Federal Court of Australia

QB4 Capital Pty Limited v Guardian Securities Limited (Final Distribution) [2026] FCA 971

ORDERS

THE COURT ORDERS THAT:

1.    Sean Wengel and Michael Brereton, as receivers and managers of the property of Fundus Management Pty Limited (Fundus), including the property held by Fundus as trustee of Fundus Trust No 1 (FT1) and Fundus Trust No 2 (FT2), are justified in making a final distribution to unitholders of the Premium Income Fund (PIF) and Enhanced Land Fund (ELF) in accordance with the Final Distribution Statement as at 13 July 2026, without further direction of the Court.

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

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from the transcript)

LEE J:

A    Introduction AND BACKGROUND

1    This application concerns the final issue left unresolved by my reasons delivered on 25 May 2026 in QB4 Capital Pty Limited v Guardian Securities Limited [2026] FCA 704 (earlier reasons).

2    That judgment disposed of the various interlocutory applications brought in connexion with the conclusion of this receivership. However, it deferred one confined controversy concerning the operation of Order 6 of the orders made on 15 February 2024, following a court-ordered mediation. Directions were then made requiring the receivers to formulate the direction or orders they contended ought properly to be made, and for the exchange of consolidated submissions and any additional evidentiary material directed solely to that issue.

3    The confined nature of the question should not obscure the wider context in which the present issue arises. This litigation has now occupied the parties and the Court for more than six years and has latterly involved the complex administration of a registered managed investment scheme under Ch 5C of the Corporations Act 2001 (Cth), known as The Guardian Investment Fund (TGIF). It is sufficient to note for present purposes that TGIF is divided into several different unit classes, including the Premium Income Fund (PIF) and the Enhanced Land Fund (ELF). Guardian Securities Limited (Guardian) was the trustee and responsible entity of TGIF, and QB4 Capital Pty Limited (QB4) was its former investment manager. Fundus Management Pty Limited (Fundus) holds the relevant property as trustee of Fundus Trust No 1 (FT1) and Fundus Trust No 2 (FT2). Messrs Sean Wengel and Michael Brereton are the court-appointed receivers and managers of Fundus and the property held by it as trustee of FT1 and FT2 (Receivers).

4    In addition to my earlier reasons, the factually dense and complex background is set out in a series of judgments, including QB4 Capital Pty Limited v Guardian Securities Limited [2022] FCA 262; (2022) 159 ACSR 289; QB4 Capital Pty Limited v Guardian Securities Limited [2023] FCAFC 72; (2023) 411 ALR 496 (per Moshinsky, Stewart and Jackman JJ); and QB4 Capital Pty Ltd, in the matter of an application by QB4 Capital Pty Limited [2026] FCA 62 (per Cheeseman J). The matter (to use that expression in its broad constitutional sense) has involved extensive interlocutory disputation, appeals, collateral proceedings and repeated contests concerning the administration of the trust assets. As I observed in my earlier reasons, one of the more dispiriting features of the matter is that every additional procedural controversy has inevitably diminished the amount ultimately available for distribution to the beneficiaries. Litigation about the consequences of litigation has itself generated further litigation. It was for that reason that, in my earlier reasons, I observed that no further interlocutory applications would be entertained without leave. It is plainly in the interests of all concerned, and particularly those beneficially interested in the trust assets, that this receivership finally be brought to a conclusion.

5    The issue now remaining concerns the proper disposition of certain costs said by QB4 to be payable from the trust assets pursuant to Order 6 made on 15 February 2024. That was described as the “seventh issue” in my earlier reasons. For ease of reference, and despite its length, it is worth setting out what I said in my earlier reasons (at [58]–[79]):

58    The issue arises out of an order I made (Order 6) on 15 February 2024. Before turning to that order, it is necessary to provide some important context. It will be recalled the appeal was dismissed on 19 May 2023, with the Full Court ordering QB4 to pay adverse costs (Order 3 and 4 of the orders made on 19 May 2023). As I have observed above, I made an order on 30 August 2023 approving certain remuneration and expenses by the Receivers, but also referring outstanding costs issues to mediation before a Registrar.

59    That mediation occurred, and I was presented with orders to be made following the conclusion of the mediation (being the orders I made on 15 February 2024). Order 6 was as follows:

Subject to the Guardian Indemnity having been discharged in full, the legal costs and expenses the subject of paragraph [3] of the QB4 Claim, (including any appeal that arose from this proceeding) (except for the costs of these proceedings in the period from 13 November 2020 onward) are to be paid to the first applicant and second applicants by the Receivers from the assets of FT1 and FT2 on a lump sum basis.

60    So that this order may be properly understood, the “QB4 Claim” was defined as the points of claim filed by QB4 on 17 July 2023. Paragraph [3] of the QB4 Claim was in the following terms:

The legal costs and outlays incurred by the Claimant in the QB4/Guardian litigation being Federal Court of Australia proceedings Nos. NSD415/2020, NSD470/20[20], NSD99/2021 and NSD582/2022.

61    The orders of 15 February 2024 were made following various communications to my chambers. On 12 February 2024, my chambers received an email from the Registrar following the conclusion of the mediation in person on 30 October 2023. For reasons not explained before me, the mediation was adjourned to short Microsoft Teams meetings with the parties on 13 November 2023, 27 November 2023, 4 December 2023, 20 December 2023 and 2 February 2024. The Registrar also informed my chambers that:

I am pleased to report the parties have agreed to many of the issues in dispute and note that they sent you proposed short minutes of order this morning for your consideration.

62    That communication from the Registrar coincided with an email my chambers received from Colin Biggers & Paisley, the solicitors for the Receivers. That email was as follows:

Dear Associate

We act for the Receivers in the above matter. This email is sent on behalf of all parties and the legal representatives for each are copied to it. In addition, the legal representatives of CloudCapital (not a party but an entity who has put forward a points of claim) are copied to this email.

We refer to the orders made on 30 August 2023 (attached) referring the matter to mediation.

As directed by order 3 of those orders, the parties have attended a mediation before Judicial Registrar O’Connor, who is copied to this correspondence.

The parties have reached a consensus as to a form of orders to address the various points of claim that have been filed. We attach proposed orders in this regard. Please note the following:

1.    The Guardian parties consent to proposed orders 1 to 4 and seek the notation at 16(b). They neither consent to, nor oppose, the balance of the orders.

2.    The QB4 parties consent to these orders.

3.    The Receivers do not oppose these orders.

4.    CloudCapital (not a party) may or may not wish to be heard in relation to these orders.

The Receivers are also seeking Court approval for their remuneration to 1 December 2023 and legal expenses up to 7 February 2024. Those amounts have been included in the draft orders which are in the form approved by the Court on prior occasions.

In the circumstances, the Parties and the Receivers wish to enquire whether Justice Lee is minded to make these proposed orders without the need for an appearance, or would otherwise be assisted by hearing from the Parties and the Receivers in relation to the proposed orders.

…

63    In short, the present dispute relates to the fact that QB4 has indicated (and this certainly was not articulated with any precision or in any detail whatsoever in the written submissions filed prior to today) that it is entitled by reason of the terms of Order 6 to be paid the appeal costs and the collateral proceeding costs out of the trust assets.

64    I have been told by those acting on behalf of the Receivers that this position was not their understanding of the nature of any agreement struck between the parties. For its part, QB4 says that the agreement it contends is reflected in Order 6 amounted to a commercial compromise between the parties of a range of outstanding claims of QB4 that went beyond the appeal costs and the collateral proceeding costs.

65    The email sent to chambers, upon examination, is ambiguous in its terms. Colin Biggers & Paisley indicated that the parties had reached a “consensus” as to the form of orders to address the various points of claim that had been filed. On the other hand, the Receivers did not say they expressly consented to the orders, but they did “not oppose these orders”. Additionally, the Guardian parties neither consented to, nor opposed, Order 6.

66    As can be seen, the parties and the Receivers enquired of my chambers whether I was minded to make the proposed orders without the need for an appearance or if I would otherwise be assisted from hearing from the parties. I made the orders in chambers because, considering the outcome of the mediation, I assumed that the correspondence sent on behalf of all parties and their legal representatives reflected an agreement reached and that there would not be further controversy.

67    As it happens, I am now confronted, over two years later, with an argument at the heel of the hunt concerning Order 6.

68    One thing can be said with confidence: having regard to the underlying merits (and absent any agreement), I would not have made an order providing for QB4 to be paid its appeal costs and its costs of the collateral proceeding out of trust assets.

69    Leaving aside the issue of the initial justification for the commencement of the proceedings (which is a matter unnecessary to delve into for present purposes), I do not consider an order of the type now sought to be consistent with how the Full Court dealt with the issue of costs. It rejected the approach taken by QB4 in the appeal, and the appeal was wholly unnecessary. This is not the same area of legal discourse as a trustee’s indemnity for reasonable litigation costs incurred. The appeal costs should fall as they lay following their determination by the Full Court.

70    Similarly, in respect of the collateral proceeding, I made the order that each party bear its own costs with the understandable and unsurprising intention that each party actually bear its own costs.

71    Accordingly, having rejected the notion that I would, absent agreement, have made an order requiring QB4’s appeal costs and its collateral proceeding costs to be paid out of the trust assets, it is necessary to identify with some precision the true issue that remains for determination.

72    Although the matter was discussed during oral argument in terms of the construction of Order 6 and, potentially, the rectification of that order, those characterisations do not, in my view, fully capture the substance of the controversy. The real question is not one of form. It is whether QB4 has any entitlement to be paid the appeal costs and the collateral proceeding costs from the trust assets.

73    It follows from what I have already said that the only presently identified foundation for QB4’s asserted entitlement is the existence of an agreement reached at the mediation. To repeat, QB4’s position is that the payment of the appeal costs and the collateral proceeding costs formed part of a broader commercial compromise by which several outstanding claims were resolved and that Order 6 was intended to record that bargain.

74    Once the issue is viewed in that way, the dispute is revealed as being less a question of construction and more a question as to the existence and content of the agreement said to have been reached between the parties. The question is whether, as part of the compromise reached following the mediation, it was agreed that QB4 would receive payment of the appeal costs and the collateral proceeding costs from the trust assets.

75    The practical consequence is that the dispute is more appropriately framed by reference to the directions sought by the Receivers. The Receivers contend they should be authorised to proceed on the basis that no agreement of the type asserted by QB4 was reached and that they are therefore not required to make any additional payment in respect of the appeal costs or the collateral proceeding costs. QB4 resists that position and contends, in substance, that the agreement for which it contends was reached and should be given effect.

76    As I have said, Order 6 was made because I understood that the parties had reached agreement following the mediation and that the proposed orders reflected that agreement. If that understanding was incorrect, and the order does not accurately reflect what was agreed, then it seems to me, subject to any further argument, that the order should be varied notwithstanding that it has been entered.

77    In this regard, FCR 39.05 provides that the Court may vary or set aside an order after it has been entered if, relevantly, “it does not reflect the intention of the Court”. If QB4 is correct in contending that Order 6 provides for the payment of the appeal costs and the collateral proceeding costs out of the trust assets, then the only basis for such an outcome would be that it reflected an agreement reached between the parties as part of the mediated compromise. As I have already explained, absent such an agreement, I would not have made an order producing that costs outcome. It follows that if the agreement for which QB4 now contends was not in fact reached, then Order 6 would not reflect the intention of the Court. Critically, the intention of the Court was not independently to determine that those costs should be borne by the trust assets, but rather to give effect to what I understood was a consensus reached between the parties as to the disposition of the outstanding costs issues. In those circumstances, my preliminary view is that the present case would provide a paradigm example of a situation in which the Court’s power under r 39.05 may be engaged.

78    Conversely, if the agreement contended for by QB4 was in fact reached, then the order should remain in place, although my preliminary view is that if this was determined to be the true nature of the agreement, there is force in the view that a more explicit form of wording would have avoided the present controversy (and the obligation to pay the relevant costs out of trust assets should be made clearer in by a supplementary, explanatory order).

79    The outstanding issue therefore comes down to a single question: was it agreed, as part of the compromise reached following the mediation, that QB4’s appeal costs and collateral proceeding costs would be paid out of the trust assets?

B    Consideration

6    There was no dispute as to the applicable principles. This is unsurprising, as they are trite. Put shortly, the task of the Court is to ascertain the objective meaning of the language chosen by the parties, read as a whole and in its proper context. The inquiry is directed to identifying the common intention expressed in the relevant instrument, not the parties’ undisclosed subjective intentions or subsequent understandings. The Court asks what a reasonable person, possessing the background knowledge reasonably available to the parties at the time the agreement was made, would have understood the language to have meant. The objective theory of contract stands at the centre of this exercise, and the concern is not with what either party privately intended, but with the legal meaning conveyed by the words adopted.

7    Context serves a relatively confined function. The surrounding circumstances known to the parties at the time of the agreement may illuminate the meaning of the language employed, but they cannot be used to rewrite the bargain or substitute a construction thought by the Court to be fairer or commercially preferable. Nor can subsequent events or later conduct alter its objective meaning. If the language is capable of more than one meaning, the Court may prefer the construction which accords with commercial common sense and avoids capricious or irrational results. But commercial common sense cannot prevail over clear language, for the Court’s function is to construe the bargain the parties made, not to make a better bargain.

8    In my view, upon proper analysis, the point of departure for the present inquiry is to construe the terms of the agreement evidenced by the material provided to the Court, there undoubtedly having been an agreement of some form. The mediation produced a consensus sufficient to enable a series of proposed orders to be transmitted to the Court for consideration. This involved the provision by the solicitors for the Receivers of the consensus said to have emerged between the participants in the mediation, being QB4, Guardian and the Receivers. That is evident from the terms of the communication. During argument, all parties were conscious of the need to respect the inadmissibility of anything said at the mediation, as provided for by s 53B of the Federal Court of Australia Act 1976 (Cth) (FCA Act).

9    The relevant contemporaneous material comprises the communication sent to my chambers and is collected in annexure RWS-20 to the affidavit of Richard William Spencer affirmed 12 June 2026 (12 June Spencer Affidavit), marked at the hearing as Exhibit 1. It records, among other things, first, that the Guardian parties consented to proposed Orders 1 to 4 and sought the notation then numbered 16(b), but neither consented to nor opposed the balance of the proposed orders; secondly, that the QB4 parties consented to the proposed orders; thirdly, that the Receivers did not oppose them; and fourthly, that CloudCapital, which was not a party, might or might not wish to be heard.

10    When that is appreciated, it is apparent that proposed Order 6 was not sought by the parties by consent. Insofar as the Receivers were concerned, at the highest, they indicated that they did not oppose the proposed order being placed before the Court. Guardian neither consented to nor opposed it. Objectively understood, therefore, the agreement extended to providing a suite of proposed orders to the Court, while identifying that not every proposed order (including Order 6) represented a concluded consensus that it be made. The parties were inviting the Court to consider and, if thought appropriate, make the orders neither consented to nor opposed in the exercise of its own powers and, if necessary, to hear further argument.

11    That distinction seems to me to be determinative. Orders as to costs are the product of the exercise of judicial discretion, and the parties were jointly inviting the Court to consider whether the orders would be made as proposed by QB4. Indeed, even where parties jointly propose orders following a mediation, the Court remains responsible for determining whether they should be made.

12    When the proposed orders came before me, I was engaged in the hearing of a lengthy trial. Proceeding upon the basis that the proposed orders substantially reflected the consensus emerging from the mediation, and that the qualifications concerning consent did not disclose any real controversy requiring an oral hearing and subsequent considered determination, I instructed my staff to enter the proposed orders.

13    With the benefit of hindsight, that course was unfortunate. Particularly where complex proposed orders emerge following a mediation, and especially where any qualification is expressed concerning consent, the preferable course is ordinarily to require oral argument before the orders are perfected. That observation reflects the practical reality that a carefully conducted oral hearing frequently exposes difficulties which are not readily apparent from proposed minutes considered in isolation in chambers.

14    The conclusion that there was no concluded bargain involving acquiescence in the making of Order 6 is reinforced by a number of other factors. The primary of these is that the result now contended for by QB4 is a striking one. QB4 was wholly unsuccessful in the Full Court and costs were ordered against it. Despite that lack of success, it contends that it should nevertheless be indemnified from the trust assets for its own costs of the unsuccessful appeal. To require the investors to bear the costs of unsuccessful appellate litigation is an outcome of some significance. It is not impossible to conceive of such an outcome if all parties clearly and objectively agree to it as part of a broader compromise, but it is sufficiently unusual that I would not infer such an agreement unless the language and admissible surrounding circumstances admitted of no real doubt.

15    Nor, as I explained in my earlier reasons, would I have made such an order had that consequence been identified to me. This is not because the Court is now revisiting the merits of the compromise or because it has changed its mind about a discretionary decision previously made; it is because I am satisfied that any perfected order, if it had the effect for which QB4 contends, would not accurately reflect my intention. I will return to the proper construction of Order 6 below, but had I thought any proposed order would result in the indemnification of QB4 for the costs of an unsuccessful appeal and subsequent collateral litigation (in respect of which I made an order that each party bear its own costs), I would have required full argument before making any such order.

16    Leaving aside this, there are two further matters that warrant comment. The first is that it is far from clear that Order 6 bears the construction now propounded by QB4. Indeed, the better view is to the contrary. As the Receivers submit, properly analysed, the language of Order 6 does four things: first, it recognises Guardian’s priority position and requires that priority to be discharged in the first instance; secondly, it identifies the scope of its application by picking up the reference in paragraph [3] of the QB4 Claim to litigation across four proceedings (three at first instance and one appellate, described collectively as “these proceedings”, including any appeal from “this proceeding”, NSD 470 of 2020); thirdly, it imposes an end date of 13 November 2020 upon all costs across those proceedings; and fourthly, it enables payment from the assets of FT1 and FT2, on a lump sum basis, of the costs incurred before that date (see the Receivers’ consolidated outline of submissions dated 19 June 2026 at [2]–[4]).

17    Having said this, the matter was not entirely beyond doubt at first glance, and it is unfortunate that proposed Order 6 was drafted in the way it was. Had the order been properly and clearly drafted, the asymmetry in understanding as to the effect of the order, which emerged during argument, would have emerged at the time of drafting. The reality of the dispute could then have been made clear to me prior to making the order. I would never have made Order 6 in the terms it was made if I thought there was any doubt harboured by the parties about its true effect.

18    A further complication is that, following the orders made on 15 February 2024 and as contemplated by Order 7, an assessment of the relevant costs took place. On 16 June 2025, Judicial Registrar Birchall made the following order (see 12 June Spencer Affidavit at [20]–[24] and Annexure RWS-26):

Pursuant to order 7 of the orders of Lee J dated 15 February 2024 (February 2024 Orders), the costs of the First and Second Applicants, payable to them as described in the February 2024 Orders, be fixed in the sum of $546,203.

19    On 17 July 2025, the Judicial Registrar made a further order disposing of the costs of the lump-sum determination (affidavit of Richard William Spencer sworn 22 May 2026 (at [14]; Annexure RWS-5)). Those orders contained the standard notification that, pursuant to s 35A(5) of the FCA Act and r 3.11 of the Federal Court Rules 2011 (Cth) (FCR), a party could apply to the Court to review the exercise of power by the Judicial Registrar. I was informed from the bar table, without contradiction, that no review of the order made on 16 June 2025 has ever been sought.

20    Plainly, the Judicial Registrar proceeded on the basis that the amount payable pursuant to Order 6 was $546,203, consistently with the Receivers’ construction of the effect of that order (and the construction that I consider is correct). Critically, this lump sum amount of costs determined and fixed by the Judicial Registrar on 16 June 2025 is taken into account in the final distribution proposed by the Receivers.

21    As I indicated in the extract from my earlier reasons, r 39.05(e) of the FCR provides that the Court may vary or set aside an order after it has been entered if, relevantly, “it does not reflect the intention of the Court”. There is some ambiguity in Order 6, and my intention was not that there be any such ambiguity. I have already indicated that the preferable construction of Order 6 is that advanced by the Receivers. In those circumstances, I consider it preferable not to exercise the power under r 39.05. These reasons now make clear how Order 6 is to be construed. Such a course is also consistent with the fact that the February 2024 Orders have been acted upon by Judicial Registrar Birchall and that Order 6, which provided the basis upon which the costs were to be identified, has already been spent by the making of the costs order on 16 June 2025.

22    It seems to me that the preferable course is simply to direct that the Receivers are justified in making a final distribution to unitholders of the PIF and ELF in accordance with the Final Distribution Statement as at 13 July 2026, without further direction of the Court. As I have already indicated, this reflects the amount identified by the Judicial Registrar as payable pursuant to my February 2024 Orders.

[the parties then addressed]

C    Costs

23    Following the delivery of the foregoing reasons, counsel for the Receivers sought leave to vary Order 4 of the orders made on 25 May 2026. That order provides:

The Receivers may pay any further legal costs, including Counsel’s fees, incurred in the course of preparing for and concluding this application at the normal commercial rates charged by each of the solicitors and counsel retained by the Receivers (but capped in the amount of $66,000 (inclusive of GST)), prior to making the distribution to unitholders and without the need for any further direction from the Court.

24    The application was made on the basis that, when the cap was fixed, it had not been foreseen that a further hearing would be required to determine the controversy concerning Order 6, and that the Receivers had necessarily incurred additional legal costs in preparing for and appearing at that hearing.

25    In that way, the question whether the cap should be exceeded is bound up with the question of the costs of the present application. Although I have been persuaded of the Receivers’ arguments as to construction, I do not consider that their success should carry an entitlement to recover the costs of the application, nor do I consider that there should be any increase in the cap.

26    Accordingly, Order 4 will not be varied.

27    As noted above, the present controversy ought never to have arisen. The parties should have done sufficient work to identify whether there remained any substantial controversy as to the operation of proposed Order 6. It was incumbent upon the Receivers, as officers of the Court, to ensure that any such issue was squarely identified before the proposed orders were entered. It was unsatisfactory for orders to be provided to me which contained potential ambiguity or asymmetry of understanding as to their effect. The proper course was to identify any residual dispute and make it plain that the proposed orders were not consented to by the Receivers and that it would be appropriate for the Court to hear argument. Had that occurred, this barren and wasteful argument would never have been necessary.

D    Conclusion

28    With the making of this order, this regrettably protracted litigation will, subject to the implementation of the remaining orders necessary to conclude the receivership, finally come to an end. This is an outcome which is long overdue and one which is in the interests not only of the parties but, more importantly, of those beneficially entitled to what remains of the trust assets.

29    The only order I will make is the order authorising the Receivers to proceed with the final distribution as proposed.

Associate:

Dated: 22 July 2026    

SCHEDULE OF PARTIES