FEG gamble loses as High Court rejects appeal

The undeniable success of FEG Recoveries in clawing back funds for the Commonwealth has certainly emboldened its decision makers, housed within the Federal Government’s Department of Employment and Workplace Relations (DEWR).

It would therefore be a brave insolvency practitioner who’d bet that the recent setback to FEG’s ambitions as meted out by the High Court of Australia will knock them off balance for long.

After all, the adverse costs which come with this decision will be borne by the taxpayer.

iNO speaks of course of the decision in Morgan v McMillan Investment Holdings Pty Ltd [2024] HCA 33, in which the High Court on Wednesday refused an appeal by liquidator and BCR Advisory principal John Morgan.

Since at least 2021 Morgan has been seeking to have a pooling order made in respect of Sydney Allen Manufacturing Pty Limited (SAM) and Sydney Allen Printers Pty Limited (SAP) so that a chose in action for an enlarged insolvent trading can then be pursued.

His targets are print baron Rob McMillan and wife Julie, who through their family-controlled company McMillan Investment Holdings (MIH) were secured creditors of the companies in liquidation and acted, Morgan alleges, as shadow directors.

Initially Morgan succeeded in obtaining the sought after order but that decision was then appealed by the McMillans who won a majority decision in the Federal Court.

Morgan and his backers then tracked to Canberra to seek relief from highest court in the land.

Alas it was not meant to be and while iNO is informed that the costs of the unsuccessful pooling order proceedings will surpass $1 million, Morgan, who was fully indemnified against any adverse costs, told us it was nowhere near that amount.

Still, the McMillans had Brett Walker SC and Julian Svehla in their camp and Somerset Ryckman’s representing them the whole way.

Morgan meanwhile has relied on the services of ERA Legal and was represented at the High Court hearings by Marcus Pesman SC and Michael Rose.

We see no opportunity for steeply discounted legal representation here.

The decision however does not mean the McMillans are free and clear. The pursuit of the pooling order was to maximise the value of the insolvent trading claim. Even without it that claim is in the millions. All that it will take for its further agitation is for FEG Recoveries to decide to throw more money Morgan’s away.

Further reading:

Joint & several curse haunts liquidator in the box