FEDERAL COURT OF AUSTRALIA Gollant, in the matter of OT Markets Pty Ltd (in liquidation) [2020] FCA 207 File number: VID 1399 of 2019 Judge: BEACH J Date of judgment: 17 February 2020 Date of publication 26 February 2020 of reasons: Catchwords: CORPORATIONS – directions sought by various liquidators – sharing of information – application of Privacy Act 1988 (Cth) – notification to creditors – directions made Legislation: Corporations Act 2001 (Cth) ss 600G, 1322(1)(b), 1332(2), Sch 2 Corporations Regulations 2001 (Cth) Insolvency Practice Rules (Corporations) 2016 (Cth) rr 70-30,70-35, 75-130 Privacy Act 1988 (Cth) Sch 1 Cases cited: Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208 Date of hearing: 17 February 2020 Registry: Victoria Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 38 Counsel for the First and Fourth Plaintiffs: Mr MGR Gronow QC Solicitor for the First and Fourth Plaintiffs: Piper Alderman Solicitor for the Second and Fifth Plaintiffs: Mr S Kingston of Maddocks Counsel for the Third and Sixth Plaintiffs: Mr JL Evans QC Solicitor for the Third and Sixth Plaintiffs: O'Loughlin Westhoff ORDERS VID 1399 of 2019 IN THE MATTER OF OT MARKETS PTY LTD (ACN 621 714 181) (IN LIQUIDATION), AGM MARKETS PTY LTD (ACN 158 706 766) (IN LIQUIDATION) AND OZIFIN TECH PTY LTD (ACN 618 038 396) (IN LIQUIDATION) MATHEW TERENCE GOLLANT, IN HIS CAPACITY AS LIQUIDATOR OF OT MARKETS PTY LTD (ACN 621 714 181) First Plaintiff JOHN ROSS LINDHOLM AND GEORGE GEORGES IN THEIR GAPACITYAS LIQUIDATORS OF AGM MARKETS PTY LTD (ACN 158 706 766) (IN LIQUIDATION) Second Plaintiff RICHARD ALBARRAN, BRENT KIJURINA AND RICHARD LAWRENCE IN THEIR CAPACITYAS LIQUIDATORS OF OZIFIN TECH PTY LTD (ACN 618 038 396) (and others named in the Schedule) Third Plaintiff JUDGE: BEACH J DATE OF ORDER: 17 February 2020 THE COURT ORDERS THAT: 1. Pursuant to ss 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations) (IPSC) (Schedule 2 to the Corporations Act 2001 (Cth)) that: (a) The First, Second and Third Plaintiffs (Liquidators) are justified in sharing relevant information between themselves, including but not limited to personal information of individuals who were investors, or were related to investors of the Fourth, Fifth and Sixth Plaintiffs (companies), which is likely to be 'personal information' as defined by the Privacy Act 1988 (Cth) (Privacy Act) (Personal Information) between them in connection with Federal Court Proceeding VID 126 of 2018 and in relation to the winding up of the companies; (b) The sharing of and access to the Personal Information is to be restricted to each of the Liquidators and their nominated staff and such others in accordance with a secure data protocol to be agreed in writing between the Liquidators; and For the purposes of clause 6.2(b) of Schedule 1 to the Privacy Act, being the Australian Privacy Principles, order 1(a) has the effect of an order authorising the use or disclosure of the Personal Information. 2. Orders pursuant to ss 90-15 and 90-20 of the IPSC that all further notices, reports and communications, and any documents required to accompany such notice which the Liquidators may or must give or send to creditors of the Companies, may be validly given or sent: (a) by sending such documents by email to the email address of any creditor whose email address is retained in the records of any of the Companies; and (b) by sending such documents by prepaid post or facsimile transmission to the postal address or facsimile number, or otherwise as provided for by the Corporations Act or Corporations Regulations 2001 to any creditors of the Companies not being a creditor referred to in paragraph (a), or to any creditor who has elected to receive documents by such a method instead of by email; without the necessity, to the extent required, of sending a list of creditors with any further notices, reports or communications. 3. An order, now for then, pursuant to ss 90-15 and 90-20 of the IPSC that all notices, reports and communications, and any documents required to accompany such notice which the Liquidators have given or sent to creditors of the Companies prior to the date of this order, may be validly given or sent: (a) by sending such documents by email to the email address of any creditor whose email address is retained in the records of any of the Companies; and (b) by sending such documents by prepaid post or facsimile transmission to the postal address or facsimile number, or otherwise as provided for by the Corporations Act or Corporations Regulations to any creditors of the Companies not being a creditor referred to in paragraph (a). 4. A declaration pursuant to ss 90-15 and 90-20 of the IPSC that the resolution of creditors of the Fourth Plaintiff approving the remuneration and expenses of the First Plaintiff both as administrator and liquidator of the Fourth Plaintiff obtained prior to the date of this order as a consequence of the said Liquidator giving notice to creditors by sending such notice by email to the email address of any creditor whose email address is retained in the records of any of the Companies is valid and effectual. 5. A declaration pursuant to ss 90-15 and 90-20 of the IPSC that the resolution of creditors of the Fifth Plaintiff approving the remuneration and expenses of the Second Plaintiff as liquidator of the Fifth Plaintiff obtained prior to the date of this order as a consequence of the said Liquidator giving notice to creditors by sending such notice by email to the email address of any creditor whose email address is retained in the records of any of the Companies is valid and effectual. 6. The costs of the First, Second and Third Plaintiffs of the Originating Process be costs in the respective liquidations of each of the Fourth, Fifth and Sixth Plaintiffs of which they are liquidator. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BEACH J: 1 The present application has been brought jointly by: (a) OT Markets Pty Ltd (in liquidation)(OT) and its liquidator; (b) AGM Markets Pty Ltd (in liquidation) (AGM) and its liquidators; and (c) Ozifin Tech Pty Ltd (in liquidation) (Ozifin) and its liquidators. 2 Now each of the liquidators of AGM, OT and Ozifin were separately represented before me although the matter has been brought as a single application having regard to the common interests and substratum of facts between the parties. 3 The liquidators of OT, AGM and Ozifin have sought orders and directions pursuant to ss 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations) (IPSC) (Schedule 2 to the Corporations Act 2001 (Cth)) in respect of the administration of each of these companies relating to: (a) the sharing of information between the liquidators held by each of them in relation to each of the companies; and (b) the method of giving notices, reports and communications to the creditors of those companies. 4 Last week I made the orders sought for the following reasons. 5 The liquidators have determined that the affairs of OT, AGM and Ozifin are complex and intertwined and that information held in relation to each of the companies may be relevant to the liquidation of each of the other companies in various respects. This is an assessment with which I agree; necessary background is provided in my separate reasons concerning the ASIC proceeding (Australian Securities and Investments Commission v AGM Markets Pty Ltd (in liquidation) (No 3) [2020] FCA 208 at [16] to [98]). 6 Now I previously appointed the liquidators, but I should note that I previously rejected common liquidators for each of AGM, OT and Ozifin for the following reasons. 7 First, I was not satisfied of the potential for significant cost savings and efficiencies from a single appointment to each of the 3 entities. In this respect: (a) Ozifin, OT and AGM are not related entities, and do not otherwise form part of a company group. The entities have separate beneficial owners, and different officers. (b) Further, there is very little commonality between Ozifin, OT and AGM's client bases. And in this respect, Ozifin, OT and AGM also operated separate customer relationship (CRM) platforms. (c) Further, the major creditors of each entity did not have any relationship with the other entities. 8 Second, in the winding up of each of Ozifin, OT and AGM, separate investigations will be necessary: (a) to identify and communicate with 3 different client bases, including to access 3 different CRM platforms; (b) in order to report to 3 different sets of creditors, including to adjudicate on 3 different groups of creditor claims; and (c) to analyse the individual affairs of each of Ozifin, OT and AGM. 9 Third, there would have been real issues concerning conflicts of duty if a single external administrator had been appointed to all arising out of the claims that are available to be made between and against the 3 entities. There are various categories of claims that are available to be made between the 3 entities. And where each of the 3 entities have 3 different creditor bases, those creditors will have divergent interests. It would be unfair on the creditors of each of the 3 entities if common liquidators were to have been appointed to decide how best to give effect to their interests. 10 It is of course possible to manage conflicts as and when they arise even if there is a single liquidator. One way to do this, if there are limited areas of likely conflict in comparison to the substantial areas of separate activity in each liquidation, would be to appoint a special purpose liquidator as necessary to make a claim or adjudicate on one as and when the need arose. But this would create an additional layer of cost. And given that the objective of a single appointment would have been to save costs, this approach would have been counter-productive. This is also particularly so in the absence of any compelling case why a single appointment would have resulted in cost savings. In the present matter, no such compelling case had been made to me at the time I decided to appoint separate liquidators for each entity. 11 Further, it is inappropriate for a liquidator of one company to lodge a proof of debt in another liquidation and then to decide whether to accept that proof of debt in his capacity as the liquidator of the other company. Moreover, as I have said, AGM, OT and Ozifin are not part of the same group. 12 Now, I could grant authorisation for conduct that would otherwise involve a conflict of duty on an application which explicitly sought dispensation from fiduciary duties, with appropriate evidence showing how and why circumstances existed to warrant such dispensation. But the task of explanation inherent in a request to be excused from fiduciary requirements is an exacting one. Alternatively, I could give a direction to a liquidator who faced a conflict of duty. 13 But in the present matter, none of those scenarios would have been advantageous. Accordingly, separate appointments were made. Let me now return to the present application dealing with the sharing of information, which application arises as a consequence of the different liquidators. 14 There is an overlap of investor/customer financial information which in the absence of the liquidators being able to access and share will lead to each of the liquidators being possessed of incomplete information and delays in resolving creditor claims. This will increase the cost of the administrations of the companies. The information is particularly relevant to the entitlement of creditors to funds held by the companies. 15 The directions and orders that I have made: (a) permit the sharing of information of the companies between the liquidators, including personal information of individuals who were investors or who were related to investors of the companies; and (b) authorise the use or disclosure of information that is likely to be "personal information" as defined by the Privacy Act 1988 (Cth) (Privacy Act) for that purpose. 16 The liquidators have sought to avoid any possible allegations that might be raised at a later date that evidence to be relied upon in any future proceedings may be tainted from having been obtained without proper authorisation. 17 The liquidators have agreed to a protocol for information sharing. Pursuant to that protocol it is proposed that the documents that would assist in identifying the entitlements of former investors/customers of OT, AGM and Ozifin be provided by the liquidators to each other as soon as possible and that requests for and provision of other documents follow. 18 As Mr Michael Gronow QC for the liquidator of OT explained, OT, AGM and Ozifin are required to comply with the Privacy Act. In particular, OT, AGM and Ozifin do not fall within the "small business operator" exemption because each of those entities are organisations that had an annual turnover of over $3 million. 19 Accordingly, OT, AGM and Ozifin are required to comply with the Australian Privacy Principles (APPs) set out in Sch 1 of the Privacy Act. APP 6.1 requires that personal information about an individual collected for a particular (primary) purpose must not be used or disclosed for a secondary purpose unless certain exemptions apply. The exemptions specified in APP 6.2 include: (a) that the individual to whom the personal information relates would reasonably expect their personal information to be used for the secondary purpose and the secondary purpose is related to the primary purpose (APP 6.2(a)); (b) where it is reasonably believed that use or disclosure is reasonably necessary for enforcement related activities conducted by, or on behalf of, an enforcement body (APP 6.2(e)). 20 Further, use and disclosure of personal information for a secondary purpose is also permitted where required or authorised by Australian law or a court order (APP 6.2(b)). 21 Take OT as an example. There is some difficulty in establishing that investors/customers would have reasonably expected their personal information to be shared with AGM and Ozifin in connection with the winding up of these separate entities. Whilst individuals might reasonably have anticipated disclosure of their personal information to AGM as the AFSL licensee for the purpose of facilitating financial transactions or where required for the AFSL licensee to comply with regulatory requirements, individuals may not have reasonably expected disclosure to AGM and/or Ozifin for a purpose in connection with the winding up of those entities. Similar points may be made if one was to focus on Ozifin or AGM and individuals who had provided personal information to them. 22 Further, it is unlikely that the proposed disclosure of personal information falls within the scope of "use or disclosure [that] is reasonably necessary for one or more enforcement related activities conducted by, or on behalf of, an enforcement body". The proposed use or disclosure is in connection with the winding up of these entities. 23 Now although the precise purpose for which the personal information will be used might not be clear yet, there is currently no intention for the personal information to be disclosed to or used by any other third party. 24 Similarly, at this stage it is not clear that the personal information will be used to establish, exercise or defend a legal or equitable claim and so trigger the "permitted general situation" exemption (see s 16A of the Privacy Act and APP 6.2(c)). This exemption anticipates a scenario where a legal or equitable claim is made or defended against the individuals to whom the personal information relates. But for the moment that scenario is not what has provoked the present application. 25 Further, whilst the corporate authorised representative agreements remained in place, the sharing of information was anticipated. But with their termination and to avoid uncertainty, the liquidators sought a direction permitting the sharing of information to obviate any potential breach of the Privacy Act. I had no difficulty in giving such a direction so that the exemption under APP 6.2(b) was triggered. 26 Let me turn to another matter. 27 The liquidators also sought orders as to the means by which the liquidators may validly give future notices, reports and communications (and any documents required to accompany them) to creditors. It was proposed that such documentation be validly given by forwarding it to the email addresses of creditors where those email addresses had been retained in the records of any of the entities and otherwise by prepaid post or facsimile transmission to such addresses as were available. 28 There are a significant number of customers and creditors in the liquidation of the entities. For example, the liquidator of OT has identified approximately 5,400 customers and creditors of OT. But he has been able to identify postal addresses for only 400 of those creditors. There are equally significant numbers of creditors in the administrations of AGM and Ozifin. In those circumstances, providing future notices, reports and communications by post to creditors will be costly to the administration of the entities. 29 Further, the liquidators sought orders for the validation of any notices, reports and communications (and any documents required to accompany them) previously sent by the liquidators to the email addresses of creditors. They also sought declarations that any resolutions passed as a result of documentation sent by the liquidators to creditors by email were valid and effectual. 30 I had no difficulty in making the orders sought. 31 Rule 70-30 of the Insolvency Practice Rules (Corporations) 2016 (IPRs) requires that a liquidator give an initial information notice (IIN) to creditors in a court winding up within 20 business days. An initial remuneration notice is required to be given at the same time (see r 70-35 of the IPRs). Such notices are to be given "to as many creditors of the company as reasonably practicable". But neither the Corporations Act nor the IPRs states how notices are to be "given". 32 Mr Gollant, the liquidator of OT, has sent an initial information pack and a statutory report to creditors of OT by email. The information pack included his IIN, his remuneration report and notices of proposals to creditors seeking approval of his remuneration as administrator and liquidator of OT and for internal disbursements of the administration and liquidation without a meeting of creditors. 33 Section 600G of the Corporations Act permits the giving of notice by email where the creditor/recipient has first nominated an email address for receipt of such notices. However it does not state that such notice as given without such nomination is ineffective. It is permissive, not restrictive, and includes deeming provisions as to service if met. 34 Now Mr Gollant has not in the liquidation of OT first written to creditors seeking them to nominate receipt of notices by email for various reasons, including that he was unable to identify postal addresses for most creditors, there would have been a substantial cost of seeking to identify such addresses, customers/investors appear to have historically communicated by email with OT, and there was a material cost with all mail outs of substance. 35 In responding to the approval notices that I referred to earlier, the creditors of OT resolved to approve Mr Gollant's remuneration and disbursements as administrator and his initial claim for remuneration and disbursements as liquidator. If the giving of the information pack by email is taken to be the giving of notice to creditors for the purpose of the Corporations Act and IPRs, then by reason of r 75-130 creditors will be taken to have resolved to approve Mr Gollant's remuneration and disbursements as administrator and his initial claim for remuneration and disbursements as liquidator. But if the giving of the information pack by email is taken not to be the giving of notice to creditors for the purpose of the Corporations Act and IPRs, approval will not be taken to have been resolved. So, Mr Gollant was concerned that the administration may be prejudiced by additional cost and delay if he was required to seek approval by another means. 36 Further, I should note that ss 1322(1)(b) and 1322(2) of the Corporations Act provide that a deficiency in the giving of notice of a meeting of creditors being a procedural irregularity as defined in s 1322(1)(b) does not invalidate the meeting unless the Court is of the opinion that the irregularity has caused or may cause substantial injustice. 37 Finally, I note that the Insolvency Law Reform Act 2016 (Cth) repealed ss 479 and 511 giving the Court power to give directions to a liquidator in a court ordered or voluntary winding up. These provisions have been replaced by s 90-15 of the IPSC. 38 For the above reasons, I saw little difficulty in making the directions and orders sought including necessary validating declarations concerning both OT and AGM with respect to past notices. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beach. Associate: Dated: 26 February 2020 SCHEDULE OF PARTIES VID 1399 of 2019 Plaintiffs Fourth Plaintiff: OT MARKETS PTY LTD (ACN 621 714 181) (IN LIQUIDATION) Fifth Plaintiff: AGM MARKETS PTY LTD (ACN 158 706 766) (IN LIQUIDATION) Sixth Plaintiff: OZFIN TECH PTY LTD (ACN 618 038 396) (IN LIQUIDATION)