These appeals are the first of their kind and are listed for a joint hearing, before the Full Federal Court of Australia and the Court of Appeal in New Zealand, on 23 September 2021.

The appeals are being funded by leading dispute resolution finance company Omni Bridgeway. This is the first time a funder distribution order will be applied and tested under Australian insolvency law and is the first insolvency matter funded via a managed investment scheme (MIS).

The Federal Court of Australia and the High Court of New Zealand handed down judgements in May 2021. At first instance, the Courts were asked to consider what was the appropriate date to value investors entitlements on the Halifax platforms. This matter differed substantially from other insolvent stockbroking platforms, for reasons that the Administrators, and then subsequent Liquidators, allowed investors to keep their investments open and trading after the date of administration, in November 2018. In comparison, other matters involving online stockbroking platforms closed all investment positions on or very shortly after the date of administration.

Maddocks represented those investors, known as ‘Category 1’ investors, being those investors who have kept their positions open and who received a higher valuation on their investments, when compared to their value as at the administration date.

Since Halifax went into administration in 2018, the value of the Category 1 investments has risen from $82 million to an estimated $170 million in April 2021 – a net increase of nearly $90 million. That increase was a result of those Category 1 investors maintaining open investment positions.

In its May judgements, the Courts concluded that it was appropriate to value the investments as at the administration date in November 2018, rather than a later date.

The appeals are brought to consider one discrete question, whether the Courts were correct in concluding that the liquidators were justified in valuing investors entitlements to the funds held on trust as at the administration date. If successful, the appeals will benefit those Category 1 investors significantly.

Partner Danielle Funston said the appeal was an important case under Australian insolvency law.

'These appeals are the first of their kind for a number of reasons. This is the first time appeals have been brought in respect of judgements given in joint hearings across Australia and New Zealand and they also represent the first insolvency matter to be funded via an MIS.

'The named appellant represents Category 1 investors, a category of investors that continually moves, depending on the current market results, however a successful appeal could see those investors share in a substantial increase.'

About Maddocks

Maddocks is a proudly independent Australian law firm that works closely with corporations, businesses and governments throughout Australia and internationally. We advise national and international clients across the built environment, education, government, healthcare and technology sectors, from our Canberra, Melbourne and Sydney offices. Our specialist expertise includes dispute resolution and litigation, employment and safety, financial services, franchising and insolvency.

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Jason Silverii
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