Re Octaviar Ltd [2020] QSC 353 (26 November 2020)

CORPORATIONS - WINDING UP - CONDUCTS AND INCIDENTS OF WINDING UP - APPLICATIONS TO COURT FOR DIRECTIONS OR ADVICE - where the liquidators in two related liquidations applied for judicial advice that they are justified in entering into, and causing the companies in liquidation to enter into, a settlement deed - where the companies in liquidation are members of a corporate group and are engaged in a miscellany of litigation concerning, inter alia, their inter-company debt position, the interest of the Commissioner of Taxation in the liquidations pursuant to a garnishee notice issued by the Commissioner, and certain disputed proofs of debts - where the settlement deed, if unconditional, would resolve the first two of those issues - where the committees of inspection of each company in liquidation, representing the majority of admitted unsecured creditors, unanimously support the settlement deed - whether the applicants should be advised that they are justified in entering into the settlement deed

Insolvency Practice Schedule (Corporations), s 90-15

Commissioner of State Revenue v Can Barz Pty Ltd (No 2) [2017] 2 Qd R 537; [2016] QCA 323, cited

McGrath Re HIH Insurance Ltd [2005] NSWSC 731, cited

Re Great Southern Managers Australia Ltd (in liq); Ex parte Jones (2014) 9 BFRA 555; [2014] WASC 312, considered

Re Houben Marine Pty Ltd (in liq) [2018] NSWSC 745, cited

Re Independent Contractor Services (Aust) Pty Ltd (in liq) (No 2) [2016] NSWSC 106; (2016) 305 FLR 222, cited

Re Kimberley Diamonds Ltd (in liq) [2018] NSWSC 1106, cited

Re Lewis (2020) 145 ACSR 459; [2020] FCA 841, considered

Re McDermott and Potts (in their capacities as joint and several liquidators of Lonnex Pty Ltd (in liq)) (ACN 097 786 751) [2019] VSCA 23, applied

Re Octaviar Administration Pty Ltd (in liq) (2015) 107 ACSR 1; [2015] NSWSC 516, cited

Re Octaviar Limited (in liq) [2019] QSC 235, cited

Re Octaviar Ltd (in liq) [2016] NSWSC 16, cited

Re One.Tel Ltd (2014) 99 ACSR 247; [2014] NSWSC 457, considered

J D McKenna QC, with C A Wilkins, for the applicants in BS 10123 of 2020

D G Clothier QC, with M J May, for the applicants in BS 10133 of 2020

Thomson Geer for the applicants in BS 10123 of 2020

Johnson Winter & Slattery for the applicants in BS 10133 of 2020

• [1] Octaviar Limited (Octaviar) was the holding company of the Octaviar group of companies. The group comprised around 50 companies and undertook activities in a broad range of areas including property funds, corporate finance, childcare centres, aged care facilities, ski and holiday resorts and tourism.
• [2] Octaviar Administration Pty Ltd (Octaviar Admin) performed the treasury function for the group, recording payments made and received in inter-company loan accounts. Its primary assets and liabilities were inter-company loans due from and to other companies within the group.
• [3] On 4 June 2008, the Public Trustee of Queensland applied to wind up Octaviar in insolvency. The application was adjourned, allowing the directors of Octaviar to place it into voluntary administration on 13 September 2008. Ultimately, Octaviar was placed into liquidation on 9 September 2009. Octaviar Admin was placed into voluntary administration on 3 October 2008 and into liquidation on 31 July 2009.
• [4] On 9 September 2009, by order of the Supreme Court of Queensland, Mr Fletcher and Ms Barnet were appointed as liquidators of both companies. Mr Fletcher and Ms Barnet were also appointed as liquidators of 11 other companies within the group, which were placed into liquidation in the period between July and December 2009.
  • [5] The liquidations of Octaviar and Octaviar Admin have been lengthy and complex. Some issues have given rise to potential conflicts as between the interests of the two companies and their respective creditors. To deal with specific issues of this kind, on 8 December 2011, by order of the Supreme Court of New South Wales, Mr Kerr was appointed a special purpose liquidator of Octaviar. On 2 February 2016, again by order of that Court, the scope of Mr Kerr's appointment was expanded to give him broad powers to represent Octaviar's interests in relation to the inter-company debt position as between Octaviar and Octaviar Admin.
• [6] In light of Mr Kerr's appointment, it is convenient to refer to Mr Fletcher and Ms Barnet as the general purpose liquidators (the GPLs) and to Mr Kerr as the special purpose liquidator (the SPL).
• [7] The evidence before me suggests that the three most significant issues which remain to be resolved in the liquidations of Octaviar and Octaviar Admin are:

(a) the resolution of the inter-company debt position as between Octaviar and Octaviar Admin;

(b) the resolution of taxation matters, including of the issues which arise in a proceeding in the Supreme Court of Queensland (the ATO Proceeding) to which Octaviar, Octaviar Admin, the GPLs, the SPL and the Commonwealth Commissioner of Taxation are party and in respect of which Ryan J has reserved her judgment; and

(c) the determination of the appeals against the GPLs' rejection of the proofs of debt lodged in the winding up of Octaviar by Octaviar Investment Notes Pty Ltd (in liquidation) (OIN) and Octaviar Investment Bonds Pty Ltd (OIB) and any consequential steps depending upon the outcome of those appeals.

• [8] I will explain those issues in more detail later. It suffices presently to observe that the SPL is vitally interested in the first of those issues but is also interested in the second, because he is a party to that litigation and because it is relevant to any dividend which Octaviar Admin might pay to Octaviar in relation to the inter-company debt position.
• [9] Octaviar, Octaviar Admin, the GPLs, the SPL and the Commissioner have executed a conditional settlement deed dated 22 June 2020 (the settlement deed) which would, if it became unconditional, resolve the first two of those three issues. The settlement deed provides for two conditions precedent to its terms becoming operative. One - namely that Ryan J agree to delay delivery of her judgment in the ATO Proceeding - has already been satisfied. The other is that this Court make orders to the effect that the GPLs and the SPL are, respectively, justified in entering into the settlement deed.
• [10] With a view to satisfying that remaining condition precedent, the GPLs and the SPL have separately applied for orders that each is justified in entering into the settlement deed. Octaviar and Ocataviar Admin are also applicants in the GPLs' application and Octaviar is also an applicant in the SPL's application.
• [11] Notably, the settlement deed has the unanimous support of the committees of inspection which have been appointed in respect of each of Octaviar and Octaviar Admin pursuant to s 548 of the Corporations Act 2001 (Cth). The members of those committees represent about 65% of the admitted unsecured creditors of Octaviar and about 63% of the admitted unsecured creditors of Octaviar Admin. OIN and OIB are represented on both committees. The Public Trustee is an admitted unsecured creditor of both companies. It is an observer but not a member of the committee of inspection. Although from time to time the Public Trustee has been critical of the conduct of the liquidators, on the question of the settlement deed, and subject to provisos which have been satisfied, the Public Trustee has communicated its lack of opposition to the settlement deed. When regard is had to the Public Trustee's position, 98.27% of the admitted unsecured creditors of Octaviar and 96.43% of the admitted unsecured creditors of Octaviar Admin either positively agree with the settlement deed (in the case of the members of the committees of inspection) or do not oppose it (in the case of the Public Trustee).

• [13] Prior to the commencement of the Insolvency Law Reform Act 2016 (Cth), applications by liquidators for judicial advice were brought under s 479(3) or s 511 of the Corporations Act. Those provisions have now been repealed and replaced with s 90-15 of schedule 2 to the Corporations Act, called the Insolvency Practice Schedule (Corporations).
• [14] The effect of the transitional provision in s 1579(2) of the Corporations Act is that the Insolvency Practice Schedule provisions apply to the present applications, notwithstanding that the liquidations of Octaviar and Octaviar Admin commenced before the commencement of the new regime.
• [15] Section 90-15 of the Insolvency Practice Schedule relevantly provides:

90-15 Court may make orders in relation to external administration

(1) The Court may make such orders as it thinks fit in relation to the external administration of a company.

(2) The Court may exercise the power under subsection (1):

(a) on its own initiative, during proceedings before the Court; or

(b) on application under section 90-20.

(3) Without limiting subsection (1), those orders may include any one or more of the following:

(a) an order determining any question arising in the external administration of the company; ...

• [16] The GPLs and the SPL here apply under s 90-20(1)(d), which permits an "officer of the company" to apply for orders under s 90-15. Section 9 of the Corporations Act defines "officer" to include a liquidator.
• [17] Subject to one caveat, the legal principles applicable to the exercise of my discretion on the present applications are those recently summarised by White J in Re Lewis [2020] FCA 841; (2020) 145 ACSR 459 at [30] to [31]:

[30] The principles applied by the courts in the exercise of the power under cl 90-15 are, in effect, the same as those which were applied in the exercise of the power under the former s 479(3) (in the case [of] a court-ordered winding up) or under s 511 (in the case of a voluntary winding up) of the Act: Re McGrath ((in their capacity as liquidators and scheme administrators of HIH Casualty and General Insurance Ltd (in liq and subject to schemes of arrangement)) (2018) 133 ACSR 338; [2018] NSWSC 1886 at [4]-[5]; Re Warner (in his capacity as liquidator of Sakr Bros Pty Ltd (in liq)) [2019] FCA 547 at [18]. In Re Hawden Property Group Pty Ltd (in liq) (2018) 125 ACSR 355; [2018] NSWSC 481, Gleeson JA noted at [8], that the power under cl 90-15 to "make such orders as it thinks fit in relation to the external administration of a company" (cl 90-15(1)), including "an order determining any question arising in the external administration of the company" (cl 90-15(3)(a)), is wider than s 479(3) and accommodates the determination of substantive rights. His Honour noted that the Court would not make a determination of substantive rights without affording potentially affected parties an opportunity to be heard: ibid.

(a) the power to give directions is intended to facilitate the performance of the liquidator's functions and should be interpreted widely to give effect to that intention: Re Octaviar Administration Pty Ltd (in liq) [2017] NSWSC 1556 ... at [9];

(b) the power is available to give a liquidator advice as to the proper course of action to be taken in the liquidation: Re Bell [[2009] WASC 235] at [47]; Re MF Global Australia Ltd (in liq) [2012] NSWSC 994 at [7];

(c) the Court may give directions that provide guidance on matters of law and the reasonableness of a contemplated exercise of discretion but will usually not do so when the subject of the directions sought relates to the making and implementation of a business or commercial decision and when there is no particular legal issue raised and no attack on the [propriety] or reasonableness of the decision: Re MF Global [[2012] NSWSC 994] at [7];

(d) the Court does not interfere with or seek to second guess the liquidator's judgment unless there is evidence of a lack of good faith, an error of law or principle, or real and substantial grounds for doubting the prudence of the liquidator's conduct or when the Court considers that the liquidator's decision is not a proper and reasonable one: Re One.Tel [(2014) [2014] NSWSC 457; 99 ACSR 247] at [36]; Re Bell [[2009] WASC 235] at [31], [47] and [50]; Re Octaviar [[2017] NSWSC 1556] at [10];

(e) the effect of a direction is to sanction a course of conduct on the part of the liquidators so that, providing full disclosure has been made to the Court, the liquidator may adopt the course free from the risk of personal liability for breach of duty: Re Bell [[2009] WASC 235] at [47]; Re One.Tel [(2014) [2014] NSWSC 457; 99 ACSR 247] at [32]; and

(f) the directions do not bind third parties, and do not determine substantive matters in dispute between the liquidator and third parties: Re Bell [[2009] WASC 235] at [47].

• [18] My caveat concerns the correctness of the observation by White J in [31](d) of the quote that "the Court does not interfere ... unless ...". For reasons which follow, to my mind that observation does not sufficiently emphasise that there is a need for the Court to be positively persuaded of the propriety of the course for which the liquidator seeks the Court's sanction, before the Court will give the liquidator the protection of its sanction.
• [19] In Re McDermott and Potts (in their capacities as joint and several liquidators of Lonnex Pty Ltd (in liq)) (ACN 097 786 751) [2019] VSCA 23, the Victorian Court of Appeal considered an appeal from an associate judge's refusal to make orders under s 477(2B) and s 511 of the Corporations Act directing that liquidators were justified in compromising a proceeding. The Court considered the approach which should be taken by a court when the effect of giving the directions sought was to exonerate the liquidator from personal liability. In a joint judgment, Whelan AP, McLeish and Hargrave JJA suggested that the role of the Court in such a case was to require positive persuasion that the liquidator's decision was a proper one.
• [20] The Court referred with approval (at [85]) to the observations made by Brereton J in Re One.Tel at [35] that:

... the fact that a direction under s 511 - unlike an approval under s 477(2A) or s 477(2B) - exonerates the liquidator from personal liability, means that a closer examination of the liquidator's decision is required than under s 477. In short, the court should not make a direction the effect of which is to exonerate the liquidator from personal liability in respect of a commercial judgment that the liquidator is concerned may prove contentious, unless satisfied that the liquidator's decision is, in all the circumstances, a proper one.

and (at [86]) referred to the fact that, in the context of such an inquiry, Brereton J had considered in some detail the reasons given by the liquidators for the compromise emphasising, amongst other things, opinions which had been obtained from two members of senior counsel, and the fact that the committee of the creditors had unanimously approved the compromise.

• [21] The Court also referred with approval (at [90]) to observations made by Pritchard J in Re Great Southern Managers Australia Ltd (in liq); Ex parte Jones [2014] WASC 312; (2014) 9 BFRA 555 at [63] to [64]:

In the case of an application under s 511 of the Act, the Court's focus will be on whether the giving of the direction will be just and beneficial (that is, advantageous) in the winding up of the company. Determining whether the direction should be given will necessarily involve a broad consideration of matters including the nature of the proposed course of action about which the direction is sought, the circumstances relevant to that proposed course of action (especially those said to warrant the making of the direction), the reasons for and consequences of that proposed course of action (and in the case of a proposed compromise of litigation, the liquidator's commercial judgment that the proposed settlement should be pursued), and in those cases involving the determination of a legal issue relevant to that decision, the principles relevant to the determination of that issue. All of these matters will be considered for the purpose of determining whether the liquidator would be justified in taking the proposed course of action, within the overall context of the liquidation.

Ordinarily the liquidator will be expected to obtain legal advice appropriate to the nature and value of the claims the subject of a proposed compromise. However, the absence of such advice is not of itself a reason to refuse to grant a direction.

• [22] Ultimately, the Court summarised the relevant principles (at [92] to [93]) in these terms (emphasis added):

The principles to be drawn from this review are the following:

(1) The nature of the inquiry undertaken by the court when approval is sought under s 477(2B) in relation to a proposed compromise of litigation is different from the nature of the inquiry the court undertakes under s 511 when a liquidator seeks directions in relation to such a compromise.

(2) On a directions application the court must be positively persuaded that the liquidator's decision to enter into the compromise is, in all the circumstances, a proper one. This necessarily involves a broad consideration of all the relevant circumstances. A direction will exonerate the liquidator.

(3) In contrast, the discrete consideration of an application under s 477(2B) involves a more circumscribed inquiry. The court reviews the liquidator's proposal, satisfying itself that there is no error of law or ground for suspecting bad faith or impropriety, and weighing up whether there is any good reason to intervene. An order under s 477(2B) does not constitute an endorsement of the proposed compromise. An approval will not exonerate the liquidator.

(4) Given that the nature of the inquiry undertaken in relation to the directions application is broader than that under s 477(2B), it would usually be convenient to deal with the directions application first, and often that consideration would substantially overtake any discrete consideration of the application under s 477(2B).

(5) The court always pays due regard to the commercial judgment of the liquidator, and, on both applications, the attitudes of creditors are also important.

(6) On both applications, but particularly the application for directions, it would ordinarily be expected that a liquidator would have obtained appropriate legal advice in relation to the proposed compromise, and the nature and content of that advice is a relevant consideration.

It can be seen that the authorities present a tension in the circumstances of the applications the subject of the present case. The liquidator is ordinarily best placed to determine what course the liquidation should take, in the interests of creditors, any contributories and the proper recovery of the costs and expenses of the liquidation. The court will generally not enter into the merits of that determination, confining itself to the question whether the proposed course is a proper one for the liquidator to take. At the same time, the interests and wishes of creditors are highly influential and the creditors are, if properly informed, in the best position to evaluate what is in their own interests. As such, the views of the creditors as to the merits of the present proposal are a highly material consideration.

• [23] I will follow the approach taken in Re McDermott and Potts. The critical question before me is whether I am positively persuaded that the decisions by the GPLs and the SPL to enter into the settlement deed are, in all the circumstances, proper decisions for them to take.

The principal remaining issues in the liquidations of Octaviar and Octaviar Admin

• [24] I have identified at [7] above a broad description of the principal remaining issues in the liquidations of Octaviar and Octaviar Admin, the first two of which would be resolved if the settlement deed became operative. It is appropriate to explain each of them in a little more detail.

The issues arising in relation to the inter-company debt position as between Octaviar and Octaviar Admin

• [25] Octaviar lodged a proof of debt in the liquidation of Octaviar Admin in the sum of $514,685,948.12 (the Octaviar Proof), being the balance of the inter-company loan account as at 3 October 2008.
• [26] Whether that figure represents the true amount owed as between the two companies is controversial for a number of reasons.
• [27] First, the Octaviar Proof was based on a debt shown in a general ledger produced by the MYOB accounting system maintained for the group. However, following an extensive review of the inter-company ledger (and transactions not recorded in the ledger), the GPLs on behalf of Octaviar Admin formed the view that a more accurate statement of the position as between the two companies would show Octaviar owing Octaviar Admin more than $318,271,200 as at the commencement of the winding up.
• [28] Second, Octaviar Admin asserted the existence of approximately $830,096,484 in claims against Octaviar, which it sought to set off against the claim advanced in the Octaviar Proof. Determining how those claims affect the amount for which Octaviar can prove in the liquidation of Octaviar Admin requires a consideration of the rule in Cherry v Boultbee[1] that "where a person entitled to participate in a fund is also bound to make a contribution in aid of that fund, he cannot be allowed so to participate unless and until he has fulfilled his duty to contribute".[2]
• [29] The claims which Octaviar Admin sought to offset were these:

(a) A claim for more than $51 million said to be due by Octaviar to Octaviar Admin under a Service Agreement entered into between Octaviar and Octaviar Admin in January 2005. This claim was said to comprise 68 separate payments to 18 different service providers, with each service provider operating under its own arrangements.

(b) A claim for more than $37 million said to be due by Octaviar to Octaviar Admin, being payments said to have been made by Octaviar Admin on behalf of Octaviar, although not reflected in the inter-company loan account. This claim is said to comprise 88 separate payments to 13 different service providers, with each service provider again operating under separate arrangements.

(c) A claim for more than $137 million said to be due by Octaviar to Octaviar Admin based on an amount for which Octaviar Admin is said to be liable to a third party (Wellington Capital Limited) as a result of Octaviar Admin having participated in a breach of trust by its directors. Octaviar was said to have been knowingly involved in, or to have participated in, the breaches by Octaviar Admin's directors, such that Octaviar should compensate Octaviar Admin for the amount of its liability to the third party. This claim concerned allegations that were part of a successful prosecution by ASIC against certain directors of Octaviar and Octaviar Admin, which took place over 60 days before Douglas J[3] and had involved appeals to the Court of Appeal[4] and to the High Court.[5]

(d) A claim for more than $600 million said to be due by Octaviar to Octaviar Admin by reason of Octaviar allegedly having been knowingly involved in, or having knowingly participated in, certain other breaches by Octaviar Admin's directors in relation to the sale of the Stella Group of companies (as to which more later) and the release of loans owed to Octaviar Admin by that group of companies.

• [30] Third, during the course of the liquidations, the SPL became concerned that the Octaviar Proof might need to be increased depending on how the two companies should properly account for the effect on the inter-company debt position of the sale of the Stella Group of companies. That concern arose in the following way:

(a) The Octaviar group operated a hotel and tourism arm known as the Stella Group. Until it was restructured in mid-2007, that group was predominantly owned by two wholly-owned subsidiaries of Octaviar.

(b) Octaviar sold its shares in those subsidiaries to Stella Group Holdings Pty Ltd (SGH) under a share sale and purchase agreement (the SGH Share Sale Agreement). On the face of it, the result of the sale was that SGH owed a debt to Octaviar for the purchase price. However, loan agreements were executed in mid-2007, one of which provided that Octaviar Admin agreed to advance the purchase price to SGH. One possible analysis of the book entries was that Octaviar Admin ended up owing the purchase price to Octaviar. The $514 million Octaviar Proof, however, did not include any such debt. If the proper analysis is that the purchase price was owed by Octaviar Admin to Octaviar, the Octaviar Proof would have to be increased by the amount of the purchase price.

(c) But the uncertainty as to whether that should occur was compounded by uncertainty as to the quantum of the purchase price. The SGH Share Sale Agreement provided that the purchase price for those shares was to be determined later by the CFO of Octaviar. There were two competing possibilities as to the purchase price as later determined: approximately $305 million and approximately $825 million. Adding the purchase price liability to the Octaviar Proof would increase the Octaviar Proof to either approximately $819 million or approximately $1.3 billion.

• [31] Fourth, Octaviar Admin claimed to have acquired a secured debt owing by Octaviar, such that on its face any dividend owing by Octaviar Admin to Octaviar would be applied first to meet that secured debt. Octaviar Admin claimed $7,912,891 in respect of that debt, which may conveniently be referred to as the Fortress Costs Amount. To explain how that debt came to exist and to provide a necessary introduction to the discussion of the issues which arise in connection with the Commissioner's claims (which will be addressed further below under the heading "The issues arising in relation to taxation matters"), it is appropriate to segue into an explanation of the relationship between the two companies and Fortress Credit Corporation (Australia) II Pty Limited (Fortress).
• [32] Fortress was the only secured creditor of Octaviar. The following summarises the position as at the commencement of Octaviar's winding up:

(a) On 31 May 2007, Octaviar guaranteed (without providing any security) the obligations of Young Village Estates Pty Ltd (YVE) under a $53.5 million loan facility provided by Fortress to YVE (the YVE Guarantee). YVE also granted Fortress a fixed and floating charge over its assets and undertakings (the YVE Charge).

(b) On 1 June 2007, Octaviar guaranteed the obligations of Octaviar Castle Pty Ltd (then named MFS Investment Holdings No 17 Pty Ltd) (Castle) under a $250 million loan facility provided by Fortress to Castle (the Castle Guarantee). Octaviar Financial Services Pty Ltd (then known as MFS Financial Services Limited) (MFS) was also a party to the Castle Guarantee and guaranteed the obligations of Castle under the Castle loan facility agreement. The Castle Guarantee was secured by first-ranking fixed and floating charges given by each of Octaviar, Castle and OFS over their respective assets and undertakings. (The charge given by Octaviar pursuant to the terms of a deed entered into with Fortress on or about 1 June 2007 (the Fortress Charge) is the most significant for present purposes.)

(c) On or about 22 January 2008, Castle, YVE and Octaviar executed an acknowledgement that the YVE Guarantee was a "Transaction Document" for the purposes of the loan facility between Castle and Fortress, one result of which was that Octaviar's previously unsecured obligations under the YVE Guarantee also became secured by the Fortress Charge (the Fortress Charge Extension).

(d) On or about 18 February 2008, Fortress and Castle entered into a Funded Participation Agreement, whereby the Castle loan facility was increased to $200 million (after having been reduced to $150 million in December 2007) and made repayable on 31 March 2008.

(e) On 29 February 2008, Fortress, Octaviar and Octaviar Admin (among others) entered into a document known as the Stella Proceeds Deed, and the loans as at that date advanced by Fortress to Castle were repaid in full by way of a payment of almost $190 million, including a $15 million "Participation Fee". Those amounts were paid primarily from the cash proceeds derived from the sale of the Stella Group to a third party.

(f) On 4 June 2008, the same date that the Public Trustee filed its application to wind up Octaviar in insolvency, the amount owing by YVE to Fortress and which was secured by the Fortress Charge was $54,817,979.26.

(g) The filing of the winding up application was an "Insolvency Event" for the purposes of the Fortress Charge and had the effect of crystallising the charge over the assets of Octaviar (including any debts owing to Octaviar) on or after 4 June 2008 (or alternatively, on or after 11 June 2008, being seven days after the winding up application was filed).

• [33] Octaviar and Octaviar Admin separately pursued significant litigation against Fortress.
• [34] In Supreme Court of Queensland proceeding BS 3442 of 2010 (the Octaviar Proceeding), Octaviar:

(a) sought to set aside the Fortress Charge Extension on the basis that it was an unfair preference or uncommercial transaction as well as an insolvent transaction, such that it was voidable under s 588FE of the Corporations Act; and

(b) sought to recover approximately $35 million from Fortress, which had been paid by Octaviar to Fortress to reduce YVE's loan facility in respect of the Fortress Charge Extension, including certain monies paid to Fortress from the proceeds derived from the sale of the Stella Group.

• [35] In Supreme Court of Queensland proceeding BS 3135 of 2012 (the Octaviar Admin Proceeding), Octaviar Admin:

(a) alleged that Octaviar Admin was the only significant creditor of the Stella Group (by reason of inter-company loans) and, as such, the whole of the proceeds derived from the sale of the Stella Group should have been paid to Octaviar Admin (in discharge of those loans);

(b) alleged that certain transactions, including the payments to Fortress and the Stella Proceeds Deed, were uncommercial and insolvent transactions by Octaviar Admin so as to be voidable under s 588FE of the Corporations Act;

(c) as an alternative, alleged that certain directors of Octaviar Admin had breached their statutory and fiduciary duties by causing Octaviar Admin to enter into transactions including the payments to Fortress and the Stella Proceeds Deed, and that Fortress was liable as being knowingly concerned in those contraventions; and

(d) sought to recover the separate payments made to Fortress from the proceeds derived from the sale of the Stella Group, being the $189 million in discharge of the Castle loan facility and the $20 million in reduction of the YVE loan facility (in addition to also seeking relief against the directors of Octaviar Admin for breaches of statutory and fiduciary duties).

• [36] The overlap and conflict between the two proceedings led to the appointment of the SPL. The SPL took over the conduct of the Octaviar Proceeding, and the GPLs continued to conduct the Octaviar Admin Proceeding.
• [37] In April 2015, the SPL settled the Octaviar Proceeding on the basis that Fortress paid Octaviar the sum of $12.35 million, that Fortress agreed the Fortress Charge did not cover the YVE loan facility (effectively, that the Fortress Charge Extension was set aside), and that the parties would each bear their own costs. The SPL sought and obtained judicial advice that he was justified in doing so: see Re Octaviar Administration Pty Ltd (in liq) [2015] NSWSC 516; (2015) 107 ACSR 1.
• [38] On 25 May 2015, the GPLs settled the Octaviar Admin Proceeding on a confidential basis and as part of the settlement of those proceedings:

(a) Octaviar Admin paid Fortress a settlement amount;

(b) Fortress assigned to Octaviar Admin all securities Fortress still held over any assets of Octaviar, OFS and Castle, including the Fortress Charge and the charges given by OFS and Castle; and

(c) any debts owed to Fortress by Octaviar parties (namely, Octaviar, Octaviar Admin, Castle, YVE (or their liquidators) or OFS) were assigned to Octaviar Admin.

• [39] The $7,912,891 Fortress Costs Amount, referred to at [31] above, represents Fortress' legal costs of defending the Octaviar Admin Proceeding, reduced by the extent of the settlement amount which Octaviar Admin paid to Fortress as part of the settlement of that proceeding. Octaviar, Castle and OFS were liable to pay that sum to Fortress pursuant to the terms of the Castle loan facility agreement.

The issues arising in relation to taxation matters

• [40] There are three important matters - deriving from my observations thus far concerning the complicated history of the present liquidations - which must be brought back to mind. First, Octaviar alleged that the debt which Octaviar Admin owed to Octaviar was significant. The Octaviar Proof alleged it was in excess of $514 million. Second, by no later than 11 June 2008, the Fortress Charge had crystallised over the assets of Octaviar, which necessarily meant that it had crystallised over any debt owed to Octaviar by Octaviar Admin. Third, on or around 25 May 2015, the Fortress Charge was assigned to Octaviar Admin as part of the settlement of the Octaviar Admin Proceeding.
• [41] On 10 September 2008 - after the crystallisation of the Fortress Charge - the Commissioner of Taxation issued to Octaviar Admin a notice under s 260-5 of schedule 1 to the Taxation Administration Act 1953 (Cth) in respect of all debts owing by Octaviar Admin to Octaviar, in order to secure payment of tax owed by Octaviar in the sum of approximately $58 million. If effective, the Commissioner's notice would have required Octaviar Admin to pay to the Commissioner (rather than Octaviar) the first $58 million of any amount which it owed to Octaviar. The true legal nature of the rights created by this procedure is discussed in Commissioner of State Revenue v Can Barz Pty Ltd (No 2) [2016] QCA 23; [2017] 2 Qd R 537 at [68] et seqq, but for present purposes it suffices to say that, by giving what is in effect a garnishee notice, the Commissioner created a secured position in respect of the amount claimed. In his affidavit, Mr Fletcher, on behalf of the GPLs, described this as .

(a) a declaration that the Commissioner was a secured creditor of Octaviar in respect of any debt owed by Octaviar Admin, ranking ahead of unsecured creditors but subject to Octaviar Admin's prior ranking security under the Fortress Charge;

(b) a declaration that the effect of the Commissioner's Security was that, amongst other things, Octaviar Admin was prevented from paying Octaviar any debt that it owed to Octaviar, and that -

(i) Octaviar Admin must instead pay any such debt to the Commissioner (but subject to Octaviar Admin's rights under the Fortress Charge); and

(ii) the Commissioner must then pay to Octaviar any surplus remaining after satisfaction of Octaviar Admin's rights under the Fortress Charge and satisfaction in full of a further "tax related liability" owed to the Commissioner.

• [46] In the ATO Proceeding, the main points of contention between the parties were:

(a) whether, upon making the $1.00 redemption payment, by operation of s 554F(2) of the Corporations Act, any security interest arising by reason of the Commissioner's garnishee notice had been validly redeemed by the GPLs, and whether the decision to redeem should be set aside pursuant to s 90-15 of the Insolvency Practice Schedule;

(b) if the inter-company debt position was as the SPL contended, whether the Commissioner's garnishee notice was of any force or effect in respect of any dividend in the winding up of Octaviar Admin that may become owing to Octaviar, including whether the effect of the Commissioner's garnishee notice was to create a statutory charge which was a "security interest" as that term is defined in s 51A of the Corporations Act;

(c) whether the Commissioner's garnishee notice attached to the debt owed from Octaviar Admin to Octaviar as at the date of the notice and any debt that may have been owed by Octaviar Admin to Octaviar at any time from 10 September 2008 until the commencement of Octaviar's liquidation, and what was the effect of any such attachment;

(d) whether, on various dates and under various scenarios as to the crystallisation of the Fortress Charge, Octaviar Admin owed Octaviar any money within the meaning of ss 260‑5(2) and (3) of schedule 1 of the Taxation Administration Act, and what was the effect of the commencement of the liquidation upon the money owing;

(e) whether, at various junctures, subdivision 260-B or subdivision 260-A of schedule 1 of the Taxation Administration Act was the appropriate mechanism by which the Commissioner could recover outstanding tax-related liabilities (as defined) owing by Octaviar Admin;

(f) whether, on or after 31 July 2019 (the date provisional liquidators were appointed to Octaviar), the Commissioner could begin or proceed with enforcement processes in relation to property of Octaviar by reason of s 471B of the Corporations Act, and therefore whether the garnishee notice could operate in respect of any amount that became owing by Octaviar Admin to Octaviar after 31 July 2009;

(g) whether the effect of the liquidation of Octaviar Admin and the provisional liquidation and then liquidation of Octaviar was that the only mechanism by which the Commissioner could recover tax-related liabilities of Octaviar Admin and Octaviar was limited to that set out in subdivision 260‑B of schedule 1 of the Taxation Administration Act; and

(h) whether the Commissioner should be granted an extension of time pursuant to item 14.2 of schedule 1A of the UCPR to apply, pursuant to s 90‑20 of the Insolvency Practice Schedule, to appeal the decision of the GPLs to redeem the Commissioner's Security.

• [47] It remains to note that there was an earlier dispute between the Commissioner and the GPLs in their capacity as liquidators of Octaviar Admin. On or around 2 April 2012, the GPLs in their capacity as liquidators of Octaviar Admin commenced a proceeding in the Supreme Court of New South Wales seeking recovery of an amount of $3,942,487.14 against the Commissioner as an unfair preference under s 588FF of the Corporations Act. The proceeding settled in late April 2016 on terms such that the amount of the settlement would be taken into account in determining any amount payable to the Commissioner by Octaviar Admin in respect of the claim advanced by the Commissioner's garnishee notice.

• [48] For completeness, I should observe that there are other issues which remain outstanding in the liquidations of Octaviar and Octaviar Admin, and also of the 11 other Octaviar companies of which the GPLs have been appointed liquidators, which would not be resolved by the settlement deed, and which will affect the ultimate return to creditors of Octaviar and Octaviar Admin.
• [49] The most significant outstanding matter is resolution of the proofs of debt lodged by OIN and OIB, as to which see [7](c) above. On behalf of Octaviar, the GPLs sought and obtained directions fr[6]m Bradley J6 that they were justified in rejecting OIB's proof of debt in the amount of $464,566,212 and OIN's proof of debt in the amount of $464,542,210: see Re Octaviar Limited (in liq) [2019] QSC 235. OIB and OIN each appealed the GPLs' rejection of the proofs of debt and the appeal is ongoing. On behalf of Octaviar Admin, the GPLs have admitted OIB as an unsecured creditor of Octaviar Admin in the amount of $104,354,806 and OIN as an unsecured creditor of Octaviar Admin in the amount of $360,907,301. OIB and OIN make up 9.52% and 32.93% respectively of the admitted unsecured claims against Octaviar Admin.
• [50] The other outstanding matters are as follows:

(a) The GPLs must adjudicate upon the three remaining proofs of debt in Octaviar Admin.

(b) The GPLs admitted in full a $38,462,851 proof of debt in the estate of Octaviar Admin lodged by a trustee company. As that company has been deregistered, the GPLs must now facilitate the appointment of a new trustee. The GPLs have taken advice on, and are taking steps towards, replacing the trustee, which will likely involve making an application to Court.

(c) The GPLs anticipate receiving funds of approximately $1,930,000 from two Octaviar subsidiaries which are also in liquidation with liquidators appointed from Deloitte and BDO.

(d) The GPLs must calculate and pay interim and final dividends to unsecured creditors.

(e) The GPLs must reconcile accounts with the SPL. If the settlement deed becomes unconditional, they anticipate that the SPL's appointment will be concluded. There will then need to be a reconciliation with the SPL of the funds received and held by him. Their view is that it is possible that this exercise will result in a further interim dividend in Octaviar, which is estimated to be in the order of $5,000,000.

(f) The GPLs must finalise the liquidations of the Octaviar companies, including by seeking approval for the GPLs' outstanding remuneration, discharging any residual liabilities, and obtaining appropriate tax clearance at the conclusion of the liquidations to ensure no outstanding tax liabilities arose in the period of the liquidations.

Why the GPLs and the SPL propose to enter into the settlement deed

The effect of the settlement deed on the inter-company debt position and on taxation matters

• [51] The compromise contained in the settlement deed sought to resolve all the controversies which arose in relation to the inter-company debt position and in relation to taxation matters.
• [52] As to the inter-company debt position:

(a) the GPLs, on behalf of Octaviar Admin, agreed to admit the Octaviar Proof in the liquidation of Octaviar Admin for $514,685,948, and the SPL agreed not to seek to have it admitted for any greater amount;

(b) all parties agreed on the Net Payment Amount which should be paid by Octaviar Admin to the Commissioner (to which I will refer in a little more detail below) in order finally to conclude the Commissioner's interest in both liquidations;

(c) upon payment of the Net Payment Amount, Octaviar agreed that the amount of the dividend which would be payable to it from the estate of Octaviar Admin would be reduced by the total of -

(i) that much of the Net Payment Amount which represented the compromise of the ATO Proceeding; and

(d) upon payment of the Net Payment Amount, Octaviar Admin released Octaviar from its liability for the Fortress Costs Amount and from the Fortress Charge; and

(e) upon payment of the Net Payment Amount, Octaviar Admin and the GPLs (in their capacity as liquidators of Octaviar Admin) released Octaviar from all claims, including, without limitation, the claims which formed the grounds for rejection of the Octaviar Proof and the claims advanced on the basis of the rule in Jeffs v Wood and Cherry v Boultbee.

(a) Octaviar Admin agreed to pay the Commissioner the Net Payment Amount, which was defined as a sum derived by subtracting an amount referable to the settlement to which I have referred in [47] above, from what would otherwise have been the amount payable to the Commissioner in respect of the compromise of the ATO Proceeding;

(b) upon payment of the Net Payment Amount, the Commissioner -

(i) agreed to withdraw various statutory notices and proofs of debt and agreed that they thereafter had no force or effect;

(ii) agreed that payment of the Net Payment Amount terminated all of the Commissioner's interests and/or entitlements in the liquidations of Octaviar and Octaviar Admin;

(iii) granted broad releases and discharges to Octaviar, Octaviar Admin, the GPLs, the SPL and certain defined "Related Parties";

(c) upon payment of the Net Payment Amount, Octaviar, Octaviar Admin, the GPLs and the SPL granted broad releases and discharges to the Commissioner; and

(d) upon payment of the Net Payment Amount, all parties consented to the filing of notices of discontinuance in respect of the ATO Proceeding.

• [54] The GPLs had modelled and assessed the potential returns to creditors of Octaviar and Octaviar Admin based on the settlement deed coming into force and based on a number of other assumed alternative outcome scenarios. The results of the modelling were presented in confidential affidavits of Mr Fletcher and of Mr Whittle. The GPLs took the modelling into account in forming their judgment.
• [55] Mr Fletcher deposed that the GPLs had reached the view that they were justified in entering into and performing their obligations under the settlement deed, and causing Octaviar Admin to enter into and perform its obligations under the settlement deed, having regard to the legal advice they had obtained and the following matters:

(a) the uncertainty regarding the outcome of the ATO Proceeding and the possibility of an appeal by either party;

(b) the further and very considerable costs and delay that would likely be incurred before the ATO Proceeding could be finally determined by litigation;

(c) the significant difference of opinion as between the GPLs in their capacity as liquidators of Octaviar Admin and the SPL as to what the "proper" accounting position was between Octaviar and Octaviar Admin;

(d) the very considerable likely costs and delay involved in litigating the issues surrounding the Octaviar Proof, which would require determination of complex legal and factual questions (including the concepts of "running accounts", set-off under s 553C of the Corporations Act, the rule in Cherry v Boultbee, and a potentially costly and expert-led deconstruction of the inter-company ledger);

(e) the fact that that exercise would only ultimately have the effect of moving funds between Octaviar and Octaviar Admin, in circumstances where their creditors are largely composed of the same entities, albeit in different proportions;

(f) the fact that those creditors who would be most impacted by resolving the dispute on the terms of the settlement deed had approved the settlement; and

(g) the fact that the settlement deed would permit an interim dividend to be paid to creditors and would eliminate two of the three major issues remaining to be addressed in these two very lengthy liquidations.

• [56] Mr Fletcher's reasoning through of the issues seemed to me to reflect a careful and proper course of reasoning.

• [57] From the SPL's perspective, resolution of the inter-company debt position was the one remaining significant aspect of his appointment. Although his involvement in the ATO Proceeding was principally for the purpose of ensuring that he was bound to the outcome, the determination of the validity of the Commissioner's claims would inevitably have an effect on the amount of the dividend to which Octaviar might be entitled from Octaviar Admin.
• [58] The SPL placed affidavit material before me which recited in detail the steps which he took to participate in negotiations from time to time with a view to settling the inter-company indebtedness position. The negotiations took place over a course of years as the position of the Commissioner in relation to the ATO Proceeding played out. He obtained advice from appropriately experienced senior and junior counsel in this regard.
• [59] The SPL thought that there were four issues in the settlement deed which were relevant to the inter-company debt position.
• [60] The first issue concerned the quantification of the Fortress Costs Amount. He received legal advice confirming Octaviar's liability to Fortress under relevant instruments for legal costs incurred by Fortress in defending the Octaviar Admin Proceeding. He formed the judgment that the quantification was appropriate and reliable. The reasoning to which he deposed in reaching that conclusion was a proper course of reasoning.
• [61] The second issue concerned the proposed deduction of the Fortress Costs Amount from the dividend payable by Octaviar Admin to Octaviar pursuant to the Octaviar Proof. His concern here was whether the proposal would prejudice the interests of Octaviar's creditors, being the Commissioner pursuant to his garnishee notice or the general creditors of Octaviar (subject to the validity of that garnishee notice). Given the evident attitude of those creditors, he properly concluded that their interests appeared to have been met.
• [62] The third issue concerned his proposed agreement not to seek to admit the Octaviar Proof for a higher amount than the proposed $514,685,948. He sought and had regard to legal advice from appropriately experienced senior and junior counsel on the relevant issues. He considered carefully the likely very large quantum of the costs which would inevitably be incurred in the event of a contested appeal against the rejection of the Octaviar Proof. He took into account the commercial consideration that, given that the significant creditors of the two companies were largely the same, further litigation would result in the expenditure of a very considerable amount of money out of a pool which would otherwise be available to the same creditors, whether they are admitted in the liquidation of Octaviar or Octaviar Admin. He concluded that the agreed amount was appropriate. The reasoning to which he deposed in reaching that conclusion was a proper course of reasoning.

Should the GPLs and the SPL be given the advice they seek?

• [64] No one can presently be sure that that the settlement reflects the outcome which would follow from a final and correct determination of all the factual and legal disputes concerning the subject matters of the settlement.
• [65] However, the aphorism "Don't let perfect be the enemy of the good" (often attributed to Voltaire[7]) is apposite.
• [66] In the present context, the lesson to be drawn is that sometimes the proper performance of a liquidator's duty will involve a decision not to expend the time and money involved in trying to achieve notional "perfection".
• [67] This is one of those times.
• [68] The material before me reveals that the GPLs and the SPL have each given careful consideration to the cost, delay and risk of litigating all those issues to finality, including by obtaining legal advice from appropriately experienced senior and junior counsel on the merits of critical issues. Having done so, they have formed the view that they are justified in entering into the settlement deed. The great majority of unsecured creditors - who might be expected to be the best judges of their own interests - support the settlement.
• [69] It remains to note that it does not seem to me that the fact that the settlement deed will not resolve all the remaining issues in the liquidations has any bearing on the question before me. On its merits, entry into the settlement deed will resolve finally some very significant issues in the liquidations which, if left unresolved, would undoubtedly lead to very much more expense and delay and little overall advantage to the creditors.
• [70] Having considered the affidavit material (including confidential legal advice) filed by each of the GPLs and the SPL, and also the detailed written and oral submissions made on their behalf, I am satisfied that the liquidators' decisions to enter into the settlement deed were, in all the circumstances, proper decisions. They were justified in entering into the settlement deed.

• [71] There are two matters, concerning the form of the orders which I should make, which must be addressed.
• [72] The first concerns the form of the orders which should be made on the merits of the two applications. The second concerns the question of the maintenance of confidentiality in some of the material on which the applicants have relied before me.

• [73] The GPLs sought orders for judicial advice that they are justified in -

(b) causing Octaviar and Octaviar Admin to enter into the settlement deed; and

(c) giving effect to, and causing Octaviar and Octaviar Admin to give effect to, the provisions of the settlement deed.

• [74] The SPL sought orders for judicial advice that he would be justified in -

(b) giving effect to, and causing Octaviar to give effect to, the provisions of the settlement deed.

• [75] In each application, the applicant liquidators seek orders that they "are" or "would be" justified in entering into the settlement deed. But the GPLs and the SPL have already executed the settlement deed. And there is authority to suggest that the Court will generally not give advice retrospectively where a liquidator has already acted without advice: see Re One.Tel at [55] per Brereton J; Re Kimberley Diamonds Ltd (in liq) [2018] NSWSC 1106 at [10] per Black J; Re Octaviar Ltd (in liq) [2016] NSWSC 16 at [14] per Brereton J.
• [76] Does this create a problem for the present applicants?
• [77] There are at least three reasons why that question should be answered in the negative. First, as the settlement deed is conditional upon the Court giving the judicial advice sought, such orders will not infringe the general rule against giving judicial advice so as to ratify past acts, because in the absence of such orders there will be no relevant act, the condition precedent having, on that hypothesis, failed and the parties having been returned to their pre-settlement deed position: see Re One.Tel at [60] per Brereton J. Second, the effect of the condition precedent could be regarded as making the entry into the agreements provisional, and so still capable of being the subject of judicial advice: see Re Independent Contractor Services (Aust) Pty Ltd (in liq) (No 2) [2016] NSWSC 106; (2016) 305 FLR 222 at [30] per Brereton J and at per Gleeson JA. Third, the rule is not absolute. As Bradley J noted in (at [10], footnotes omitted):

The court's power to give judicial advice is confined only by the subject matter, scope and purpose of the statutory provision conferring the power. It is not appropriate to read the provision down or imply any limitation on the power or the discretionary factors relevant to its exercise. Section 90-15(1) contains no express words of limitation. It is intended to facilitate the performance of a liquidator's functions. It should be interpreted widely to give effect to that intention; so, the court may give advice where it is in the interests of the liquidation to do so.

• [78] It follows from my earlier analysis that I think each of the applicant liquidators is justified in entering into the settlement deed. However, if I advise the liquidators accordingly, it would seem to follow that in the present circumstances the duty of each liquidator would require them to give effect to the settlement deed they had already executed. In those circumstances, I cannot see any particular reason to make orders that they are justified in giving effect to the settlement deed, and no submission was put before me explaining why orders giving that advice were necessary. I will limit the orders I make accordingly.
• [79] On the application by the GPLs, I make the following orders:
  1. Pursuant to section 90-15 of the Insolvency Practice Schedule, the third applicants are justified in -

(a) entering into the settlement deed appearing at Tab 1 of Exhibit WJF-2 to the confidential second affidavit of William John Fletcher filed by leave on 13 October 2020; and

(b) causing the first and second applicants to enter into that deed.

1. The applicants' costs of this application be costs in the winding up of, and paid out of the assets of, each of the first and second applicants, with each company to bear 50% of those costs.

• [80] On the application by the SPL, I make the following orders:
  1. Pursuant to section 90-15 of the Insolvency Practice Schedule, the second applicant is justified in entering into the settlement deed appearing at Tab 1 of Exhibit DJK1 to the affidavit of David John Kerr filed by leave on 13 October 2020.
     1. The applicants' costs of this application be costs in the winding up of, and paid out of the assets of, the first applicant.

The orders to be made concerning confidentiality

• [81] The two applications before me were heard on 13 October 2020.
• [82] In the SPL's application, I made the following confidentiality order, after giving leave to the Commissioner to be heard in support of it:
  1. The exhibits to the affidavit of Joel Michael Shaw filed by leave on 13 October 2020:

(a) be placed in a sealed envelope marked: "Not to be opened without an order of a Judge of the Court - Exhibits to the affidavit of Joel Michael Shaw filed by leave on 13 October 2020 in Proceeding BS10123/20"; and

(b) not be available for inspection except so far as the Court orders.

1. Until 7 days after judgment is published in relation to the second applicant's originating application the affidavit of the second applicant filed by leave on 13 October 2020 (together with its exhibit):

(a) be placed in a sealed envelope marked: "Not to be opened without an order of a Judge of the Court - Affidavit of David John Kerr filed by leave on 13 October 2020 in Proceeding BS10123/20"; and

(b) not be available for inspection except so far as the Court orders.

1. Any application which the Commissioner of Taxation wishes to make to extend the duration of Order 2 above, or for some other order about the affidavit of the second applicant filed by leave on 13 October 2020 (or any part thereof) which would prevent inspection of it under UCPR, r.981, be emailed to the Associate to Bond J by 23 October 2020.

• [83] In the GPLs' application, also after having given the Commissioner leave to be heard in support of it, I made the following confidentiality order:
  1. The applicants file a copy of the Confidential Second Affidavit of William John Fletcher sworn 18 September 2020 (the Fletcher Confidential Affidavit) which:

(ii) the headings and sub-headings within the affidavit;

(iii) paragraphs 1-6, 8, 9 (first sentence only), 10-11, 13, 14-16, 20-21, 33-39 of the affidavit; and

(b) omits the exhibit to the affidavit other than that part of exhibit WJF-2 behind tab 2.

1. The applicants file a copy of the Confidential Affidavit of John Carmel Whittle sworn 13 October 2020 (the Whittle Confidential Affidavit) which:

(ii) the headings and sub-headings within the affidavit;

1. Until 7 days after judgment is published in relation to the third applicants' originating application or further order, the Fletcher Confidential Affidavit (including the exhibits thereto) and the Whittle Confidential Affidavit (including the exhibit thereto):

(a) be placed in a sealed envelope marked "Not to be opened without an order of a Judge of the Court"; and

(b) not be made available for inspection except insofar as the Court orders.

1. Any application which the applicants or the Commissioner of Taxation wish to make to extend the duration of Order 3 above, or for some other order about the Fletcher Confidential Affidavit or the Whittle Confidential Affidavit (or any part thereof) which would prevent inspection of it under UCPR, r.981, be emailed to the Associate to Bond J by 23 October 2020.

• [84] The effect of orders 3 and 4 made in the GPLs' application is that the confidentiality order in order 3 will expire unless extended, with the result that the sealed material will be placed on the Court file. The Commissioner emailed my associate on 23 October 2020 enclosing the confidentiality application intended to be made. On the same day, the GPLs also emailed my associate their own application for further orders in relation to the two confidential affidavits. The result is that the operation of order 3 should be extended until judgment is published in respect of those two applications.
• [85] The effect of orders 2 and 3 made in the SPL's application is the same. The Commissioner emailed my associate on 23 October 2020 enclosing the confidentiality application intended to be made. The result is that the operation of order 2 should be extended until judgment is published in respect of that confidentiality application.
• [86] However, order 1 in the SPL's application will operate permanently unless another order is made by the Court. The affidavit the subject of order 1 is the affidavit which exhibits the SPL's legal advice. That order was justified for the reasons explained by Barrett J in McGrath Re HIH Insurance Ltd [2005] NSWSC 731, followed in many cases since: see Re JN Taylor Holdings Ltd (in liq) [2007] SASC 193; (2007) 62 ACSR 695 per Debelle J; Re Bell Group NV (in liq); Ex parte Troika Holding BV [2009] WASC 309 per Simmonds J; Jones, Saker, Weaver & Stewart (Liquidators), in the matter of Great Southern Ltd (in liq) (Receivers & Managers Appointed) [2012] FCA 1072 per Gilmour J; Re Great Southern Ltd (in liq); Ex parte Great Southern Ltd (in liq) [2015] WASC 171 at per Beech J.

[1] The rule is named after Cherry v Boultbee [1839] EngR 1099; (1839) 4 My & Cr 442; 41 ER 171, although it might more properly be known as the rule in Jeffs v Wood [1722] EngR 17; (1723) 2 P Wms 28; 24 ER 668: see Otis Elevator Co Pty Ltd v Guide Rails Pty Ltd (in liq) (2004) 49 ACSR 531 at [33] per Palmer J. The technicality is irrelevant for present purposes.

[2] See Re Peruvian Railway Construction Co Ltd [1915] 2 Ch 144 at 150 per Sargant J.

[3] See ASIC v Managed Investments Ltd and Ors (No 9) [2016] QSC 109.

[4] See King v Australian Securities and Investments Commission [2018] QCA 352 and also King v Australian Securities and Investments Commission [2019] QCA 121

[5] See Australian Securities and Investments Commission v King [2020] HCA 4.

[6] Re Octaviar Limited (in liq) [2019] QSC 235.

[7] Voltaire actually wrote "Le mieux est l'ennemi du bien" (literally, "the best is the enemy of the good"). His 1772 poem "La Bégueule" attributed the phrase to an old Italian saying: see Oxford Dictionary of Quotations (7th ed) at p 834.