Australian Securities and Investments Commission v Marco

1. The reasons for the last conclusion relating to the distribution method, may be summarised as follows.

(1) On the facts set out in the affidavits in support of the application, the Liquidators would be justified in treating all Scheme members who have received payments out of Scheme property as bona fide recipients of the payments for value without notice of wrongdoing and, as such, as the legal and beneficial owners of all funds received out of Scheme property. Accordingly, no Scheme member could be compelled to repay amounts received out of Scheme property: at [206], [245], [250].

(2) Nonetheless, where the Scheme member had bona fide, for value and without notice of wrongdoing received more than the amount of capital contributed to Scheme property in payments out of Scheme property, the Liquidators would be justified in not admitting any claim against the remaining Scheme property by that Scheme member: at [206].

(3) Although not under an obligation to repay payments received out of Scheme property, as a matter of equitable principle, any Scheme member who wanted to participate in a distribution out of the remaining Scheme property would be required to account to the Liquidators (bring in to hotchpot) any amount that member had received in payments out of the Scheme property before becoming entitled to a distribution out of the remaining Scheme property. Further, that member's participation in the fund should be postponed to those members who have not received such a benefit or benefits to the same extent: at [236], [245]-[246], [250].

(4) None of the proposed methods of distribution was likely to reflect the true property rights of Scheme members. All proposed methods involved some form of proportionate division of the remaining Scheme property. Due to the inability to compel repayments and the insufficiency of the remaining fund it was not possible to achieve complete equality between all Scheme members. However, the method described in the orders of 9 March 2023 gave the most complete effect to the hotchpot principle in a pro rata distribution of the remaining Scheme property as the remnant of a single mixed trust fund into which no individual Scheme member's property was able to be traced: [243]-[244], [251].

1. The Liquidators' proceedings against Scheme members who received more than the amount they contributed to the Scheme property cannot be advanced on the basis that the defendants in those proceedings were bona fide recipients of payments for value without notice of wrongdoing or that repayment of amounts 'overpaid' cannot be compelled because the defendants are the legal and beneficial owners of the amounts overpaid. However, that observation does not undermine the reasoning in Marco (No 13) for concluding that the distribution method described in the orders of 9 March 2023 was the most appropriate method. Assuming that the defendants in the Supreme Court proceedings are entitled to retain the amount of their original contributions to the Scheme property, they would not have any admissible claim against the remaining Scheme property. Therefore, any overpayments recovered would merely augment the remaining mixed fund for distribution between other Scheme members who have made admissible claims.
2. The Liquidators submit that, as none of the Scheme members who are defendants to the Supreme Court proceedings has made a claim against the remaining Scheme property, the recovery of surplus funds paid to those defendants does not affect the observations about the distributions or the reasons for the distribution method in Marco (No 13). For the reasons given in the preceding paragraph, I accept that submission.
3. On the evidence upon which the Liquidators rely in support of the minute of proposed orders, there is no doubt that the causes of action in the Supreme and Federal Court proceedings the Liquidators have commenced against third parties and Scheme members form part of the property of the Scheme. Any proceeds obtained from settlement or judgment in those proceedings would form part of the property of the Scheme and augment the remaining mixed (deficient) fund comprising Scheme property. There is no evidence of any change in circumstances from those prevailing at the time the orders were made on 13 February 2023 and 9 March 2023 that would affect the nature of the priorities or the most appropriate method for distribution of the remaining Scheme property.
4. It follows that, on the basis of the conclusions and reasons given in Marco (No 13) to which reference has been made, it is appropriate that the proceeds from settlement of the Supreme and Federal Court proceedings or from any judgments obtained in those proceedings be pooled with other funds obtained from the realisation of other property of the Scheme and be distributed in accordance with the priorities and methodology described in the orders of 13 February 2023 and 9 March 2023. Thus, the proposed orders or directions reflect an appropriate mechanism for distributing the proceeds derived from the court proceedings in circumstances in which it is not pragmatic to ascertain the precise proprietary rights of each individual Scheme member.

1. The Liquidators requested that the Court make an order under s 37AF of the Federal Court of Australia Act 1976 (Cth) that would preclude disclosure of annexures 'RCB48', 'RCB50' and 'RCB52' to Mr Brauer's affidavit sworn and filed on 30 January 2026. The relevant annexures are the settlement agreements of two Supreme Court proceedings and the Federal Court proceeding. Each settlement agreement contains a term to the effect that the parties to the agreement must, subject to certain exceptions, maintain the confidentiality of the terms of the agreement. Mr Brauer's affidavit sworn 24 September 2025 refers to the settlement agreements but does not disclose the substance of them. Mr Brauer's affidavit sworn 30 January 2026 was filed in response to a request of the Court, given the nature of the powers of the Court that the Liquidators invoke, that the Liquidators make full disclosure of the facts and circumstances that underpin the proposed orders including the terms of the settlement agreements.
2. Rule 2.32(1)(b) of the Rules provides that a party may inspect any document in the proceeding except a document that the Court has ordered be confidential. Rule 2.32(2) and r 2.32(2A) provide that a person who is not a party to a proceeding may inspect certain documents. Affidavits are not in the category of documents a non-party may inspect. Further, r 2.32(3) provides that a person who is not a party to a proceeding is not entitled to inspect a document the Court has ordered be confidential or ordered is forbidden or restricted from publication to the person or class of person of which the person is a member. Otherwise, r 2.32(4) provides that a person who is not a party may apply to a Registrar for leave to inspect a document that the person is not entitled to inspect.
3. As to applications for leave under r 2.32(4), except for documents to which r 2.32(3) applies, leave will generally be granted to inspect a document (including an affidavit) if the document has been read or relied upon in open court: Access to Documents and Transcripts Practice Note (GPN-ACCS) at [4.3]; see also Seven Network Ltd v News Ltd (No 9) [2005] FCA 1394; 148 FCR 1 at [27] (Sackville J); Hartnell v Federal Commissioner of Taxation (No 1) [2009] FCA 230; 254 ALR 71 at [9] (Perram J). The rationale for permitting such inspection is to preserve and give effect to the principle of open justice in the context of the modern approach to litigation in which far less evidence is given orally and parties rely extensively on written submissions and other pre-trial processes that make hearings more efficient, but less 'public': see, e.g., Australian Competition and Consumer Commission v ABB Transmission and Distribution Limited (No 3) [2002] FCA 609 at [3]- [7] (Finkelstein J).
4. Part VAA of the Federal Court Act provides for the Court to make suppression or non-publication orders. A suppression order means an order that prohibits or restricts the disclosure of information (by publication or otherwise). A non-publication order means an order that prohibits or restricts the publication of information (but that does not otherwise prohibit or restrict the disclosure of information): s 37AA. Part VAA does not limit or affect any powers that the Court has apart from that Part to regulate its proceedings or deal with a contempt of the Court: s 37AB. Relevantly, the Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, as the Court thinks appropriate: s 23. The Court also has general power to make rules not inconsistent with the Federal Court Act: s 59(1).
5. The Court may make a suppression order or non-publication order that prohibits or restricts the disclosure or publication of information that relates to a proceeding before the Court and is information that comprises evidence or information about evidence or information lodged with or filed in the Court (including documents): s 37AF(1)(b)(i), s 37AF(1)(b)(iv) of the Federal Court Act. The Court may make a suppression or non-publication order on the ground that the order is necessary to prevent prejudice to the proper administration of justice: s 37AG(1)(a). In deciding whether to make a suppression or non-publication order, the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice: s 37AE. Certain persons, including news publishers, are entitled to appear and be heard on the application for a suppression or non-publication order: s 37AH. A suppression or non-publication order operates for the period decided by the Court and specified in the order: s 37AJ. It is an offence to contravene a suppression or non-publication order: s 37AL.
6. The applicable principles for making a suppression or non-publication order are well settled. Such orders should only be made in exceptional circumstances. That is because it must be both 'necessary' and the Court must take into account a primary objective of the administration of justice is to safeguard the public interest in open justice. Relevantly, the critical question is whether the making of a suppression or non-publication order is 'necessary to prevent prejudice to the proper administration of justice'. The word 'necessary' in that context is a 'strong word'. Nonetheless, it is not to be given an unduly narrow construction and the question whether an order is necessary will depend on the particular circumstances of the case. Once the Court is satisfied that an order is necessary, it would be an error not to make it. There is no discretion involved: Country Care Group Pty Ltd v Director of Public Prosecutions (Cth) (No 2) [2020] FCAFC 44; 275 FCR 377 at [8]- [9] (Allsop CJ, Wigney and Abraham JJ). However, as Jagot J observed in Porter v Australian Broadcasting Corporation [2021] FCA 863, while a primary objective of the administration of justice is to safeguard the public interest in open justice it is not the primary objective because there are many other primary objectives of the administration of justice: Porter at [83]; Lee v Deputy Commissioner of Taxation [2023] FCAFC 22; 296 FCR 272 at [83] (Thawley, Stewart and Abraham JJ).
7. Relevantly, there is a very significant public interest in the settlement of litigation: see, e.g., Reynolds v JP Morgan Administrative Services Australia Limited (No 2) [2011] FCA 489; 193 FCR 507 at [30] (Rares J). That public interest may be undermined if members of the public have access to and could report on matters which the parties have agreed should be confidential as part of the terms of their settlement: Porter at [84], [99]-[105]; McLaughlin v Glenn [2020] FCA 679 at [27] (Abraham J). Suppression or non-publication orders are also regularly made with respect to confidential and commercially sensitive information because disclosure of that information would destroy the confidentiality of the information and has the potential to result in financial harm to a party to the proceeding: Lee v Deputy Commissioner of Taxation at [95]-[97]. It is also generally accepted that it is 'conventional' and 'appropriate' to make non-publication orders in respect of confidential information a liquidator has disclosed to the Court for the purposes of an application for approval of a litigation funding agreement under s 477(2B). That is partly due to the competing public interest in the due administration of the insolvent estate of the company in liquidation. Liquidators who propose to pursue litigation for the benefit of creditors should, as a general matter, have the expectation that they will be able to do so free from distortions of a kind that would not arise if the litigation were pursued by an ordinary litigant in the ordinary way: Australian Securities and Investments Commission v Marco (No 16) (Special Purpose Appointment) [2024] FCA 1000 at [101]- [102]. In this respect, although the context was different, the observations of Barratt J in in McGrath, Re HIH Insurance Ltd [2005] NSWSC 731 at [13] are pertinent:

...The special circumstances of the liquidators and the statutory functions they perform, coupled with the need for them to come to court on this occasion to seek leave in a way that an ordinary litigant does not have to seek, sets the case apart in such a way that justice will best be served by an examination of the matters the liquidators are bound to raise with the court in an atmosphere where they can lay them before the court fully and frankly and without any apprehension that the interests they are bound to serve will thereby be prejudiced...

1. Taking all these matters into account, I am satisfied that it is necessary to prevent prejudice to the proper administration of justice that the information about the terms of settlement contained in Mr Brauer's affidavit of 30 January 2026 remain confidential even though it was received in evidence at a hearing in open court. However, I am not satisfied that an order should be made under s 37AF in circumstances in which contravention of that order would be an offence and no person potentially interested in the application had notice of the Liquidators' application for a suppression order or an opportunity to appear and make submissions on the application. Moreover, the confidentiality of the affidavit and the ability of a potentially interested person to apply to inspect the affidavit can be preserved within the framework of r 2.32 of the Rules.
2. In the case of Mr Brauer's affidavit of 30 January 2026 although it was 'read' it was not, in fact, read out loud in open court and no parts of it were otherwise disclosed in public. Further, in accordance with the Rules, other than a party to the proceeding, a person cannot inspect the affidavit without leave of a Registrar of the Court. Therefore, all that is 'necessary' to prevent prejudice to the proper administration of justice is an order that Mr Brauer's affidavit of 30 January 2026 'be confidential' for the purposes of r 2.32(1)(b) and r 2.32(3)(a) of the Rules. Such an order will preclude inspection of the contents of the affidavit by any party or any person who is not a party to the proceeding.
3. Having regard to the public interest in open justice, a party to the proceeding and, with leave, a person who is not a party to the proceeding should be permitted to inspect the non-confidential parts of the affidavit. Accordingly, the orders include a requirement for the Liquidators to file a redacted version of the affidavit to facilitate that inspection. Otherwise, a party or a person who is not a party to the proceeding may apply for leave to inspect the unredacted affidavit under r 2.32(4) and the question of whether that party or person should be permitted to do so can be resolved at that time. In such circumstances, the party or person applying for leave to inspect will then have an opportunity to be heard on that question.

I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Feutrill.

ROBERT MICHAEL KIRMAN AND ROBERT CONRY BRAUER AS INTERIM RECEIVERS

CAMERON SHAW, RICHARD ALBARRAN AND MARCUS WATTERS, THE JOINT AND SEVERAL ADMINISTRATORS OF AMS HOLDINGS (WA) PTY LTD (RECEIVERS APPOINTED) (ADMINISTRATORS APPOINTED)

CAMERON SHAW, RICHARD ALBARRAN AND MARCUS WATTERS, THE JOINT AND SEVERAL ADMINISTRATORS OF AMS HOLDINGS (WA) PTY LTD (RECEIVERS APPOINTED) (ADMINISTRATORS APPOINTED) AS TRUSTEE FOR AMS HOLDINGS TRUST (THE ADMINISTRATORS)

GIOVANNI MAURIZIO CARRELLO AS THE TRUSTEE IN BANKRUPTCY OF CHRIS MARCO

TONPOSE PTY LTD AS TRUSTEE FOR MARKS AUTOS SUPERANNUATION FUND ACN 008 850 057

LOUGHTON PATTERSON PTY LTD AS TRUSTEE OF THE LOUGHTON PATTERSON UNIT TRUST

RECEIVED PTY LTD AS TRUSTEE OF THE INCREASE TRUST