FEDERAL COURT OF AUSTRALIA Jones, Saker, Weaver and Stewart (Liquidators), in the matter of Great Southern Limited (in liq) (Receivers and Managers Appointed) [2012] FCA 1072 Citation: Jones, Saker, Weaver and Stewart (Liquidators), in the matter of Great Southern Limited (in liq) (Receivers and Managers Appointed) [2012] FCA 1072 Parties: MARTIN BRUCE JONES, ANDREW JOHN SAKER, DARREN GORDON WEAVER AND JAMES HENRY STEWART IN THEIR CAPACITIES AS JOINT AND SEVERAL LIQUIDATORS OF GREAT SOUTHERN LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 052 046 536), GREAT SOUTHERN FINANCE PTY LTD (IN LIQUIDATION) (ACN 009 235 143) AND GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 083 825 405) File number: WAD 242 of 2012 Judge: GILMOUR J Date of judgment: 27 September 2012 Catchwords: CORPORATIONS - Ex parte - application to Court under s 477(2B) of the Corporations Act 2001 (Cth) for the Liquidators to enter into funding arrangements – whether the liquidators have acted in good faith and for proper purposes – factors relevant to the exercise of the Court's discretion CORPORATIONS - confidentiality orders sought under s 50(1) of the Federal Court of Australia Act (1976) (Cth) – whether the orders sought are the minimum necessary to prevent prejudice to the administration of justice Legislation: Corporations Act 2001 (Cth) s 477(2B) Federal Court of Australia Act (1976) (Cth), ss 17(1), 50(1) Federal Court of Australia Amendment (Criminal Jurisdiction) Act 2009 (Cth) Cases cited: Hogan v Australian Crime Commission [2010] 240 CLR 651 discussed McGrath v Re HIH Ltd [2005] NSWSC 731 applied Re ACN 076 673 875 Ltd (2002) 42 ACSR 296 cited Re Addstone Pty Ltd (in liq) (1998) 83 FCR 583 discussed Re Imobridge Pty Ltd (in liq) (No 2) [2000] 2 Qd R 280 cited Re JN Taylor Holdings Limited (In Liquidation) (2007) 62 ACSR 695 discussed Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 cited Re The Bell Group Limited (In Liquidation) ACN 008 666 993 [2009] WASC 235 discussed Scott v Scott [1913] AC 417 applied Date of hearing: 17 September 2012 Place: Perth Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 51 Counsel for the Plaintiff: Mr M C Hoffmann QC with Mr R W Douglas Solicitor for the Plaintiff: Gadens Lawyers IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 242 of 2012 In the matter of Great Southern Limited (in liquidation) (Receivers and Managers appointed) (ACN 052 046 536), Great Southern Finance Pty Ltd (in liquidation) (ACN 009 235 143) and Great Southern Managers Australia Limited (in liquidation) (Receivers and Managers appointed) (ACN 083 825 405) BETWEEN: MARTIN BRUCE JONES, ANDREW JOHN SAKER, DARREN GORDON WEAVER AND JAMES HENRY STEWART IN THEIR CAPACITIES AS JOINT AND SEVERAL LIQUIDATORS OF GREAT SOUTHERN LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 052 046 536), GREAT SOUTHERN FINANCE PTY LTD (IN LIQUIDATION) (ACN 009 235 143) AND GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 083 825 405) Plaintiff JUDGE: GILMOUR J DATE OF ORDER: 27 SEPTEMBER 2012 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The application be heard at a hearing of the Court from which the public is excluded with the exception of: (a) Messrs Jones, Saker, Weaver and Stewart and their legal representatives; and (b) all necessary staff of the Court including any associate, any orderly and any Court recording officer. 2. Paragraph 3 of Part A of the Originating Process filed on 11 September 2012 be deleted and replaced with the following: "Messrs Jones, Saker, Weaver and Stewart as joint and several Liquidators of the Companies have approval to enter into and cause the Companies to enter into: (a) the agreement that is attachment AJS-25 to the affidavit of Mr Andrew John Saker sworn on 11 September 2012 and files in these proceedings; and (b) The agreement to retain Lipman Karas lawyers on the terms set out in attachment AJS-17 to the affidavit of Andrew John Saker sworn on 25 July 2012 and filed in WAD 171 of 2012 which comprises attachment AJS-35 to the affidavit of Andrew John Saker sworn on 13 September 2012 and filed in these proceedings". 3. Messrs Jones, Saker, Weaver and Stewart as joint and several Liquidators of the Companies have approval to enter into and cause the Companies to enter into: (a) the agreement that is attachment AJS-25 to the affidavit of Mr Andrew John Saker sworn on 11 September 2012 and filed in these proceedings; and (b) the agreement to retain Lipman Karas lawyers on the terms set out in attachment AJS-17 to the affidavit of Andrew John Saker sworn on 25 July 2012 and filed in WAD 171 of 2012 which comprises attachment AJS-35 to the affidavit of Andrew John Saker sworn on 13 September 2012 and filed in these proceedings. 4. Each of the Saker Affidavits sworn 11 September 2012 and 13 September 2012 (including each attachment thereto), the supporting written outline of submissions and any transcript of hearing of the application (Documents): (a) be placed in a sealed envelope marked: "Confidential – not to be accessed for inspection without order of a Judge or Registrar of the Court"; (b) not be made available for inspection except so far as the Court otherwise orders; and any application to inspect the Documents is to be referred to a judge or registrar of the Court with three business days' notice thereof to be provided to the solicitors for Messrs Jones, Saker, Weaver and Stewart. 5. Publication of the reasons for judgment be suspended for 7 business days from the date of provision to the applicants, within which the applicants are to make any application for confidentiality orders with respect to those reasons. 6. The costs of this application are costs in the winding up of the Companies and may be paid out of the assets of the Companies. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 242 of 2012 In the matter of Great Southern Limited (in liquidation) (Receivers and Managers appointed) (ACN 052 046 536), Great Southern Finance Pty Ltd (in liquidation) (ACN 009 235 143) and Great Southern Managers Australia Limited (in liquidation) (Receivers and Managers appointed) (ACN 083 825 405) BETWEEN: MARTIN BRUCE JONES, ANDREW JOHN SAKER, DARREN GORDON WEAVER AND JAMES HENRY STEWART IN THEIR CAPACITIES AS JOINT AND SEVERAL LIQUIDATORS OF GREAT SOUTHERN LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 052 046 536), GREAT SOUTHERN FINANCE PTY LTD (IN LIQUIDATION) (ACN 009 235 143) AND GREAT SOUTHERN MANAGERS AUSTRALIA LIMITED (IN LIQUIDATION) (RECEIVERS AND MANAGERS APPOINTED) (ACN 083 825 405) Plaintiff JUDGE: GILMOUR J DATE: 27 SEPTEMBER 2012 PLACE: PERTH REASONS FOR JUDGMENT 1 By Originating Application dated 26 July 2012 (WAD 171 of 2012), the plaintiffs (Liquidators), in their capacity as liquidators of Great Southern Limited, Great Southern Managers Australia Limited and Great Southern Finance Pty Ltd (collectively the Companies) applied to the Court for approval under s 477(2B) of the Corporations Act 2001 (Cth) (the Act) for the Liquidators and the Companies to enter into a contract that may end more than 3 months after the agreement is entered into. 2 On 27 July 2012, Justice Siopis made a confidentiality order in respect of the affidavit affirmed by Andrew John Saker on 25 July 2012 filed in support of that application. 3 At the hearing of this application on 27 July 2012, Justice Siopis declined to make the orders sought on the basis of the evidence before the Court at that time, namely, Mr Saker's affidavit of 25 July 2012 and oral evidence given by him during the course of the hearing. 4 When dismissing the earlier application Justice Siopis held that the evidence adduced by the Liquidators at that time was deficient in relation to the following matters: 1. the prospects of success in then identified potential claims and the conclusions reached by the Liquidators' solicitors in relation to prospects of success; 2. the investigations undertaken to date by the Liquidators; 3. the further avenues of investigation which have not yet been pursued which still need to be pursued in respect of each of the potential claims; 4. the estimated value of the potential claims; and 5. the prospects of the Liquidators returning a dividend to creditors having regard to the estimated value of potential claims, the size of the Funder's premium and the amount of Liquidators' costs and legal costs to be incurred in conducting further investigations and any subsequent litigation. 5 By the Originating Process dated 11 September 2012, the Liquidators seek approval pursuant to s 477(2B) of the Act to enter into the same agreement which was the subject of the earlier application. Two further affidavits have been affirmed by Andrew John Saker and filed in support of the present application: Mr Saker's affidavit of 11 September 2012 (Mr Saker's second affidavit) and Mr Saker's affidavit of 13 September 2012, annexed to which is a copy of Mr Saker's first affidavit of 25 July 2012 which was filed in WAD 171 of 2012 and the transcript of the hearing before Justice Siopis on 27 July 2012 in WAD 171 of 2012. 6 Mr Saker's second affidavit addresses each of the deficiencies identified by Justice Siopis. 1. In respect of the prospects of success of potential claims, the Liquidators have obtained the written advice of counsel. 2. The investigations undertaken to date by the Liquidators are identified. 3. The further avenues of investigation that the Liquidators have not yet pursued, which still need to be pursued in respect of each of the potential claims are identified. 4. The estimated value of identified potential claims are identified together with the recoverability of those claims. 5. The potential returns to creditors having regard to the estimated value of identified claims and the Liquidators' costs and legal costs which are projected to be incurred in conducting further investigations in any subsequent litigation are set out in Mr Saker's second affidavit and identify potential substantial returns to unsecured creditors. 7 The Liquidators seek confidentiality orders in connection with the application, submissions and affidavits filed in support of the application, and an order that the application be heard in camera. Confidentiality orders and hearing in camera 8 The application for confidentiality orders and for a hearing in the absence of the public is made because of the highly sensitive and confidential nature of the matters disclosed in supporting affidavits affirmed by Mr Saker (being his first affidavit of 25 July 2012 which was filed in proceeding number WAD 171 of 2012 and his second affidavit which has been filed in this proceeding), the content of the agreement in respect of which approval is sought, the context in which this application is made and the context in which the agreement is to operate. 9 The Liquidators are concerned that if the orders sought by them in relation to confidentiality and non-publication are not granted the Companies will suffer irreparable harm and detriment. This is because the hearing of the application under s 477(2B) of the Act will involve adducing evidence and making submissions detailing: 1. privileged advices; 2. confidential details of insurance policies; and 3. confidential investigations and the Liquidators' proposed strategy for future investigations; which any ordinary litigant would not be required to disclose, and which, as a matter of public policy, the Liquidators should not be required to publically disclose by reason of the statutory requirement to seek directions of this Court. This latter submission affects, objectively, the administration of justice in contrast to the particular prejudice to the Companies and their creditors. 10 Section 50(1) of the Federal Court of Australia Act (1976) (Cth) (FCA Act) provides: (1) The Court may, at any time during or after the hearing of a proceeding in the Court, make such order forbidding or restricting the publication of particular evidence, or the name of a party or witness, as appears to the Court to be necessary in order to prevent prejudice to the administration of justice or the security of the Commonwealth. 11 The High Court in Hogan v Australian Crime Commission (2010) 240 CLR 651 considered the effect of s 50 in its form prior to its amendment by the Federal Court of Australia Amendment (Criminal Jurisdiction) Act 2009 (Cth). This amendment is not presently material. 12 The Court at [7] observed that "s 50 qualifies the general provision in s 17(1) of the [FCA Act] that the jurisdiction of the Federal Court is to be exercised in open court". Later at [31] it emphasised that an order under s 50 is not to be made merely because it appears "to the Federal Court to be convenient, reasonable or sensible, or to serve some notion of the public interest, still less that, as the results of some 'balancing exercise', the order appears to have one or more of those characteristics". Any such order, relevantly, must be "necessary in order to prevent prejudice to the administration of justice …". I am satisfied for the reasons which follow that the orders sought are the minimum necessary to avoid such prejudice. Mr Saker's second affidavit 13 Confidentiality orders have already been made in WAD 171 of 2012 in respect of Mr Saker's affidavit of 25 July 2012. 14 Mr Saker's second affidavit refers to: (a) confidential commercial information as to the amount expected to be realised from the sale of assets, which is not already in the public domain and the disclosure of which may prejudice the ultimate sale price achieved; (b) details of investigations undertaken in respect of potential claims against various defendants, the public disclosure of which may prejudice any claim ultimately brought; (c) details of the evidence given at examinations which were conducted in the absence of the public; (d) privileged and confidential expert opinion in relation to certain potential claims prepared in contemplation of litigation and not otherwise in the public domain; (e) privileged and confidential information as to the nature, quantum and recoverability of the potential claims which is not otherwise in the public domain; (f) privileged and confidential advice of senior counsel in relation to potential claims which is not otherwise in the public domain; (g) confidential information regarding the ability to recover judgments in respect of the potential claims which is not otherwise in the public domain, including details of the insurance policies held by the Companies, and privileged counsel opinion in relation thereto; (h) confidential and privileged details of anticipated costs of investigation and litigation, including legal costs and details of proposed proceedings which are not otherwise in the public domain; and (i) confidential details of the terms of the agreement the entry into which is the subject of this application which are not otherwise in the public domain. 15 The courts have recognised that justice cannot be done if such matters are required to be heard in public. The foundation of this principle was summarised in the oft-cited passage from the decision of Viscount Haldane LC in Scott v Scott [1913] AC 417 at 437: While the broad principle is that the Courts of this country must, as between parties, administer justice in public, this principle is subject to apparent exceptions, such as those to which I have referred. But the exceptions are themselves the outcome of a yet more fundamental principle that the chief object of Courts of justice must be to secure that justice is done. ... As the paramount object must always be to do justice, the general rule as to publicity, after all only the means to an end, must accordingly yield. But the burden lies on those seeking to displace its application in the particular case to make out that the ordinary rule must as of necessity be suspended by this paramount consideration. 16 In McGrath v Re HIH Ltd [2005] NSWSC 731, as here, the liquidator sought orders that his application for approval to enter into an agreement under s 477(2B) of the Act be heard in camera. Barrett J in granting the application stated: [10] In the present case, I see two other public interests as competing with the public interest in the open justice. The first is the public interest in the due and beneficial administration of the estates of insolvent companies under the Corporations Act by liquidators appointed by and answerable to the court, that administration being for the benefit of creditors. The public interest in the due administration of the insolvent estates of the HIH companies is particularly pronounced where there are many thousands of creditors from all walks of life. The liquidators are officers of the court and are entitled to have the court appropriately facilitate such actions as they may properly take in the interests of creditors and in the furtherance of the public interest to which I have just referred. [11] The second competing public interest arises from the fact that the agreements in respect of which application is made under s.477(2B) are agreements concerned with the pursuit of litigation. All the actions in contemplation are actions in this court. There is a clear public interest in the due administration of justice in that litigation. The liquidators who propose to pursue it for the benefit of creditors should, as a general matter, have an expectation that they will be able to do so free from distortions of a kind that would not arise if the litigation were pursued by an ordinary litigant in the ordinary way. Unlike ordinary litigants who pursue litigation in the ordinary way, liquidators in the position of the present applicants are required to come to the court to seek approval if and when it becomes appropriate for them to enter into contracts not to be performed within the space of three months. Were it not for that requirement and for the supervision of the Court in that respect, the liquidators would, like other litigants, merely go ahead and enter into the agreements to which the confidentiality concerns relate. [12] The administration of justice is, in my view, very likely to be prejudiced in two ways by availability to the potential defendants of (and any public airing of) the information concerning the liquidators' proceedings that will inevitably be divulged by the adducing of evidence and the making of submissions on the hearing of the s.477(2B) applications. There is a likelihood of a real and negative impact upon the due and orderly conduct of the proposed proceedings themselves, in that the defendants in them will have access to information that, in the ordinary course, a plaintiff is entitled to keep confidential in the plaintiff's own interests. Any such access would produce an undue distorting effect in relation to the due conduct of those proceedings themselves. There is also a likelihood of a real and negative impact upon the due conduct of the several windings up by the court in the interests of the creditors of the respective companies. … [13] In the particular circumstances of the present s.477(2B) applications, I am satisfied that the two aspects of the public interest which compete with the public interest in the maintenance of open justice should be regarded as outweighing that latter interest. The special circumstances of the liquidators and the statutory functions they perform, coupled with the need for them to come to court on this occasion to seek leave in a way that an ordinary litigant does not have to seek, sets the case apart in such a way that justice will best be served by an examination of the matters the liquidators are bound to raise with the court in an atmosphere where they can lay them before the court fully and frankly and without any apprehension that the interests they are bound to serve will thereby be prejudiced. Applying the terminology used by Viscount Haldane LC in Scott v Scott, I am of the opinion that the paramount object of securing that justice is done in both the proceedings instituted by the liquidators' filing of statements of claim and the respective windings up will really be rendered doubtful of attainment if an order under s.80 is not made." (Original emphasis.) 17 These remarks were approved by Debelle J in Re JN Taylor Holdings Ltd (in liq) (2007) 62 ACSR 695 at [28] and I respectfully adopt them here. 18 The matters referred to in Mr Saker's second affidavit are private to the administration of the Companies. These matters are commercially sensitive, highly confidential and legally professionally privileged which, in the ordinary course, the Liquidators are entitled to keep confidential in both their and the Companies' own interests. 19 It would be quite prejudicial to the interests of the Companies and their unsecured creditors, being the very interests that the Liquidators seek to advance and protect, were the contents of Mr Saker's affidavits and the associated evidence and submissions to be publically available. The Liquidators submit, and I accept, that this would be directly contrary to the public interest in the due administration of justice concerning insolvent companies. 20 If the contents of Mr Saker's second affidavit referred to at [19] became known to potential defendants, it would give them a substantial tactical advantage in any litigation and result in a corresponding detriment to the Companies. This could have a real and negative impact upon the due and orderly conduct of the liquidations of the Companies and any proceedings brought by the Liquidators. Disclosure of the terms of the Companies' insurance policies may adversely affect the ability to make claims upon the insurer. Accordingly, disclosure of Mr Saker's second affidavit would likely defeat the paramount object of this Court which is to do justice according to law. It is significant that the Liquidators' application for Court approval under s 477(2B) of the Act is made in the performance of their statutory functions and obligations. The Liquidators are officers of the Court and are answerable to the Court. 21 I am, for these reasons, satisfied that it is necessary, in order to prevent prejudice to the administration of justice, for the Court to make orders excluding all persons other than the Liquidators and their legal representatives and essential court officers from the hearing of the Liquidators' application. Mr Saker's affidavits sworn 11 and 13 September 2012 respectively, including each attachment thereto, in support of the application, together with the supporting written submissions made on his behalf and any transcript of this hearing (together "the Documents") should be held in a sealed envelope on the Court file. There will be further orders that the envelope is to be marked "Confidential – not to be accessed for inspection without order of a Judge or Registrar of the Court" and is not to be made available for inspection except so far as the Court otherwise orders. Further, any application to inspect the Documents is to be referred to a Judge or Registrar of the Court within three business days notice thereof being provided to the solicitors for the Liquidators. 22 I have, in coming to this decision, had the benefit of considerably more detailed information than is exposed in these reasons. It would, of course, defeat the very purpose of the orders I propose to make were that detailed information to be published. Accordingly, so as to make the Court's orders efficacious, I have omitted this material. Section 477(2B) application 23 Section 477(2B) of the Act provides: Except with the approval of the Court, of the committee of inspection or of the resolution of the creditors, a liquidator of a company must not enter into an agreement on the company's behalf (for example, but without limitation, a lease or an agreement under which a security interest arises or is created) if: (a) without limiting paragraph (b), the term of the agreement may end; or (b) obligations of a party to the agreement may, according to the terms of the agreement, be discharged by performance; more than 3 months after the agreement is entered into, even if the term may end, or the obligations may be discharged, within those 3 months. 24 The Liquidators lack the necessary funds to pursue the investigations identified in Mr Saker's second affidavit, and subject to the outcome of those investigations, pursue the claims now identified and upon which counsel has advised. 25 The Liquidators and the Companies therefore propose to enter into a funding agreement with Riverrock Capital Limited (the Funder) in the form of attachment AJS-25 to Mr Saker's second affidavit (Funding Agreement). Under the Funding Agreement the Funder will provide the necessary funds to cover the Liquidators' and the Companies' costs associated with the investigations and any proceedings. 26 The Funding Agreement is conditional upon the Liquidators obtaining the Court's approval under s 477(2B) of the Act to enter into the Funding Agreement as well as the retainer of Lipman Karas. 27 The Funding Agreement is intended to govern the rights and obligations of the parties until final determination of any proceedings either by judgment or settlement. The Liquidators' investigations and any consequential proceedings are unlikely to be resolved within 3 months of the execution of the Funding Agreement. 28 Because the term of the Funding Agreement may end or the obligations of a party to the agreement may be discharged more than 3 months after entering into the agreement, the Liquidators must obtain the Court's approval under s 477(2B). 29 The principles to be applied by the Court in determining whether to grant approval to the Liquidators under s 477(2B) of the Act, to enter into the Funding Agreement, are well settled: 1. The role of the court is to grant or deny approval to the Liquidators' proposal: Re The Bell Group Ltd (in liq) [2009] WASC 235 at [57]. 2. The task of the court is not to reconsider all of the issues which have been weighed up by the Liquidators or to second guess the Liquidators' judgment. Thus the Court's role is not to determine if the Liquidators' proposal is the best available option, to develop some alternative proposal which might seem preferable or to substitute its own views for those of the Liquidators: Re The Bell Group Ltd (in liq) at [57]; Re Addstone Pty Ltd (In Liquidation) (1998) 83 FCR 583 at 593-594. 3. Rather, the court must review the Liquidators' proposal to "be satisfied that the liquidator is acting in good faith in the making of the commercial judgment in respect of which the Court is being asked to make an order": Re Addstone Pty Ltd (In Liquidation) at 594. The Court's approval of the proposal is thus not an endorsement of the proposed agreement. It is merely a permission to the Liquidators to exercise their own commercial judgment in the matter. 30 If the Court is satisfied that in entering into the Funding Agreement, the Liquidators have acted in good faith and for proper purposes the Court will give the Liquidators considerable latitude in exercising their commercial judgment: Re ACN 076 673 875 Ltd (rec and mgr apptd) (in liq) (Bendeicn as liq, Greatorex) (2002) 42 ACSR 296 at [16] and Re Imobridge Pty Ltd (in liq) (No 2) [2000] 2 Qd R 280 citing Re Spedley Securities Ltd (in liq) (1992) 9 ACSR 83 at 85-86, where Giles J remarked (in a different context): …the court is necessarily confined in attempting to second guess the liquidator in the exercise of his powers, and generally will not interfere unless there can be seen to be some lack of good faith, some error of law or principle, or real and substantial grounds for doubting the prudence of the liquidator's conduct. 31 In reviewing a liquidator's proposal to enter into a funding agreement the authorities have identified a non-exhaustive list of factors relevant to the exercise of the Court's discretion. Not all of these factors will be relevant in all cases. None are determinative. 32 The factors relevant to the exercise of the Court's discretion may include: 1. the nature and complexity of the matter and the risks involved in pursuing a claim or claims; 2. the prospects of success of the proposed action; 3. the amount of costs likely to be incurred in the conduct of the action and the extent to which the funder is to contribute to those costs; 4. the extent to which the funder will contribute towards the opponent's costs in the event that the action is not successful or towards any order for security for costs; 5. the circumstances surrounding the making of the contract, including the ability of the funder to meet its obligations; 6. the level of the funder's premium; 7. the extent to which the liquidators have canvassed other funding options and consulted with the creditors of the company; 8. the interests of creditors and the effect that the funding agreement may have on creditors of the company; 9. possible oppression to another party in the proceedings; and 10. the extent to which the liquidators maintain control over the proceedings. 33 The following authorities variously support such an approach: Re ACN 076 673 875 Ltd; Re Addstone Pty Ltd (In Liquidation); Re Imobridge Pty Ltd (in liq) (No 2). 34 It should be observed that in Re Addstone Pty Ltd (In Liquidation), as was pointed out by Austin J in Re ACN 076 673 875 Ltd at [28]: Mansfield J explored the legal principles which permit a liquidator to enter into a litigation funding agreement notwithstanding the law of maintenance and champerty. He observed (at 1328) that the power to dispose of property of the company conferred by s 477(2)(c) of the Corporations Act creates a statutory exception to the law of maintenance and champerty. He then considered whether the liquidator in the case before him was acting bona fide under s 477(2)(c) in selling or disposing of property of the company, namely causes of action or the proceeds of conducting litigation, in entering into the proposed litigation funding agreement. 35 Accordingly, while not on all fours with the present, his Honour's analysis of relevant factors is nonetheless of considerable assistance in the present context. 36 A number of these factors are present here, and I will deal with them in turn. Nature of the matter, risks involved and prospects of success 37 The Liquidators consider for good reasons that further substantive investigation needs to be undertaken in order to determine whether proceedings should be brought in respect of the potential claims identified to date. It is thus too early to opine more definitely on the prospects of success. However, even on the evidence presently available there are causes of action available to the Liquidators that appear to have prospects of success. These causes of action are likely to be valuable by reason of applicable insurance policies. Further, the Liquidators consider that there may be further claims not yet identified which may be prospective. These further claims require investigation. Funder's contribution to costs 38 The Liquidators and their lawyers to be retained pursuant to the Funding Agreement have each prepared budgets estimating the costs of investigating the potential claims identified to date and the costs of bringing proceedings in respect of those potential claims. The Funding Agreement will cover these and other costs. Interests of creditors 39 In the Liquidators' opinion, it is in the interests of the creditors for the investigations to be undertaken, and the Funding Agreement provides the only realistic means for those investigations to be funded. I consider this opinion to be well-founded. 40 In the Liquidators' opinion absent entry into the Funding Agreement there will be no prospect of any return to the unsecured creditors. I am also satisfied that this opinion is well-founded. 41 The committees of inspection of the Companies, on 4 July 2012, approved entry into the Funding Agreement and the retainer of Lipman Karas. 42 There are safeguards in place to protect the Companies against adverse costs. Funder's premium 43 I am satisfied that the premium for the Funder in the Funding Agreement is reasonable given: 1. the large financial commitment by and associated risk to the Funder; 2. further investigations are required in relation to the potential claims before they can be brought; 3. the Liquidators sought unsuccessfully to obtain alternative funding proposals; and 4. Mr Saker's opinion, based on his knowledge and experience of the premiums and other terms of litigation funding agreements in the market place, that the Funder's premium is reasonable and commercially acceptable. Other funding options 44 The Liquidators have made extensive enquiries as to alternative funding, including from members of the committees of inspection but without success. Possible oppression 45 This factor is not relevant. It is concerned with whether there may be oppression to another party in the proceedings or in third party proceedings arising from approval of the funding agreement as a result of, for example, undue delay on the part of the Liquidators or because the Liquidators have not paid the costs of another party in a previous application: see Re ACN 076 673 875 Ltd at [25]. Liquidators' control over the proceedings 46 The Funding Agreement expressly provides for the Liquidators' control over the proceedings. Acting in good faith and for proper purposes 47 I am satisfied that the Liquidators have made this application to the Court in good faith in genuine belief that the Funding Agreement and retainer of Lipman Karas is in the best interests of the Companies and their creditors: 1. the Funding Agreement will provide the Liquidators with the funding necessary to conduct the investigations and any proceedings; 2. the Funding Agreement represents the best means available to the Liquidators to obtain funding for the conduct of the investigations and any proceedings; and 3. entry into the Funding Agreement is in the best interests of the Companies because it provides the only opportunity to provide returns to the Companies and their unsecured creditors. Absent the Funding Agreement and the prosecution of the potential claims, there is likely to be no return to unsecured creditors. 48 It is appropriate, in these circumstances, for the Court to give the Liquidators considerable latitude in exercising their commercial judgment. Ex parte application 49 This application is made ex parte. Other than the members of the committees of inspection and those secured creditors who have executed confidentiality agreements, no other person was put on notice that this application was to be made. 50 It is not necessary for the Liquidators to give notice of this application for approval under s 477(2B) of the Act to any party. As Hasluck J noted in Re The Bell Group Ltd (in liq) at [58]: It was said further in that case [Re Newtronics Pty Ltd; Ex parte Stewart [2007] FCA 1375] that the court's approval [under s 477(2B)] 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. (Emphasis added.) Conclusion 51 For these reasons approval, pursuant to s 477(2B) of the Act, permitting the Liquidators and the Companies to enter into the Funding Agreement on behalf of the Companies will be given. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour. Associate: Dated: 27 September 2012