Federal Court of Australia

Frisken (Trustee) v E K Recruitment Pty Ltd (in liq), in the matter of E K Recruitment Pty Ltd (in liq) [2026] FCA 223

ORDERS

THE COURT:

1.    Advises the Plaintiff pursuant to s 63 of the Trustee Act 1925 (NSW) that the Plaintiff, in his capacity as trustee of the EK Recruitment Creditors Trust (the Trust) would be justified in proceeding on the basis that:

(a)    the “Fund” under the Deed of Company Arrangement (the DOCA) meant:

(i)    in cll 10.1 and 10.2 of the DOCA, the bank account referred to in cl 10.1 (the Bank Account), and

(ii)    in sub-cl 10.4(d) of the DOCA, the money standing to the credit of the Bank Account;

(b)    cll 10.2 and 10.4 of the DOCA meant that:

(i)    the Plaintiff, as Administrator of the Defendant, was required to transfer the Bank Account to the Plaintiff, as trustee of the Trust, once he had received the amounts referred to in sub-cll 10.2(a) and 10.2(b) of the DOCA (the Transfer); and

(ii)    the Plaintiff, as Administrator of the Defendant, was not required to pay into the Bank Account the fixed amount referred to in sub-cl 10.2(c) of the DOCA;

(c)    simultaneously with or immediately after the Transfer, the “Claim” (as defined by cl 1 of the DOCA) of each “Creditor” (as defined by cl 1 of the DOCA) was discharged and extinguished and converted to a “Claim” (as defined by cl 1 of the Creditors’ Trust Deed (the Trust Deed)) against the “Trust Fund” (as defined by cl 1 of the Trust Deed);

(d)    clause 8.2 of the DOCA can be disregarded;

(e)    the “Trust Creditors”, for the purposes of the Trust Deed, are each a “Claimant” (as defined by cl 1 of the Trust Deed);

(f)    the “Trust Fund”, for the purposes of the Trust Deed, means the amount the subject of the Transfer plus any amount subsequently received by the Plaintiff, as trustee of the Trust, by way of the fixed amount referred to in sub-cl 10.2(c) of the DOCA and cl 2.2 of the Trust Deed;

(g)    the reference to “Regulations 5.6.12 to 5.6.36A of the Corporations Regulations” in cl 6.3 of the Trust Deed be read as referring to Div 75 of the Insolvency Practice Schedule (Corporations) and Div 75 of the Insolvency Practice Rules (Corporations) 2016 (Cth), as if the references in those Divisions to “external administrator” and “external administrator of a company” were references to the Plaintiff in his capacity as trustee of the Trust;

(h)    the “Excluded Creditors”, for the purposes of cl 5.11 of the Trust Deed, are any “Non Participating Creditor” as defined by cl 1 of the DOCA;

(i)    the second sentence in cl 2.2 of the Trust Deed be read as “The Company must in addition pay a fixed amount to the trustee to ensure that the unsecured Creditors receive a sum (after payment of priority creditors) which is no less than two cents in the dollar of the total of the unsecured debt”; and

(j)    the reference to “section 449E of the Act” in cll 7.1 and 7.2 of the Trust Deed be read as if it were referring to Div 60 of the Insolvency Practice Schedule (Corporations) with the following modifications:

(i)    the references to an “external administrator” and “administrator” be read as if they were references to “the trustee”;

(ii)    the references to “a company” be read as if they were referring to “the EK Recruitment Creditors’ Trust”;

(iii)    the references to “the external administration” be read as if they were referring to “the Creditors’ Trust Deed”; and

(iv)    the references to “creditors” be read as if they were referring to “the beneficiaries of the EK Recruitment Creditors’ Trust”.

2.    Orders that:

(a)    Subject to the question of costs, the Amended Originating Process otherwise be dismissed;

(b)    The Defendant and the interested parties file and serve any affidavits and written submissions on the question of costs by 27 March 2026;

(c)    The Plaintiff file and serve any affidavits and written submissions on the question of costs by 17 April 2026; and

(d)    The Defendant and the interested parties file and serve any written submissions in reply (whether to the Plaintiff or to each other) by 1 May 2026.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

JACKMAN J:

Introduction

1    This is an application by the plaintiff, Mr Daniel Frisken as trustee of the EK Recruitment Creditors’ Trust (the Trust), under ss 63 and 81 of the Trustee Act 1925 (NSW) (the Trustee Act), s 447A of the Corporations Act 2001 (Cth) (the Corporations Act) and s 90–15 of the Insolvency Practice Schedule (Corporations) in Sch 2 of the Corporations Act (the IPS). EK Recruitment Pty Ltd (in liq) (the Company) is the defendant in these proceedings. The application was very substantially amended in the course of argument, and these reasons concern the final version of the Amended Originating Process which I granted leave to file during the afternoon of the hearing.

2    I also granted a number of interested parties leave to appear, namely:

(a)    the Deputy Commissioner of Taxation, who was a creditor of the Company and is now a beneficiary of the Trust;

(b)    Mr Rafayel El-Khoury and Mr John Paul El-Bayeh (the Guarantors), being two of the three guarantors under the Deed of Guarantee and Indemnity (the Guarantee) referred to below (the other guarantor being Mrs Noelle El-Khoury); and

(c)    Madison Marcus Law Firm and Mr Gerard Breen (the Solicitors), who drafted the documents which lie at the heart of the present controversy.

3    Each of the interested parties was ably represented by counsel and I am indebted to them for their thorough and measured submissions.

Salient facts

4    On 15 May 2020, Mr Frisken was appointed as voluntary administrator by the Company. On 12 June 2020, Mr Frisken issued a notice of the second meeting of creditors of the Company and provided his report to creditors (the Report). The Report included the salient terms of a proposed deed of company arrangement and information concerning a proposed creditors’ trust. The rationale for the creditors’ trust was explained in the Report as being a mechanism used to accelerate a company’s exit from external administration, in that creditors’ claims could be managed while the director of the company controlled its future operations without the words “subject to deed of company arrangement” attached to the name of the Company, and thus avoiding the stigma of the external administration appointment while the Company sought to improve its trading performance.

5    On 22 June 2020, the second meeting of creditors was held and resolved that the Company execute a deed of company arrangement “in terms not materially different to those contained in the draft DOCA tabled at the meeting and which formed part of” the Report. It does not appear that any draft deed of company arrangement was in fact tabled at the meeting, and the Report contained only a summary of the proposed deed of company arrangement, not the document itself.

6    On 23 June 2020, three documents were executed, namely:

(a)    the Deed of Company Arrangement (the DOCA);

(b)    the Creditors’ Trust Deed (the Trust Deed) between Mr Frisken as trustee and the Company, creating the Trust; and

(c)    the Guarantee, given in favour of Mr Frisken.

7    The DOCA and the Trust Deed are not well drafted. The present application seeks to resolve the drafting issues which have arisen, either by a process of construction or by Court orders varying their terms, or by a combination of those approaches. No question arises on the present application concerning the Guarantee, and nothing in these reasons should be taken as expressing any views as to the construction or application of the Guarantee.

8    On 23 June 2020, being the same day that the three documents to which I have referred were executed, Mr Frisken caused a Form 505 to be lodged with the Australian Securities and Investments Commission (ASIC) recording the cessation of his appointment as voluntary administrator on 23 June 2020. On 20 July 2020, Mr Frisken caused an end of administration return to be lodged with ASIC with respect to the period of time that he was voluntary administrator of the Company, namely from 15 May 2020 to 23 June 2020. On 24 July 2020, Mr Frisken caused an end of administration return to be lodged with ASIC with respect to the period of time that he was the DOCA administrator, being from 23 June 2020 to 23 June 2020. That is, Mr Frisken’s role as DOCA administrator began and ended on the same day that the DOCA was executed. On 6 August 2020, Mr Frisken caused a Form 5056 notice to be lodged with ASIC recording that the DOCA had been wholly effectuated on 23 June 2020.

9    From the end of July 2020 to January 2022, monthly contributions were made by the Company to Mr Frisken for the purposes of there being sufficient funds to pay the fixed amount (referred to below) within 24 months of the date of the DOCA.

10    On 31 March 2022, Mr Frisken issued a report to the beneficiaries of the Trust, in which he stated that he intended to declare a dividend of 100 cents in the dollar in respect of the debt to the Australian Taxation Office (ATO) for superannuation guarantee charge (SGC) in the amount of $231,995.75, and that it was likely he would declare a dividend of 2 cents in the dollar to the remaining unsecured creditors. On 1 April 2022, Mr Frisken caused a Notice of Intention to Declare a Dividend to be issued to the beneficiaries of the Trust, indicating that a first and final dividend was to be declared on 22 May 2022 and the beneficiaries of the Trust were to formally prove their debt or claim on or before 19 April 2022. On 5 April 2022, Mr Frisken received a letter from the ATO attaching an updated proof of debt in the sum of $1,077,339.45, comprising $419,492.43 for SGC and $657,847.02 for Running Balance Account (RBA) deficit debt.

11    On 27 November 2023, Mr Rajiv Ghedia was appointed voluntary administrator of the Company. On 20 December 2023, Mr Ghedia wrote to Mr Frisken requesting that Mr Frisken convene a meeting of the beneficiaries of the Trust for the purposes of terminating the Trust and paying the funds held by Mr Frisken to the Company. On 4 January 2024, Mr Ghedia was appointed liquidator of the Company.

12    On 20 February 2024, a meeting of the beneficiaries of the Trust was held, but no resolution was proposed to terminate the Trust. The solicitor for Mr Ghedia, who attended the meeting, informed the meeting that in his opinion, the beneficiaries’ claims as creditors of the Company had not been released and that he believed that the beneficiaries could claim in the liquidation of the Company.

13    On 3 April 2024, Mr Ghedia issued his statutory report to creditors of the Company in which he stated that he believed that the Trust ought to terminate, and that the funds held on trust by Mr Frisken were returnable to the company (para 3.11 of the report).

Salient terms of the constituent documents

The DOCA

14    Clause 1 of the DOCA contains definitions, including the following:

Appointment Date means 15 May 2020.

Claim means as at the Appointment Date, a debt owing (whether then, now, in the future or contingently) by, or a claim subsisting against, the Company in favour of a person, irrespective of whether the debt or claim arose by virtue of contract, at law, in equity, or otherwise and including (without limitation) a claim sounding only in damages, a debtor claim arising pursuant to any guarantee and a debt or claim of a Secured Creditor, Owner or Lessor.

Fund means the assets and cash referred to in clause 10.2.

Non Participating Creditor means:

the Director of the Company;

any related party or close associate as defined by section 9 of the Corporations Act 2001 (Cth);

Scottish Pacific Business Finance Pty Ltd (ACN 008 636 388).

Trustee means Daniel Frisken in his capacity as trustee of the Creditors’ Trust.

15    Clause 4.1 of the DOCA provided as follows:

The provisions contained in Schedule 8A of the Corporations Regulations 2001 (C’th), (excluding clause 4 thereof) will apply to this Deed.

16    Pausing there, s 444A(5) of the Corporations Act provides that the instrument containing a deed of company arrangement is taken to include the “prescribed provisions”, except so far as it provides otherwise. The DOCA expressly provided otherwise in relation to cl 4. The prescribed provisions are set out in Schedule 8A of the Corporations Regulations 2001 (Cth) (Sch 8A), and include the following:

Priority

4     The administrator must apply the property of the company coming under his or her control under this deed in the order of priority specified in section 556, 560 or 561 of the Act.

Discharge of Debts

5    The creditors must accept their entitlements under this deed in full satisfaction and complete discharge of all debts or claims which they have or claim to have against the company as at the day when the administration began and each of them will, if called upon to do so, execute and deliver to the company such forms of release of any such claim as the administrator requires.

Claims Extinguished

6    If the administrator has paid to the creditors their full entitlements under this deed, all debts or claims, present or future, actual or contingent, due or which may become due by the company as a result of anything done or omitted by or on behalf of the company before the day when the administration began and each claim against the company as a result of anything done or omitted by or on behalf of the company before the day when the administration began is extinguished.

17    Clause 7 of the DOCA provided as follows:

This deed contemplates the entry by the Company into a Creditors’ Trust Deed whereby:

(e)    the Administrator will cause the Company to execute and require the Trustee to execute the Creditors’ Trust Deed;

(f)    the Trustee will act as trustee for each of the Creditors pursuant to the Creditors’ Trust as created by the terms of the Creditors’ Trust Deed;

(g)    upon the balance of the Fund and assets being paid or transferred by the Administrator to the Trustee of the Creditors’ Trust the Claims of the Creditors will be released as against the Company and this Deed will terminate; and

(h)    notwithstanding that the Cliams (sic) of the Creditors are released against the Company, the Creditors will maintain a right as beneficiaries under the Creditors’ Trust Deed to receive a rateable distribution in respect of their Claims in accordance with the terms of the Creditors Trust Deed.

18    Clause 8 of the DOCA dealt with implementation. Clause 8.1 provided as follows:

If the Conditions Precedent have been satisfied or waived in accordance with clause 10.4, the parties must take the steps specified in clauses 10.2 to 10.4.

The term “Conditions Precedent” was not defined, and clause 3 of the DOCA expressly stated that the DOCA was not subject to the satisfaction of any conditions precedent.

19    Clause 8.2 provided as follows:

(a)    If the Conditions Precedent have been satisfied or waived in accordance with clause 10.4, on the Implementation Date, the Deed Proponent and the Deed Administrators must procure that the amounts specified below are paid and applied as follows:

(b)    the Top Up Cash Amount shall be paid by the Deed Proponent to the Deed Administrators and paid by them into one or more Deed Administrators’ Accounts nominated by the Deed Administrators; and

(c)    an amount equal to the Fund Amount shall be paid by the Deed Administrators to the Trustees to comprise and be administered under the Trust as the Trust Fund.

No definition of “Deed Proponent” was provided, and nothing in the DOCA indicates who it might have been. No definition of “Implementation Date” was provided. Further, no definition of “Top Up Cash Amount” was provided in either the DOCA or the Trust Deed, and there is no provision which gives any indication of what it might have comprised.

20    Sub-clause 8.4(a) provided as follows:

The actions to take place as contemplated by clauses 10.2 to 10.4are (sic) interdependent and must take place, as nearly as possible, simultaneously.

21    Clause 10 of the DOCA dealt with the creation of the Fund. Clause 10.1 provided as follows:

The Administrator must establish a bank account in the name of E K Recruitment Pty Ltd (subject to Deed of Company Arrangement) as soon as is practical after the execution of this deed (Fund).

22    Clause 10.2 of the DOCA provided as follows:

Subject to the terms of the document, the Administrator must pay into the Fund the (sic)

(a)    The cash at bank held by the Administrator, or subsequently received by the Administrator.

(b)    All other assets available to the Company available as at the Appointment Date; and

(c)    A fixed amount, which will be an amount required to ensure a distribution to ordinary unsecured creditors of no less than 2 cents per dollar of any Claims approved by the Trustee (after payment of priority creditors) to be paid within twenty-four (24) months from the Commencement Date.

23    Clause 10.4 dealt with the transfer of money to the Creditors’ Trust in the following terms:

Subject to

(a)    The approval by the Creditors of the Deed of Company Arrangement and the Creditors’ Trust Deed, and the execution by the Creditor’s (sic) of the Deed of Company Arrangement and Creditors’ Trust Deed.

(b)    The provision by the Guarantors by John Paul El-Bayeh, Noelle El-Khoury and Rafayel El-Khoury, and the provision of those Guarantees in respect of the payment into the Creditors’ Trust of a sum not less than 2 cent (sic) in the dollar of the total amount of the unsecured debts of the Company to the Trustee of the Creditors’ Trust Deed.

(c)    the transfer and/or collections pursuant to clause 10.2 of this Deed;

(d)    the Administrators will transfer the Fund to the Trustee to be distributed in accordance with the terms of the Creditors’ Trust Deed; and

(e)    terminate this Deed in accordance with clause 18.2.

24    Clause 18.2 dealt with notice of effectuation of the DOCA in the following terms:

Upon this Deed being wholly effectuated, the Deed Administrators or one of them must certify to that effect in writing and must as soon as practicable, lodge with ASIC a notice of termination of this Deed substantially in the following form in respect of each Deed Company:

“I, Daniel Frisken of O’Brien Palmer, Level 9, 66 Clarence Street, Sydney NSW 2000 as Deed Administrators of the Deed of company arrangement pertaining to EK Recruitment Pty Ltd (subject to deed of company arrangement) executed on [insert date] certify that this Deed has been wholly effectuated and the lodgement of this notice terminates this Deed”

25    Clause 18.3 provided that, in accordance with s 445H of the Corporations Act, the termination or avoidance, in whole or in part, of the DOCA did not affect the previous operation of the DOCA.

26    Clause 20.13 of the DOCA was headed “Entire understanding” and provided as follows:

(a)    This document contains the entire understanding between the parties as to the subject matter of this Deed.

(b)    All previous negotiations, understandings, representations, warranties, memoranda or commitments concerning the subject matter of this Deed are merged in and superseded by this document and are of no effect. No party is liable to any other party in respect of those matters.

(c)    No oral explanation or information provided by any party to another:

(i)    affects the meaning or interpretation of this Deed; or

(ii)    constitutes any collateral agreement, warranty or understanding between any of the parties.

The Trust Deed

27    The Trust Deed begins unpromisingly by referring in its recitals to the document as though it were the DOCA and by stating falsely that the Guarantors had executed the Trust Deed.

28    Clause 1 of the Trust Deed contains various definitions, including the following:

Claim means as at the Appointment Date [not defined in the Trust Deed but defined in the DOCA as meaning 15 May 2020], a debt owing (whether then, now, in the future or contingently) by, or a claim subsisting against, the Company in favour of a person, irrespective of whether the debt or claim arose by virtue of contract, at law, in equity, or otherwise and including (without limitation) a claim sounding only in damages, a debt or claim arising pursuant to any guarantee and a debt or claim of a Secured Creditor, Owner or Lessor.

Claimant means a person who has a Trust Claim or claims to have a Trust Claim.

Creditor means a person, other than a Secured Creditor, who has, or had, a Claim against the Company whether present or future, certain or contingent ascertained or sounding only in damages, the circumstances giving rise to which occurred on or before the Relevant Date.

DOCA means the Deed of Company Arrangement executed by the Company and the Administrator on 22 June 2020.

Fund means the fund referred to in clause 10 of the DOCA.

Priority Trust Claim means a Trust Claim arising out of a Claim against the company as at the Relevant Date which, had the Company been wound up with the Relevant Date being the day on which the winding up was taken to have begun, would have been a Claim which needed to be paid in priority to all other Claims in accordance with section 556, section 560 or section 561 of the Act.

Relevant Date means 22 June 2020.

Trust Claim means a claim to participate in distributions from the Trust Fund on the basis and to the extent that the Claimant had or has a Claim against the Company or any equity interest in the Company as at the Relevant Date before the termination of the DOCA.

Trust Fund means the trust fund created in accordance with clause 10 of this deed [sic: the DOCA], and made up of:

(a)    the Settlement Sum [which is defined as the sum of $10];

(b)    the balance of the Fund which is paid or transferred by the Deed Administrator pursuant to clause 10.4 of the DOCA; and

(c)    transfer of the Relevant Assets under clause 9 [sic: cl 10] of the DOCA.

29    Sub-clause 1(e) of the Trust Deed provides:

A reference to any statute, regulation, rule or similar instrument includes any consolidations, amendments or re-enactments of it, any replacements of it, and any regulation or other statutory instrument issued under it.

30    Clause 2.1 deals with the commencement date of the Trust Deed and provides as follows:

This deed commences on the later of the date it is executed by the Company and the Trustee or upon effectuation of the DOCA.

31    Clause 2.2 provides as follows:

The Deed Company shall pay or have paid the Fund Amount to the Trustees in accordance with clauses 10.2 and 10.4 of the DOCA. The Company must in addition pay a fixed amount to the Trustee to ensure that the unsecured Creditor’s (sic) receive a sum which is no less than two cents of the dollar of the total of the unsecured debt.

32    Clause 3.1 provides as follows:

The Trustee acknowledges and declares that the Trust Fund will be held on trust by the (sic) for the benefit of:

(a)    Claimants; and

(b)    the Trustee.

33    Clause 5 deals with Trust Claims. Clause 5.1 provides as follows:

(a)    Upon this Deed being settled, and in accordance with clause 7 (c) of the DOCA, all Claims of the Trust Creditors against the Deed Companies will convert to and become claims against the Trust Fund under this Deed, equal in amount to the released Claims.

(b)    Interest will not accrue or be payable on any Admitted Claim.

34    Clause 5.2 provides as follows:

The Trustees may, in their absolute discretion:

(a)    admit all or part of a Claim;

(b)    reject all or part of a Claim; or

(c)    pay any Admitted Claim,

in accordance with the provisions of this Deed.

The term “Admitted Claim” is defined in the DOCA as meaning “a Claim that it is admitted to proof by the Trustee pursuant to the terms of this Deed (sic), in the amount for which it has been admitted, but does not include an Excluded Claim”. The term “Excluded Claim” is not defined in either the Trust Deed or the DOCA.

35    Sub-clause 5.3(a) provides as follows:

Subdivisions A, B, C, D and E of Division 6 of Part 5.6 of the Corporations Act (except section 556 (other than to the extent expressly incorporated)) apply to Claims under this Deed as if references to the liquidator were references to the Trustees and references to winding up were references to this Deed, and with such other modifications as are necessary to give effect to this Deed, except to the extent that those provisions are varied or excluded expressly or impliedly by this Deed.

36    Sub-clause 5.3(e) provides as follows:

The Trustees must declare and distribute trust property under this Deed as soon as practicable after the Trust comes into effect under clause 3.1. However, subject to clauses 6.3(a) and 6.3(b), the Trustees have an absolute and unfettered discretion as to the admission of Claims, and the amount and timing of the distribution of the trust property in payment of Admitted Claims.

37    Clause 5.5 provides as follows:

If the Trustees determine that the whole of a Claim is, save for this clause, otherwise admissible to proof under the terms of this Deed by virtue of being by way of a Superannuation Contribution, such claim is not admissible to proof if:

(a)    a debt by way of Superannuation Guarantee Charge:

(i) has been paid and to that extent only; or

(ii) is, or is to be, admissible to proof under this Deed; and

(b)    the Trustees are satisfied that the Superannuation Guarantee Charge is attributable to the whole of that Claim.

For the purposes of this clause “Superannuation Contribution” has the meaning given in section 556 of the Corporations Act.

38    Clause 5.9 provides as follows:

On payment of the Final Dividend to the Trust Creditors from the Trust Fund, all Claims against the Trust Fund are extinguished and each Trust Creditor will, if called upon to do so, execute and deliver to the Trustees such forms of release of any Claim as the Trustees require.

39    Clause 5.11 provides as follows:

The Excluded Creditors are not entitled to participate in or receive any distribution from, and will not prove to recover any Claim for the purposes of, and in relation to, the Trust Fund.

40    Clause 6.3 provides in relation to the procedure for meetings of claimants as follows:

Regulations 5.6.12 to 5.6.36A of the Corporations Regulations will apply, with such modifications as are necessary, to any meetings of Claimants or of the Committee held under this deed as if the references to the liquidator, the liquidator or provisional liquidator , the liquidator, provisional liquidator or chairperson or a liquidator, provisional liquidator or trustee for debenture holders, as the case may be, were references to the Trustees of this deed.

41    Clause 7.1 provides in relation to the Trustee’s remuneration:

The Trustee will receive remuneration from the Trust Fund for any work performed by the Trustees or the Trustee’s partners and employees in respect to the time spent by them in performing the powers, functions and duties of the Trustee under this deed, calculated on a time cost basis at the scheduled hourly rates charged from time to time by them or by the firm of which they are members as may be determined in accordance with section 449E of the Act, in addition to all expenses, costs, disbursements and GST incurred or payable by the Trustees in relation to this deed.

42    Clause 7.2 provides as follows:

Section 449E of the Act will apply to the determination of Trustee’s remuneration as if references to the administrator were references to the Trustee and references to the deed of company arrangement were reference (sic) to this deed. The parties to the Deed acknowledge that certain amounts in respect of the Administrator’s and Trustee’s future remuneration were approved by Creditors at the Meeting on 22 June 2020.

43    Clause 8.2 provides as follows:

The Administrators and Trustees right of indemnity conferred by this clause 8 has priority over any other Priority Trust Claim.

44    Clause 14.3 provides as follows:

This Trust will terminate if:

(a)    a Court so orders; or

(b)    the Trust Creditors pass a resolution terminating this Trust at a meeting duly convened pursuant to clause 14.2.

In that event, any remaining part of the Trust Fund must be immediately refunded to the Deed Companies and shall not be available for distribution to Trust Creditors.

45    Clause 17.13 contains an “entire understanding” clause in the same terms as clause 20.13 of the DOCA.

The Guarantee

46    Clause 2.1 of the Guarantee contains the following relevant definitions:

Creditors’ Trust Deed means the Deed entered into between the Debtor and Daniel [Frisken] on or about the date of this Deed;

Debt means any amount which becomes owing pursuant to the Creditors’ Trust Deed;

Debtor means the “Company” as defined in the Creditors’ Trust Deed; being E K Recruitment Pty Ltd (Administrators Appointed) ACN 620 229 763;

Guaranteed Money means all present and future debts and monetary liabilities (whether actual or contingent and whether owed jointly or severally or in any other capacity) of the Debtor to or for the account of Daniel [Frisken] for any reason under or in connection with the Creditors’ Trust Deed and irrespective of whether those debts or liabilities are: owed as principal, interest, fees, charges, taxes, losses, damages, costs or expenses or any other account;

47    Clause 3.1 provides as follows:

The Guarantor irrevocably and unconditionally:

(1)    Guarantees the due and punctual payment to Daniel [Frisken] of the Guaranteed Money and the punctual performance by the Debtor of all other obligations of the Debtor under the Creditors’ Trust Deed;

(2)    Undertakes with Daniel that whenever the Debtor does pay any amount of Guaranteed Money when due (or any amount of Guaranteed Money which would have been due if the Creditors’ Trust Deed or the amount was enforceable valid and not illegal), the Guarantor must immediately on demand pay that amount as if it was the principal Debtor; and

(3)    Indemnifies Daniel immediately on demand against any cost, loss or liability suffered by Daniel if any obligation guaranteed by it (or anything which would have been an obligation guaranteed by it if not unenforceable, invalid or illegal) is or becomes unenforceable, invalid or illegal. The amount of the cost, loss or liability must be equal to the amount which Daniel would otherwise have been entitled to recover.

Each of the clause 3.1 (1), 3.1 (2) and 3.1 (3) is a separate obligation. None is limited by reference to the other

Principles of Construction

48    There was some debate before me as to the applicable principles of construction in relation to the DOCA. Surprisingly, the Full Federal Court has said that a deed of company arrangement must be construed as a statute: Commissioner of Taxation v Yeo as Liquidator of Ready Kit Cabinets Pty Ltd (in liq) [2020] FCAFC 199 at [25] (Jagot, Davies and Markovic JJ). However, the only authority cited for that proposition was the decision of Rees J in Re Antqip Hire Pty Ltd (subject to a deed of company arrangement) (in liq) [2020] NSWSC 487 at [68] and [70]. In that decision, Rees J adopted what her Honour thought was the reasoning of the Full Federal Court in City of Swan v Lehman Brothers Australia Ltd [2009] FCAFC 130; (2009) 179 FCR 243, particularly that of Stone and Perram JJ. However, Rees J noted perceptively that construing deeds of company arrangement as statutes or as subordinate legislation was “perhaps unfortunate” as they were often drafted in urgent circumstances and frequently fell short of the standards of excellence of statutory draftspersons, and indeed were generally prepared by accountants and insolvency practitioners rather than lawyers: [70]. One might go further and add that in Lehman Brothers, the question of construction of the deed of company arrangement was resolved by reference to the principle stated in Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 at 426–7 that words may be supplied, omitted or corrected where that is necessary to avoid absurdity or inconsistency: see [17] (Stone J) and [133] (Perram J). That is a principle of contractual construction, although it does have a statutory analogue: see Taylor v Owners – Strata Plan No 11564 [2014] HCA 9; (2014) 253 CLR 531. The issue which was treated as one of statutory construction in Lehman Brothers (by Stone J at [9] and [19]–[44], Rares J at [69]–[127] and Perram J at [135]–[151]) was not one of construing the meaning of the deed of company arrangement itself, but of whether a provision of the deed of company arrangement (when properly construed) was valid and within the powers conferred by Part 5.3A. Accordingly, if the matter were free of Full Court authority, I would not regard the applicable principles for construing a deed of company arrangement as being principles of statutory construction.

49    There is no difficulty in principle in construing a deed of company arrangement according to the principles stated by Dixon CJ and Fullagar J in Fitzgerald v Masters, namely that words can be supplied, omitted, or corrected where to do so is necessary in order to avoid absurdity or inconsistency, at least where the error appears wholly within the confines of the stipulations which are binding by statute: Reed Constructions Australia Ltd v DM Fabrications Pty Ltd [2007] NSWSC 1190 at [20] (Barrett J). Barrett J in that case recognised the well-established principle that a deed of company arrangement is more than a contract or a set of promises between those who are parties to it, in light of the statutory regime which controls its legal effect and binds persons by virtue of the execution of the relevant instrument: see MYT Engineering Pty Ltd v Mulcon Pty Ltd [1999] HCA 24; (1999) 195 CLR 636 at [25] (Gleeson CJ, Gaudron, Gummow and Hayne JJ). As the High Court said at [25], a deed of company arrangement binds all creditors, not just those who voted in favour of it. Further, the construction of a deed of company arrangement must not be undertaken without regard to the context and purpose of the arrangements which it records: Matheson Property Group Pty Ltd v Virgin Australia Holdings Ltd [2022] FCA 1243; (2022) 165 ACSR 550 at [25] (Lee J). But none of that reasoning supports the proposition that principles of statutory, rather than appropriately modified contractual, construction should be applied in ascertaining the proper meaning of the language used in a deed of company arrangement.

50    In the present case, there is no need to take this issue of principle any further, as I cannot discern any material difference relevant to the present controversy between the applicable principles of contractual and statutory construction. The question is simply one of ascertaining the proper meaning of the DOCA and the Trust Deed according to the language used in those documents, reading the two documents harmoniously as two components of one overall scheme or transaction. However, it is worth noting that there would be an oddity in that process of construction if the DOCA and the Trust Deed were to be construed according to different principles: that is, if the DOCA were to be construed as a statute, whereas the Trust Deed were to be construed as a private deed or other contract. The two documents are complementary aspects of a single overall scheme or transaction, and it would be anomalous if different principles of construction were to yield different conclusions as between the two documents.

The Issues of Construction of the DOCA and the Trust Deed

51    The Amended Originating Process identifies ten issues of construction relating to the DOCA and the Trust Deed. Judicial advice under s 90–15 of the IPS or s 63 of the Trustee Act on those ten issues is not the plaintiff’s first preference, as the plaintiff would prefer the orders which it proposes varying the DOCA and the Trust Deed. However, the questions of construction are the logical starting-point of the analysis, as it is necessary to ascertain the proper meaning of the DOCA and the Trust Deed before giving consideration to whether they should be varied pursuant to the statutory powers invoked by the plaintiff, if indeed the Court has power to do so. Accordingly, I will deal in turn with the ten issues of construction.

What is the “Fund” under the DOCA?

52    The plaintiff seeks an order that he would be justified in proceeding on the basis that the “Fund” under the DOCA comprised the bank account referred to in cl 10.1 of the DOCA.

53    The DOCA defines “Fund” in two ways. In cl 1, “Fund” is defined as meaning the assets and cash referred to in cl 10.2; that is, the amounts paid into the bank account. Clause 10.1, however, defines the “Fund” as the bank account itself, rather than the money which has been paid into it. The first of those meanings applies where the term “Fund” is used in the opening line of cl 10.2, which refers to money being paid into the Fund, thus indicating that the Fund is simply the bank account. However, in sub-cl 10.4(d) the Fund is used in the sense of the money which has been paid into the bank account, as it refers to the transfer of the Fund to the Trustee to be distributed in accordance with the terms of the Trust Deed. Accordingly, the term “Fund” has a different meaning according to the context in which it has been used, and it is not possible to give a simple answer of “yes” or “no” to this particular question.

Should the reference to cl 10.2 in sub-cl 10.4(c) of the DOCA be construed as referring only to the amounts referred to in sub-cll 10.2(a) and (b), and not (c)?

54    The plaintiff seeks an order that he would be justified in proceeding on the basis that cll 10.2 and 10.4 of the DOCA mean that:

(a)    the plaintiff, as administrator of the Company, was required to transfer the bank account to the plaintiff, as trustee of the Trust, once he had received the amounts referred to in sub-cll 10.2(a) and 10.2(b) of the DOCA;

(b)    the plaintiff, as administrator of the Company, was not required to pay into the bank account the fixed amount referred to in sub-cl 10.2(c) of the DOCA; and

(c)    the Company was required to pay to the plaintiff, as trustee of the Trust, the amount in sub-cl 10.2(c) of the DOCA.

55    It should be observed at the outset that the problem to which this question is directed arises from the fact that the amounts referred to in sub-cll 10.2(a) and (b) were held by the Company as at 23 June 2020, whereas the amount in sub-cl 10.2(c) was anticipated to be paid over the following two years. If the condition referred to in sub-cl 10.4(c) was intended to refer to all of the collections pursuant to cl 10.2, then the Fund could not be transferred to the Trustee for distribution and the DOCA could not be terminated until the fixed amount had been paid over that two-year period.

56    The literal language of sub-cl 10.4(c) favours a negative answer, because it refers to “the transfer and/or collections pursuant to cl 10.2 of this Deed”, and cl 10.2 comprises all three sub-clauses, including sub-cl (c).

57    However, there are a number of countervailing indications. In cl 2.2 of the Trust Deed, the first sentence also refers generally to the payments to be made in accordance with cl 10.2, but then in the second sentence says that the Company must “in addition” pay a fixed amount to the Trustee to ensure that the unsecured creditors receive a sum which is no less than two cents in the dollar of the total of the unsecured debt. There is a slip in the second sentence, in that it does not refer to the payment of two cents in the dollar to unsecured creditors being made “after payment of priority creditors”, in contrast to sub-cl 10.2(c) of the DOCA (which I deal with below by construing the second sentence of cl 2.2 of the Trust Deed as containing those additional words). In my view the second sentence of cl 2.2 of the Trust Deed should be construed as intending to refer to the amount in sub-cl 10.2(c) of the DOCA. Accordingly, cl 2.2 of the Trust Deed treats the amount in sub-cl 10.2(c) as being “in addition” to the generalised reference to the amounts to be paid in accordance with cl 10.2 of the DOCA, which could only be the case if the reference to cl 10.2 were construed as referring only to sub-cll 10.2(a) and (b). The reference to cl 10.2 in cl 10.4(c) should be construed in the same way.

58    Further, if one construes the reference in sub-cl 10.4(c) of the DOCA to cl 10.2 as including the amount in sub-cl 10.2(c), then the DOCA would not be effectuated for a period of two years. Clause 2.1 of the Trust Deed provides that the Trust Deed commences on the later of the date it is executed by the Company and the Trustee or upon effectuation of the DOCA. If one puts sub-cl 10.2(c) of the DOCA to one side, then the DOCA was fully effectuated on 23 June 2020. That is consistent with cl 5.1 of the Trust Deed which provides that “Upon this Deed being settled” the claims against the Company would be released and become claims against the Trust Fund under the Trust Deed. In other words, cl 5.1 of the Trust Deed was intended to come into operation on the day the Deed was settled (ie 23 June 2020), and not two years later. Accordingly, the text of the two documents when read together indicates strongly that the Trust Deed was intended to replace the DOCA on 23 June 2020, and the termination of the DOCA referred to in sub-cl 10.4(e) would occur on that date. That is further reinforced by sub-cl 8.4(a) of the DOCA, which refers to the steps contemplated by cll 10.2 and 10.4 as being interdependent and taking place as nearly as possible simultaneously. That could only be the case if the step referred to in sub-cl 10.2(c) was not a condition of the obligations in sub-cll 10.4(d) and (e). That again requires that the reference to cl 10.2 in sub-cl 10.4(c) should be construed as referring only to sub-cll 10.2(a) and (b).

59    Those textual indications for an affirmative answer to this question depend heavily (and appropriately) on reading the two documents together as complementary components of the one overall scheme or transaction. I note that each of the DOCA and the Trust Deed contains an “entire understanding” clause which provides that each of the two documents contains the entire understanding between the parties as to the subject matter of each deed. That cannot be read in an overly literal manner as meaning that each of the two deeds must be construed in a manner wholly independent of the other. The DOCA contains many cross-references to the Trust Deed (most explicitly in cl 7) and the Trust Deed contains many references to the DOCA (even to the point of referring in the recitals to the Trust Deed as if it were the DOCA itself). Accordingly, the “entire understanding” clauses compel, rather than prevent, a construction of the two documents which is based on them being read harmoniously together.

60    Further, while it is not necessary to the conclusion which I have reached on this question, the obvious commercial rationale for the existence of the Trust Deed was to enable the Company to trade immediately without the stigma of the label “subject to deed of company arrangement” being attached to its name, and it would have been irrational to force the Company to trade with that stigma for a further two years pending payment of the fixed amount referred to in sub-cl 10.2(c) of the DOCA. That is the purpose or object of the Trust Deed which ought to be taken into account in construing the document. In making that finding as to purpose or object, I am not placing reliance on the evidence of what was said by Mr Frisken in the Report, which I regard as precluded by the terms of the “entire understanding” clause.

61    The advice sought by the plaintiff includes the proposition in [54(c)] above that cll 10.2 and 10.4 of the DOCA mean that the company was required to pay to the plaintiff, as trustee of the trust, the amount in cl 10.2(c) of the DOCA. However, on the view which I have formed of the proper construction of cll 10.2 and 10.4, the condition in sub-cl 10.4(c) refers only to sub-cll 10.2(a) and (b), and not sub-cl 10.2(c), and once those amounts were transferred to the Trustee pursuant to sub-cl 10.2(d), the DOCA would be terminated. Accordingly, the obligation stipulated by sub-cl 10.2(c) for the Administrator of the DOCA to pay the fixed amount into the Fund within two years was terminated on 23 June 2020. That does not raise any practical difficulty, because the second sentence of cl 2.2 of the Trust Deed imposes the same obligation (once it is properly construed as including the words “after payment of priority creditors”). The advice which I regard as appropriate to give the plaintiff thus does not include the proposition set out in [54(c)] above.

62    Accordingly, with the exception explained in the previous paragraph, the plaintiff would be justified in proceeding on the basis which he proposes in relation to this question.

Were the Claims against the Company discharged and extinguished, and converted to Claims against the Trust Fund, on 23 June 2020?

63    The plaintiff seeks advice as to whether he would be justified in proceeding on the basis that, simultaneously with or immediately after the transfer of the bank account with the amounts referred to in sub-cll 10.2(a) and (b), the “Claim” (as defined by cl 1 of the DOCA) of each “Creditor” (as defined by cl 1 of the DOCA) was discharged and extinguished and converted to a “Claim” (as defined by cl 1 of the Trust Deed) against the “Trust Fund” (as defined by cl 1 of the Trust Deed).

64    In my view, the plaintiff would be justified in so proceeding.

65    I referred above to cll 5 and 6 of Sch 8A, which are incorporated in the DOCA both by s 444A(5) of the Corporations Act and cl 4 of the DOCA. The question is what the creditors’ entitlements (or full entitlements) are, as referred to in cll 5 and 6 of Sch 8A, under the DOCA.

66    Applying cll 10.2 and 10.4 on their proper construction as stated in answer to the previous issue, the entitlements of creditors under the DOCA are (a) that, subject to the Trust Deed and the Guarantee being executed, the cash at bank held as at 23 June 2020 and all other assets available to the Company as at 15 May 2020 are to be transferred to the Trustee on 23 June 2020, and then (b) to have the DOCA terminated. At that point, cll 5 and 6 of Sch 8A are effective to discharge and extinguish debts and claims against the Company. The rights of creditors to any payment are then not under the DOCA but under the Trust Deed.

Can cl 8.2 of the DOCA be disregarded?

67    The plaintiff seeks advice that he would be justified in proceeding on the basis that cl 8.2 of the DOCA can be disregarded.

68    Clause 8.2 is largely meaningless. It refers to the satisfaction or waiver of Conditions Precedent, which did not exist (cl 3 of the DOCA), and cl 10.4 did not refer to them or to their satisfaction or waiver. Neither the “Implementation Date” nor the “Deed Proponent” was defined. The “Top Up Cash Amount” was not defined and does not appear to relate to any identifiable sum referred to in any provision of either document. If it means the fixed amount referred to in sub-cl 10.2(c), then that obligation under the DOCA terminated when the DOCA was terminated on 23 June 2020, and the corresponding obligation under the second sentence of cl 2.2 of the Trust Deed became operative. Sub-clause 8.2(c) appears to correspond to the subject-matter of sub-cl 10.4(d), and is superfluous given the existence of sub-cl 10.4(d).

69    Accordingly, cl 8.2 serves no practical purpose and can be disregarded.

Are Trust Creditors Claimants?

70    The plaintiff seeks advice that he would be justified in proceeding on the basis that the “Trust Creditors”, for the purposes of the Trust Deed, are each a “Claimant” (as defined by cl 1 of the Trust Deed).

71    The term “Trust Creditors” is not defined but the terms “Trust” and “Creditors” are defined in the Trust Deed. When one puts the two words together, the term corresponds to the definition of “Claimant” in the Trust Deed. That is plainly the meaning which the term “Trust Creditors” is intended to have in sub-cl 5.1(a) of the Trust Deed. Accordingly, the plaintiff is justified in proceeding on the basis proposed.

What is the meaning of the “Trust Fund” in the Trust Deed?

72    The plaintiff seeks advice that he would be justified in proceeding on the basis that the “Trust Fund”, for the purposes of the Trust Deed, means the amount the subject of the transfer of the bank account containing the amounts referred to in sub-cll 10.2(a) and (b) of the DOCA, plus any amount subsequently received by the plaintiff, as trustee of the Trust, in respect of the fixed amount referred to in sub-cl 10.2(c).

73    There is some confusion in the definition of the “Trust Fund” in the Trust Deed. In particular, para (c) of that definition refers to the transfer of the Relevant Assets (which are not defined) under cl 9 (rather than cl 10) of the DOCA. However, it is clearly the intention of the Trust Deed that the amounts referred to in each of sub-cll 10.2(a), (b) and (c) of the DOCA will, at the appropriate time, become parts of the Trust Fund. That intention is made explicit in cl 2.2 of the Trust Deed. It follows from my reasoning in relation to the Construction of cll 10.2 and 10.4 above that the amounts in sub-cll 10.2(a) and (b) would be transferred and become part of the Trust Fund as at 23 June 2020, whereas the fixed amount referred to in sub-cl 10.2(c) (and the second sentence of cl 2.2 of the Trust Deed) would not become part of the Trust Fund until it was paid within the two-year period thereafter. Accordingly, para (b) of the definition of Trust Fund in the Trust Deed should be construed as referring both to what was on hand as at 23 June 2020 (that is, under sub-cll 10.2(a) and (b)), and what was subsequently collected by way of the fixed amount and then paid or transferred to the Trustee.

What are the provisions which apply to meeting procedure?

74    The plaintiff seeks advice that he would be justified in proceeding on the basis that the reference to “Regulations 5.6.12 to 5.6.36A of the Corporations Regulations” in cl 6.3 of the Trust Deed be read as referring to Div 75 of the IPS and Div 75 of the Insolvency Practice Rules (Corporations) 2016 (Cth) (IPR), as if the references in those Divisions to “external administrator” and “external administrator of a company” were references to the plaintiff in his capacity as trustee of the Trust.

75    As I have indicated above, sub-cl 1(e) of the Trust Deed provides (among other things), that a reference to any regulation includes any replacements of it. Regulations 5.6.12–5.6.36A were repealed before the Trust Deed was executed. Division 75 of the IPS and Div 75 of the IPR apply to meetings of companies under external administration. The plain intention in cl 6.3, read in light of sub-cl 1(e), was to refer to the currently applicable provisions for such meetings. Accordingly, the reference to regs 5.6.12 to 5.6.36A of the Corporations Regulations is to be read as if it referred to Div 75 of the IPS and Div 75 of the IPR, with such modifications as are necessary. The plaintiff is justified in proceeding in the manner proposed.

Who, if anyone, are the “Excluded Creditors” in cl 5.11 of the Trust Deed?

76    The plaintiff seeks advice that he would be justified in proceeding on the basis that the “Excluded Creditors”, for the purposes of cl 5.11 of the Trust Deed, are any “Non Participating Creditor” defined by cl 1 of the DOCA.

77    There is no definition of “Excluded Creditor” in either the Trust Deed or the DOCA, but the term is obviously intended to mean a Creditor which is excluded from participating in payments from the Trust Fund. The DOCA does provide a definition of Non Participating Creditor, but it does not use that term. It is important to bear in mind when contracts use labels as defined terms that the words used as labels are seldom arbitrary and are usually chosen as a distillation of the meaning or purpose of a concept intended to be more precisely stated in the definition: Chartbrook Limited v Persimmon Homes Limited [2009] UKHL 38; [2009] 2 AC 1101 at [17] (Lord Hoffmann). The label “Non Participating Creditor” in the DOCA was plainly intended to refer to creditors which are excluded from participating in payments otherwise to be made to those who have a valid claim upon the Company or the Trust Fund. Reading the two documents together in a harmonious way, the term “Excluded Creditors” used in cl 5.11 of the Trust Deed has the same meaning as the defined term “Non Participating Creditor” in the DOCA. The plaintiff is therefore justified in proceeding in the manner proposed.

What is the proper construction of the second sentence in cl 2.2 of the Trust Deed?

78    The plaintiff seeks advice that he would be justified in proceeding on the basis that the second sentence in cl 2.2 of the Trust Deed be read as “The Company must in addition pay a fixed amount to the Trustee to ensure that the unsecured Creditors receive a sum (after payment of priority creditors) which is no less than two cents in the dollar of the total of the unsecured debt”.

79    The significance of the plaintiff’s formulation is that it has added the bracketed words “after payment of priority creditors” to the text of the second sentence of cl 2.2 of the Trust Deed, consistently with the language of sub-cl 10.2(c) of the DOCA. The Trust Deed clearly contemplates the existence of priority creditors. It contains a definition of “Priority Trust Claim”, which is used in cl 8.2 in providing that the Administrator’s and Trustee’s right of indemnity has priority over any other Priority Trust Claim. The Priority Trust Claims are by definition Trust Claims, which have priority over Trust Claims generally. Accordingly, some provision for their payment from the Trust Fund must be made. The omission of any reference to priority creditors in the second sentence of cl 2.2 is an obvious error, and adding the proposed bracketed words is consistent with what was plainly intended. It is also consistent with the language of sub-cl 10.2(c) of the DOCA, and the two documents must be read harmoniously. Accordingly, the plaintiff is justified in proceeding in the manner proposed.

What provision applies to the remuneration of the Trustee?

80    The plaintiff seeks advice that he would be justified in proceeding on the basis that the reference to “section 449E of the Act” in cll 7.1 and 7.2 of the Trust Deed is to be read as if it were referring to Div 60 of the IPS with the following modifications:

(a)    the references to an “external administrator” and “administrator” be read as if they were references to “the Trustee”;

(b)    the reference to “a company” be read as if they were referring to “EK Recruitment Creditors’ Trust”;

(c)    the references to “the external administration” be read as if they were referring to “the Creditors’ Trust Deed”; and

(d)    the references to “creditors” be read as if they were referring to the “beneficiaries of the EK Recruitment Creditors’ Trust”.

81    Clauses 7.1 and 7.2 of the Trust Deed refer to s 449E of the Corporations Act, which was repealed before execution of the Trust Deed. Division 60 of the IPS now deals with the remuneration of most external administrators under the Corporations Act. The provisions of Div 60 of the IPS fall within the concept of “replacements” in cl 1(e) of the Trust Deed. Accordingly, references to s 449E of the Act should be read as if they were references to Div 60 of the IPS, with the modifications proposed by the plaintiff.

Variations proposed by the plaintiff to the DOCA and the Trust Deed

82    In addition to seeking judicial advice on the questions of construction which I have dealt with above, the plaintiff seeks an order pursuant to s 90–15 of the IPS or s 447A of the Corporations Act that the DOCA be varied by:

(a)    removing the words “This deed contemplates the entry by the Company into a Creditors’ Trust Deed whereby:” in cl 7 of the DOCA;

(b)    deleting sub-cl 10.2(c) of the DOCA; and

(c)    inserting a new clause in cl 10.2 below sub-cl 10.2(b) that states “Subject to the terms of the document, the Company must pay to the Trustee a fixed amount, which will be an amount required to ensure a distribution to ordinary unsecured creditors of no less than 2 cents per dollar of any Claims approved by the Trustee (after payment of priority creditors) to be paid within twenty-four (24) months from the Commencement Date.”

83    Further, as an alternative to seeking advice on the issues of construction (and seeking variations to the DOCA as outlined above), the plaintiff seeks the wholesale variation of the DOCA and the Trust Deed to bring them into line with the plaintiff’s proposed construction of those documents, as well as ironing out a large number of drafting wrinkles.

84    Those aspects of the Amended Originating Process raise an issue as to whether the proposed variations fall within any of the Court’s statutory powers which the plaintiff seeks to invoke, namely s 90–15 of the IPS, s 447A of the Corporations Act or s 81 of the Trustee Act.

85    As to s 90–15 of the IPS, that provision confers power on the Court to make “such orders as it thinks fit in relation to the external administration of a company”. Section 90–20 provides that certain classes of persons may apply for an order under s 90–15, the first of them being “a person with a financial interest in the external administration of the company”. That term is defined in s 5–30 as including a person who “is an external administrator of the company” (emphasis added). Pursuant to s 5–20 of the IPS, a person is an external administrator of a company if, among other things, the person is the administrator under a deed of company arrangement that has been entered into in relation to the company. The plaintiff’s claim that he has standing under s 90–20 to bring an application under s 90–15 relies on those provisions.

86    There is an obvious flaw in the plaintiff’s contention, namely that, although he was the administrator of the Company under a deed of company arrangement for a short period of time on 23 June 2020, he no longer is such a person. The provisions as to standing use the present tense of the verb “to be”, and it is plainly not sufficient for the plaintiff to point to some period of time in the past when he was an external administrator. Accordingly, the plaintiff does not have standing to make an application under s 90–15.

87    Further, even if the plaintiff had standing, I do not regard the orders sought by the plaintiff as being “in relation to the external administration of a company”. The meaning “external administration of a company” is provided by s 5–15 of the IPS. The DOCA was effectuated and terminated on 23 June 2020, and I do not regard the proposed variations to the DOCA as being in relation to an external administration which ended almost six years ago. A liquidator is currently appointed in relation to the Company, but the proposed variations to the DOCA are not in relation to that external administration. Orders in relation to the Trust are not, in my view, orders in relation to the external administration of a company, as the Trust does not fall within the definition of external administration in s 5–15 of the IPS. Indeed, a creditors’ trust of that kind operates outside the ambit of an external administration under Pt 5.3A of the Corporations Act: Re Rocke (as Liquidator of ACN 080 794 636 Pty Ltd) [2007] FCA 1687 at [48]–[51] (French J).

88    As to s 447A of the Corporations Act, that provision confers on the Court power to “make such order as it thinks appropriate about how this Part is to operate in relation to a particular company”. That language means that orders under s 447A can only have effect from the time of their making: Australasian Memory Pty Ltd v Brien [2000] HCA 30; (2000) 200 CLR 270 at [26] (Gleeson CJ, McHugh, Gummow, Hayne and Callinan JJ). Further, the overriding requirement for an order under s 447A is that any order made must be designed to achieve the objective of Pt 5.3A as expressed in s 435A, and must have a nexus with how Pt 5.3A is to operate in relation to the particular company: Re Maria’s Farm Veggies Pty Ltd (Administrators Appointed) [2016] NSWSC 1899 at [21] (Black J).

89    In the present case, the proposed variations to the DOCA are directed retrospectively towards affecting rights and obligations under a DOCA which has been effectuated and terminated. They do not involve a reinstatement of the administration of the kind considered in Australasian Memory at [27]–[28]. The object of the order is in substance the operation of the Trust, rather than the Company. There is no aspect of the orders sought which would involve the future operation of Pt 5.3A in relation to the Company. In relation to the Trust Deed, s 447A cannot be used to vary the terms of a creditors’ trust, which operates independently of Pt 5.3A: Parkview Constructions Pty Ltd v Tayeh [2009] NSWSC 186; (2009) 71 ACSR 65 at [68]–[76] (Barrett J).

90    As to s 81 of the Trustee Act, the NSW Court of Appeal has held unequivocally that s 81 does not confer on the Court a power to amend a Trust Deed: Re Dion Investment Pty Ltd [2014] NSWCA 367; (2014) 87 NSWLR 753 at [94], [97]–[98] (Barrett JA, with whom Beazley and Gleeson JJA agreed); Cisera v Cisera Holdings Pty Ltd [2018] NSWCA 286; (2018) 98 NSWLR 747 at [67] (White JA, with whom Bathurst CJ and Beazley P agreed). The plaintiff ultimately abandoned its reliance on s 81 of the Trustee Act.

91    Accordingly, I find that the Court does not have power to make the orders sought concerning variations of the DOCA and the Trust Deed.

92    In any event, even if I had formed the view that the Court did have such power, I do not regard the proposed changes to the DOCA or the Trust Deed as either necessary or desirable in light of the findings which I have made as to the proper construction of those documents. I cannot discern any practical problem which remains to be resolved by orders for variation in light of my findings as to the proper construction of the constituent documents.

Costs

93    The parties and interested parties expressed a preference to deal with the question of costs after delivery of these reasons for judgment. Accordingly, I have set a timetable in today’s orders for the filing and service of affidavits and written submissions concerning the question of costs. In the event that any of the parties or interested parties seeks special orders as to costs (such as lump sum orders), I anticipate that the affidavits and submissions will deal with the quantification of those costs (in addition to the question of entitlement to such orders) so that I do not need to burden a Registrar with that task. I anticipate dealing with the question of costs on the papers.

Associate:

Dated:    9 March 2026