Glenfyne International Holding Ltd v Glenfyne Farms International AU Pty Ltd

Glenfyne International Holding Ltd v Glenfyne Farms International AU Pty Ltd - [2021] NSWSC 1514 - NSWSC 2021 case summary — Zoe

[3]

BACKGROUND

BBYL and its related companies conducted a financial services and stockbroking business, which included dealing in financial products traded on Australian and foreign stock exchanges as agent for its clients. BBYL would place orders to buy and sell financial products on behalf of its clients, sometimes via other intermediaries.
BBYL organised its business by reference to product lines. One of those product lines was a white label online trading platform operated by Interactive Brokers LLC (IB) and labelled "BBY Online Professional" (the IB platform and the IB product line). The IB platform facilitated trading by BBYL clients in a variety of financial products.
BBYN is a wholly owned subsidiary of BBYL. BBYN did not trade on its own behalf. It acted as a bare trustee and nominated custodian for approximately 600 clients of BBYL.
In the course of its business, BBYL held monies on behalf of its clients in client segregated accounts maintained for the purpose of s 981B of the Corporation Act 2001 (Cth) (CSAs). The CSAs were also organised broadly by reference to product lines. The CSAs for products within the IB product line comprised two master accounts established and maintained by IB for BBYL (designated with an account number commencing with the letter "I") and, within each master account, sub-accounts for BBYL's underlying clients (designated with an account number commencing with the letter "U").
Investigations undertaken by the BBYL Liquidators revealed that there were significant shortfalls of funds in almost all of the CSAs and that that there had been mixing of funds between several of the CSAs. However, there was no shortfall in the CSAs for the IB product line and the funds from those CSAs had not been mixed with funds in other CSAs.
On 13 August 2015, the BBYL Liquidators commenced these proceedings seeking directions and declarations in relation to (inter alia) the distribution of funds held by BBYL in CSAs. The issues included whether and how funds held in different CSAs should be grouped or pooled, the treatment of funds deposited into CSAs after 15 May 2015 (BBYL's last trading day), the treatment of interest earned on CSAs and how positive and negative client positions should be treated.
The Court made orders appointing representative defendants to represent certain groups of BBYL clients. The fifth defendant, Mr Nadin, was appointed to represent all BBYL clients with an IB account.
Following a hearing in 2017, Brereton J (as his Honour then was) delivered judgment addressing numerous issues, including how client entitlements to CSA funds should be calculated and whether the BBYL Liquidators were justified in treating clients with a low balance in a CSA as having no entitlement to participate. [1] Prior that hearing in 2017, all parties had accepted that there was no shortfall in the CSAs for the IB product line and no mixing of funds from those CSAs with other CSAs. The fifth defendant was therefore excused from appearing at the hearing in 2017 and orders in the following terms were made by consent on 5 December 2016: "1. The plaintiffs are justified in treating: (a) the assets referred to as 'Total Counterparty Cash, Stock and Options' in the 'IB' column of the table at page 68, paragraph 12.1 of the Client monies investigations Liquidators' Supplementary Report dated 15 June 2016 ('CSA 2'), and (b) the funds in account 553619321 with St George Bank styled 'BBY Ltd IB Buffer', (collectively, 'the IB Platform Assets') as beneficially owned by all clients of the Second Plaintiff with an account with the Second Plaintiff established in connection with financial products offered by Interactive Brokers LLC ('the IB Clients'). 2. The plaintiffs are justified in: (a) distributing the IB Platform Assets in their entirety to the IB Clients; (b) not distributing the IB Platform Assets, or any part thereof, to clients or former clients of the Second Plaintiff other than the IB Clients; (c) offering the IB Clients the opportunity to assert and prove a claim, including a tracing claim, in respect of the IB Platform Assets (or any part thereof); (d) distributing any part of the IB Platform Assets in respect of which a tracing claim is proved to the IB Client who proved the claim upon payment by that IB Client to the first plaintiffs of their costs of: i. adjudicating the IB Client's claim; and ii. distributing the assets the subject of the claim to the IB Client. (e) subject to (c) and (d) above, directing the sale of those IB Platform Assets other than open derivative positions (as defined in the orders made on 27 September 2016); and (f) making a rateable distribution of the IB Platform Assets (including the proceeds of the sales referred to at (e) above) to each IB Client who makes a claim against the IB Platform Assets (but who does not prove a tracing claim against the IB Platform Assets) equal to: A x (B/C) where: A = the total value of the IB Platform Assets (including the proceeds of the sales referred to at (e) above) at the date of distribution; B = the balance, as at 15 May 2015, of the relevant IB Client's 'sub-account' (as described at page 52, paragraph 9.4.1 of CSA 2); and C = the aggregate of the balances of all IB Clients' sub‑accounts as at 15 May 2015."
The effect of those orders was that the total cash and assets relating to the IB product line as at BBYL's last trading day was to be distributed between clients of BBYL on whose behalf BBYL traded the relevant IB platform products rateably according to the value of each client's relevant sub-accounts as at 15 May 2015, subject to specific assets being distributed to particular clients who established an entitlement to the asset through tracing.
Brereton J delivered a further judgment on 12 November 2018 that addressed, inter alia, the distribution process to be adopted by the BBYL Liquidators. [2] His Honour made orders on 26 November 2018 to the effect the BBYL Liquidators were justified in adopting a specified claim and distribution process and distributing monies to BBYL clients in accordance with that process. For present purposes, the key features of that process may be summarised as follows (the BBYL Distribution Process): 1. the claims of BBYL clients are assessed by the BBYL Liquidators on the basis of specified sources of information (being client summary reports sourced from the IB platform insofar as BBYL conducted trading on behalf of clients through the IB platform (IB clients)); 2. clients have an opportunity to dispute the Liquidators' assessment of their claims within specified time frames and IB clients have an opportunity to make in specie claims to particular assets via tracing; 3. following verification and adjudication of all client claims by the BBYL Liquidators, a distribution model is created that will calculate the required cash distributions based on the judgment, accepted claims and available funds, whilst retaining sufficient funds to provide for: 1. any further distributions that may be required in the event of any client claims in respect of which the BBYL Liquidators' determination is disputed or appealed; 2. the BBYL Liquidators' remuneration and expenses; 3. the legal expenses of the representative defendants; and 4. any in specie claims made by IB clients that have been allowed by the BBYL Liquidators or the Court, or that have not yet been adjudicated or are subject of an appeal to the Court from the BBYL Liquidators' adjudication; 1. the BBYL Liquidators give notice under s 60 of the Trustee Act 1925 (NSW) once the amount available for distribution as described in (3) above has been calculated, and distributions are paid on the expiry of that notice; and 2. the BBYL Liquidators give notice under s 60 of the Trustee Act once in specie claims have been determined by the BBYL Liquidators' adjudication or by the Court, and each relevant asset is transferred to the relevant IB client on the expiry of that notice, subject to payment by each relevant client of a proportionate amount of the BBYL Liquidators' remuneration, costs and expenses and the legal costs of the representative defendants.
In the course of reviewing BBYL's client ledger for the purpose of identifying clients entitled to participate in the BBYL Distribution Process, the BBYL Liquidators identified account number U1280575 in the name of BBYN referable to the IB product line with a balance of $3,671,058.77 as at 15 May 2015 (the BBYN Account). [3]
Evidence to which I will refer in greater detail later in these reasons establishes that the BBYN Account was an IB sub-account in which BBYN held shares in foreign listed company Linc Energy Ltd (Linc Energy) that were traded through the IB platform on behalf of certain BBYL clients (the Underlying Shareholders).
The BBYL Liquidators are now ready to make distributions in accordance with the BBYL Distribution Process. On the basis of the BBYN Liquidators' investigations concerning the BBYN Account that are described in detail later in these reasons, it is proposed that BBYN will participate in the BBYL Distribution Process as a client of BBYL with a claim for $3,671,058.77 (the BBYN Claim) and that BBYN will then distribute the proceeds of the BBYN Claim to the Underlying Shareholders in proportion to the number of Linc Energy shares held by BBYN on behalf of each of them.
As I have already mentioned, the present application principally concerns the submission and adjudication of the BBYN Claim in the BBYL Distribution Process (in circumstances where Messrs Vaughan and Hall are the BBYL Liquidators and also the BBYN Liquidators) and the manner in which the proceeds of the BBYN Claim are proposed to be distributed by the BBYN Liquidators to the Underlying Shareholders.

[4]

THE PRESENT APPLICATION

By interlocutory process filed on 13 April 2021, the BBYL Liquidators and BBYN Liquidators sought the following relief pursuant to r 6.24 of the Uniform Civil Procedure Rules 2005 (NSW) and s 63 of the Trustee Act and/or s 90-15 of the Insolvency Practice Schedule in Schedule 2 to the Corporations Act 2001 (Cth) (the Application): [4] 1. an order joining BBYN and Messrs Vaughan and Hall (in their capacity as BBYN Liquidators) as plaintiffs in these proceedings; 2. an order that the BBYN Liquidators are justified in submitting the BBYN Claim in the amount of $3,671,058.77 and that the BBYL Liquidators and BBYL are justified in admitting the BBYN Claim in that amount and paying such claim in accordance with the BBYL Distribution Process; 3. an order that BBYN and the BBYN Liquidators are justified in not seeking an in specie distribution of any assets of BBYL as part of the BBYL Distribution Process; 4. an order that BBYN and the BBYN Liquidators are justified in adopting a specified distribution process (the BBYN Distribution Process) in order to verify and adjudicate claims of the Underlying Shareholders to the proceeds of the BBYN Claim and to make distributions; 5. an order that BBYN and the BBYN Liquidators are justified in adopting the BBYN Distribution Process without permitting in specie claims; 6. an order that the BBYN Liquidators' past remuneration, and future remuneration, costs and expenses to be incurred in the BBYN Distribution Process, be paid out of the proceeds of the BBYN Claim on an indemnity basis and in priority to any claims admissible in the BBYN Distribution Process; 7. an order that the BBYN Liquidators and BBYN need not obtain the approval of the Court prior to paying the remuneration, costs and expenses referred to in (6) above out of the proceeds of the BBYN Claim; 8. an order that BBYN and the BBYN Liquidators are justified in treating the Underlying Shareholders in respect of each claim to the proceeds of the BBYN Claim of $100 or less as having no entitlement to participate in the BBYN Distribution Process; and 9. an order that BBYN and the BBYN Liquidators are justified in communicating with the Underlying Shareholders in a specified manner (predominantly electronically) for the purpose of the BBYN Distribution Process.
Evidence adduced by the BBYL Liquidators and BBYN Liquidators established that all representative defendants had been notified of the Application and did not wish to be heard.

[5]

Joinder of BBYN and BBYN Liquidators as plaintiffs

At the outset of the hearing of the Application, I made an order joining BBYN as the third plaintiff to the proceedings. I was satisfied that this was appropriate because, as submitted by Mr Healey of counsel for the BBYL Liquidators and the BBYN Liquidators, the Application concerns BBYN's rights in the BBYL Distribution process and BBYN is therefore entitled to be heard. As Messrs Vaughan and Hall were already the first plaintiffs to the proceedings in their capacity as BBYL Liquidators, I formally noted that, with effect from 13 April 2021, the first plaintiffs are acting in the proceedings in their capacities as joint and several liquidators of BBYL and joint and several liquidators of BBYN. I was satisfied that this was appropriate because, as submitted by Mr Healey, one of the issues raised by the Application is whether or not it is appropriate that the same persons continue to act as BBYL Liquidators and BBYN Liquidators in circumstances where the BBYN Liquidators wish to submit the BBYN Claim in the BBYL Distribution Process and it will fall to the BBYL Liquidators to adjudicate the BBYN Claim. [5]
In support of the remaining claims for relief in the Application, the BBYL Liquidators and BBYN Liquidators relied on affidavits of Mr Vaughan affirmed on 17 August 2015, 23 December 2015, 11 May 2016, 27 February 2018, 8 April 2021 and 26 April 2021. Those affidavits, together with the documents exhibited to them, establish the background factual matters to which I have already referred above and set out a detailed account of the investigations undertaken by the BBYN Liquidators to ascertain the arrangements pursuant to which the BBYN Account was held in the name of BBYN, the purpose for which the BBYN Account was operated, the assets held in the BBYN Account, the value of those assets and the clients of BBYL for whose benefit those assets were held by BBYN. It is convenient to set out the salient details of that evidence before addressing the remaining claims for relief in the Application.

[6]

Linc Energy shares, the BBYN Account and the Underlying Shareholders

Due to inadequacies in the records maintained by BBYL and BBYN, the BBYN Liquidators have undertaken extensive investigations in order to identify (inter alia) BBYN's assets and liabilities and ascertain whether and for whom its assets were held on trust. The work has included: [6] 1. issuing questionnaires to clients and seeking supporting documentation to ascertain any claims they may have to particular assets of BBYN, and reviewing responses and documentation received against the books and records of BBYL and BBYN and any other relevant records available (including, in the case of the IB product lines, documents of IB); and 2. where possible, terminating custodial arrangements and transferring or dealing with the relevant assets in accordance with the instructions of the BBYN client beneficially entitled to those assets.
In relation to the BBYN Account, the BBYN Liquidators' investigations since their appointment on 8 October 2015 have included: [7] 1. reviewing the terms that applied as between IB and BBYL, and as between BBYL and/or BBYN and clients of BBYL, in relation to the trading of financial products on behalf of BBYL clients through the IB platform; 2. reviewing account statements issued in respect of the BBYN Account to ascertain the balance of the account at relevant times; 3. corresponding extensively with: 1. the CEO and Managing Director Linc Energy; 2. the Senior Legal Counsel of Linc Energy; 3. the third party share registrar for Linc Energy (both when it was listed on the Australian Stock Exchange during the period from May 2006 until December 2013 and when it was listed on the SGX from December 2013); and 4. ABN Amro Clearing Bank N.V., Singapore Branch (ABN Amro), which was the central depository participant through which Linc Energy shares were traded on the SGX; and 1. reviewing spreadsheets maintained by BBYL purporting to record details of the Underlying Shareholders, investigating the reliability of those spreadsheets and cross-checking them against and updating them with other sources of information from within BBYL and BBYN, and information provided by Linc Energy and its share registrar.
The salient information revealed by the BBYN Liquidators' investigations in relation to the BBYN Account may be summarised as follows: [8] 1. for listed and unlisted shares in jurisdictions outside Australia, BBYL used the services of an international broker and an international custodian to trade and hold shares in behalf of BBYL's clients; 2. this typically occurred in circumstances where the BBYL client had entered into a nominee agreement or similar document with BBYN, neither BBYL nor BBYN were licensed to deal in securities or provide custodial services in the relevant foreign jurisdiction and BBYL and BBYN had a referral relationship and agreements in place with third parties who held the requisite licences in that jurisdiction; 3. in this context, BBYL's client would give instructions to BBYN and BBYN would then give instructions via BBYL to the relevant international broker and the relevant international custodian (or, in some instances, the international custodian would receive instructions from the international broker rather than from BBYL); 4. these practices are broadly consistent with BBYL's "ASX and International Trading Terms" issued to clients, which contained provisions to the effect that: 1. BBYL will provide a service to the client for trading, clearing and settlement of international securities; [9] 2. BBYL will purchase international securities on instructions from the client and procure that those securities are held on the client's behalf; [10] 3. BBYL will sell international securities on the client's instructions and arrange collection of sale proceeds for the client; [11] 4. the custody of international securities will be undertaken by third parties appointed by BBYL; [12] 5. subject to completion of the relevant application form by or on behalf of the client, BBYL will arrange for BBYN or another nominee appointed by BBYL to hold securities and other financial products nominated by the client as bare trustee and nominee for the client; [13] 6. where BBYN acts as nominee in respect of any financial product for a client, BBYN will be registered as the holder of those financial products; [14] and 7. the client must give all instructions in relation to financial products held by BBYN or another nominee to BBYL, and authorises BBYL to accept and act on those instructions; [15] 1. as I have mentioned earlier in these reasons, IB operated the white label securities trading platform which facilitated BBYL's clients trading in foreign securities; 2. Linc Energy was listed on the SGX from 18 December 2013 (after delisting from the Australian Stock Exchange); 3. Central Depository Pte Limited, a subsidiary company of SGX, operated as the clearing house for SGX, trading on the SGX had to be conducted through a central depository participant (or CDP) and shares traded were registered in the name of the CDP; [16] 4. upon Linc Energy listing on the SGX, ABN Amro became the CDP for Linc Energy shares. To trade in those shares on the SGX, a party had to hold an account with ABN Amro; 5. IB had an account with ABN Amro, and Linc Energy shares traded through that account by IB on instructions from BBYL were held in the BBYN Account established by IB as a sub-account under one of the two BBYL master accounts that IB created for the purpose of BBYL effecting transactions on behalf of its clients; [17] 6. Linc Energy's share register showed ABN Amro (the CDP account holder) as the shareholder, but it was Linc Energy's understanding that the shares were held by BBYN and that BBYN in turn held the shares as bare trustee for clients of BBYL on whose behalf BBYL facilitated trading in those shares in the manner described above; and 7. the spreadsheet maintained by BBYL and information provided by Linc Energy and its share registrar, referred to at [22] above, indicate that the Linc Energy shares were held and traded on behalf of the Underlying Shareholders and not by BBYN on its own account or on behalf of BBYL. BBYN did not trade on its own account, as referred to at [5] above.
Inconsistences within the BBYL spreadsheet, discrepancies between that spreadsheet and information provided by Linc Energy, and interviews with former BBYL staff indicate that neither the BBYL spreadsheet nor the Linc Energy records are a complete and accurate record of the identity of the Underlying Shareholders and the number of Linc Energy shares held on their behalf. However, all sources of information consistently record that the BBYN Account held 14,973,816 Linc Energy shares as at 15 May 2015 and at all times thereafter, until a share consolidation undertaken by Linc Energy in March 2016 reduced the number of those shares to 2,328,875 shortly before Linc Energy entered into administration on 15 April 2016.
Linc Energy subsequently went into liquidation on 23 May 2016. It had not paid a dividend to shareholders since October 2010 and its liquidators published a declaration on 27 May 2016 in accordance with s 104-145 of the Income Tax Assessment Act 1997 (Cth) stating that they had reasonable grounds to believe that there was no likelihood that its shareholders would receive any distribution in the course of the winding up of the company.
On the publication of that declaration, the Linc Energy shares in the BBYN Account that had been valued at $3,671,058.77 on BBYL's last trading day became essentially worthless, and this occurred before the BBYN Liquidators had been able to complete the work of identifying the Underlying Shareholders and their beneficial entitlements to the Linc Energy shares in the BBYN Account with a view to arranging in specie distributions of those Linc Energy shares.

[7]

BBYN Claim

I now turn to the second and third aspects of the Application referred to at [17] above, being the claim for orders that the BBYN Liquidators are justified in submitting the BBYN Claim for $3,671,058.77 in the BBYL Distribution Process and in not seeking an in specie distribution and that the BBYL Liquidators and BBYL are justified in admitting and paying the BBYN Claim in that amount in accordance with the BBYL Distribution Process.
As Mr Healy identified, these aspects of the Application raise the following issues: 1. whether BBYN held the Linc Energy shares in the BBYN Account as bare trustee or nominee for BBYL clients; 2. whether BBYN was a "client" of BBYL in respect of the Linc Energy shares in the BBYN Account, in the sense that BBYN is entitled to submit a claim in the BBYL Distribution Process; 3. if so, in what amount is BBYN entitled to make the BBYN Claim in the BBYL Distribution Process; and 4. how to address the potential conflict between the interests of BBYN (in submitting and achieving a favourable determination of the BBYN Claim on behalf of the Underlying Shareholders) and the interests of BBYL (in having that claim adjudicated by the BBYL Liquidators according to applicable principles in the interests of all BBYL clients who are entitled to participate in the BBYL Distribution Process), in circumstances where Messrs Vaughan and Hall are the BBYN Liquidators submitting the claim on behalf of BBYN and are also the BBYL Liquidators responsible for adjudicating that claim.
The proposed BBYN Claim relates solely to the Linc Energy shares in the BBYN Account. There is no evidence that any other IB platform products traded on behalf of BBYL clients were held in accounts in the name of BBYN. On the contrary, the evidence is to the effect that sub-accounts created by IB under the BBYL master accounts were typically in the name of the BBYL end client rather than in the name of BBYN.
I accept the submission made on behalf of the BBYN Liquidators that the information revealed by their investigations, summarised above, supports the conclusion that BBYL arranged for BBYN to hold the Linc Energy shares in the BBYN Account as bare trustee and nominee for clients of BBYL who had entered in BBYL's terms referred to at [23(4)] above. On Linc Energy's share register, those shares were registered in the name of ABN Amro (as the CPD account holder). The intention of BBYL, BBYN and the Underlying Shareholders that the shares should be held by BBYN on bare trust for the Underlying Shareholders is evident from BBYL's terms and from the circumstance that there were Underlying Shareholders (being some or all of the persons identified in the internal records of BBYL and the independent records of Linc Energy referred to above) who wished to hold and trade in Linc Energy shares on the SGX. That trading could only occur through a CDP. This, in turn, required BBYL to engage the services of an intermediate broker and custodian because BBYL was not licensed in Singapore to trade financial products on behalf of its clients. IB (as the operator of the platform through which the shares were traded) was the intermediate broker and custodian of the Linc Energy shares. BBYN was the named account holder in the sub-account created by IB under the BBYL master account. The conclusion that BBYN held the Linc Energy shares as bare trustee for the Underlying Shareholders is further supported by the fact that BBYN's business did not include trading on its own account.
As BBYN is named as the "client" of BBYL in respect of the IB platform assets in the BBYN Account as at 15 May 2015 (being BBYL's last trading day and the date incorporated in the formula incorporated in the 5 December 2016 orders), the BBYN Liquidators are entitled to submit a claim on behalf of BBYN for a rateable distribution of those assets in accordance with the 5 December 2016 orders and the BBYL Distribution Process established by the 26 November 2018 orders, on the basis that the proceeds of the BBYN Claim will in turn be distributed to the BBYL clients for whom BBYN held the Linc Energy shares as bare trustee. As counsel for the BBYN Liquidators' submitted, this ensures that the value of the Linc Energy shares as at 15 May 2015 will be distributed to the Underlying Shareholders in the winding up of BBYL and BBYN. The Underlying Shareholders are not able to make a claim directly in relation to the Linc Energy shares in the BBYL Distribution Process in accordance with the orders made on 5 December 2016. That is because the account in which the Linc Energy shares are held is in the name of BBYN rather than in the names of the Underlying Shareholders. BBYN is the "IB Client" as defined in the 5 December 2016 orders insofar as those orders apply to the Linc Energy shares.
Although the shares are now worthless as a result of Linc Energy being in liquidation and having insufficient funds to pay a dividend to shareholders, I accept the submission made on behalf of the BBYN Liquidators that it is nevertheless appropriate that the claim to be submitted on behalf of BBYN in the BBYL Distribution Process should be in an amount equivalent to the value of the shares as at 15 May 2015, being the last day on which BBYL traded. That date has been adopted as the reference date for all distributions to be made in respect of the IB platform assets and CSA funds, with the result that all IB platform clients of BBYL will share in the aggregate proceeds of liquidated securities on the IB platform according to their holdings as at the reference date. Except to the extent that they can establish an in specie entitlement to a particular asset through tracing, no IB platform clients will be beneficially or adversely affected by changes in the price or value of any IB platform assets held on their behalf after the reference date.
As the BBYN Liquidators' submissions identified, the records of BBYL and IB align in relation to the number of Linc Energy shares in the BBYN Account as at 15 May 2015 (14,973,816 shares) and the price of those shares (AUD$0.26 per share). That number of shares at that price would result in a total value of $3,893,192.16, but BBYL's records for the BBYN Account stated the value of the account as $3,671,630.86 as at 15 May 2015. I assume that the relatively minor discrepancy between the two amounts is attributable to various fees and commissions that have been debited to the account over time. The fact that fees and commissions are debited is evident from the records of BBYL and IB, but the evidence does not provide or facilitate a reconciliation of the value of the Linc Energy shares in the BBYN Account based solely on the number of shares and share price as at 15 May 2015, and the lesser value ascribed to that account in BBYL's records as at that date. [18]
In circumstances where the Linc Energy shares are now worthless, I have no hesitation in accepting the submission made on behalf of the BBYN Liquidators that they would be justified in submitting the claim for distribution out of the IB platform assets based on the value of the Linc Energy shares as at 15 May 2015 rather than submitting a claim for an in specie distribution of those shares to BBYN.
As the submissions made on behalf of the BBYN Liquidators and the BBYL Liquidators acknowledge, there is a clear potential for conflicts of interest and duty to arise from the concurrent roles of Messrs Vaughan and Hall in formulating the BBYN Claim in their capacity as BYYN Liquidators and in adjudicating that claim on its merits as BBYL Liquidators, acting in a quasi-judicial capacity and applying principles and standards of proof that are equivalent to those that would be a applied by a court in an action brought against BBYL. [19]
It was submitted, and I accept, that conflicts of this kind are not new and that the courts have typically addressed such conflicts in one of three ways: [20] 1. by appointing a special purpose liquidator to determine the issue that has created the conflict (and only that issue); 2. by removing the liquidator affected by the conflict from one or more of the companies concerned and appointing a new liquidator in their place; or 3. by a direction to the conflicted liquidator pursuant to s 90-15 of the Insolvency Practice Schedule or the inherent jurisdiction of the Court that they would be justified in performing an act which would or may otherwise involve a conflict, such as admitting or rejecting a contentious proof. [21]
I accept the submissions made on behalf of the BBYN Liquidators and BBYL Liquidators that the third course above is the preferable course in this case for the following reasons.
First, the BBYL Liquidators and BBYN Liquidators have been in office for almost six years. The investigations undertaken in relation to the BBYN Account have been extensive and there is consistent information from different sources about the basis on which BBYN held the Linc Energy shares in the BBYN Account and the value of that holding as at 15 May 2015. It is unlikely that any new evidence concerning the Linc Energy shares or their value would be discovered by any special purpose liquidator or replacement liquidator.
Second, the BBYN Liquidators' investigations have been undertaken with the benefit of the extensive knowledge that they have developed in relation to the nature of the businesses and activities of BBYL and BBYN, the nature of the records kept by those companies and the manner in which BBYL and BBYN interacted with intermediary brokers and custodians in relation to foreign listed securities. It would be a costly and time-consuming exercise for a replacement liquidator or newly appointed special purpose liquidator to undertake their own independent investigations at this stage. This additional delay to an already long and complex winding up and the additional cost (which would be likely to be significant) would impose a further burden on BBYL and BBYN clients that is, in all the circumstances, unwarranted.
Third, none of the representative defendants advocated for the appointment of new liquidators to either BBYL or BBYN or for the appointment of a special purpose liquidator to adjudicate the BBYN Claim in the BBYL Distribution Process. None of the representative defendants opposed the directions sought by the BBYL Liquidators and BBYN Liquidators in relation to the BBYN Claim.
For those reasons, there will be orders to the effect that the BBYN Liquidators are justified in submitting the BBYN Claim for $3,671,058.77 in the BBYL Distribution Process and in not seeking an in specie distribution, and that the BBYL Liquidators and BBYL are justified in admitting and paying the BBYN Claim in that amount in accordance with the BBYL Distribution Process

[8]

BBYN Distribution Process

I now turn to consider the issues raised by the fourth, fifth, eighth and ninth aspects of the Application referred to at [17] above, namely the proposed BBYN Distribution Process and whether the BBYN Liquidators are justified in adopting that process without permitting in specie claims.
The proposed BBYN Distribution Process is set out in Annexure A to these reasons. It gives effect to the same principles underlying the 5 December 2016 orders in relation to BBYL's IB platform assets, save that in specie claims and distributions are not contemplated for the reasons already explained.
The object of the 5 December 2016 orders, operating together with the BBYL Distribution Process established by the 26 November 2018 orders applies, is to facilitate the distribution of the IB platform assets and funds to BBYL clients on whose behalf those assets and funds were held, rateably in accordance with their entitlement to the relevant assets and funds as at BBYL's last trading day on 15 May 2015.
The object of the BBYN Distribution Process is to ensure that the proceeds of the BBYN Claim (representing the value of the BBYN Account as at 15 May 2015) are distributed to those BBYL clients entitled to the Linc Energy shares rateably in accordance with their entitlement to those shares as at 15 May 2015. This is reflected in the formula set out in Step 3 of the BBYN Distribution Process.
The BBYN Distribution Process sets out the manner in which further work will be undertaken to identify the Underlying Shareholders and their respective beneficial entitlements to the Linc Energy shares.
Once that further work has been completed and after all notices required by the BBYN Distribution Process have been given, the proceeds of the BBYN Claim will then be distributed to the Underlying Shareholders via BBYN in the same manner as the proceeds of all other IB platform assets [22] are to be distributed to BBYL's other clients through the BBYL Distribution Process.
Consistently with the BBYL Distribution Process, Underlying Shareholders will have no entitlement to participate in the BBYN Distribution Process in respect of claims of less than $100. As Brereton J said in In the matter of BBY Ltd (recs and mgrs. apptd) (in liq) (No. 2), [23] this gives pragmatic effect to the reality that the costs of administering a claim for less than that threshold amount are disproportionate to the benefit to the claimant.
The communication processes with Underlying Shareholders are tailored to accommodate the reality that the BBYN Liquidators may have only an email address or a postal address for Underlying Shareholders and may have no current contact details for some Underlying Shareholders. Communication is to be direct to the extent that either email or postal contact details are available (with email communications to be preferred) and public notices will be issued to reach those Underlying Shareholders for whom no contact details are available.
In my opinion, the underlying principles and the details of the BBYN Distribution Process are appropriate having regard to the nature and means of information available to the BBYN Liquidators following their extensive investigations, and taking into account the need for the claims of BBYL clients to be addressed equitably according to the same general principles irrespective of whether they are claiming directly in the BBYL Distribution Process or through BBYN as bare trustee in the BBYN Distribution Process.
For those reasons, there will be orders to the effect that the BBYN Liquidators are justified in adopting the BBYN Distribution Process without permitting in specie claims in respect of the Linc Energy shares and excluding Underlying Shareholders with claims to the value of $100 or less. There will also be an order to the effect that the BBYN Liquidators are justified in communicating with Underlying Shareholders in the manner that I have described above.

[9]

BBYN Liquidators' remuneration

Finally, I turn to consider the application for approval of the BBYN Liquidators' past remuneration ($45,721.50) and future remuneration and costs (capped at $297,236), being the sixth and seventh aspects of the Application referred to at [17] above.
It is well established that the Court has an inherent equitable jurisdiction to allow a trustee remuneration, costs and expenses out of trust assets, and that this extends to a liquidator who is, for practical purposes, controlling a trustee: see In the matter of MF Global Limited (in liq) (No. 2); [24] In the matter of North Food Catering Pty Ltd. [25]
That jurisdiction is engaged in this case because BBYN acted solely as bare trustee and nominee and did not trade for its own benefit. Mr Vaughan has deposed, and I accept, that his investigations have not revealed any significant assets of BBYN other than its claim in respect of the Linc Energy shares in the BBYN Account, which it holds on trust. [26] The approval sought by the BBYN Liquidators in relation to their past remuneration relates to their work in investigating the beneficial entitlement to those shares. The approval sought in respect of future remuneration and costs is limited to remuneration and costs incurred in connection with the BBYN Distribution Process, capped as I have explained above. All of that past and future work was and will be directed to the recovery of a distribution in the winding up of BBYL in respect of the Linc Energy shares for the benefit of those BBYL clients ultimately entitled to them as beneficiaries under the bare trust pursuant to which BBYN held those shares. The applications for approval of that past and future remuneration are therefore in the nature of an approval of a trustee's remuneration out of trust assets that form no part of BBYN's insolvent estate. It follows that the provisions of the Corporations Act concerning liquidators' remuneration do not directly apply to the determination of the applications. [27]
The applicable principles were recently summarised by Gleeson J (sitting at first instance) in the context of an application by the BBYL Liquidators for approval of their past and future remuneration and expenses for the BBYL Distribution Process. [28] I respectfully adopt his Honour's comprehensive summary, which it is convenient to set out in full here: "52 The Court's approach when exercising its inherent equitable jurisdiction to allow remuneration out of trust assets in connection with the administration of a trust fund is described in In the matter of Houben Marine Pty Ltd (in liq) [2018] NSWSC 745 at [20]-[21], where I said: 20 In allowing remuneration to the liquidator, the Court treats the work done in administering the trust as an incident of the liquidation, and approaches the application for remuneration as analogous to one by an official liquidator for approval of remuneration: Alphena Pty Ltd (in liq) v PS Securities Pty Ltd (ACN 141 021 445) (as trustee of the Joseph Family Trust) [2013] NSWSC 447; (2013) 94 ACSR 160 at [53], [63]-[64]. Accordingly, regard may be had, by analogy, to the factors listed in the now repealed s 473(10) of the Corporations Act (which continues to apply to the administration of Houben by reason of the transitional provisions in the Corporations Act, s 1581(1)). 21 The essential question which arises on the present application, as arises under the applicable provisions of the Corporations Act with respect to court appointed liquidators, is whether the remuneration of which approval is sought is 'reasonable': Sanderson, as liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38 (Sakr). 53 The essential task of the Court, constituted by a judge, when asked to approve remuneration of a liquidator is encapsulated in the statement by Barrett J in Re Anderson Group Pty Ltd [2002] NSWSC 764 ; (2002) 20 ACLC 1607 at [12]: In the ordinary course, the process of determination comes down essentially to ensuring that the work upon which the claim was based was work undertaken in the due course of administration and that the amount claimed for having done that work is a fair and reasonable reward for it. 54 That proposition was repeated by the Court of Appeal in Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr (2017) 93 NSWLR 459; [2017] NSWCA 38 (Sakr) at [69]-[72], where Bathurst CJ (the other members of the Court agreeing) said that the essential task of the Court is to allow reasonable remuneration. 55 As explained in Re Houben Marine at [23]-[25], several of the propositions in Sakr have relevance, by analogy, to an application such as the present for approval of a liquidator's remuneration out of the assets of a trust of which the company in liquidation is a trustee. 56 First, the onus is on the liquidator to establish that the remuneration claimed is reasonable. It is the function of the Court to determine the remuneration by considering the material provided and by bringing an independent mind to the relevant issues: Sakr at [54]. 57 Second, the question of proportionality - in terms of work done as compared with the size of the property the subject of the administration or the benefit to be obtained from the work - is an important consideration in determining reasonableness: Templeton v Australian Securities and Investments Commission [2015] FCAFC 137 at [32]; (2015) 108 ACSR 545. The work done must be proportionate to the difficulty and importance of the task in the context in which it needs to be performed: Templeton citing McLure JA in Conlan (as liquidator of Rowena Nominees Pty Ltd) v Adams [2008] WASCA 61; (2008) 65 ACSR 521 at [47]. This is what is encompassed in assessing the value of the services rendered: Sakr at [55]. 58 Third, the mere fact that the work performed does not lead to augmentation of the funds available for distribution does not mean that the liquidator is not entitled to be remunerated for it. Provided it was reasonable to carry out the work and the amount charged is reasonable, there is no reason a liquidator should not recover remuneration for undertaking such work: Sakr at [57]-[58]. 59 Counsel for the liquidators submitted that the present applications are analogous to one by a liquidator for approval of remuneration and that the Court may have regard to the factors listed in the statute for approval of the liquidators' remuneration. So much can be accepted insofar as the factors in s 60-12 of the Insolvency Practice Schedule, being Schedule 2 to the Corporations Act, may be taken as an indication of the types of considerations that inform the question of reasonableness in the present case…"
The BBYN Liquidators rely on Mr Vaughan's affidavit affirmed on 8 April 2021 in relation to both the past remuneration and the future remuneration for which approval is sought.

[10]

Past remuneration and costs

I have referred earlier in these reasons to the substance of Mr Vaughan's evidence concerning the nature and extent of the work undertaken by the BBYN Liquidators in investigating the basis on which BBYN held the Linc Energy shares in the BBYN Account and, once it was established that BBYN held those shares as bare trustee, the identity of the BBYL clients for whom BBYN held those shares on trust and the amount of shares held for each such client. As Mr Vaughan deposes in paragraphs 27 to 32 of his 8 April 2021 affidavit, that work had not been completed before Linc Energy went into administration and was subsequently wound up in circumstances that rendered its shares worthless. Consequently, the BBYN Liquidators' work did not achieve the outcome initially intended of facilitating the termination of the custodial and trust arrangements in relation to the Linc Energy shares and facilitating transfers of those shares from the BBYN Account to the Underlying Shareholders beneficially entitled to them. Mr Vaughan deposes, and I accept, that the investigative work was nevertheless a necessary step that would have been required to be undertaken to achieve the revised objective of facilitating a distribution to those Underlying Shareholders reflecting the value of the Linc Energy shares as at 15 May 2015. The work will be beneficial to the BBYN Distribution Process, including the assessment of Underlying Shareholders' claims.
An itemised description of this investigative work, the time taken for each task and the fees charged in respect of each task is included in the documents exhibited to Mr Vaughan's affidavit. [29]
I am satisfied for the reasons explained below that the amount in respect of which approval is sought for past remuneration is a fair and reasonable amount for work that it was necessary to undertake in the course of the administration and liquidation of BBYN having regard to the inadequate records maintained by BBYL and BBYN in relation to the BBYN Account.
Consistently with Mr Vaughan's evidence to which I have referred earlier in these reasons, the work was undertaken during the period from 2 July 2015 (shortly after the appointment of Messrs Vaughan and Hall as administrators of BBYN) and continued after their appointment as BBYN Liquidators until Linc Energy entered into administration on 15 April 2016. I accept that the work was required as a result of the inadequate records and in circumstances where Linc Energy had informed the BBYN Liquidators in strong terms that it understood that the relevant shares were held for the benefit of BBYL clients but this was not reflected in Linc Energy's share register due to the custodial structure I have described above.
The work was undertaken by Mr Vaughan (at a rate of $650 per hour) and five other persons of different seniority levels within his firm: an Associate Director (at the rate of $550 per hour), a Manager (at the rate of $50 per hour), two Executives (at the rate of $350 per hour), and an Analyst (at the rate of $200 per hour). Mr Vaughan has deposed, and I accept, that the hourly rates charged were consistent with the prevailing market rates in the insolvency industry at the time this work was done. [30] The majority of the work was done at the Manager and Executive level, with some work being done at a more senior level by Mr Vaughan and his Associate Director and some work being done by the junior Analyst. This pattern seems to me to be consistent with Mr Vaughan's evidence that he and Mr Hall have controlled costs by delegating work wherever possible to less senior members of their firm with lower charge out rates, but with appropriate levels of supervision. I accept that evidence. [31] My impression after reviewing the itemised description of work in a broad way is that the work described in the time entries appears to be appropriate to the level of seniority of the person doing the work, and the time recorded for the work does not appear to be disproportionate to the nature of the work described.
For those reasons, and for the further reasons at [73]-[75] below, I am satisfied that the amount of $45,721.50 (plus GST) for work undertaken by the BBYN Liquidators in the period up to 15 April 2016 is fair and reasonable remuneration for work that was necessary in the course of the administration and liquidation of BBYN and that appears to have been done in a reasonable and cost-effective manner.

[11]

Future remuneration and costs

Mr Vaughan has deposed that the BBYN Liquidators estimate that their total costs of undertaking the work required for the BBYN Distribution Process will be between $172,169 and $297,236 (plus GST), broken down between the three stages of that work as follows: [32] 1. for Step 1 in the BBYN Distribution Process (issuing notices to Underlying Shareholders to submit proofs of claim), estimated costs of $67,203 (plus GST) assuming that notices will be issued to the 373 potential Underlying Shareholders identified by the investigative work to date and that the BBYN Liquidators will receive approximately 100 communications from those persons or entities as an immediate response to the notices; 2. for Step 2 (adjudicating proofs of claim), the estimated costs are a range of $60,706 to $141,647 (plus GST), with the lower end of the range being based on proofs of claim being submitted by 30% of potential Underlying Shareholders to whom notices are issued and the upper end of the range based on 70% of those persons submitting proofs of claim. The estimates assume that each adjudication will require approximately 2.1 hours of work by the BBYN Liquidators or their staff; and 3. for Step 3 (distributing the proceeds of the BBYN Claim), the estimated costs are a range of $44,260 to $88,386 (plus GST), depending on the number of Underlying Shareholders to whom distributions are required to be made and assuming that each distribution will require approximately 2.5 hours of work by the BBYN Liquidators or their staff (including the preparation of the notice and an accompanying letter, the preparation of the distribution in MYOB and participating in any telephone inquiries made by Underlying Shareholders).
The estimates exclude GST, which will be charged by the BBYN Liquidators' firm and claimed back in the liquidation as an input tax credit.
The estimates also exclude any disbursements that the BBYN Liquidators may incur (such as fees payable for the publication of notices in national newspapers) and any legal expenses that may be incurred in the event that their adjudication of proofs of claim is challenged in legal proceedings. [33]
I accept Mr Vaughan's evidence that these estimates are fair and reasonable for the following reasons. [34]
The estimates and the assumptions underlying them are informed by the BBYN Liquidators' experience of the similar BBYL Distribution Process. [35] I accept Mr Vaughan's evidence that it is difficult to predict how many proofs of claim will be submitted, and this uncertainty has been catered for by presenting the estimates for Steps 2 and 3 as a range.
The estimates are calculated on the basis of the BBYN Liquidators' charging for the work on a time costed basis applying the same hourly rates that applied to the work undertaken more than five years ago. Given that these rates have not increased in the past five years, I accept Mr Vaughan's evidence that he considers that the rates are reasonable having regard to prevailing rates in the insolvency industry. [36]
I also accept Mr Vaughan's evidence that work will be delegated to more junior members of his staff with lower hourly rates where appropriate and possible, as occurred with the work in 2015 and 2016. [37] The estimates for the three steps in the BBYN Distribution process have been calculated on this basis. The majority of the work for Step 1 is intended to be undertaken by an Analyst (the most junior staff level), with supervision from an Associate Director and limited involvement by Mr Vaughan himself. [38] A similar approach has been taken for Step 2 [39] and Step 3. [40]
The estimate of 2.1 hours' work for the BBYN Liquidators and their staff to adjudicate each proof of claim appears to me to represent an efficient approach to each adjudication. The estimate of 2.5 hours' work for the distributions at first seems a little high compared to the estimate for adjudicating claims, but it is reasonable in my opinion to include in the estimate for distributions the potential need to field telephone inquiries from Underlying Shareholders during this stage of the BBYN Distribution Process.
In any event, the BBYN Liquidators are content with an order approving their future remuneration up to a maximum of the upper end of the range ($297,236 plus GST). If their costs of the BBYN Distribution Process are in fact lower than this upper estimate, they will charge only the lower amount of costs actually incurred at the specified hourly rates.
For those reasons, and for the further reasons at [73]-[75] below, I am satisfied that an amount of up to $297,236 (plus GST) for work to be undertaken for the BBYN Distribution Process is fair and reasonable remuneration for work that is necessary and is planned that to be undertaken in a reasonable and cost-effective manner and reasonable hourly rates. I am also satisfied that it is appropriate to approve the BBYN Liquidators' future remuneration up to that maximum amount to avoid the need for a further application to the Court once the BBYN Distribution Process is otherwise completed. As the BBYN Liquidators' submitted, this will enable them to make a final distribution to the Underlying Shareholders whose claims are adjudicated in their favour in a more timely way than would otherwise be the case.

[12]

Proportionality of total costs and appropriateness of time-based charging

The total past and future remuneration is $342,957.50 (plus GST), applying the upper end of the estimated future remuneration. This represents a modest proportion (approximately 9.3%) of the amount of the BBYN Claim ($3,671,058.77). However, Mr Vaughan has deposed that the BBYL Liquidators estimate that approximately 44 cents in the dollar will be returned to BBYL clients in respect of IB platform assets. This is due to the ability of BBYL clients to make in specie claims in respect of other IB platform assets, leaving all other BBYL clients who traded through the IB platform to share in the distribution of the remaining IB platform assets only. [41] Assuming that 44 cents in the dollar is paid in respect of the BBYN Claim ($1,615,265.86), the past and future remuneration of up to $342,957.50 represents approximately 21.2% of the value of the BBYN Claim (before deducting the BBYN Liquidators' remuneration) or approximately 27% of the net value of the BBYN Claim ($1,272,308.36 after deducting the remuneration).
At 27%, the estimated remuneration represents a reasonably high proportion of the value of the asset expected to be recovered by the work done and proposed to be done. However, it is necessary to bear in mind that the proportionality is assessed on the basis of the upper end of the range of estimated future remuneration. The actual costs of the BBYN Distribution Process may be less than estimated. Even assuming that the maximum estimated costs are in fact incurred, I consider that the total remuneration is nevertheless proportionate to the difficulty of the work done to date (and the work remaining to be done), which has been and is likely to continue to be complicated by the multi-layered custodial arrangements, the lack of proper records within BBYN and BBYL and the potential gaps in records held by Underlying Shareholders given the time that has elapsed since the Linc Energy shares were acquired on behalf of the Underlying Shareholders (due to the complexity of the BBYL liquidation). I consider that the amount of remuneration is also commensurate with the importance of undertaking the work so as to ensure that BBYN is able to make the BBYN Claim in the winding up of BBYL for the benefit of the Underlying Shareholders, and that those the Underlying Shareholders are treated equitably in the winding up of BBYN and are not disadvantaged compared to other BBYL clients merely because the asset in which they invested was held on bare trust by BBYN.
In my opinion, it is appropriate that the BBYN Liquidators' remuneration for this work be determined on a time-charging basis. I do not consider that alternative methods (such as a percentage of the value of the BBYN Claim) would fairly compensate the BBYN Liquidators for the time that they have had to spend (and the further time they will need to spend in the future) in solving problems created by the lack of records maintained by BBYN and BBYL.

[13]

CONCLUSION AND ORDERS

For all of the reasons above, I make the following orders, notation and directions: 1. Order that the BBYN Liquidators are justified in submitting the BBYN Claim and the BBYL Liquidators are justified in admitting the BBYN Claim and paying that claim in accordance with the BBYL Distribution Process. 2. Order that the BBYN Liquidators are justified in not seeking a distribution in specie of any asset of BBYL as part of the BBYL Distribution Process. 3. Order that BBYN and the BBYN Liquidators are justified in adopting the BBYN Distribution Process in order to verify and adjudicate claims of Underlying Shareholders to the proceeds of the BBYN Claim and to make any distributions, including with respect to any Unclaimed Money. 4. Order that BBYN and the BBYN Liquidators are justified in adopting the BBYN Distribution Process without permitting claims to any assets in specie. 5. Order that BBYN and the BBYN Liquidators are justified in treating any Underlying Shareholder with a claim to the proceeds of the BBYN Claim of $100 or less as having no entitlement to participate in the BBYN Distribution Process in respect of that claim. 6. Order that BBYN and the BBYN Liquidators are justified in publishing or sending any notices, correspondence or other material to the Underlying Shareholders as part of the BBYN Distribution Process by: 1. sending copies of any notices, correspondence or other relevant materials to the email address of each Underlying Shareholder for whom the BBYL Liquidators, BBYL, the BBYN Liquidators or BBYN hold an email address; 2. sending copies of any notices, correspondence or other relevant materials to the postal address of any Underlying Shareholder for whom the BBYL Liquidators, BBYL, the BBYN Liquidators or BBYN hold a postal address, not being a person referred to in order 6(a) above; 3. notice or link on the website maintained by KPMG relating to the external administrations of BBYL and BBYN: 1. at URL www.kpmg.com/au/bby requesting Underlying Shareholders who have not received an email or postal notification described in Orders 6(a) and (b) above to contact the BBYN Liquidators for further details, or to prepare and submit a Proof of Claim for the purposes of the BBYN Distribution Process; 2. at URL www.kpmg.com/au/bby providing notice of intended distribution for the purposes of section 60 of the Trustee Act 1925 (NSW); 1. publishing notice of the intended BBYN Distribution Process 1. at URL www.kpmg.com/au/bby; 2. in an Australian national newspaper; 3. in an Singaporean national newspaper or similar publication; and/or 4. in an ASIC Gazette; and 1. publishing notice of intended distribution for the purposes of section 60 of the Trustee Act 1925 (NSW) in a national Australian newspaper. 1. Order that the following amounts be paid to the BBYN Liquidators out of the proceeds of the BBYN Claim on an indemnity basis and in priority to any claims admissible in the BBYN Distribution Process: 1. the fees incurred by the BBYN Liquidators (including in their former capacity as administrators of BBYN) in the period up to 15 April 2016 in the amount of $45,721.50 (plus GST); and 2. the remuneration, costs, expenses and disbursements reasonably incurred by the BBYN Liquidators (or by BBYN, to the extent that they are distinguishable from those incurred by the BBYN Liquidators) in connection with the BBYN Distribution Process, up to a maximum amount of $297,236 (plus GST). 1. Order that the BBYN Liquidators and BBYN need not obtain the approval of the Court prior to paying to themselves the amounts referred to in Order 7 above out of the proceeds of the BBYN Claim. 2. Note that, in these Orders: 1. BBYL Distribution Process has the same meaning as in the orders made in these proceedings on 26 November 2018; 2. BBYN Claim means a claim on behalf of BBYN in the amount of $3,671,058.77 to be submitted to the BBYL Liquidators in accordance with the BBYL Distribution Process; 3. BBYN Distribution Process means the process described in Annexure A to the reasons for judgment published on 25 November 2021: In the matter of BBY Limited (Receivers & Managers Appointed) (In Liquidation) [2021] NSWSC 1514; 4. BBYL Liquidators means the first plaintiffs, Mr Steven Vaughan and Mr Ian Hall, in their capacity as joint and several administrators of BBY Limited (in liq) ACN 006 707 777 (BBYL); 5. BBYN Liquidators means the first plaintiffs, Mr Steven Vaughan and Mr Ian Hall, in their capacity as joint and several administrators of BBY Limited (BBYL) and BBY Nominees Pty Limited (in liq) ACN 007 001 443. 6. Unclaimed Money has the meaning defined in Step 3 of the BBYN Distribution Process. 7. Underlying Shareholder means each person or entity identified by the investigations of the BBYN Liquidators as potentially entitled to any of the 14,973,816 shares in Linc Energy Limited that were held in the BBYN Account (being the sub-account established by Interactive Brokers LLC in the name of BBYN bearing account number U1280575) as at 15 May 2015. 1. Direct that Exhibit SV-31 to the affidavit of Mr Stephen Vaughan affirmed on 8 April 2021 be returned to the solicitors for the first plaintiffs.

[14]

Endnotes

In the matter of BBY Limited (Receivers and Managers appointed) (in liquidation) (No. 2) (2018) 363 ALR 492; [2018] NSWSC 346.
In the matter of BBY Limited (Receivers and Managers appointed) (in liquidation) (No. 3) [2018] NSWSC 1718.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraphs 17-19 and Exhibit SV-1, p 1580; Mr Vaughan's affidavit affirmed on 26 April 2021, paragraph 10 and Annexure B.
Prayer 2 of the interlocutory process was not pressed: T51.25-T52.5.
T5.31-6.10.
Mr Vaughan's 8 April 2021 affidavit, paragraphs 23-24.
Mr Vaughan's 8 April 2021 affidavit, paragraph 25.
Mr Vaughan's 8 April 2021 affidavit, paragraph 26; Mr Vaughan's affidavit affirmed on 26 April 2021, paragraph 10 and Annexure B; T31.35-32.17.
Schedule 1, clause 2.1 at p 650 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Schedule 1, clause 2.5 at p 650 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Schedule 1, clause 2.6 at p 650 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Clause 1(e) of the Risk Disclosure Statement in Schedule 1 p 651 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Schedule 6, clauses 1.2, 1.3, 3.1 and 3.2 at p 665 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Schedule 6, clause 2.2(a) at p 665 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Schedule 6, clauses 4.1 and 4.2 at p 665 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Exhibit 1, tab 3; T21.23-21.40.
See [6] above and T23.46-24.20. The purpose of the master accounts was recorded in an "Interactive Brokers Consolidated Account Clearing Agreement" between IB and Tricom Equities Limited (an entity that was subsequently acquired by BBYL): pp 670-698 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Pages 758-768 of Exhibit SV-30 to Mr Vaughan's affidavit affirmed on 8 April 2021.
Tanning Research Laboratories Inc v O'Brien (1990) 169 CLR 332 at 338-339 (Brennan and Dawson JJ).
See In the matter of Bestjet Travel Pty Ltd (in liq) [2020] FCA 1881 at [4] and the authorities there referred to.
Such an order is within the broad power conferred by s 90-15 of the Insolvency Practice Schedule: Glenfyne International Holding Ltd v Glenfyne Farms International AU Pty Ltd (2019) 101 NSWLR 358; [2019] NSWCA 304 at [58]-[61]. For an example of a case in which such a direction has been made, see Warner (liquidator); In the matter Sakr Bros Pty Ltd (in liq) [2019] FCA 547.
Excluding other 1B platfor assets that are the subject if in specie claims.
(2018) 363 ALR 492; [2018] NSWSC 346 at [393]-[397].
[2012] NSWSC 1426 at [55].
[2014] NSWSC 77 at [9]. Brereton J's statement of the principles in that case has been cited with approval and applied in many subsequent cases, including In the matter of Houben Marine Pty Ltd (in liq) [2018] NSWSC 745 at [14]-[20], In the matter of JML Property Services Pty ltd (in liq) [2018] NSWSC 1069 at [11], In the matter of BBY (receivers and managers appointed) (in liq) (No 3) [2018] NSWSC 1718 at [93]-[94], In the matter of Abderdeen All Farm Pty Ltd (in liq) [2020] NSWSC 770 at [11]-[20]; and In the matter of BBY Ltd (receivers and mgrs. apptd) (in liq) [2021] NSWSC 1299 at [9].
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraph 58.
In the matter of BBY Ltd (receivers and mgrs. apptd) (in liq) [2021] NSWSC 1299 at [17].
In the matter of BBY Ltd (receivers and mgrs. apptd) (in liq) [2021] NSWSC 1299 at [52]-[59].
Exhibit SV-31, pp 530-538.
Paragraph 44(a) of Mr Vaughan's affidavit affirmed on 8 April 2021.
Paragraph 44(b) of Mr Vaughan's affidavit affirmed on 8 April 2021.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraphs 42-43, 46-55.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraphs 48 and 56.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraph 57.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraphs 42-43.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraph 44(a).
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraph 44(b).
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraphs 46-47 and Exhibit SV-30, p 1573.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraph 49 and Exhibit SV-30, p 1574.
Mr Vaughan's affidavit affirmed on 8 April 2021, paragraph 53 and Exhibit SV-30, p 1575.
Mr Vaughan's affidavit affirmed on 26 April 2021, paragraphs 8-9. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 November 2021

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