Fowler, In the matter of Opes Prime Stockbroking Limited [2009] FCA 989 (28 August 2009)

Last Updated: 1 September 2009

FEDERAL COURT OF AUSTRALIA

Fowler, In the matter of Opes Prime Stockbroking Limited

[2009] FCA 989

ROBERT FOWLER v JOHN ROSS LINDHOLM, ADRIAN LAWRENCE BROWN and PETER DAMIEN MCCLUSKEY
VID 627 of 2009

GORDON J
28 AUGUST 2009
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 627 of 2009
GENERAL DIVISION

IN THE MATTER OF OPES PRIME STOCKBROKING LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 086 294 028)

BETWEEN:

ROBERT FOWLER Applicant

AND:	JOHN ROSS LINDHOLM First Respondent ADRIAN LAWRENCE BROWN Second Respondent PETER DAMIEN MCCLUSKEY Third Respondent

JUDGE:	GORDON J
DATE OF ORDER:	28 AUGUST 2009
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The application for leave to appeal and any appeal will be heard next Thursday, 3 September at 10:15am before the Full Court of the Federal Court.
2. By 9:30am on Tuesday 1 September 2009, the Applicant file and serve any application for leave to adduce evidence including the proposed evidence and an outline of his submissions.
3. By 12 noon on Wednesday 2 September 2009, the Respondents file and serve any answering material.
4. By 4:00pm on Wednesday 2 September 2009, the Applicant file and serve any material in reply.
5. Costs reserved.
   

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 627 of 2009
GENERAL DIVISION

IN THE MATTER OF OPES PRIME STOCKBROKING LIMITED (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) (ACN 086 294 028)

BETWEEN:

ROBERT FOWLER Applicant

AND:	JOHN ROSS LINDHOLM First Respondent ADRIAN LAWRENCE BROWN Second Respondent PETER DAMIEN MCCLUSKEY Third Respondent

JUDGE:	GORDON J
DATE:	28 AUGUST 2009
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. By notice of motion dated 27 August 2009, the liquidators, and now scheme administrators (“the Liquidators”) of Opes Prime Stockbroking Limited (receivers and managers appointed) (in liquidation), Leverage Capital Proprietary Limited (receivers and managers appointed) (in liquidation), Hawkswood Investments Proprietary Limited (receivers and managers appointed) (in liquidation), and Opes Prime Group Limited (receivers and managers appointed) (in liquidation), (collectively “the Scheme Companies”), seek orders that an application filed by Mr Robert Fowler, (“the Applicant”), for leave to appeal from the Orders of Finkelstein J on 4 August 2009 be expedited.
2. In addition, the Liquidators seek an order that the application for leave to appeal be heard instanter with that appeal. Counsel for the Applicant, Mr Sweeney QC and Mr Lawrence Maher, oppose the application on the grounds that they require a reasonable amount of time for the preparation of the application for leave to appeal and any subsequent appeal, and submitted that the usual procedure should be followed. Mr Sweeney had three principal objections to the application for expedition and to the application that leave to appeal be heard instanter with that appeal.
3. In relation to expedition, Mr Sweeney submitted that there was a “funding related issue which would require at least a month to resolve”, and secondly, “a logistical difficulty” arising from the fact that the Applicant would seek leave to lead evidence at any hearing of the appeal. That evidence was said to be directed at two issues. First, that the material before Finkelstein J of the break up of the voting was misleading, and secondly, that the Liquidators and their solicitors have misled creditors by informing those creditors that they would not permit the scheme to be amended to enable payment of litigation funders. In relation to the application for leave to appeal to be heard instanter with the appeal, Mr Sweeney opposed the application on two related grounds; first, that such an order would maximise costs and risks, and secondly, that the application for leave would only take about one and a half hours, but any appeal would take in excess of one day, and possibly two to three days.
4. The Applicant’s application for leave to appeal relates to Federal Court proceeding VID 222 of 2009 (“the Scheme Proceeding”). In that proceeding, the Liquidators sought a number of orders, including:
   1. for the approval of an explanatory statement prepared by them in relation to schemes of arrangement between the Scheme Companies and their respective creditors (“the Schemes”);
   2. pursuant to s 411(1) of the Corporations Act 2001 (Cth) (“the Act”), that the Liquidators convene meetings (“Scheme Meetings”) of all of the creditors of each of the Scheme Companies for the purpose of considering, and if thought fit, resolving, with or without modification, to approve the Schemes; and
   3. that the schemes of arrangement between each of the Scheme Companies and their respective creditors agreed to by each class of its creditors at the meetings convened pursuant to Orders made by Finkelstein J on 1 July 2009, and held on 24 July 2009, be approved.
5. On 1 July 2009, Finkelstein J approved the explanatory statement that had been filed by the Liquidators, and granted the Liquidators leave to convene those meetings of separate classes of the companies’ creditors to consider the schemes of arrangement between those Scheme Companies and those creditors. Consistent with the Orders made by Finkelstein J on 1 July 2009, Scheme Meetings were held on 24 July 2009. The timing of the payment of the interim dividend referred to in the explanatory statement was discussed at those meetings.
6. The key dates for the Schemes were set out in the explanatory statement and included, for present purposes, two dates. First, the earliest possible “release date” in relation to other litigation was said to be 1 September 2009, and secondly, and no less importantly, that an interim dividend would be payable, so it was said, by the end of December 2009. On 4 August 2009, Finkelstein J approved the Schemes under s 411(6) of the Act. Some aspects of the Schemes, according to his Honour’s reasons for decision, troubled him.
7. The Applicant, a non-party who, on one view, did not appear at the hearing on 4 August 2009, seeks leave to appeal from the Orders made by his Honour on that date on the grounds that his Honour should not have approved the Schemes, and in particular, should not have approved a scheme of arrangement which proposed a deed releasing all the “released parties”, as that term is defined in In the matter of Opes Prime Stockbroking Limited (No 2) [2009] FCA 864 at [5]. Since the approval of the Schemes, a number of steps have been taken. Those steps were set out in paragraph 5 of an affidavit filed by Mr Troiani on behalf of the Liquidators.
8. As I have said, the Applicant requires leave to appeal from the Orders of Finkelstein J of 4 August 2009. The Liquidators are concerned that unless that application for leave to appeal, and any subsequent appeal is expedited, there is a real likelihood that the Scheme creditors will be prejudiced by not being paid an interim dividend by the end of December 2009, and may not in fact be paid until some months into 2010. As noted earlier, the Applicant opposes those applications. In the present case, two issues arise: should the application for leave to appeal and any appeal be heard instanter, and if so, should the hearing of those applications be expedited? In my view, the answer to both is yes. The Schemes are complex. Litigation has ensued throughout Australia and overseas. It involves, according to the reasons for decision of Finkelstein J, in excess of 600 creditors, who have lost approximately $630 million. Moreover, according to Finkelstein J, many of those creditors have lost all of their savings and suffered greatly, and that has, unsurprisingly, created difficulties for many people and their families.
9. In the modern world, Courts, litigants, and their advisors are under a duty to ensure the issues in dispute are resolved as quickly, inexpensively, and efficiently as possible. Given the nature of the issues in dispute and the circumstances in which those issues arise, it is appropriate that the application for leave to appeal and any appeal be heard instanter. The difficulties I have referred to earlier must be brought to an end as soon as possible, consistent with the interests of justice. Moreover, any application for leave to appeal must, according to the authorities, consider the merits of issues sought to be raised by the Applicant.
10. The remaining issue which arises is whether the hearing should be expedited, and if so, to what date. In my view, the hearing should be heard as soon as reasonably practical. The relevant principles governing application for expedition are well-known. In National Aboriginal and Torres Strait Islander Legal Services Secretariat Limited v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 609 at [4], Sackville J referred to the fact that an application for expedition would be granted if it could be shown there was some significant practical disadvantage if the hearing did not take place until after a particular date.
11. In the present case, the risk is clear. Without funding, the Liquidators cannot progress the proofs of debt. Unless the proofs of debt are progressed, there will be delay in the payment of the interim dividend. On any view, that risk should be avoided. As I have said, the expedition application was opposed by Counsel for the Applicant. There are a number of matters to be noted about that opposition. First, the contention that the Applicant had a funding related issue was not supported by any evidence and no explanation was adduced as to why the current Applicant was selected and not one of the other creditors who appeared before Finkelstein J. Moreover, as Counsel for the Applicant properly submitted, the “funding” issue may take “at least one month” to resolve. In those circumstances, I accept the Liquidators’ submission that that issue is not a strong factor in opposing a grant of application for expedition.
12. Secondly, the logistical difficulties identified by the Applicant in my view can be addressed by the Applicant in the near future. Both matters are entirely within the knowledge of the Applicant, namely how the material before Finkelstein J of the break up of the voting was said to be misleading, and secondly, when and how the Liquidators and their solicitors allegedly misled creditors by informing creditors that they would not permit the Schemes to be amended to enable payment of the litigation funders. Of course, whether that evidence is adduced and ultimately admitted by the Full Court is a matter for the Full Court.
13. Finally, I do not accept that Counsel for the Applicant will be prejudiced by an early hearing. As Counsel for the Applicant submitted before me, they appeared at both hearings before Finkelstein J and made submissions in respect of each of the matters sought to be argued on the application for leave to appeal. To the extent that Counsel for the Applicant did not traverse other grounds covered by other objectors to the Schemes in the hearing before Finkelstein J, then, in my view, they have two benefits which otherwise would not be normally present; the benefit of the argument having been present before Finkelstein J when the matters were argued, and finally, the benefit of the written submissions prepared by Counsel for the other parties.
14. For those reasons, the application for leave to appeal and any appeal will be heard next Thursday, 3 September 2009, at 10:15 am, before the Full Court of the Federal Court in Melbourne. The Applicant will be directed to file any application for leave to adduce evidence, including the proposed evidence in admissible form, and an outline of his submissions by 9:30 am on Tuesday, 1 September 2009. The Liquidators will be directed to file and serve any answering material by 12 noon on Wednesday, 2 September 2009. The Applicant will then be directed to file and serve any material in reply, if any, by 4:00 pm on Wednesday, 2 September 2009. I will reserve the question of costs.
    

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon.

Associate:

Dated: 31 August 2009

Counsel for the Applicant:	CA Sweeney QC with LW Maher
Solicitor for the Applicant:	John M Barbouttis
Counsel for the Respondents:	C Scerri QC with R Strong
Solicitor for the Respondents:	Mallesons Stephen Jaques

Date of Hearing:	28 August 2009
Date of Judgment:	28 August 2009