GGPG Pty Ltd (Receiver and Manager Appointed) v Golden Eagle Property Group Pty Ltd

Background 3 Thynne + Macartney is a well-known and respected legal firm in Brisbane. Equally, Mr Marc Maskell is a highly respected solicitor and partner of that firm. 4 Mr Maskell has, for some time, been acting on behalf of Mr Watters in QUD 462 of 2022 (QUD462/2022). In that action, Mr Watters seeks orders as to the entitlement to certain land situated at 202 Park Ridge Road, Park Ridge, Queensland (which was referred to by the parties as "Lot 202"). Relevantly, Golden Eagle Property Group Pty Ltd (Golden Eagle), an entity related to GGPG and controlled by Mr David Whiteman, had entered into a contract to acquire an option to purchase Lot 202. On 28 March 2022, Mr Watters commenced proceedings on behalf of GGPG alleging a breach of fiduciary duties by Golden Eagle, Mr Whiteman and Mr Marc Clancy arising out of the acquisition of the option, with the consequence that the beneficial interest in the contract and the land rested with GGPG. 5 Those proceedings were commenced in the Supreme Court of Queensland but were subsequently transferred to this Court. Prior to the proceedings being transferred, orders were made effectively preserving the position asserted by GGPG. The result was that, upon the giving of a personal undertaking as to damages by the receiver, Lot 202 was sold to Park Ridge 180 Pty Ltd (another entity within the "GGPG group" and under the receiver's control) and the proceeds were retained. 6 The reason for the transfer of the proceeding was that the issue of the acquisition of Lot 202 by Golden Eagle is the subject of a much larger and broader dispute in this Court in QUD 93 of 2022 (QUD93/2022). That proceeding involves allegations and counter allegations between two persons and various companies associated with them, which can be generally described as the "So interests" and the "Clancy interests". Mr Shan Ngai So and Mr Clancy, after whom the interests are named, were engaged in a large land development referred to as "Carver's Reach". Whilst that was a profitable enterprise, Mr So and Mr Clancy have had a falling out, and each now allege misconduct on behalf of the other in relation to the development. 7 QUD93/2022 was commenced on 25 March 2022 by the Clancy interests against Mr So and various companies associated with him. Relevantly, the applicants in the proceeding sought and obtained leave to bring derivative proceedings on behalf of a number of companies involved in the Carver's Reach development against the So interests in relation to the conduct of Mr So and others. A wide variety of relief is sought, including relief pursuant to s 233 of the Corporations Act in respect of alleged oppressive conduct; allegations are also made of breaches of fiduciary and cognate duties imposed by the Corporations Act on company directors. 8 In their defences, the So interests have, inter alia, deployed allegations surrounding Mr Clancy and his involvement in the acquisition by Golden Eagle of Lot 202. It is alleged that Golden Eagle and/or Mr Clancy acquired or caused the acquisition of Lot 202 in breach of Mr Clancy's duties owed to GGPG and others. This reflects the substance of the claim made in QUD462/2022. 9 The twenty-second respondent in QUD93/2022 is a Mr Paul Wong. He is a partner of the firm Thynne + Macartney and a legal adviser to the So interests. The twenty-third respondent is Thynne + Macartney itself. Mr Wong was joined as a respondent on 28 July 2023, whilst Thynne + Macartney was joined as recently as 3 September 2024. 10 In relation to Mr Wong, the allegations concern his provision of advice and services to the So interests and, in particular, that he was knowingly concerned in breaches of duty by Mr So. 11 As against Thynne + Macartney, the allegations made are that it was similarly involved in those breaches and profited from the breaches by the receipt of approximately $762,000 in fees. A claim is made for the return of those fees. 12 Following the transfer of QUD462/2022 to this Court, it was ordered that the proceeding be heard concurrently with QUD93/2022, with evidence in one being evidence in the other. The two proceedings were not consolidated, but they are being case managed together and will be heard simultaneously. 13 Since at least late 2022, the solicitors for the Clancy interests have suggested that the receiver's continued engagement of Thynne + Macartney in QUD462/2022 is inappropriate. It is now said, among other things, that their engagement is inappropriate because Mr Wong and Thynne + Macartney are parties to QUD93/2022. 14 As a result, Mr Watters has brought the present application seeking advice as to whether he should persist utilising Thynne + Macartney in the manner in which he has.

The application for directions 15 Section 424 of the Corporations Act provides: 424 Controller may apply to Court (1) A controller of property of a corporation may apply to the Court for directions in relation to any matter arising in connection with the performance or exercise of any of the controller's functions and powers as controller. (2) In the case of a receiver of property of a corporation, subsection (1) applies only if the receiver was appointed under a power contained in an instrument. 16 In general terms, an application for directions under s 424 can be made to the Court if a receiver is concerned about the veracity of their powers or any actions which they might pursue. In Re Madden (in his capacity as receiver of Direct Acceptance Corporation Ltd (rec apptd) (in liq)) (2019) 136 ACSR 245, 250 [35], Ward CJ in Eq said the following of the power in s 424: [35] The power to make directions under s 424 of the Act is a broad one, intended to facilitate the work of receivers (see Korda (recs and mgrs apptd) v Silkchime Pty Ltd ((recs and mgrs apptd atf Silkchime Unit Trust) (2010) 78 ACSR 675; 243 FLR 269; [2010] WASC 155 (Korda) at [30]) and should be interpreted as widely as possible to give effect to that intention (see Re Madden (as joint and several receiver and manager of Mirabela Nickel Ltd (recs and mgrs apptd)) [2018] WASC 335 at [86]; Re Odessa Promotions Pty Ltd (in liq); Pescod v Harrison (1979) CLC 40-523). 17 Some of the limitations to the power to give judicial advice were referred to in Re One.Tel Networks Holdings Pty Ltd (Hall as rec and mgr) (2002) 40 ACSR 83, 90 - 91 [29], where Austin J observed: [29] However, case law recognises some limitations upon the availability of directions under s 424. As Hodgson J observed in Re Vartex Petroleum Industries Pty Ltd (unreported, SC(NSW), Hodgson J, No 3688 of 1989, 17 August 1989, BC8901834), an application under s 424 and its statutory predecessor has some similarity to an application for judicial advice under s 63 Trustee Act 1925 (NSW), and is therefore subject to similar limitations. Case law on the statutory provision for judicial advice in trustee legislation shows that the court will not as a general rule give a trustee any opinion or advice where the question concerns the respective rights of the beneficiaries or their identity, or the matter is one of controversy between parties to the trust (although it may choose to give judicial advice, in the exercise of its discretion, where the controversy between the parties is confined to an issue of law and there are no disputed questions of fact: MTM Funds Management Ltd v Cavalane Holdings Pty Ltd (2000) 158 FLR 121; 35 ACSR 440). However, the procedure is appropriate where the question involves the nature and extent of the trustee's powers or duties of management or administration: see R P Meagher and W M C Gummow, Jacobs' Law of Trusts in Australia, 6th ed, Butterworths, Sydney, 1997, para 2134. A common case for judicial advice is where the trustee seeks directions concerning the conduct of legal proceedings: see Glazier Holdings Pty Ltd v Australian Men's Health Pty Ltd [2000] NSWSC 253; BC200001836 at [133]-[142]. In a commercial context, it may be appropriate to give judicial advice to the responsible entity of a managed investment scheme, which is a statutory trustee under s 601FC(2) of the Corporations Act 2001 (Cth), as to whether it is justified in convening meetings to enable unitholders to consider a scheme of arrangement proposal: Re Mirvac Ltd (1999) 32 ACSR 107. However, there is an important distinction between ruling as to the propriety of the trustee's contemplated exercise of discretion, and ruling as to the wisdom of such exercise: Re IOOF Australia Trustees Ltd (1999) 205 LSJS 98.

Is this a matter in respect of which advice can be given? 18 Whilst an application such as the present is one between the controller of property and the Court, in this case, the defendants in QUD462/2022 were given notice of the application and they chose to appear. There was no opposition to their appearance, nor to their making submissions as to the appropriateness of the Court providing the advice sought. In their submissions they postulated an altruistic stance of being present before the Court for the purposes of assisting it in reaching any conclusion. However, the reality was that they opposed the giving of the advice and, indeed, they submitted that the Court should not do so for several reasons. 19 An initial submission advanced on behalf of the defendants was that the giving of advice to the receiver about the propriety of him continuing to engage Thynne + Macartney was beyond the scope of the Court's powers. With respect, that is incorrect. The receiver is seeking to ascertain whether or not he ought to continue the contractual relationship between him and the firm, Thynne + Macartney, in the circumstances which have arisen. Those particular circumstances include the suggestions that the continued engagement of Thynne + Macartney would, in effect, be contrary to the proper administration of justice on the basis that its continued engagement would be detrimental to the integrity of the judicial process and the appearance of justice. Whilst it may well be the case that the question asked of the Court does not involve one of lawfulness or otherwise, it is certainly one concerned with the propriety of the receiver's actions and, in particular, his conduct before the Court. There is very little difference between the current application and the common form of application relating to the propriety of a controller of property commencing, continuing or defending proceedings. 20 It is necessary to keep steadily in mind that the benefit of this application inures solely for the receiver. If the receiver has brought to the attention of the Court all relevant information, he may rely upon the advice of the Court in respect of any subsequent allegations of wrongdoing in the course of his receivership. The benefit of the advice does not inure to the firm Thynne + Macartney and nor should it. It is in the position of being able to ascertain for itself whether it should continue to act in the proceedings.

Issues relating to the restraint of solicitors 21 Though there was no application by any party seeking orders that Thynne + Macartney and Mr Maskell be restrained from acting for Mr Watters, the matter was advanced to the Court on the basis that those principles governed the application made. If it was ascertained that the Court would enjoin the firm and Mr Maskell from acting, that would necessarily imply that the Court would decline to indicate that it was appropriate that the receiver continue to retain them. Conversely, if the Court would not enjoin the solicitors, it was implied that the Court should give the directions sought. 22 The relevant basis on which it was suggested that the Court might act was that the proper administration of justice requires that the solicitors be prevented from acting so as to protect the integrity of the judicial process and the due administration of justice, including the appearance of justice: see Dealer Support Services Pty Ltd v Motor Trades Association of Australia Ltd (2014) 228 FCR 252, 254 [4]. In that case, Beach J identified (at 276 [94] - [97]) the foundational principle for the granting of relief on that basis as being: 94 First, the test to be applied is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a solicitor [or barrister] be prevented from acting in the interests of the protection of the integrity of the judicial process and the appearance of justice. 95 Second, due weight should be given to the public interest in a client not being deprived of the solicitor of its choice. That public interest is an important value, although it can be over-ridden with due cause (WA v Ward at 498 per Hill, Branson and Sundberg JJ). 96 Third, this third basis [for disqualification] is not discharged by it being demonstrated that the first basis does not apply (cf Photocure at [56] and [60] per Goldberg J). It has independent scope. The third basis deals not just with private fiduciary relationships and inter-partes fiduciary obligations, but rather the administration of justice, the public interest and the appearance of propriety of officers of the court. The third basis is not only justified, but its justification explains its additional scope. 97 Fourth, nevertheless this jurisdiction is an "exceptional one" and is "to be exercised with appropriate caution" (Young J in Geelong School Supplies at [35] and Brereton J in Kallinicos at [76]). 23 In the receiver's written submissions, reference was made to the decision in Kallinicos v Hunt (2005) 64 NSWLR 561, 582 [76], where Brereton J identified that the restraint of a solicitor from acting should be exceptional and that, in the ordinary course, a party should not be deprived of the services of the lawyer of their choice without due cause. In Mitchell v Burell [2008] NSWSC 772 [20], his Honour also said: … the line is crossed only when the solicitor has a personal stake in the outcome of the proceedings or in their conduct, beyond the recovery of proper fees for acting … The presence of such circumstances will be a strong indication that the interests of justice - which in this field involve clients being represented by independent and objective lawyers unfettered by concerns about their own interests - require the lawyer to be restrained from continuing to act. 24 The receiver also referred to the practical considerations of restraining a solicitor from acting. They include the timing at which an application is brought to restrain the solicitor, the cost, inconvenience or impracticality of requiring the cessation of the provision of services, and the right of a litigant to choose their representation. Whilst these are matters which are inherently relevant on an inter-parties application to restrain someone from using the solicitors of their choice, they may not be as relevant on an application of the present kind. This is not a matter where the Court is seeking to ascertain the balance of convenience as between the protagonists, or any dispute. 25 The Court was also referred to r 27 of the "Australian Solicitors' Conduct Rules", which stated as follows: 27. SOLICITOR AS MATERIAL WITNESS IN CLIENT'S CASE 27.1 In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court, the solicitor may not appear as advocate for the client in the hearing. 27.2 In a case in which it is known, or becomes apparent, that a solicitor will be required to give evidence material to the determination of contested issues before the court the solicitor, an associate of the solicitor or a law practice of which the solicitor is a member may act or continue to act for the client unless doing so would prejudice the administration of justice. 26 It is not clear which version of the Australian Solicitors' Conduct Rules the parties were referring to. Relevantly, r 27.2 of the Australian Solicitors' Conduct Rules 2023 (being the rules in effect in Queensland at the date of the hearing) provides that a solicitor "must not continue to act for the client if doing so would prejudice the administration of justice". Nonetheless, it does not matter. Although this form of the rule effectively reverses the starting point of the analysis, it does not impact the conclusions reached below.

Precision in the identification of the contentious issues 27 The issues in QUD462/2022 are not concerned with the conduct of Thynne + Macartney or Mr Maskell. The subject matter of that action is the acquisition of Lot 202 and whether or not the attempt by Golden Eagle and any involvement by Mr Clancy or Mr Whiteman was in contravention of the duties owed to GGPG. It was not seriously suggested that Mr Maskell or Mr Wong would be a witness in relation to those issues. Therefore, but for the concurrent hearing of the action with QUD93/2022, no issue would arise in Thynne + Macartney or Mr Maskell continuing to act. 28 It follows that the essential issue is whether the concurrent hearing of the two proceedings, where the evidence in each matter will be treated as evidence in the other, impacts the propriety of Thynne + Macartney continuing to act. 29 As mentioned, apart from general background matters, the issue of the circumstances of the acquisition of Lot 202 is common to both proceedings. The protagonists, Mr So and Mr Clancy, will be cross-examined about those matters, as will other persons. However, again, this of itself would not inhibit the continuance of Thynne + Macartney acting in the proceedings. The evidence of the acquisition and any problematic difficulties arising from it would be the same regardless of whether it is heard in QUD462/2022 or QUD93/2022. Whilst it is undoubted that Thynne + Macartney will advance Mr Watters' case on this issue, and no doubt substantially, it is not self-evident that the propriety of them continuing to act is affected by other issues in QUD93/2022. 30 The main issue said to give rise to difficulty is that Mr Wong was substantially involved in a number of the transactions put in place by Mr So and the So interests and, in particular, the granting of certain securities. Serious allegations are made against Mr Wong in this respect and, as a result, claims are made to recover the fees earned by Thynne + Macartney. However that may be, those issues do not touch the issues arising in QUD462/2022. As a practical matter it is not possible to see Thynne + Macartney or Mr Maskell as Mr Watters' solicitors engaging with, or being involved in, those issues. Mr Maskell will not be instructing counsel to examine or cross-examine any witness in relation to those issues and they are substantially separate and distinct from the issues surrounding the acquisition of Lot 202. 31 Whilst GGPG is entitled to litigate any issue which might impact upon the questions to be determined between it and the defendants in QUD462/2022, it has no interest in and nor will it have any involvement in issues which are beyond the scope of those which arise on the pleadings in that action. For that reason it is difficult to identify any tension between Thynne + Macartney's continued involvement in QUD462/2022 even though it will be heard in the same Court and at the same time as QUD93/2022. 32 Some attempt was made to suggest that Mr Maskell may be a witness in QUD462/2022, although how that was so was difficult to ascertain. Similarly, it was suggested that Mr Wong is somehow involved in the issues arising in QUD462/2022, but again, any connection is tenuous. The real and substantive issues concern the circumstances of the acquisition of Lot 202, the relationship of Mr Whiteman and Mr Clancy to GGPG, and the scope of its business undertakings. Despite the attempts to suggest that either Mr Wong or Thynne + Macartney have some greater or significant involvement, that was not established. 33 Despite some minor overlap of issues, the role of Thynne + Macartney and of Mr Maskell in QUD462/2022 does not generate any circumstance which would warrant their recusal from the proceedings. A fair-minded and reasonably informed member of the public would understand that, although the one hearing occurs, it is comprised of two separate proceedings (perhaps even three) and that, as engaged solicitors, Thynne + Macartney and Mr Maskell are only involved in one. Whilst Mr Maskell might be present in the Court and representing Thynne + Macartney during the cross-examination of Mr Wong for the purposes of QUD93/2022, that of itself provides no relevant detriment to the administration of justice. Further, none of the potentially overlapping issues will put Thynne + Macartney or Mr Maskell in a position whereby their duty of loyalty to the Court might be tested or put under pressure. There is no issue on which the expected level of professionalism and the duty to the Court owed by Thynne + Macartney and Mr Maskell will be imperilled by their remaining in the proceedings. 34 Whilst a lot of noise was generated in the course of the hearing as to the issues involving Thynne + Macartney in QUD93/2022, no specific decision or group of decisions which Mr Maskell might have to make in QUD462/2022 were identified as potentially being affected by reason of Thynne + Macartney's involvement in the other proceedings generally. Whilst it undoubtedly has an interest in the outcome in QUD93/2022, there is no area where its involvement in QUD462/2022 would influence the specific matters with which it is interested. 35 In all the circumstances, a fair-minded, reasonably informed member of the public would not conclude that the proper administration of justice requires that Thynne + Macartney, or Mr Maskell, be prevented from acting in the interests of the protection of the integrity of judicial process and the appearance of justice.

Other matters 36 In the foregoing, consideration has not been given to a range of pragmatic circumstances which might weigh in the balance on an application for an injunction. However, when attention is given to those matters, it only strengthens the conclusion which has already been reached. 37 Those relevant factors include the substantial length of time that Thynne + Macartney and Mr Maskell have acted for Mr Watters in QUD462/2022, during which significant expenses have been incurred and, as a consequence of which, Mr Maskell is intimately familiar with the proceedings. It would be a very expensive exercise for a new set of solicitors to familiarise themselves with the nature of QUD462/2022 and the evidence in relation to it. If this were an application seeking to enjoin the solicitors from acting, that would be very relevant to the balance of convenience. Secondly, the claimed potential for any damage to the integrity of the judicial process was not occasioned by Mr Watters or Thynne + Macartney. To the extent to which any damage might exist, it arises because Thynne + Macartney and Mr Wong were lately joined in QUD93/2022 in circumstances where that proceeding was ordered to be heard together with QUD462/2022. This is not a case where it can be said that Thynne + Macartney or Mr Watters have undertaken some step which has put them in the position in which they now find themselves. On the contrary, they have acted entirely properly throughout, and the current circumstances were imposed upon them by litigious steps taken by the Clancy interests. 38 Thirdly, it is the strong desire of the receiver to keep the representation of his choice. That is a not insignificant factor. It is often repeated that it is in the public interest that litigants are not deprived of the legal practitioners of their choice and that cannot be doubted. 39 Fourthly, there is no question of the misuse of confidential information nor the existence of any risk that confidential information might be misused. These are not factors in this case. 40 Fifthly, the circumstances under discussion have arisen at a very late stage in the proceedings. The two actions have been subject to intensive case management over a long period of time and they are largely ready for hearing. Indeed, the matters were previously set down for trial in September 2024, albeit that trial was vacated. The matters are now set down for trial in April 2025. In such circumstances, were Mr Watters required to change solicitors, much unnecessary disruption would be caused to the litigation, which would be contrary to the efficient management of the litigation. Indeed, there would be a danger that it would delay the hearing of the proceedings even further. 41 Sixthly, the evidence shows that Mr Watters is acting under some financial constraints. Whilst there is some third party support in respect of the costs of the litigation, it is obviously not unlimited. The requirement to engage new solicitors would put these limited financial resources under further strain.

Conclusion 42 In the result, there is no discernible reason why Mr Watters, as the receiver of GGPG, should not continue to retain Thynne + Macartney and Mr Maskell as his solicitors in QUD462/2022. Mr Watters is entitled to receive advice pursuant to s 424 of the Corporations Act that he is acting reasonably and properly in continuing to retain Thynne + Macartney as his solicitors so that they can continue to act for him in the performance of his functions and powers as the plaintiff in QUD462/2022.

Costs 43 In the ordinary course, it might be assumed that the receiver's costs of this application be his costs in the receivership. However, here, the application was prompted by the Clancy interests' incorrect assertions as to the propriety of Thynne + Macartney continuing to act in the action. Further, the Clancy interests appeared at the hearing and actively opposed the relief sought. In those circumstances, the parties should be heard on the question of costs. I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.

SCHEDULE OF PARTIES QUD 462 of 2022 Cross-Respondents Second Cross-Respondent PARK RIDGE 180 PTY LTD ACN 616 431 157 (RECEIVER AND MANAGER APPOINTED)