FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v Piggott Wood & Baker (a firm) [2015] FCA 18 Citation: Australian Securities and Investments Commission v Piggott Wood & Baker (a firm) [2015] FCA 18 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v PIGGOTT WOOD & BAKER (A FIRM) File number(s): T42 of 2001 Judge(s): KERR J Date of judgment: 29 January 2015 Catchwords: CORPORATIONS – Liquidation of unregistered managed investment scheme – Liquidator's application for approval of settlement of litigation in Supreme Court of Tasmania – Approval granted PRACTICE AND PROCEDURE – Application for non-publication orders in respect of liquidator's affidavit and annexures – Non-publication orders not necessary to prevent prejudice to the proper administration of justice – Non-publication orders not made Legislation: Corporations Act 2001 (Cth) ss 411(4)(b), 477, 477(2A), 477(2B), 479(3), 601EE(1), 601EE(2) Federal Court of Australia Act 1976 (Cth) ss 37AF, 37AG(1)(a) Federal Court Rules 2011 r 9.71(2)(c) Legal Profession Act 1993 (Tas) ss 111, 113 Cases cited: Elderslie Finance Corporation Ltd v Newpage Pty Ltd (No 6) [2007] FCA 1030; (2007) 160 FCR 423 Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 Jones v State of Victoria [2014] FCA 1404 Modra v State of Victoria (Department of Human Services Victoria & Department of Education and Early Childhood Development) [2013] FCA 1041 Re Bell Group Ltd [2013] WASC 409; (2013) 97 ACSR 117 Re Chase Corporation (Australia) Equities Pty Ltd (1990) 8 ACLC 1118 Re HIH Insurance Ltd [2007] NSWSC 498 Re Lemon Tree Passage and Districts RSL and Citizens Club Co-Operative Limited (1988) 6 ACLC 24 Re Spedley Securities Ltd (1992) 9 ACSR 83 Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 Wade v State of Victoria (No 2) [2012] FCA 1080 Date of hearing: 17 October 2014 Date of last submissions: 28 November 2014 Place: Hobart Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 73 Counsel for the Applicant: Mr A Buckley Solicitor for the Applicant: Toomey Maning & Co IN THE FEDERAL COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY GENERAL DIVISION T42 of 2001 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant AND: PIGGOTT WOOD & BAKER (A FIRM) Respondent JUDGE: KERR J DATE OF ORDER: 29 JANUARY 2015 WHERE MADE: HOBART THE COURT ORDERS THAT: 1. Pursuant to s 601EE(2) of the Corporations Act 2001 (Cth) Barry Kenneth Hamilton as liquidator of the Piggott Wood & Baker Run-out Mortgage Business is justified in entering into and performing the Deed of Settlement made 9 September 2014 [annexure "BKH-47" to the affidavit of Barry Kenneth Hamilton sworn 11 September 2014 ("Settlement Deed") and the Deed made 26 June 2014 [annexure "BKH-50" to the affidavit of Barry Kenneth Hamilton sworn 11 September 2014 ("ST Deed")]. 2. To the extent necessary, pursuant to s 601EE(2) of the Corporations Act 2001 (Cth) Barry Kenneth Hamilton as liquidator of the Piggott Wood & Baker Run-out Mortgage Business has the approval of the Court to enter into the Settlement Deed, notwithstanding that obligations of one or more of the parties to the Settlement Deed may, according to the terms of the Settlement Deed, be discharged by performance more than three months after the date of the Settlement Deed. 3. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) the reasons for decision in Australian Securities and Investments Commission v Piggott Wood & Baker (a firm) [2015] FCA 18 not be published to any person other than the parties. 4. Order 3 to remain in force until 12 noon on 12 February 2015. 5. The liquidator's costs of and incidental to this application be paid out of the assets of the Piggott Wood & Baker Run-out Mortgage Business. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA TASMANIA DISTRICT REGISTRY GENERAL DIVISION T42 of 2001 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Applicant AND: PIGGOTT WOOD & BAKER (A FIRM) Respondent JUDGE: KERR J DATE: 29 JANUARY 2015 PLACE: HOBART REASONS FOR JUDGMENT 1 On 13 December 2001 Sundberg J ordered that the Run-out Mortgage Business conducted by the Tasmanian law firm Piggott Wood & Baker be wound up as an unregistered managed investment scheme. His Honour appointed Barry Kenneth Hamilton as liquidator of the scheme and conferred on Mr Hamilton all of the powers that a liquidator of a company would have pursuant to s 477 of the Corporations Act 2001 (Cth) as if the Run-out Mortgage Business were a company. Justice Sundberg's orders were made pursuant to s 601EE(1) of the Corporations Act. 2 Mr Hamilton subsequently commenced, inter alia, Proceeding No 404 of 2003 in the Supreme Court of Tasmania against Piggott Wood & Baker seeking damages and other relief in respect of various causes of action in relation to moneys paid between 1991 and 1999 to Piggott Wood & Baker by investors in the firm's contributory mortgage scheme. 3 The various interested parties including Mr Hamilton as liquidator have now reached a proposed settlement which will conclude the Tasmanian Supreme Court proceedings on agreed terms. The proposed settlement is subject to the approval of this Court. The liquidator accordingly applies to the Court to approve his entering into the compromise reached by agreement of the parties in Proceeding No 404 of 2003. 4 For the reasons that follow I have decided that the approval sought by the liquidator should be granted. 5 However, I have rejected the submissions advanced on behalf of the liquidator that much of the material before the Court relating to the application for approval to enter into the compromise should remain confidential. A non-publication order is not, in my judgment, necessary for the proper administration of justice. 6 Rather, and notwithstanding the unique position in which a liquidator stands in applying to the Court for approval of a compromise, a circumstance which often may justify an order for non-publication, I am affirmatively satisfied that in the present instance the proper administration of justice requires this Court to incline towards the fullest possible disclosure and transparency rather than secrecy. The factors which have influenced me to reach that conclusion include (a) the plight of investors caught up in the collapse of the mortgage scheme has been and remains the subject of considerable public interest; (b) the management of the mortgage scheme involved a firm of legal practitioners; (c) the delay between the collapse of the fund and settlement has been significant; (d) the compromise will not result in full satisfaction of all investor claims; and, having regard to the above, (e) there is some risk that failure to expose the reasons that justify the compromise, and the materials upon which the Court has relied, could be misunderstood as the legal profession protecting its own. 7 Point (e) has greater significance than it would in instances where the affected parties have had an opportunity to be heard. However, for reasons I explain later, I did not require Mr Hamilton to serve his application seeking the Court's approval of his entry into the compromise on the some 300 investors or their estates in the case of those that have since deceased. 8 Finally, for reasons I give later, in the particular circumstances of this matter, none of the usual reasons that can sometimes justify an order to restrict access to the documents filed in the proceeding in my view warrant departure from that general approach. Background 9 Piggott Wood & Baker is a long established Tasmanian firm of solicitors. The failure of its mortgage scheme and the circumstances surrounding that failure attracted very large public attention. The publicity, almost all of it negative, surrounding the collapse of the scheme was extensive. The standing and reputation of the Tasmanian legal profession was affected. The collapse of Piggott Wood & Baker's mortgage scheme significantly depleted the funds in the Solicitors' Trust because those funds had to be applied to reduce the large losses suffered by investors. Those facts are so notorious that I regard them as common knowledge in this locality. 10 Piggott Wood & Baker notified its insurers in 1998 and/or 1999 of potential claims relating to the operation of its contributory mortgage scheme. The very substantial scale of those problems soon became obvious. 11 On 1 October 2002 the Law Society of Tasmania obtained orders from the Supreme Court of Tasmania pursuant to s 111 of the Legal Profession Act 1993 (Tas) that Piggott Wood & Baker was in default. That default was the trigger for the first of many drawdowns from the Solicitors' Trust, a fund set aside to protect the clients of solicitors from such losses. Between 2002 and 2013 the Solicitors' Trust made payments of $195,601.74, $6,173,312.31 and $1,036,529.27 as the equivalent of a return of principal to investors in the contributory mortgage scheme. It paid each of the investors all of the principal due to them save for $11,400 that remains due to two investors. 12 The rights and interests of the investors in the contributory mortgage scheme arising from losses incurred in respect of which the default order was made were, by operation of s 113 of the Legal Profession Act 1993 (Tas), assigned to the Solicitors' Trust to the extent that the Solicitors' Trust had made those payments to the investors. 13 However recovery by the Solicitors' Trust of the entitlements so assigned and by the investors of the interest that had been promised them was destined not to be simple. 14 The scale of the investors' losses (including the amounts equivalent to a return of principal paid by the Solicitors' Trust) eventually proved beyond the capacity of many of the partners who at various times had constituted the firm of Piggott Wood & Baker to meet. 15 Only four of the former partners remained solvent throughout the aftermath of the collapse. In respect of those four persons Mr Hamilton deposes that given the periods that they were partners of that firm, "their liability would be small in comparison to the total claimed…on the basis that the majority of breaches…occurred when [those persons] were not partners…" (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [49].) For those reasons their circumstances are only marginally relevant to these proceedings. I have no basis to doubt the conclusion expressed by Mr Hamilton at [50] that the policies of insurance held by the firm should respond to his claims against those partners. 16 Six other partners of Piggott Wood & Baker at times between 1991 and 1999 became bankrupt: Colin Peter Reginald Hill and Michael Graeme Foster in 2004, and John Thomas Turner, Grant Edward Kench, Audrey Roselene Mills and Peter Gavan Wood in 2005. Roger Geoffrey McBain was appointed the trustee in bankruptcy of each of the bankrupt partners. 17 A further former partner of Piggott Wood & Baker, Geoffrey Leigh Sealy, entered into a personal insolvency agreement in 2005. In 2009 Mr Sealy's trustee assigned to Mr McBain any rights the trustee held to claim upon Piggott Wood & Baker's insurance. 18 The Solicitors' Trust lodged proofs of debt in each bankrupt estate with Mr McBain for the amounts of principal the Solicitors' Trust had paid to the investors. Mr Hamilton lodged with Mr McBain proof of debt for the small outstanding $11,400 of principal. 19 Mr Hamilton also lodged proof of debt for the interest due to the investors and the Solicitors' Trust up until 21 July 2005, the date of bankruptcy of Peter Gavan Wood. Mr Wood was the last of the Piggott Wood & Baker partners to be declared bankrupt. Interest claimed for investors totals $8,545,187.42 and interest claimed for the Solicitors' Trust totals $529,817.62. 20 This background goes some way towards placing Supreme Court Proceeding No 404 of 2003 (the Tasmanian Supreme Court action) and the current application to approve its compromise in context. 21 The Tasmanian Supreme Court action was commenced by the applicant liquidator with the object of recovering from the former partners who constituted the firm of Piggott Wood & Baker the principal paid to investors by the Solicitors' Trust; the principal outstanding to investors; and interest. What remains at stake in those proceedings has evolved. I accept the characterisation given to the proceedings by Mr O'Farrell SC (counsel who settled the original writ in the Tasmanian Supreme Court action) that what remained in dispute can best be understood as "essentially a claim for the recovery of interest lost by investors". Because of the subsequent bankruptcy of the former partners who constituted that firm at various times, the prospects of recovery turns substantially on whether their insurers are liable to meet claims for those amounts. 22 The insurers of Piggott Wood & Baker for the years 1998 and 1999 were FAI General Insurance Company Ltd ("FAI") for claims up to $1,100,000; FAI, GIO Insurance Ltd and QBE Insurance Ltd for the layer $1,100,000 to $5,000,000; and GIO Insurance Ltd, QBE Insurance Ltd, FAI, AMP General Insurance Ltd, MMI Insurance Ltd and certain Lloyds underwriters for the layer $5,000,000 to $7,500,000. (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [31]; copies of the relevant policies are at annexure BKH-21.) 23 As a general proposition the insurers dispute both the existence of and, to the extent liability exists, more strongly, the quantum of, their liability under the various policies. 24 There is a further complication because, as is well known, in 2001, the most financially exposed of those insurers, FAI, was placed into liquidation. In 2006 pursuant to Corporations Act s 411(4)(b) a Scheme of Arrangement was approved for companies in the HIH group including FAI. The Scheme Administrators were empowered to set dates by which creditor claims had to be submitted and proceedings commenced. 25 In consultation with the applicant liquidator, Mr Hamilton, Mr McBain submitted claims and commenced proceedings against FAI within the time limits set by the Scheme Administrators. Mr McBain also pursued claims for assistance under the HIH Claims Support Scheme established by the Commonwealth Government. However that scheme is now closed. It has now become apparent that the Commonwealth Government will not process a number of the claims lodged by former partners and pursued by Mr McBain. (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [54].) The complications arising from these side-issues also have to be taken into account in assessing the overall wisdom of the proposed settlement. Evolution towards the proposed settlement 26 The materials before the Court do not disclose when or which of the interested parties initiated discussions about the possibility of settling these complex and protracted disputes without the Tasmanian Supreme Court proceedings going to trial but it is clear that by early 2014 discussions to explore that possibility had begun. By that time the number of interested parties (excluding the 300+ individual investors or their estates) with a direct or indirect interest in finalising that litigation and the liquidation of the mortgage scheme set in motion by the orders of Sundberg J some 13 years previously had expanded to include (a) Mr Hamilton as liquidator; (b) Mr McBain as trustee for the bankrupt former partners and as the assignee of rights from Mr Sealy's trustee; (c) the Solicitors' Trust; (d) FAI; (e) the other insurers and, where relevant, their successors in title; (f) the FAI Scheme Administrators; and (g) the Commonwealth of Australia in relation to the HIH support scheme. (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [55].) Those parties agreed they would attend mediation in June 2014. 27 To prepare for that mediation the parties who shared common interests (a) McBain, the Solicitors' Trust and Mr Hamilton—pursuing the claims for principal paid by the Solicitors' Trust, and seeking interest; (b) FAI and the Scheme Administrators; and (c) the Excess Layer Insurers, each prepared joint position papers setting out their respective understanding of the law and its application to the facts. (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [58].) 28 Those position papers revealed that the main issues remaining in contention between the parties were, as Mr Hamilton summarises: (a) categories of claims – whether or not a "claim" under the insurance policies should be categorised such that each investor is said to have one claim for principal and a separate claim for interest (the position of FAI and the Excess Layer Insurers), or characterised such that there is said to be one claim for the principal and interest outstanding for each loan (the position of McBain, The Solicitors' Trust and me); (b) interest – whether or not I could claim interest up until the last date of bankruptcy (21 July 2005) or only until the day before the liquidation of FAI (26 August 2001); (c) double deductible – whether or not the insurers were entitled to apply a double deductable [sic] (a total of $42, 000.00) to each claim. (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [59].) 29 Mediation took place on 10 and 11 June 2014. What was said in those discussions is properly not before the court but by early September 2014 agreement had been reached. 30 Mr Hamilton deposes: Subject to the approval ("Approval") of this Honourable Court, by a Deed of Settlement dated 9 September 2014, I agreed to settle: (a) Supreme Court Proceeding Number 404 of 2003; and (b) all claims I may have in my capacity of liquidator of the Business against the parties to the Deed, on the basis, inter alia, that: (c) the Scheme Administrators will, upon being served with a copy of the Order containing the Approval, accept the claims of McBain (in relation to the proof of debt lodged by The Solicitors' Trust and my proof of debt) as an Established Scheme Claim in the sum of $6,600,000.00; (d) within 28 days of being served with a copy of the Order containing the Approval, the Scheme Administrators will pay to McBain an amount by way of interim dividend equal to their current Payout Percentage (as defined in the Scheme of Arrangement); (e) within 28 days of being served with a copy of the Order containing the Approval, the following amounts will be paid by the Excess Layer Insurers to McBain: (i) $256,000.00 by the parties defined in Recital M of the Deed of Settlement as "Gordian"; (ii) $256,000.00 by the parties defined in Recital N of the Deed of Settlement as "QBE"; and (iii) $53,000.00 by the parties defined in Recital O of the Deed of Settlement as "Allianz"; (f) within 28 days of being served with a copy of the Order containing the Approval, The Commonwealth will pay $50,000.00 to McBain; (g) each party to the Deed releases each other party to the Deed and Underwriters of Lloyds from all claims and liability. (Affidavit of Barry Kenneth Hamilton sworn 11 September 2014 [63].) Jurisdiction to make orders sought 31 Mr Hamilton has sought approval of the above settlement pursuant to several provisions of the Corporations Act: the Court's power to give directions under s 479(3); the Court's power to approve long-term agreements under s 477(2B); and the Court's power to approve a compromise of a debt to the company over $20,000 under s 477(2A). Written submissions subsequently filed on behalf of the liquidator identified further alternative bases upon which Mr Hamilton contended the Court had power to make the orders sought approving the settlement: Corporations Act s 601EE(2) pursuant to which the Court may make any orders it considers appropriate for the winding up of an unregistered managed investment scheme; the liberty to apply reserved to the liquidator by Sundberg J in his Honour's orders of 13 December 2001; and the Court's powers of supervision over a trustee. 32 Counsel for the liquidator, in his written submissions filed in this proceeding, submits that "it may be debatable" whether the settlement involves a "debt to the company" within the meaning of Corporations Act s 477(2A). This jurisdictional issue is comprehensively addressed by Lindgren J in Elderslie Finance Corporation Ltd v Newpage Pty Ltd (No 6) [2007] FCA 1030; (2007) 160 FCR 423 at [17]-[41]. I am not persuaded that the settlement involves a "debt to the company". 33 As to Corporations Act s 477(2B), it is clear that the settlement involves a long-term agreement of the kind that would require approval under that section were Mr Hamilton the liquidator of a company rather than the liquidator of an unregistered managed investment scheme because over three months has elapsed since the Deed of Settlement was entered into on 9 September 2014, and the performance of the parties' obligations under that Deed is required within 28 days of their being served with a copy of the Court's order granting approval of the settlement. Although Mr Hamilton was granted all the powers of a company liquidator would have pursuant to s 477 of the Corporations Act, he is not the liquidator of a company in this case. For that reason I am sceptical of the proposition that he is subject to any limitation in respect of a requirement for court approval which derives from the terms of s 477(2B). 34 Notwithstanding that the proposed settlement does not appear to me to involve a debt to a company within the meaning of s 477(2A), I am satisfied that I have jurisdiction to approve the liquidator entering into the compromise pursuant to s 601EE(2), and pursuant to the liberty to apply reserved to him by Sundberg J. That conclusion flows naturally from (a) the broad words of the statute and (b) the express terms of the orders Sundberg J made pursuant thereto. In addition the Court's power to give directions pursuant to s 479(3) is enlivened by this application. The principles to be applied in considering whether or not to grant approval are in any event essentially the same, whether the Court is exercising its jurisdiction under s 477(2A), 477(2B), 479(3), 601EE(2) or pursuant to the liberty to apply reserved to Mr Hamilton. For the same reason, for the avoidance of doubt, I am prepared to approve pursuant to s 601EE(2) the liquidator's entering into the settlement deed notwithstanding that the obligations of a party to the agreement may be discharged by performance more than three months after the settlement deed was entered into. Principles governing approval 35 In Re Spedley Securities Ltd (1992) 9 ACSR 83 when asked to approve an agreement Giles J stated: The court pays regard to the commercial judgment of the liquidator. That is not to say that it rubber stamps whatever is put forward by the liquidator but, as is made clear in Re Mineral Securities (Australia) Ltd [1973] 2 NSWLR 207 at 231–2, the court is necessarily confined in attempting to second guess a 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 in law or principle, or real and substantial grounds for doubting the prudence of the liquidator's conduct. 36 Giles J's statement has been repeatedly reaffirmed as a convenient summary of the principles to be applied: see Re Bell Group Ltd [2013] WASC 409; (2013) 97 ACSR 117 at 121 [28] per Allanson J. 37 In Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375 Gordon J set out more comprehensively the principles relevant to the Court's power under s 477(2B) in the following terms: (1) the court does not simply "rubber stamp" whatever is put forward by a liquidator. As Giles J said in Re Spedley Securities Ltd (In liq) (1992) 10 ACLC 1,742 at 1,745 in relation to the powers of a liquidator to compromise claims: [T]he 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 in law or principle, or real and substantial grounds for doubting the prudence of the liquidator's conduct. The same restraint must apply when the question is whether the liquidator should be authorised to enter into a particular transaction the benefits and burdens of which require assessment on a commercial basis. Of course, the compromise of claims will involve assessment on a legal basis, and a liquidator will be expected (as was made plain in Re Chase Corporation (Australia) Equities Ltd) to obtain advice and, as a prudent person would in the conduct of his own affairs, advice from practitioners appropriate to the nature and value of the claims. But in all but the simplest case, and demonstrably in the present case, commercial considerations play a significant part in whether a compromise will be for the benefit of creditors. (2) a court will not approve an agreement if its terms are unclear: Re United Medical Protection (No 4) (2002) 20 ACLC 1,647; (3) 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: Corporate Affairs Commission v ASC Timber Pty Ltd (1998) 16 ACLC 1,642; (4) in reviewing the liquidator's proposal, the task of the Court is: [not] to reconsider all of the issues which have been weighed up by the liquidator in developing the proposal, and to substitute its determination for his in….a hearing de novo [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 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. See ASC Timber at 1,650; see also Re Gate Gourmet Australia Pty Ltd (in liq) (2005) 23 ACLC 834 at [10] and Warne v GDK Financial Solutions; Peridon Village Nominees (2006) 24 ACLC 1,019 at [60]. The Court's approval is not an endorsement of the proposed agreement but is merely a permission for the liquidator to exercise his or her own commercial judgment in the matter; (5)… [not relevant in the present instance]; (6) generally, the Court grants approval … only where the transaction is the proper realisation of the assets of the company or otherwise assists in the winding up of the company: GDK Financial Solutions at [58] and the cases cited therein. 38 There is no plausible reason to apply different principles if the jurisdiction the Court exercises is that pursuant to s 601EE(2). I therefore proceed on that basis. 39 Mr Hamilton explains his understanding of the practical effects of the proposed settlement in his affidavit at [64]-[68]. 40 Mr Hamilton accepts that the total amount he will recover if the compromise is entered into will be substantially less than he initially estimated to be his legal entitlement. At [69] of his affidavit he details what he had previously estimated would be the outcome. The difference between those amounts, taking all of the sub-issues into account, is the difference between his receiving $ 1,473,150 (less costs and expenses) under the compromise from McBain and his receiving $2,089,734.93 (less costs and expenses) from McBain on the basis of his pre-settlement estimate of his prospects of success. 41 Notwithstanding, Mr Hamilton deposes at [70] that in his view the proposed settlement would be commercially sound for the following reasons: (a) significant costs, both my own and that of solicitors and Counsel, will be incurred in pursuing the proceeding, and the limit of indemnity under the insurance policies annexed hereto as "BKH-21" includes amounts payable for a claimant's costs; (b) even if I am successful against the respondent in the proceeding: (i) there may be merit in some of the arguments raised by FAI and the Excess Layer Insurers in respect of the manner in which the insurance policies should respond to my claims, resulting in a return less than what I anticipate receiving as a result of the Deed of Settlement; (ii) the liability of the partners referred to in paragraph 48 may be minimal; (iii) the quantum of my claim for interest will decrease, given it is currently calculated at a rate of 10.25%; (iv) there will be a significant dispute, particularly with the Excess Layer Insurers, regarding in which policy year (1998 or 1999) the respondent notified the insurers of the claims; (v) the quantum of my claim will most likely reduce on the basis that my current claim includes interest claims for investors whose money was not included in the original advances to borrowers of the Scheme, but was substituted into various loans during the course of the loans, in which case it is highly likely that the insurance policies will treat such substituted amounts as separate claims; (vi) I may be required, in lieu of my claim for interest, to substitute a claims for loss of use of money pursuant to the principles set out in Hungerfords & Ors v. Walker & Ors (1990) 171 CLR 125, which would require me to interview and obtain documentation from over 300 investors detailing what each investor would have done with their money if it had of been [sic] repaid by the respondent when repayment was requested; (c) the investors have endure over 12 years of delays in the recovery of money and, whilst they have been repaid their principal in full (except for 2 investors in a total amount of $11,430,00), they deserve to have the Supreme Court Proceeding resolved in a timely manner now that it is capable of being resolved; (d) if this Honourable Court grants the Approval, upon receipt of all money from McBain relating to the matters set out in the Deed of Settlement and further money from McBain in relation to other recoveries he has made, I will then be able to apply to this Honourable Court seeking directions as to how the funds received should be distributed; (e) the opinion of Michael O'Farrell SC which is annexed and marked "BKH-52" supports the merits of the proposed settlement. Independence of counsel 42 Mr Hamilton relies upon the opinion of Mr O'Farrell SC in support of his conclusion that the proposed settlement is legally and commercially sound. Mr O'Farrell is a very experienced commercial barrister. He was appointed Senior Counsel in 2009. Shortly before these proceedings were commenced he was appointed Solicitor-General for the State of Tasmania. Mr O'Farrell clearly satisfies the requirement that counsel providing advice to a liquidator on the exercise of commercial judgment in a matter involving large sums of money be either senior counsel or counsel of at least seven years standing: Re Chase Corporation (Australia) Equities Pty Ltd (1990) 8 ACLC 1118; Re Lemon Tree Passage and Districts RSL and Citizens Club Co-Operative Limited (1988) 6 ACLC 24. 43 It is not a statutory requirement that counsel providing an opinion in these circumstances be independent. However, advice compromised by any suggestion of bias could not assist the Court and because Mr O'Farrell drafted the statement of claim in the Tasmanian Supreme Court proceedings and was instructed by Mr Hamilton in the mediation, I sought submissions as to the relevance of that circumstance. Having considered the question I am content to proceed on the basis that Mr Hamilton is entitled to rely on Mr O'Farrell's opinion in forming his commercial judgment. 44 There are strong practical reasons to accept that Mr Hamilton was entitled to have sought Mr O'Farrell's opinion rather than instructing someone who had an entire absence of prior knowledge or familiarity with the proceedings. First, Mr O'Farrell's familiarity with the issues dealt with in the mediation was of benefit in that it would have been significantly more costly for the liquidator to have had to brief new counsel. Second, given the complexity of the issues involved, not all of which are self-evident, some significant additional time as well as money would have been expended in obtaining an opinion from counsel with no prior knowledge of or familiarity with the proceeding. 45 Mr O'Farrell's representation of Mr Hamilton at the June 2014 mediation does not require me to find any lack of independence in the subsequent advice he tendered to Mr Hamilton as to the merits of the settlement Mr Hamilton proposes to enter into. I discern nothing in the tone or content of Mr O'Farrell's opinion that could give rise to any suggestion of want of professional impartiality on his part. 46 Even in those instances in which the opinion of an independent lawyer is a formal requirement (for example, if the litigation representative of a person under a legal incapacity seeks the approval of a court for a settlement pursuant to Federal Court Rules 2011 r 9.71(2)(c)) the requirement of independence may be best understood as a reference to an opinion provided in furtherance of the lawyer's duty to assist the Court, rather than requiring an absence of prior knowledge or familiarity with the proceeding: see Wade v State of Victoria (No 2) [2012] FCA 1080; Modra v State of Victoria (Department of Human Services Victoria & Department of Education and Early Childhood Development) [2013] FCA 1041; Jones v State of Victoria [2014] FCA 1404. 47 Mr O'Farrell SC expressly provided his opinion to assist the Court and I am satisfied that he has brought a relevantly independent mind to the task of assessing the merits of the proposed settlement. Counsel's opinion 48 Mr O'Farrell's opinion identifies the three critical issues that divided the parties prior to mediation. 49 In respect of the first issue, "Categories of Claims", Mr O'Farrell concludes: it is not possible accurately to predict the outcome. Mr Hamilton may well have respectable arguments, but he may still lose the issue. As he points out in his affidavit, if FAI is correct (and I would add even partially correct) his claim for interest would be reduced. 50 In respect of the second issue, "Interest", Mr O'Farrell concludes "the arguments available to FAI on this point were more attractive" than those sought to be pressed by Mr Hamilton. 51 In respect of the third issue "Deductible" Mr O'Farrell notes that if FAI is right in its view as to the law "Mr Hamilton's claims to interest would be significantly reduced". Mr O'Farrell adds "I also consider that FAI's construction of the words, 'otherwise than in accordance r.12 etc' is likely to be correct." 52 Summarising his views Mr Farrell states: [30] The case is complex. It involves a considerable number of loan transactions, with each party likely to focus on different aspects of each transaction at trial. There are arguments each way. While it may be possible to find a way to resolve some of the legal issues before trial, it is likely that the insurers would continue to insist on the factual issues being ventilated. That would occasion considerable time and expense. [31] Some of the investors are dead. The person most likely to assist in the firm's background to the transaction is Mr Turner, who has already endured considerable scrutiny and adverse comment in the courts. He is likely to be antagonistic to Mr Hamilton. [32] For these reasons, I consider that there is sufficient uncertainty attending the prosecution of this case to recommend the settlement to the Federal Court. Consideration 53 I can discern no lack of good faith, error of law or principle, or real and substantial grounds for doubting the correctness of Mr O'Farrell's opinion or the prudence of Mr Hamilton's conduct in agreeing to settle the matters involved in these proceedings on the terms proposed: Re Spedley Securities Ltd (1992) 9 ACSR 83 at 85-86. 54 These proceedings are complex. I accept that there are arguments each way on the legal points that if not settled would have to be determined in the Tasmanian Supreme Court proceedings. However, there is nothing to suggest that if the matter was to proceed to trial the probability of the liquidator achieving a better result would be significantly better than that of his doing worse. My role is not to develop some alternative proposal that might seem preferable—although, lest that suggest otherwise, I might indicate that no such alternative has commended itself to me. 55 I am mindful that while I must not simply rubber stamp what Mr Hamilton has put forward, I must pay regard to the commercial judgment of the liquidator. In that regard, he has obtained appropriate legal advice having regard to the nature and value of the matters in issue as would a prudent person in the conduct of his own affairs. The advice he obtained supported his entry into the compromise. 56 My approval of the compromise will assist in his concluding the liquidation of the unregistered managed investment scheme. I am satisfied that the terms of the agreement to be approved are sufficiently clear. 57 I am therefore satisfied that the criteria for the court to approve the liquidator entering into the arrangements which constitute the compromise are met: Re Spedley Securities Ltd (1992) 9 ACSR 83; Stewart, in the matter of Newtronics Pty Ltd [2007] FCA 1375. 58 Finally I should give my reasons for not having required the liquidator to give notice of these proceedings to the some 300+ investors and their estates in the case of those who have since died. 59 The orders made by Sundberg J that appointed Mr Hamilton as liquidator of the unregistered managed investment scheme, conferred upon him wide authority as an officer of the court. On one view those orders are sufficiently robust to have authorised Mr Hamilton to enter into the proposed compromise without further consent. 60 However, those orders also provide that Mr Hamilton's exercise of his powers is subject to the control of the Court and as a matter of prudence Mr Hamilton has chosen to settle the Tasmanian Supreme Court proceedings subject to the agreement of this Court. That he chose to proceed in that way appears to me to have been fully justified. 61 Mr Hamilton's choice to seek the Court's approval does not change the function the liquidator is exercising. The liquidator must still exercise his own commercial judgment. As a liquidator appointed under s 601EE of the Corporations Act Mr Hamilton is not subject to the control of the investors either individually or collectively. 62 Had the number of investors been few it might have been convenient to require their notification but in circumstances where so many investors would have had to be notified without any realistic prospect of their being able to meaningfully contribute to the proceedings I declined to do so. Confidentiality 63 At the first directions hearing I expressed reservations as to the confidentiality orders sought by Mr Hamilton in respect of his affidavit and exhibits, given that ordinarily the work of the Court must be conducted in a transparent and open manner. I made directions for the filing and service of submissions directed to the issue of confidentiality by the liquidator and by any of the parties to the September Deed of Settlement and the June Deed. Mr Hamilton by his counsel undertook to notify the other parties to the September Deed of Settlement and the June Deed of my directions and to invite those parties to make any submissions they might wish to put before the court on the issue. 64 No other party sought to make any submissions as to confidentiality. 65 The order sought by the liquidator was "That the affidavit (including annexures) of Barry Kenneth Hamilton lodged in support not be published without leave of the Court." The power of the Court to make a non-publication order is found in Federal Court of Australia Act 1976 (Cth) s 37AF, and the grounds upon which an order may be made are set out in s 37AG(1)(a): that "the order is necessary to prevent prejudice to the proper administration of justice". 66 In Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 French CJ, Gummow, Hayne, Heydon and Kiefel JJ observed that the word "necessary" in s 50 (the predecessor section to Federal Court of Australia Act 1976 s 37AG) "is a strong word" [30]. Their Honours continued [31]: It is insufficient that the making or continuation of an order under s 50 appears to the Federal Court to be convenient, reasonable or sensible, or to serve some notion of the public interest, still less that, as a result of some "balancing exercise", the order appears to have one or more of those characteristics. 67 I am content that Mr Hamilton is not simply seeking reassurance from the Court as to the correctness of a commercial decision; the settlement of complicated and long-running litigation involves a substantive legal issue upon which it is appropriate for this Court to give directions. Applying for approval of such a compromise necessarily involves the liquidator's having to waive legal privilege and make substantial disclosure, inter alia, of his legal advice. However that is not the end of the matter. There are other bases for confidentiality—some particularly relevant to the duty of liquidators. 68 As Lindgren J observed in Elderslie Finance Corporation Ltd v Newpage Pty Ltd (No 6) [2007] FCA 1030; (2007) 160 FCR 423 at [43], "[t]he administration of justice, including the just and efficient winding up of a company, requires that proper compromises be facilitated rather than obstructed." In an appropriate case, the Court will make a non-publication order so as to prevent prejudice to the proper administration of justice. In the circumstances of this case, publication of the details of the settlement will not obstruct a proper compromise. 69 In Re HIH Insurance Ltd [2007] NSWSC 498 at [6], Barrett J commented: There is a clear public interest in the due administration of justice, in that in litigation in the normal course an ordinary litigant would keep close to the chest, as it were, the matters that the liquidators, because of their position see fit to bring to court. The liquidators, because of their position, should not be set aside from other litigants and be placed at a disadvantage… 70 I agree with those observations. In many instances a liquidator may approach the court concerned that their position in future proceedings could be weakened should the nature of the matters he or she puts before the court in support of a particular step in which the court's approval has been sought be revealed. 71 However, such a concern is not relevant in this case. Mr Hamilton deposes at [11] of his affidavit of 11 September 2014 that he has already realised all the property that he can sell pursuant to mortgages granted by the borrowers, and, excepting Supreme Court Proceeding No 404 of 2003, has exhausted all avenues of recovery against borrowers, mortgagors and guarantors for capital advanced to borrowers plus interest. 72 I therefore proceed on the basis that upon approval by the Court of Mr Hamilton's entering into the compromise, no further litigation is foreseeable other than the foreshadowed interlocutory applications to this Court for directions on matters such as to how the funds should be distributed by the liquidator following the settlement. In such circumstances I do not discern how disclosing the matters set out in the liquidator's affidavit of 11 September 2014 could relevantly disadvantage the liquidator or prejudice the proper administration of justice. Accordingly I decline to make the non-publication orders sought by the liquidator. 73 I will however order pursuant to s 37AF of the Federal Court of Australia Act 1976 that these reasons for decision not be published to any person other than the parties to this proceeding, such order to continue until 12 February 2015. A non-publication order lasting 14 days from the date of this judgment will permit Mr Hamilton to institute any proceedings with respect to confidentiality as he may be advised to pursue. I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kerr. Associate: Dated: 29 January 2015