LM Investment Management Ltd (receiver apptd) (in liq) v Drake

In the case of LM Investment Management Ltd (receiver apptd) (in liq) v Drake, the applicant sought advice from the court regarding whether it should proceed with an appeal against a trial judgment that was unsuccessful. The applicant was the court-appointed receiver of an investment fund and had conducted litigation against the fund’s directors for breaches of their duties under the Corporations Act 2001 (Cth). The trial counsel provided submissions, a summary of the proposed grounds of appeal, and confidential advices to the court, which the contradictor liquidator of the fund argued should be shared on the basis of common interest privilege. The contradictor liquidator later submitted that the court should decline to provide advice. The court was required to determine whether the applicant had demonstrated arguable grounds for appeal, reasonable prospects of success, and whether it was in the best interest of the beneficiaries to proceed with the appeal.

The court found that the applicant had demonstrated a reasonably arguable basis for bringing an appeal. It considered the summary of proposed submissions and the "reasonable argument" that occurred during the hearing, and allowed for the suggestion that the grounds themselves may have to be "very good" in this type of case involving an appeal and a costs order. The court also assessed the discretionary considerations, including the prospects of success and the proportionality involved in pursuing the application. The court found that the applicant had submitted two opinions from counsel who conducted the trial, which were placed before the court on a confidential basis. The applicant opposed their disclosure on the basis of legal professional privilege. However, the court was not required to rely on counsel’s opinions to assess the arguability of the grounds.

The court concluded that the application for advice should be refused. The court directed the parties to file and serve written submissions as to costs by a specified date, and that question would be determined on the papers. The court did not disclose the confidential advices to the contradictor liquidator on the basis of legal professional privilege. However, the court considered that the applicant had demonstrated a reasonably arguable basis for bringing an appeal, and that it was in the best interest of the beneficiaries to proceed with the appeal.