CITATION : RE THE BELL GROUP LTD (in liq) ACN 008 666 993 and certain of its subsidiaries as listed in the schedule to the originating process; EX PARTE WOODINGS as liquidator of THE BELL GROUP LTD (in liq) ACN 008 666 993 and as liquidator or provisional liquidator of certain of its subsidiaries as listed in the schedule to the originating process [2009] WASC 235

ANTONY LESLIE JOHN WOODINGS as liquidator of THE BELL GROUP LTD (in liq) ACN 008 666 993 and as liquidator or provisional liquidator of certain of its subsidiaries as listed in the schedule to the originating process

Corporations - Winding up - Powers of liquidator - Exercise and control of liquidator's powers - Ex parte application by liquidator for directions arising from final orders on Bell liquidation - Judgment debtors seek to suspend payment of judgment debt pending appeal - Directions sought with regard to proposed trust, undertaking and charge arrangements and approval to provide charges for benefit of judgment debtors - Court's function is not to determine substantive matters in dispute between liquidator and third parties - Determination required as to whether applicant's proposed approach to suspension issue is lawful, reasonable and consistent with liquidator's obligations - Application by judgment debtors for suspension order to be dealt with in due course by appeal court - Directions and approval sought by liquidator granted

Corporations Act 2001 (Cth), s 477, s 477(2B), s 479(3), s 485(3), s 556(1)

Directions made pursuant to s 479(3) of the Corporations Act 2001(Cth)

Approval granted pursuant to s 477(2B) of the Corporations Act 2001 (Cth)

Barnes v Addy (1874) LR 9 ChApp 244

Brown v DML Resources Pty Ltd (in liq) (No 7) [2002] NSWSC 162

Re Ansett Australia Ltd & Korda (No 3) [2002] FCA 90; (2002) 115 FCR 409

Re Newtronics Pty Ltd; Ex parte Stewart [2007] FCA 1375

Re Spedley Securities Ltd (in liq) (1992) 10 ACLC 1742

The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107

The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239

TK, PB & LS v Australian Red Cross Society (1989) 1 WAR 335

1 HASLUCK J: This is an ex parte application made by the plaintiff, Antony Leslie John Woodings, in his capacity as liquidator of The Bell Group Ltd (in liquidation) ('Bell Group'), described as TBGL, and as liquidator of certain of its subsidiaries. The application is dated 13 August 2009. The plaintiff seeks directions in relation to matters arising out of the final orders made by the trial judge, Owen J, in the Bell litigation. I must begin by looking at the background to the application.

2 In early 1990 the defendants in the Bell litigation, a group of 20 banks who had made loans to certain companies in the Bell Group, took security over all valuable assets of companies in the Bell Group. The Bell Group failed in 1991 and the defendants enforced their securities and were (but for a relatively trivial sum) repaid the sums outstanding to them.

3 The plaintiffs in the Bell litigation were certain companies in the Bell Group and their liquidators. The plaintiff in these proceedings, Antony Woodings, is the liquidator of the two principal companies, The Bell Group Ltd (in liquidation) (the parent of the group) and Bell Group Finance Pty Ltd (in liquidation) (the company through which most of the borrowings of the group were channelled). I understand that Bell Group (UK) Holdings Limited (in liquidation) (described as BGUK), which is one of the relevant plaintiffs, is not an Australian resident company for the purposes of Australian taxation legislation.

4 The plaintiffs alleged that at the time the defendant banks took the securities the companies providing those securities were insolvent, the directors of those companies had acted in breach of fiduciary duty and the defendants knew about the insolvency of the plaintiff companies and about the breach of fiduciary duty.

5 The plaintiffs claimed by way of relief that the defendants were knowing recipients under the first limb of Barnes v Addy (1874) LR 9 ChApp 244, the relevant transactions were liable to be rescinded, the defendants were liable to certain plaintiff companies as constructive trustees of the money obtained by them as a result of the breaches of fiduciary duty and were liable as a result to repay the moneys to those companies. Further, the defendants were liable to pay the plaintiff's compound interest by way of equitable compensation for having held the plaintiffs out of their moneys.

6 After a long and complicated trial running for several years Owen J delivered reasons for judgment on 28 October 2008 in which he held that the plaintiffs had successfully established their principal causes of action: The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) [2008] WASC 239. Final orders, including monetary orders, were handed down by His Honour on 30 April 2009: The Bell Group Ltd (in liq) v Westpac Banking Corporation (No 10) [2009] WASC 107.

7 Some of the final orders dealt with forms of declaratory relief and other matters. In relation to monetary relief, including awards of compensatory interest and provision for the defendants to pay the plaintiffs' costs - which were fixed in the sum of $82.5 million - the relief was provided by way of orders 5, 6 and 7.2 of the judgment of Owen J dated 30 April 2009 ('the monetary orders').

The Court further orders that orders 5, 6 and 7.2 [the monetary orders] be dated 29 May 2009 and take effect from that date.

9 It is important to understand that the claims and circumstances of the various plaintiff companies were similar but not entirely the same. This meant that the monetary orders provided for payments of different sizes to be made to the various claimants. The orders require payments to the plaintiff judgment creditors of an overall judgment sum in excess of $1.5 billion.

10 The defendant banks made it clear that they intended to appeal, and would seek a stay or suspension of the monetary orders in order to preserve the subject matter of the appeal. The defendants were concerned, having regard to the size of the overall payment, that the plaintiff judgment creditors would be unable to repay the amounts in question if the appeal succeeded, for the plaintiff judgment creditors were insolvent, with their only substantial asset being the property recovered in the Bell litigation.

11 The defendants contended that in the absence of a suspension of the effect of the monetary orders the appeal process would be rendered nugatory. I note in passing that the foreign resident plaintiff company BGUK does not oppose suspension in respect of its judgment sum, subject to finalisation of the terms upon which a suspension should be ordered.

12 The plaintiff formed the view that it was within the power of the liquidator, with court approval, to enter into arrangements not to distribute any judgment sum received pending the outcome of the appeal and for the sum to be held in trust. This would preserve the judgment sum and meet the opposing case for a stay or suspension.

13 As to any debate concerning the monetary orders, the plaintiff contended that the judgment creditors should be in no worse position than if they had been paid the judgment sums in accordance with their entitlement. The plaintiff's position was that:

(a) The judgment creditors should not be exposed over the lifetime of the appeal to any insolvency risk on the part of the defendants ('the insolvency risk').

(b) They should not be detrimentally prevented from benefitting from the application of their tax losses as against any tax payable on income earned on the judgment sums throughout the duration of the appeal ('application of deductions') and

(c) The judgment sums should be managed to seek to provide an appropriate rate of return ('investment return').

14 These events led to a number of approaches to the court.

15 On 18 May 2009 the plaintiff, upon an ex parte basis, filed an originating process for certain directions and orders. The matter came before Simmonds J who made orders in terms of a minute dated 21 May 2009. These orders provided for the plaintiff's application to be dealt with upon a confidential basis. Disclosure or publication of any report of the hearing or the contents of the documents was prohibited.

16 I pause here to say that as to the present application I will follow the course set by Simmonds J and make the various confidentiality orders applied for by the plaintiff including provision for a hearing in camera. I do so pursuant to the precept that orders of this kind are justified if public knowledge is likely to defeat the paramount object of doing justice according to law: TK, PB & LS v Australian Red Cross Society (1989) 1 WAR 335.

17 The plaintiff's position was reflected in the 21 May orders. The plaintiff was authorised to enter into trust arrangements in the terms of a draft trust deed providing for the funds the subject of the monetary orders to be held in trust.

18 The plaintiff was authorised also to cause TBGL and the subsidiaries to seek or to consent to arrangements whereby the monetary orders were suspended or to not come into effect subject to the defendant banks paying the sums the subject of the monetary orders to the plaintiff to be held as a trust fund for investment and managed accordingly.

19 By par 4 of the 21 May orders, it was provided that in the event of one or more of the banks being successful in an appeal then the relevant payment was to be repaid to the bank in question.

20 The effect of these orders (made on an ex parte basis) was to enable the plaintiff as the proposed trustee to negotiate with the solicitors for the defendants as to whether the monetary orders should be suspended or otherwise to meet the defendants' case for suspension pending the outcome of the appeal.

21 I note in passing that shortly after his initial application the plaintiff applied to suspend the effect of the monetary orders in the manner contemplated by the 21 May orders. However, as a result of some reconsideration, the plaintiff's application was not proceeded with.

22 In the meantime, on 6 July 2009 an application was submitted to the court in the appeal proceedings by the defendant banks to the effect that the monetary orders be suspended until further order of the court in relation to all the banks or, alternatively, arrangements be made whereby an individual bank at its election would provide the judgment creditors with a letter of credit or bank guarantee by an authorised deposit taking institution.

23 There were then various exchanges between the parties about the manner in which the judgment sum should be held pending the outcome of the appeal. The effect of interim orders made by Wheeler J of the Supreme Court in the appeal proceedings was a suspension of payment pursuant to the monetary orders until 7 September 2009.

24 The plaintiff's reconsideration of his position was prompted by a number of factors including a deeper appreciation of possible insolvency risks and the tax implications of receipt of the judgment sum. I understand that the plaintiff has been in communication with the Australian Tax Office and has now managed to obtain clarification and related legal advice as to the matters in issue. The present application for directions and other orders arises out of the process of reconsideration and various exchanges with the solicitors for the defendant.

25 The outcome of the communications with the ATO have been described by the plaintiff at pars 19 to 22 of his written submissions in the appeal proceedings in this way:

1. Accordingly, the Australian judgment creditors are not required to lodge income tax returns for the year the judgment debts are paid, and there is a deferral of the due date for payment of any consequential assessment, until three months after the determination of the appeal. It follows that there is no risk of tax being assessed and paid on the compensatory interest component of the judgment debts before the respondents become immediately obliged to repay, and the Banks become entitled to enforce their charge.
2. Moreover, if the appeal is successful, the Commissioner has confirmed that any of the judgment sum ordered to be repaid will not be required to be included as part of the Australian judgment creditors' assessable income: tax will not be assessed, and need not be paid, to the extent that the Banks are successful.
3. The ATO's deferment letter is binding. Without more, it means there is no material Tax Risk.
4. The ATO's confirmation letter is likely to be treated by the Commissioner as administratively binding. See by analogy PSLA 2008/3 Provision of Advice and Guidance by the Tax Office at [205] - [216].

26 The plaintiff's 13 August or present, ex parte application for directions is made in circumstances of the defendant banks having brought on for hearing their application for a suspension order in the Court of Appeal. The defendants' application is to be heard in the near future on 24 August 2009.

27 It appears from an application for leave to amend the appellant's application dated 6 July 2009 that the defendants/appellants will apply for suspension on the following terms:

1. The date on which Orders 5, 6 and 7.2 made by Owen J on 30 April 2009 take effect, and enforcement of those Orders, is suspended with immediate effect and until further order of the court in relation to all Appellants;
2. alternatively to order 1 herein (as concerns Orders 5 and 6 made by Owen J on 30 April 2009 and any Appellant in respect of whom the Court is unwilling to make an order in terms of order 1 herein), the date on which Orders 5 and 6 made by Owen J on 30 April 2009 take effect, and enforcement of those Orders, is suspended in relation to that Appellant with immediate effect and until further order of the court, provided that the Appellant, on or before the date which is fourteen days after the date of these orders, at its election:

2.1 provides to the judgment creditors a letter of credit or bank guarantee (Bank Guarantee) given by an authorised deposit-taking institution, whether an Australian corporation, a foreign bank branch or an Australian subsidiary of a foreign bank, which is authorised under Part II of the Banking Act 1959 (Cth) to carry on banking business in Australia and which is able to issue such a Bank Guarantee (Approved Guarantor) for the whole of the amounts otherwise required to be paid by that Appellant pursuant to Orders 5 and 6 as at the date of the guarantee; or

2.2 pays, or procures payment of, any amount otherwise required to be paid by that Appellant, pursuant to Orders 5 and 6 as at the date of the payment, into an interest bearing account (Suspension Account) held with any branch of any of Australia and New Zealand Banking Group Limited, Commonwealth Bank of Australia, National Australia Bank Limited, Westpac Banking Corporation, HSBC Bank Australia Limited or Societe Generale, provided that such deposit is mortgaged and charged in favour of the judgment creditors in a form satisfactory to the Court;

2.3 pays into court any amount otherwise required to be paid by that Appellant pursuant to Orders 5 and 6 as at the date of the payment.

1. Any funds paid into court pursuant to these orders are to be invested by the Public Trustee in its Common Fund.
2. Pursuant to s 8(2) of the Civil Judgments Enforcement Act 2004 (WA), interest on any amount required to be paid pursuant to or in respect of Orders 5, 6 and 7.2 shall accrue from the date of these orders:

4.1.1 into the Suspension Account pursuant to these orders, at the rate of interest paid on that account from time to time; and

4.1.2 in Court, at a rate which is equivalent to the after tax earnings on those funds; and

4.2.1 for those judgment sums denominated in Australian Dollars, at the 90 day Bank Bill Swap Rate from time to time; and

4.2.2 for those judgment sums denominated in Pounds Sterling, at the 90 day LIBOR Rate from time to time.

28 In essence, as set out in a letter dated 6 July 2009 from Blake Dawson to Freehills, the plaintiff's position has been and continues to be that the sums due to the Australian judgment creditors pursuant to the monetary orders should be paid on 7 September 2009, with interest due to that date in accordance with the orders made previously by Wheeler J. Upon receipt of the sums due, the plaintiff will:

(a) Cause each sum to be paid into a trust and then invested so as to achieve an appropriate investment return.

(b) Provide an undertaking not to distribute the funds in the liquidation of each of those companies pending the outcome of the appeal.

(c) Cause each company to grant a charge, if required, in favour of each paying bank to the extent of any entitlement it may have following the conclusion of this appeal.

29 According to the plaintiff, the issues for court in dealing with the suspension issue are as follows:

(1) Given the liquidator's undertaking and the proposed trust arrangement to be implemented by the Australian judgment creditors, which provide a means for restitution in the event the appeal is successful, will the Banks' right of appeal be rendered nugatory in the absence of a suspension order?

(2) If the Court is satisfied that a suspension order is necessary to preserve the integrity of the Banks' appeal, where does the balance of convenience lie? This needs to be considered on a Bank by Bank basis.

(3) If there is to be a suspension order, should the Court exercise its power under s 8(2) of the Civil Judgments Enforcement Act 2004 (WA) to reduce the rate of interest payable on the Banks' unpaid judgment debts?

30 It follows from this narrative that the orders and directions sought by the plaintiff before me have been formulated in order to underpin the plaintiff's capacity to negotiate effectively with the defendants or otherwise to present to the Court of Appeal and contend for a clear proposal that will meet the defendants' case for suspension of the monetary orders.

31 It emerges, then, that my task is to determine whether the plaintiff's proposed approach to the suspension issue is lawful, reasonable and justifiable having regard to the obligations of the liquidator. It will, of course, be open to the defendants in the appeal proceedings to evaluate and critique the adequacy of the plaintiff's position, having regard to some of the considerations I will come to in a moment.

32 It follows that the defendants are not at risk in respect of the plaintiff's ex parte application because they will have a full opportunity to be heard in the course of further negotiations, or before a judge of the Court of Appeal, concerning the terms upon which a suspension of the monetary orders, if any, should take place.

33 The plaintiff described the task before the court in respect of the present, ex parte application for directions at pars 44 to 47 of his written submissions in this way:

1. Accordingly, the Court need not come to any final conclusion as to the parties' respective contentions in connection with the suspension order application. (The plaintiff has nevertheless referred to the Banks' concerns and evidence as it is proper to do so to meet the obligation of disclosure that arises on this ex parte application).
2. That said, the directions and approvals sought by this application are applied for to allow the relevant Bell Group companies to advance Mr Woodings' preferred position in opposition to the Bank's suspension order application.
3. It follows that the Court should satisfy itself that the basis of the proposed opposition to the Banks' suspension application is one that is reasonably open to the relevant Bell Group companies as companies that are being wound up by order of the court.
4. This is not to say that the Court needs to be satisfied that the basis of opposition should or will succeed. That goes too far. All that is necessary is that the Court should be satisfied that the liquidator is acting reasonably in causing the relevant Bell Group companies to oppose the suspension order application on the basis outlined by Mr Woodings, ie that the relevant Bell Group companies' position is fairly arguable.

34 The plaintiff's position is supported by the affidavits and written submissions lodged in support of his application for the 21 May orders, by his affidavits of 12 August and 17 August 2009 in these proceedings, and by his affidavit and written submissions in the appeal proceedings. I have also the affidavit of Andrew James Hunter Harpur sworn 19 August 2009 to which is exhibited recent correspondence between the solicitors for the parties including a copy of the application for leave to amend mentioned earlier.

35 I note in passing that the plaintiff's affidavit sworn 17 August 2009 has exhibited to it not only in his affidavit in the appeal proceedings but also certain affidavits relied upon by the defendants and the affidavit of Michael Karl Korber sworn 14 August 2009. The latter, on behalf of the plaintiff, draws upon his experience of managing investments in the Perpetual Group in providing information about authorised investments and other matters which bear upon the workings of the plaintiff's proposed trust fund.

36 It emerges from the materials before me that although negotiations are proceeding, no agreement has been reached between the parties on the manner in which the judgment sums should be held pending the appeal.

37 The banks contend that the right of appeal will be nugatory in the absence of a suspension order because there is a dissipation risk, a tax risk and a competing priority claims risk. There is said to be also a shortfall risk; that is, a risk that the Bell companies might lose part of the judgment sum or not earn a sufficient return on it.

38 The defendant banks have made these observations at par 9 of their written submissions:

1. If the Banks simply pay the judgment sum to the Respondents and the Banks succeed on appeal, there is a real risk that the Respondents will be unable to repay the Banks' monies:

9.1 if the interest component of the judgment sum (which is in excess of $1.1 billion) is taxable in the hands of the judgment creditors upon receipt, since a significant proportion of the judgment sum may be paid in satisfaction of that liability before the appeal is determined (First Vaughan Affidavit at [46] to [47]) (Tax Risk); or

9.2 if the judgment creditors intend (as they have indicated) simply to retain and invest the funds pending the determination of the appeal, since:

9.2.1 the Banks' claim to restitution in the event of a successful appeal would, prima facie, be a personal claim against the Respondents: Heydon at [26]. Even if the claim were a priority claim under section 556(1)(a) of the Corporations Act, the claim may compete for repayment with other priority claims, such as the substantial costs incurred by the judgment creditors at first instance and on appeal (First Vaughan Affidavit at [45]) or in relation to taxation (First Vaughan Affidavit at [46]) (Competing Priority Claims Risk); and

9.2.2 there is a risk that the Respondents would not earn a sufficient return on the judgment sum, or may lose a portion of the capital invested by them (Shortfall Risk).

39 Put shortly, the bank's primary application is for orders that would excuse them from immediate payment of the judgment debts without any security; that is, suspension with immediate effect until further order. In the alternative, the banks seek suspension on the proviso that at the individual bank's election: first, the bank provides a letter of credit or bank guarantee as to its individual judgment debts; or second, the bank pays its individual judgment debts into an interest bearing suspension account which is to be mortgaged or charged in favour of the Australian judgment creditors; or third, the bank pays its individual judgment debts into court.

40 The plaintiff opposes the banks' suspension order application. To meet the banks' concerns, the plaintiff contends for the proposed trust, undertaking and charge arrangement mentioned earlier. Counsel for the plaintiff took me carefully through the principal documents in that regard at the hearing of the ex parte application. They are exhibited to the plaintiff's affidavit of 17 August 2009, namely, the plaintiff's undertaking to pay the judgment sum into the proposed trust and not to distribute any part of the same (ALJW43 at page 117), the proposed Trust Deed (ALJW44), the Deed of Charge (Final Award) which will charge the subject judgment creditors' units and related rights in the trust (ALJW46) and the Deed of Charge (Investment) which will charge the subject judgment creditors' entitlements to the proceeds of the monetary orders (ALJW47).

41 It is said on behalf of the plaintiff that the trust fund will be maintained intact pending appeal with two exceptions. First, the costs associated with the trusts. Second, the Bell Group of Companies will have limited redemption rights. They will be able to redeem units when required to pay tax due in respect of distributable income on units; that is, on their respective shares in the trust's earnings.

42 It is said on behalf of the plaintiff that the so-called 'dissipation risk' is covered by the proposed undertaking and trust arrangements. The 'tax risk' described by the defendants is covered by the assurances provided by the ATO mentioned earlier.

43 As to the competing priority claims risk the plaintiff has said this at par 24 and par 25 of its written submissions in the appeal:

1. As noted above, this risk is addressed by the trust, undertakings and charges. Any claimant on the funds available to the liquidator will have to take those funds as they find them. If the funds are subject to a charge validly created by the liquidator then the rights of priority creditors are necessarily subject to that charge.
2. The Banks do not advance any reason to doubt the validity of the charges the liquidator proposes to create. The decision in Brown v DML Resources Pty Ltd [2001] NSWSC 590; (2001) 52 NSWLR 685 (affirmed [2003] NSWCA 216; 58 NSWLR 322) is not on point - it concerns only the need to give notice of an application to extend time for preference claims to persons against whom it is intended to bring such claims, rather than having them placed in the position of seeking to set aside the ex parte order.

44 As to the 'shortfall risk', the plaintiff has made these submissions:

1. A necessary starting point is to recognise that any investment of the judgment debts involves risk. Not even banks are without risk - for which reason the Banks are limited in their ability to place funds of this magnitude with other banks. See para 17 of Mr Vaughan's affidavit sworn 31 July 2009.
2. The liquidator's proposal has the merit of placing the funds in a diversified and liquid set of investments with credit ratings equivalent to or better than those of the Banks. From the point of view of security of capital alone the liquidator's proposal should be preferred.
3. The proposed trust will have an independent trustee and an investment committee. The function of the investment committee will be to assist the trustee in monitoring assets and the performance of an investment manager. The investment committee will comprise 5 persons (the liquidator, 2 nominees of the liquidator and 2 nominees of the Banks). However, the liquidator must vote last and, if his vote is to be a casting vote, the liquidator must vote in a manner consistent with advice from a professional person.
4. The trustee of the proposed trust will be able to invest in a limited class of 'Authorised Investments': cl 10.4 of the Trust Deed. That term is defined in cl 1.1 of the Trust Deed. In general an investment must satisfy a certain credit rating to be an Authorised Investment.
5. The liquidator of the Australian judgment creditors wishes the trust to be managed so as to earn an appropriate rate of return, having regard to the need for capital preservation and adequate liquidity. There is no proper basis to suggest that the proposed trust will see unwarranted investment risk to the possible detriment of the Banks. See the affidavit of Mr Korber sworn 14 August 2009. On the contrary, the proposed investment is less risky (more diversified, equivalent or higher credit rating) than leaving the money with the Banks.

45 Let me now turn to the matters to be addressed by me.

46 Section 479(3) of the Corporations Act 2001 provides that a liquidator may apply to the court for directions in relation to any particular matter arising under the winding up.

47 The decided cases indicate that this provision does not permit binding orders in the nature of judgments, and its function is to give advice as to the proper course of action in the liquidation, not to determine substantive matters in dispute between the liquidator and third parties. The effect of the directions is that the liquidator, if he has made full and fair disclosure to the court of the material facts, will be protected from liability for any alleged breach of duty as liquidator to a creditor or contributory or to the company in respect of anything done by him in accordance with the directions. The court will not interfere or second guess the liquidator's judgment unless there is a lack of good faith, error of law or principle, or real and substantial grounds for doubting the prudence of the liquidator's conduct: Re Spedley Securities Ltd (in liq) (1992) 10 ACLC 1742.

48 In essence, the plaintiff by his present application seeks directions as to whether he may properly and justifiably enter into the proposed trust, undertaking and charge arrangements. In addition, he seeks approval under s 477(2B) of the Corporations Act in respect of certain of the Bell companies, so that he may cause the companies to provide charges for the benefit of the judgment debtors to secure payment in the event of any restitutionary order on appeal.

49 I noted in earlier discussion that the plaintiff does not seek to resolve any of the differences between the banks and the relevant Bell Group companies on the suspension application. That will be the subject of an inter-partes hearing before a single judge of the Court of Appeal. Accordingly, the court need not come to any final conclusion as to the parties respective contentions in connection with the suspension order application. The directions and approval sought by the application are applied for to allow the plaintiff to advance his preferred position in opposition to the banks' suspension order application.

50 It follows from these observations that in relation to the plaintiff's application for directions the court must satisfy itself that the basis of the proposed opposition to the banks' suspension application is one that is reasonably open to the relevant Bell Group companies as companies that are being wound up by order of the court; that is, it must be satisfied that the liquidator is acting reasonably in causing the relevant Bell Group companies to oppose the suspension order sought by the defendants on the basis outlined by the plaintiff.

51 I have described the respective positions contended for by the parties. In part the difference of opinion arises because the defendant banks are also creditors of some of the Bell Group companies under order 4.1 of the judgment. It would certainly be expected that, if the banks' appeal is successful, any judgment sums paid to the Bell Group companies would have to be repaid.

52 The principle of impartiality suggests that, in the circumstances I have described, the plaintiff should take such lawful steps as are available to maintain the judgment sums intact pending determination of the banks' appeal. However, it must not be forgotten that one of the primary duties of a court appointed liquidator is to take under his control all the property to which the Bell Group companies are or appear to be entitled pursuant to the duty of a liquidator to get in the assets and distribute as quickly as possible.

53 Moreover, while having minimised the potential adverse taxation consequences associated with receipt of the compensatory interest component to the judgment, there remains a theoretical concern that receipt may trigger adverse taxation consequences. Additionally, the plaintiff wishes to guard against any insolvent risk in relation to any of the banks and to see that the judgment sums are invested in such a way as to achieve an appropriate investment return.

54 To avoid the difficulties inherent in these conflicting duties and objectives, the plaintiff seeks a direction that he may properly and justifiably enter into, and give effect to, the proposed trust, undertaking and charge arrangement. The rule is that there must be something more than the making of a business or commercial decision before a court will give directions in relation to, or approval of, that decision. It may be a legal issue of substance or procedure, it may be an issue of power, proprietary or reasonableness, but some issue of this nature is required to be raised. There must be an issue calling for the exercise of legal judgment: Re Ansett Australia Ltd & Korda (No 3) [2002] FCA 90; (2002) 115 FCR 409 at [65].

55 Section 477 of the Corporations Act sets out the powers of a liquidator. Section 477(2B) is sometimes described as the 'long term agreements' provision. It imposes constraints upon a liquidator by providing that except with the approval of the court, a liquidator must not enter into an agreement on the company's behalf where the term of the agreement may end or obligations of a party to the agreement may be discharged by performance more than three months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those three months.

56 This provision operates in relation to seven of the relevant Bell Group companies. It operates in relation to the investment charge and the final award charge. Further, while not operating in relation to those relevant Bell Group companies wound up by order made prior to 23 June 1993, nor as to the proposed undertaking or payment and reinvestment into the trust, the principles that underlie s 477(2B) are apt when considering whether to direct more generally that the plaintiff would be acting properly and justifiably in effecting the proposed trust, charge and undertaking arrangement.

57 The principles applicable to an application under s 477(2B) were reviewed by Gordon J in Re Newtronics Pty Ltd; Ex parte Stewart [2007] FCA 1375. The role of the court is to grant or deny approval to the liquidator's proposal. Its role is not to develop some alternative proposal which might seem preferable. Further, the task of the court is not to reconsider all of the issues which have been weighed up by the liquidator but simply to review the liquidator's proposal, paying due regard to his or her commercial judgment and knowledge of all of the circumstances of the liquidation, 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 in terms of the expeditious and beneficial administration of the winding up.

58 It was said further in that case that the court's approval is not an endorsement of the proposed agreement but is merely a permission of the liquidator to exercise his or own commercial judgment in the matter. It follows from these precepts that, in my view, as indicated by the reasoning in Brown v DML Resources Pty Ltd (in liq) (No 7) [2002] NSWSC 162, it is not necessary for notice of the present ex parte application to be given to the defendant banks or other actual or prospective creditors, with a view to affording them an opportunity to be heard, because the directions and orders applied for do not purport to determine the matters in issue. The effect of the directions procedure is to protect the liquidator against any possible allegations of breach of duty: McPherson: The Law of Company Liquidation (4th ed) at 352 to 355.

59 In the end, having regard to the principles I have mentioned, and the need to preserve the funds paid pursuant to the monetary orders pending resolution of the appeal proceedings, I am persuaded that the directions sought by the plaintiff should be given. In my view, the plaintiff as liquidator is acting reasonably, properly and justifiably in opposing the banks' application for suspension and, pursuant to his obligation to get in and take control of the judgment sum, in seeking to carry into effect his proposed undertaking, trust and investment arrangements.

60 Further, I am of the view that it is appropriate, having regard to the terms of the investment charge and the final award charge that the liquidator be granted approval under s 477(2B) of the Act.

61 The purpose of the investment charge and the final award charge is to secure the banks' right to payment in accordance with any restitutionary order the banks may obtain in the event of the appeal being successful. It avoids the possibility of the banks having to compete with s 556(1) priority debts or claims as concerns the property coming into the windings up in the form of the proceeds of the judgment debts or the income earned there from and then reinvested into the trusts.

62 In the event of a successful appeal on the part of the banks the holders of the s 556(1) priority debts or claims would, in the absence of such security or an order under s 485(3), be enjoying a windfall at the expense of the banks.

63 The underlying reality is that the subject property has essentially come into the windings up as a result of the judgment in the Bell litigation and the proposed trust arrangements. If the judgment is reversed on appeal the ordinary expectation is that there would be restoration and the doing of practical justice as between the parties. In economic substance the Bell Group companies will only come into the relevant property because of that paid by the banks under what, for the purposes of the present application, must be assumed to be an erroneous application of the banks' property due to the reversed judgment. Thus, it seems appropriate that the product of that property should be available to the banks in priority to any other claimant.

64 In summary, then, I will make orders in terms of the plaintiff's minute of proposed orders dated 18 August 2009 as amended which includes orders concerning the confidentiality of this ex parte application.