Seafarms Group Ltd v McKinnon[2025] QSC 45

SUPREME COURT OF QUEENSLAND

Introduction

1. [1]
   Project Sea Dragon Pty Ltd (PSD) is a company that was placed into voluntary administration (VA) on 14 February 2023.  It subsequently entered into a deed of company arrangement on 23 March 2023 (DOCA); creditors resolved to approve a deed of company arrangement on 21 March 2023.  The DOCA was terminated by the Federal Court of Australia on 22 February 2024 and PSD was placed into liquidation.  The orders of the Federal Court were appealed by the DOCA proponent, and an interim stay of the termination of the DOCA and the liquidation was granted pending the determination of the appeal.  The appeal was unsuccessful and the liquidators commenced their appointment to PSD on 1 November 2024.  The liquidation is not yet finalised. 
2. [2]
   This proceeding was commenced by way of originating application on 8 November 2024 by the parent company of PSD (and DOCA proponent), Seafarms Group Limited (SFG), who contributed: 

   1. funding towards the VA of PSD of $1.4m (Interim Funding Amount) pursuant to a working capital funding agreement dated 17 February 2023 (Funding Agreement);
   2. a financial contribution under the DOCA of $3.5m (Proponent Contribution). 

By the originating application SFG seeks to recover against the deed administrators the sum of $3,844,101.85, or such other sum as the Court orders, pursuant to a clause of the DOCA. 

3. [3]
   The proceeding has since expanded in terms of the parties to the proceeding and the relief sought by way of various applications. 
4. [4]
   There are funds of money being held relevant to the issues in dispute.  When the DOCA was terminated, the deed administrators held a fund of money (the Deed Fund) derived from a number of sources including the Interim Funding Amount, the Proponent Contribution and other company funds.  That fund must have totalled the amount of $3,858,126.55 at some stage given that $769,366.47 has been retained from the Deed Fund by the deed administrators by way of a claim of lien to satisfy remuneration and expenses claimed to be owed to them, and the amount of $3,088,760.08 has been received from the Deed Fund as a payment into court.  
5. [5]
   The amount of $3,858,126.55 is some $14,024.70 more than the records for PSD show in the Deed Fund as at 1 November 2024 of $3,844.101.85 (page 12 of exhibit HW-3, affidavit of Whitcombe, CDI 2).  The difference does not appear to be explained.  The quantum of money sought by SFG in the originating application corresponds with the records for PSD as at 1 November 2024.   
6. [6]
   The parties to the proceeding now comprise:  

   1. SFG – the applicant (represented by Mills Oakley);
   2. Shaun McKinnon and Andrew Fielding – the first and second respondents; the former voluntary administrators of PSD and the former deed administrators of the DOCA (the Administrators) (represented by Cowen Schwarz Marschke Lawyers);
   3. PSD – the third respondent;
   4. Robert Hutson and David Johnstone as liquidators of PSD – the fourth respondents (the Liquidators) (represented by Dunham Shaw);
   5. Canstruct Pty Ltd – the fifth respondent (Canstruct); a major creditor of PSD (represented by Thomson Geer).
7. [7]
   The present applications before the court to be determined comprise, in summary:

   1. the originating application (CDI 1) brought by SFG for the Administrators to pay to it $3,844,101.85 (or such other sum as the Court orders) pursuant to clause 12.2 of the DOCA –
   1. this application involves SFG seeking to recover from the Administrators the Interim Funding Amount and the Proponent Contribution (less certain amounts expended by the Administrators);
   2. this application is opposed by the Liquidators and Canstruct who contend that those amounts paid by SFG are company (PSD) property;
   3. Canstruct further contends that such amounts are not repayable to SFG in any event,
   2. an interlocutory application (CDI 22) brought by the Administrators to the effect that –
   1. insofar as they have any liability to SFG under the Funding Agreement, the DOCA or otherwise, they are entitled to be indemnified from the Deed Fund;
   2. in the alternative, they have no liability to repay any amounts to SFG and are discharged from any liability to repay SFG,
   3. an interlocutory application (CDI 19) by the Administrators to have certain remuneration and expenses set –
   1. the parties appear to have reached a consensus in relation to most of this application,
   4. an interlocutory application (CDI 31) by the Liquidators to –
   1. be granted leave to be appointed as voluntary administrators for PSD and for the winding up of PSD to be stayed until the end of the voluntary administration (and associated orders);
   2. this application is supported by SFG and is opposed by Canstruct.
8. [8]
   There is some interplay between the applications that have made it desirable for one judge to hear all applications at the same time, which is not how the applications were initially listed for hearing but has occurred by order of the court.  The hearing of all applications occurred on 4 and 5 March 2025.  The parties agreed, and I agree, that the entitlement to the Deed Fund and the liability position of the Administrators are sensibly determined before the application to place PSD back into voluntary administration.  The nature of that latter application though has meant that I have given some priority to determining all applications as quickly as possible. 
9. [9]
   The key findings of this decision are:

   1. the Deed Fund is the property of PSD (subject to the Administrators’ right to indemnity for remuneration and expenses from same);
   2. SFG has no right of repayment pursuant to the DOCA;
   3. the Administrators have no repayment liability to SFG under the terms of the DOCA;
   4. the repayment obligations imposed on the Administrators under the terms of the Funding Agreement have not been discharged by the DOCA;
   5. the Administrators have no present liability to SFG under the terms of the Funding Agreement;
   6. leave is not granted for the Liquidators to appoint themselves as voluntary administrators of PSD.

Background to PSD and its external administration to date

10. [10]
    PSD is a special purpose vehicle, incorporated to establish and operate a large-scale prawn aquaculture project in Western Australia and the Northern Territory.  It has been facilitating the development of prawn farming infrastructure, including in the Northern Territory at a site called “Legune Station”.
11. [11]
    SFG is PSD’s parent company and owns all of the shares in PSD.  The two companies have common directors.  SFG has funded PSD through an informal arrangement when required from time to time.  PSD does not presently have any income stream and has limited assets of its own.  SFG (along with related companies) are PSD’s largest creditor, owed about $70m in total.    
12. [12]
    Canstruct was retained by PSD to do construction works at Legune Station.  Canstruct and PSD fell in dispute.  Canstruct obtained an adjudication decision against PSD in the amount of approximately $14m.  PSD refused to pay the adjudicated amount (and in any event was unable to pay Canstruct from its own resources).  SFG declined to provide funding to PSD to pay Canstruct.  
13. [13]
    PSD and SFG pursued a strategy to avoid the majority of PSD’s liability to Canstruct.  SFG stopped providing funding to PSD, thereby rendering PSD insolvent.  PSD was placed into voluntary administration by its directors.  PSD then entered into the DOCA that had been proposed by SFG, pursuant to which all arm’s length creditors, except Canstruct, were to be paid in full.  Canstruct was to receive a return of about 10-11 cents in the dollar.^[1]  It was anticipated that once the DOCA was administered PSD would resume ordinary operations in essentially the same position that it was in prior to its entry into the DOCA, minus any liability to Canstruct. 
14. [14]
    Prior to PSD being placed into voluntary administration, SFG and the Administrators entered into the Funding Agreement.  The amount advanced by SFG to the Administrators pursuant to the Funding Agreement was $1.4m (the Interim Funding Amount).  There was a further $200,000 payment before the Funding Agreement was entered into, but no party now contends that such amount was a payment under the Funding Agreement, and it can be ignored for present purposes.   
15. [15]
    SFG, as the deed proponent, made a contribution under the terms of the DOCA in the amount of $3.5m (being the Proponent Contribution). 
16. [16]
    On application of Canstruct, the Federal Court terminated the DOCA on 22 February 2024 pursuant to ss. 447A and 447D(1)(g) of the Corporations Act 2001 (Cth) (CA) on the basis that (amongst other things):

    1. the use of the VA and DOCA processes constituted an abuse of the provisions of Part 5.3A of the CA;
    2. the DOCA was unfairly prejudicial to, or unfairly discriminatory, against Canstruct;
    3. effect could not be given to the DOCA without injustice.
17. [17]
    The termination of the DOCA and the winding up of PSD was the subject of a stay pending an appeal brought by SFG. 
18. [18]
    The decision of Derrington J of the Federal Court (Canstruct Pty Ltd v Project Sea Dragon Pty Ltd (subject to a deed of company arrangement) (No 4) [2024] FCA 112) was upheld on appeal by the full Federal Court (Project Sea Dragon Pty Ltd (subject to a deed of company arrangement) v Canstruct Pty Ltd [2024] FCAFC 141) on 1 November 2024.  Accordingly, the winding up of PSD actually commenced on 1 November 2024.    
19. [19]
    It is relevant to note that by the time of the termination of the DOCA, SFG had paid all small non-related creditors.^[2]   The only non-related creditor remaining was, and is, Canstruct with a debt owed to it of approximately $14m.    

Deed Fund 

20. [20]
    The monies paid into court comprise $3,088,760.08.  The monies retained by the Administrators comprise $769,366.47.  The total of those two sums of money, the Deed Fund, is $3,858,126.55.  As noted above, that is $14,024.70 more than the records for PSD show in the Deed Fund as at 1 November 2024 of $3,844,101.85 (page 12 of exhibit HW-3, affidavit of Whitcombe (CDI 2)), which is the figure to which the parties have referred.   
21. [21]
    The amount of $3,844,101.85 is derived from $4,371,067.40 of receipts less $526,965.55 in payments, over the period 23 March 2023 to 31 October 2024 (the period of operation of the DOCA).  See the receipts and payments detailed listing for PSD at pages 11 and 12 of exhibit HW-3, affidavit of Whitcombe (CDI 2). 
22. [22]
    The receipts comprise:

    1. $525,747.41 cash at bank transferred from the Administrators on 23 March 2023 (the date the DOCA commenced), which is likely to contain at least some part of the unused amount to that date of the Interim Funding Amount;
    2. $3.5m on 24 March 2023, being the Proponent Contribution;
    3. other receipts including GST, legal fees (which appear to be a refund of an amount paid twice) and interest.
23. [23]
    The payments comprise expenses such as consumables, repairs and maintenance, utilities, freight, legal fees, bank charges and tax.
24. [24]
    I raised with the parties during the hearing that no party appeared to me to grapple directly with the fact of the Deed Fund being a mixed fund received from different sources with outgoings from the one mixed fund, and what that might mean in terms of the relief sought.  For example, there appeared no obvious reason to me to assume that any particular part of the approximate $3.1m in court (being part of the Deed Fund) comprised any particular portion of the Interim Funding Amount, the Proponent Contribution or other company funds.  I will return to that issue should it be necessary to do so after making other findings.

Relevant provisions of the Funding Agreement

25. [25]
    The Funding Agreement is an agreement between the Administrators and SFG dated 17 February 2023.^[3]       
26. [26]
    It sets out the terms upon which SFG provided and the Administrators accepted funding to facilitate the voluntary administration of PSD by the Administrators and the continued trading of the business of PSD. 
27. [27]
    The purpose of the facility was set out in item 2 of schedule 1 to the Funding Agreement as “Funding the Administrators remuneration, Trading Liabilities, employee wages and entitlements, rent, operational costs and any non-trading costs or expenses associated with the administration of the Company.”
28. [28]
    Clause 1.1 of the Funding Agreement contained definitions, including:

    1. Money Owing – “at any time, the aggregate of all amounts advanced by the Proponent in connection with the WC Facility which is owing to the Proponent”;
    2. Termination Date – “the date of any of the occurrences set out in clause 5.2”. 
29. [29]
    Clause 2.1 (Funding and Purpose) provided: “At the request of the Administrators, the Proponent has agreed to provide a working capital facility under which the Proponent will advance funds to the Administrators for the Purpose(WC Facility)”.
30. [30]
    Clause 3.1 (Limitation of Administrators’ Liability) provided:

    1. In consideration of the Proponent providing the WC Facility and subject to clause 3.2 below, the Proponent acknowledges and agrees that:
    1. The Administrators are only liable for the repayment of the Money Owing under section 443A of the Act on a limited recourse basis;
    2. Without limiting clause 3.1(a)(i), the Administrators’ liability to repay the Money Owing is limited to the assets of the Company from which the Administrators are actually indemnified for the liability and in respect of which the Administrators have a lien under sections 443D and 443F of the Act (except to the extent an Administrator does not have such a lien because of his or her own fraud, negligence or wilful default) and any equitable lien of the Administrators may have with respect to the care and preservation of the Company’s assets.
    2. This limitation of the Administrators’ liability applies despite any other provision of this letter or any other document and extends to all liabilities and obligations of the Administrators in any way connected with any representation, warranty, conduct, omission, agreement or transaction related to this letter or any other document.
31. [31]
    Repayment was dealt with in clause 2.5 that provided: “Subject to clause 3.1, on the Termination Date, the Administrators will repay or reimburse to the Proponent the Money Owing”.
32. [32]
    Repayment priority was dealt with in clause 3.5 that provided:

Subject to the Act, the parties acknowledge and agree that:

1. this agreement and the repayment of the Money Owing are money borrowed within the meaning of section 443A of the Act;
2. in the event the Money Owing is not repaid in full prior to the Termination Date, the Money Owing will be repaid as part of the Administrators’ indemnity described in section 443D of the Act;
3. in the event that the Company is wound up and a liquidator appointed:
1. any amounts due and owing under this agreement are, by operation of section 556 of the Act, a priority in the liquidation; and
2. the Proponent will, to the extent that the Administrators’ fees or expenses remain unpaid, pay the unpaid amounts to the Administrators pursuant to the Fee Agreement; and
4. the Administrator may set-off part or all of the Money Owing against any amounts payable by the Proponent pursuant to the Fee Agreement.

33. [33]
    Clause 5.2 dealt with termination of the Funding Agreement as follows:

    1. The Proponent may terminate this letter and the WC Facility immediately upon notice in writing to the Administrators, subject to clause 5.2(c), upon the replacement or retirement of the Administrators as administrators of the Company.
    2. The Administrators may terminate this letter and the WC facility immediately upon notice in writing to the Proponent if the Proponent:
    1. fails to make the Initial Payment within the timeframe referred to in clause 2.2(c)(ii);
    2. declines or fails to make any Additional Payment under a Utilisation Request as contemplated by clause 2.3(a)(ii), within the timeframe set out in clause 2.3(c); or
    3. declines or fails to agree to an increase to the Facility Limit request by the Administrators within the timeframe set out in clause 2.3(c).
    3. Notwithstanding clause 5.2(a), if the Administrators become deed administrators under a DOCA, this letter will apply as if references to the ‘Administrators’ were references to the ‘deed administrators’ under a DOCA.
    4. If this letter is terminated in accordance with this clause 5.2, the rights and obligations of the parties under this letter that have arisen prior to the termination of this letter shall survive such termination.
34. [34]
    No party contended that there was any termination of the Funding Agreement in accordance with clause 5.2.

Relevant provisions of the DOCA

35. [35]
    The DOCA was entered into on 23 March 2023.  The parties to the DOCA were PSD, the Administrators in their capacity as administrators of the DOCA, and SFG.^[4]   
36. [36]
    The DOCA contained definitions in clause 1.1 including:

    1. Deed Administrators’ Account – “an Australian dollar denominated account operated and specified by the Deed Administrators”;
    2. Interim Funding Amount – “the amount advanced by Seafarms Group Limited to the voluntary administrators under a Funding Agreement dated 17 February 2023”.
37. [37]
    Clause 1.6 provided: “The prescribed provisions contained in Schedule 8A of the Regulations apply to this Deed unless they are inconsistent with the terms of this Deed”.
38. [38]
    Clause 5 dealt with the Deed Fund.  Clauses 5.1, 5.2, 5.3, 5.4 and 5.5 provided:

5.1 Deed Fund

1. The Deed Administrators must establish the Deed Fund as soon as possible after the Commencement Date (or, as appropriate, as soon as possible after receipt of the relevant property), which will comprise the following:
1. the Cash Balance;
2. any accounts receivable due to the Company in respect of work done or services provided  by the Company prior to the Commencement Date that are received by the Administrators before Effectuation of this Deed;
3. the Proponent Contribution.

2. The Deed Administrators must hold all property in the Deed Fund on trust for the benefit of the Deed Administrators and the Dividend Creditors in accordance with the terms of this Deed.
3. For the avoidance of doubt, the Deed Fund will not comprise any other property of the Company other than the property and assets referred to in clause 5.1(a).

5.2 Payments to Deed Fund by Deed Administrators

1. As soon as reasonably practicable after the Commencement Date, the Deed Administrators will:
1. apply the Cash at Commencement Date in payment of any Administration Trading Liabilities, and unpaid remuneration or expenses of the Administrators;
2. apply the Cash Balance, if any, to the Deed Fund.
2. The Deed Administrators will apply any Deed Administrators’ Receipts to the Deed Fund as soon as reasonably practicable following receipt.

5.3 Payments to Deed Fund by Proponents

1. By no later than the date falling seven Business Days after the Commencement Date, the Proponent will pay the Seafarm Contribution to the Deed Administrators.

5.4 Distribution of Deed Fund

The Deed Administrators must distribute the Deed Fund in the following order:

1. firstly, in repayment of the Interim Funding Amount to the Proponent;
2. secondly, in payment of priority creditors as determined by the application of ss 556, 560 and 561 of the Act.  This shall include:
1. payment of the Costs (to the extent not previously paid pursuant to the terms of this Deed);
2. payment of the Remuneration (up to the Approved Amounts) (to the extent not previously paid pursuant to the terms of this Deed); and
3. payment of any Eligible Employee Creditor in accordance with clause 5.6 below.

3. fourthly [sic], in payment of any Admitted Claims of Small Claims Creditors;
4. fifthly [sic] in payment of any other Admitted Claims

5.5 Interim Funding

Repayment of the Interim Funding Amount, shall be made by direction by the Deed Administrators to the Proponent that a portion of the Proponent Contribution shall be paid to the Proponent, in full and final settlement of any and all amounts of funding due to be repaid by the Administrators to the Proponent.

39. [39]
    Clauses 7.3 and 7.4 of the DOCA provided:

7.3 Deed Administrators are agents

In exercising the powers conferred by this Deed and carrying out the duties arising under this Deed, the Deed Administrators will act as agent for and on behalf of the Company.

7.4 Management of the Company

1. Subject to clauses 7.4(b) and 7.7 and save in the case of termination of this Deed in accordance with clause 12.2, on the Commencement Date:
1. management and control of the Company will revert to the Directors; and
2. the power, functions and duties of the Deed Administrators will be limited to:
1. controlling, administering and distributing the Deed Fund in accordance with this Deed and carrying out any other functions or obligations they may have under this Deed;
2. monitoring and enforcing compliance by the Directors with performance of their duties and obligations under this Deed; and
3. considering any requests for consent in relation to any of the matters referred to in clause 7.4(b),

in each case to the exclusion of the Directors.

2. In the event that the powers, functions and duties of the Deed Administrators and the Directors overlap in any way, the powers, functions and duties of the Deed Administrators operate to the exclusion of the Directors (unless the Deed Administrators consent in writing to the Directors performing the relevant powers, functions and duties).
3. For such time as the Company remains under the management and control of the Directors during the Deed Period, the Company and the Directors (as appropriate) must:
1. meet (and procure that the Company meets) all of the Company’s statutory reporting and filing obligations as required by any relevant laws; and
2. pay (and procure that the Company pays) all of its liabilities as and when they fall due.

40. [40]
    Clauses 8.3 and 8.5 of the DOCA provided:

8.3 No Personal Liability

During the Deed Period, the Deed Administrators act as the agent of the Company and accept no personal liability for any acts, matters or omissions relating to things done or not done in that capacity, including (without limitation) any liability relating to any amounts payable by the Deed Administrators for services rendered, goods bought or property hired, leased, used or occupied by or on behalf of the Company.

…

8.5 To the maximum extent permitted by law, the Deed Administrators shall not be personally liable for:

1. any debts incurred or any claims, obligations, demands, actions, loss, damages, costs, charges, expenses or liabilities caused by any act, omission or default by or on behalf of the Deed Administrators or their representatives and advisers in administering this Deed or exercising their duties and obligations under this Deed;

2. any debts incurred or any claims, obligations, demands, actions, loss, damage, costs, charges, expenses or liabilities caused by any act, omission or default by or on behalf of the Company whether before, during or after the Deed Period;

3. any debts incurred or any claims, obligations, demands, actions, loss, damage, costs, charges, expenses or liabilities suffered or sustained or incurred by any Director, Officer, Member or Creditor, except where the loss or damage is occasioned by the gross negligence or fraud of the Deed Administrators.

41. [41]
    Clause 12.2 dealt with termination of the DOCA as follows:

Upon the happening of any one of the following events, this Deed will automatically terminate:

1. the court makes an order terminating this Deed under section 445D of the Act; or
2. the Creditors pass a resolution terminating this Deed at a meeting convened under the Act and clause 11 by notice setting out the proposed resolution.
3. If this Deed is terminated by order of the Court or by Creditors resolution:
1. the Interim Funding Amount (if it has not already been repaid), less payment of any unpaid Administration Trading Liabilities, Remuneration or Costs will be immediately repaid by the Administrators (subject always to the Administrators having sufficient available cash to make such repayment and subject to the terms of the Funding Agreement dated 17 February 2023 between the Proponent and the Administrators); and
2. The Proponent Contribution (if it has not already been paid), will no longer be payable and if the Proponent Contribution has been received, the Administrators shall refund it less payment of any unpaid Administrators Trading Liabilities, Remuneration or Costs and less any other amounts distributed by Administrators to Creditors, in accordance with the terms of this Deed.

The proposal for the DOCA

42. [42]
    The proposal for a deed of company arrangement^[5] that was included in the report to creditors that went before the creditors at the second creditors’ meeting did not include, in express terms, clause 12.2. 
43. [43]
    The report to creditors did provide for some information, though, about the then proposed proponent contribution. 
44. [44]
    Item 6 of the report set out the key terms of the proposed deed of company arrangement including as follows: 

In accordance with this proposal, the DOCA will contain the following key terms:

1. Seafarms will contribute the Seafarms Contribution to the Deed Administrators to be available for distribution to creditors.
2. The Seafarms Contribution (other than the Interim Funding) will be paid in a single tranche at the commencement of the DOCA.  If the DOCA terminates and does not effectuate in accordance with its terms, then the Seafarms Contribution will no longer be payable.
3. The only assets of the Company to be available for distribution to Admitted Creditors under the DOCA will be the Seafarms Contribution and any Working Capital Amounts.

45. [45]
    Item 25 of the report set out details of the Advance of Interim Funding including: 

    1. Seafarms has agreed to provide the Interim Funding to the Administrators.
    2. The Interim Funding will be repaid from the Deed Fund.  Repayment will be made by direction by the Deed Administrators to Seafarms that a portion of the Seafarms Contribution be paid to Seafarms in repayment of the Interim Funding.
    3. If the DOCA is terminated otherwise than upon completion of the DOCA in accordance with its terms, the Interim Funding will be immediately repaid by the Administrators (subject always to the Administrators having sufficient available cash to make such repayment) subject to the terms of the Funding Agreement.
46. [46]
    Interim Funding was defined to mean the amounts paid by SFG to the Administrators pursuant to an agreement dated 17 February 2023 (that is, the Interim Funding Amount under the Funding Agreement). 

Ownership of the monies in the Deed Fund

The claim pursuant to clause 12.2(c) of the DOCA

47. [47]
    In terms of how SFG advanced its claim to the Deed Fund in its originating application, that application is readily dismissed.  The originating application seeks the return of monies pursuant to clause 12.2(c)(i) of the DOCA.  The Full Federal Court terminated the DOCA on 1 November 2024.  The DOCA could have no effect after that time to create any new rights.  In accordance with s. 445H of the CA,^[6]  the termination of the DOCA did not affect the previous operation of the DOCA.  Section 445H of the CA provides: “The termination or avoidance, in whole or in part, of a deed of company arrangement does not affect the previous operation of the deed.” 
48. [48]
    As was stated by Barrett J in Lombe v Wagga Leagues Club Ltd (2006) 56 ACSR 387 at 407:

I have previously expressed the opinion that it is implicit in s 445H that, upon termination of a deed of company arrangement, the several persons initially bound by the deed (that is, the creditors referred to in s 444D and the other persons mentioned in s 444G) cease to be bound as to their future conduct, rights and liabilities: Sutherland v Rahme Enterprises Pty Ltd (2003) 46 ACSR 458; [2003] NSWSC 673 at [14].  In Arcfab Pty Ltd v Boral Ltd (2002) 43 ACSR 573; [2002] NSWSC 1188 (Arcfab), Austin J said (at [37]):

when the deed was subsequently terminated, the administrator’s powers and obligations as administrator ended and he was released and discharged from his office and his obligations under clause 16.4, although the termination of the deed did not affect its previous operation (s 445H) and things done by the administrator were valid by virtue of s 451C.

49. [49]
    Whilst I note clause 12.6 of the DOCA specified clauses said to survive termination of the DOCA, the specified clauses did not include clause 12.2(c).  I do not consider clause 12.6 would have effect in any event to allow clauses of the DOCA to survive a court termination of the whole of the DOCA, beyond the operation of s. 445H of the CA. 
50. [50]
    The right granted by clause 12.2(c) of the DOCA is not an accrued right as at termination of the DOCA.  The refund right accrues either at the same time as or after termination of the DOCA.  It is not a pre-termination right.
51. [51]
    SFG made an alternative argument that the right to a refund was an accrued right that was simply subject to a condition of the DOCA being terminated, and on that basis remained enforceable post-termination.  The High Court case of Westralian Farmers Limited v Commonwealth Agricultural Service Engineers Limited (in liquidation) (1936) 54 CLR 361 was relied upon at 379-380 per Dixon and Evatt JJ wherein their Honours stated (emphasis added to reflect the particular part of the decision relied upon by SFG): 

In general the termination of an executory agreement out of the performance of which pecuniary demands may arise imports that, just as on the one side no further acts of performance can be required, so, on the other side, no liability can be brought into existence if it depends upon a further acts of performance.  If the title to rights consists of vestitive facts which would result from the further execution of the contract but which have not been brought about before the agreement terminates, the rights cannot arise.  But if all the facts have occurred which entitle one party to such a right as a debt, a distinct chose in action which for many purposes is conceived as possessing proprietary characteristics, the fact that the right to payment is future or contingent upon some event, not involving further performance of the contract, does not prevent it maturing into an immediately enforceable obligation.

52. [52]
    SFG’s reliance upon the above passage is of no assistance to it.  Here the right to a refund is contingent on a contractual event – the termination of the DOCA.  There is no immediately enforceable obligation. 
53. [53]
    That is made clear by referring to the decision in Lucas Drilling Pty Limited v Armour Energy Limited [2013] QCA 111 at [53]-[54] where Daubney J, with whom the other members of the Court agreed, adopted the reasoning of Stevenson J in Southern Cross Constructions (NSW) Pty Ltd (administrators appointed) v Bucasia Pty Ltd [2012] NSWSC 1419 at [15] where it was said: “Where a contract is terminated, the parties are not divested of such rights as they already had ‘unconditionally acquired’” (citations omitted). 
54. [54]
    The Federal Court could have been asked to consider making orders carving out of its termination of the DOCA any termination of the operation of clause 12.2(c) of the DOCA, but that did not occur.  The whole of the DOCA was terminated.   
55. [55]
    SFG therefore has no right to a refund under clause 12.2(c) of the DOCA of any amount. 
56. [56]
    Although that conclusion would deal with the originating application in its terms, SFG advanced in the proceeding an alternative basis of entitlement based on a trust, that was addressed by the other parties.  I will deal with that argument as well. 

The claim pursuant to a trust/s

57. [57]
    SFG’s alternative argument proceeded like this and affects the Proponent Contribution only.  On a proper construction of the DOCA and consistent with the intention of the relevant parties, either PSD or the Administrators (or perhaps the Administrators as agents for PSD) held the Proponent Contribution effectively on two trusts (or one trust with two parts):

    1. first, for the Administrators and Dividend Creditors in the event that the DOCA was fully performed (consistent with the terms of clause 5.1(b) of the DOCA) (the primary trust);
    2. second, in default of the DOCA being fully performed, for SFG (the secondary trust). 
58. [58]
    Canstruct and the Liquidators deny that any such trust/s arose.
59. [59]
    Both parties referred to a number of cases said to support their construction of the DOCA for and against a trust in favour of SFG.  Ultimately each case turns on its particular facts.  The usual principles for the construction of commercial agreements apply.  Particularly important of those principles in this case include that ordinarily words of a contract should be given meaning and not be rendered superfluous, and a commercial construction of a commercial agreement should ordinarily be preferred. 

Case comparatives

60. [60]
    It is useful to start by considering the primary cases the parties have referred to by way of analogy. 
61. [61]
    In the case of FCT v All Suburbs Car Repairs (1994) 14 ACSR 753 the relevant term of the deed of company arrangement provided: 

    1. The Directors shall make available to the Administrator the funds specified in the Directors Deed (hereinafter called “the Directors’ Fund”) being an amount of not less than $70,000 and not more than $95,000.00 
62. [62]
    Davies J noted that the Directors Deed was made between the shareholders and the administrator in his capacity as the administrator of the company.  The deed provided therefore for the payment to the administrator in his capacity as administrator for, and agent for, the company.  The deed of company arrangement was not inconsistent with that.  In fact, the deed of company arrangement incorporated clause 1 of Schedule 8A of the Corporations Regulations 2001 (Cth) (CR) – that is, in exercising the powers conferred by the deed and in carrying out duties under the deed, the administrator was taken to act as agent for and on behalf of the company.  His Honour continued at 758-759:

In follows, in my opinion, that, when the directors and shareholders agreed to pay sums to Mr Silvia in his capacity as administrator, they agreed to pay those sums to him in his capacity as agent for All Suburbs and, consequently, that the sums when paid would be received by him on behalf of the company.  It necessarily follows that the sums when received would be property of All Suburbs.  This also accords with the ordinary operation of company schemes of arrangement.  Thus when s 444A(4)(b) provides that the deed must specify “the property of the company (whether or not already owned by the company when it executed the deed) that is to be available to pay creditors’ claims”, it contemplates that sums may be paid by third parties for distribution to creditors and that those sums will be property of the company available to pay creditors’ claims.

63. [63]
    The decision in FCT v All Suburbs Car Repairs was followed in Lombe v Wagga Leagues Club Ltd (2006) 56 ACSR 387.  It was another case where a deed fund was established by the administrators that included external contributions.  The deed provided in clause 4.5(a) for the administrators to hold the deed fund on trust for the benefit of the administrators and participating creditors (like clause 5.1(b) of the DOCA here). 
64. [64]
    Barrett J adopted the reasoning of Davies J in FCT v All Suburbs Car Repairs and went on to find that clause 4.5(a) did not in fact create any trust.  He relevantly found at 405-406:

This analysis seems to me to hold good in every case where, in accordance with a deed of company arrangement incorporating cl 1 of Sch 8A to the Corporations Regulations, funds are provided from outside the company’s existing resources for application towards creditors’ claims pursuant to the deed. Those funds become the property of the company.  That they should therefore be controlled and applied by the deed administrator is a corollary of the statutory scheme that makes the administrator the agent of the company.  In the ordinary course of events, the deed administrator, being an agent of the company and a fiduciary, obtains no proprietary interest in the contributed funds.  And, as one of the parties bound by the deed (s 444G(c)), the deed administrator must deal with the relevant property as the deed provides.

What, in the present case, was the true effect of cl 4.5(a) of the deed and its direction that the deed administrators “shall hold the Deed Fund on trust for the benefit of the Administrators, Deed Administrators and for those Creditors who become Participating Creditors “in accordance with this deed of company arrangement”?  It must be recognised that, as is shown by Davies J’s analysis, the property to which that direction related (including property provided by QCM) was in truth property of the club.  The direction was accordingly a direction about application of the club’s property by persons who stood in a fiduciary relationship to the club.  They, as agents of the club, were directed to “hold” the property “on trust”, first, “for the benefit of” certain persons and, second, “for” certain other persons “in accordance with the terms of this deed of company arrangement”.

…

In the present case, there is specific reference to the “Deed Fund” being held “by” the deed administrators “on trust”.  Those words did not, in my view, cause the relevant property of the club to be divested from it and vested in the deed administrators.  Clause 4.1, which required the deed administrators to “establish” the deed fund and, in effect, to receive into it the several sums of money mentioned is, upon its proper construction, a provision about how the deed administrators, as agents of the company, were to segregate and apply part of the club’s property.  The statement that they were then to hold that part of the club’s property “on trust” to be applied in certain ways is, in my view, no more than a particular way of emphasising the fiduciary position they occupied in relation to the club and the trustee-like responsibility they had to apply the relevant part of the club’s property according to the benefits and detriments statutorily created by virtue of the advent of the deed.

…

The only person capable of creating a trust affecting property of the club was the club itself.  Essential to any conclusion that it had done so would be a finding that there was divestment from the club of all legal and beneficial interests in the relevant property, in such a way that the deed administrators became the owners at law and other persons became entitled in equity.  I do not think that it was intended by the deed of company arrangement that the various persons referred to in cl 4.1, including creditors whose claims were to be dealt with under the deed, should be the beneficial owners of the deed fund.  Rather, it was intended that the deed fund should be applied by reference to the claims of those persons, being claims against the club.  Application of the deed fund was thus to be by way of quid pro quo: payment of part of the fund to a particular person was the reward for elimination of a claim that person had against the club.  That intention is incompatible with the creation of a trust in respect of the property concerned. It is consistent with the application of company property for company benefit.

65. [65]
    In the matter of Antqip Hire Pty Limited (subject to deed of company arrangement) (in liquidation) [2020] NSWSC 487 Rees J from [94] undertook an analysis of competing historical decisions concerning whether agency or trust prevails in circumstances such as the present.
66. [66]
    The decisions where the view had prevailed that the deed fund was not an asset of the company included Dean-Wilcocks v ACG Engineering Pty Ltd (in liquidation) (2003) 45 ACSR 290 where, although a trust was not created in express terms, it was found to exist by reference to the following clause:

5.4(a) The Administrator shall hold the Administration Fund in accordance with the terms of this Deed of Company Arrangement.

(b) The Company and the Directors agree that any monies paid to the Administrator by the Company or any third party on behalf of the Company shall not be refunded to the Company or third party.

67. [67]
    The decision in Dean-Wilcocks v ACG Engineering was followed by Campbell J in Shepard v Sports Mondial of Australia Pty Ltd (in liquidation) (2005) 53 ACSR 746.
68. [68]
    However, Rees J also noted at [104] that the decision in Lombe v Wagga Leagues Club had been widely followed and cited a number of cases to that effect. 
69. [69]
    In applying to the competing authorities to the deed of company of arrangement under consideration, Rees J noted, at [112], clause 7 which was a modified form of clause 1 of Schedule 8A of the CR.  His Honour concluded at [114]:

Clause 7 does not use the language of an express trust, albeit that is not fatal if the intention to create a trust may otherwise be inferred from the conduct of the parties and all the circumstances of the case: Cohen v Cohen (1929) 42 CLR 91; [1929] ALR 204; Vedejs v Public Trustee [1985] VR 569.  But the fact that clause 7 described the deed administrators’ role when receiving the deed fund contributions “as Agent” rather than trustee is not unimportant.  It suggests that the parties did not intend to create a trust.  An agent can also be a trustee, but where commercial parties specifically describe one’s role as “agent”, it is reasonable to think that they intended that the party would have the attributes ascribed by the law of agency rather than trust law. 

70. [70]
    Reference was also made by Canstruct to some non-DOCA cases that concern whether a trust could be found to exist in respect of certain arrangements. 
71. [71]
    The first was Jessup v Queensland Housing Commission [2002] 2 Qd R 270.  In that case the Queensland Housing Commission (QHC), pursuant to an agreement, provided money to an organisation that was to provide in-home assistance to certain persons.  The money was paid into a particular account held by the organisation.  Any surplus was to be returned to the QHC.  The organisation went into liquidation.  The QHC claimed the money in the account was held on trust for it; the liquidator claimed the money in the account was company property.   
72. [72]
    McPherson JA (with whom the other members of the court agreed) noted at 273-274 that it was: 

difficult to ignore the fact that in all the lengthy and detailed provisions of the Agreement there is nowhere any reference to the existence of a trust at all.  It is true that, at various points, the Agreement imposes on CCT some obligations characteristic of trustees.  The funds, which are provided “conditionally”, are to be spent only for the purposes described (though not with great specificity) in sch. 2, and within a limited period of time.  They must be returned to QHC “immediately” if not spent within that period, or if CCT at any time ceases to operate, which is what happened here.  In the meantime, the funds must be deposited and retained in a nominated and agreed bank account, from which interest that is generated by those funds may be used only for the specified purposes.  With QHC approval, funds may be used to purchase assets in the name of CCT; but, if sold, the proceeds must be deposited in the nominated account and also used only for the specified purposes; or, if unspent, dealt with under the regime laid down in cl. 1.5.4.

All of these are or resemble obligations like those imposed by equity on a trustee in similar circumstances.  In the end, however, they tell against rather than in favour of the existence of a trust.  If QHC as settler had intended to create a trust, it would have been simple to have said so, instead of descending to the detail it did in the Agreement; or, if the reason for including the detail was to point up the specific obligations of CCT as trustee, it would have been cautionary to have done both.  It is true, said du Parcq L.J. in Re Schebsman [1944] Ch. 83, 104, that:

“by the use possibly of unguarded language, a person may create a trust, as Monsieur Jourdain talked prose, without knowing it, but unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention.”

If the purpose of QHC was to inspire the poetry of trusts, it is odd that it chose to express itself in common law prose. The instrument in which its intention is to be derived is a 16-page bipartite contract containing some 23 composite paragraphs which was executed under seal. Because QHC is an instrumentality of government and the supplier of the funds, it was in an unusually strong position to dictate to CCT whatever terms it chose.

73. [73]
    His Honour also went on at 274-275 to refer to:

The obligation to keep trust funds separate and not to mix them with money from other sources has been described as “a hallmark duty of a trustee”: Associated Alloys Pty Ltd v. ACN 001 452 106 Pty Ltd (2000) 202 C.L.R. 588, 605; and see Burdick v. Garrick (1870) L.R. 5 Ch. App. 233, 243, cited in Cohen v. Cohen (1929) 42 C.L.R. 91, 100.  Failure to do so may not be conclusive of the absence of a trust because it may in fact be no more than some evidence of a breach of trust.  But when the alleged trust instrument, while expressly providing for payment of funds into a nominated and agreed account, deliberately refrains from prohibiting any such intermixing of funds, it is some indication, and possibly a strong one, that no trust of those funding payments was intended.  Despite the provision in cl. 7.1.1 requiring an accounting system capable of identifying income emanating from QHC funding, it ill accords with the notion that QHC was, from the beginning and throughout, the beneficial owner of the funds it supplied and that CCT was simply the legal title holder of those funds for QHC.

74. [74]
    No trust was found to exist. 
75. [75]
    The second was Korda v Australia Executor Trustees (SA) Limited (2015) 255 CLR 62.  The background facts to the decision are conveniently set out in the reasons of Hayne and Kiefel JJ at 88-91 [55]-[67]; and the issue at 91 [68].  Important to the outcome that there was no trust created in that case included the following factors:

    1. the documents contemplated a mixing of funds – the possible trust funds with company monies (per Hayne and Kiefel JJ at 94 [84] and 101 [110]-[111]) – “absence of a contractual intention that the money was to be held in a separate fund must surely be fatal to the imputation of a contractual intention to create a trust over that money” (at 101 [111]);
    2. there was no commercial necessity requiring the imputing of a trust (per Hayne and Kiefel JJ at 95 [86]);
    3. the relevant documents made no express provision for the trusts contended for and there was an understanding from the document that funds would be mixed (per Keane J at 106 [136] and 128 [225]);
    4. the general principle that “the established rule that in order to constitute a trust the intention to do so must be clear and that it must also be clear what property is subject to the trust and reasonably certain who are the beneficiaries” (per Keane J at 123 [204] quoting from Kauter v Hilton (1953) 90 CLR 86 at 97); 
    5. the language of the relevant documents is not to be strained to discover an intention to create a trust (per Keane J at 124 [208]). 
76. [76]
    The third was Sino Iron Pty Ltd v Palmer (No 3) [2015] 2 Qd R 574 per Jackson J.  In that decision his Honour noted the difficulties associated with cases where there is uncertainty as to whether a trust exists at 586 [56].  Important to the outcome in this case was –

    1. the failure of the relevant documents to prevent a mixing of funds, and that such omission appeared deliberate (592-593 [90], [92], [94]);
    2. no commercial necessity for a trust (596 [107]-[109]).

Construction of this DOCA

77. [77]
    Canstruct emphasises that the obligation to pay the Proponent Contribution is to the Administrators (clause 5.3) and the Administrators act as agent for PSD.  The latter proposition is made clear through a combination of clauses including 7.3, 8.3 and 1.6 (incorporating clause 1 of Schedule 8A of the CR).  It says that is of critical importance because the DOCA authorised the Administrators to receive the Proponent Contribution as agents for PSD.  And ordinarily in that case the Proponent Contribution would become property of the principal, PSD. 
78. [78]
    Whilst that is an important part of the drafting of the DOCA to take into account, I do not consider it determinative.  The DOCA in its express terms does not prevent the Administrators acting in some other capacity, or the Administrators acting in the capacity as agents for PSD then acting in that capacity as trustees.  Two capacities may co-exist. 
79. [79]
    Clause 5.3 of the DOCA simply requires the Administrators to receive the Proponent Contribution – and they do that.  It does not say in what capacity the Proponent Contribution is received. 
80. [80]
    Canstruct also points to the terms of clause 5.1(b) which speaks of the Deed Fund being held on trust for the benefit of the deed administrators and the dividend creditors, and that no other trust is mentioned.  Again, I do not consider that drafting determinative.  It still permits of the possibility that there is a secondary trust that exists in the event the primary trust cannot be fulfilled.  It permits of the possibility that the beneficiary of the secondary trust is SFG even though they are excluded from the benefits of the primary trust.  But it is a factor to be taken into account that there is no express reference to any other trust. 
81. [81]
    Canstruct also points to the Deed Fund being a single fund – comprising a conglomeration of monies from different sources, including the Proponent Contribution and undisputed company funds.  The DOCA contains no provisions requiring the Proponent Contribution to be kept separate from company funds.   I agree that strongly tells against there being the trust for which SFG contends. 
82. [82]
    It is also relevant that clause 12.2(c) in its terms appears to contemplate the sum of $3.5m but not the same $3.5m held on trust.  There is no apparent separation or segregating of the $3.5m once received.  Tracing through a mixed fund is not impossible, but the mixing of funds is a factor suggesting that there was no intention to create a trust as contended for by SFG.  
83. [83]
    A key part of the DOCA that SFG relies upon for the argument that there is a secondary trust in its favour is clause 12.  Canstruct says that clause is drafted in the language of contract, rather than trust – and that is true.  Again, that is not determinative, but points against the imposition of the trust for which SFG contends. 
84. [84]
    Canstruct’s construction of the DOCA, if it is accepted that clause 12.2(c) cannot survive a termination of the DOCA by the court and does not result in the accrual of rights pre-termination, results in clause 12.2(c) having no effect in the present situation.  Where the construction of a commercial agreement is concerned, judges will often be concerned about a construction which results in a clause having no effect.  Likewise where the construction contended for appears to have an unintended and unfair result.  That is one of these cases.  At a high level Canstruct’s construction does not accord with common sense.  A deed proponent contributes a significant sum of money to effect a DOCA, the DOCA is terminated by the court so the DOCA cannot be effected, but the contribution is kept by the company and not returned to the deed proponent. 
85. [85]
    But it is not for the court to re-write the DOCA or impose a trust simply to achieve what might be thought to be a fair outcome.  The DOCA could have readily set up a trust of the type contended for by SFG with express words.    
86. [86]
    And there is no commercial necessity to impose a trust.  The particular problem that exists in this case could have been addressed by seeking that the Federal Court not terminate the whole of the DOCA. 
87. [87]
    The intention to create the trust contended for by SFG is not sufficiently clear, and it would be to strain the construction of the DOCA to find same. 
88. [88]
    In my opinion, there is no trust as contended for by SFG in its favour under the DOCA and the Proponent Contribution is the property of PSD.  

The liability and indemnification of the Administrators

89. [89]
    It is then necessary to consider whether the Administrators have any liability to SFG in respect of either or both of (in whole or part):

    1. the $3.5m Proponent Contribution; 
    2. the $1.4m Interim Funding Amount,

and if so whether the Administrators have any right of indemnity against the Deed Fund or PSD’s other assets.

90. [90]
    Whilst I note that SFG has not in any application sought to recover from the Administrators any part of the Interim Funding Amount pursuant to the terms of the Funding Agreement,^[7] the Administrators’ liability and right to indemnity in respect of that amount, including under the Funding Agreement, is the subject of the Administrators’ application (CDI 22).
91. [91]
    In summary, SFG contends that even if it fails in having the court decide that any of the Deed Fund is repayable to it under the terms of the DOCA, or that the Proponent Contribution is held on trust for it, then the Administrators still have a liability to it in respect of the Proponent Contribution and the Interim Funding Amount, whether pursuant to the DOCA or the Funding Agreement (in respect of the Interim Funding Amount only). 
92. [92]
    On the other hand, Canstruct contends that:

    1. the Administrators have no obligation to pay SFG any amount on account of the Proponent Contribution in light of the termination of the DOCA;
    2. the Administrators have no obligation to pay SFG any amount on account of the Interim Funding Amount in light of the termination of the DOCA, and have no obligation under the Funding Agreement as the DOCA was effective to entirely discharge all obligations of the Administrators in relation to the repayment of the Interim Funding Amount under the Funding Agreement. 

The liability of the Administrators to SFG under the DOCA

93. [93]
    For the reasons already expressed, there is no liability for the Proponent Contribution or the Interim Funding Amount to be repaid to SFG under the terms of the DOCA by any person, including the Administrators.

The liability of the Administrators to SFG under the Funding Agreement

94. [94]
    The Funding Agreement contains a repayment obligation in clause 2.5.  The timing of the repayment obligation depends on the termination date that is defined by reference to clause 5.2. 
95. [95]
    It was not contended for by any party that the termination date under the Funding Agreement had accrued.  That is sufficient to dispose of any claim to repayment of the Interim Funding Amount under clause 2.5 of the Funding Agreement. 
96. [96]
    SFG raised two alternative bases to recover under the Funding Agreement.  First it argued that clause 3.5(b) of the Funding Agreement gave rise to a separate repayment obligation.  Second it argued that the Funding Agreement was a loan agreement so it was obvious that the Interim Funding Amount was required to be repaid and a term should be implied to that effect.
97. [97]
    As to clause 3.5(b) of the Funding Agreement, the difficulty with reliance upon this clause is that the repayment obligation is tied to the event of the Money Owing not being repaid in full prior to the Termination Date.  If a Termination Date never occurs, does any repayment obligation arise?  In my opinion, the answer must be no.  It is not a separate repayment obligation – it simply supplements clause 2.5 and, as its heading suggests, deals with repayment priority rather than giving rise to a separate repayment obligation. 
98. [98]
    As to a possible implied term, I would not be prepared to imply a term regarding repayment.  The express terms deal with repayment and repayment priority.  Whilst no precise term was contended for by SFG, I do not think in light of the express repayment provisions that such a term is so obvious so as to go without saying or necessary to give business efficacy to the document. 
99. [99]
    Canstruct has asked for the court’s decision to go further due to the possibility that notice could be given terminating the Funding Agreement pursuant to its terms.  The other relevant parties have engaged on the further issue, and so I will go further as requested.   
100. [100]
     The Administrators can have personal liability for the Interim Funding Amount under the Funding Agreement but only on a limited liability basis – see clause 3.1.  The DOCA came into effect about a month after the Funding Agreement.  The parties to the DOCA include the parties to the Funding Agreement and others. 
101. [101]
     The DOCA defines the Interim Funding Amount and provides clauses for the repayment of that amount – clauses 5.4(a), 5.5 and 12.2(c)(i).  Unlike the terms of the Funding Agreement, under the DOCA the Administrators have no personal liability in respect of the Interim Funding Agreement – see clauses 8.3 and 8.5(a). 
102. [102]
     The question then is whether the Administrators’ possible liability for the Interim Funding Amount under the Funding Agreement survives the entry into the DOCA.  Or expressed another way, did the DOCA (as the later agreement) impliedly discharge the repayment obligations under the Funding Agreement.   
103. [103]
     Canstruct points to what it says are the radical differences between the Funding Agreement and the DOCA as to the methods of repayment and the timing of repayments in respect of the Interim Funding Amount as demonstrating that the intent of the DOCA was to supersede the Funding Agreement insofar as repayment obligations in respect of the Interim Funding Amount were concerned. 
104. [104]
     Canstruct relies upon the case of Balanced Securities Ltd v Dumayne Property Group Pty Ltd (2017) 53 VR 14 in support of its arguments.  The court in that case gathered the relevant principles from the authorities at 32 as follows:

     1. The relevant issue is whether the subsequent agreement amends the earlier agreement or brings it to an end and replaces it (FCT v Sara Lee).
     2. The earlier agreement may be brought to an end either expressly or by implication (Tallerman and FCT v Sara Lee).
     3. The issue is to be resolved by ascertaining the manifest intention of the parties (FCT v Sara Lee and Concut v Worrell).
     4. The manifest intention of the parties is to be ascertained objectively by the construction of the subsequent agreement, having regard to the relevant context of that agreement where it is permissible to do so in accordance with the ordinary principles of contractual construction (Concut v Worrell, Hillam v Iacullo, Schreuders v Grandiflora).
     5. A potentially critical factor militating in favour of a conclusion that the manifest intention of the parties, objectively ascertained, was to bring the earlier agreement to an end and replace it, is where the terms of the two relevant agreements deal with the same subject matter in different and inconsistent ways (Hillam v Iacullo).
105. [105]
     Reference was made at 33 to the decision in Hillam v Iacullo (2015) 90 NSWLR 422 that was said to be not distinguishable and directly on point.  The two agreements in that case were held to deal with the “very same advance in different and inconsistent ways.  They could not each be performed.  The rights and obligations under the first were wholly discharged and replaced by the second which thereafter governed the parties’ rights and obligations.” 
106. [106]
     I do not agree that the same conclusion should be reached in this case.  The Funding Agreement and the DOCA in respect of the repayment obligations in relation to the Interim Funding Amount can work together.  Whilst plainly the amount cannot be twice recovered, in my view the DOCA had the effect of introducing a new possible method of repayment, without taking away the rights that existed under the Funding Agreement.  Any possible inconsistency does not rise to the level that the DOCA impliedly discharged the repayment obligations under the Funding Agreement.      

The Administrators’ remuneration and expenses

107. [107]
     As mentioned, the Administrators are holding $769,366.47 from the Deed Fund in respect of a claim for a lien for remuneration and expenses. 
108. [108]
     As I understand the position of the parties as it was by the end of the oral hearing, all interested parties agree that the Administrators can pay to themselves the following remuneration and expenses from the monies held by them:

     1. $279,795.45 including GST on account of remuneration pre-DOCA termination (that is, prior to 1 November 2024);
     2. $55,000 including GST on account of remuneration post-DOCA termination (that is, from 1 November 2024);
     3. $3,685.47 including GST on account of office disbursements;
     4. the assessed amount of the actual costs of $39,161.25 including GST that Derrington J of the Federal Court has ordered to be paid out of the Deed Fund. 
109. [109]
     It is then also agreed that there will be orders in the proceeding that permit the Administrators to recover:

     1. legal costs of the Administrators’ application for remuneration;
     2. legal costs of the proceeding. 
110. [110]
     At the minimum, the Administrators will recover those legal costs from the Deed Fund.  I note that the Administrators have confirmed that they will not seek any payment beyond the $769,366.47 held by them for all remuneration and expenses.  They abandon any recourse to the monies held in court.   
111. [111]
     However, I am not making orders about the costs in [109] now because some of the parties wish to argue in respect of those legal costs of the Administrators that some other party ought be responsible for bearing those legal costs (rather than the Deed Fund bearing those costs).  That is a matter that is properly considered after this decision is delivered. 

Should PSD go back into VA

112. [112]
     I am strongly of the view that this court should not permit the Liquidators to be appointed as voluntary administrators of PSD in order to permit the proposed second DOCA to be considered. 
113. [113]
     I accept that the Liquidators presently can, as of right, appoint administrators to PSD and that it is only because they wish themselves to be appointed as administrators that the court’s leave is required – s. 436B CA.
114. [114]
     I accept that there is no challenge to, and no reason whatsoever to challenge, the Liquidators’ appointment as administrators on the basis of qualification or competency.  
115. [115]
     However, given my findings about the ownership of the Deed Fund (which includes the monies in court), the proposed second DOCA proceeds on an incorrect premise and should not be put before creditors.  The underlying assumption of the proposed second DOCA is that the monies in court are properly owned by SFG.  The proposed second DOCA provides for $1.4m of the monies in court to be returned to SFG (as a representation of the funds advanced under the Funding Agreement) and the balance (approx. $1.65m) be treated as a proponent contribution by SFG to the DOCA to be made available (assumedly after VA expenses) to pay to the remaining non-related creditor, Canstruct.
116. [116]
     SFG submitted that the application for the Liquidators to be appointed administrators under a second VA could succeed regardless of the determination of the ownership of the monies in the Deed Fund.  It said that even if the ownership of the Deed Fund was found to be with PSD, the proposed second DOCA then simply constituted a distribution of the available funds between the two sets of creditors – $1.4m to SFG and its related companies, $1.4m to Canstruct (the balance presumedly VA expenses). 
117. [117]
     Regardless, and even if I am wrong in concluding that the Deed Fund is owned by PSD, I still would not have permitted the Liquidators to be appointed as voluntary administrators of PSD in order to permit the proposed second DOCA to be considered. 
118. [118]
     In my view, based on the evidence before me, the proposed second DOCA, if entered into, would be at very significant risk of being set aside on very similar grounds to those found in the Federal Court in relation to the DOCA.  The proposed second DOCA is, in my view based on the evidence presently available, no more than a further abuse of the provisions of Part 5.3A of the CA.  It is a continuation of the abuse of process that the Federal Court previously found was engaged in by PSD and SFG.   
119. [119]
     I form such a view cognisant of the following matters that were raised by the Liquidators in favour of their application to be appointed administrators.
120. [120]
     First, the test for the grant of leave is not onerous and ordinarily will be granted unless there is some specific reason why the liquidators are not suitable administrators.  That is not the case here.  
121. [121]
     Second, generally there is a public interest in companies being permitted to continue trading.  That public interest is heightened here in circumstances where the failure of PSD may result in losses to landlords, defaults on land agreements with First Nation peoples, and losses of future employment opportunities and business.  The business of PSD is described as a significant project across several sites, potentially involving thousands of employees, and involves native title agreements and opportunities for indigenous communities in remote areas of Western Australia and the Northern Territory.  There is evidence that further funding to progress PDS’s business is dependent on the proposed second DOCA succeeding.  Thus there is a strong likelihood, absent a further VA and subsequent DOCA, that PSD will be wound up, and any public interest in permitting PSD to continue to trade will not be achieved.   
122. [122]
     Third, whether a company in some form of external administration should be permitted to eventually re-enter the marketplace is not of critical importance at the stage of deciding whether it should enter voluntary administration.   That is a matter that can be dealt with at a termination application (see Re Nardell Coal Corporation Pty Ltd (receivers and managers appointed) (in liquidation) (2003) 47 ACSR 122 at 125), or,  in this case, where at the conclusion of the voluntary administration the stay of the liquidation would lift, at the application that would inevitably have to be made to terminate the liquidation to allow a deed of company arrangement to proceed – see for example Deputy Commissioner of Taxation v Foodcorp Pty Ltd (1994) 13 ACSR 796 at 798.  Whilst I accept the thrust of the Liquidators’ submission, this is a case where I consider the possible challenge to any second DOCA weighs heavily now on the discretion to exercised.  
123. [123]
     Fourth, the Liquidators having carried out some investigations, although of the opinion that the date of insolvency may be earlier than that considered by the Federal Court^[8] (perhaps as early as 1 November 2021), they consider that substantially all of PSD’s unsecured debts were incurred prior to 1 November 2021, and no further inquiries are needed in respect of possible breaches of the CA.  SFG went so far as to submit that based on the findings about insolvency made by the Full Federal Court, and in light of investigations so far made by the Liquidators, there was “practically speaking” no prospect of a liquidator commencing any insolvent trading proceedings.  I consider that submission goes too far.  On the evidence presently available I think at best for PSD it could be concluded that insolvent trading proceedings are unlikely, but not impossible.  The fact that a second DOCA might avoid any further scrutiny of PSD and directors is a relevant factor to consider, even if it is not an overly weighty consideration.   
124. [124]
     Fifth, the return to unrelated, unsecured creditor under the proposed second DOCA would exceed that in the winding up.  Canstruct is likely to receive much less, if anything, in winding up (perhaps $280,000) but about $1.4m under the proposed second DOCA (monies in court, less $1.4m to be returned to SFG, less VA expenses).  That is a factor to be considered, but is not determinative.  From Canstruct’s point of view in either scenario the loss to be suffered is near complete.       
125. [125]
     Sixth, by reference to the decision in Re Data Homes Pty Ltd (in liq) [1972] 2 NSWLR 22, it was argued for the Liquidators that whilst not an irrelevant consideration, whether the proposed second DOCA might constitute an abuse of process along the same lines as the DOCA is not a matter that is encompassed under the heading of commercial morality, which the courts have considered in cases where liquidators apply to be appointed administrators of a company.  It was suggested that matters like the motivation for a second DOCA “would be an irrelevant consideration – or not a consideration of any weight under these sort of principles”.  I disagree.  Whilst the concepts of commercial morality in the cases I have been referred to do not per se deal with the exact type of situation here under consideration, the heading is wide enough to apply in this case.  I think it is obvious that if the proposed second DOCA is liable to be set aside as an abuse of the VA and DOCA processes, then allowing the liquidators to become administrators to propose the second DOCA is detrimental to commercial morality (or against the public interest – the two concepts being interrelated). 
126. [126]
     I note that SFG made further submissions supporting the Liquidators’ application to the following effect.
127. [127]
     First, it was submitted that the second DOCA proposal is different to the first because there is not the same distinction being made between the small unsecured creditors (who under the first DOCA were to receive a return of 100 cents in the dollar) and Canstruct.  Of course, that lack of distinction now does not exist only because SFG in fact paid all the small unsecured creditors outside of the DOCA.  No other unrelated creditors now remain. 
128. [128]
     Second, it was said that in nearly every DOCA the DOCA proponent will put forward a proposal that will result in some creditors not being paid in full and that is the purpose of Part 5.3A of the CA.  As a general proposition that is correct.  But it does not detract from the fact that a deed of company arrangement is properly set aside when the underlying purpose of the deed is not lawful – as here occurred with the first DOCA.
129. [129]
     In that respect, I drew the attention of the parties to the fact that in these proceedings no person on behalf of SFG had sworn any evidence accepting the findings of the Federal Court at first instance and on appeal, and stating or demonstrating why there was a different purpose underlying the proposed second DOCA than existed for the first.  I would have expected to see such evidence to support a submission by SFG that there was a new and different purpose underling the proposed second DOCA and so as to avoid an adverse Jones v Dunkel inference.  I do draw that adverse inference against SFG.        
130. [130]
     All of those matters raised by the Liquidators and SFG, even in combination, do not persuade me that returning PSD to VA is the appropriate course.  
131. [131]
     The findings of Derrington J about the abuse of process that underlay the DOCA seem to me to still substantially exist.  Refer to the first instance decision at [121], [124], [182], [186]; and the full court decision at [134].  
132. [132]
     The objective circumstances, based on the present evidence, demonstrate the same purpose being sought to be achieved by the second VA process and proposed second DOCA – simply for PSD to get rid of the Canstruct debt and otherwise progress unimpeded. 
133. [133]
     The possible availability for external funding is not a new circumstance to be considered.  It was part of the argument run on behalf of PSD at first instance and on appeal – see the Fraser affidavit (CFI 30) at [2(c)], [43]-[45], [46(f)]. 
134. [134]
     Canstruct also raised that ordinarily a court would not be inclined to stay a winding up unless it could be demonstrated that the company is solvent: In the matter of Wine National Pty Ltd, James Estate Wines Pty Ltd, Liquor National Pty Ltd [2014] NSWSC 507 per Black J.  Here, whilst there is a suggestion of possible external funding, that is far from assured.  Canstruct points to what it described as the “dubious” financial position of SFG revealed by the evidence.  Mr Fraser swears that SFG without external funding is unlikely to have the capacity to keep PSD solvent if it recommences business.  That is a factor I have considered, but given my conclusions about abuse of process based on the present evidence, it is not determinative.       

Conclusions

135. [135]
     The key findings of this decision are: 

     1. the Deed Fund is the property of PSD (subject to the Administrators’ right to indemnity for remuneration and expenses from same);
     2. SFG has no right of repayment pursuant to the DOCA;
     3. the Administrators have no repayment liability to SFG under the terms of the DOCA;
     4. the repayment obligations imposed on the Administrators under the terms of the Funding Agreement have not been discharged by the DOCA;
     5. the Administrators have no present liability to SFG under the terms of the Funding Agreement;
     6. leave is not granted for the Liquidators to appoint themselves as voluntary administrators of PSD.   
136. [136]
     I will ask the parties to bring in a form of order reflecting these reasons and will hear submissions as to costs.