Re Octaviar Ltd (in liq)

[2016] NSWSC 16

Supreme Court

New South Wales

Medium Neutral Citation:

In the matter of Octaviar Limited (in liq); In the matter of Octaviar Administration Pty Limited (in liq) [2016] NSWSC 16

Hearing dates:

15 December 2015

Date of orders:

02 February 2016

Decision date:

02 February 2016

Before:

Brereton J

Decision:

The court should not give directions under s 479(3) which have the effect of retrospectively ratifying what the OA Liquidators have already done. The OA Liquidators would be justified in proceeding henceforth on the basis that they validly entered into the Fortress Funding Deed and that that Deed was valid, effective and binding on OA, notwithstanding the judgment of the Court of Appeal. The OA Liquidators would be justified in adopting the position that OA is entitled to receive payments pursuant to clauses 7.2, 7.3 and 7.5 of the Fortress Funding Deed and should be given advice to that effect. The OA Liquidators would be justified in releasing the Castle Charge, and in not releasing, at least for the time being, the other charges assigned to OA by Fortress. To the extent that the GPLs may require leave to continue to act, where those charges have been assigned to OA, such leave should be granted. The OA Liquidators are entitled to negotiate with the Commissioner a resolution of OA’s liability as garnishee without reference to the SPL, and do not need a direction to do so. They should not be authorised to negotiate with the Commissioner, so as to bind OCV and to the exclusion of the SPL, in respect of the OCV Proof. The SPL’s powers should be expanded to include (a) calling for, assessing and administering any proof of debt lodged by OA in the estate of OCV, without previous limitations; (b) representing the interests of OCV in respect of any proof of debt that may be appropriate for it to lodge in the estate of OA (including by appealing the decision of Mr Fletcher and Ms Barnet as the liquidators of OA rejecting OCV’s proof dated 11 April 2011 for approximately $514m; and (c) representing exclusively the interests of OCV in respect of OCV’s claims to be a creditor of OA, and OA’s claims to be a creditor of OCV. The GPLs should be required to provide him with such assistance in the winding up of OCV as he reasonably requires in his capacity as SPL. There should not be any formal deferral of the SPL’s enlarged powers.

Catchwords:

PROCEDURE – judgments and orders – superior courts – where deed entered into in reliance on order later set aside on appeal – whether obligations under deed validly incurred – held, they were and remain valid effective and binding notwithstanding appellate judgment

 

CORPORATIONS – winding up – liquidators –application for directions – considerations relevant to giving directions – in respect of past conduct – in respect of uncontroversial commercial decisions – where directions sought in respect of past acts of liquidator – whether appropriate exercise of s 479(3) power to ratify past conduct – held, not appropriate –however, liquidators entitled to advice that they would be justified in acting in the future on the basis that acts and obligations were and remain valid effective and binding notwithstanding appellate judgment

 

CORPORATIONS – winding up – liquidators – where, after appointment, related corporation of which liquidator is also liquidator obtains assignment of security over assets of corporation – whether liquidator thereby disqualified under (CTH) Corporations Act 2001, s 532(2)(c)(ii) – if so, whether leave should be granted – held, given appointment of special purpose liquidator, leave if required should be granted

 

CORPORATIONS – winding up – liquidators – special purpose liquidators – whether powers of special purpose liquidator should be expanded, to enable independent representation of corporation in respect of all intercompany issues – held, they should.

  CORPORATIONS – winding up – liquidators – special purpose liquidators – where general purpose liquidators seeks direction authorising them to negotiate with a third party without reference to special purpose liquidator – where subject matter of proposed negotiation includes matter in respect of which special purpose liquidator empowered – direction refused.

Legislation Cited:

(CTH) Corporations Act 2001, s 473(8), s 477(2B), s 479(3), s 532(2), s 1318(2), s 1322(4)
(CTH) Taxation Administration Act 1953, s 260-5

Cases Cited:

Commissioner for Railways (NSW) v Cavanough [1935] HCA 45; (1935) 53 CLR 220
Dr Drury’s Case (1610) 8 Co Rep 141b; 77 ER 688
Great Wall Resources Pty Ltd (in liq) v Rafeletos [2012] FCA 1302
In the matter of 7 Steel Distribution Pty Limited (in liq) (receivers and managers appointed) [2013] NSWSC 669
McBride v Walton (NSWCA, Handley JA, 27 August 1993, unreported)
Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38; 71 NSWLR 262
Re Ansett Australia Limited and Korda [2002] FCA 90; (2002) 115 FCR 409; 40 ACSR 433
Re Antard Pty Ltd (in liq); ex parte Cohen [1977] VR 200; (1976) 2 ACLR 108
Re McGrath [2010] NSWSC 404; (2010) 78 ACSR 405
Re Octaviar Limited; Re Octaviar Administration Pty Ltd [2015] NSWSC 1621
Re One.Tel Ltd [2014] NSWSC 457; 99 ACSR 247
Re One-Tel Networks Holdings Pty Ltd [2001] NSWSC 1065; (2001) 40 ACSR 83
Re Penning; ex parte State Bank of South Australia (1989) 89 ALR 417; (1989) 23 FCR 588
Re S&D International Pty Ltd (in liquidation) (No 7) [2012] VSC 551
Re Spedley Securities Ltd (1992) 9 ACSR 83
Residual Assco Group Ltd v Spalvins [2000] HCA 33; (2000) 202 CLR 629
Sanderson v Classic Car Insurances Pty Limited (1985) 10 ACLR 115
Singtel Optus Pty Ltd v Weston [2012] NSWSC 674; 90 ACSR 225
Suter v Commissioner of Police (Northern Territory) (1998) 147 FLR 111
Wilde v Australian Trade Equipment Co Pty Ltd [1981] HCA 13; (1981) 145 CLR 590
Woodgate v Keddie [2006] FCA 1728

Category:

Principal judgment

Parties:

2011/ 397200:
William John Fletcher & Katherine Elizabeth Barnet (first plaintiffs)
Octaviar Limited (in liq) (second plaintiff)
Octaviar Administration Pty Ltd (in liq) (third plaintiff)
David John Kerr (applicant)

  2012/ 089484:
William John Fletcher & Katherine Elizabeth Barnet (first plaintiffs)
Octaviar Administration Pty Ltd (in liq) (second plaintiff)

Representation:

Counsel:
D B Studdy SC w A Flecknoe-Brown (Mr Fletcher & Ms Barnet)
J C Sheahan QC w CA Wilkins (Mr Kerr)

  Solicitors:
Henry Davis York (Mr Fletcher & Ms Barnet)
Thomson Geer (Mr Kerr)

File Number(s):

2011/3972002012/089484

Judgment

1. Proceeding 2012/89484 (“the OA Proceeding”) relates to the liquidation of Octaviar Administration Pty Ltd (“OA”), of which Mr Fletcher and Ms Barnet are the liquidators (“the OA Liquidators”). Proceeding 2011/397200 (“the OCV Proceeding”) relates to the liquidation of Octaviar Limited, of which Mr Fletcher and Ms Barnet are the general purpose liquidators (“the GPLs”), and Mr Kerr is the special purpose liquidator (“the SPL”). Although the parties usually refer to Octaviar Limited as OL, in the judgment delivered on 3 November 2015 [1] (“the previous judgment”), I adopted the abbreviation OCV, for consistency with some of the essential transaction documents in which Octaviar Limited was so described. For consistency with that judgment, I take the same approach in this judgment, and for ease of understanding, I have substituted OCV for OL in quotations throughout.

   1. Re Octaviar Limited; Re Octaviar Administration Pty Ltd [2015] NSWSC 1621.

2. In the previous judgment, with which this judgment should be read, I summarised my conclusions as follows:

[50] In circumstances where there is a not insignificant possibility that the general purpose liquidators of OCV may be disqualified from continuing to act, and on the one hand repayment to them of the $1.5 million advanced by them to the special purpose liquidator would involve no significant risk, but on the other, there appears to be no identifiable risk or detriment in the SPL retaining the fund for the time being, and the general purpose liquidators do not oppose his doing so, the SPL is justified in retaining that fund for the time being.

[51] It is at least arguable that validity and enforceability of the Fortress Funding Deed as between OA and OCV was unaffected by the decision of the Court of Appeal, because the question of such approval is relevant only as between the liquidator and the company and not as against third parties, and also because, on the authority of Wilde v Australian Trade Equipment Co, the approval was beyond recall once the liquidators had acted on it. There are considerable potential benefit and negligible detriment for OCV in the SPL adopting the position that he is entitled to terminate, or has terminated the Fortress Funding Deed for breach. The SPL would be justified in adopting, for the time being, the position that he has terminated, or is entitled to terminate, the funding deed.

[52] The SPL would be justified in applying for an extension of his powers to enable him to prosecute an appeal from the rejection of OCV’s proof of debt in the OA winding, after the expiration of 30 days. In the meantime, it is appropriate that he be appointed to represent the interests of OCV in the contemplated negotiations pertaining to that proof of debt.

[53] Unless OA takes an assignment of the Fortress Charge, and that Charge catches the proceeds of the OCV/Fortress settlement, I am unpersuaded that, even retrospectively, it can be said that there was such benefit for OA in the OCV/Fortress Proceedings that their funding by OA was “necessary” in the relevant sense for the winding up of the affairs of OA. However, as already explained, there is a strongly arguable case, founded on Wilde v Australian Trade Equipment Co, that the liquidators had the requisite power when they entered into the deed, which approval was beyond recall once they did so, and it may be prudent for the liquidators to obtain judicial advice or declaratory relief to that effect.

3. In the OCV Proceeding, I made orders, relevantly, that:

(1) Pursuant to Corporations Act, s 479(3), the applicant David John Kerr would be justified in:

(a) purporting to terminate the Fortress Funding Deed dated May 2012 (or treating that deed as having already been terminated by him);

(b) applying, after 1 December 2015, to expand his powers as the special purpose liquidator of Octaviar Limited so as to empower him to represent Octaviar Limited’s interests in respect of its claims to be a creditor of Octaviar Administration Pty Limited and to appeal the decision of the first plaintiffs William John Fletcher and Katherine Elizabeth Barnet as liquidators of Octaviar Administration Pty Limited to reject Octaviar Limited’s proof of debt dated 11 April 2011 for approximately $514 million;

(c) dealing with the funds which remain in his control as special purpose liquidator of Octaviar Limited by

(i) making any payments due to Octaviar Administration Pty Limited pursuant to clause 10.4(a) of the Fortress Funding Agreement;

(ii) preserving 25% of $12.35 million pending agreement between the parties or the making of an order as to how it is to be distributed;

(iii) otherwise retaining any funds in his hand for the purposes of his role as special purpose liquidator.

(2) The applicant as special purpose liquidator of Octaviar Limited is further empowered to exclusively represent the interests of Octaviar Limited in any negotiation before 1 December 2015 attempting to resolve Octaviar Limited’s claims to be a creditor of Octaviar Administration Pty Limited, otherwise than by appealing the decision of the first plaintiffs as liquidators of the third plaintiff rejecting the second plaintiff’s proof of debt.

4. In the OA Proceeding, I made orders relevantly that:

(2) The application of the first plaintiffs for approval pursuant to Corporations Act, s 477(2)(b), to enter into the agreement between them, the second plaintiff, Octaviar Limited, and the liquidators of Octaviar Limited made on 17 May 2012 (“Fortress Funding Deed”), notwithstanding that the term of the agreement may end or obligations of a party to the agreement may according to its terms be discharged by performance more than three months after the agreement was entered into, be stood over to a date to be fixed.

5. The Proceedings were adjourned to 15 December 2015 for that purpose. Then, the OA Liquidators no longer pressed the application for approval under s 477(2B) for entry into the Fortress Funding Deed. However, by a Further Amended Originating Process filed in the OA Proceeding on 6 July 2015, they now sought:

1. directions and orders pursuant to Corporations Act, ss 479(3) and/or 1322(4):

1. that they were justified in (i) entering into, performing and making the Advances pursuant to the Fortress Funding Deed; (ii) ceasing to make Further Advances pursuant to the Fortress Funding Deed; and (iii) making available $1.5m of funds held in the OCV general liquidation account to the SPL;

2. that the acts done by them in entering into and giving effect to the Fortress Funding Deed during the period following the Hammerschlag J approval until it was set aside by the Court of Appeal on 8 April 2015 remain valid and effective; and

3. that they are justified in seeking recovery from OCV of payments pursuant to cl 10.4(a)(iii) of the Fortress Funding Deed;

2. a direction pursuant to s 479(3) that it would be reasonable for them to engage with the Commissioner of Taxation with respect to a s 260-5 notice given by the Commissioner to OA in a certain manner, without also including the SPL except to a specified limited extent; and

3. directions pursuant to s 479(3) that they would be justified in maintaining the charges over OCV (“the OCV Charge”) and Octaviar Financial Services Pty Ltd (“the OFS Charge”) assigned to OA pursuant to the settlement of its claim against Fortress, but releasing the charge over Octaviar Castle Pty Ltd (“the Castle Charge”).

6. Further, by interlocutory process filed in the OCV proceeding by leave on 15 December 2015, Mr Fletcher and Ms Barnet, qua general purpose liquidators of OCV, seek:

1. an order pursuant to Corporations Act, s 532(2), that until further order they have leave to continue to act as general purpose liquidators of OCV and to represent the interests of OCV except in respect of any claim by OA to be a secured creditor of OCV and any claim by OA that depends on such a claim;

2. an order pursuant to Corporations Act, s 473(8), empowering Mr Kerr as SPL, in addition to those matters in respect of which he is already empowered, to represent the interests of OCV in respect of any claim by OA to be a secured creditor of OCV and any claim by OA that depends on such a claim, and otherwise representing the interests of OCV in respect of any such claims to the exclusion of the GPLs; and

3. directions and orders pursuant to s 479(3) and/or s 1322(4) that they were justified in making available $1.5m of funds held in the OCV general liquidation account to the SPL.

7. By interlocutory process filed in the OCV Proceedings on 11 December 2015, Mr Kerr as SPL of OCV applies for:

1. an order pursuant to s 473(8) varying the orders of 8 December 2011 which appointed him as SPL, to the effect that his powers include “calling for, assessing and administering any proof of debt lodged by OA in the estate of OCV”, without previous limitations to matters arising from the OCV/Fortress Proceedings, and “representing the interests of OCV in respect of any proof of debt that may be appropriate for it to lodge in the estate of OA (including by appealing the decision of Mr Fletcher and Ms Barnet as the liquidators of OA rejecting OCV’s proof dated 11 April 2011 for approximately $514m”;

2. an order pursuant to s 473(8) empowering him as SPL to represent exclusively the interests of OCV in any negotiation attempting to resolve OCV’s claims to be a creditor of OA, and OA’s claims to be a creditor of OCV; and

3. an order requiring Mr Fletcher and Ms Barnet to provide all such assistance in the winding up of OCV as is reasonably required by the SPL.

8. The issues that arise may conveniently be arranged under the following headings:

1. The Fortress Funding Deed – pars 1 (a), (b) and (c) of the Further Amended Originating Process and par 3 of the interlocutory process;

2. The Charges, and leave under s 532(2) – par 3 of the Further Amended Originating Process and par 1 of the interlocutory process;

3. The Commissioner of Taxation – par 2 of the Further Amended Originating Process; and

4. The SPL’s powers – par 2 of the interlocutory process, and the SPL’s interlocutory process.

The Fortress Funding Deed: Further Amended Originating Process pars 1(a), (b) and (c)

9. In the previous judgment, I tentatively suggested that, as there was a valid approval under s 477(2B) in effect at the time the Fortress Funding Deed was entered into, the Deed remained on foot and binding on OA despite the decision of the Court of Appeal, on the basis that an act performed under the authority of and in reliance on an order of a superior court remains valid and effective notwithstanding that the order is later set aside on appeal, even where the original order was made ex parte. [2] This observation was founded on the authority of Wilde v Australian Trade Equipment Co Pty Ltd. [3] Counsel for the OA Liquidators has cited extensive further authority supportive of that proposition. [4] The SPL did not submit to the contrary, and added another authority to the list. [5]

   2. Re Octaviar Limited; Re Octaviar Administration Pty Ltd [2015] NSWSC 1621 at [25].

   3. (1981) 145 CLR 590 per Stephen, Murphy, Aickin and Wilson JJ; Gibbs J dissenting.

   4. Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629 at [73]; Woodgate v Keddie [2006] FCA 1728 at [31]; Great Wall Resources Pty Ltd (in liq) v Rafeletos [2012] FCA 1302 at [17]-[18]; Suter v Commissioner of Police (Northern Territory) (1998) 147 FLR 111 at 115-116; McBride v Walton (NSWCA, Handley JA, 27 August 1993, unreported); Re Penning; ex parte State Bank of South Australia (1989) 23 FCR 588 at 597; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225, 227-8, citing Dr Drury’s Case (1610) 8 Co Rep 141b; 77 ER 688.

   5. Miltonbrook Pty Ltd v Westbury Holdings Kiama Pty Ltd [2008] NSWCA 38; 71 NSWLR 262.

10. Application of the principle in Wilde in the present context means that in entering into the Fortress Funding Deed, the OA Liquidators were empowered to do so by the order of Hammerschlag J granting approval under s 477(2B), and in addition had the benefit and protection afforded by the direction given by his Honour under s 479(3), and the Deed did not cease to be binding on OA upon the Court of Appeal setting aside his Honour’s orders, but remained valid and effective. Because the legal obligations the Deed created were validly incurred when the Deed was made, the obligations of OA and the OA Liquidators under it subsist, regardless of the later setting aside of Hammerschlag J’s orders.

11. Against that background, the OA Liquidators now seek (by par 1(a) of their Further Amended Originating Process) directions that they were justified in giving effect to the Fortress Funding Deed prior to the Court of Appeal’s judgment; then in declining to advance further funds after the Court of Appeal’s judgment; and also in advancing $1.5 million to the SPL out of the OCV general liquidation account. They contend that in the light of the uncertainty which obtained following the Court of Appeal’s orders, and the steps which they then took to seek an expeditious redetermination of the remitted application in the period before the trial of the Fortress Proceedings was due to commence, they took as reasonable a course as was open and possible: the use of the $1.5 million from the general account, which already belonged to OCV, avoided any question of whether they were exceeding their powers as OA Liquidators by providing funding to another entity in the absence of the Court’s approval, whereas continuing to give effect to the Deed after the Court of Appeal’s judgment may have been in excess of their powers.

9. If this application had been made prospectively, I would very likely have given advice to the effect that the OA Liquidators would be justified in acting on the basis that the Fortress Funding Deed remained valid, effective and binding notwithstanding the decision of the Court of Appeal. That would accord with the principle in Wilde.

10. In my view, consistent with the principle in Wilde, the OA Liquidators would be justified in proceeding henceforth on the basis that they validly entered into the Fortress Funding Deed and that that Deed was and remained valid, effective and binding on OA notwithstanding the judgment of the Court of Appeal. However, the advice sought by the OA Liquidators in their application was to the effect that that they were justified in entering into, performing and making the Advances pursuant to the Fortress Funding Deed; in ceasing to make Further Advances pursuant to the Deed after the Court of Appeal’s judgment, and in making available $1.5m of funds held in the OCV general liquidation account to the SPL. So expressed, that would not be advice as to how they should act, but effectively ratification of actions they have already taken.

11. In my view, it is not appropriate to give judicial advice of this kind retrospectively, so as to confer on a liquidator protection or immunity in respect of acts already undertaken. Directions under s 479(3) are not given in respect of a liquidator’s past acts. [6] If advice under s 479(3) is to be sought, it should be sought prospectively, not retrospectively. Where retrospective exoneration is sought, the appropriate remedy if any is not under s 479(3), but under s 1318(2) or s 1322(4), after those who might assert a liability against the liquidators (typically, the creditors) have had an opportunity to be heard. Thus the engagement of s 479(3) to obtain directions which have the effect of retrospectively ratifying what the OA Liquidators have already done – whether in ceasing to perform the Fortress Funding Deed following the decision of the Court of Appeal, or in making funds available to the SPL out of the OCV general liquidation account – is inappropriate.

    6. Re One.Tel Ltd [2014] NSWSC 457; 99 ACSR 247 at [55]-[57] and [61].

12. Ultimately, the OA Liquidators did not cavil with the proposition that the power to give directions under s 479(3) was not concerned with ratifying past acts, but submitted that there was no clear distinction in this case between past and present or future acts. In particular, they submitted that the facts which were the subject matter of the directions sought in paragraphs 1(a)(i) and 1(b) of the Further Amended Originating Process could be the subject of findings of fact for the purposes of the direction as to future conduct sought in paragraph 1(c), and that directions could be made under s 479(3) to the effect that they would be justified in proceeding henceforth on the basis that, from the time of delivery of the Court of Appeal’s judgment, it was reasonable for them to cease to perform the Fortress Funding Deed on the understanding that they no longer had power to provide further funding, and it was reasonable for them qua GPLs to respond to the dilemma by making funds available out of the OCV general liquidation fund.

13. I do not consider that giving such advice, even in the modified form now proposed, would be an appropriate exercise of the power under s 479(3). Although it may be that, for the reasons they advance, the course adopted by them was not an unreasonable one, in circumstances where they did not seek advice at the time, I do not see why a direction should now be made exonerating them from future liability for acting in the manner they did. As application of the Wilde principle leads to the conclusion that the Deed remained effective and binding, having been entered into under an approval which was valid at the time – and thus that notwithstanding the Court of Appeal’s judgment, the OA Liquidators remained bound by the Fortress Funding Deed – I would not likely have advised them prospectively that, in the light of the Court of Appeal’s judgment, they would be justified in ceasing to make advances to the SPL in accordance with the terms of the Deed. If such advice would not have been given prospectively, it is even less appropriate to give it retrospectively when the liquidators chose to act without advice.

14. Nor do I see it as desirable to give general advice that they would be justified in acting in the future on the basis that their past course of conduct was reasonable. To do so would effectively if indirectly ratify their past course of conduct. If there is any specific future act to which such a question is relevant, advice can be sought then in respect of it.

15. Moreover, the OA Liquidators’ decision to cease to perform the Deed was a contentious one, and there is likely to be an issue between the SPL and the OA Liquidators as to whether the SPL has validly terminated the Deed for breach by OA. Indeed, in the previous judgment, I advised the SPL that he would be justified in adopting, for the time being, the position that he has terminated, or is entitled to terminate, the Deed, for breach by OA. Although the OA Liquidators submit that the advice sought is limited to their personal liability, and would not preclude OA from being held liable to OCV, a direction that the OA Liquidators were justified in ceasing to make advances in accordance with the terms of the Deed would exonerate them from potential liability for causing OA to breach its obligations under the Deed. To give such advice at this stage would effectively pre-empt the determination of such an issue, and could be inconsistent with findings made in a subsequent claim by the SPL for damages for breach of the Deed, in which further evidence of the liquidators’ decision-making process might emerge. The OA creditors may have an interest in whether or not the OA Liquidators should be exonerated from liability in that respect. If exoneration from liability in respect of past acts is sought, then s 1318(2) and/or s 1322(4) are the powers to be engaged.

16. Insofar as the OA Liquidators sought advice that they were justified in making available $1.5m of funds held in the OCV general liquidation account to the SPL, the SPL pointed out, correctly, that that pertains to their conduct in their capacity as GPLs of OCV, not OA. In answer to that objection, the GPLs sought advice to the same effect in that capacity by their interlocutory process in the OCV proceeding. However such advice, in any case, relates to past acts of the liquidators, and while the course they adopted in this respect may well have been a very reasonable one, if they wish to have it ratified they must apply under s 1318(2) or s 1322(4). Again, I do not see it as desirable to give general advice that they would be justified in acting in the future on the basis that such course of conduct was reasonable, and if there is any specific future act to which such a question is relevant, advice can be sought then in respect of it.

17. The OA Liquidators’ application (in par 1(b) of the Further Amended Originating Process) for a direction or order to the effect that the acts done by them in entering into and giving effect to the Fortress Funding Deed during the period following the Hammerschlag J approval until it was set aside by the Court of Appeal on 8 April 2015 remain valid and effective invokes Corporations Act, s 1322(4), which provides as follows:

(4) [Court may make orders] Subject to the following provisions of this section but without limiting the generality of any other provision of this Act, the Court may, on application by any interested person, make all or any of the following orders, either unconditionally or subject to such conditions as the Court imposes:

(a) an order declaring that any act, matter or thing purporting to have been done, or any proceeding purporting to have been instituted or taken, under this Act or in relation to a corporation is not invalid by reason of any contravention of a provision of this Act or a provision of the constitution of a corporation;

(b) an order directing the rectification of any register kept by ASIC under this Act;

(c) an order relieving a person in whole or in part from any civil liability in respect of a contravention or failure of a kind referred to in paragraph (a);

(d) an order extending the period for doing any act, matter or thing or instituting or taking any proceeding under this Act or in relation to a corporation (including an order extending a period where the period concerned ended before the application for the order was made) or abridging the period for doing such an act, matter or thing or instituting or taking such a proceeding;

and may make such consequential or ancillary orders as the Court thinks fit.

21. The OA Liquidators’ application does not in terms invoke subs (4)(c). Insofar as the application invokes the power under s 1322(4)(a), that is a power to validate purported acts, matters, things or proceedings done or taken in “contravention of a provision of this Act or a provision of the constitution of a corporation”. The starting point for the exercise of that power is the identification of the act, matter, thing or proceeding to be validated, and the relevant contravention. Here, it is not apparent that there was any such contravention: for the reasons already advanced, the Fortress Funding Deed remained valid and effective, notwithstanding that the Court of Appeal set aside the s 477(2B) approval. If s 1322(4)(c) were also invoked, retrospective exoneration of the OA Liquidators in this respect would be inappropriate without identification of the contravention in question and the related civil liability, and notice to the parties affected – namely, those with an interest in asserting any civil liability of the liquidators, and in particular the OA creditors – so that they might have an opportunity to be heard.

22. As to the OL Liquidators’ application (in par (1)(c) of their Amended Originating Process) for a direction that they are justified in seeking recovery from OCV of payments pursuant to clause 10.4(a)(iii) of the Fortress Funding Deed: even assuming that the Deed has been terminated for breach under cl 10.4(a), OA prima facie is entitled to receive payments pursuant to clauses 7.2 (the relevant percentage of OCV’s Legal Costs and Disbursements, OCV’s Liquidators’ Fees, the Common Interest Matters Legal Costs and Disbursements, the Common Interest Matters Fees, and any clause 2.2 amounts, plus GST), 7.3 (the relevant percentage is to be based upon the total value of the cash payments to be made by Fortress to OA and OL, supplemented by a further amount of 25% on account of the release of the Fortress Charge over the YVE moneys) and 7.5 (the SPL Legal Costs and Disbursements) – because the settlements of the OCV Proceedings and the OA Proceedings resulted in there being “an OCV Judgment” and an “OCV Charge Judgment” as defined in the Deed. The SPL accepts that, in the events which have happened, OA is entitled to those amounts – subject to a set-off if the SPL is entitled to damages for breach of the Deed (the only contentious issue being whether OA is entitled to a 25% share of OCV’s settlement with Fortress, which the OA Liquidators do not currently propose to claim). As there is at the very least an arguable case that they are entitled to recover from OCV such payments pursuant to clause 10.4(a)(iii), the OA Liquidators are plainly justified in adopting that position.

23. However, in the absence of controversy, it may be questioned whether judicial advice to that effect is necessary or appropriate. While the ability of a liquidator to approach the Court for directions is intended to facilitate the liquidator's functions and should be interpreted widely to give effect to that intention, [7] it is insufficient to justify giving such directions that the liquidator wants reassurance about a commercial decision: some such issue as a question of law or procedure, of power, propriety or reasonableness, is required to warrant approaching the court for directions. As Goldberg J has explained (in the context of a voluntary administrator's application for directions under s 447D): [8]

The prevailing principle adopted by the courts, when asked by liquidators and administrators to give directions, is to refrain from doing so where the direction sought relates to the making and implementation of a business or commercial decision, either committed specifically to the liquidator or administrator or well within his or her discretion, in circumstances where there is no particular legal issue raised for consideration or attack on the propriety or reasonableness of the decision in respect of which the directions are sought. There must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approving of, the decision. It may be a legal issue of substance or procedure, it may be an issue of power, propriety or reasonableness, but some issue of this nature is required to be raised. It is insufficient to attract an order giving directions that the liquidator or administrator has a feeling of apprehension or unease about the business decision made and wants reassurance.

7. Re One-Tel Networks Holdings Pty Ltd [2001] NSWSC 1065; (2001) 40 ACSR 83.

8. Re Ansett Australia Limited and Korda [2002] FCA 90; (2002) 115 FCR 409; 40 ACSR 433, [65].

24. Thus it has been said that the cases in which directions might properly be given fall into four categories, namely guidance on matters of law, guidance on questions of legal procedure, whether a liquidator should postpone a sale in order to achieve a better price, and where there are two competing offers for assets and a liquidator wishes to gain court directions in order to avoid a subsequent allegation that he or she has acted improperly in choosing one over the other. [9] Although those categories are not exhaustive, and in particular it is common for a liquidator to seek directions as to whether he or she is justified in entering into a particular compromise, a court will not make a liquidator's commercial decision for him or her. [10] Thus the court will not generally give a direction where the matter relates to the making or implementation of a business or commercial decision, or where no legal issue is raised and there is no attack on the propriety or reasonableness of the liquidator's decision, although it may do so in the context of a proposed compromise, [11] and/or where the decision is likely to be contentious. [12]

    9. Sanderson v Classic Car Insurances Pty Limited (1985) 10 ACLR 115, 117 (Young J)

    10. Re Spedley Securities Ltd (1992) 9 ACSR 83, 85 (Giles J).

    11. As I observed in One.Tel at [35], with reference to Re Spedley Securities, 85

    12. As I observed in One.Tel at [35], with reference to Re Ansett, [65]; In the matter of 7 Steel Distribution Pty Limited (in liq) (receivers and managers appointed) [2013] NSWSC 669, [20]; and Re S&D International Pty Ltd (in liquidation) (No 7) [2012] VSC 551, [58]-[59].

25. Although I have reservations that such advice is necessary, the circumstance that, notwithstanding the SPL’s apparent acceptance of their entitlement to recover the amounts in question, doing so may potentially require the institution of legal proceedings, in the light of the well-established practice of a trustee obtaining advice as to whether it would be justified in instituting or defending proceedings, coupled with the view that the Court should not be excessively reluctant to give advice to its officer when sought, persuade me that the OA Liquidators should be given the advice they seek on this question.

The Charges, and s 532(2) leave: Further Amended Originating Process par 3; interlocutory process par 1

26. Pursuant to the settlement between Fortress and OA, Fortress assigned to OA all securities it then still held over any assets of OCV, Octaviar Financial Services Pty Ltd (“OFS”) and Octaviar Castle Pty Ltd (“Castle”). The relevant Charges have now been assigned to OA. The OA Liquidators propose to release the Castle Charge – as they have formed the view that OA would achieve a superior result through the combination of being an unsecured creditor of Castle and a secured creditor of OCV – but to maintain, at least for the time being, the OCV and OFS Charges, which appear to have sufficient value to be worth pursuing. They seek advice that they would be justified in so doing. As this relates to their future and not past acts, retrospectivity presents no objection to giving such advice.

27. The OA Liquidators would be justified in releasing the Castle Charge. They have formed the view, on reasonable grounds, which they have explained, that in all the circumstances OA will achieve a better outcome by doing so. As a decision to release what is prima facie an asset of OA might otherwise be called into question, it is appropriate to provide the OA Liquidators with the protection of a direction in that respect.

28. At first, the SPL opposed advice being given that the OA Liquidators would be justified in enforcing the OCV Charge, on grounds that included that it would be premature (as the SPL had not yet been empowered to represent the interests of OCV in respect of its claims to be a creditor of OA, or OA’s claims to be a creditor of OCV, except insofar as those claims arose out of events associated with Fortress); that an important question arose as to the interpretation of s 532(2)(c)(ii); that enforcement of the Charges would impact adversely on OCV’s creditors; that at the time the assignments were negotiated, the OA Liquidators may have been (and might remain) in a position of conflict; and that the SPL desired an opportunity to take advice about opposing the application and applying to enjoin OA from enforcing the OCV Charge.

29. However, it became clear that the advice the OA Liquidators sought in respect of the OCV and OFS Charges was confined to that they would be justified in “maintaining” – in the sense of “not releasing” – those Charges, as distinct from that they would be justified in proceeding to enforce them. To that extent, the SPL did not object to such advice sought being given, at least on an interim basis.

30. It is not readily apparent why the OA Liquidators would need advice that they were justified in merely not releasing what is prima facie a valuable asset of OA. According to the principles, to which I have already referred, which inform the exercise of the Court’s power to give advice, an uncontroversial commercial decision not to release, for the time being, the OCV and OFS Charges, would not warrant an application for directions. However, the issues foreshadowed by the SPL’s submissions indicate that the role of the OA Liquidators in respect of these Charges may be impugned. As all that is presently sought is advice to the effect that they would be justified in not releasing those Charges, which will do no more than preserve the status quo for the time being, the OA Liquidators should be advised accordingly.

31. The assignment of these Charges to OA also necessitates consideration of the application by the GPLs for leave under s 532(2) to continue to act as GPLs of OCV, as by virtue of that assignment OA has become a secured creditor of OCV, and the OA Liquidators are thus, as such, officers of a secured party in relation to property of OCV (within s 532(2)(c)(ii)).

32. In the previous judgment, I said that it was by no means clear that s 532(2)(c) operated to disqualify a liquidator who became a secured party by reason of a post-appointment event – as distinct from operating upon the state of affairs at the time of appointment. [13] In this respect I referred to in Re Antard Pty Ltd; ex parte Cohen, [14] in which Harris J held that the predecessor provision (Uniform Companies Acts, s 277A(1A)) was concerned only with circumstances that obtain at the time when the liquidator consents to be appointed, and not states of affairs that arise subsequent to the appointment. [15] However, in Re McGrath,[16] Barrett J (as he then was) said:

Under the present legislation, the court may grant leave so as to allow a person not yet appointed both to seek appointment and to act once appointed; and it may, as a separate matter, grant leave to act to a person who, being already in office, is, by subsequent events, brought within one of the categories that attract the prohibition on acting.

13. Re Octaviar Limited; Re Octaviar Administration Pty Ltd [2015] NSWSC 1621 at [18].

14. [1977] VR 200; (1976) 2 ACLR 108.

15. [1977] VR 200; (1976) 2 ACLR 108 at 111.

16. [2010] NSWSC 404; (2010) 78 ACSR 405 at 419-420.

33. His Honour appears to have considered that differences in wording between Corporations Act, s 532(2), and its predecessor considered in Re Antard had the consequence that leave was now required, even if the relevant relationship arose after the appointment. Although I respectfully doubt whether the difference in language reveals an intent to achieve that result, rather than mere modernisation of language, it is unnecessary to resolve that issue, as if leave were required, I am satisfied that it should be granted. Given the appointment and role of the SPL, and the proposed expansion of the SPL’s role in representing the interests of OCV in OCV’s proof in the OA estate and OA’s proof in the OCV estate, there is no risk that the estate of OCV would be jeopardised by the GPLs continuing to act as such in those aspects of the OCV administration that are not entrusted to the SPL. On the other hand, there is considerable advantage in avoiding duplication, especially so far as concerns the common creditors of OCV and OA, for the GPLs to continue to act – including potentially by a pooling of the estates.

34. To the extent that the GPLs may require leave under s 532(2) to continue to act as GPLs of OCV, such leave should be granted.

The Commissioner of Taxation: Further Amended Originating Process, par 2

35. OCV went into voluntary administration on 3 June 2008, and into liquidation on 9 September 2009. During the period of administration, on 10 September 2008, a Deputy Commissioner of Taxation issued a notice under (CTH) Taxation Administration Act, s 260-5, to OA, requiring OA to pay to the Commissioner any money that may become owing to OCV up to the amount of the tax debt payable by OCV to the Commissioner (said to be $58,092,713.50), and on the same day, informed OCV of this action and provided it with a copy of the notice. The effect of the notice, if valid, is to impose on OA a statutory obligation to pay any money owing by it to OCV to the Commissioner in satisfaction of OCV’s tax liability, and not to OCV.

36. On 14 February 2011, OCV (by its then receivers and managers) lodged a proof of debt in the winding up of OA for approximately $514 million (“the OCV Proof”). The OA Liquidators rejected the OCV Proof, on the basis of offsetting claims, on 11 April 2014. On 30 September 2014, the receivers and managers filed an appeal against that rejection, which appeal remained on foot at the time of the settlement of OA’s claim against Fortress. That settlement provided for the consensual discontinuance of the appeal, but on the basis that a further challenge to the rejection of the OCV Proof was not precluded. The money available to satisfy the s 260-5 notice will be constituted by any dividend that may be payable by OA to OCV in respect of the OCV Proof. Until the settlement with Fortress, the Fortress Charge attached to any such dividend and would have had priority over the Commissioner’s notice. Following the settlement of the Fortress litigation, prima facie the Commissioner now has first priority in respect of any payments in respect of the OCV Proof. Payment by OA to the Commissioner is, pursuant to s 260-15, taken to have been authorised by OCV.

37. The notice imposes obligations on OA, which are not contingent on any act or interest of OCV. The interests of OCV creditors rank behind the Commissioner’s claim. In effect, any moneys that may become payable by OA in respect of the OCV Proof have been garnisheed by the Commissioner. OA is in the position of a garnishee, and it is entirely open to the OA Liquidators to negotiate and resolve with the Commissioner what amount the Commissioner may be prepared to accept in satisfaction of OA’s liability under the notice. This could hardly be questioned, and was not disputed by the SPL.

38. However, the advice sought by the OA Liquidators in this respect goes further. They seek a direction under s 479(3) to the effect that they would be justified in all the circumstances in engaging with the Commissioner with respect to the s 260-5 notice in the manner set out in the letter which is Tab 39 of Exhibit WJF-1 to the affidavit of Mr Fletcher sworn 28 August 2015, without also including the SPL, save in respect of the threshold question of whether the notice is valid and effective. This involves two relevant elements: (1) the proposal in the Tab 39 Letter, and (2) the exclusion of the SPL.

39. The OA Liquidators characterise the proposal referred to in the Tab 39 Letter as one that provides for the determination of the value to the Commissioner of the priority claim to any dividends paid on the OCV Proof, through the engagement of independent senior counsel acceptable to the Commissioner to be briefed with materials relevant to the OCV Proof and the OA Liquidators’ rejection of it, to assist the Commissioner in negotiating with the OA Liquidators a resolution of the Commissioner’s claim. They say that as originally formulated it was contemplated that confirmation would be sought from both the OCV and OA committees that they were comfortable with and supportive of the agreed mechanism as being the appropriate way for resolving the OCV Proof and OA adjudication issue in a manner that bound both estates. They submit:

Naturally, in the absence of express confirmation from the [OCV] committee of inspection, the SPL’s agreement could ensure that [OCV] is bound by any resolution as to the value of [OCV]’s claim to be a creditor of OA agreed in the course of negotiation and settlement of the s 260-5 liability. However, that is not the only way of approaching the matter, and it is the Liquidators’ understanding that it is not the way the creditors of OA and [OCV] would prefer the negotiation to proceed. Meetings of creditors can be called to resolve these matters.

In any event, the Liquidators’ revised proposal is that, at the stage when a resolution has been agreed in principle, they will inform the [OCV] SPL of the proposed terms of that resolution and, insofar as the resolution purports to address the determination of the [OCV] Proof, will invite the views of the [OCV] SPL and seek to reach agreement with the [OCV] SPL and/or seek Court approval of the terms of the resolution.

40. However, the process described in the Tab 39 Letter includes as an element the establishment of “an appropriate way for resolving the OCV Proof and OA adjudication issue in a manner that binds both estates”. The proposal thus envisages not merely negotiation between OA and the ATO, but incorporates the resolution of issues in respect of the OCV Proof in the OA liquidation, so as to bind both estates.

41. OA’s liability to the Commissioner involves at least the following three issues:

1. the existence and amount of OCV’s tax liability to the Commissioner;

2. the formal validity of the notice; and

3. the existence and amount of OA’s debt to OCV.

42. The first appears uncontroversial, as the GPLs have admitted the Commissioner’s proof of debt of 18 September 2008 in the OCV estate for $58,164,482.42. The proposal does not involve excluding of the SPL from negotiations in respect of the second, as it specifically exempts it from the exclusion. But the third depends on the OCV Proof, which is the principal issue that the SPL has been appointed to address.

43. The OA Liquidators submit that it is of primary significance that the creditors of OA and OCV have communicated to the OA Liquidators views supportive of their proposed course of action. However, while the OA committee of inspection supports the proposed course, the creditors of OCV have not been asked; and although one major creditor of OCV, the Public Trustee of Queensland (who is also a creditor of OA), has expressed support, its representative also acknowledges that the interests of OCV and OA may be in conflict; that their creditors are not identical; and that as a member of both committees he is himself in a position of conflict.

44. It is fundamentally inconsistent with the rationale for appointment of the SPL in the first place to permit the OA Liquidators to negotiate, without reference to the SPL, a resolution (so as to bind OCV) of the OCV Proof and OA adjudication issue, whether or not in the context of a resolution of the s 260-5 notice. While there is merit in an approach that would avoid duplication, and while the committee of inspection of OA (whose creditors substantially but not completely overlap the creditors of OCV) apparently support the OA Liquidators’ proposed approach, a course which envisages a binding resolution of the OCV Proof issue without the participation the SPL who has been appointed to represent the interests of OCV in respect of that very issue should not be countenanced.

45. Insofar as the OA Liquidators’ “revised proposal” apparently involves negotiating an in-principle agreement and then seeking the SPL’s agreement or the approval of the Court, what is proposed is insufficiently clear and crystallised to warrant court sanction at this stage. The OA Liquidators are manifestly entitled to negotiate with the Commissioner a resolution of OA’s liability as garnishee, without reference to the SPL, and they do not need a direction to permit that course. They should not be authorised to negotiate with the Commissioner, so as to bind OCV and to the exclusion of the SPL, in respect of the OCV Proof.

Extension of the SPL’s powers: SPL’s interlocutory process

46. The orders made in the OCV proceeding on 3 November 2015 advised the SPL that he would be justified in applying, after 1 December 2015, to expand his powers as SPL to include representing OCV’s interests in respect of its claims to be a creditor of OA and appealing the decision of the OA Liquidators to reject OCV’s proof of debt of 11 April 2011 for approximately $514 million. Those orders also empowered the SPL to represent exclusively the interests of OCV in any negotiation before 1 December 2015 attempting to resolve OCV’s claims to be a creditor of OA, otherwise than by appealing the rejection of the proof. That course was taken in circumstances where a large creditor, and the liquidators, had asked that he defer applying to enlarge his powers while the prospect of a resolution without further litigation was explored, and the SPL had agreed to wait for 30 days before making any such application. [17]

    17. Re Octaviar Limited; Re Octaviar Administration Pty Ltd [2015] NSWSC 1621 at [30].

47. In fact no such negotiations ensued, and the SPL now seeks to have his powers expanded to include (a) calling for, assessing and administering any proof of debt lodged by OA in the estate of OCV, without previous limitations to matters arising from the OCV/Fortress Proceedings; (b) representing the interests of OCV in respect of any proof of debt that may be appropriate for it to lodge in the estate of OA (including by appealing the decision of Mr Fletcher and Ms Barnet as the liquidators of OA rejecting OCV’s proof dated 11 April 2011 for approximately $514m); and (c) representing exclusively the interests of OCV in any negotiation attempting to resolve OCV’s claims to be a creditor of OA, and OA’s claims to be a creditor of OCV. The SPL also seeks an order requiring the GPLs to provide him with such assistance in the winding up of OCV as he reasonably requires in his capacity as SPL. [18]

    18. Cf Singtel Optus Pty Ltd v Weston [2012] NSWSC 674; 90 ACSR 225.

48. As the GPLs accept, given their concurrent appointment as OA Liquidators, OCV requires representation independent of them in respect of issues where there is competition or conflict between OCV and OA, most obviously the intercompany debt issues, and in particular the OCV Proof. The GPLs agree to the orders referred to in (a) and (b), and – subject to some minor uncontentious variations, being the widening of (c) to cover representation of OCV’s interests in respect of the claims referred to generally (not limited to negotiations), and provision for their remuneration and expenses – do not oppose those in (c) and (d). However, at least at first, they sought to have the SPL’s exercise of the expanded powers deferred, until “there has been a resolution of the ATO’s garnishee claim”, and the OA Liquidators “have reached a decision whether (or not) to pool the OCV and OA estates”. The reasons advanced for this are that it is said that the OCV Proof does not have practical effect until the ATO garnishee claim is resolved; that although resolution of the ATO claim involves a commercial evaluation of the OCV Proof, it will not amount to a determination of or in any way affect the OCV Proof; and that if pooling is a practical option, it may save both estates the considerable cost of a final determination of the OCV Proof.

49. The SPL submitted that formal deferral of the powers was not warranted; that there was no reason to suppose that he would not exercise the additional powers sensibly, reasonably and prudently, having regard to the utility of doing so from time to time; and that it is not apparent that a settlement of the ATO’s claim would avoid any need for independent representation of OCV as regards the final disposition of the position between them, even if pooling were proposed.

50. I do not consider that there should be any formal deferral of the SPL’s enlarged powers. Quantification of the OCV Proof is an element of any settlement of the DCT’s s 260-5 notice. If anything, the OA Liquidator’s proposal for concurrent resolution of the OCV Proof issue and the Commissioner’s claim highlights the need for independent representation in that process of the interests of OCV. The better course is to grant the SPL those powers, relying on his professional judgment and discretion as to when and how he exercises them.

Conclusion

51. My conclusions may be summarised as follows.

52. The court should not give directions under s 479(3) to the OA Liquidators which, however framed, have the effect, directly or indirectly, of retrospectively ratifying what they have already done – whether ceasing to perform the Funding Deed following the decision of the Court of Appeal, or (qua GPLs) making funds available to the SPL out of the OCV general liquidation account. However, the OA Liquidators should be advised that they would be justified in proceeding henceforth on the basis that they validly entered into the Fortress Funding Deed and that that Deed was valid, effective and binding on OA, notwithstanding the judgment of the Court of Appeal.

53. The OA Liquidators would be justified in adopting the position that OA is entitled to receive payments pursuant to clauses 7.2, 7.3 and 7.5 of the Fortress Funding Deed and should be given advice to that effect.

54. The OA Liquidators would be justified in releasing the Castle Charge, and in not releasing, at least for the time being, the other charges assigned by Fortress. To the extent that they may require leave under s 532(3) to continue to act as GPLs, where those Charges have been assigned to OA, such leave should be granted.

55. It would be inconsistent with the rationale for appointment of the SPL in the first place to permit the OA Liquidators to negotiate, without reference to the SPL, a resolution of the OCV Proof, whether or not in the context of a resolution of the s 260-5 notice. The OA Liquidators are manifestly entitled to negotiate with the Commissioner a resolution of OA’s liability as garnishee, without reference to the SPL, and they do not need a direction to permit that course. They should not be authorised to negotiate with the Commissioner, so as to bind OCV and to the exclusion of the SPL, in respect of the OCV Proof.

56. The SPL’s powers should be expanded to include (a) calling for, assessing and administering any proof of debt lodged by OA in the estate of OCV, without previous limitations to the OCV/Fortress Proceedings; (b) representing the interests of OCV in respect of any proof of debt that may be appropriate for it to lodge in the estate of OA (including by appealing the decision of Mr Kerr and Ms Barnet as the liquidators of OA rejecting OCV’s proof dated 11 April 2011 for approximately $514m; and (c) representing exclusively the interests of OCV in respect of OCV’s claims to be a creditor of OA, and OA’s claims to be a creditor of OCV; and the GPLs should be required to provide him with such assistance in the winding up of OCV as he reasonably requires in his capacity as SPL. There should not be any formal deferral of the SPL’s enlarged powers.

57. Although I consider that in some respects the advice sought was not appropriate or necessary, and unnecessary applications for advice should be discouraged because they visit unnecessary costs on the administration, nonetheless taking into account the background to the present application (including the suggestion in the previous judgment that it might be appropriate to seek advice), the appropriateness of seeking advice in some respects, the circumstance that the matters in respect of which advice was unnecessarily sought would not have greatly increased the costs, and the assistance which the SPL’s submissions have provided to the court, it is appropriate that all parties’ costs should be paid as costs of the relevant liquidation.

58. Accordingly, in the OA Proceeding (2012/089484), the Court orders that:

1. pursuant to (CTH) Corporations Act 2001, s 479(3), the first plaintiffs (William John Fletcher and Katherine Elizabeth Barnet as liquidators of the second plaintiff Octaviar Administration Pty Ltd) would be justified in proceeding henceforth on the basis that they validly entered into the Fortress Funding Deed and that that Deed was and remained valid, effective and binding on the second plaintiff notwithstanding the judgment of the Court of Appeal;

2. the first plaintiffs would be justified in adopting the position that the second plaintiff is entitled under clause 10.4(a)(iii) of the Fortress Funding Deed to receive payments pursuant to clauses 7.2 (the relevant percentage of OCV’s Legal Costs and Disbursements, OCV’s Liquidators’ Fees, the Common Interest Matters Legal Costs and Disbursements, the Common Interest Matters Fees, and any clause 2.2 amounts, plus GST), 7.3 (the relevant percentage is to be based upon the total value of the cash payments to be made by Fortress to OA and OCV, supplemented by a further amount of 25% on account of the release of the Fortress Charge over the YVE moneys) and 7.5 (the SPL Legal Costs and Disbursements).

3. The first plaintiffs would be justified in:

1. releasing the Charge over the assets of Octaviar Castle Pty Limited assigned to the second plaintiff pursuant to the settlement of its claim against Fortress; and

2. until further order, not releasing the Charges over the assets of Octaviar Limited and Octaviar Financial Services Pty Ltd assigned to the second plaintiff pursuant to the settlement of its claim against Fortress.

4. All parties’ costs of the first plaintiffs’ Further Amended Application be costs in the liquidation of the second plaintiff.

59. In the OCV proceeding (2011/ 397200), the Court orders that:

1. pursuant to (CTH) Corporations Act 2001, s 532(2), the first plaintiffs (William John Fletcher and Katherine Elizabeth Barnet as general purpose liquidators of the second plaintiff Octaviar Limited) have leave, insofar as it may be required, to continue to act as general purpose liquidators of the second plaintiff and to represent the interests of the second plaintiff, except as to any matter in respect of which the applicant (David John Kerr) has been or is empowered as special purpose liquidator.

1. Order 7 of the orders made by Barrett J on 8 December 2011 be further varied by:

1. Deleting the words “in so far as the proof depends on claims arising out of the events referred to in paragraph 7(a) above” where they appear in subparagraphs 7(d) and 7(e);

2. Inserting the words “calling for,” at the beginning of subparagraph 7(d); and

3. Inserting the words “(including by appealing the decision of the first plaintiffs as liquidators of the third plaintiff rejecting the second plaintiff’s proof of debt dated 11 April 2011 for approximately $514 million)” at the end of subparagraph 7(e),

4. so that:

5. Subparagraph 7(d) shall read: “calling for, assessing and administering any proof of debt lodged by the third plaintiff in the estate of the second plaintiff”, and

6. Subparagraph 7(e) shall read: “representing the interests of the second plaintiff in respect of any proof of debt that may be appropriate for the second plaintiff to lodge in the estate of the third plaintiff (including by appealing the decision of the first plaintiffs as liquidators of the third plaintiff rejecting the second plaintiff’s proof of debt dated 11 April 2011 for approximately $514 million)”.

3. The applicant as special purpose liquidator of the second plaintiff be empowered to represent exclusively the interests of the second plaintiff in respect of:

1. The second plaintiff’s claims to be a creditor of the third plaintiff; or

2. The third plaintiff’s claims to be a creditor of the second plaintiff (including the third plaintiff’s claims to be a secured creditor of the second plaintiff).

4. The first plaintiffs (as liquidators of the second plaintiff) provide such assistance to the applicant in the winding up of the second plaintiff as is reasonably required by the applicant as the special purpose liquidator of the second plaintiff.

5. The remuneration and expenses of the first plaintiffs (as liquidators of the second plaintiff) for providing such assistance to the applicant be paid as an expense of the liquidation of the second plaintiff.

6. All parties’ costs of the interlocutory applications of the applicant and of the first plaintiffs be costs in the liquidation of the second plaintiff.

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Endnotes