Australian Securities and Investments Commission v Falcon Capital Limited [2025] FCA 359

1. Pursuant to s 461(1)(k) of the Corporations Act, the First Defendant, Falcon Capital Limited, be wound up.
2. Ross Andrew Blakeley and Paul Stuart Harlond of FTI Consulting (Joint and Several Liquidators) be appointed as joint and several liquidators of the First Defendant.
3. The Plaintiff provide the Joint and Several Liquidators with copies of such books and records relating to the First Defendant which have been obtained by the Plaintiff under Pt 3, Div 3 of the Australian Securities and Investments Commission Act 2001 (Cth) (ASIC Act), that the Joint and Several Liquidators reasonably request in writing for the purpose of performing their duties.
4. Pursuant to s 601ND(1)(a) of the Corporations Act, the Joint and Several Liquidators of the First Defendant are directed to wind up the First Guardian Master Fund (ARSN 635 429 113).
5. Pursuant to s 601NF(2) of the Corporations Act, the Joint and Several Liquidators are directed to wind up the First Guardian Global Income Fund.
6. Pursuant to s 601NF(2) of the Corporations Act, the Joint and Several Liquidators are directed to wind up the First Guardian Australian Development Fund.
7. Pursuant to s 601NF(2) of the Corporations Act, the Joint and Several Liquidators are directed to wind up the First Guardian Absolute Equities Fund.
8. Pursuant to s 601NF(2) of the Corporations Act, the Joint and Several Liquidators are directed to wind up the First Guardian Trulet Innovation Fund.
9. Pursuant to s 601NF(2) of the Corporations Act, the Joint and Several Liquidators are directed to wind up the First Guardian Global Equity Fund.

1. Pursuant to s 1323(1)(h)(i) of the Corporations Act, Paul Anthony Allen of PKF Melbourne (Receiver) be appointed as receiver to the Property of the Second Defendant, Mr David Anderson.
2. The Receiver has, in respect of the Property of the Second Defendant, the following powers:

(a) The power to do all things necessary or convenient to be done for or in connection with, or as incidental to, the identification, preservation and securing of all the Property of the Second Defendant for the benefit of potential creditors.

(b) Without limiting the generality of the power in the preceding sub-paragraph, the power to enter into possession and take control of the Property of the Second Defendant to the extent that the exercise of the power is reasonably necessary to achieve the purpose set out in paragraph 11(a) above.

1. The power referred to in paragraph 11 above shall not extend to the sale, letting or encumbering of the Property of the Second Defendant without prior leave of the Court or the consent of the Second Defendant.
2. The Receiver has the power to investigate and report on the following matters:

(a) the identification of the assets and liabilities of the Second Defendant;

(b) an opinion as to the solvency of the Second Defendant;

(c) any other information necessary to assess the financial position of the Second Defendant; and d. any other matter that the Receiver considers relevant to the identification, preservation and securing of all the Property of the Second Defendant for the benefit of potential creditors,

and must, within 60 days of the date of this order, provide the Court and parties with a report as to the receivership of the Second Defendant.

1. The Plaintiff provide the Receiver with copies of such books and records relating to the Second Defendant which have been obtained by the Plaintiff under Pt 3, Div 3 of the ASIC Act, that the Receiver reasonably requests in writing for the purpose of performing his duties.
2. The Receiver is entitled to such remuneration and expenses properly incurred in the performance of his duties and the exercise of his powers, as may be fixed by the Court on the application of the Receiver.
3. Remuneration and expenses of the Receiver shall be paid from the Property of the Second Defendant.

1. Paragraph 3 of the orders made on 17 March 2025, providing for matters which the Defendants are not prevented from doing, be further varied to add the following subparagraphs:

"f. the Joint and Several Liquidators, or anyone authorised by them, from taking any action in relation to the Property of the First Defendant;

1. the Receiver, or anyone else authorised by them, from taking any action in relation to the Property of the Second Defendant; or
2. the Second Defendant from paying or otherwise incurring a liability for costs reasonably incurred: from the appointment of the Receiver according to these orders; or because of the Plaintiff's ongoing investigation as referred to in paragraphs 8 to 14 of the affidavit of Brody Wons dated 24 February 2025."

1. The First Defendant pay the Plaintiff's costs of the application to wind up the First Defendant filed on 17 March 2025 to be agreed, or failing agreement, to be taxed.
2. Pursuant to s 466(2) of the Corporations Act, the Plaintiff's costs referred to in paragraph 18 be taxed and paid out of the Property of the First Defendant.
3. As between the Plaintiff and Second Defendant, costs be reserved for determination after the report of the Receiver has been received.

1. Pursuant to s 467(3)(b) of the Corporations Act, Rule 5.4 of the Federal Court (Corporations) Rules 2000 (Cth), be dispensed with.
2. There be liberty to apply.

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

1. This is an application by the plaintiff, the Australian Securities and Investments Commission (ASIC) for orders that the first defendant, Falcon Capital Limited (Falcon) be wound up on the just and equitable ground (see s 461(1)(k) of the Corporations Act 2001 (Cth)), with a direction to the liquidator of Falcon to wind up the First Guardian Master Fund (FGMF) and underlying funds. ASIC also seeks an order, pursuant to s 1323(1)(h) of the Corporations Act, that a receiver be appointed to the property of the second defendant, David Charles Knowles Anderson.
2. By way of background, on 24 February 2025 a freezing order was made by the Court in relation to the property of each of the defendants. On 27 February 2025, the Court made orders continuing the freezing orders. Subsequently, on 17 March 2025, another freezing order was made in relation to the property of each of the defendants. The orders made on that date also gave leave to ASIC to file an amended originating process, which ASIC subsequently did. The amended originating application seeks orders for the winding up of Falcon and for the appointment of a receiver to the property of Mr Anderson.
3. The parties rely on the following affidavits. ASIC relies on four affidavits of Brody Wons, a lawyer employed by ASIC, dated 24 February 2025, 16 March 2025, 19 March 2025 and 31 March 2025, and an affidavit of Christopher Sones, a lawyer employed by ASIC's solicitors, dated 8 April 2025.
4. Falcon relies on an affidavit of Keith Crawford, a partner at McGrathNicol and a registered liquidator, dated 26 March 2025.
5. Mr Anderson relies on his own affidavit dated 13 March 2025.
6. At the hearing today, three non-parties sought leave to appear and to rely on affidavits and make submissions. That leave was unopposed and was granted. The non-parties are unitholders (on behalf of investors) in the FGMF. The non-parties are: Diversa Trustees Ltd; Netwealth Superannuation Services Pty Ltd; and Equity Trustees Superannuation Ltd. Between them, the three non-parties hold a large majority (in excess of 85%) of the units in the FGMF. The non-parties support the orders sought by ASIC in relation to Falcon, namely for the winding up of Falcon, with a direction that the liquidator wind up the FGMF and the underlying funds.
7. It will be convenient to deal first with the orders sought in relation to Mr Anderson (because the extent of dispute is quite limited), and then turn to the orders sought in relation to Falcon.

Appointment of a receiver to the property of Mr Anderson

1. As set out in his outline of submissions, Mr Anderson consents to the appointment of a receiver over his property, and to the appointment of Mr Paul Anthony Allen of PKF (the person nominated by ASIC). Mr Anderson also consents to: the receiver being empowered to investigate and report to the Court; and the receiver having such powers as are reasonably necessary to achieve the objective of identifying, preserving and securing assets.
2. In Mr Anderson's outline of submissions, he raises a number of matters to which he does not consent. Most of these points have been accommodated in ASIC's proposed orders, as provided to the Court for the purposes of the hearing today. There remain only four items of dispute. These were the subject of submissions at the outset of the hearing today. At the conclusion of those submissions, I indicated how I proposed to resolve each of those four issues, and said I would give reasons later. I now set out my reasons on those matters.
3. The first issue was whether the period of time for the receiver to report back to the Court (as contemplated in paragraph 13 of ASIC's proposed orders) should be 60 days (as proposed by ASIC) or 30 days (as contended for by Mr Anderson). In my view, in the circumstances, 60 days is the preferable period of time given the matters that may require investigation.
4. The second issue was whether there should be an order, as sought by ASIC in paragraph 16 of its proposed orders, that the remuneration and expenses of the receiver be paid from the property of Mr Anderson. Mr Anderson contended that it was preferable to defer for later consideration (after the receiver's report has been received) the question whether the receiver's renumeration should be paid from Mr Anderson's property. Mr Anderson drew the Court's attention to Australian Securities and Investments Commission v Marco (No 3) [2020] FCA 719, where, in paragraph 12 of the orders, a comparable question was deferred. In my view, the circumstances that make it appropriate for a receiver to be appointed to the property of Mr Anderson also support an order that the renumeration and expenses be paid from the property of Mr Anderson.
5. The third issue was whether costs orders should be made against Mr Anderson as sought in paragraphs 20 and 21 of ASIC's proposed orders. Mr Anderson contended that this issue should be deferred. In my view, this is a matter that should be deferred for argument at a later stage, after the report of the receiver has been received. This will enable the issue to be considered in light of the orders that are made today, taking into account the extent to which (and the time at which) Mr Anderson agreed to those orders.
6. The fourth issue was whether there should be a further "carve out" from the existing freezing orders (which it is intended will continue) as sought in paragraph 6 of Mr Anderson's proposed orders. In summary, the further carve out would permit Mr Anderson to pay costs reasonably incurred: from the appointment of the receiver; or because of ASIC's ongoing investigation as referred to in paragraphs 8 to 14 of the affidavit of Mr Wons dated 24 February 2025. ASIC opposed the further carve out. In my opinion, the further carve out is appropriate. It may be that Mr Anderson needs legal assistance in relation to these matters and, if so, it is appropriate that he be permitted to pay or incur a liability for costs reasonably incurred in relation to these matters.
7. Having resolved the four matters in dispute, I am otherwise satisfied that it is appropriate to make an order for the appointment of a receiver to the property of Mr Anderson, and to make the ancillary orders sought by ASIC in relation to that appointment.

Whether an order should be made winding up Falcon

1. I now turn to the issues between ASIC and Falcon. As indicated above, ASIC seeks an order that Falcon be wound up on the just and equitable ground, together with directions to the liquidator of Falcon that the FGMF and certain underlying funds be wound up. Insofar as the direction is sought in relation to FGMF, the direction is sought pursuant to s 601ND(1)(a) of the Corporations Act, FGMF being a registered managed investment scheme. Insofar as directions are sought in relation to the underlying funds, as these are unregistered managed investment schemes, the directions are sought pursuant to s 601NF(2). No issue was raised as to the power of the Court to make such directions.
2. The proposed liquidators (who have consented to being appointed) are Ross Andrew Blakeley and Paul Stuart Harlond of FTI Consulting.
3. In the alternative to orders winding up Falcon, ASIC seeks the appointment of a receiver to the property of the company, pursuant to s 1323 of the Corporations Act.
4. Falcon opposes the orders sought by ASIC. In its outline of submissions, Falcon accepts that Falcon, the FGMF and the underlying funds must be wound down in an orderly fashion. However, Falcon proposes that this be done by (at least in the first instance) the appointment of Mr Crawford and Matthew Hutton of McGrathNicol to carry out a wind down in accordance with a wind down plan (the Wind Down Plan). McGrathNicol have already been engaged for about one month in assisting Falcon and have already undertaken over 100 hours of work. The key aspects of the Wind Down Plan, as summarised in Falcon's written submissions, are as follows:

(a) Governance: McGrathNicol will have oversight of all operational and asset realisation activities, and final sign off on all decisions.

(b) Operations: McGrathNicol will oversee a change in operations from seeking new investment opportunities to fund wind down. McGrathNicol will assume responsibility for authorising payments and maintain control of bank accounts.

(c) Communications: McGrathNicol will ensure investors are kept informed, will communicate with other key stakeholders to ensure asset value is maintained, and will meet all reporting obligations including with ASIC.

(d) Data Preservation: McGrathNicol will preserve and secure IT infrastructure to assist with any future investigations.

(e) Asset Reviews: McGrathNicol will review each asset to understand its nature, stage of life, key stakeholders, complexities and key issues to be resolved prior to asset realisation, immediate sale prospects, additional capital required to maximise value and associated risks, realisation timeframes and estimated values.

(f) Realisation Strategy and Modelling: McGrathNicol will develop a realisation strategy for each asset with the primary focus being on maximising investor returns within acceptable risk parameters and timeframes.

(g) Key Management Risk and Employees: McGrathNicol will require the support of the directors and employees to leverage their relationships with stakeholders and knowledge of assets.

1. Falcon submits, in summary, that the Wind Down Plan is a less drastic approach than the winding up of Falcon and therefore should be adopted in accordance with established principles: see National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] VicRp 31; [1991] 1 VR 386 at 539-541; Australian Securities and Investments Commission v Letten [2010] FCA 140 at [16]; Re Dalkeith Investments Pty Ltd (1984) 9 ACLR 247 at 252.
2. Falcon submits that the Wind Down Plan has the following main advantages. First, it avoids the expense and delay associated with a Court-appointed liquidator or receiver getting "up to speed" and duplicating work already completed by McGrathNicol. Secondly, it takes advantage of the relationships McGrathNicol has already developed with the directors, management and staff, and with those involved in certain assets of Falcon.
3. There does not appear to be any real issue as to the applicable principles relating to the making of a winding up order on the just and equitable ground. These principles are set out, for example, in Australian Securities and Investments Commission v ABC Fund Managers [2001] VSC 383; 39 ACSR 443 at [119]; Galanopoulos v Moustafa [2010] VSC 380 at [32]; Australian Securities and Investments Commission v ActiveSuper Pty Ltd (No 2) [2013] FCA 234; 93 ACSR 189 at [20]- [24]; Australian Securities and Investments Commission v International Unity Insurance Pty Ltd [2004] FCA 1059 at [135]- [139].
4. As is apparent from the foregoing, there is no issue between the parties that Falcon, FGMF and the underlying funds need to be wound down. The real issue between the parties is whether it is necessary and appropriate to make an order for the winding up of the company in circumstances where it has proposed, as an alternative, the Wind Down Plan.
5. In my opinion, for the reasons that follow, it is necessary and appropriate to make an order winding up Falcon, together with the directions sought by ASIC, directing the liquidators to wind up FGMF and the underlying funds.
6. First, the statutory basis for the orders proposed by Falcon (attached to its outline of submissions) is unclear. This point was raised by ASIC in its oral submissions at the hearing today. In response, Falcon initially referred to s 1323(1)(h) of the Corporations Act. However, Falcon subsequently accepted that, in circumstances where it does not propose that Mr Crawford and Mr Hutton be appointed as receivers, s 1323(1)(h) is not apposite. Falcon then referred to the powers in s 467(1)(c) of the Corporations Act and s 23 of the Federal Court of Australia Act 1976 (Cth). Section 467(1)(c) provides that, on hearing a winding up application, the Court may "make any interim or other order that it thinks fit". In circumstances where ASIC is the moving party for a winding up order (by way of final relief), it is perhaps odd for the defendant to seek an interim order relying on that provision. In any event, I accept that the Court has power, at least, under s 23 of the Federal Court of Australia Act to make the orders proposed by Falcon. Nevertheless, the discussion of the issue of power highlights that the proposed role of Mr Crawford and Mr Hutton is not easily described or defined. It does not fit into established categories, such as a receiver. This creates a concern in my mind that their role may not be sufficiently clear, and this may well create difficulties in the process of undertaking the Wind Down Plan.
7. Secondly, there is some lack of clarity as to the role, if any, of the directors of Falcon in the ongoing management of the Company (cf s 198G of the Corporations Act, where a company is placed in external administration, including liquidation). In oral submissions, Falcon accepted that the directors would remain in place, but submitted that, for practical purposes, they would have no active role, and that there were adequate protections built in to the proposed orders. However, the plan that is annexed to Mr Crawford's affidavit creates some lack of clarity as to the directors' role: see, eg, pp 10, 11 of that plan.
8. Thirdly, while the Wind Down Plan envisages that Mr Crawford and Mr Hutton would provide their opinion about various matters, including whether there are any suspected contraventions of the Corporations Act by Falcon or by the directors and officers of Falcon, Mr Crawford and Mr Hutton would not have the powers of a liquidator to commence proceedings in relation to any alleged contraventions. More generally, Mr Crawford and Mr Hutton would not have available to them the statutory powers of liquidators.
9. For these reasons, I do not consider the Wind Down Plan to be satisfactory.
10. On the basis of the affidavit material relied on by ASIC, I am satisfied that it is necessary and appropriate to make an order winding up Falcon on the just and equitable ground. It is also appropriate to make the directions sought by ASIC.

1. I will therefore make orders substantially in the terms proposed by ASIC in relation to Falcon. In relation to Mr Anderson, I will make orders as proposed by ASIC, subject to the adjustments noted earlier in these reasons.

I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Moshinsky.