Commissioner of Taxation v Interhealth Energies Pty Ltd as Trustee of the Interhealth Superannuation Fund

Solicitor for the First Intervener: Solon Lawyers

Solicitor for the Second Intervener: Hynes Lawyers

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 221 of 2010

AND: INTERHEALTH ENERGIES PTY LTD ACN 003 104 505 AS TRUSTEE OF THE INTERHEALTH SUPERANNUATION FUND

IVOR WORRELL AND JASON BETTLES IN THEIR CAPACITY AS JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF PATRICK SHAUN WILSON

JUDGE: LOGAN J DATE OF ORDER: 18 MAY 2012 WHERE MADE: BRISBANE

1. The Respondent pay to the First Intervener, Patrick Shaun Wilson, $64,750.72 by way of interest on the sum of $249,457.35 (the principal compensation sum) being an amount calculated by reference to the principal compensation sum: 1.1 at a rate of 7% per annum from 30 September 2008 to 22 February 2012; and 1.2 on a compound basis with yearly rests.
2. The First Intervener may enforce the order for payment made by order 1 in the same manner as a judgment obtained by him against the respondent for the sum of $249,457.35.
3. For the purpose of ensuring the making to the First Intervener of the payments referred to in order 1 made by this Court on 22 February 2012 and order 1, together with any interest thereon accruing pursuant to r 39.06 of the Federal Court Rules 2011 above: 3.1 Mr Nick Jim Combis, a registered liquidator, is appointed as the Receiver of all of the right, title and interest in the assets of Interhealth Energies Pty Ltd which it holds as the trustee of the Interhealth Superannuation Fund (including without limiting the generality of the foregoing all units held in the Green Haven Unit Trust and all choses in action which it might have as trustee against Ms Joanna Hambrook or any other person) (the superannuation fund); 3.2 the Receiver may exercise each of the following powers in respect of the trust property to the exclusion of any conflicting power exercisable by the trustee for the time being of the superannuation fund: (a) to enter into possession and take control of property of the superannuation fund; and (b) to lease, let on hire or dispose of any part of the superannuation fund; and (c) to grant options over any part of the superannuation fund on such conditions as the Receiver thinks fit; and (d) to borrow money on the security of superannuation fund; and (e) to insure any part of the superannuation fund; and (f) to repair, renew or enlarge any part of the superannuation fund; and (g) to convert into money any part of the superannuation fund; and (h) to carry on any business conducted by the Respondent in its capacity as trustee of the superannuation fund; and (i) to take on lease or on hire, or to acquire any property necessary or convenient in connection with the carrying on of any such business; and (j) to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the trustee for the time being of the superannuation fund; and (k) to draw, accept, make and indorse a bill of exchange or promissory note; and (l) to engage or discharge employees on behalf of the trustee for the time being of the superannuation fund; and (m) to appoint a solicitor, accountant or other professionally qualified person to assist the Receiver; and (n) to appoint an agent to do any business that the Receiver is unable to do, or that it is unreasonable to expect the Receiver to do, in person; and (o) where a debt or liability forms part of the superannuation fund to prove the debt or liability in a bankruptcy, insolvency or winding up and, in connection therewith, to receive dividends and to assent to a proposal for a composition or a scheme of arrangement; and (p) to refer to arbitration any question affecting the superannuation fund; and (q) to institute or defend any legal proceedings in relation to the superannuation fund; and (r) otherwise to do all things necessary or convenient to be done in respect of the superannuation fund. 3.3 the conferring on the Receiver of powers in relation to the superannuation fund does not, of itself, affect any rights in relation to any part of that fund of any other person other than the trustee for the time being of that fund and Ms Joanna Hambrook in her capacity as a member of that fund; 3.4 any amount paid to the First Intervener by the Receiver shall be taken to be a pro tanto satisfaction of the amount payable to the First Intervener by the Respondent as required by the orders of this Court; 3.5 the Receiver shall be entitled to receive remuneration for work done in discharging his obligations under this order on the basis of his fair and reasonable time charges plus GST from time to time and all reasonable out of pocket expenses such remuneration and expenses to be deducted from the assets of which the Receiver becomes possessed pursuant to this order; 3.6 upon the payment to the First Intervener of the amounts referred to in this order and the remuneration and expenses of the Receiver, the Receiver shall pay any surplus to the Respondent or such other entity as may for the time being be the trustee of the superannuation fund; 3.7 nothing in the orders made herein impairs or impedes the entitlement of the First Intervener to enforce either this order or the orders of this Court made on 22 February 2012.
4. Until further order or until the First Intervener has been paid the full amount of the moneys payable to him under this order and that of 22 February 2012: (a) with the exception of transferring any part of the superannuation fund to the Receiver in accordance with this order, orders 1, 2, 3, 4, and 5 of the orders of this Court of 11 November 2011 be continued; and (b) the superannuation fund shall, in respect of the years ended 30 June 2005 to 30 June following the date on which the full amount is paid, be taken to be a complying superannuation fund for the purposes of the Superannuation Industry (Supervision) Act 1993 (Cth).
5. It is declared that neither Ms Joanna Hambrook nor the Respondent are entitled to any indemnity from the assets held by the Respondent (or any replacement trustee) as trustee of the superannuation fund in respect of their costs relating to this proceeding.
6. The Respondent and Ms Joanna Hambrook pay the Applicant's costs of and incidental to this proceeding. The liability in respect of costs thus created is joint and several.
7. Each intervener is to bear his own costs in respect of the intervention in the proceeding.
8. The operation of order 3 is stayed pending the hearing and determination of any appeal against either or each of the order of this Court made on 22 February 2012 or this order or further earlier order of the Court.
9. Liberty to apply. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 221 of 2010

AND: INTERHEALTH ENERGIES PTY LTD ACN 003 104 505 AS TRUSTEE OF THE INTERHEALTH SUPERANNUATION FUND

IVOR WORRELL AND JASON BETTLES IN THEIR CAPACITY AS JOINT AND SEVERAL TRUSTEES OF THE BANKRUPT ESTATE OF PATRICK SHAUN WILSON

JUDGE: LOGAN J DATE: 18 MAY 2012 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 On 22 February 2012, for reasons published that day, I made the following declarations and orders: Commissioner of Taxation v Interhealth Energies Pty Ltd as Trustee of the Interhealth Superannuation Fund [2012] FCA 120 (principal judgment): THE COURT DECLARES THAT: (a) the respondent breached the enforceable undertaking under the Superannuation Industry Supervision Act 1993 (Cth) (SIS Act) dated 28 February 2008 in that it failed by 30 May 2008: (i) to collect a distribution payable to the Interhealth Superannuation Fund (ISF) by the Greenhaven Unit Trust by that date; (ii) failed to pay in full to Mr Patrick Shaun Wilson, a member of the ISF the retirement benefit then due to him; and (iii) failed to report the making of payment in full by the date specified in the undertaking. (b) the respondent likewise failed to perform the actions referred to in paragraphs (a)(i) and (a)(ii) by 19 June 2008 and failed to report by 25 June 2008 its carrying out of those actions; (c) the amount of Mr Patrick Shaun Wilson's residual interest in the ISF as at 20 June 2008 was, after allowance for the payment to him by the respondent of the sum of $42,824.15 by cheque sent to him that day and earlier payments made to him or on his behalf by the respondent, $249,457.35; (d) a reasonable time by which the respondent should have paid in full the amount of Mr Patrick Shaun Wilson's residual interest in the ISF was 30 September 2008; (e) the amount which the respondent should have paid to Mr Patrick Shaun Wilson by 30 September 2008 so as to pay in full his residual interest in the ISF was $249,457.35. THE COURT ORDERS THAT: 1. The respondent pay to Mr Patrick Shaun Wilson the sum of $249,457.35. 2. Mr Patrick Shaun Wilson may enforce the order for payment in the same manner as a judgment obtained by him against the respondent for the sum of $249,457.35. 3. This proceeding be adjourned to a date to be fixed for further consideration as to what further or other orders, if any, having regard to the reasons for judgment published today, should be made, including whether interest can or should be awarded in respect of the sum ordered to be paid and, if so, for what period and at what rate, whether the respondent should be restrained from dealing with the ISF and, if so, on what terms and whether any charge over the ISF should be ordered. 4. All questions as to costs be reserved to a date fixed for further consideration of ancillary orders These reasons for judgment must be read in conjunction with the principal judgment. They address the consequential relief, if any, which ought to be granted in light of the declarations and orders made on 22 February 2012. 2 In the principal judgment I identified, in a then necessarily provisional way, a number of issues relating to consequential relief. I shall consider each of these issues in turn.

Can and should interest be awarded? 3 Initially, the Commissioner sought an award of simple interest up to the date of judgment in respect of any sum awarded to be paid by Interhealth. Taking into account the observations which I made in the principal judgment, the Commissioner has come now to seek an award of compound interest, ie interest upon interest, in respect of the pre-judgment period. Interhealth did not, in terms, oppose the making of such an award although it submitted that no such award should be made until after the hearing of an appeal against the principal judgment and that there should be a stay of that judgment pending the hearing and determination of the appeal. Interhealth also submitted that any award of interest should be on yearly, not monthly, rests. For their part, each of the interveners, Mr Wilson and his trustee in bankruptcy, submitted that there was power to award interest and that such an award should be made in the circumstances. 4 In those types of case to which the section applies, the Court is empowered to award such interest by s 51A of the Federal Court of Australia Act 1976 (Cth) (FCA) with the rate and period being determined by the exercise of a judicial discretion. That power is materially limited by s 51A(2)(a) of the FCA, which precludes, "the giving of interest upon interest or of a sum in lieu of such interest". Further and in any event, that power is exercisable only in proceedings "for the recovery of any money (including any debt or damages or the value of any goods)": s 51A(1) of the FCA. These are not proceedings of that kind. The power to award compound interest, if it exists at all in the present type of case, must therefore be found in s 262A of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act). Absence of active controversy about the reach of the powers conferred by that section is not itself a source of power. Whether the powers conferred on the Court by s 262A of the SIS Act extend to the awarding of interest has not hitherto been the subject of judicial consideration. 5 As a matter of ordinary language, the purpose of the power conferred by s 262A(4)(c) of the SIS Act, is compensatory. Section 262A(4)(d) of the SIS Act, "any other order that the Court considers appropriate" is cast in broad, open-ended language. Nonetheless, the power it confers on the Court is necessarily limited by the context in which that provision appears and the subject matter, scope and purpose of the jurisdiction inferentially conferred on the Court by s 262A(3) of the SIS Act to entertain an application by the Regulator for an order under s 262A(4). 6 Necessarily, the granting of any relief under s 262A(4) of the SIS Act is premised upon a proven breach of a particular enforceable undertaking. Relief under s 262A(4)(d) will only be "appropriate" if it is consequentially related to that proven breach. 7 In Marine Board of Launceston v Minister of State for the Navy (1945) 70 CLR 518 at 532-533 (Launceston Marine Board Case) Dixon J, referring to a statutory provision empowering the awarding of compensation in respect of compulsory acquisitions, stated that: The difference, I think, is quite clear between the sum awarded or assessed as compensation as at the date of acquisition for loss of property and a sum awarded for interest or compensation because the acquisition deprived the claimant of the profitable occupation or use of the property without any immediate recoupment of capital in money. But, where a legislative instrument empowers a court or tribunal to deal with the question of compensation, it is a question of interpretation whether its jurisdiction is extensive enough to cover incidental matters and so to enable the court or tribunal to order that interest shall be paid on the compensation assessed and awarded, where according to legal or equitable principles it is payable. Though in America the reparation expressed by the word compensation is considered incomplete unless pending payment it includes interest on the capital sum arrived at, in English law I should not think that without context the primary meaning of the word would go so far. But the jurisdiction to determine compensation may be readily interpreted as extending to what is consequential upon or incidental to the award. Where the sum awarded carries interest according to the substantive law, including in that expression the doctrines of equity, it is no great step to say that the tribunal dealing with the matter may so declare. [Emphasis added] 8 The words emphasised in the passage quoted from the Launceston Marine Board Case are exactly apposite here. The Court is not only empowered to direct compliance with an undertaking which has been breached but also, materially, to make a compensatory order and to make such other orders as are appropriate. 9 Provision for undertakings to be given to an officer or agency of the Executive Government charged with the administration of a Commonwealth statute in respect of compliance with an obligation arising under that statute is, these days, a not uncommon feature of Commonwealth legislation conferring regulatory responsibilities on that officer or agency. Such provision complements and facilitates that administration by offering both the Executive and an affected person an alternative to potentially costly enforcement litigation with attendant delays and consumption of relatively scarce, publically funded, judicial resources. Enforcement of an undertaking so given necessarily requires an exercise of Commonwealth judicial power. In this instance, the power so engaged is closely analogous to that exercised by courts of equity in respect of matters touching on the administration of trusts. As I pointed out in the principal judgment, a "superannuation fund" is not a legal entity but rather property in respect of which a trustee has assumed particular trust obligations the nature and extent of which are governed not just by a trust deed but also, where advantageous tax treatment is desired, by the SIS Act. 10 In circumstances where there is no express limitation in s 262A of the SIS Act excluding a power to award compound interest and where consideration of statutory context and purpose discloses similarities with a jurisdiction exercised by courts of equity, it is instructive to consider whether or not that jurisdiction extends to the awarding of compound interest in circumstances where a trustee has breached an obligation arising under a trust deed to pay a sum to a beneficiary. 11 The position in courts of equity in relation to the awarding of interest is as stated by Lord Denning MR in Wallersteiner v Moir (No 2) [1975] 2 WLR 389 at 393. His Lordship stated: ... equity was in the habit of awarding interest when it was considered equitable to do so. In some cases it awarded simple interest. In others compound interest, i.e., with yearly rests. The principles on which the courts of equity acted are expounded in a series of cases of which I would take the judgment of Sir John Romilly M.R. in Jones v. Foxall; of Lord Cranworth L.C. in Attorney-General v. Alford; of Lord Hatherley L.C. in Burdick v. Garrick; and of Sir W. M. James L.J. in Vyse v. Foster. Those judgments show that, in equity, interest is never awarded by way of punishment. Equity awards it whenever money is misused by an executor or a trustee or anyone else in a fiduciary position - who has misapplied the money and made use of it himself for his own benefit. The court: "presumes that the party against whom relief is sought has made that amount of profit which persons ordinarily do make in trade, and in those cases the Court directs rests to be made," i.e., compound interest: see Burdick v. Garrick, per Lord Hatherley L.C. The reason is because a person in a fiduciary position is not allowed to make a profit out of his trust: and, if he does, he is liable to account for that profit or interest in lieu thereof. In addition, in equity interest is awarded whenever a wrongdoer deprives a company of money which it needs for use in its business. It is plain that the company should be compensated for the loss thereby occasioned to it. Mere replacement of the money - years later - is by no means adequate compensation, especially in days of inflation. The company should be compensated by the award of interest. That was done by Sir William Page Wood V.-C. (afterwards Lord Hatherley) in one of the leading cases on the subject, Atwool v. Merryweather. But the question arises: should it be simple interest or compound interest? On general principles I think it should be presumed that the company (had it not been deprived of the money) would have made the most beneficial use open to it, cf. Armory v. Delamirie. It may be that the company would have used it in its own trading operations; or that it would have used it to help its subsidiaries. Alternatively, it should be presumed that the wrongdoer made the most beneficial use of it. But, whichever it is, in order to give adequate compensation, the money should be replaced at interest with yearly rests, i.e., compound interest. [Footnote references omitted] 12 In short, courts of equity can and do order the payment of interest, including compound interest, in circumstances which include the awarding of compensation for being kept out of the use of money by a fiduciary: Hungerfords v Walker (1989) 171 CLR 125 at 148; Thomas v SMP (International) Pty Ltd No 6 [2010] NSWSC 1311 at [10] to [14] (Thomas v SMP (International) Pty Ltd No 6). 13 As the Launceston Marine Board Case highlights, the analogy with the position in equity has proved persuasive in construing other statutory powers to award compensation as including a power to award compensatory interest; see also to like effect Ben v Suva City Council [2008] FJSC 17 (Mason, Handley and Sackville JJ) (Ben v Suva City Council). The position is, of course, different where a statute makes express provision to the contrary on the subject of whether compound interest may be awarded: South Australian Land Commission v Perry (1977) 15 SASR 315, but that is not this case. The construction of s 262A(4)(c) of the SIS Act is not to be constrained by notions drawn from the past whereby the awarding of interest, especially at compound rates, was regarded as usury. That was the error of approach made by the Fiji Court of Appeal, corrected by the Fiji Supreme Court, in Ben v Suva City Council, in relation to the construction of a statutory power to award compensation. 14 For these reasons, I conclude that the use of the word "compensation" in s 262A(4)(c) of the SIS Act itself carries with it a power to award compound interest in the nature of compensation for being kept out of money which ought to have been paid in accordance with an undertaking given to "the Regulator". In these circumstances, it is unnecessary to look to the ancillary powers conferred by s 262A(4)(d) of the SIS Act, admittedly broad, as a source of power to award compound interest. 15 Whether or not to award compound interest and, if so, at what rate and for what period requires the exercise of a judicial discretion as to what is just compensation in the circumstances of a particular case. 16 The Commissioner submitted that an award of interest should be made at the rate of 4% above prevailing Reserve Bank cash rates, compounding at yearly rests from 30 September 2008, which was the date by which I concluded in the principal judgment that Mr Wilson should have been paid the balance of his entitlement. 17 That compensation in this case ought to include a component for the loss of use of the balance of the superannuation entitlement on and from 30 September 2008 is clear. As explained in the principal judgment, Mr Wilson's failure to receive his entitlement by then was the result of breaches of fiduciary duty and, in turn, a breach of the enforceable undertaking by Interhealth via Ms Hambrook. 18 Should that be at the fluctuating rate put forward by the Commissioner or some other rate? 19 In Thomas v SMP (International) No 6 Pembroke J grappled with answering a like question in the analogous context of a breach of trust. His Honour's judgment at [15] to [23] under the headings, "Rate of Interest" and "Practice Note 16" is, with respect, noteworthy for its valuable discussion of principle and policy on those subjects. The underlying requirement, there identified by Pembroke J in relation to an award of interest in respect of a breach of trust, that it be compensatory, not punitive, and not attended by historic distinctions between "trustee" and "mercantile" rates of interest applies even more so in relation to the making of any order under s 262A(4)(c) of the SIS Act in respect of interest. That is because the explicit purpose of the power is wholly compensatory. 20 Subject to what follows, I consider that the reasoning (albeit relating to a different period of time) evident in the following passage from Thomas v SMP (International) No 6 at [23], in which Pembroke J refers to the equivalent New South Wales Supreme Court Practice Note, is apposite in determining whether, as a matter of discretion, the rate promoted by the Commissioner ought to be adopted: 23 Nonetheless, the formula utilised in the Practice Note provides valuable guidance to me in the exercise of my equitable discretion. The Reserve Bank of Australia cash rate is the interest rate paid by banks in the overnight money market in Australia. It is one of the tools by which the central bank regulates monetary policy. It is currently 4.75%. In 1990 it was 17.5%. In February 2000 it was 5.50%. In recent times it has been as low as 3%. These are all matters of public record and common knowledge. The standard variable rate is a base rate used by lenders. It is the rate to which loans revert after the application of any discounted introductory rate. Information about a lender's standard variable rate is publicly available. The standard variable rate moves up or down depending on movements in the cash rate and may vary between lenders. But it is always higher than the cash rate. The margin above the cash rate is often approximately 2% but it may be greater. Business overdraft rates on the other hand are generally higher than the standard variable rate and personal overdraft rates are higher still. By contrast, term deposit rates are the rates offered by financial institutions on monies deposited with them. They vary substantially depending on the amount of the deposit and the length of the term, but at any particular point in time, they are less than lending rates. 21 Here, too, this Court's Practice Note CM-16 (Pre-judgment Interest) provides valuable guidance, even though it is not directly applicable. In September 2008, the Reserve Bank cash rate was 7%. Thereafter, it fell steadily to a low of 3% in April 2009 before gradually rising again to a high of 4.75% in November 2010. It has fallen since then and was 4.25% at the time when the principal judgment was delivered in February 2012. These are matters of public record (and are exhibited to Mr Hanson's affidavit). Having regard to the prevailing Reserve Bank cash rates since then, the reasoning of Pembroke J and the guidance by analogy offered by Practice Note CM-16, there is certainly support for the interest rate submission made by the Commissioner. I bear in mind though that that practice note is not expressly directed to the subject of an award of interest at compound rates. 22 Ensuring that Mr Wilson is not overcompensated is just as important as ensuring that he is not undercompensated. As a matter of impression and recollection, uncritically adding 4% to prevailing Reserve Bank cash rates in respect of an award of interest at a compound rate might have a tendency to overcompensate in terms of bank term deposit returns available from time to time over and above the prevailing Reserve Bank cash rate since September 2008. In the passage quoted above from Thomas v SMP (International) No 6 Pembroke J alludes to bankers' margins over this rate when seeking term deposits. Greater precision on this subject would require more detailed evidence than is to hand in this case. Adopting an interest rate of 7% in the circumstances of this case for the whole of the period discounts somewhat the 4% above cash rate approach and gives at least some recognition to a need not to overcompensate Mr Wilson. 23 The Commissioner has also submitted that the compound interest calculation should be made on the basis of yearly rests. It is not uncommon for compound interest awards to be made on this basis. Certainly other rests are possible. Whether the rolling over of a capital sum at shorter rest periods would, over the period, have produced a higher annual yield is moot. Sometimes, depending on interest rate fluctuation forecasts, higher interest rates are available for short term deposits. At other times, when interest rates might fall over the longer term, locking in an interest rate for a longer term deposit might be advantageous. Again, the evidence does not admit of greater precision in respect of the period since September 2008. Once again as a matter of impression and recollection, to adopt monthly rests at an interest rate of 7% might have a tendency to overcompensate. I shall therefore adopt annual rests. 24 For these reasons, there will be a further order that Interhealth pay to Mr Wilson compound interest at the rate of 7% calculated at yearly rests on and from 30 September 2008 to 22 February 2012.

Possession of the Fund and Powers 25 The Commissioner submitted that, for the purpose of making payment to Mr Wilson of the balance of his entitlement together with interest and having regard to the findings made in the principal judgment in respect of Ms Hambrook's conduct, the ISF ought to be placed in the hands of a nominee. Mr Combis, a registered liquidator who was willing so to act, was put forward as a suitable person. 26 The Commissioner did not, in terms, seek an order removing Interhealth as trustee of the ISF but rather an order the effect of which was to vest the assets of the ISF in the nominee for the purpose of paying with interest the balance of Mr Wilson's entitlement, together with administration expenses. To that end, the order promoted by the Commissioner envisaged the payment of any surplus upon realisations to Interhealth, presumably in its continuing capacity as trustee of the ISF. 27 The Commissioner submitted that power to make such an appointment was to be found in s 262A(4)(d) of the SIS Act. By analogy with observations made, initially by Young J and, on appeal, by Spigelman CJ in Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (2001) 37 ACSR 672 at [143] in respect of the power conferred on a court by s 233(1) of the Corporations Act 2001 (Cth) (formerly s 260) (Corporations Act), which empowers in oppression matters the making of "an order that it considers appropriate" the Commissioner submitted that the power conferred by s 262A(4)(d) was likewise plenary and fell to be exercised according to what was just and equitable in the circumstances of a particular case. I agree. 28 The power conferred on the Court by s 262A(4)(d) of the SIS Act is certainly not one which stands apart from the jurisdictional foundation of a proven contravention of an enforceable undertaking. However, once that jurisdiction is engaged and providing the purposes of rectifying the end to which the contravened undertaking was directed and the awarding of consequential compensation are served, there is no warrant for reading down the generality of the language found in s 262A(4)(d). In Australasian Memory Pty Limited v Brien (2000) 200 CLR 270 at [17], in construing yet another provision empowering the making of "appropriate" orders, s 447A(1) of the Corporations Act, in the High Court drew attention to an earlier observation of that Court in The Owners of the Ship "Shin Kobe Maru" v Empire Shipping Company Inc (1994) 181 CLR 404 at 421: It is quite inappropriate to read provisions conferring jurisdiction or granting powers to a court by making implications or imposing limitations which are not found in the express words. It would be likewise inappropriate to construe the power conferred by s 262A(4)(d) of the SIS Act in any other way. 29 There are also, in my opinion, analogies to be found in an inherent jurisdiction of courts of equity, which may be traced to a jurisdiction exercised by the Court of Chancery in England from the middle of the Fifteenth Century, to appoint a receiver for the purpose of safeguarding an equitable interest in property. Exercising the power conferred by s 262A(4)(d) of the SIS Act so as to remove from Interhealth responsibility for realising the assets of the ISF for the purpose of paying with interest the balance of Mr Wilson's entitlement and administration expenses sits well with such an analogy. It would alternatively be possible to remove Interhealth as trustee and to appoint the nominee in its place but that would burden the nominee with all of the other responsibilities of a trustee of the ISF. I note that Ms Hambrook remains a member of the ISF. 30 I propose therefore to make an order appointing Mr Combis as a receiver for the purpose of realising the assets of the ISF so as to pay the balance with interest of Mr Wilson's entitlement and administration expenses with any surplus being paid to Interhealth. 31 The Commissioner submitted that the powers conferred upon a liquidator by s 477 of the Corporations Act might be conferred, mutatis mutandis, upon Mr Combis. However, the role of Mr Combis is not to wind up the ISF but rather to ensure that Mr Wilson is paid with interest the balance of his entitlement. In these circumstances, it seems to me that the better source for the incorporation of powers by analogy is to be found in the provision in s 420 of the Corporations Act in relation to receivers. The order shall therefore make such provision.

Ancillary Orders 32 A number of ancillary considerations arise. As I have stated, Ms Hambrook remains a member of the ISF. It would not, however, be appropriate, in my opinion, in the circumstances of this case and having regard to the findings made in the principal judgment, for any payment of any further entitlement to her from the trust fund to occur before or to take priority over the discharging in full of the payment with interest of the balance of Mr Wilson's entitlement. 33 Further, it would not be appropriate for such of the superannuation trust fund as would otherwise be available for payment with interest of this balance to be diminished by the incidence of penal rates of taxation which would otherwise fall on the ISF if it were regarded as a non-complying superannuation fund. Had the ISF been properly administered by Interhealth and the enforceable undertaking complied with, Mr Wilson would have received his entitlement from a complying superannuation fund. It is true that the Commissioner possesses a discretion to treat a fund as complying but the efficacy of a compensation order ought not to depend upon the exercise of an administrative discretion. Further, the existence of such a discretion is no warrant for reading down the breadth of the power conferred by s 262A(4)(d). I regard the power conferred by s 262A(4)(d) of the SIS Act as sufficiently broad to deem a fund to be complying in an appropriate case until payment with interest of the balance of the entitlement (and administration costs) is made. I note that the Commissioner did not submit otherwise when I put this proposition to his counsel in the course of submissions. 34 The Commissioner also submitted that, given the findings made in the principal judgment concerning Ms Hambrook, an efficacious way of ensuring that she did not prevent the nominee from obtaining the worth of the units in the PWUT would be to vest the right title and interest of GHUT Holdings Pty Ltd in the assets of the GHUT in the nominee, Mr Combis. Even assuming that there may be power so to do, I do not see the need so to exercise the power. To hinder or obstruct without reasonable excuse Mr Combis in the discharge of his duties pursuant to the Court's order would be a serious contempt punishable by fine or imprisonment (or both). It will give sufficient recognition to Ms Hambrook's past failings to appoint Mr Combis for the purpose of ensuring the payment with interest of the balance of Mr Wilson's entitlements. 35 The Commissioner further submitted that the restrains on the disposal of property ordered on an interlocutory basis on 11 November 2011 ought to remain in place until the payment with interest of the balance and administration costs occurs. I agree.

Refusal of Costs Indemnity to Interhealth? 36 Relying upon Adsett v Berlouis (1992) 37 FCR 201 and, in turn, on In Re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 562, the Commissioner submitted that Interhealth ought not to enjoy any right of indemnity from the ISF in respect of the costs which it incurred in responding to the application. Reliance upon these authorities was apt. Having regard to the findings which I made in the principal judgment in relation to Interhealth's conduct, it would not, in my opinion, be "appropriate" for Interhealth to enjoy any such right of indemnity. It would not be appropriate for whatever remains in the ISF to be diminished by its costs of the defending the application which the Commissioner brought. That would be subversive of any ability to meet the payment with interest from that fund of the balance of Mr Wilson's entitlement. I consider that the power conferred by s 262A(4)(d) of the SIS Act is broad enough to make such an order. The same applies in relation to Ms Hambrook.

Payment of the Commissioner's costs by Ms Hambrook? 37 The Commissioner sought an order that Ms Hambrook, who was not a party to the application made under s 262A of the SIS Act, pay his costs. Because she was in jeopardy in respect of this application, I heard from Ms Hambrook on whether such an order ought to be made. She opposed the making of such an order but her submissions came to underscore her lack of insight as to why it was, having regard to the comprehensive deed of settlement referred to in the principal judgment, there was no warrant for not paying Mr Wilson the amount of his superannuation entitlement. 38 That the Court has power to award costs against a non-party is not in doubt: Knight v F.P. Special Assets Limited (1992) 174 CLR 178 at 192-193. One category of case in which such costs are awarded is where the party itself is either insolvent or without any asset of substance, where the non-party concerned has played an active role in the conduct of the litigation and where the non-party or some person on whose behalf of the non-party is acting has an active interest in the subject of the litigation. 39 The complete nature and extent of the worth of Interhealth in its own right is not clear. It appears that it does carry on business in its own right apart from acting as trustee of the ISF. On the evidence, Interhealth did not have the means of affording legal representation from its own resources. From this I infer that its net worth is modest. Further, whatever is otherwise its net worth, Interhealth will also be personally liable for making payment to Mr Wilson pursuant to the Court's orders. 40 That Ms Hambrook took an active role in the conduct of the litigation was obvious from the very first directions hearing and ever thereafter. 41 As to an interest in the subject matter of the litigation, the Commissioner submitted that this arose in three ways: (a) acrimony towards Mr Wilson; (b) to the extent that payment to Mr Wilson from the ISF was minimised her interest as the remaining member of the ISF increased; and (c) by preventing the sale of the Bilambil land she was able to further commercial ventures with Mr Williams and Tweed Mortgage Investment Pty Ltd. 42 The first two of these are certainly made out. As to the third, the conclusion which I draw from the evidence is that it was not convenient to Ms Hambrook, having regard to the interests of others in the Bilambil land, for it to be sold in 2008 so as to yield funds which would flow through to the ISF and thereby enable the payment out of Mr Wilson. I have set out the others interested in the Bilambil land in the diagram of the cascade of trusts trustee entities and directors in the principal judgment. 43 In short, this is the very type of case in which the making of an order for costs against a non-party is warranted. There will be an order accordingly such that Ms Hambrook is jointly and severally liable for the Commissioner's costs.

In whom does the balance and interest vest? 44 Both Mr Wilson and, because of a supervening bankruptcy, his trustee in bankruptcy were granted leave to make submissions as to the form of orders which ought to be made. It became apparent that there existed an underlying controversy between them as to in whom the balance vested. The origin of that controversy lies in the following exemptions, respectively found in s 116(2)(d)(iii) and s 116(2)(d)(iv) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) from what constitutes property divisible amongst the creditors of a bankrupt: s 116(2) (d) subject to sections 128B, 128C and 139ZU: … (iii) the interest of the bankrupt in: (A) a regulated superannuation fund (within the meaning of the Superannuation Industry (Supervision) Act 1993); … (iv) a payment to the bankrupt from such a fund received on or after the date of the bankruptcy, if the payment is not a pension within the meaning of the Superannuation Industry (Supervision) Act 1993. 45 The effect of the deeming order which I propose to make is that the ISF will at all material times be deemed to be a complying superannuation fund for the purposes of the SIS Act. Any payment to Mr Wilson in accordance with the order of the Court of the balance of Mr Wilson's entitlement, including any payment in respect of interest, made from the ISF, would seem to me to be one received after the date of bankruptcy and thus fall within s 116(2)(d)(iii) of the Bankruptcy Act. However, it may be that the source of any payment to Mr Wilson does not come in whole or in part from the ISF. It is possible, though unlikely on present materials, that it might come from Interhealth in its own right. It is preferable, in my opinion, not to make any order in respect of to whom a realisation should be paid until such time as there is a realisation. In the event of continuing disagreement, Mr Combis could apply to the Court for directions, joining the bankruptcy trustee and Mr Wilson and pay the money concerned into court. The controversy could then be resolved not in the abstract but rather in respect of a particular realisation from a particular source. At the moment, the Bankruptcy Act itself provides sufficient guidance as to how in the abstract any such controversy would fall for resolution.

Stay pending appeal? 46 Interhealth has instituted an appeal against the orders made at the time when the principal judgment was published. The grounds of appeal principally concern issues not raised at trial by it concerning whether the Commissioner has standing as "Regulator". The appeal has been set down for the August sittings of the Full Court. 47 The institution of an appeal does not, of itself, stay the operation of a judgment. A successful party is entitled to enjoy the fruits of that judgment unless and until it is set aside. Here though the consequential orders will include the appointment of Mr Combis and the incurring thereby by the ISF of the costs of administration. If the appeal is successful it is reasonable to expect that consequential orders such as that appointing Mr Combis will be set aside. A question might then arise as to by whom and from which source administration costs incurred to that point by him ought to be paid. Interhealth relied on these considerations and the proximity of the hearing of the appeal in seeking a stay. I consider that there is merit in the application. Mr Wilson's position and that of his bankruptcy trustee will be sufficiently protected by a continuation, pending the hearing and determination of the appeal of the restraints ordered at an interlocutory stage. I propose to grant a stay on such terms. 48 There will be orders accordingly. I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.