Goyal and Conneely (Liquidators), in the matter of FSM Developments Pty Ltd (in liq) (No 3) [2026] FCA 557

This Federal Court decision came out of the liquidation of FSM Developments Pty Ltd and related companies, but the judgment itself was not about the final outcome of the liquidation. It was about a narrower costs fight that arose after documents had already been produced under the Corporations Act examination regime.

The liquidators sought examination summonses and production orders against a number of people and companies, including Ray White Capital Pty Limited and Keyview Investment Management Limited. Those entities were not officers of FSM. They were third parties who had documents relevant to the investigation.

The commercial background was a property finance dispute. FSM and others had entered into a loan facility secured by a first ranking mortgage over an Ashfield property. Zagga had financed another company related to FSM's director and held a second ranking mortgage over the same property. A trust managed by Ray White Capital later acquired the debt from La Trobe. Zagga then redeemed the mortgage, transferred it to its subsidiary Stingray, and Stingray and Zagga appointed the liquidators as administrators before the companies moved into liquidation.

The judgment also records that Zagga was a competitor of Ray White Capital and Keyview, both operating as alternative investment firms in the real estate sector. That detail mattered because once Stingray and Zagga wanted access to documents produced by Ray White Capital and Keyview, confidentiality concerns became central.

Ray White Capital and Keyview complied with the Federal Court production orders. But the story did not end there. Stingray separately commenced a Supreme Court of New South Wales proceeding as an eligible applicant under Pt 5.9 of the Corporations Act, also seeking production and examination orders concerning FSM and related companies. Orders for production and examination were issued to Ray White Capital and Keyview in that proceeding as well.

Instead of pressing ahead with duplicate production processes in two courts, Stingray and Zagga filed an interlocutory process in the Federal Court seeking permission to uplift and copy the documents Ray White Capital and Keyview had already produced there, and to be released from the implied undertaking attached to those documents. Some access was granted by consent for documents over which no confidentiality claim was made.

The remaining documents were more difficult. The parties then spent about six months negotiating a confidentiality regime. The judgment does not set out all the details of those negotiations, but it makes clear they were detailed and prolonged. Eventually, the amended interlocutory process was resolved by consent and dismissed, with further production occurring under the agreed arrangements.

That left one live issue. Ray White Capital and Keyview wanted Stingray and Zagga to pay their costs of responding to the access application, specifically the work of reviewing documents for confidentiality, negotiating the confidentiality regime and producing the documents. They also sought payment on a lump sum basis.

The proceeding sat within the Corporations Act examination framework. The liquidators had sought orders under ss 596A, 596B, 596D, 596F and 597 of the Corporations Act 2001 (Cth), together with r 30.34 of the Federal Court Rules 2011 (Cth). For costs, the Court referred to its powers under ss 23 and 43 of the Federal Court of Australia Act 1976 (Cth), as well as s 597 of the Corporations Act.

The Court said there was no dispute that it had power to award costs to a party who produces documents in answer to an order made under s 597. So the case was not about whether the Court had jurisdiction or power. It was about how that discretion should be exercised on these facts.

Justice Markovic referred to earlier authority, including Hodgkinson, in the matter of Kupang Resources Ltd, which summarised principles about when examinees or document producers may recover costs. Those principles include that reasonable costs of attending an examination may be compensable, and in some cases the examinee can also be compensated for searching for documents required to be produced. But the authorities also show limits. Costs of legal consultation and representation are not automatically recoverable, and the question is highly fact-sensitive.

The central issue in this case was whether the costs claimed by Ray White Capital and Keyview were really costs of production in the relevant sense, or whether they were instead later costs associated with confidentiality review and negotiations over access to documents that had already been identified and produced.

Justice Markovic ordered that there be no order as to costs of the amended interlocutory process. That meant Ray White Capital and Keyview did not recover the costs they sought from Stingray and Zagga.

The Court accepted one part of Ray White Capital's and Keyview's argument. To the extent the insider versus outsider distinction remains relevant in this area, they were outsiders. They were not officers of FSM or its related companies. But that point did not carry the application far enough.

The more important point was the character of the work for which costs were claimed. The Court accepted that Ray White Capital and Keyview had incurred costs in negotiating a confidentiality regime and reviewing documents to be produced in line with that regime. However, most of the costs claimed were not costs of undertaking searches for material to be produced. The judgment says that, in an appropriate case, search costs may be compensated and in this matter were to be compensated by the liquidators. By contrast, the costs claimed here principally related to reviewing documents already identified and produced to the liquidators for confidentiality, and to correspondence with the parties, the Court and their solicitors.

That distinction was decisive. The Court was not satisfied that Stingray and Zagga should be ordered to pay those costs.

The Court also accepted Stingray's explanation for bringing the amended interlocutory process. Stingray said it pursued the application to avoid a multiplicity of proceedings and to minimise prejudice, cost and duplication for Ray White Capital and Keyview, rather than forcing them to go through the same production exercise again in the Supreme Court proceeding. Justice Markovic treated that explanation as a relevant discretionary factor.

Ray White Capital also argued that Stingray and Zagga were pursuing private interests rather than a public duty, and that Stingray's separate examinations had effectively gone nowhere because they were stayed. The Court said that submission did not take the matter further. The focus remained on the actual purpose and effect of the amended interlocutory process and the nature of the costs claimed.

Because the Court refused to make a costs order at all, it did not need to decide whether a lump sum costs order would otherwise have been appropriate.

The most commercially useful part of the judgment is the line it draws between different kinds of compliance work.

On one side are costs of searching for and identifying documents for production. The Court, drawing on earlier authority, recognised that these costs may be compensable in an appropriate case. The judgment also notes that in this matter those search-related costs were to be compensated by the liquidators. That tells businesses that the Court does not treat all compliance work as unrecoverable.

On the other side are costs incurred after the documents have already been identified and produced, where the later work is about managing access. In this case, the claimed costs mainly fell into that second category. They were costs of reviewing already-identified documents for confidentiality, negotiating a confidentiality regime, and corresponding with the parties, the Court and solicitors. The Court did not treat those costs as a sufficient basis for ordering Stingray and Zagga to pay.

That does not mean confidentiality-related costs can never be recovered. The judgment does not go that far. It means that on these facts, and given the discretionary context, the Court was not persuaded to shift those costs. Businesses should therefore avoid broad labels like 'production costs' and instead break work down into precise categories.

If your business receives a production order in an insolvency examination, this case is a warning not to assume that all compliance and legal costs will be shifted to someone else. Even where the work is substantial and confidentiality concerns are genuine, the Court may ask exactly what kind of work was done and whether it was part of initial production or part of a later access and confidentiality dispute.

If you are the producing party, separate your workstreams from the start. Record who did the document search, who identified responsive material, who reviewed confidentiality, who considered privilege, and who negotiated access terms. If those tasks are blended together in invoices and file notes, it becomes harder to show that a particular category should be compensated.

If you are seeking access to documents already produced, this case shows the value of explaining why your approach reduces duplication. Stingray's position that it was trying to avoid multiple proceedings and minimise prejudice to Ray White Capital and Keyview was accepted as relevant. That did not guarantee success on every issue, but it helped resist the costs order sought.

Businesses should also remember the competitive context. Where a competitor is seeking access, confidentiality protocols are likely to be heavily negotiated. That may be commercially necessary, but it does not follow that the other side will be ordered to pay for all of that work.

The judgment was delivered by Markovic J on 6 May 2026 and was determined on the papers. The order made was limited to costs of the amended interlocutory process filed by Stingray Management Pty Ltd and Zagga Investments Pty Ltd. The Court ordered that there be no order as to costs of that interlocutory process.

This should be read as a procedural costs ruling in a specific insolvency investigation setting. It does not decide the broader merits of the liquidation, the underlying financing disputes, or the ultimate outcome of any examinations or related proceedings.