite Advisors was part (Brite Group) was annexed as Annexure A to the reasons in Brite Advisors.

8    On 15 September 2025, having identified the Beneficiaries and the amounts due to them on the date the application to wind up Brite Advisors was filed (13 December 2023), the Receivers applied for interim distribution orders so that interim distributions to the Beneficiaries could commence.

9    After hearing from the Receivers and other interested parties, the Court ordered that the Receivers would be acting properly and are justified in adopting the approach set out in those draft orders in determining and making an interim distribution from the trust assets to corporate trustees and Beneficiaries (Interim Distribution Orders).

10    There were three matters that arose when considering whether the Interim Distribution Orders should be made, two of which were referred to as the ‘Surrender Rebate Disputes’ and the ‘Interest Disputes’. Orders were made dismissing claims by certain Beneficiaries in relation to those matters.

11    The third matter concerned an amount to be retained by Interactive Brokers Australia (IB Australia) as security against any potential claim against it. That matter was the subject of reasons in Brite Advisors (No 3).

12    Of the parties who appeared at the hearing, Relay Group and Alltrust Services Ltd did not object to the Interim Distribution Orders. Sovereign Group was heard on the Surrender Rebate Disputes. Mr Barton-Costa appeared in person on the Interest Disputes.

13    These reasons deal with the making of the Interim Distribution Orders as well as the Surrender Rebate Disputes and the Interest Disputes.

Principles

14    Pursuant to s 1323 of the Corporations Act 2001 (Cth), the Court has power to make the directions sought by the Receivers. That power also resides in the Court pursuant to ss 23 and 27 of the Federal Court of Australia Act 1976 (Cth).

15    The entitlement of a person to be paid from funds or other assets held on trust is determined according to general principles of trust law subject to the statutory requirements: Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 at [100]-[102].

16    The Court may permit two or more funds to be pooled with a view to their proportionate distribution where two or more funds are mixed. In Georges v Seaborn International (Trustee), in the matter of Sonray Capital Markets Pty Ltd (in liq) [2012] FCA 75 at [82]-[86], Gordon J (as a member of this Court) observed:

[82]    In the present case, applying these provisions of the Corporations Act and the Regulations is not straight forward. First, the words “entitled” and “entitlement” are not defined in the Corporations Act or the Regulations. Given the statutory trust imposed by s 981H(1) of the Corporations Act, the Liquidators submitted (and I accept) that these words import the principles applicable to trusts and, in particular, to deficient mixed trust accounts: cf re Lehman Brothers at [67]-[72] and [181].

[83]    Those principles provide that all contributors to a deficient mixed fund hold an equitable charge over the entire fund and its traceable proceeds to the value of their contributions, subject to any dealings and costs (Sutherland Re; French Caledonia Travel Services Pty Ltd (in liq) (2003) 59 NSWLR 361 and Australian Securities and Investments Commission v Letten (No 7) (2010) 80 ACSR 401) or are equitable tenants in common of the mixed fund as a whole, including its traceable proceeds, and subject to such deductions: Goode, Royston Miles, Goode on Legal Problems of Credit and Security (4th ed, 2008, Sweet & Maxwell/Thomson Reuters) [6-11 to 6-14].

[84]    Next, the Corporations Act and the Regulations do not deal with the situation where it is not possible to work out precisely who is entitled to what moneys in particular segregated accounts. It was common ground that all the Court can do in such circumstances is to permit the moneys in the segregated accounts to be pooled with a view to their proportionate distribution. The basis for the rateable distribution is the mixing of the funds: Re French Caledonia at [127] and [187].

[85]    Such a course of action is consistent with the purpose of the statutory regime, namely the achievement of a fair outcome between clients by a pragmatic and even-handed distribution amongst them: see, by way of example, s 983E of the Corporations Act which provides that where the money received is insufficient to pay all proved claims, the Court may “despite any rule of law or equity to the contrary, apportion the money among the claimants in proportion to their proved claims and show in the scheme how the money is so apportioned” and the second reading speeches in relation to the Financial Services Reform Bill 2001 (Cth) which indicate that the legislation was designed to produce a harmonised regulatory regime for market integrity and consumer protection across the financial services industry.

[86]    Of course, rateable distribution is subject to an important qualification – it does not apply if the claimants do not have equal claims: Re French Caledonia at [176] and [185]. Put another way, it is necessary to determine whether there should be differential treatment of claimants. That question is determined on available evidence. Thus, if a claimant can establish a remedy founded on tracing, the Court will grant relief founded on that evidence because it permits it to reach a different conclusion in respect of that claimant: Re French Caledonia at [178], [187] and [189].

17    Consistent with French Caledonia, there are two categories of investment where the funds are traceable. However, the vast majority of the Brite Advisors Client Assets under Management (Client AuM) comprises a deficient mixed fund. A deficient mixed fund results from:

(a)    the mixing of funds from more than one source, such that it is practically difficult or not economically feasible to trace or identify individual investor entitlements: In the matter of BBY Limited (Receivers and Managers appointed) (in liquidation) (No 2) [2018] NSWSC 346 (Brereton J) at [38]-[57], [83(4)] and [400]; or

(b)    the application of funds from one trust being applied to meet the obligations of another: BBY (No 2) at [83(4)].

18    As Gordon J noted in Sonray, all contributors to the deficient mixed fund hold an equitable charge over the entire fund and its traceable proceeds to the value of their contributions: at [83].

19    The Court must also decide how to determine the distribution to be made from the deficient mixed fund. A simple pari passu approach by reference to each Beneficiary’s entitlement as at a particular date has been treated as appropriate in analogous circumstances, where:

(a)    the nature of the investment involves investors knowing that their funds will be pooled with those of other investors for investment purposes: Caron v Jahani (No 2) [2020] NSWCA 117 at [89] referring to In re Australian Home Finance Pty Ltd [1956] VLR 1;

(b)    money has been misappropriated from a trust account but not debited against the ledger of any particular client or clients: Re Magarey Farlam Lawyers Trust Accounts (No 3) (2007) 96 SASR 337 at [123]; and/or

(c)    records were not adequately maintained so that it is impossible or not economically feasible to identify the money/assets belonging to each person who has contributed to a mixed fund: ASIC v Letten (No 7) (2010) 190 FCR 59 (Gordon J as a member of this Court) at [332]-[336].

20    There is no prescribed statutory methodology for assessing each Beneficiary’s entitlement: Sonray at [116]. Courts select a methodology by reference to the circumstances of the case. Under those circumstances, the Court can only work with the evidence it has available to it. That may involve some “rough justice”: BBY (No 2) at [40]-[41] and [61].

Consideration

21    The orders sought are not to the detriment of any person who may have a claim to an entitlement from the trust assets in the sense that any existing rights those persons may have are not extinguished: Letten (No 7) at [336].

22    In this matter, the Court has adopted a claims-based approach, where each Beneficiary’s entitlement will be determined by reference to the position if Brite Advisors had properly performed its obligations: MF Global at [107]; Orders 8 of the Orders dated 5 June 2024; and Order 9 of the Orders dated 2 September 2024. There has been no challenge to this approach, nor has any party sought leave to be heard on this issue. In those circumstances, the previous orders of the Court adopting the claims-based approach should not be disturbed.

23    This is a highly complex Receivership. It carried with it many complications involving, amongst other things, identifying and tracing the Beneficiaries, which was made all the more difficult by deficiencies in the record keeping by Brite Advisors and the group of which Brite Advisors was part.

24    Further, the Directors of Brite Advisors and the various companies forming part of the Brite Advisors group provided limited or no assistance.

25    The moneys received from investors who became clients of Brite Advisors and the investments made with those moneys was held on trust by Brite Advisors for the benefit of those clients: see ss 981A, 981B, and 981H of the Corporations Act; BBY (No 2) at [32].

26    The work done by the Receivers leading to the application for distribution orders has been time consuming, difficult, and extensive. The work done has been made all the more difficult for the reasons I have explained.

27    During the Receivership, the Receivers have produced a number of reports. The Fourth and Fifth Reports, dated 9 August 2024 and 4 December 2024 respectively, reported comprehensively on the progress of the Receivership.

28    The Fourth Report included the steps taken to secure the Client AuM, including recovering money from offshore accounts and identifying other potential assets. One of the steps taken was to appoint an interim Funds Manager to manage the Client AuM whilst the funds were being identified, tracked and to the extent possible, recovered.

29    In so doing, it was necessary to identify a date at which the value of the Beneficiaries’ assets were to be valued. Fairness requires that a single date be adopted to calculate Beneficiaries’ entitlements to the deficient mixed fund: Sonray at [112].

30    Beneficiaries’ entitlements to the Client AuM have been determined in accordance with the orders of the Court by reference to what Brite Advisors recorded each Beneficiary as holding as at 13 December 2023, being the date the Receivers were appointed, with positive balances set-off against negative balances for each Beneficiary: Order 9 of the Orders dated 2 September 2024; see also MF Global at [107], [110] and [157].

31    In accordance with Order 8 of the Orders made on 5 June 2024, the Receivers have assessed each Beneficiary’s entitlement by reference to 13 December 2023. In the circumstances, this is the logical date to assess the value and is supported by the authorities: MF Global at [110] and [114]; Seventh Smith Affidavit affirmed 17 May 2024 at [10]-[20]. There was no particular science to choosing that date. The date was always going to have an arbitrary nature about it, but the Receivers were appointed on that date and any transaction either before or after that date had the potential to benefit some Beneficiaries over others which carried with it an element of unfairness.

32    Several Beneficiaries have disputed this approach and contend that a date closer to the date of distribution be used to calculate their entitlements. The practical effect of a later date would be to allocate any growth, or loss, in the Client AuM post-appointment date based on performance of specific assets which Brite Advisors purported to hold for individual Beneficiaries. The impact of such an approach is detailed in the Post-Appointment Value Report at [3]. For the reasons outlined in the Supplementary Explanatory Memorandum dated 25 March 2025 at [2.8]-[2.9] and the Supplementary Report regarding growth of Client AuM since 13 December 2023 dated 23 July 2025 at [3.4], the Receivers recommend maintaining the date of their appointment, being 13 December 2023.

33    I accept that recommendation.

34    Prior to the application being heard on 15 September 2025, in accordance with the Court’s orders of 13 December 2024, the Receivers had provided detailed Explanatory Memorandum dated 4 December 2024 and the Supplementary Explanatory Memorandum which was made available to the Beneficiaries.

35    The Receivers’ approach was to identify Beneficiaries’ entitlements, which in broad terms involved identifying the Beneficiaries, obtaining and verifying the Beneficiaries’ respective details so that each Beneficiary’s individual account could be accessed, and calculating the value of each Beneficiary’s entitlement. Once done, each Beneficiary was asked to review their entitlement calculation and either confirm it or raise a dispute with the Receivers.

36    A number of different funds were identified as having been mixed with the consequence that the Receivers were either practically unable to trace entitlements to individual investors or unable to undertake the tracing exercise in an economically reasonable manner. The position was complicated further by what appeared to be funds from one trust held by Brite Advisors being used to meet the obligations of another trust. There was what might fairly be described as a Gordian Knot which demanded a practical and economically prudent method of dealing with the Client AuM.

37    The amount of work involved in that exercise should not be underestimated. Not only were there in the order of 2,000 Beneficiaries, they were spread throughout the world and as I have noted, Brite Advisors’ poor record keeping and the deficient records across the Brite Group created considerable difficulties.

38    All monies identified and collected by the Receivers were invested under the management of an interim Funds Manager. With the benefit of the interim funds management, as at 4 July 2025, there was a surplus of USD$45.9 million when compared to the benchmark figure on 13 December 2023. That money and any investment income was held on trust: ss 981A, 981B and 981H of the Corporations Act, with each Beneficiary who has established an entitlement to be paid from that money held on trust: s 981F of the Corporations Act.

39    Because of the model adopted across the Brite Group, the funds being held were, with some exceptions, held in Interactive Brokers Accounts in Australia (IBA). That involved a number of complexities because the sums were held in an Omnibus account with no records held by IBA. As a consequence, the Receivers were unable to identify the ultimate beneficial owners of those assets.

40    Further, the Receivers discovered that on one view there was a shortfall in the IBA accounts since 30 June 2020, and on another view, as from January 2021.

41    That shortfall increased in the period leading up to January 2021 with the consequence that there has been a deficient mixed fund since that time. As at 13 December 2023, the shortfall was in the order of USD$94.3 million.

42    The Receivers point to the following matters which led to there being a deficient mixed fund:

(a)    There was a Security Facility Agreement in place between Brite Advisors and IBA. The Court dealt with that Security Facility Agreement in Brite Advisors (No 3) at which time I found that it was not the case that all funds in different IBA accounts served as collateral for margin loans that had been put in place by Brite Advisors and other companies within the Brite Group across all IBA’s accounts: see also Fourth Report at [4.6.14];

(b)    The Receivers had established that client deposits were diverted, without authorisation, and that assets in the IBA accounts had been liquidated. It seems the proceeds of those activities had been used for other purposes;

(c)    Since Brite Advisors did not maintain adequate books and records, there was no certainty as to whom securities remaining in the IBA accounts belonged: Fourth Report at [1.2];

(d)    Any attempt to reconstruct books and records would be prohibitively expensive and time-consuming to resolve: Fourth Report at [6.9]; and

(e)    Although particular assets could be identified and attributed to specific Beneficiaries, nonetheless by reason of the matters set out above, there would be a number of competing claims.

43    Given the significant size of the deficiency in the fund and the mixing of assets, the Receiver’s approach in treating each Beneficiary’s entitlement in any one account as identical to its entitlement to the others results in any particular Beneficiary’s interest as being notionally equal in the deficient mixed fund: BBY (No 2) at [83(7)]. In all the circumstances, that is the only practical and economically responsible approach.

Distribution of the Trust Assets

44    In their written submissions filed on 23 July 2025 at [8], the Receivers explained their proposed approach to distributing the trust assets.

45    Those submissions set out the following defined terms:

(a)    Deficient Mixed Fund – “Deficient Mixed Fund” means:

(i)    the assets and cash contained in the IB Accounts;

(ii)    the cash contained in the Westpac Client Accounts which does not form a part of the Excluded Assets;

(iii)    the cash contained in Westpac Operating Accounts;

(iv)    the proceeds of any assets in the IB Accounts that have, pursuant to orders of the Court, been liquidated and transferred out of the IB Accounts;

(v)    the assets and cash contained in the EU Moventum Account;

(vi)    any future recoveries as contemplated by orders 6 and 38 below; and

(vii)    any interest accrued on (ii), (iii), (iv), (v) or (vi),

as a pooled fund with each Beneficiary having an equitable charge over the entire pooled fund to the value of their Verified Entitlement (to the extent it includes assets and cash which Brite Advisors held or purported to hold in the Interactive Brokers Accounts), but without any traceable interest to specific assets or cash in the Deficient Mixed Fund;

(b)    AuM – Assets under Management; and

(c)    IBAU – Interactive Brokers Australia.

46    The submissions explained:

a)    The bulk of the Client AuM, approximately 99.6%, forms part of the Deficient Mixed Fund. These assets are to be liquidated and a cash distribution be made, on a pari passu basis, to Corporate Trustees where one exists or to Beneficiaries where they are direct investors, in accordance with each Beneficiary’s entitlement assessed as at 13 December 2023; Orders 2 – 7, 23 – 34, Minutes of Proposed Orders; Order 8 of the Orders dated 5 June 2024; Orders 9 and 10 of the Orders dated 2 September 2024.

b)    Certain cash and assets within the Client AuM, approximately 0.4%, are excluded from the Deficient Mixed Fund and will be transferred back to the Beneficiaries entitled to that cash or those assets, less an amount reflecting a proportionate share of fees and expenses of the Receivers concerning the work relating to that cash or those assets: Orders 8 – 14, Minute of Proposed Orders.

c)    Certain cash and assets will be retained and not distributed until the conclusion of the Receivership. The cash held in respect of the Margin Loan within the IBAU Accounts under the 5 June 2024 Orders in this matter will not be distributed. A further amount will be retained for potential tax liabilities, costs associated with pursuing claims against third parties, and the Receivers’ costs in otherwise managing the Receivership until it is concluded. This amount is to be determined on application to this Court. Any residual amounts remaining at the conclusion of the Receivership, including future recoveries from actions against third parties, are to be distributed in accordance with the orders relating to the Deficient Mixed Fund: Orders 15 – 22, 35, Minute of Proposed Orders.

47    Whereas there were a number of individual Beneficiaries, a significant number have assets held by corporate trustees. The Receivers propose to distribute funds to those corporate trustees which have satisfied the Receivers that they are indeed the trustee of an individual Beneficiary’s entitlement.

48    It is against that background that the Receivers sought the Court’s approval to liquidate the Client AuM, the majority of which comprises the deficient mixed fund: Orders 23-24 of the draft Interim Distribution Orders; Explanatory Memorandum at [4.2.4]-[4.2.6], with distributions to be paid in accordance with Beneficiaries’ entitlements to the deficient mixed fund as determined by the formula that appears in the draft Interim Distribution Orders:

Where:

BE (Beneficiary Entitlement) is the total value of an individual Beneficiary’s Verified Entitlement relating to assets and cash which Brite Advisors held or purported to hold in the IB Accounts.

TE (Total Entitlements) is the sum of each and every BE.

TL (Total Loans) is the sum of each and every Loan.

Final Total Value is the total value of the Deficient Mixed Fund, less any amount representing the value of the Retained Funds identified in order 20 and the IB Margin Loan Security Assets identified in order 17 below, plus any pension withdrawals paid to Beneficiaries after 13 December 2023 as required by order 27 and any Tax that has been paid by the Receivers before the Valuation Date. The Final Value is to be determined as at the Valuation Date, as defined in order 27. For clarity, the Deficient Mixed Fund does not include the Excluded Assets.

Withdrawals are post-appointment pension/hardship withdrawals paid to that Beneficiary. This represents a set-off against the Beneficiary’s distribution.

Loans are any funds provided by Brite Advisors to that Beneficiary pursuant to a loan agreement and which have not been repaid. This represents a reduction of the Beneficiary’s Verified Entitlement.

Tax is any tax liability which the Receivers or Brite Advisors must pay or has paid on behalf of a Corporate Trustee or Beneficiary or an amount that must be withheld or has been withheld in respect of a Corporate Trustee or Beneficiary’s tax liability. This represents a deduction against the Beneficiary’s distribution.

ID (Interim Distribution) is any distribution already paid for the benefit of that Beneficiary pursuant to an order made by this Court in this matter and as contemplated by order 24A.

49    Insofar as corporate trustees are concerned, the amount to be distributed will reflect the total of the Beneficiaries’ entitlements for whom the trustee holds the entitlement.

Excluded Assets

50    There remain two classes of assets in relation to the proposed Distribution Methodology which the Receivers propose to exclude from the deficient mixed fund distribution, being:

(a)    certain cash and securities held on the Moventum platform; and

(b)    certain cash held in Westpac Client Accounts.

51    The Receivers propose to exclude those assets on the basis that the cash and securities in question have never formed part of the deficient mixed fund and it is because those assets have not been part of the deficient mixed fund that the Receivers also seek an order that those identifiable funds and securities be distributed in specie to certain of the corporate trustees who satisfy the Receivers that they are in fact trustees for the Beneficiaries identified. That is consistent with French Caledonia.

52    The date and basis on which a Beneficiary’s entitlement for those two classes of assets is yet to be determined.

53    It is for the reasons which I have set out that I accept the Receivers’ submissions that the liquidation of the deficient mixed fund and transfer of the proceeds to the corporate trustees or Beneficiaries directly is the most efficient and effective way to return the deficient mixed fund to the Beneficiaries. An in specie distribution is not possible under these circumstances.

54    It is for the reasons set out above that the Interim Distribution Orders were made.

The Surrender Rebate issue

55    The Receivers identified instances where Beneficiaries had rolled over their pension assets from a prior pension provider to Brite Advisors, subject to a surrender or exit fee charged by the prior pension provider. The consequence was that the asset value at the time of the rollover was reduced by the surrender or exit fee amount. In those circumstances, Brite Advisors offered the relevant Beneficiaries what the Receivers describe as an “interest free loan” in the sum of the surrender or exit fee charged by the prior pension provider to replenish the rollover amount. Those arrangements did not attract interest and were repayable by the Beneficiary from their pension assets to Brite Advisors in monthly instalments over a 10-year period. This kind of arrangement was referred to internally by Brite Advisors as a Surrender Rebate: Surrender Rebate and Interest Report dated 1 August 2025 at [2.1] and [2.3].

56    The Receivers note that there is a cohort of 1,107 Beneficiaries with a total entitlement of USD$444.7 million who have outstanding Surrender Rebates in the sum of approximately USD$16.5 million: Surrender Rebate and Interest Report at [2.2.1].

57    The Receivers considered it appropriate that all Surrender Rebates be offset as a negative balance against the positive value of the Beneficiaries’ investments in calculating their entitlements in accordance with Order 9(b) of the draft Interim Distribution Orders: Surrender Rebate and Interest Report at [2.4].

58    Sovereign Group objected to the Receivers’ position in respect of the Surrender Rebates.

59    Sovereign Group submitted that any outstanding balances on the Surrender Rebates should not be offset against the value of their investments, or alternatively that the amounts to be offset should be reduced to account for the fact that they would have had years to repay those amounts.

60    The Receivers oppose the position taken by Sovereign Group.

61    First, Sovereign Group contends the exit fee payment was not a loan, but rather an inducement for Beneficiaries to transfer their entitlements to Brite Advisors.

62    I do not accept that position. It may have been interest free, but it was to be repaid and is properly described as a loan.

63    Second, Sovereign Group submit that Brite Advisors is in breach of the agreement with the relevant beneficiaries by the Receivers electing to terminate the relevant agreement, such that the Receivers cannot now, in effect, benefit from the breach.

64    I do not accept that submission. Brite Advisors, through the Receivers, did not breach any agreement. What is being contemplated is an accounting exercise that recognises the benefit received by those Beneficiaries who received the Surrender Rebate.

65    The Receivers submit that if the Surrender Rebates are not treated as negative account balances, then those amounts would be taken on by the entire group of Beneficiaries in proportion to their entitlement, effectively causing a wealth transfer from Beneficiaries without Surrender Rebates to Beneficiaries with Surrender Rebates. The Receivers note further that the Beneficiaries without Surrender Rebates have already, in effect, assisted in funding the Surrender Rebates. This is because a margin loan was used and interest was incurred by Brite Advisors to fund the Surrender Rebates. That interest was not passed on to the Beneficiaries taking advantage of the Surrender Rebates: Surrender Rebate and Interest Report at [2.11].

66    I accept that submission which is, with respect, demonstrably correct.

67    Next, the Receivers submit that it would be inequitable to forgive loans to certain of the Beneficiaries who took advantage of the Surrender Rebate at the detriment of the remaining Beneficiaries.

68    I accept that submission. Such an approach is to prefer the interests of one set of Beneficiaries who have had the advantage of a loan over those Beneficiaries who have not.

69    Next, the Receivers contend that the Surrender Rebate is repayable according to the relevant contractual terms. The Surrender Rebate was funded through a general margin loan with the contractual terms notifying the Beneficiaries that their assets could be used “in part or in full, at any time from their Managed Portfolio” to service that debt: Surrender Rebate and Interest Report at [2.6.4].

70    I accept that submission. There is no basis to forgive the loan, which would result in a readily identifiable inequity as between Beneficiaries.

71    Next, the Receivers contend that the particular circumstances of the transfer of South African investors from DeVere Group to Brite Advisors and the conduct of DeVere SA do not oblige Brite Advisors to forgive the Surrender Rebate for Beneficiaries who were DeVere Group clients. According to the Receivers’ investigations, at least some of the Beneficiaries knew about the Surrender Rebate; however, the effect of the arrangement may have been misrepresented by their financial advisor. If in fact there was a misrepresentation by a financial advisor from DeVere SA, the Receivers submit that no recourse is available against trust assets in respect of that misrepresentation: Surrender Rebate and Interest Report [2.9].

72    I accept that submission. Any recourse which is contended for as a result of an alleged misrepresentation should be directed elsewhere.

73    Next, the Receivers reject the corporate trustee’s contention that Surrender Rebates should be forgiven because they fell outside its investment guidelines which prohibit loans being made to its members. The Receivers’ have found no indication, nor any evidence to indicate that the Surrender Rebate was misrepresented to corporate trustees. The Receivers submit that even if the corporate trustee had properly understood the Surrender Rebate as a loan from Brite Advisors and rejected it, the Beneficiaries with Surrender Rebates still received the benefit in the form of funds which were invested: Surrender Rebate and Interest Report at [2.8].

74    I accept that submission.

75    Next, the Receivers submit that to apply a discount to the Surrender Rebates would involve further costs to be incurred, result in additional delay and is not justifiable in the circumstances: Surrender Rebate and Interest Report at [2.10].

76    I accept that submission.

77    It is for these reasons that I dismissed the claim by certain of the Beneficiaries claiming that any outstanding balances as Surrender Rebates should not be offset or otherwise reduced against the value of their investments.

The Interest Disputes

78    Six of the Beneficiaries with a total entitlement of USD$2.6 million disputed their Valuation Notices on the ground that they ought to have accrued interest applied to their cash holdings.

79    The Receivers note that if the Court were to find that interest ought to be retrospectively applied to cash balances recorded as at 13 December 2023, this would affect all Beneficiaries: Surrender Rebate and Interest Report at [3.4].

80    The Receivers submit that the 13 December 2023 entitlements should not be amended retrospectively to apply interest to cash balances. The Receivers contend that doing so would be against the interests of the Beneficiaries as a whole.

81    I accept that submission which has the effect of preferring one group of Beneficiaries over another notwithstanding their interests form part of the same deficient mixed fund.

82    The Receivers submit that there is no legal basis to support the position that interest should be retrospectively applied to the cash balances.

83    In support of that submission, the Receivers refer first to reg 7.8.02(7) of the Corporations Regulations 2001 (Cth) which states:

7.8.02 Accounts maintained for section 981B of the Act

…

(7)    For paragraph 981C(1)(c) of the Act, if money is held in an account maintained for section 981B of the Act:

(a)    the financial services licensee is entitled to the interest on the account; and

(b)     the interest on the account is not required to be paid into the account;

only if the financial services licensee discloses to the client that the financial services licensee is keeping the interest (if any) earned on the account.

…

84    The Receivers submit that the accounts holding the cash balances are not client money accounts for the purpose of s 981B of the Corporations Act such that reg 7.8.02(7) of the Regulations does not apply. They submit that a client money account is an account with an Authorised Deposit-taking Institution, an approved foreign bank or a cash management trust: s 981B(1)(a) of the Corporations Act; reg 7.8.01(2) of the Regulations. I accept that submission.

85    The Receivers observe that Brite Advisors’ client money accounts were with Westpac: Fourth Report at [5.4.3]-[5.4.5], and that cash held in these accounts are not the subject of the Interest Disputes. The Receivers submit that the Interest Disputes instead relate to cash held on the IB Platform which does not appear to be a client money account under s 981B.

86    I accept that is the case.

87    Next, the Receivers submit that in any event, the handling of interest with respect to the IB Platform was disclosed in the Platform Agreement or the Managed Portfolio Application Agreements: Sixteenth Smith Affidavit at [56]; Surrender Rebate and Interest Report at [3.2.3]. Those agreements conferred on Brite Advisors the ability to determine whether interest on cash held in a Beneficiary’s account would be credited to that Beneficiary. In practice, however, interest in the IB Platform accounts accrued on an aggregate basis and was not allocated to the accounts of individual Beneficiaries. The Receivers also note that typically, Brite Advisors did not earn interest on its cash holdings that it could then pass on to cash holding Beneficiaries: Surrender Rebate and Interest Report at [3.2.4]-[3.2.6].

88    The Beneficiaries contend that communications exist between them and Brite Advisors inferring that they were, or ought to be, earning interest. In response, the Receivers submit that these communications do not overcome the barriers to retrospectively applying interest to Beneficiaries’ accounts. The Receivers submit further that even if Brite Advisors made misrepresentations to certain of the Beneficiaries, it would likely give rise to unsecured claims against the company rather than claims against the Client AuM: Surrender Rebate and Interest Report at [3.3.4(b)].

89    I accept the Receivers’ submissions.

90    Finally, the Receivers submit that the exercise of reconstructing cash balances over time to adjust cash holding Beneficiaries’ entitlements to include interest would incur further costs, result in additional delay, and is not justifiable in the circumstances.

91    I accept that submission. Although not perfect, it is part of the “rough justice” that is, unfortunately, necessary in matters such as this: BBY (No 2) at [40]-[41] and [61].

92    It is for these reasons that the challenge to the valuation of their entitlements by a small number of Beneficiaries based on the non-attribution of interest to their cash holdings was dismissed.

Associate:

Dated:    30 July 2026