Federal Court of Australia

QB4 Capital Pty Limited v Wengel (Leave to Appeal) [2026] FCA 1093

ORDERS

THE COURT ORDERS THAT:

1.    The application for leave to appeal dated 28 July 2026 be dismissed.

2.    The applicants pay the first respondents’ costs of that application.

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

REASONS FOR JUDGMENT

Delivered ex tempore

JACKMAN J:

1    This is an application for leave to appeal filed on 28 July 2026 from the judgment of the primary judge in QB4 Capital Pty Ltd v Guardian Securities Ltd (Final Distribution) [2026] FCA 971 (the Primary Judgment). Section 24(1A) of the Federal Court of Australia Act 1976 (Cth) provides that an appeal shall not be brought from an interlocutory judgment unless the Court or a judge gives leave to appeal. By their application for leave to appeal, the applicants contend that leave to appeal is not necessary, but seek leave to appeal as a fall-back in the event that the Primary Judgment is found to be interlocutory in nature. Leave to appeal is opposed by the first respondents (the Receivers).

2    The test for determining whether a judgment is final or interlocutory is whether the judgment finally determines the substantive rights of the parties in terms of its legal rather than practical effect, and it is not final if it is open to a party to bring another application: Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246 at 248 (Gibbs CJ), 253–4 (Mason J); Sanofi v Parke Davis Pty Ltd (No 1) [1982] HCA 9; (1982) 149 CLR 147 at 153 (Gibbs CJ, Stephen and Mason JJ).

3    On 25 May 2026, the primary judge resolved six of the seven issues between the parties which had arisen in three interlocutory applications: QB4 Capital Pty Limited v Guardian Securities Ltd [2026] FCA 704. I will follow the primary judge in referring to those reasons as the earlier reasons. The primary judge referred to the Court’s task (at [11]) as being practical and supervisory in character, being to ensure that the Receivers may conclude the administration of the trusts consistently with the prior orders of the Court and equitable principle. One of the interlocutory applications was filed by the Receivers on 13 March 2026 seeking judicial directions concerning the final distribution exercise, approval of remuneration and expenses incurred since the previous approval period, and ultimately a discharge and release.

4    One of the issues concerned the terms of the proposed discharge and release of the Receivers. The primary judge made a prospective order for the discharge and release of the Receivers which would operate only upon the Receivers finally distributing the funds. The primary judge acknowledged the possibility that proceedings against the Receivers might be commenced before the final distribution was made, in which case the claimants could exercise a liberty to apply, and the issue of the release would then be reconsidered: at [41]. While the primary judge was not encouraging further disputation, his Honour said he would not peremptorily shut out the possibility of a claim being agitated if it was commenced before distribution: at [41].

5    Order 11 made on 25 May 2026 was as follows:

Following the hearing on 14 July 2026, no further interlocutory applications are to be entertained unless his Honour grants specific leave to do so.

6    The primary judge fixed a further hearing for 14 July 2026 to deal with the seventh issue. His Honour expressed the intention that, subject to the determination of the seventh issue, the matter would be brought to an end.

7    On 14 July 2026, his Honour heard argument on the seventh issue and determined that issue adversely to the applicants and favourably to the Receivers in the Primary Judgment. The order made that day was as follows:

Sean Wengel and Michael Brereton, as Receivers and Managers of the property of Fundus Management Pty Ltd (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.

8    It is clear that that order does not finally determine the parties’ substantive rights in terms of its legal effect. Order 11 made on 25 May 2026 remains on foot, such that further applications may be made with the leave of the primary judge. One way in which they may arise would be if further proceedings are commenced against the Receivers, which require reconsideration of their prospective release from liability upon the final distribution being completed, as his Honour expressly contemplated. It is also conceivable that unforeseen circumstances may arise which cause the Receivers to seek further directions. The primary judge certainly discouraged that course, but did not rule it out. Accordingly, the order made on 14 July 2026 is interlocutory in nature, and leave to appeal is necessary.

9    The tests to be applied in determining whether leave to appeal should be granted are whether the decision at first instance was attended with sufficient doubt to warrant it being reconsidered, and whether substantial injustice would result if leave were refused, supposing the decision at first instance was wrong: Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397 at 398–9 (Sheppard, Burchett and Heerey JJ).

10    The Primary Judgment resolved a controversy concerning order 6 made on 15 February 2024, which was in the following terms:

Subject to the Gurdian 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.

11    The “QB4 Claim” was defined as the Points of Claim filed by the first applicant (QB4) on 17 July 2023. Paragraph [3] of the QB4 Claim was as follows:

The legal costs and outlays incurred by the Claimant in the QB4/Guardian litigation being Federal Court of Australia Proceedings No.s NSD415/2020, NSD470/2020, NSD99/2021 and NSD582/2022.

Proceedings NSD99/2021 are referred to as “the collateral proceedings”, and proceedings NSD582/2022 are referred to as “the appeal”.

12    The applicants claim that the effect of order 6 is that they are entitled to be paid the costs they incurred after 13 November 2020 in the appeal and in the collateral proceedings out of the assets of FT1 and FT2, in the amount of $524,246.09. The Receivers resist that claim and contend that order 6 does not apply to any costs of any of the proceedings referred to in the determination of the “QB4 Claim” from 13 November 2020 onwards.

13    The primary judge identified the central question as being whether it was 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: see earlier reasons at [79]. The primary judge answered that in the negative, in that order 6 was not sought by the parties by consent; rather, the parties were inviting the Court to consider, and if thought appropriate, to make the orders which were neither consented to nor opposed in the exercise of its powers and, if necessary, to hear further argument: Primary Judgment at [10]. The primary judge explained that he had proceeded on the basis that the proposed orders substantially reflected the consensus emerging from the mediation (at [12]), and his Honour would not have made order 6 if it had been pointed out that QB4 was being indemnified from the trust assets for its own costs of the unsuccessful appeal and the subsequent collateral litigation in respect of which the primary judge ordered that each party bear its own costs (at [15]). Such a consequence would not have reflected the primary judge’s intention: Primary Judgment at [15].

14    The primary judge then found that on the proper construction of order 6, that order did not bear the construction now propounded by QB4: Primary Judgment at [16] and [21]. An aspect of his Honour’s reasoning was that order 6 imposed an end-date of 13 November 2020 upon all costs across the various sets of proceedings. Further, the primary judge said that he would never have made order 6 in the terms in which it was made if his Honour had thought that there was any doubt harboured by the parties about its true effect: at [17]. However, it was neither necessary nor desirable to vary order 6 now that the primary judge had explained how order 6 is to be construed, and that order had been acted on by the Registrar in assessing lump sum costs and making an order as to the amount payable on 16 June 2025: Primary Judgment at [21]. Accordingly, the primary judge described order 6 as already being spent: at [21].

15    Accordingly, the primary judge regarded the preferable course as being to direct that the Receivers are justified in making a final distribution to relevant unitholders in accordance with the Final Distribution Statement as at 13 July 2026, without further direction of the Court. The primary judge reiterated that that reflected the amount identified by the Registrar as payable pursuant to order 6: at [22].

16    The applicant’s draft notice of appeal contains five grounds.

17    Ground 1 is that the primary judge erred in finding that no concluded agreement was reached at the mediation for the making of order 6, and it is said that the finding is contrary to (a) the parties’ communication to the Court of 12 February 2024; (b) the dismissal by order 8 of the balance of the QB4 Claim; and (c) the earlier reasons at [66] and [76]–[79]. In my view, the primary judge’s reasons on this issue were entirely correct. I cannot discern any language in the 12 February 2024 communication to the primary judge which expressed agreement as to order 6. That email referred to the parties having “reached a consensus as to the form of orders to address the various points of claim that have been filed”, but expressly stated that the Receivers did not oppose the proposed orders, not that they consented to them. His Honour correctly said (at [10]) that the parties were inviting the court to consider and (if thought appropriate) to make the order, which was neither consented to nor opposed, in the exercise of its own power. Contrary to the applicants’ submission, the question reserved for further consideration at [79] of the earlier reasons is the same as the question answered in the Primary Judgment, namely whether it was agreed (ie consented to), as part of the compromise reached following the mediation, that the applicants’ appeal costs and collateral proceeding costs would be paid out of the trust assets.

18    Further, the primary judge’s finding is entirely consistent with order 8, otherwise dismissing the balance of the QB4 Claim. In addition, the primary judge’s finding is consistent with the paragraphs of the earlier reasons referred to in Ground 1, which raised the issue whether order 6 was an agreed order but did not make any finding in relation to it.

19    Ground 2 is that the primary judge erred in construing order 6 as excluding the applicants’ costs of proceedings NSD582 of 2022 (being the appeal) and NSD99 of 2021 (being the collateral proceedings). The applicants submit that the construction adopted by the primary judge deprives the reference in order 6 to the appeal and to the collateral proceedings of any work, because those proceedings did not exist before 13 November 2020 and generated no costs before that date. The applicants submit that their construction is supported by order 7(a) of the orders of 15 February 2024, which required the applicants’ costs summary to include the cost agreements for all costs incurred on or before 14 February 2024. The applicants also point to the primary judge’s own recognition of ambiguity in order 6 (at [17] and [21] of the Primary Judgment).

20    I accept that, as a matter of the objective construction of order 6, there is some merit in the applicants’ argument, although I am inclined to think, consistently with the primary judge, that the end-date of 13 November 2020 applied to all costs across those proceedings despite that rendering otiose the references to the appeal and the collateral proceedings (picked up by order 6) in para 3 of the definition of QB4 Claim. Order 6 itself uses the phrase, “including any appeal that arose from this proceeding”, despite the costs of the appeal already being picked up in para 3 of the QB4 Claim. That illustrates how redundant language is often used in legal drafting where it is (perhaps mistakenly) thought to add emphasis, but with the unintended consequence of introducing ambiguity. The wide definition of “QB4 Claim” makes more sense in the context of that term being used in orders 5 and 8 of the orders of 15 February 2024, than it does in order 6.

21    However, even if the applicants persuade a Full Court that the primary judge’s construction of order 6 was incorrect as to the objective meaning of the language used, that would not be the end of the matter. Assuming the Full Court were to find that there was no binding agreement as to order 6, but agreed with the applicants’ construction of order 6, the question would then arise whether order 6 should be varied on the ground specified in r 39.05(e) of the Federal Court Rules 2011 (Cth) that it does not reflect the intention of the Court. The draft notice of appeal does not seek an order that the matter be remitted to the primary judge on that question. From the applicants’ perspective, a remitter would appear unwelcome because the primary judge expressly stated at [15] (and at [77] of the earlier reasons) that if order 6 had the effect for which the applicants contend, it would not reflect his Honour’s intention. In light of the primary judge’s construction of order 6, it was not necessary for his Honour to consider making a variation to order 6 under r 39.05(e), but there is no doubt that his Honour would have varied the order if it had been construed according to the applicants’ submission. The overwhelming probability, if not practical certainty, is that (if necessary) the Full Court would act on that proposition and vary order 6 such that it would correspond to the construction which the primary judge adopted. Any success by the applicants on the appeal would be entirely Pyrrhic, and a waste of the time and money of the parties and a waste of the Court’s resources.

22    Ground 3 contends that the primary judge erred in finding that order 6 was spent by the costs order of 16 June 2025, whereas the applicants contend that that determination fixed only the pre-13 November 2020 tranche of costs in NSD 470 of 2020. However, the primary judge found, independently of that finding, that order 6 was not a consent order, and did not bear the construction for which the applicants contend. It was those findings which were dispositive of the issue. Accordingly, even if the applicants succeed in establishing that the primary judge’s finding in relation to the Registrar’s costs determination of 16 June 2025 was erroneous, that would not affect the dispositive nature of those anterior findings. Accordingly, ground 3 does not in my view justify the grant of leave to appeal.

23    Ground 4 contends that the applicants were denied procedural fairness in that the proposition concerning the Registrar’s costs order of 16 June 2025 was first raised by the primary judge during oral argument, without a fair opportunity to answer it by evidence. However, the point was raised and argued before the primary judge. Further, as with ground 3, the point was not necessary for the primary judge’s conclusion, and therefore cannot affect the outcome of the proposed appeal. I note that after the matter was raised by the primary judge at the hearing on 14 July 2026, senior counsel for the applicants did not seek an opportunity to prepare further evidence on the point, and even with the benefit of hindsight at today’s hearing, senior counsel for the applicants accepted that it was unlikely that there would have been any evidence which could have affected the determination of the matter.

24    Ground 5 contends that, having declined to vary order 6, the primary judge erred in depriving it of effect by authorising a final distribution making no provision for the disputed sum. However, the primary judge found that order 6 did not have the effect for which the applicants contended, and found that the costs claimed by the applicants should not be paid out of the trust assets because that was not the intention of order 6 on its proper construction. The primary judge was not depriving order 6 of effect, but gave it the effect which the order, properly construed, was intended to have.

25    Accordingly, in my opinion, the proposed appeal has no realistic prospect of success, and the application for leave to appeal should be dismissed with costs.

Associate:

Dated:    6 August 2026

SCHEDULE OF PARTIES