Re LM Investment Management Ltd (in liq)
[2022] QSC 133
•24 June 2022
SUPREME COURT OF QUEENSLAND
CITATION:
Re LM Investment Management Ltd (in liq) [2022] QSC 133
PARTIES:
RAYMOND EDWARD BRUCE
(first applicant)
AND
VICKI PATRICIA BRUCE
(second applicant)
v
LM INVESTMENT MANAGEMENT LIMITED (IN LIQUIDATION) ACN 077 208 461 IN ITS CAPACITY AS RESPONSIBLE ENTITY OF THE LM FIRST MORTGAGE INCOME FUND
(first respondent)
AND
THE MEMBERS OF THE LM FIRST MORTGAGE INCOME FUND ARSN 089 343 288
(second respondent)
AND
ROGER SHOTTON
(third respondent)
AND
AUSTRALIAN SECURITIES & INVESTMENTS COMMISSION
(intervener)FILE NO:
BS 3383 of 2013
DIVISION:
Trial Division
PROCEEDING:
Interlocutory application
ORIGINATING COURT:
Supreme Court at Brisbane
DELIVERED ON:
24 June 2022
DELIVERED AT:
Supreme Court at Brisbane
HEARING DATE:
10 June 2022
JUDGE:
Kelly J
ORDER:
The application for leave to appear is refused.
CATCHWORDS:
CORPORATIONS – RECEIVERS, CONTROLLERS AND MANAGERS – POWERS – TO APPLY TO COURT FOR DIRECTIONS – where the applicant was appointed by orders of this Court of 21 August 2013 to take responsibility for winding up a registered managed investment scheme and act as the receiver of the property of that scheme – where the applicant brought proceedings against auditors in the name of the responsible entity of that scheme on 2 March 2015 – where the applicant applied for directions in the inherent jurisdiction of the Court that he is justified in settling those proceedings according to the terms of settlement of 31 May 2022 – where the solicitor for the liquidator of the fund sought leave to appear in the hearing of the application for judicial advice – where the applicant opposed leave – whether leave to appear should be granted.
COUNSEL:
S Doyle QC, D Ananian-Cooper and N Derrington for the applicants.
SOLICITORS:
Gadens for the applicants
SC Russell for the first respondent
By orders of this Court made on 21 August 2013, Mr David Whyte (“the applicant”) was relevantly appointed:
(a)pursuant to s 601NF(1) of the Corporations Act 2001 (Cth) (“the Act”) to take responsibility for the winding up of the registered managed investment scheme known as LM First Mortgage Income Fund (“the Fund”); and
(b)pursuant to s 601NF(2) of the Act as the receiver of the property of the Fund.
LM Investment Management Ltd (in liquidation) (“LMIM”) is the responsible entity of the Fund. Pursuant to the terms of the orders appointing him, the applicant was relevantly authorised to bring any proceedings on behalf of the Fund in the name of LMIM as was necessary for the winding up of the Fund including, if appropriate, to provide instructions in relation to the settlement of any such proceedings.
On 2 March 2015, the applicant commenced proceedings in this Court in the name of LMIM being Supreme Court proceedings 2166 of 2015 (“the Supreme Court proceedings”).
On 6 June 2022, the applicant filed an interlocutory application by which he relevantly seeks directions in the inherent jurisdiction of this Court as to whether he is justified in settling the Supreme Court proceedings on the terms set out in a document entitled Terms of Settlement dated 31 May 2022 (“the Terms of Settlement”) and in causing LMIM as the responsible entity of the Fund to enter into and perform the Terms of Settlement.
When the interlocutory application came before me and appearances were required, Mr Russell sought leave to appear on behalf of LMIM, instructed by its liquidator. That leave was opposed by the applicant who wished for the interlocutory application to be heard ex parte in closed Court. After hearing brief oral argument from Mr Doyle QC, who appeared for the applicant, and Mr Russell, I refused to grant the leave which was sought.
My reasons may be set out as follows. The role of the Court when giving “judicial advice” is properly characterised as the Court exercising its supervisory responsibility for the conduct of the winding up, rather than as resolving a dispute between parties or giving advice to an external party.[1] Judicial advice is hence properly described as “private advice”.[2] In Yuill v Spedley Securities Ltd (in liq),[3] the Court (Gleeson CJ, Mahoney and Priestley JJA) said of applications for judicial advice as to whether a liquidator would be justified to commence proceedings that “Applications of that kind … are ordinarily heard in camera”.
[1]Gardner v London Chatham and Dover Railway Co (No 1) (1867) LR 2 Ch App 201, 211; Rosanove v O’Rourke [1988] 1 Qd R 171, 173 (Connolly, Carter and de Jersey JJ); Re GB Nathan & Co Pty Ltd (in liq) (1991) 24 NSWLR 674, 677.
[2]Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66, 91-2 [64]-[65].
[3]Unreported, NSWCA, 8 May 1992
In the present case, by this Court’s orders dated 21 August 2013, the applicant was conferred with, inter alia, power and authority to commence, maintain and, if appropriate, settle, proceedings on behalf of the Fund brought in the name of LMIM as were necessary for the winding up of the Fund. The subject matter of the interlocutory application was private advice about the exercise of the power and authority conferred upon the applicant by this Court. The applicant sought that private advice in circumstances where, in order to obtain the advice, he needed to place before the Court confidential material including the Terms of Settlement themselves, legal advice and reference to without prejudice communications. There were good reasons for all of that the material to be protected by confidentiality orders in circumstances where the Supreme Court proceedings remain on foot and the material included privileged advice. Further, to the extent that without prejudice material was referenced, the defendants to the Supreme Court proceedings had an obvious interest in protecting that material from further disclosure other than to the Court on a confidential basis for the limited purpose of the applicant obtaining private advice.
Given the nature of the interlocutory application and the circumstances in which it was made, I was not persuaded that LMIM had a proper interest to be represented and heard. The involvement of any party other than the applicant would also have given rise to practical concerns as the extent to which the confidential material could be adequately and confidently protected and whether the grant of leave might then have to be extended to a multitude of other parties.
In all of the circumstances, I determined to refuse the application for leave to appear.
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