Equititrust Ltd v Members of the Equititrust Income Fund

1. Pursuant to s 23 and s 37P of the Federal Court of Australia Act 1976 (Cth), rule 1.32 and rule 1.36 of the Federal Court Rules 2011 (Cth), these reasons for judgment in support of the orders made on 1 December 2016, are published in Chambers. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 These proceedings are concerned with an application by Michael Andrew Owen, Stephen James Parbery and Christopher Clarke Hill in their capacities as joint and several liquidators of RiverCity Motorway Management Limited (In Liquidation) ACN 117 343 361, ("RCMML") and the other entities described in the Schedule. RCMML is Responsible Entity (and Trustee) of two trusts, namely the RiverCity Motorway Holding Trust ARSN 119 128 193 ("RCMHT") and RiverCity Motorway Investment Trust ARSN 119 128 326 ("RCMIT") (together "the Trusts"). The application is made under ss 511 and 601NF of the Corporations Act 2001 (Cth) (the "Act"), r 1.8 of the Federal Court (Corporations) Rules 2000, s 37 AF of the Federal Court of Australia Act 1976 (the "FCA"), and the inherent jurisdiction of the Court. 2 The applicants seek orders pursuant to s 601NF(2) of the Act, first, that the applicants be appointed to take responsibility for ensuring that each of the Trusts are wound up in accordance with the Constitution of the respective Trust; second, put simply, orders facilitating the winding-up of the Trusts and alleviating the requirement of a statutory audit; and third, orders in respect of the Liquidators' lien and remuneration in respect of the affairs of the Trusts. 3 The applicants also seek directions pursuant to s 511 of the Act that directions be made in respect of the remuneration of the Liquidators in relation to the work of administering the Trusts in the periods from 8 July 2014 to 29 May 2016 and from 30 May 2016 to date. 4 The applicants also seek confidentiality orders in relation to particular documents pursuant to s 37AF of the FCA. On 1 December 2016, the Court made extensive orders arising out of the present application. The Court now publishes these reasons in support of those orders.

Factual Background 5 The application is principally supported by an affidavit of Mr Michael Owen sworn 11 November 2016 ("the Fourth Owen Affidavit"). Mr Owen is a Registered and Official Liquidator and Partner in the firm PPB Advisory. 6 As to the factual background of the matter, the applicants are the joint and several liquidators of the following 10 companies (together the "RCY Group"): RiverCity Motorway Pty Ltd; RiverCity Motorway Asset Nominee 2 Pty Ltd; RiverCity Motorway Asset Nominee Pty Ltd; RiverCity Motorway Finance Pty Ltd; RiverCity Motorway Holdings Pty Ltd; RiverCity Motorway Construction Pty Ltd; Flow Tolling Pty Ltd; RiverCity Motorway Services Pty Ltd; RiverCity Motorway Management Limited (RCMML); RiverCity Motorway RE Holdings Pty Ltd ("RC Holdings"). 7 The RCY Group developed the North South Bypass Tunnel ("NSBT") which opened to traffic in March 2010. On 25 February 2011, the RCY Group was placed into administration. Receivers and managers were appointed to the first eight companies recited at [6] of these reasons. Those eight companies are referred to in the affidavit material as the Obligors. I have adopted that term in these reasons. On 8 July 2014, each of the companies in the RCY Group was placed in liquidation. Although RCCML and RC Holdings are in liquidation, receivers and managers have not been appointed to them. RCMML is wholly owned by RC Holdings. 8 RCCML is the responsible entity of the Trusts. The Trusts issued stapled units to members of the public by way of an initial public offering on the Australian Securities Exchange in August 2006. The funds were on lent to other entities within the RCY Group for the purposes of developing the NSBT. 9 In May 2012, Federal Court Action NSD 757 of 2012 ("the Hopkins proceedings") was commenced as a class action by unitholders in the Trusts against a company called AECOM Australia Pty Ltd ("AECOM") seeking recovery of losses said to arise out of a AECOM's negligent and misleading traffic forecast for the NSBT. AECOM filed a cross-claim against RCMML in its own capacity and as a responsible entity of the Trusts. 10 On 5 May 2016, the Court made orders, among other things, that it was a proper exercise of the Liquidator's powers and functions to pursue a cross-claim against AECOM in the Hopkins proceedings. 11 On 6 June 2016, the Court made further orders that it was a proper exercise of the Liquidator's powers and functions to cause RCMML to enter into a settlement deed in respect of the Hopkins proceedings and cause and permit RCMML to carry out its obligations under the Settlement Deed. 12 On 10 August 2016, Nicholas J made orders in the Hopkins proceedings approving the settlement of those proceedings and other orders concerning the settlement which included an order that the applicants in those proceedings ("the Hopkins applicants"), within two business days of the distribution of funds to group members pursuant to the Settlement Distribution Scheme, apply for orders dismissing the Hopkins proceedings with no orders as to costs. 13 The applicants say that at the date of filing of this application, the Liquidators expected that the Hopkins applicants would be in a position to apply for orders dismissing the Hopkins proceedings shortly after 30 November 2016. However, the Liquidators say that they have recently been advised that the Hopkins applicants do not expect to be in a position to apply for orders dismissing the proceedings until after 20 January 2017. 14 Two other proceedings involving the companies in the RCY Group, Federal Court actions NSD 697 of 2012 (the "Portigon proceedings") and NSD 678 of 2012 (the "RiverCity Finance proceedings"), were also commenced in New South Wales. On 13 October 2016, orders were made by consent in both proceedings for the discontinuance of the costs claims made by RCMML. Those orders brought RCMML's involvement in those proceedings to an end. 15 As to the winding-up of the Trusts, the Trusts are managed investment schemes registered under s 601EB of the Act and must be wound up in accordance with the Constitution of each respective Trust and any orders that may be made by the Court pursuant to s 601NF(2) of the Act. 16 The Constitution of each of the respective Trusts (the "Constitution"), as amended by the Amending Deed dated 22 December 2015 provides, pursuant to Article 20.3(a), that the Trust will be wound up on the "Winding-Up Commencement Date". Article 32.1 defines the Winding-Up Commencement Date as the first to occur of a number of dates, including the "Date of the Finalisation of the Proceedings". The Date of the Finalisation of the Proceedings is, in turn, defined to mean the date on which the "Proceedings" (being the Hopkins proceedings and a number of other proceedings defined in the Amending Deed) are settled and withdrawn or there is a "Final Determination" in the Proceedings. Final Determination is defined to mean the decision of the Court having jurisdiction over the proceedings from which all appeals have been exhausted or expired. 17 The applicants say that all other relevant proceedings (including the Portigon proceedings and the RiverCity Finance proceedings) have finalised and that the settlement (and orders for the dismissal) of the Hopkins proceedings will therefore be the Winding-Up Commencement Date which will initiate the winding-up of the Trusts. By operation of Articles 20.3(a) and 32.1 of the Constitutions of the respective Trusts, their windings-up will commence on or about 20 January 2017, consequent upon finalisation of the Hopkins proceedings. 18 The Constitutions do not, however, set out the procedures identifying how the winding-up is to be conducted and, in particular, how the assets are to be identified. Having regard to these considerations, the Liquidators contend that by reason of their intimate knowledge of the affairs of the Trusts, it is appropriate (having regard to s 601NF(2) of the Act) that they have the carriage of the winding-up of the Trusts and thus they seek orders that they be so appointed. Consequential orders are also sought. Further, the applicants note the following concerns: (a) RCMML is the Manager of the Trusts intended to take responsibility to wind up the Trusts under the Constitutions; (b) pursuant to s 601NE of the Act, RCMML as the Responsible Entity of each Trust is required to ensure that the Trust is wound up in accordance with its Constitution and any orders made pursuant to s 601NF(2) of the Act; (c) the Constitutions do not address the situation where the Manager is itself being wound up or otherwise is subject to external administration; (d) the Trusts are "stapled" which means that they have common unitholders and are administered together; (e) as the winding-up of RCMHT requires the realisation of its assets, this requires the realisation and winding-up of RCMML; (f) as the winding-up of RCMIT and RCMHT requires payment of Trust liabilities, this requires payments by RCMML from the relevant Trust assets, but also RCMML's own assets as relevant liabilities are not limited to the Trust assets; (g) the winding-up of RCMIT and RCMHT therefore requires completion of the winding-up of RCMML after the final distribution to its creditors; (h) once RCMML is wound up, the Trusts will not have a Responsible Entity to complete the winding-up of the Trusts. 19 As to the current position of RCMML, the applicants say that as a consequence of a substantial shortfall in the assets held by the Obligors to meet the claims of secured lenders, there will be no return to the Trusts in relation to any intercompany amounts outstanding as at the appointment of voluntary administrators. 20 Accordingly, the only asset in RCMML is cash at bank. The affidavit material put on by the applicants shows that as at 31 October 2016, RCMML had cash assets totalling approximately $2,747,947, of which: $422,056 was held in its personal capacity; $2,036,065 was held on behalf of RCMIT; and $289,826 was held on behalf of RCMHT. 21 After deduction of unpaid past expenses and the future estimated expenses of completion of the winding-up, the cash balance at completion is estimated by the applicants at approximately $1,994,477, of which: $122,421 will be held in RCMML's personal capacity; $1,653,088 will be held on behalf of RCMIT; and $218,968 will be held on behalf of RCMHT. 22 The applicants say that the expenses to be deducted from the cash balances at [20] of these reasons are primarily comprised of: Liquidators' remuneration for work to 29 May 2016 (of which the amount unpaid is $127,116, inclusive of GST); Liquidators' estimated remuneration for the period from 30 May 2016 to completion of the winding-up (totalling $250,000, plus GST), which is inclusive of the Liquidators' estimated remuneration for completing the winding-up of the Trusts as sought in paragraph 3 of the Application; unpaid and future estimated legal expenses (including costs related to this application); and administration costs, including custodian fees, unpaid fees of Link, and document retention costs. 23 As to the position with respect to the creditors of RCMML in its capacity as responsible entity of the Trusts, the applicants say that the unsecured creditors in respect of RCMIT are now limited to RiverCity Motorway Asset Nominee Pty Ltd ("RCMAN") as trustee for RiverCity Motorway Asset Trust ("RCMAT") in an amount of $292,457; and to RCMHT in an amount of $13,722,972. The unsecured creditors in respect of RCMHT are now limited to RCMAN as trustee for RCMAT in an amount of $28,952,961; and to RiverCity Motorway Pty Ltd ("RCM Operations") in an amount of $375,800. The applicants say that there will not be any surplus funds to return to unitholders under clause 21.4 of the Constitutions. 24 As to the winding-up of the RCY Group, the applicants say that upon the dismissal of the Hopkins proceedings, the liquidators will be in a position to make distributions of the cash held by RCMML and thereby proceed to complete the winding-up of the RCY Group. This remains subject to the winding-up of the Trusts which in turn depends on final distributions and the winding-up of RCMML.

S601NF - Winding up registered schemes 25 As earlier mentioned, RCCML seeks orders and directions pursuant to s 601NF of the Act, which relevantly provides: (1) The Court may appoint a person to take responsibility for ensuring a registered scheme is wound up in accordance with its constitution and any orders under subsection (2) if the court thinks it necessary to do so (including for the reason that the responsible entity has ceased to exist or is not properly discharging its obligations in relation to the winding-up). (2) The Court may, by order, give directions about how a registered scheme is to be wound up if the Court thinks it necessary to do so (including for the reason that the provisions in the scheme's constitution are inadequate or impracticable). 26 The exercise of the power to appoint a person under s 601NF(1) of the Act may arise for consideration in a wide variety of circumstances: Equititrust Ltd v Members of the Equititrust Income Fund (2011) 288 ALR 800 ("Equititrust") at [37] and is not unusual: Re PWL - ACN 084 252 488 Ltd; Ex Parte PWL Ltd (Formerly Palandri Wines Ltd) (Administrators Appointed) [No 2] [2008] WASC 232 ("Re PWL")at [86]-[92]; Shepard v Downey (2009) 69 ACSR 530 at [131]-[132]; and Re Rubicon Asset Management Ltd (2009) 77 NSWLR 96; 74 ACSR 346 ("Re Rubicon") at [30]. 27 Those circumstances include where the responsible entity will cease to exist before the winding-up of the Trusts is completed or otherwise be incapable of doing the tasks (of ensuring that registered scheme is wound up): Equititrust at [37] and [39]. 28 In concluding that it was necessary and appropriate to appoint the Administrators of the responsible entity under s 601NF(1) of the Act, Gordon J, in Silvia administrators appointed, in the matter of FEA Plantations Ltd (subject to deed of company arrangement) (receivers appointed) [2013] FCA 1331 ("Silvia") noted at [33]: In the present case, it is appropriate that the Administrators be appointed, pursuant to s 601NF(1) of the Act, to take responsibility for ensuring that the Schemes are wound up in accordance with their Constitutions. FEAP is insolvent and under external administration. Since April 2010, the Administrators have built up a substantial body of knowledge as to the affairs of each Scheme. It would be wasteful and expensive if their services, and that body of knowledge, were not utilised in the winding up process: see Re Rubicon at [30]. 29 The nature and extent of the powers which s 601NF confers upon an appointed person by virtue of his or her appointment are broad. The authorities do not seek to canvass the full extent of the power to give directions under s 601NF(2): Equititrust at [47]; see the references at [47] in Equititrust to the observations of McDougall J in Re Rubicon quoting the observations of White J in In Re Stacks Managed Investments Ltd (2005) 219 ALR 532 ("Re Stacks"). 30 In Equititrust, Applegarth J said this as to the proper scope of s 601NF(2): (a) section 601NF(2) is not simply a power to give directions but contemplates the Court making orders. The orders that might be made under s 601NF(2) are not confined to directions about winding up the scheme in accordance with its constitution: Equititrust at [40]; (b) section 601NF(2) does not specify all of the circumstances under which it may be necessary to give directions, but the circumstances include the fact that the provisions in the scheme's constitution are inadequate or impracticable: Equititrust at [40]; (c) however, s 601NF(2) does not authorise the court "to confer additional powers upon a responsible entity to which third parties would be made subject, or to interfere with the rights which third parties would otherwise enjoy": Equititrust at [45], agreeing with White J in Re Stacks; and (d) section 601NF(2) provides a source of power to make an order giving directions that an appointee under s 601NF(1) act as a receiver of the scheme's property of a scheme, but only where a strong case is made out for the need for such an order: Equititrust at [53] - [54].

Section 511 and the Liquidators' duties 31 The Liquidators also seek directions pursuant to s 511 of the Act which relevantly provides: (1) The liquidator … may apply to the Court: (a) to determine any question arising in the winding up of a company; or (b) to exercise all or any of the powers that the Court might exercise if the company were being wound up by the Court. … (2) The Court, if satisfied that the determination of the question or the exercise of power will be just and beneficial, may accede wholly or partially to any such application on such terms and conditions as it thinks fit or may make such other order on the application as it thinks just. 32 The principles relevant to the Court's exercise of its powers to give directions under s 511(1) of the Act are well established and were summarised by Warren CJ in Handberg (in his capacity as liquidator of S&D International Pty Ltd & Anor (ACN 075 030 447 (in liq)) v MIG Property Services Pty Ltd [2010] VSC 336, in these terms, at [7]-[8]: (a) A liquidator may apply to the Court for directions in a voluntary winding up pursuant to section 511 of the Act, in much the same way that a liquidator may make such applications in a compulsory winding up pursuant to section 479(3) of the Act; (b) If the Court is satisfied that the granting of such an order would be "just and beneficial" it may accede to that request and make the desired order on such terms and conditions as it thinks fit; (c) Such an order will be just and beneficial where it "will be of advantage in the liquidation", and (d) The effect of such an order is not to determine rights and liabilities arising out of particular transactions, but rather to protect the liquidator from claims that they acted unreasonably or inappropriately, with such protection being conditional upon the "full and fair disclosure of all relevant facts and circumstances before the court" at the time that the order is made. 33 Courts will generally not provide directions regarding matters of purely commercial judgment or routine matters where there is no particular issue calling for the exercise of legal judgment: In the matter of One.Tel Limited (2014) 99 ACSR 247; [2014] NSWSC 457 at [35] ("One.Tel"); Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409 ("Re Ansett No 3") per Goldberg J at [65]. Instead, the matter must usually include an issue of law or procedure or some question of power, propriety or reasonableness: One.Tel at [35]; Re Ansett No 3 per Goldberg J at [65]. 34 The applicants say that, in light of the evidence before the Court as set out in the Fourth Owen Affidavit, the application before the Court clearly raises issues of the sort identified by Goldberg J such that it is an appropriate matter for directions of the Court.

Liquidators - Responsible Entities/Trustees 35 When a company which is trustee of a trust goes into liquidation its assets remain vested in it including those held on trust: In the matter of French Caledonia Travel Service Pty Ltd (in liq) [2002] NSWSC 641 at [12]. In Timbercorp Securities Ltd v WA Chip & Pulp Co Pty Ltd [2009] FCA 901, Finkelstein J considered the duties of liquidators of responsible entities and expressed these observations: [8] It is, I think, necessary to say something about the position of a liquidator of a responsible entity which is in the course of being wound up in insolvency. The liquidator is fiduciary. The principal beneficiaries of the duties owed by the liquidator in their capacity as a fiduciary are those who are interested in the liquidation, namely the creditors and members. Moreover, as a fiduciary the liquidator must act impartially between all those who are interested in the winding up. [9] Is the position of a liquidator of a responsible entity any different? The Corporations Act requires a managed investment scheme to have a responsible entity operate the scheme: s 601FB. The responsible entity must be a public company that holds an Australian financial services licence authorising it to operate a managed investment scheme: s 601 FA. Strict duties are imposed on a responsible entity under s 601FC. One duty is that the responsible entity must act in the best interests of members and, if there is conflict between the members' interests and the entity's own interests, it must give priority to the members' interests: s 601FC(l)(c). This duty overrides any conflicting duty an officer of the responsible entity has under Pt 2D.1: s 601FC(3). Part 2D.1 contains the general duties owed by directors and other officers of a corporation. Included among them is the duty to act with reasonable care and diligence (s 180), the duty of good faith (s 181), and the obligation to not use their position to improperly gain an advantage (s 182). [10] The Corporations Act also imposes duties upon an officer (which would include a liquidator) of a responsible entity: see s 601FD. The duties are similar to those owed by the responsible entity. Like the obligations of the responsible entity, the duties of an officer override any conflicting duty the officer has under Pt 2D.1: s 601FD(2). [11] The liquidators seem to be of the opinion that by reason of ss 601FC and 601FD they are required to look after the interests of investors even if that be at the expense of other creditors. In my view that is wrong. There is nothing in ss 601FC or 601FD that overrides the liquidator's duty to those interested in the winding up. It would be quite extraordinary were that to be the case. I think the liquidators should readjust their priorities. 36 In Re Willmott Forests Ltd (No 2) [2012] VSC 125 Davies J, after citing with approval the observations of Finkelstein J, stated: [96] ... An important consequence of the fiduciary position of the Liquidators in relation to the company, its creditors and members is that the Liquidators have imposed on them the duty to act at all times with complete impartiality between the various persons interested in the property and liabilities of the company. Thus the interests of the Growers are not the only or primary consideration of the Liquidators. 37 See also Re Great Southern Managers (Australia Ltd (No 1) [2009] VSC 642 at [10]-[12].

RCMML's application under s 601NF 38 RCMML's application under s 601NF of the Act arises in circumstances where the responsible entity is owned by a holding company (RC Holdings) that is in itself owned by one of the Trusts (RCMHT). Both the responsible entity and its holding company, RC Holdings, are therefore in effect assets of RCMHT which will have to be realised under clause 21.1(a) of RCMHT's Constitution in order to complete the winding-up of RCMHT. As a consequence, the responsible entity will be wound up before the winding-up of the Trusts is completed, or will be otherwise incapable of doing the tasks to ensure that the Trusts are wound up. 39 The applicants also emphasise the following circumstances: RCMML is insolvent and in liquidation; the winding-up of RCMML (after the final distribution to its creditors) is required before the winding-up of the Trusts, and consequently there will be timing and logistical issues due to the flow through of distributions made by RCMML in its personal capacity and as responsible entity of the Trusts; and since February 2011, the Liquidators have built up a substantial body of knowledge as to the affairs of the Trusts such that it would be wasteful and expensive if their services, and that body of knowledge, were not utilised in the winding-up process. 40 As earlier mentioned, the applicants seek orders that they be appointed to take responsibility for ensuring that each of the Trusts are wound up in accordance with the respective Constitution. The applicants seek orders to this effect on the basis that the Liquidators have built up a substantial body of knowledge and experience dealing with the Trusts' assets and affairs, in addition to the affairs of the responsible entity (RCMML), which would ordinarily be expected to take responsibility for the winding-up of the Trusts. The applicants say they are therefore best placed to conduct the winding-up, and engaging them to do so would be the most cost effective outcome for the Trusts. The applicants say that for the same reasons expressed by Gordon J in Silvia (noted at [28] of these reasons), that it is necessary and appropriate to appoint the Liquidators of RCMML under s 601NF(1) of the Act to take responsibility for ensuring that the Trusts are wound up in accordance with their Constitutions and any orders made under s 601NF(2). 41 I am satisfied that it is necessary and appropriate that the orders sought by the applicants be made. 42 As to the orders facilitating the winding-up of the Trusts, the applicants seek directions, set out in para 2 of the application, requiring that the relevant notices to creditors and members of the Trusts be provided only by way of a circular published online (set out in para 2(a)); defining actions that the appointees would be justified in taking to identify and apprehend the liabilities of the Trusts for the purposes of applying the assets of the Trusts in accordance with the order of priority in Article 21.2 of the Constitutions (set out in para 2(b)); relieving the proposed appointees from the requirement under Article 21.4 of the Constitutions to arrange for an independent audit of the final accounts of the Trusts (set out in para 2(c)); and granting each of the proposed appointees all powers necessary to give effect to the windings up in accordance with the Constitutions and to any order made under s 601NF(2) of the Act and to request deregistration of the Trusts (set out in para 2(d)). 43 The basis for seeking the directions set out in para 2 of the application is detailed in paras 39 to 57 of the Fourth Owen Affidavit. In particular, the Liquidators emphasise the following reasons in support of the application: (a) in relation to the order sought at para 2(a) of the Application, in circumstances where there will be no return to unitholders, the Liquidators consider it appropriate to notify unitholders of the commencement of the winding-up of the Trusts and the likelihood of no return to unitholders by way of a circular posted on the PPB Advisory website, rather than incurring the cost of sending a circular to 8,800 unitholders individually; (b) in relation to the order sought at paras 2(b)(i)-(iii) of the Application, the Liquidators say that they have already undertaken a thorough process for identifying creditors and assessing claims made by creditors. It is respectfully submitted that there is no need for an additional or parallel creditor identification process; (c) in relation to the order sought at para 2(b)(iv) of the Application: (i) the Liquidators say they have undertaken investigations into the intra-group loan from RCMML as responsible entity of RCMIT to RCMML as responsible entity for RCMHT and formed the view that it is an unsecured debt; and (ii) the Liquidators say this determination does not affect the position of unsecured creditors; (d) in relation to the order sought at para 2(b)(v) and (vi) of the Application, the applicants say that: (i) the Constitutions do not provide for the order in which the Trusts are to be wound up or distributions made; (ii) the ultimate recipients of distributions from both Trusts are the Obligors; (iii) the Liquidators have formed the view that making a single distribution to unsecured creditors from each Trust is the most cost effective approach; and (iv) a single distribution from each Trust can only be made if distributions are made from RCMIT prior to RCMHT; (e) in relation to the order sought at para 2(c) of the Application, the Liquidators have formed the view that an independent audit would be unnecessary and expensive. They say that: (i) the Trusts hold no assets other than cash (ii) there will be no surplus for distribution to unitholders (iii) the liquidators themselves are in the relevant sense sufficiently independent, and are experienced and expert accountants; (iv) the complexity of the group and the winding-up is such as to make the scope of an independent audit considerable - the cost of a firm of accountants unfamiliar with the matter undertake such an audit would likely be substantial; and (v) there would be little identifiable benefit in a further review or audit of the groups' accounts. Any benefit would likely be outweighed by the diminution in the assets available for distribution to creditors. 44 Having regard to the material before me I am satisfied that the directions sought pursuant to s 601NF(2) of the Act are necessary and appropriate in order to facilitate the winding-up of each of the Trusts.

Appointees' remuneration - paragraph 3 of the Application 45 At para 3 of the Application, RCMML seeks an order under s 601NF(2) of the Act and, or alternatively, the Court's inherent jurisdiction for the remuneration of the Appointees to be incurred consequent upon their appointment under s 601NF(1) (the "Appointees' Remuneration") and for orders that the Appointees are entitled to be indemnified out of and have a lien over the Trust assets in respect of the Appointees' Remuneration. 46 The applicants say that this is a necessary order to ensure payment of the Appointees' costs and expenses consequent upon their appointment under s 601NF(1) of the Act. It is also, they say, consistent with the operation of s 601FH, which provides that a responsible entity does not lose its right of indemnity out of scheme property upon being placed into external administration: Re Rubicon at para [55]. 47 The exercise of the power conferred by s 601NF(2) to give a direction about the costs of the winding-up was considered in Re Rubicon, where McDougall J held that the power to give directions under s 601NF(2) includes a power to give directions about how the costs and expenses of the winding-up of a scheme should be paid: at para [54]-[56]. 48 I am satisfied that the orders sought pursuant to s 601NF(2) in terms of para 3 of the application ought to be made.

Liquidators' remuneration - paragraph 4 of the Application 49 The Liquidators seek directions and orders, under s 511 of the Act and, or alternatively, the inherent jurisdiction of the Court: first, for the approval of remuneration from the Trusts in respect of work undertaken related to the general administration of the Trusts (the "Trust Administration Work") where such work is not within the scope of the Appointees' Remuneration, or paras 3(a) to 3(d) of the Orders of September 2014 (the "Claim Related Work"); and second, for their entitlement to be indemnified out of, and have a lien over, the property and assets of each of the Trusts for their remuneration in respect of Trust Administration Work. 50 While the Liquidators have already obtained Committee of Inspection approval for the amount of remuneration for the Trust Administration Work in relation to the period from 8 July 2014 to 29 May 2016, orders are sought to confirm their entitlement to be indemnified out of, and have a lien over, the property and assets of each of the Trusts for the proposed amounts and proportions as sought in para 4(a) of the Application. 51 The orders sought in para 4(b) of the Application are sought to cover the period from 30 May 2016 until the completion of the winding-up of RCMML. 52 I am satisfied that orders ought to be made in those terms.

The Fourth Owen Affidavit 53 As to the question of confidentiality orders, the Court may make confidentiality and non-publication orders if public knowledge of the proceedings is likely to defeat the paramount object of doing justice according to law: JN Taylor Holdings in liquidation (2007) ("JN Taylor") 62 ACSR 695 at 28; Jones, Saker, Weaver and Stewart (Liquidators), in the matter of Great Southern Limited (in liquidation)(Receivers and Managers appointed) [2012] FCA 1072. 54 The public interest in the due and orderly conduct of liquidations is a factor that weighs in favour of granting confidentiality and non-publication orders: McGrath & Anor re HIH Insurance Ltd & Ors [2005] NSWSC 731 per Barrett J at [10]; JN Taylor per Debelle J at [27]-[28]. 55 The applicants say that in the absence of confidentiality orders being made in applications such as this, there would tend to be a discouragement of the negotiation of compromises of disputes, because liquidators would be fettered in their conduct because they would not want all of their negotiations, privileged advice and compromise agreements to become publicly available: Elderslie Finance Corporation Limited v Newpage Pty Ltd (No 6) (2007) 160 FCR 423 at 43. They say that the clear public interest in the due administration of justice is that liquidators, acting in the interests of creditors, should have an expectation that they will be able to conduct and compromise litigation free from distortions of any kind that would not arise if litigation were pursued by an ordinary litigant in the ordinary way: McGrath & Anor Re HIH Insurance Ltd [2005] NSWSC 731 at [11]. 56 Moreover, the applicants say that when a liquidator applies to the Court for directions as to the manner in which the litigation should be conducted, such as in an application under s 511, the liquidator will often be required to disclose to the Court confidential matters related to the litigation such as opinions of counsel or information regarding the financial impacts of proposed settlements. It is, the applicants say, in the interests of the administration of justice to maintain the confidentiality of these matters: McGrath & Anor Re HIH Insurance Ltd [2005] NSWSC 731 at [11]. 57 RCMML and the Liquidators intend to read from and rely upon the Fourth Owen Affidavit. The applicants say that that affidavit includes confidential material including: (a) highly sensitive and privileged material regarding the settlement of litigation (including discussion of specific clauses in the Hopkins Settlement Deed); (b) confidential information divulged to the Liquidators in respect of creditors' proofs of debt (including the Hopkins Applicants' proofs of debt); and (c) information as to litigation strategies and decisions taken by the Liquidators in relation to RCMML (including copies of reports prepared on a confidential basis and provided to the Committee of Inspection which disclose details of "without prejudice" negotiations, information relating to the "Netherlands arbitration" and tasks to be undertaken in connection with the legal proceedings). 58 The public interest in the due and orderly conduct of liquidations is a factor that weighs in favour of granting confidentiality and non-publication orders. I am satisfied that RCMML and the Liquidators are required, in bringing this application, to disclose a number of facts which are sensitive and which, in the interests of the administration of justice, should remain confidential. In determining this application, I have had regard to additional affidavit material and submissions not exposed in these reasons which will remain confidential. 59 I am satisfied that it is appropriate for the Court to make an order sealing the un-redacted affidavit and the un-redacted copy of the submissions, and marking them "not to be opened save by order of a court or a Judge". Such an order is necessary to prevent prejudice to the proper administration of justice.

Review of previous Confidentiality Orders 60 Similar orders regarding confidentiality were made in this matter by the Court including orders made on 11 September 2014, 25 February 2016 and 6 June 2016 (collectively referred to as the "Confidentiality Orders"). The Court also made order to close the Court to the public during the last two hearings of this matter (25 February 2016 and 6 June 2016). 61 I indicated in my reasons for judgment of 6 June 2016, that at an appropriate moment in time, the matter ought to be re-listed to reconsider, in an overview sense, whether or not the Confidentiality Orders are to be sustained in the long term. In due course, that matter will be further considered by the Court.

Costs of the Application 62 The applicants seek orders that the costs of and incidental to the application be paid out of the Trusts (RCMIT and RCMHT). The applicants also seek an order that they be indemnified out of, and have a lien over, the property and assets of each of the Trusts for those costs and that the indemnity be satisfied out of the property and assets of RCMIT and RCMHT in proportion to the value of the funds held by each of those Trusts at the time the indemnity is satisfied. 63 I am satisfied that orders in these terms ought to be made. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

SCHEDULE OF PARTIES QUD 481 of 20144 Applicants: Second Applicant: RIVERCITY MOTORWAY PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 116 665 304 Third Applicant: RIVERCITY MOTORWAY ASSET NOMINEE 2 PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 406 158 Fourth Applicant: RIVERCITY MOTORWAY ASSET NOMINEE PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 139 714 Fifth Applicant: RIVERCITY MOTORWAY FINANCE PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 139 303 Sixth Applicant: RIVERCITY MOTORWAY HOLDINGS PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 279 188 Seventh Applicant: RIVERCITY MOTORWAY CONSTRUCTION PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 139 554 Eighth Applicant: FLOW TOLLING PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 134 967 356 Ninth Applicant: RIVERCITY MOTORWAY SERVICES PTY LTD (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) ACN 117 139 992 Tenth Applicant: RIVERICTY MOTORWAY RE HOLDINGS PTY LTD (IN LIQUIDATION) ACN 133 419 637