FEDERAL COURT OF AUSTRALIA Kelly (Liquidator), in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Loo (No 2) [2022] FCA 1078 File number: NSD 2191 of 2018 Judgment of: MARKOVIC J Date of judgment: 25 August 2022 Date of publication of reasons: 14 September 2022 Catchwords: CORPORATIONS – application under s 477(2B) of the Corporations Act 2001 (Cth) for approval of entry into a funding agreement – whether it is a proper exercise of the liquidators' powers – application allowed – application for judicial advice and/or directions to the effect that liquidators would be justified in prosecuting a proceeding – whether it is proper for the liquidators to incur the costs and expenses, comprising their remuneration and expenses other than legal fees, in prosecuting the proposed proceeding – application granted – application for confidentiality orders pursuant to s 37AG(1)(a) of the Federal Court of Australia Act 1976 (Cth) – whether orders necessary to prevent prejudice to the proper administration of justice – application granted Legislation: Corporations Act 2001 (Cth) s 477(2B) Federal Court of Australia Act 1976 (Cth) s 37AF, s 37AG(1)(a) Trustee Act 1925 (NSW) s 63 Cases cited: Goyal (liquidator) in the matter of OLI 1 Pty Ltd (in liq) [2020] FCA 450 Hughes, in the matters of Sales Express Pty Ltd (in Liq) [2016] FCA 423 Kelly (Liquidator), in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Loo [2021] FCA 531 Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 Motorola Solutions Inc v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17 Division: General Division Registry: New South Wales National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 50 Dates of hearing: 25 August 2022 Counsel for the Plaintiffs: Ms E Holmes Solicitor for the Plaintiffs: K&L Gates ORDERS NSD 2191 of 2018 BETWEEN: MORGAN JOHN KELLY IN HIS CAPACITY AS A JOINT AND SEVERAL LIQUIDATOR OF HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) ACN 096 980 522 First Plaintiff PHILIP ALEXANDER QUINLAN PHILIP ALEXANDER QUINLAN IN HIS CAPACITY AS A JOINT AND SEVERAL LIQUIDATOR OF HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) ACN 096 980 522 Second Plaintiff HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) Third Plaintiff AND: CHOO BOON LOO First Defendant ELYSIUM BUSINESS SYSTEMS PTY LTD Second Defendant JASON PAUL HINGSTON (and others named in the Schedule) Third Defendant order made by: markovic j DATE OF ORDER: 14 september 2022 THE COURT ORDERS THAT: 1. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), to prevent prejudice to the proper administration of justice: (a) the unredacted version of the reasons for judgment not be published and not be made available to any person other than the plaintiffs to the proceeding or their legal representatives otherwise than pursuant to an order of a judge of the Court; (b) within seven days the plaintiffs provide to the Associate to Justice Markovic a proposed redacted version of the reasons for judgment which the plaintiffs consider is appropriate for publication. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. ORDERS NSD 2191 of 2018 IN THE MATTER OF HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) ACN 096 980 522 BETWEEN: MORGAN JOHN KELLY IN HIS CAPACITY AS A JOINT AND SEVERAL LIQUIDATOR OF HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) ACN 096 980 522 First Plaintiff PHILIP ALEXANDER QUINLAN PHILIP ALEXANDER QUINLAN IN HIS CAPACITY AS A JOINT AND SEVERAL LIQUIDATOR OF HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) ACN 096 980 522 Second Plaintiff HALIFAX INVESTMENT SERVICES PTY LTD (IN LIQUIDATION) Third Plaintiff AND: CHOO BOON LOO First Defendant ELYSIUM BUSINESS SYSTEMS PTY LTD Second Defendant JASON PAUL HINGSTON (and others named in the Schedule) Third Defendant order made by: MARKOVIC J DATE OF ORDER: 25 August 2022 THE COURT ORDERS THAT: 1. Pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and on the ground that it is necessary to prevent prejudice to the proper administration of justice for the purposes of s 37AG(1)(a) of the FCA Act, until the conclusion of the proceeding contemplated by the plaintiffs which is the subject of the application for judicial advice or directions or further order of the Court, the following material is not to be disclosed or made available for inspection by any person other than the docket judge, a member of the docket judge's staff, any officer of the Court authorised by the docket judge or any judge or other officer of the High Court of New Zealand, the plaintiffs, their staff and their legal representatives: (a) the unredacted copy of the affidavit of Morgan John Kelly affirmed on 11 August 2022 (Kelly August affidavit); (b) Confidential Exhibit H (formerly Confidential Exhibit MJK-15) to the Kelly August affidavit; (c) the unredacted copy of the written submissions dated 11 August 2022 provided by the plaintiffs in support of the amended interlocutory process; and (d) the transcript of today's hearing. 2. On the basis that it is necessary to prevent prejudice to the proper administration of justice from 11.24 am AEST the Court be closed on the hearing of the plaintiffs' amended interlocutory process filed on 15 August 2022 (Amended Interlocutory Process) until further direction with only the following persons permitted to remain: (a) officers of the Court; (b) representatives of the transcript provider; (c) the plaintiffs; and (d) the plaintiffs legal representatives. 3. The requirement for service of the Amended Interlocutory Process, the Kelly August affidavit and the exhibits to the Kelly August affidavit on the defendants be dispensed with. 4. Pursuant to s 477(2B) of the Corporations Act 2001 (Cth), the plaintiffs be granted approval to enter into the funding agreement (Funding Agreement) in substantially the form appearing at pages 192 to 217 of Confidential Exhibit H to the Kelly August affidavit. 5. The plaintiffs are justified in bringing and prosecuting proceedings substantially in the form of those set out in the draft statement of claim at pages 2 to 113 of Confidential Exhibit H in circumstances in which the Funding Agreement is in place. 6. The plaintiffs are justified in paying the plaintiffs' remuneration, costs and expenses in respect of the proceedings referred to in Order 5 in accordance with the process provided for by the Orders of Gleeson J made on 2 July 2020. 7. The plaintiffs' costs of and incidental to this application be costs and expenses in the liquidation of the third plaintiff and be paid out of the funds and accounts listed in Order 1 of the Orders made by Gleeson J on 2 July 2020. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MARKOVIC J: 1 By amended interlocutory process filed on 15 August 2022 Morgan John Kelly and Philip Alexander Quinlan in their capacity as joint and several liquidators (Liquidators) of Halifax Investments Services Pty Ltd (in liquidation) (Halifax AU) and Halifax AU (plaintiffs) sought various order and directions including: (1) an order pursuant to s 477(2B) of the Corporations Act 2001 (Cth) for the plaintiffs to enter into a funding agreement in respect of a proposed recovery proceeding against the former auditors and solicitors of Halifax AU; and (2) judicial advice and/or directions to the effect that the plaintiffs would be justified in: (a) bringing and prosecuting a proceeding substantially in the form of a draft statement of claim exhibited to the affidavit of Mr Kelly affirmed on 11 August 2022 (Kelly Affidavit); and (b) being paid their remuneration for bringing and prosecuting the proceeding referred to in (a) above in accordance with the process provided for by the orders made by this Court on 2 July 2020. 2 In support of the application the plaintiffs relied on the Kelly Affidavit and two exhibits thereto, one of which was subject to a claim for confidentiality, and a separate bundle of correspondence. The plaintiffs sought an order pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) in relation to, among other things, the Kelly Affidavit and the confidential exhibit to it, which became Exhibit H. 3 The application was brought with a degree of urgency because of the imminence of the expiration of limitation periods in relation to some of the claims the subject of the proposed proceeding. For that reason it was listed at short notice for hearing before me. 4 On 25 August 2022 I made the orders sought by the plaintiffs in their amended interlocutory process. These are my reasons for making those orders. BACKGROUND 5 The Liquidators were first appointed as joint and several voluntary administrators and then liquidators of Halifax AU on 23 November 2018 and 20 March 2019 respectively. They were also appointed as voluntary administrators and then liquidators of Halifax New Zealand Limited (in liquidation) (Halifax NZ) on 27 November 2018 and 22 March 2019 respectively. Halifax AU held 70% of the shares in Halifax NZ. 6 Halifax AU and Halifax NZ were financial services providers dealing in financial products on behalf of their respective investor clients: see Kelly (Liquidator), in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Loo [2021] FCA 531 (Halifax v Loo) at [3]. The business of Halifax AU and Halifax NZ is described in detail in Halifax v Loo at [32]-[72]. It is not necessary to repeat those details here save to note that the application made in that proceeding and the parallel proceeding commenced in the High Court of New Zealand (NZ High Court) arose from the uncontroversial fact that there was (and is) a deficiency in moneys which are held on trust by Halifax AU and Halifax NZ for the benefit of their investor clients and that, prior to the date of administration, in breach of statutory requirements, there was commingling of funds held as between Halifax AU's accounts, Halifax NZ's accounts, and as between the accounts of Halifax AU and Halifax NZ such that as at the date of administration there was a single deficient mixed fund. In those circumstances the Liquidators sought judicial advice and directions from this Court and the NZ High Court in relation to the way in which the funds held in trust should be distributed. 7 Following a joint hearing between this Court and the NZ High Court, orders and directions were made in the proceeding before each court in relation to the method of distribution of the funds: see Halifax v Loo and Halifax New Zealand Limited (in liq) v Loo & Ors [2021] NZHC 1113. Appeals by the first defendant from an aspect of the Orders made in this Court and the NZ High Court were dismissed: see Loo, in the matter of Halifax Investment Services Pty Ltd (in liquidation) v Quinlan (Liquidator) [2021] FCAFC 186 and Loo v Quinlan (in their capacity as liquidators) [2021] NZCA 561. I will refer to these proceedings collectively as the client money proceedings. 8 As is apparent from the matters set out above, and as explained by Mr Kelly, the assets held by the Liquidators since their appointment to Halifax AU and Halifax NZ are held on trust for the investor clients of those companies and are to be distributed by the Liquidators in accordance with the directions given by this Court and the NZ High Court, subject to payment from time to time of the costs of the liquidation, in accordance with a process approved by each Court, from those trust funds. 9 The Liquidators have recently recovered a sum of money following the confidential settlement of a claim against a third party. However, they understand that sum may, subject to judicial advice, also form part of the commingled funds held on trust for investor clients of Halifax AU and Halifax NZ. 10 It follows that the Liquidators do not have any funds available to them to commence any proceedings to seek to recover amounts from third parties, other than funds which are or may be trust assets. Work undertaken to date 11 Since their appointment the Liquidators have undertaken and completed significant work in relation to the question of treatment of investor funds and the distribution of those funds including for the purposes of the client money proceedings. A significant proportion of the Liquidators' work and time up to the conclusion of the appeal proceedings referred to at [7] above was concerned with the client money proceedings. However, at the same time the Liquidators also completed work in relation to potential recovery actions against third parties. Since the resolution of the client money proceedings the Liquidators have been in a position to undertake work to progress those potential claims. Identification of potential claims 12 As a result of the work they have undertaken and with the assistance of their legal advisors, the Liquidators have identified a number of potential claims that may be available to Halifax AU. They include claims against its former auditors and solicitors. 13 The Liquidators have obtained advice from counsel in relation to the potential claims against third parties and have prepared a draft statement of claim in relation to Halifax AU's potential claims against its former auditors and solicitors. I was informed that, subject to some minor amendments, that draft was substantially in a form ready for filing. The advice obtained by the Liquidators and the draft statement of claim were in evidence before me but are subject to the confidentiality order. Funding of potential claims 14 The Liquidators have also taken steps to secure funding in order to be able to prosecute the potential claims against Halifax AU's former auditors and solicitors. 15 On 30 June 2020 the Liquidators applied to the Australian Securities and Investments Commission's (ASIC) Assetless Administration Fund for funding, including for the purpose of making inquiries of the previous advisors to Halifax AU and for the purpose of undertaking public examinations. On 24 December 2021 ASIC requested further information from the Liquidators which they provided on 16 February 2022. However, as at 11 August 2022, the date on which Mr Kelly affirmed his affidavit, ASIC had not offered to provide funding to the Liquidators for the purposes of its further investigations or public examinations. 16 In mid-2019 the Liquidators entered into preliminary discussions with prospective funders. In July 2021 they identified four prospective private litigation funders to approach in relation to the possibility of funding their proposed claims. The Liquidators entered into confidentiality deeds with, and issued an "Invitation to prospective funders" to, each of them. 17 Three of the four prospective funders declined to provide an offer of litigation funding to the Liquidators. On 3 June 2022 the Liquidators received an indicative funding proposal from the remaining prospective funder (proposed funder) for the funding of potential claims against Halifax AU's former auditors and solicitors. The indicative proposal was subject to approval by the proposed funder's investment committee. 18 On 30 June 2020 the proposed funder's investment committee considered the Liquidators' funding application and recommended it to its board for funding on the terms set out in an agreed form of funding agreement which had been the subject of discussions between the Liquidators and the proposed funder (Funding Agreement). 19 On 11 July 2022 the Liquidators were notified that the proposed funder's board had approved funding in accordance with the Funding Agreement. 20 A copy of the Funding Agreement was in evidence before me. It is also the subject of the confidentiality order. Accordingly, I have not set out its terms. Notice to investor clients and creditors 21 In a "Report to Investors and Creditors" dated 31 August 2020 the Liquidators informed investor clients and creditors of Halifax AU and Halifax NZ of work undertaken by them in relation to a potential action against Halifax AU's former auditors. 22 Mr Kelly gave evidence that more generally at meetings and in reports the Liquidators have informed investor clients and creditors about possible recovery actions. 23 By notice dated 16 August 2022 (Notice), among other things, the Liquidators notified investor clients that they had: … identified a number of claims against former lawyers and auditors who provided professional services to Halifax AU. The claims arise out of services provided to Halifax AU before the Liquidators' appointment which the Liquidators consider caused loss to the Halifax Group. That loss is, in significant part, its liability to Investors, being the difference between the money that should have been held on trust by Halifax AU for Investors and the amount that was actually held on trust. The loss also includes costs associated with the liquidation. 24 The Notice also: (1) referred to the fact that the Liquidators had reached an agreement in principle with a funder to provide funding to pursue the proposed claims; (2) referred to the filing of the application for approval to enter into the Funding Agreement and for judicial advice or directions to pursue the proposed proceedings against the former auditors and solicitors and to pay the Liquidators' remuneration for doing so from the moneys held on trust for investor clients; and (3) provided details of the date, time and venue for the hearing of the plaintiffs' application referred to in (2) above. 25 The Liquidators have received responses to their earlier notifications and, more recently, to the Notice. Those responses fall into two broad categories: those which raised the risk of delay in the payment of dividends because of the pursuit of the proposed proceeding; and those which were concerned with whether there would be any net benefit to investors, in terms of recovery, as a result of the proposed proceeding. 26 The Liquidators responded to each of the queries. In summary they informed investor clients that: (1) they intend to continue to pay dividends notwithstanding commencement of the proposed proceeding, although they acknowledge that payment of a final dividend will likely be delayed until completion of the proceeding; and (2) if the proposed proceeding is successful the pool of funds available to investor clients will likely increase, subject to payment of the Liquidators' remuneration and costs and, if it is not successful, the downside to investors is those costs. 27 No investor client or creditor sought to appear at the hearing of the application. APPROVAL TO ENTER INTO THE FUNDING AGREEMENT 28 The Liquidators applied for approval pursuant to s 477(2B) of the Corporations Act to enter into the Funding Agreement. That application was necessary because the terms of the Funding Agreement will end, and some of the obligations of the parties to that agreement may be performed, more than three months after the date on which the Liquidators enter into it. 29 Section 477(2B) of the Corporations Act provides: Except with the approval of the Court, of the committee of inspection or of a 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. 30 The principles in relation to the application of s 477(2B) of the Corporations Act are well established. 31 The object of s 477(2B) of the Corporations Act is to ensure that the expectation that the winding up process will proceed in as expeditious a fashion as the circumstances allow is not unnecessarily prejudiced. The section is also seen to afford some protection to the company's creditors against ill-advised or improper actions on the part of a liquidator. However, the Court does not simply "rubber stamp" any agreement that a liquidator proposes to enter into. The approval process requires an assessment by the Court that entry into the agreement is a proper exercise of power and not ill-advised or improper on his or her part, rather than involving the exercise of commercial judgment: see Kogan, in the matter of Rogulj Enterprises Pty Ltd (in liq) [2021] FCA 856 at [16]-[18]. 32 In Hughes, in the matters of Sales Express Pty Ltd (in Liq) [2016] FCA 423 at [20] Edelman J set out the principles that apply in considering an application under s 477(2B) of the Corporations Act as follows: The approach to be taken to s 477(2B) is well settled. The principles, based on the authorities cited at the conclusion of this paragraph, concerning the grant or refusal of approval by the Court can be summarised as follows: (1) the role of the Court is to grant or refuse approval. It is not to develop an alternative proposal; (2) the notion of necessity in the power of the liquidator to do "things as are necessary" has a broad meaning and empowers a liquidator to do anything expedient in relation to the beneficial completion of the winding-up of the affairs of the corporation and the distribution of its assets; (3) however, notwithstanding this breadth, the Court must be satisfied that there is a good and solid reason for concluding that the processes of winding up and distribution would be enhanced by the funding agreement, compared with the ordinary deployment of surplus funds. The enhancement must be demonstrated by some informed and independent assessment of the separate and selfish interests of the funding company; (4) although the Court must be satisfied that it is appropriate for the exercise of power under s 477(2B), the Court will not generally review a liquidator's commercial judgment or second guess its decision; (5) circumstances in which the Court will scrutinise a liquidator's decision closely include where there appears to be a lack of good faith, an error of law or principle, or a real or substantial ground for doubting the prudence of the liquidator's conduct; (6) the Court will rarely approve an agreement which has important terms that are unclear; (7) in considering whether the Court's power under s 477(2B) should be exercised, any relevant matter can be considered. Matters that are commonly relevant include: (a) the manner in which the funding or indemnity will be provided under the agreement; (b) the extent to which the liquidator has considered other funding options; (c) the interests of creditors other than the proposed or potential respondents and the extent to which the liquidator has consulted them; (d) the liquidator's prospects of success in the litigation although this factor will rarely be able to be assessed at anything other than a high level of abstraction; (e) possible oppression in bringing the proceedings; (f) the nature and complexity of the cause of action; (g) the risks involved in the claim (including the amount of costs likely to be incurred in the proposed litigation, the extent to which the funder is to contribute to those costs, and the extent to which the funder is to contribute to the costs of the defendant in the event that the action is not successful, or towards any order for security for costs); (h) any particular premium or benefit which is promised in consideration of the provision of the funding or indemnity including whether that benefit is proportionate to the risk undertaken by the funder; (i) whether the liquidator is subject to any control over the conduct of the litigation, other than the usual obligation to keep the funder fully informed of all matters relating to the action; and (j) whether the agreement provides for a clear mechanism for resolving any dispute between the funder and the liquidator about the compromise of the litigation which is funded, … (Citations omitted.) 33 Having regard to the factors identified in Hughes, I was satisfied that an order should be made under s 477(2B) of the Corporations Act approving entry by the Liquidators into the Funding Agreement. This was because: (1) there is good reason for concluding that the processes of winding up and distribution would be enhanced by the Funding Agreement. This is because the Funding Agreement will permit the Liquidators to pursue the proposed claim against Halifax AU's former auditors and solicitors in circumstances where the only costs to which investors will be exposed, assuming entry into of the Funding Agreement, are the Liquidators' own costs (i.e. remuneration and expenses) in connection with the litigation. Mr Kelly has identified those costs associated with pursuing the proposed proceeding which have already been incurred and provided an estimate of future costs. The Liquidators incurred past costs as they formed the view that the proposed proceeding should only be pursued if litigation funding could be obtained which, in turn, could only be obtained once the proposed proceeding was developed and its merits considered; (2) the Liquidators have attempted to obtain funding from ASIC and four funders. The Funding Agreement is the only viable option; (3) the terms of the Funding Agreement are clear. More specifically, Mr Kelly opined that the terms of the Funding Agreement are commensurate with those ordinarily encountered by liquidators; (4) preparation for the proposed proceeding is well developed. A pleading has been drafted and is close to finalisation; (5) while it is an aspect that only need be addressed at a high level of abstraction, based on the advices obtained by the Liquidators in relation to the prospects of success of the proposed proceeding, I was comfortably satisfied that it was a proper exercise of power for the Liquidators to enter in to the Funding Agreement; and (6) notice of the proposal to enter into the Funding Agreement was provided to investor clients. In that respect, as set out above, responses were provided to any queries posed by investor clients and no investor client or creditor sought to appear at the hearing or be heard on the application. JUDICIAL ADVICE AND/OR DIRECTIONS 34 The Liquidators also seek judicial advice and/or directions that they are justified in pursuing the proposed proceeding and that they are entitled to their remuneration in accordance with the process for its approval put in place by this Court. 35 Section 63 of the Trustee Act 1925 (NSW) provides that: (1) A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. (2) If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee's own responsibility, to have discharged the trustee's duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction. 36 In Halifax v Loo at [18]–[19] I relevantly summarised the principles in relation to obtaining judicial advice pursuant to s 63 of the Trustee Act by reference to the decision in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 as follows: 18 The principles in respect of judicial advice to trustees were considered in [Macedonian Orthodox Church]. There, the plurality (Gummow ACJ, Kirby, Hayne and Heydon JJ) observed at [56]-[60] that there is no limitation on the power of the Court to give judicial advice pursuant to s 63 of the Trustee Act but there is one jurisdictional bar to relief under the section. That is that an applicant "must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument": see Macedonian Orthodox Church at [58]. 19 At [64] of Macedonian Orthodox Church, the plurality observed that s 63 of the Trustee Act operates as an exception to a court's ordinary function of deciding disputes between competing litigants and affords a facility for providing private advice to a trustee, noting that it is private advice because, as is evident from the operation of s 63(2) of the Trustee Act, its function is to give personal protection to the trustee. … 37 Further and, of particular relevance to this application, at [71] of Macedonian Orthodox Church, the plurality said: In short, provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee's duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs. (Emphasis in original.) 38 The Liquidators seek judicial advice and/or directions in this case because, as explained at [6]-[8] above, the monies held by them are, by virtue of the relevant sections of the Corporations Act, held in trust for the benefit of the investor clients of Halifax AU and Halifax NZ. That means that, to the extent that the costs of the proposed proceeding against Halifax AU's former auditors and solicitors are not covered by the Funding Agreement, the Liquidators will seek to have those costs paid from the commingled trust monies. 39 The plaintiffs submitted that the matters relevant to take into account on an application for judicial advice are in the discretion of the Court but observed that in this case the considerations are similar to those addressed for the purposes of their application pursuant to s 477(2B) of the Corporations Act for approval to enter into the Funding Agreement. They submitted that the two applications go hand in hand because it will only be proper for the Liquidators to enter into the Funding Agreement if it is proper for them to pursue the proposed proceeding. I accept that is so. 40 On this aspect of the application, the question for the Court was whether it is proper for the Liquidators to incur the costs and expenses, comprising their remuneration and expenses other than legal fees, in prosecuting the proposed proceeding. I was satisfied that it was having regard to the matters set out at [33] above and the following further matters. 41 First, the nature of the claim as set out in the draft statement of claim. The claim is against the former auditors and solicitors of Halifax AU and, in broad terms, concerns advice given to Halifax AU prior to its entry into administration. The claim made against each respondent is for damages for breach of provisions of the Australian Consumer Law being Sch 2 to the Competition and Consumer Act 2010 (Cth), breach of contract and breach of duty. The drafting of the claim is well advanced and, as I have already observed, subject to some minor amendment, will be filed substantially in the form of the draft statement of claim in evidence before me. 42 Secondly, the Liquidators have obtained detailed advice from their legal team in relation to prospects of success of the claims. Those advices were prepared having regard to the detailed understanding that the Liquidators and their legal advisers have of the operations of Halifax AU and Halifax NZ as a result of the client money proceedings. They consider prospects of success against each party, including in relation to questions of causation, damages and recovery. Given the confidential nature of the advices, I do not intend to refer to them in any detail here save to note that I was satisfied that the Liquidators have received advice sufficient for the purposes of this application and which provide a proper basis to draw a conclusion as to their likely prospects of success. 43 Thirdly and relatedly, in pursuing the proposed proceeding the funds held on trust are exposed to a limited degree only; that is for the Liquidators' remuneration as estimated by them. Those funds are not exposed to legal costs or to adverse costs orders, all of which are subject to and covered by the Funding Agreement. Insofar as the Liquidators' remuneration is concerned, the Liquidators have provided an estimate of those costs, which is contained in Exhibit H and is confidential. Accordingly, I have not set that estimate out. However, I am satisfied that the estimated remuneration and related costs are reasonable and appropriate. ORDERS FOR CONFIDENTIALITY 44 As set out above, on the application of the plaintiffs I made an order pursuant to s 37AF of the Federal Court Act, on the grounds in s 37AG(1)(a) of that Act, that the unredacted versions of the Kelly Affidavit, the submissions filed by the plaintiffs, Exhibit H and the transcript of the proceeding be kept confidential until the conclusion of the proposed proceeding against the former auditors and solicitors of Halifax AU. Redacted versions of each of the Kelly Affidavit and the submissions were also filed. 45 Section 37AF of the Federal Court Act empowers the Court to make a suppression or non-publication order prohibiting or restricting the publication of, among other things, evidence in a proceeding or information about evidence that is filed with the Court. The grounds on which such an order can be made are set out in s 37AG of that Act and relevantly include to "prevent prejudice to the proper administration of justice": see s 37AG(1)(a). 46 In Motorola Solutions Inc v Hytera Communications Corporation Ltd (No 2) [2018] FCA 17 at [6] Perram J summarised the principles to be applied in making a non-publication or suppression order under s 37AF of the Federal Court Act as follows: This Court has recently set out the principles to be applied when it is considering whether or not to make a suppression or non-publication order: Chief Executive Officer of Australian Transaction Reports and Analysis Centre v TAB Limited (No 4) [2017] FCA 1532 ('CEO of AUSTRAC v TAB (No 4)' at [9]-[12]. The present application does not call for any greater elaboration of those principles but they may be distilled as follows: (1) the FCAA contains Part VAA which relates to suppression and non-publication orders; (2) the power of the Court to make such orders is contained in s 37AF and the grounds for making them are to be found in s 37AG which includes within it that 'the order is necessary to prevent prejudice to the proper administration of justice': s 37AG(1)(a); (3) such an order is not lightly to be made. It must be necessary to prevent prejudice to the proper administration of justice and not merely desirable: see Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at 666 [39]; Australian Competition and Consumer Commission v Valve Corporation (No 5) [2016] FCA 741 at [8] per Edelman J; (4) the Court may make any other order necessary to give effect to the primary order: s 37AF(2) of the FCAA. (5) the order, once made, must remain in place no longer than is reasonably necessary to achieve its purpose: s 37AJ(2); and (6) the Court must take into account that a primary objective of the administration of justice is to safeguard the public interest in open justice (s 37AE) but no balancing exercise need be carried out between the utility of the order and the interest which open justice assumes under the FCAA: Australian Competition and Consumer Commission v Air New Zealand (No 12) [2013] FCA 533 at [21]. 47 In Goyal (liquidator) in the matter of OLI 1 Pty Ltd (in liq) [2020] FCA 450, in considering an application for orders pursuant to s 37AF of the Federal Court Act over some of the material relied on for the purposes of an application under s 477(2B) of the Corporations Act at [30]-[34], I observed: 30 Mr Goyal is concerned that if the proposed defendants to any proceeding are made aware of the commercial terms of the Funding Deed it would provide them with an unfair forensic advantage in relation to how they conduct any proceeding and/or any negotiations for the resolution of any proceeding. 31 The Goyal Affidavit refers in detail to the Offer Letter and the Funding Deed and the way in which the funding would operate including its effect on recoveries in certain scenarios and exhibit "RG-1" thereto includes the Offer Letter and Funding Deed. The Submissions also refer to the terms of the Offer Letter and the Funding Deed, although in less expansive terms. 32 It has been generally accepted that it is "conventional" or "appropriate" to make orders of the nature sought by Mr Goyal in relation to material relied on in support of an application by a liquidator for approval of a funding deed for the prosecution of litigation for the benefit of creditors: see, for example, Hird (Liquidator), in the matter of Allmine Group Limited (in liq) [2018] FCA 781 at [47]; Vickers, in the matter of JM Kelly Builders Pty Ltd (in Liquidation) [2019] FCA 2141 at [20]; Pogroske, in the matter of Bower Projects Australia Pty Ltd (in liq) [2019] FCA 1688 at [22]-[23]. 33 The rationale for that approach was explained by Barrett J in McGrath & Anor Re HIH Insurance Ltd [2005] NSWSC 731 at [10]-[13] and, in particular, at [12] where his Honour relevantly said: 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.447(2B) [sic] 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. … 34 In DCT v ACN 154 520 199 at [40]-[41] Gleeson J made the following observations in considering an application for confidentiality orders pursuant to s 37AF of the FCA Act in connection with affidavits relied on by the plaintiff in that case: 40 In previous cases which are substantially similar to this case, including Re Ambient Advertising Pty Ltd (in liq) [2015] NSWSC 1079, Victoria v Goulburn Administration Services (In Liq) [2016] VSC 654 and Victoria v CTM Training Solutions Pty Ltd (In Liq) [2017] VSC 47, the proposed funding deeds were kept confidential as between the special purpose liquidators and the funder. There is no reason why this matter should be any different. 41 The clear public interest in the due and beneficial administration of the estates of insolvent companies for the benefit of creditors is a relevant consideration in favour of a s 37AF order in this case. I was satisfied that an order pursuant to s 37AF should be made to protect commercially confidential information provided in support of the application. 48 In this case the orders were sought in relation to the Funding Agreement and material which went to and described the nature of the proposed proceeding against Halifax AU's former auditors and solicitors and the prospects of success of that proceeding. That is material which would, if it was available to the proposed respondents to the proceeding, provide them with an unfair forensic advantage and which could well undermine the conduct of the proceeding and the administration of the insolvent estate. In those circumstances it is in the interests of the administration of justice that material of that nature be kept confidential until the conclusion of the proposed proceeding. 49 Accordingly I was satisfied that the order sought by the plaintiffs in relation to the material listed at [44] above was appropriate. CONCLUSION 50 For those reasons I made the orders sought by the plaintiffs in their amended interlocutory application. I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Markovic. Associate: Dated: 14 September 2022 SCHEDULE OF PARTIES NSD 2191 of 2018 Defendants Fourth Defendant: ATLAS ASSET MANAGEMENT PTY LTD Fifth Defendant: FIONA MCMULLIN Sixth Defendant: ANDREW PHILLIP WHITEHEAD AND MARLENE WHITEHEAD IN THEIR CAPACITY AS THE TRUSTEES OF THE BEELINE TRUST Seventh Defendant: ANDREW PHILLIP WHITEHEAD Eighth Defendant: JEFFREY JOHN WORBOYS Ninth Defendant: HONG KONG CAPITAL HOLDINGS PTY LIMITED