Supreme Court New South Wales Medium Neutral Citation: In the matter of Metal Storm Ltd (subject to Deed of Company Arrangement) [2014] NSWSC 813 Hearing dates: 27 - 29 May 2014 Decision date: 19 June 2014 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: Parties to bring in agreed short minutes of order to give effect to judgment within 14 days or, if there is no agreement between them, their respective draft orders and short submissions as to the differences between them. Parties to be heard as to costs. Catchwords: CONTRACT - construction - where trustee and relevant company subject to deed of company arrangement entered into trust deeds in respect of issuing of secured and unsecured notes - where majority secured creditor provided directions to trustee after company entered into voluntary administration - where directions were made in respect of voting for variations to deed of company arrangement and the release of trustee's charge over assets of company - whether trustee was obliged to comply with relevant directions - whether trustee was justified in not complying with directions under Corporations Act 2001 (Cth) s 283HA - whether trustee is relieved from liability from having proceeded on such a basis under Trustees Act 1925 (NSW) s 85 - whether administration of company is an 'enforcement' under relevant clause - whether majority secured creditor is entitled to vote in meeting of creditors. CORPORATIONS - management and administration - application for appointment of a receiver - whether appointment should be made under Supreme Court Act 1970 (NSW) s 67 or Corporations Act s 283HB - where there exist a deadlock preventing sale of company's assets - where company's financial position is deteriorating - whether relevant factors for appointment of receiver have been satisfied - whether current deed administrator should be appointed as receiver - whether appointment of receiver entitles trustee to release relevant charge - whether relevant parties are entitled to exercise an equitable lien over assets of company. CORPORATIONS - voluntary administration - deed of company arrangement - orders sought for repayment to trustee of monies wrongly paid by deed administrator to majority secured creditor under Corporations Act s 447E - whether deed of company arrangement authorised payment of monies to creditor. EQUITY - trusts and trustees - powers, duties, rights and liabilities of trustees - where trustee had failed to appoint controller in relevant decision period - where trustee had failed to appoint controller after relevant decision period - where trustee failed to comply with written directions of majority secured creditor - whether such conduct amounted to breach of trust deed or equitable duties - whether defences of waiver and acquiescence, estoppel, delay and laches can be established - whether trustee had acted honestly or reasonably in failing to appoint a controller during the decision period - where trustee had notice of appointment of deed administrators - whether trustee should be relieved from liability under Trustee Act s 85 - whether secured majority creditor suffered damage or loss arising from trustee's failure to appoint a controller. Legislation Cited: - Corporations Act 2001 (Cth) ss 9, 51B, 283AB(1), 283EA, 283HA, 283HB(1), 283HB(1)(g), 418(1)(a), 420B, 424, 436A, 439A, 440B, 440B(2), 441A, 443D, 443E(5), 443F, 445D, 445D(1)(g), 445F, 447E(1), 536, Pt 2M.3, 5.3A - Evidence Act 1995 (NSW) s 136 - Trustee Act 1925 (NSW) ss 59(2), 59(3), 85 - Supreme Court (General Civil Procedure) Rules 2005 r 54.02 - Supreme Court Act 1970 (NSW) s 67 - Uniform Civil Procedure Rules 2005 (NSW) Pt 28 Cases Cited: - Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133 - Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (as trustee for the Albans Unit Trust) (1994) 14 ACSR 230 - Agricultural & Rural Finance Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 - Amaelor Jones Investments (1989) 54 SASR 285 - Arena Management Pty Ltd (recs and mgr apptd) v Campbell Street Theatre Pty Ltd [2011] NSWCA 128; (2011) 80 NSWLR 652 - Assenagon Asset Management SA v Irish Bank Resolution Corp Ltd (formerly Anglo Irish Bank Corp Ltd) [2012] EWHC 2090 (Ch); [2013] 1 All ER 495 - Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 - Australian Executor Trustees Ltd v Provident Capital Ltd [2012] FCA 728; (2012) 203 FCR 461 - Australian Securities and Investments Commission v Bridgecorp Finance Ltd [2006] NSWSC 636; (2006) 58 ACSR 499 - Australian Securities & Investments Commission v Edge [2007] VSC 170; (2007) 211 FLR 137 - BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266 - BL & GY International Co Ltd v Hypec Electronics Pty Ltd [2010] NSWSC 959; (2010) 79 ACSR 558 - Baburin v Baburin (No 2) [1991] 2 Qd R 240 - Bastion v Gideon Investments Pty Ltd (in liq) [2000] NSWSC 939; (2000) 35 ACSR 466 - Causley v Countryside (No 3) Pty Ltd (Court of Appeal (NSW), 2 September 1996, unrep) - Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 - Dodson v Sandhurst & Northern District Trustees Executors & Agency Co Ltd [1955] VLR 100 - Elder's Trustee & Executor Co Ltd v Higgins [1963] HCA 48; (1963) 113 CLR 426 - F&C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) [2011] EWHC 1731; [2012] Ch 613 - GIS Electrical Pty Ltd v Melsom [2001] WASC 314 - Hall, Re Australian Capital Reserve Ltd (admin apptd) [2007] FCA 1328 - Hardoon v Belilios [1901] AC 118 - Haulotte Australia Pty Ltd v All Area Rentals Pty Ltd (in liq) [2012] FCA 615; (2012) 90 ACSR 177 - Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653 - In the matter of Metal Storm Ltd (subject to Deed of Company Arrangement) [2014] NSWSC 615 - JPMorgan Chase Bank, National Association v Fletcher (as liquidator of Octaviar Ltd) (recs and mgrs apptd) (in liq) [2014] NSWCA 31; (2014) 306 ALR 224 - Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221 - Love v Rowtor Steamship Co Ltd [1916] 2 AC 527 - McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 - Maelor Jones Investments (Noarlunga) Pty Ltd v Heywood-Smith (1989) 54 SASR 285 - National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 - National Trustees Executors & Agency Co of Australasia Ltd v General Finance Co of Australasia Ltd [1905] AC 373 - Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 - Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 - Partridge v Equity Trustees Executors & Agency Co Ltd [1947] HCA 42; (1947) 75 CLR 149 - Perpetual Trustees WA Ltd v Elderslie Finance Corp Ltd [2008] FCA 1068 - Peter's American Delicacy Co Ltd v Heath (1939) 61 CLR 457 - Port of Brisbane Corporation v ANZ Securities Ltd [2001] 2 Qd R 51 - Re Centro Retail Australia Ltd [2012] VSC 240; (2012) 35 VR 512 - Re Charterhouse Capital Ltd Arbuthnott v Bonnyman [2014] EWHC 1410 - Re GDK Financial Solutions Pty Ltd (in liq) (No 3) [2008] FCA 448; (2008) 246 ALR 580 - Re Intercontinental Properties Pty Ltd (in liq) (1977) 2 ACLR 488 - Re Jax Marine Pty Ltd [1967] 1 NSWR 145 - Re Jick Holdings Pty Ltd (in liq) [2009] NSWSC 574; (2009) 234 FLR 22 - Re Kershaw [2005] NSWSC 313; (2005) 54 ACSR 214 - Re Orient Power Holdings Ltd [2008] 2 HKLRD 494 - Re Pan Pharmaceuticals Ltd [2003] FCA 855; (2003) 47 ACSR 139 - Re Parker; Strongest Link Pty Ltd (in liq) [2008] FCA 1007; (2008) 169 FCR 559 - Re Universal Distributing Co Ltd (in liq) [1933] HCA 2; (1933) 48 CLR 171 Redwood Master Fund Ltd v TD Bank Europe Ltd [2002] EWHC 2703 (Ch) - SingTel Optus Pty Ltd v Weston [2012] NSWSC 674; (2012) 90 ACSR 225 - Stewart v Atco Controls Pty Ltd [2014] HCA 15; (2014) 307 ALR 562 - Toyama Pty Ltd v Landmark Building Developments Pty Ltd (No 2) [2007] NSWSC 55 - Trust Company (Nominees) Ltd v Gippsland Secured Investments Ltd [2013] FCA 1393 - Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ASCR 642 - Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 - Walker v Giles (1848) 6 CB 662 - Wellnora Pty Ltd v Fiorentino [2008] NSWSC 483; (2008) 66 ACSR 229 Texts Cited: - Austin & Black's Annotations to the Corporations Act - H Ford and W Lee, Law of Trusts (4th ed 2010, Thomson Reuters) - JD Heydon and M Leeming, Jacobs' Law of Trusts in Australia (7th ed 2006, LexisNexis Butterworths) Category: Principal judgment Parties: Adam Shepard (in his capacity as deed administrator of Metal Storm Ltd) (First Plaintiff) Metal Storm Ltd (subject to a deed of company arrangement) (Second Plaintiff) ANZ Trustees Ltd (formerly ANZ Executors & Trustee Company Ltd) (First Defendant) The Australian Special Opportunity Fund, LP (Second Defendant) Representation: Counsel: V R Gray (Plaintiffs) C Scerri QC/H Austin/D Krochmalik (First Defendant) M R Hall (Second Defendant) Solicitors: Somerset Ryckmans (Plaintiffs) Ashurst Australia (First Defendant) Squire Sanders (Second Defendant) File Number(s): 2013/377450 Judgment Introduction 1These proceedings involve several issues arising in respect of the administration of Metal Storm Ltd (subject to a deed of company arrangement) ("Metal Storm"). The plaintiffs in the proceedings are Mr Adam Shephard as deed administrator of Metal Storm and Metal Storm. I will use the term "Deed Administrator" to refer both to Mr Shepard and Mr Farnsworth, who were joint deed administrators until Mr Farnsworth's retirement, and Mr Shepard who continued as sole deed administrator from that time, since it is not necessary to distinguish between the two for the purposes of this judgment. The First Defendant, ANZ Trustees Ltd, formerly known as ANZ Executors and Trustee Co Ltd ("ANZ Trustees"), is the trustee in respect of secured and unsecured notes issued by Metal Storm. The Second Defendant, The Australian Special Opportunity Fund LP ("ASOF"), is a limited partnership constituted under the laws of Delaware in the United States of America and is managed by another entity, The Lind Partners LLC ("Lind Partners"). ASOF holds a small number of convertible notes issued by Metal Storm. ASOF also holds 88,112,393 secured notes that it acquired at a substantial discount prior to the appointment of administrators to Metal Storm and presently holds approximately 86% in the number and value of the secured notes issued by Metal Storm. The remaining 14% of secured notes not held by ASOF are held by approximately 353 other secured note holders. 2The proceedings were commenced by an Originating Process filed on 16 December 2013 by the Deed Administrator and Metal Storm, and sought declaratory relief as to issues arising from the Convertible Notes Trust Deed dated 11 July 2006 ("Convertible Notes Trust Deed") between Metal Storm and ANZ Trustees (CB 5/1102) and the Metal Storm Security Trust Deed Secured Notes dated 31 July 2009 ("Security Trust Deed") (CB 5/1153) between the same parties. The Plaintiffs also sought, in effect, an order that, if the construction of the trust deeds for which they contended was not correct, the Deed Administrator be appointed as receiver of the assets and undertaking of Metal Storm. 3The Plaintiffs rely on the Deed Administrator's affidavit dated 16 December 2013. The Deed Administrator's evidence is that his view is that it is essential to sell Metal Storm's remaining assets which include an interest in a US subsidiary and patent and other intellectual property rights, the maintenance of which requires continued funding. The Deed Administrator notes that funding has to date been provided by ASOF but further funding is not assured and the lapse of the patents would bring about a deterioration in the remaining value of Metal Storm. The Deed Administrator cannot proceed to a sale of Metal Storm's assets unless ANZ Trustees releases its security over those assets and ANZ Trustees has not been prepared to release that security in the circumstances to which I will refer below. The Plaintiffs also relied on the Deed Administrator's further affidavit dated 7 March 2014, which dealt with the appointment of the administrators, funding during the administration period and proposals in relation to the entry into a deed of company arrangement. 4By a Second Further Amended Interlocutory Process filed on 14 April 2014, ANZ Trustees in turn seeks declarations that, broadly, it was not required to comply with a written direction dated 13 December 2013 given by ASOF ("December 2013 Direction"); that the administration is not an "enforcement" for the purposes of the Security Trust Deed; orders for the appointment of persons other than the Deed Administrator as receivers of the assets and undertaking of Metal Storm; declarations that it is entitled to an indemnity secured by an equitable lien in respect of certain amounts; directions that ASOF is obliged to pay certain amounts or indemnify ANZ Trustees against those amounts; and orders that the Deed Administrator pay certain amounts to ANZ Trustees. ANZ Trustees also seeks directions under s 283HA of the Corporations Act 2001 (Cth) and relief under s 85 of the Trustee Act 1925 (NSW), including in respect of the fact that ANZ Trustees did not appoint a controller to Metal Storm within the decision period (as described below) after it was placed in administration. ANZ Trustees relies on the affidavits of Mr Michael Budnow dated 6 February 2014, 20 February 2014, 7 March 2014 and 14 May 2014. 5By Interlocutory Process dated 7 March 2014, ASOF seeks orders as to the admission of its proof of debt by the Deed Administrator or, in the alternative, a declaration that ANZ Trustees is obliged to attend and vote at a creditors' meeting in accordance with its instructions. Other noteholders whose interests may well be adversely affected by the declarations sought by ASOF were not joined by ASOF as parties to the proceedings, a matter to which I drew attention in an earlier judgment delivered on 15 April 2014 ([2014] NSWSC 615). However, in the particular circumstances, it seemed to me that ANZ Trustees served as a proper contradictor in respect of the issues determined in this judgment: compare Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653. ASOF also filed a Cross-Claim seeking damages against ANZ Trustees on 9 April 2014, to which ANZ Trustees filed an Amended Defence. ASOF relies on the affidavit of the Managing Partner of Lind Partners, Mr Jeffrey Easton, dated 20 February 2014. 6On 17 April 2014, I made an order for the purposes of Pt 28 of the Uniform Civil Procedure Rules 2005 (NSW) that all issues other than the quantum of any loss suffered or claimed by ASOF be determined separately and before any determination of the quantum of that loss. Background facts 7The background facts to this application are generally not in dispute. Metal Storm was listed on Australian Securities Exchange Ltd until 30 August 2013. Metal Storm's primary business was the development of defence technologies for government agencies and departments and for the defence industry and it is the registered owner of numerous patents, trademarks and website domain registrations (Shepard 16.12.2013 [7]). Metal Storm also owns 49% of the common stock in Metal Storm Inc ("MSI"), a company incorporated in Delaware in the United States which is engaged in a similar business in the United States. 8Metal Storm initially issued unsecured notes on the terms of the Convertible Notes Trust Deed. There are on issue 32.2 million unsecured convertible notes, with a face value of $4.379 million and PNG Port Corporation owns 69.8% of the unsecured convertible notes and ASOF holds a small number of notes. While the Convertible Notes Trust Deed was only in evidence in an unexecuted form (CB 5/1102), all parties accepted that that was the operative version of that document. Clause 7.1 of the Convertible Notes Trust Deed set out the trustee's obligations and cl 7.4 provides that ANZ Trustees will, as regards all the powers, authorities and discretions vested in it by that trust deed, have absolute and uncontrolled discretion as to the exercise or non-exercise of those powers and limits its responsibility in that regard. I will refer to cll 7.6 and 7.8 of the Convertible Notes Trust Deed below. Clause 7.11 contains a wide exclusion of liability of ANZ Trustees. 9The unsecured convertible notes issued by Metal Storm were divided into two classes of notes, being secured notes and interest bearing notes on or about 31 July 2009 (Shepard 16.12.2013 [11]). ANZ Trustees and Metal Storm are party to a Security Trust Deed dated 31 July 2009 in respect of the secured notes (CB 5/1153). Clause 17.1 of the Security Trust Deed provides that it is governed by and construed in accordance with the laws of Queensland. There was no suggestion that the laws of Queensland were different, in any relevant respect, from the laws of New South Wales. I will refer to other relevant provisions of the Security Trust Deed below. 10ANZ Trustees also holds a fixed and floating charge dated 31 July 2009 ("Charge") (CB 5/1054) over Metal Storm's assets as security in respect of its obligations under secured notes. Clause 1.7 of the Charge provides that each Security Interest (as defined in the Charge) under the Charge is held by ANZ Trustees as trustee for the Beneficiaries (as defined) under the Security Trust Deed. By cl 3.1 of the Charge, Metal Storm charged the Secured Property to ANZ Trustees for itself and as trustee for the Beneficiaries to secure the payment of the Secured Money. The term "Secured Property" is defined as any legal or equitable estate or interest in any present or future undertaking and property of Metal Storm. The appointment of an administrator to Metal Storm was an event of default under the Charge, and the floating charge under the Charge automatically converted into a fixed charge over the whole of the Secured Property on that appointment. The Charge provided that ANZ Trustees could sell the Secured Property or appoint a receiver or receiver and manager of the Secured Property while an event of default subsisted. Those provisions were subject to the provisions of the Security Trust Deed and, during an administration, they were also subject to Pt 5.3A Div 6 of the Corporations Act. 11On 26 July 2012, Metals Storm was placed in voluntary administration by resolution of its directors under s 436A of the Corporations Act and joint voluntary administrators including Mr Shephard were appointed (CB 2/108). It is common ground that the "decision period" as defined in s 9 of the Corporations Act commenced on 27 July 2012 and expired on 15 August 2012 and that ANZ Trustees did not appoint a controller (as also defined in s 9 of the Corporations Act) to Metal Storm in that period. 12The administrators issued their report to creditors under s 439A of the Corporations Act on 22 August 2012 including a proposal for a deed of company arrangement ("Initial DOCA") advanced by ASOF (CB 2/129). A supplementary report was sent to creditors under s 439A of the Corporations Act on 24 October 2012 (CB 2/186). On 30 October 2012, ANZ Trustees invited ASOF, as majority note holder, to instruct ANZ Trustees to vote in favour of the Initial DOCA at the second meeting of creditors and ASOF provided that instruction on 31 October 2012 (Easton 20.2.2014 [22]). 13At the second meeting of creditors of Metal Storm held on 1 November 2012, a resolution to approve the Initial DOCA was moved by a representative of ANZ Trustees and it voted its notes in favour of the resolution (CB 2/178), which was approved by creditors. The Initial DOCA provided for a restructure of the share capital and recapitalisation of Metal Storm, by which secured notes would have been converted into ordinary shares in the capital of Metal Storm and there would have been a share consolidation and a further share placement by Metal Storm to ASOF which would then have held up to 95% in the issued shares in Metal Storm. The remaining 5% of the issued share capital in Metal Storm would then be held by existing shareholders and the remaining secured note holders (Easton 20.2.2014 [18]). The Initial DOCA also provided for ASOF to enter into a loan agreement with Metal Storm to provide further funding in the amount of approximately $1 million which would form a deed fund under the DOCA to pay the administrator's remuneration and expenses and employee claims in full and a small dividend to unsecured creditors (cl 3.2(g)); that it did not affect any right or interest of secured creditors of Metal Storm (which would include ANZ Trustees) although they may have voted in favour of the DOCA (cl 4.2); and that newly appointed directors of Metal Storm, nominated by ASOF, would have its day-to-day management (cl 6). The conditions precedent to the Initial DOCA were not satisfied within 6 months of its execution as required by its terms. 14ASOF provided funding to the voluntary administrators during the period of the voluntary administration, including funding used by MSI, and has continued to fund those operations since the Initial DOCA (Easton 20.2.2014 [12]). On 20 December 2012, ASOF, the voluntary administrators and Metal Storm entered into a loan agreement. 15A further report by the Deed Administrator dated 2 August 2013 (CB 2/300) set out a proposed variation of the DOCA ("First DOCA Variation Proposal") to be considered at a meeting of creditors. Broadly, the First DOCA Variation Proposal provided for a sale of Metal Storm's assets by the Deed Administrator to ASOF's US subsidiary, LSOS LLC ("LSOS"). The consideration payable by LSOS was stated as $2,300,000, but the amount of loan advances by ASOF was to be set off against part of the amount payable and the balance was to be satisfied by extinguishing amounts owed by Metal Storm to ASOF or associated entities under secured notes to the value of $1,500,000. The First DOCA Variation Proposal also provided that the Deed Administrator would establish a deed fund after completion of the sale, into which the Deed Administrator would pay cash on hand or at bank, the net proceeds of sale under the Asset Sale Agreement and a further amount of $50,000 to be paid by ASOF. The Deed Fund was in turn to be distributed in a specified order of priorities, the first priority being $50,000 (corresponding to the amount paid by ASOF) to secured note holders, and subsequent priorities including the Deed Administrator's remuneration and costs, priority creditors and other creditors. 16By letter dated 7 August 2013 ("August 2013 Direction") (CB 2/361), Lind Partners (presumably acting on behalf of ASOF) gave a direction to ANZ Trustees to attend a meeting of creditors proposed to be held on 12 August and vote in favour of the First DOCA Variation Proposal and in a specified manner in respect of other resolutions. The basis of that direction was stated to be that, relevantly, ASOF's Secured Notes represented approximately 86% of the 102,292,874 secured notes under the Security Trust Deed and 66% of all secured and unsecured notes the subject of the Convertible Notes Trust Deed; cl 4.1 of the Security Trust Deed "provides that the Security Trustee must act if it receives clear instructions in writing by the Secured Note Holders holding not less than 50% in nominal value of the Secured Notes"; cl 7.6 of the Convertible Notes Trust Deed "requires the Security Trustee to exercise its powers where a Default Event has occurred if requested in writing by Note Holders holding not less than 50% in nominal value of the Notes as at the date of such request"; and a Default Event had occurred as Metal Storm was subject to the Initial DOCA. The letter stated that it: "... shall constitute a request in writing for the purposes of clause 7.6 of the [Convertible] Note Trust Deed and clause 4.1 of the Security Trust Deed that [ANZ Trustees] exercises its right and power to vote at the Meeting by lodging the Proxy Form and Proof of Debt Form in the manner and form requested above." This direction relies on cl 4.1 of the Security Trust Deed and cl 7.6 of the Convertible Notes Trust Deed to which I will refer below. 17ANZ Trustees replied, through its solicitors, by letter dated 9 August 2013 and did not accept that it was required to act upon "unilateral instructions" from ASOF (CB 2/372) and identified reasons for not complying with that direction including the circumstances of the proposed transaction, and also required an indemnity to be given by ASOF supported by a bank guarantee and that it should be put in sufficient funds to meet likely costs and expenses of complying with the direction (CB 2/373). By letter also dated 9 August 2013 to the Deed Administrator, ANZ Trustees sought further information and advised that it proposed to seek an adjournment of the proposed creditors' meeting scheduled to consider the First DOCA Variation Proposal and hold any necessary meeting of all unsecured and secured note holders to obtain those instructions (CB 2/375). 18Prior to the proposed second meeting of creditors on 12 August 2013, ANZ Trustees' solicitors also notified the Deed Administrator of ANZ Trustees' position that it was not possible for ANZ Trustees to discharge its security as part of a sale of Metal Storm's assets to ASOF or LSOS, as contemplated by the First DOCA Variation Proposal, unless secured note holders unanimously instructed ANZ Trustees to discharge that security or there was an "enforcement" of the security within the meaning of that term in cl 6.1(c) of the Security Trust Deed (Shepard 16.12.2013 [29]). I will address that matter further below. 19Further meetings to consider proposals for a variation of the Initial DOCA were subsequently convened but adjourned in the second half of 2013. 20By email dated 13 September 2013 (CB 2/395), the solicitors for ANZ Trustees advised the solicitors for the Deed Administrator and solicitors for ASOF of concerns in respect of the First DOCA Variation Proposal, including that it: * "gives preferential recoveries to one secured noteholder (ASOF) that are not extended to other secured note holders; * seeks to repay funding extended to the administrators (by ASOF) before repayment of secured note holders (who have priority right of payment); * sells the Metal Storm business to a subsidiary of ASOF against the background of the above circumstances; * does not pay the Trustee's fees and expenses, which have first priority ahead of all other stakeholders, including secured note holders; and * leaves Metal Storm, the entity, in an uncertain state, not having produced its statutory accounts for a long time." By the same email, ANZ Trustees invited ASOF to instruct it to appoint receivers to Metal Storm, on the basis that ASOF would provide a wide indemnity to ANZ Trustees, which would have established an "enforcement" for the purposes of cl 6.1(c) of the Security Trust Deed, to which I will refer below. 21In late October or early November 2013, ASOF's solicitors sent ANZ Trustees' solicitors a further revised DOCA proposal by ASOF ("Second DOCA Variation Proposal"), which was not in evidence but is referred to in a letter dated 21 February 2014 from ASOF's solicitors (CB 3/770) which, it appears, proposed to amend the terms in respect of the establishment of the deed fund and provided that LSOS would, if requested by a secured noteholder, issue that noteholder shares in it so that it would hold a percentage interest in LSOS equal to its percentage interest in the secured notes (Budnow 6.2.2014 [55]). 22By letter dated 11 December 2013 from its solicitors (CB 2/417), ANZ Trustees took the position that, in the absence of a unanimous direction of all secured note holders instructing it to discharge its security as part of a sale of Metal Storm's assets, that security could only be released and discharged pursuant to an "enforcement" within the meaning of the Security Trust Deed. I will refer to that concept below. That letter proposed that secured note holders instruct ANZ Trustees to appoint receivers, but emphasised the breadth of the indemnity which it sought, noting that: "the Trustee has repeatedly requested, through discussion between [ANZ Trustees' solicitors] and [ASOF's solicitors], and otherwise, that ASOF provide an indemnity to the Trustee in connection with both past costs and expenses incurred for the trust to date, and liabilities to be incurred in connection with the Trustee appointing a receiver to the Company." At this point, the indemnity sought by ANZ Trustees was arguably substantially wider than that to which it may be entitled so as to protect it against liability in respect of the appointment of any receiver, extending not only to the costs and any liability that would be incurred in respect of the appointment of a receiver but also past costs in respect of both the trusts constituted by the Convertible Notes Trust Deed and the Security Trust Deed. ASOF did not, as it might have done, then offer an indemnity limited to the costs and any liability arising from the appointment of a receiver or, indeed, any indemnity. 23On 13 December 2013, ASOF gave a further written instruction (CB 2/283-485) ("December 2013 Direction") to ANZ Trustees, relying on cll 4.1 and 6.1 of the Security Trust Deed, which stated that it reflected an extraordinary resolution of note holders (as defined in the Convertible Notes Trust Deed) under cl 15.12(a) of the Convertible Notes Trust Deed and that ASOF, as a noteholder holding approximately 86% of the notes, resolved that: "ANZ Trustees Limited ... as the Trustee under the Convertible Notes Deed and the Security Trustee under the Metal Storm Security Trust Deed (Secured Notes) dated 21 July 2009 (Security Trust Deed): (a) be directed by the Note Holders or by The Australian Special Opportunity Fund on behalf of Note Holders (or otherwise be directed by the passing of this extraordinary resolution) to release and discharge the fixed and floating charge held by it over the assets and undertaking of the Company, in the event the Deed Administrator ... is able to sell the Company's assets to a purchaser on terms reasonably acceptable to [ASOF]; and (b) be expressly permitted to provide this release and discharge (as referred to in paragraph (a) above) under clause 6.1(c) of the Security Trust Deed without the need for any further consent or instructions from any of the [B]eneficiaries under the Convertible Notes Trust Deed." 24By letter dated 21 February 2014 from ASOF's solicitors (CB 3/770) ("February 2014 Direction"), ASOF directed that ANZ Trustees vote in favour of a resolution that the terms of the Initial DOCA be varied as set out in a notice of meeting to creditors dated 17 February 2014 (CB 3/613) and vote in a specified manner in respect of other resolutions at an adjourned creditors meeting proposed to be held on 3 March 2014 or an adjournment of that meeting, and also reiterated the direction to ANZ Trustees to discharge the Charge if Metal Storm's assets were sold to a purchaser on terms reasonably acceptable to ASOF as instructed by the December 2013 Direction. 25Further meetings of creditors under s 445F of the Corporations Act to consider a variation of the Initial DOCA have been held but adjourned in the first half of 2014. Whether ANZ Trustees is obliged to comply with the December 2013 Direction 26By paragraph 1 of the Originating Process, the Deed Administrator and Metal Storm seek a declaration in the following terms: "A declaration that upon the true construction of the [Convertible Notes Trust Deed] and the [Security Trust Deed], [ANZ Trustees] (as the Security Trustee under the Security Trust Deed) is bound to release any Security Document (as that term is defined in the Security Trust Deed) once it has received clear instructions to do so from a Secured Note Holder or Secured Note Holders holding not less than 50% in nominal value of the Secured Notes at the date of the instruction and that the [December 2013 Direction] constitutes such a clear instruction." 27In his written opening submissions, the Deed Administrator contended that ANZ Trustees was obliged to release its Charge pursuant to the December 2013 Direction and was able to rely on the exception provided under cl 6(c)(i) of the Security Trust Deed to which I will refer below. The Deed Administrator pointed out that the December 2013 Direction, at least purportedly, constituted an "express permission" for ANZ Trustees to provide that release without the need for further consent or instructions from any of the Beneficiaries under the Convertible Notes Trust Deed. In oral closing submissions, the Deed Administrator took the position that whether that declaration should be made was an issue between ANZ Trustees and ASOF and did not further address on that matter, other than to indicate that he supported the position adopted by ASOF in that regard. 28By paragraph 2 of the Originating Process, the Deed Administrator and Metal Storm also sought a wider order or direction: "That subject to creditors of [Metal Storm] approving a variation of the deed of company arrangement permitting the deed administrators to sell the assets and undertakings of [Metal Storm], [the Deed Administrator] and [Metal Storm] sell all the assets and undertaking of the Company by such mode of sale, on such terms and conditions, and for the best price or prices reasonably obtainable, as [the Deed Administrator] and [Metal Storm] think fit and otherwise in accordance with the terms of any varied deed of company arrangement and that [ANZ Trustees] within 28 days of the date of this order or within such other period or periods as the Court thinks fit deliver to [the Deed Administrator] and [Metal Storm] a discharge and release or such discharges and releases of its security or securities over the assets and undertaking of the Company as may be reasonably required to enable such sale or all such sales to be duly completed." In submissions, Mr Gray, who appears for the Deed Administrator and Metal Storm, did not press that order or direction, which he accepted was consequential upon the dispute as to the validity of the December 2013 Direction and did not address that matter on the basis that it was also in issue between ANZ Trustees and ASOF (T116). 29By paragraph 2 of its Interlocutory Process filed on 7 March 2014, ASOF also sought declaratory relief in respect of the same matter, but in broader terms than that sought by the Deed Administrator. ASOF did not press for that broader declaration, at least if the first and second orders sought by the Deed Administrator in the Originating Process were made. In the event, the Deed Administrator did not press the second order sought in the Originating Process and the first order will not be made for the reasons set out below. It does not seem to me that the broader declaration sought by ASOF could be made, even if it were pressed, where the narrower declaration cannot be made for the reasons noted below. 30Conversely, by paragraphs 1 and 1A of its Second Further Amended Interlocutory Process, ANZ Trustees sought a declaration that it was not obliged to comply with the December 2013 Direction or alternatively a direction under s 283HA of the Corporations Act that it was justified in proceeding on that basis or an order under s 85 of the Trustee Act that it be relieved from liability for having done so. 31There was no controversy between the parties as to the approach to be adopted in the construction of the Security Trust Deed and Convertible Notes Trust Deed, although there were differences between them as to the construction that was to be adopted, which involves matters of real difficulty. In Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36; (1973) 129 CLR 99 at 109, Gibbs CJ observed that: "It is trite law that the primary duty of a court in construing a written contract is to endeavour to discover the intention of the parties from the words of the instrument in which the contract is embodied. Of course the whole of the instrument has to be considered, since the meaning of any one part of it may be revealed by other parts, and the words of every clause must if possible be construed so as to render them all harmonious one with another. If the words used are unambiguous the court must give effect to them, notwithstanding that the result may appear capricious or unreasonable, and notwithstanding that it may be guessed or suspected that the parties intended something different. The court has no power to remake or amend a contract for the purpose of avoiding a result which is considered to be inconvenient or unjust. On the other hand, if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust." Attention must be given to the language used by the parties and the commercial circumstances that the document addresses and the objects that it is intended to secure: McCann v Switzerland Insurance Australia Ltd [2000] HCA 65; (2000) 203 CLR 579 at 589 [22]. In Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22], the High Court noted that: "The construction of commercial contracts is to be determined by what a reasonable person in the position of [the contracting party] would have understood them to mean .... That requires consideration, not only of the text of the documents, but also the surrounding circumstances known to the parties, and the purpose and object of the transaction ..." [citations omitted] The relevant principles were summarised by Bergin CJ in Eq in Carlow Castle Pty Ltd trading as Greenhill Capital Partners v Aztec Resources Ltd [2014] NSWCA 123 at [70] (with whom Barrett JA agreed at [1]) as including, relevantly, that the meaning of words in a contract is to be determined objectively, with attention to be given to the language of the contract, the commercial circumstances the contract addresses, the purpose of the transaction and the objects intended to be secured by it. 32The December 2013 Direction, which I set out in paragraph 23 above, relied on cll 4.1 and 6.1 of the Security Trust Deed and cl 15.12 of the Convertible Notes Trust Deed. It will be necessary to refer to those clauses and the somewhat complex interaction between them. Clause 4.1 of the Security Trust Deed provides that: "Subject to this document, the Security Trustee must, and is only obliged to, act if and only if it receives clear instructions to do so (either in writing or by means of a resolution of Secured Note Holders passed at a meeting convened and conducted in accordance with clause 15 of the Convertible Notes Trust Deed) by the Secured Note Holders holding not less than 50% in nominal value of the Secured Notes as at the date of such instruction." This provision is expressly subject to the Security Trust Deed, and other provisions in it. Clause 4.2 of the Security Trust Deed in turn provides that: "The Security Trustee is not obliged to act in the absence of instructions from the Beneficiaries in the manner contemplated by clause 4.1, but may so act in what it (in its sole discretion) considers to be the best interests of all the Beneficiaries." ASOF contends, and I accept, that the reference in cl 4.2 to the fact that the trustee is not obliged to act in a particular way, absent an instruction under cl 4.1, contrasts with the mandatory character of cl 4.1. There is also no requirement in cl 4.1 corresponding to the requirement for the trustee to consider the best interests of all Beneficiaries found in cl 4.2. 33Clause 4.11 of the Security Trust Deed then provides that: "Despite any other provision of [the Security Trust Deed], the Security Trustee need not act (whether or not on instructions from one or more of the Beneficiaries) if: (a) it is impossible to act or to act lawfully due to any cause beyond its control...; (b) unless its liability is limited as set out in clause 2 [of the Security Trust Deed.] No Beneficiary may take action or have recourse to the Security Trustee where the Security Trustee does not act on the Beneficiary's instructions as contemplated by clause 4.11." ASOF contends that this clause is to be understood as creating three categories where the trustee is not obliged to follow a direction, namely, acts that are made impossible by a cause beyond the trustee's control; acts that are made unlawful by a cause beyond the trustee's control; and acts in respect of which the trustee does not enjoy the limits on liabilities set out in cl 2. In oral submissions, Mr Hall, who appeared for ASOF, acknowledged that there was a potential ambiguity in the clause as to whether the exceptions for both impossibility and unlawfulness, or only unlawfulness, were qualified so as to exclude a position arising from an act of the security trustee, but it is not necessary to determine that matter since no question of impossibility arises in this case. 34Clause 4.11 of the Security Trust Deed in turn refers to cl 2 of the Security Trust Deed. Clause 2.1(a) of the Security Trust Deed provides that, subject to cl 2.2, ANZ Trustees is not liable to "any party" for, among other things, any loss or damage occurring as a result of it exercising any Power (as defined) under the Security Trust Deed or in relation to any Security Document, which includes the Charge. Clause 2.1(d) in turn provides that ANZ Trustees shall not be liable to any party for any other matter or thing done, or not done, in relation to the "Security Document", relevantly the Charge. Clause 2.2 provides that the exclusion of liability is not available where ANZ Trustees or its employees, agents or officers has been guilty of fraud, negligence or breach of trust or wilful act, omission or default. 35It is now necessary to address whether the requirements of cll 2 and 4.11(b) of the Security Trust Deed were satisfied in respect of the December 2013 Direction so as to require ANZ Trustees to act on that direction. This depends in part on the proper construction of cl 2 of the Security Trust Deed. Mr Hall contended, in oral submissions, that it was difficult to understand the reference in cl 4.11(b) of the Security Trust Deed to cl 2 of the Security Trust Deed, because it was difficult to envisage a circumstance in which the ANZ Trustees would not have the benefit of that clause. It seems to me that cl 4.11(b) cannot be read, as that submission assumed, as merely requiring that there exist a limitation on the trustee's liability in the terms of cl 2 of the Security Trust Deed. ANZ Trustees' liability was necessarily limited by the terms of that clause, so far as it existed in the Trust Deed, and a reading of cl 4.11(b) as requiring no more that the existence of that limitation would render that paragraph superfluous. In oral submissions, Mr Hall raised a second possible construction of cl 4.11(b), that it might be intended to address the position where majority note holders, in requiring the ANZ Trustees to take an action, expressly sought to impose liability upon it inconsistent with the terms of cl 2 (T130). It does not seem to me that cl 4.11(b) was likely to be required to address that possibility, because it is by no means clear that such a course would prevail over cl 2, and it seems to me that cl 4.11(b) has wider operation. 36A third possible construction of cl 4.11(b) is that the paragraph is directed, for example, to the position where an exception to cl 2 is established such that the indemnity under that clause is not available. This construction in turn raises the difficulty that the limitation of liability in cl 2 is excluded in respect of conduct that is negligent or in breach of trust but also in respect of any "wilful act, omission or default". Both ASOF and ANZ Trustees contended that those words could not be read literally, so that ANZ Trustees was not deprived of the limitation on liability simply because an act was deliberately undertaken. This reading of the exception is supported by s 59(2) of the Trustee Act, which provides that a trustee is not liable for loss unless that loss happens through the trustee's own wilful neglect or default. Section 59(3) of the Trustee Act in turn states that subsection (2) shall not prejudice the provisions of the instrument creating the trust. ANZ Trustees submits, and I accept, that the better reading of the phrase "fraud, negligence or breach of trust" is that it refers to wilful breaches of trust, consistent with the provisions of section 59(2) and the use of the term "wilful" to qualify the subsequent words "act, omission or default". If the contrary view were undertaken, the limitation in cl 2 would have a narrow, and possibly illusory, operation, because it would not be available even in respect of an act taken deliberately albeit reasonably and in good faith. I accept that the better view of the section is that for which ASOF and ANZ Trustees contend and, on that view, that clause potentially has effect so as to limit ANZ Trustee's liability in respect of a deliberate failure to comply with the December 2013 Direction, subject to the other issues noted below. 37A fourth possible construction of cl 4.11(b), which seems to me to be the proper construction of the clause, is that it requires that the limitation contained in cl 2 have legal effect in the relevant circumstance. That in turn raises a further complexity. That clause limits ANZ Trustees' liability to the "parties" to the Security Trust Deed, and the named parties to that document are ANZ Trustees and Metal Storm, so there is a question whether that clause limits ANZ Trustees' liability in respect of Beneficiaries (as defined) under the Security Trust Deed, relevantly, the secured note holders. By contrast, several other provisions of the Security Trust Deed expressly refer to limitation of liability to the Beneficiaries of the Security Trust Deed, in a manner that cl 2.1 does not: for example, cl 4.13(b) expressly refers to the fact that the trustee is "not liable to any Beneficiary or the Company" in the situations addressed in that clause, and cl 4.15 of the Security Trust Deed limits the trustee's liability to any "Beneficiary" in respect of specified matters. The term "party" has been held, in the context of determining who is a "party" to litigation, to be capable of having a wider meaning depending on its context: JP Morgan Chase Bank, National Association v Fletcher (as liquidator of Octaviar Ltd) (recs & mgrs apptd) (in liq) [2014] NSWCA 31; (2014) 306 ALR 224 at [100]ff. An extended meaning of that term is supported by cl 1.11(b) of the Security Trust Deed which provides that a Beneficiary is bound by it. The exclusions in cl 2.1 also point to an extended meaning of that term, excluding liability, inter alia, for any failure by Metal Storm to perform specified obligations or any statement, representation or warranty of Metal Storm being incorrect or misleading. Those exclusions would have little purpose if they only had effect in relation to liability to Metal Storm and not wider effect in respect of secured note holders. On balance, it seems to me that the word "party" in cl 2.1 extends beyond the named parties to the Security Trust Deed to secured note holders; that clause potentially applies to limit ANZ Trustees' liability to secured note holders; and that clause would potentially have effect so as to limit ANZ Trustees' liability in respect of the subject matter of the direction, so that the exception in cl 4.11(b) of the Security Trust Deed, if that clause does not apply, is not established. 38ASOF also draws attention to cl 4.13 of the Security Trust Deed which provides that the trustee has protection when acting on instructions even if the instruction later turns out to be invalid. It does not seem to me that that clause assists in determining the question posed by the second paragraph of cl 4.11 of the Security Trust Deed, which is whether the trustee's liability is limited by cl 2 of the Security Trust Deed. 39It is now necessary to turn to cl 6.1 of the Security Trust Deed. Clause 6.1(a) of the Security Trust Deed provides that, except as expressly provided in the "Security Documents" (which includes the Security Trust Deed and the Charge), the Security Trustee must act only on, and exercise its "Powers" in accordance with, the instructions of secured note holders as provided under cl 4.1 of the Security Trust Deed. Clause 6.1(c) of the Security Trust Deed provides that the instructions of all Beneficiaries are required to release the Charge except where ANZ Trustees is expressly permitted to provide such release without the need for any further consent or instructions from any Beneficiaries under the Convertible Notes Trust Deed or upon an enforcement in accordance with the Security Trust Deed or the Charge. Clause 6.2 of the Security Trust Deed provides that, unless ANZ Trustees receives instructions from the applicable Beneficiaries in accordance with the Security Trust Deed or the Charge, ANZ Trustees is not bound to exercise any power or take any other action under the Charge. 40ANZ Trustees contends, and I accept, that there is an inconsistency between cl 4.1 of the Security Trust Deed so far as it provides for directions to ANZ Trustees (which at least in this case purportedly extended to a direction to release the Charge) and cl 6.1(c) so far as it limits the circumstances in which ANZ Trustees may release the Charge. ANZ Trustees relies on the principle of construction that the specific (cl 6.1(c)) overrides the general (cl 4.1). It seems to me that it is not necessary to have regard to that principle, since cl 6.1(c) prevails, in the event of any inconsistency, by reason that it is unqualified whereas cl 4.1 is expressly "[s]ubject to this document". ANZ Trustees also submits that cl 4.1 of the Security Trust Deed is also to be read subject to cl 4.11 of the Security Trust Deed. That seems to me also to follow from the opening words of cl 4.1 by which it is subject to other provisions in the Security Trust Deed. The result of these provisions is that the limitations under cl 6.1(c) apply to the circumstances in which ANZ Trustees must release the Charge even if a direction has been given under cl 4.1, and that, absent consent of all Beneficiaries under the Security Trust Deed - that is, both the secured note holders and ANZ Trustees - ANZ Trustees is only obliged to appoint a receiver if one of the exceptions to cl 6.1(c) is satisfied. 41Clause 6.1(c)(i) of the Security Trust Deed in turn allows the release of the Charge, without the instructions of all Beneficiaries under the Security Trust Deed: "where [ANZ Trustees] is expressly permitted to provide such release without the need for any further consent or instructions from any of the Beneficiaries under the Convertible Notes Trust Deed." There is an ambiguity in this paragraph, since it is unclear whether it is intended to refer to a permission arising under the terms of the Convertible Notes Trust Deed or a permission provided in a manner permitted by the terms of the Convertible Notes Trust Deed, such as a resolution of note holders under cl 15.11 or a written direction under cl 15.12. A third possibility, that the paragraph refers to a permission given by persons who are "Beneficiaries under the Convertible Notes Trust Deed", can be excluded, because the Convertible Notes Trust Deed does not use the defined term "Beneficiaries", which is used in the Security Trust Deed. 42The December 2013 Direction appears to assume, in paragraph (b) (as set out in paragraph 23 above), that an express permission to provide a release of the Charge without the need for any further consent or instructions from any of the Beneficiaries under the Convertible Notes Trust Deed could be given, for the purposes of cl 6.1(c)(i) of the Security Trust Deed, by a majority of the holders of secured notes, and specifically by ASOF, in the manner provided by cll 15.11 and 15.12 of the Convertible Notes Trust Deed. 43Clause 6.1(c)(i) does not indicate the source of the express permission that it contemplates. It is common ground between the parties that there is no express provision contained in the Convertible Notes Trust Deed by which holders of convertible notes give the relevant consent or instruction for the purposes of cl 6.1(c)(i) of the Security Trust Deed. ANZ Trustees contends that the exception in cl 6.1(c)(i) of the Security Trust Deed does not apply because there are no provisions in the Convertible Notes Trust Deed that on their express terms empower a release of security without further consent or instruction. In oral submissions, Mr Hall contended that no further permission was required, where the Convertible Notes Trust Deed did not contain any restriction on the capacity to release the security, so that the security trustee was always in a position to act without further consent or instructions from the Beneficiaries under the Convertible Notes Trust Deed (T20). However, it does not seem to me that the absence of a prohibition under the Convertible Notes Trust Deed can be equated to an "express permi[ssion]" under that deed. 44The Deed Administrator in turn pointed out that ANZ Trustees' construction of cl 6.1(c)(i) of the Security Trust Deed, as requiring an express permission that does not exist in the Convertible Notes Trust Deed, would leave that paragraph with no operative effect. There is substantial force in that submission, so far as the Security Trust Deed was entered at a time the Convertible Notes Trust Deed contained no such provision. It is unlikely that, on its objective construction, cl 6.1(c)(i) would be directed only to a matter that could not be satisfied, at least as the Convertible Notes Trust Deed then stood. On balance, it seems to me that, on its proper construction, the paragraph is directed to an express permission given by secured note holders in the manner which such permission can be given under the Convertible Notes Trust Deed, namely, by a resolution passed in accordance with cl 15 of the Convertible Notes Trust Deed. 45It seems to me that this view is supported by cl 6.1(a) of the Security Trust Deed, which contemplates that "instructions of the Beneficiaries" can be given to the Security Trustee as provided in cl 4.1, the terms of which I set out in paragraph 32 above. That clause contemplates the giving of instructions by secured note holders by the specified mechanism, by a written direction or resolution under cl 15 of the Convertible Notes Trust Deed, which could include the giving of the "express permi[ssion]" contemplated by cl 6.1(c) of the Security Trust Deed. This construction of the relevant provisions is at least not inconsistent with s 283EA of the Corporations Act, which requires the trustee of a trust deed for debentures to comply with directions given to it at a debenture holders' meeting called by the borrower or trustee or ordered by the Court, other than in the circumstances specified in that section. 46I now turn to cll 15.11 and 15.12 of the Convertible Notes Trust Deed. Clause 15 of the Convertible Notes Trust Deed deals with meetings of note holders, and cl 15.11 deals with the powers of such a meeting and lists matters that may be determined by a special resolution of note holders. ANZ Trustees contends that cl 15.11 does not include a power to release security, even by special resolution. However, that clause includes an express power to: "authorise the Trustee to take, or to refrain from taking, any action which may be taken by the Trustee under any express or implied power or authority however conferred." On its face, that power extends to actions that might be taken under the Security Trust Deed and the Charge, which would include the release of the Charge. A proviso at the end of cl 15.11 of the Convertible Notes Trust Deed provides that, if, in the opinion of the Convertible Note Trustee, an extraordinary resolution of note holders proposed "directly or indirectly especially prejudices or affects any class of Note Holders, that Extraordinary Resolution will not become effective in respect of that class of Note Holders unless it has been approved or confirmed by an Extraordinary Resolution of that class of Note Holders." Clause 15.12 in turn provides that a resolution of note holders may be passed as an Extraordinary Resolution for the purpose of cl 15 if approved by a written resolution signed by note holders comprising 75% of all notes outstanding. 47Clause 15.11 contemplates that an Extraordinary Resolution (as defined) under that clause may direct the trustee to take, or refrain from taking, any action under the powers conferred on the trustee by the Convertible Notes Trust Deed. While that clause refers to "note holders", which would potentially include unsecured note holders, cl 4.1 of the Security Trust Deed makes clear that the relevant resolution is one of secured note holders passed at a meeting convened and conducted in accordance with that clause. As I noted above, cl 15.12 in turn permits the passage of such a resolution, in the case of an Extraordinary Resolution, by a resolution in writing signed by a note holder holding 75% of the notes, and ASOF satisfies that requirement as applied to the secured notes by cl 4.1 of the Security Trust Deed. It seems to me that, subject to one further matter as to the operation of cl 15.11 of the Convertible Notes Trust Deed which I now address, the exception in cl 6.1(c)(i) of the Security Trust Deed is capable of being satisfied by a written direction by ASOF so that ANZ Trustees could release the Charge, on the basis that that direction is an express permission to do so in accordance with cl 15 of the Convertible Notes Trust Deed. ANZ Trustees contends that the proviso at the end of cl 15.11 of the Convertible Notes Trust Deed, to which I referred in paragraph 46 above, applies to any resolution of note holders put pursuant to that clause in relation to voting on or releasing the Charge to facilitate the First DOCA Variation Proposal and to any written resolution of the requisite majority of note holders under cl 15.12. That proviso applies where the relevant resolution, in ANZ Trustees' opinion, "directly or indirectly especially prejudices or affects any class of Note Holders". It seems to me that proviso is capable of applying to such a written resolution, both because cl 15.12 expressly provides that such a written resolution takes effect under cl 15 and because the parties to the Convertible Notes Trust Deed could not have intended that the majority note holders could avoid that proviso by the simple expedient of giving a direction in writing rather than passing a resolution in a meeting of note holders. 48The proviso in cl 15.11 of the Convertible Notes Trust Deed applies if ANZ Trustees holds the relevant opinion, namely that the resolution supporting the December 2013 Direction directly or indirectly especially prejudices or affects any class of Note Holders. The term "class" is defined in Black's Law Dictionary (9th ed West, 2009) as "[a] group of people, things, qualities, or activities that have common characteristics or attributes" and in Jowitt's Dictionary of English Law (3rd ed Sweet & Maxwell, 2010) as "[a] number of persons possessing a common attribute who are intended to be indicated as a group...". It seems to me that the term "class" used in the proviso to cl 15.11 of the Convertible Notes Trust Deed is consistent with that meaning, referring to a group of note holders having a common characteristic, namely, that they are exposed to the relevant prejudice or effect. It does not seem to me that the principle applicable in schemes of arrangement, that the determination of a class has reference to differences in members' rights rather than to any collateral interest in promotion of the scheme has application here, since the Court's discretion whether to approve a scheme at the second scheme hearing limits the need for separate class meetings in that situation: Re Jax Marine Pty Ltd [1967] 1 NSWR 145 and see the other cases cited in Austin & Black's Annotations to the Corporations Act [5.411]. By contrast, there would be here no further requirement for court approval prior to the implementation of the outcome of a meeting at which note holders with different economic interests voted. 49This reading of the proviso to cl 15.11 of the Convertible Notes Trust Deed seems to me to give effect not only to the terms of the clause but also to its commercial purpose, as it appears from the terms of the clause and the surrounding circumstances, namely, to provide some protection to minority note holders against the abuse of majority voting power. The issues arising in that regard have been recognised in two English decisions to which ANZ Trustees referred and several later decisions referring to them. In Redwood Master Fund Ltd v TD Bank Europe Ltd [2002] EWHC 2703 (Ch) at [105], Rimer J referred to the principles applicable to fraud on the minority at general law and observed that: "The vice against which control on the exercise of majority power is directed is the potential for a dishonest abuse of that power. The starting point in assessing the validity of its exercise in any case must be to assess, by reference to all available evidence, whether the power is being exercised in good faith for the purpose for which it was conferred. If it is, then the mere fact that it can be shown that a minority of those affected by it have been relatively disadvantaged by it as compared with the majority cannot automatically mean it has been exercised improperly. Of course, if it can be shown that the power has been exercised for the purpose of conferring special collateral benefits on the majority, or if the obtaining of such collateral benefits can be shown to have been the motive for the exercise of the power, that will be likely to lead to a conclusion that the exercise has been bad. It would not have been exercised for the purpose for which it was conferred, and its exercise in those circumstances would or might amount to a fraud on the minority. ..." The review of the relevant authorities by Rimer J in Redwood Master Fund above was in turn noted with approval in F&C Alternative Investments (Holdings) Ltd v Barthelemy (No 2) [2011] EWHC 1731; [2012] Ch 613 at [235]. In Assenagon Asset Management SA v Irish Bank Resolution Corp Ltd (formerly Anglo Irish Bank Corp Ltd) [2012] EWHC 2090; [2013] 1 All ER 495 at [47]-[48], Briggs J referred to the principle that the power of a majority to bind a minority must be exercised for the purpose of benefiting the class as a whole and not its individual members and also noted that specific provisions in trust deed may address that issue, observing that: "The underlying risk of abuse of power by a majority at which this principle is aimed may be combated otherwise than by the direct invocation of the principle itself ... even in provisions conferring wide powers, the parties may include bespoke restrictions designed to avoid its exercise otherwise than for the benefit of the relevant class." His Honour also held (at [84]) that it is not lawful for a majority to lend its aid to the coercion of a minority by voting for a resolution that expropriates the minority's rights under their bonds for, in that case, a nominal consideration. His Honour's reasoning was in turn cited with approval in Re Charterhouse Capital Ltd Arbuthnott v Bonnyman [2014] EWHC 1410 at [298]-[299] per Asplin J. 50In my view, the evidence established that ANZ Trustees in fact held the opinion that the December 2013 Direction (and the resolution under cl 15 of the Convertible Notes Trust Deed that was its basis) directly or indirectly especially prejudiced or affected minority secured note holders. The release of the Charge was plainly associated with the implementation of the First DOCA Variation Proposal and the associated asset sale although it also left open the possibility of other sale transactions on other terms approved by ASOF. ANZ Trustees had identified several aspects of the First DOCA Variation Proposal and associated asset sale as being prejudicial to or affecting minority secured note holders in its solicitors' correspondence and its opinion as to that matter is confirmed by Mr Budnow's evidence. The concerns expressed on behalf of ANZ Trustees in the correspondence from its solicitors, particularly the email to which I referred in paragraph 20, point to prejudice or an adverse effect on minority secured note holders arising from the First DOCA Variation Proposal and associated asset sale. Mr Budnow in turn sets out his concerns as to the terms of the proposed sale contemplated by the First DOCA Variation Proposal as follows (Budnow 6.2.2014 [69]): "It was my belief that the First DOCA Variation Proposal was not in the best interests of the creditors of Metal Storm for the following reasons: (a) a large proportion of the Purchase Price for the assets of Metal Storm was to be paid in kind, by ASOF extinguishing its secured notes, which would see a 100% recovery for ASOF on these notes, which benefit would not be provided to other secured note holders with the same legal rights as ASOF; and little cash consideration being paid for the assets of Metal Storm. Given that Metal Storm itself is unlikely to continue as a going concern and will probably be liquidated, there is no obvious benefit to Metal Storm in having its secured notes extinguished ... (b) a large proportion of the Purchase Price for the assets of Metal Storm is to be paid in kind, by ASOF setting off that part of the Purchase Price against lending ASOF has made to Metal Storm during its administration and DOCA periods. This would see ASOF recover 100% of that funding, which is a recovery I believe exceeds ASOF's legal entitlement to the recovery of this money, and would see ASOF recover these funds in priority to secured noteholders ... (c) little cash consideration would be paid, which among other things would make it difficult for ANZ Trustees' outstanding fees and expenses to be paid; (d) the sale would result in assets of Metal Storm being sold to the Purchaser, being ASOF's American subsidiary, LSOS LLC [in circumstances where other minority secured note holders have complained about the lack of marketing of the assets, and the lack of visibility of the value of the assets given Metal Storm has not produced up-to-date financial reports]." The words in square brackets above were admitted subject to a limiting order under s 136 of the Evidence Act 1995 (NSW) that they were not proof of the asserted facts. 51I should more readily accept that ANZ Trustees held the requisite opinion where that opinion is one that could readily have been reached on the facts known to it. The best indication of ASOF's preferred terms for the asset sale was then the proposed asset sale agreement (CB 6/1366) put forward by ASOF in connection with the First DOCA Variation Proposal, under which the purchase price of AU$2,300,000 would be paid by LSOS partly by payment of the sum of US $1,068,637 less all amounts ASOF had lent to Metal Storm and its administrators. ANZ Trustees submitted that, although the offset amount is unknown, it could amount, including default interest, to approximately AUD $850,000 (CB 6/1499). The Deed Administrator and ASOF did not offer an alternative calculation of this amount. The proposed asset sale agreement also contemplates that the balance of the consideration would be paid by ASOF forgiving an amount equal to A$1,500,000 of its secured convertible notes issued by Metal Storm, giving ASOF a recovery on the face value of these secured convertible notes when the same treatment is not extended to other secured note holders. ANZ Trustees submits that, after deduction of ANZ Trustees' fees, other secured convertible note holders would likely receive nothing under that proposal and the Deed Administrator and ASOF again did not offer an alternative calculation. In oral submissions, Mr Scerri, who appeared with Mr Austin and Mr Krochmalik for ANZ Trustees, submitted that the First DOCA Variation Proposal would have involved a sale of assets to ASOF, by which Metal Storm's alleged indebtedness to ASOF would be set-off against the purchase price, bringing in no new money for the sale and leaving virtually no money for other note holders (T14). The release of the Charge as directed by ANZ Trustees would have allowed that result. It seems to me that ANZ Trustees could readily have formed the opinion that this matter gave rise to a special prejudice or effect on minority secured note holders for the purposes of the proviso to cl 15.11 of the Convertible Notes Trust Deed, in the sense that only minority note holders and not ASOF suffered those disadvantages without the advantage of an acquisition of the business by an affiliated entity. 52ANZ Trustees also submits that, to the extent that the December 2013 Direction only permits the release of the Charge upon a sale of assets on terms "reasonably acceptable" to ASOF, that would be to preordain a sale to ASOF on unknown terms (implicitly, if the sale did not take place on the terms indicated in respect of the first DOCA Variation Proposal) and that that is also prejudicial to other secured note holders. The release of the Charge in a transaction that was acceptable to ASOF, but not otherwise, might well give the majority secured note holder a control over the sale process that would be advantageous to ASOF, in maximising its opportunity to acquire the assets on the least onerous terms to it and the least advantageous terms to Metal Storm and its other creditors, and correspondingly prejudicial to other note holders who had no such control and would potentially be disadvantaged by the exercise of that control. It seems to me that those matters also give rise to a special prejudice or effect on minority secured note holders for the purposes of the proviso to cl 15.11 of the Convertible Notes Trust Deed. 53Where ANZ Trustees held the requisite opinion, and a fortiori where it did so on a rational basis, the effect of the proviso to cl 15.11 is that the resolution passed by ASOF, and the December 2013 Direction which depends on it, does not take effect until it is approved by secured note holders other than ASOF. No such approval by secured convertible note holders other than ASOF has been given. In these circumstances, the relevant express permission under cl 6.1(c)(i) of the Security Trust Deed, which depends on that resolution and direction, is not presently effective and that exception to the requirement for the consent of all Beneficiaries under that clause is not available. 54There may also be a question whether ANZ Trustees was not obliged to act in respect of the December 2013 Direction, because its acting so as to release the Charge to facilitate the asset sale contemplated by the First DOCA Variation Proposal would have amounted to oppression of minority secured note holders or a misuse of the majority's voting power (in the sense identified in Peter's American Delicacy Co Ltd v Heath (1939) 61 CLR 457 at 511-513 per Dixon J, Redwood Master Fund at [105] and Assenagon at [86]) that fell within the exception for unlawful conduct under cl 4.11 of the Security Trust Deed, for the same reasons as it gave rise to special prejudice to minority secured note holders so as to require approval in a class meeting. The parties did not, in submissions, identify any case law as to whether, and in what circumstances, principles of oppression may extend to dealings among note holders. In oral closing submissions, Mr Gray for the Deed Administrator submitted that the concept of "unlawfulness" in cl 4.11 did not extend to conduct which "may in somebody's view amount to some form of oppression, exploitation or the like" (T177), so far as the majority of the class will normally carry the day. Mr Hall submitted that the fact that a majority had the power to give a direction meant that there will be circumstances in which the minority would have wishes for a different course (T179-180). Mr Hall acknowledged, however, that the argument for unlawfulness was stronger if the Court were to find that the proposal put by ASOF in fact amounted to oppression of minority secured note holders in the relevant circumstances, although he responded that all secured note holders had taken their interest on the basis of the terms of cl 4.1 of the Security Trust Deed (T180). It is not necessary to express a final view as to that matter in the absence of detailed submissions and given the conclusion that I have reached on other grounds. 55ANZ Trustees also contended that the December 2013 Direction would place it in a conflict with its obligations as trustee of the Convertible Notes Trust Deed. ASOF responded that that position resulted, at least in part, from ANZ Trustees' accepting both positions and could have been cured by ANZ Trustees resigning as trustee of the Convertible Notes Trust Deed (T128). It also does not seem to me to be necessary to determine that matter, given the findings that I have reached on other grounds. 56Alternatively, ASOF relied on cl 6.1(c)(ii) of the Security Trust Deed as authorising the release of the Charge. Mr Hall indicated, in oral opening submissions, that ASOF contended that the word "enforcement" referred to the administration, the Initial DOCA and the First DOCA Variation Proposal, each of which would constitute an "enforcement" so as to permit and require ANZ Trustees to comply with the direction it had received (T19). Mr Hall also contended that the meaning of "enforcement" within the Corporations Act should not be adopted in respect of cl 6.1(c)(ii) of the Security Trust Deed. On one view of Mr Hall's closing submissions, he also advanced a wider contention that cl 6.1(c)(ii) would apply to permit the release of the security where the trustee was taking any step to enforce the security (T138). On the other hand, ANZ Trustees contended that the word "enforcement" in cl 6.1(c)(ii) is restricted to circumstances in which a controller or receiver had been appointed. ANZ Trustees contends that neither an administration nor a deed of company arrangement is an "enforcement" for the purpose of that clause, and refers to the definition of "enforce" in s 9 of the Corporations Act, which refers to receivership or controllership. ANZ Trustees also submits that the fact that secured creditors can stand outside an administration or deed of company arrangement and can enforce security subject to any applicable statutory moratorium means that these procedures do not constitute the enforcement of security. ANZ Trustees also points out that cl 4.2 of the Initial DOCA and the corresponding clause of the First DOCA Variation Proposal provide that they do not bind or affect the rights of secured creditors and that the proposed third version of the DOCA (CB 5/1272) has not been put to creditors and also would not bind secured creditors. 57The reference in cl 6.1(c)(ii) of the Security Trust Deed to an "enforcement in accordance with this document or any other Security Document" (emphasis added) is narrower than the concept of "enforcement" generally and seems to me to apply where a controller has been appointed in accordance with cl 6.1 of the Security Trust Deed. That has not occurred in this case. It does not seem to me that an administration or deed administration in accordance with the Corporations Act constitutes "an enforcement in accordance with this document or any other Security Document". 58For these reasons, the exceptions to cl 6.1(c) of the Security Trust Deed are not satisfied. Where ANZ Trustees held the relevant opinion, and a fortiori where it seems to have done so on reasonable grounds, the effect of the proviso to cl 15.11 is that the December 2013 Direction did not take effect and ANZ Trustees was not required to act in accordance with it until it was approved by all secured note holders. No such approval by secured convertible note holders other than ASOF was given and ANZ Trustees was not required to release the Charge or act in accordance with the December 2013 Direction. Whether ANZ Trustees was obliged to comply with the August 2013 Direction 59By paragraphs 1 and 1A of its Second Further Amended Interlocutory Process, ANZ Trustees also sought a declaration that it was not obliged to comply with the August 2013 Direction or alternatively a direction under s 283HA of the Corporations Act that it was justified in proceeding on that basis or an order under s 85 of the Trustee Act that it be relieved from liability for having done so. ANZ Trustees contends that cll 4.1 and 6.1 of the Security Trust Deed do not require or permit ANZ Trustees to vote for the First DOCA Variation Proposal as required by the August 2013 Direction for the reasons it advanced in the context of the December 2013 Direction for release of the Charge. 60I have referred above to the terms of the First DOCA Variation Proposal and to the concerns expressed by ANZ Trustees in its solicitors' correspondence and by Mr Budnow in his affidavit evidence in that regard. It is sufficient, for the purposes of the proviso to cl 15.11 of the Convertible Notes Trust Deed, that ANZ Trustees held the opinion that the First DOCA Variation Proposal directly or indirectly especially prejudiced or affected any class of Note Holders, and that opinion also seems to me to be one that could readily have been formed. As ANZ Trustees points out, the fixed $50,000 distribution for the benefit of secured note holders prejudiced or affected secured note holders other than ASOF, so far as they would otherwise have had a prior right to the proceeds of any sale under the security, and did not stand to share in the benefit obtained by ASOF and the acquisition of the assets by its affiliate. So far as the First DOCA Variation Proposal was intended to bring about the sale of the assets under the asset sale agreement, it also prejudiced or affected secured note holders other than ASOF so far as that asset sale agreement had the disadvantages noted above. 61These matters seem to me to "especially prejudice or affect" minority secured note holders for the purposes of the proviso to cl 15.11 of the Convertible Notes Trust Deed, in the sense that only minority note holders and not ASOF suffer those disadvantages without the advantage of an acquisition of the business by an affiliated entity. Where ANZ Trustees held the relevant opinion, and a fortiori where it seems to have done so on reasonable grounds, the effect of the proviso to cl 15.11 is that the August 2013 Direction did not take effect and ANZ Trustees was not required to act in accordance with it until it was approved by secured note holders other than ASOF. No such approval by secured convertible note holders other than ASOF was given and ANZ Trustees was not required to act in accordance with the August 2013 Direction. 62For completeness, I should note that the Deed Administrator pointed out that ANZ Trustees had previously acted in accordance with ASOF's instructions during the voluntary administration period, by voting in favour of the Initial DOCA. It does not seem to me that this matter assists in determining this issue, which must be determined by reference to the terms and circumstances of the particular direction. No estoppel case is pleaded, nor was one likely to have been established, where the circumstances of any previous vote in favour of the Initial DOCA in its then form raised quite different issues from the instructions subsequently given by ASOF to ANZ Trustees. Directions under s 283HA of the Corporations Act and relief under s 85 of the Trustee Act 63ANZ Trustees seeks retrospective directions under 283HA of the Corporations Act or relief under s 85 of the Trustee Act in respect of several of the matters in issue in the proceedings. Relevantly, ANZ Trustees seeks, by paragraphs 1 and 1A of its Second Further Amended Interlocutory Process, in the alternative to declaratory relief, a declaration under s 283HA of the Corporations Act that it was justified in proceeding on the basis that it was not obliged to comply with the December 2013 Direction and the August 2013 Direction and/or an order under s 85 of the Trustee Act that it be relieved from any liability from having proceeded on that basis. In a matter of this complexity, and where I understand that there is commercial urgency in the delivery of judgment so that the parties may progress a sale of Metal Storm's assets, it seems to me preferable not to decide issues that need not be decided. This issue does not arise, since I have held that ANZ Trustees was not obliged under the terms of the Security Trust Deed to comply with those directions. ANZ Trustees' claim for declaration as to cl 6.1 of the Security Trust Deed 64By paragraph 2 of its Second Further Amended Interlocutory Process, ANZ Trustees seeks a declaration that the administration of Metal Storm pursuant to a deed of company arrangement is not an "enforcement in accordance with [the Security Trust Deed] or any other Security Document" within the meaning of cl 6.1(c) of the Security Trust Deed. This declaration was directed to a matter that was, as I noted above, relevant to whether ANZ Trustees was obliged to act in accordance with the December 2013 Direction. I have addressed that matter above and held that a deed of company arrangement is not an "enforcement in accordance with [the Security Trust Deed) or any other Security Document" for relevant purposes. It does not seem to me that declaratory relief is necessary in that regard. 65By paragraph 2A of its Second Further Amended Interlocutory Process, in the alternative to declaratory relief, ANZ Trustees seeks a direction under s 283HA of the Corporations Act that it was justified in proceeding on the basis that the administration of Metal Storm pursuant to a deed of company arrangement is not "an enforcement in accordance with [the Security Trust Deed) or any other Security Document" within the meaning of cl 6.1(c) of the Security Trust Deed or an order under s 85 of the Trustee Act relieving it from liability in that regard. As I noted above, in a matter of this complexity, and where I understand that there is commercial urgency in the delivery of judgment so that the parties may progress a sale of Metal Storm's assets, it seems to me preferable not to decide issues that need not be decided. This issue does not arise, since I have determined the underlying legal issue above. Whether ANZ Trustees was obliged to comply with the February 2014 Direction 66By paragraph 2B of its Second Further Amended Interlocutory Process, ANZ Trustees also sought a declaration that it is not obliged comply with the February 2014 Direction, which I have set out in paragraph 24 above. There is a degree of uncertainty as to the content of that direction, which, as I noted above, required ANZ Trustees to vote in favour of a resolution that the terms of the Initial DOCA be varied as set out in a notice of meeting to creditors dated 17 February 2014. That notice of meeting in turn referred to a variation of the DOCA without identifying that variation. That direction could therefore apply to the First DOCA Variation Proposal, the Second DOCA Variation Proposal, a further revision of the Initial DOCA that the Deed Administrator now seeks to propound in place of the Second DOCA Variation Proposal (CB 5/1272) or any other variation of the Initial DOCA that might have been put to that meeting. This uncertainty may itself have deprived that direction of operative effect, since cl 4.1 of the Security Trust Deed applied only in respect of "clear instructions" given to the Security Trustee by a resolution of Secured Note Holders. However, no party took that point in submissions. 67So far as the February 2014 Direction instructed ANZ Trustees to vote in favour of the First DOCA Variation Proposal, ANZ Trustees was not obliged to comply with it for the reasons that it was not obliged to comply with the August 2013 Direction to that effect. 68So far as the February 2014 Direction may have referred to the Second DOCA Variation Proposal, it continued to contemplate a sale of Metal Storm's assets to LSOS on the terms noted above, but further amended the DOCA by providing that LSOS would issue shares to minority secured note holders in Metal Storm in proportion to their holdings on request. Mr Budnow expresses the view (Budnow 6.2.2014 [71]) that: "It is my belief that the Second DOCA Variation Proposal is also not in the best interests of the creditors of Metal Storm for the same reasons as those set out at paragraph 69 above and for the further reason that secured noteholders are being given an opportunity to purchase shares in LSOS, LLC which is a United States company they will likely have very little or no knowledge about given that the company is incorporated overseas, and no information as to its assts or financial position has been provided by ASOF or the Deed Administrators to the secured noteholders to date." The reference to paragraph 69 in that paragraph is to the evidence that I set out in paragraph 50 above. Mr Easton responded that the Second DOCA Variation Proposal was a "significant improvement" in the position of secured note holders (Easton 20.2.2014 [18]), although that proposition depends on the extent of the advantage that minority secured note holders would obtain by becoming minority securityholders in a US-incorporated entity controlled by ASOF. 69The relationship between the Second DOCA Variation Proposal and the asset sale agreement circulated with the First DOCA Variation Proposal was not entirely clear; it appears that ANZ Trustees sought clarification of that matter, but no response was provided by the Deed Administrator; and Mr Budnow's evidence is that ANZ Trustees did know how any purchase price upon a sale of Metal Storm's assets in respect of the Second DOCA Variation Proposal would be paid or how much that purchase price would be, since those matters are not dealt with in the Second DOCA Variation Proposal but in the associated asset sale agreement (Budnow 7.3.2014 [6]). 70It seems to me that the views expressed by ANZ Trustees in its solicitors' correspondence and by Mr Budnow in evidence are sufficient to establish that ANZ Trustees held the opinion that the February 2014 Direction, so far as it constituted or was based upon an extraordinary resolution passed by ASOF as majority secured note holder, directly or indirectly especially prejudiced or affected minority secured note holders, for the purposes of the proviso to cl 15.11 of the Convertible Notes Trust Deed. As I noted above, the proviso to cl 15.11 of the Convertible Notes Trust Deed applies where ANZ Trustees held the requisite opinion. So far as that direction reiterated the December 2013 Direction, requiring ANZ Trustees to release the Charge as instructed by the December 2013 Direction, ANZ Trustees was not obliged to comply with it for the reasons that it was not obliged to comply with the December 2013 Direction. 71By paragraph 2C of its Second Further Amended Interlocutory Process, in the alternative to declaratory relief, ANZ Trustees seeks a direction under s 283HA of the Corporations Act that it was justified in proceeding on the basis that it was not obliged comply with the February 2014 Direction or an order under s 85 of the Trustee Act that it should be relieved from liability for having proceeded on that basis. This issue also does not arise since I have held above that ANZ Trustees was not obliged to act on that direction. Whether ASOF is a creditor entitled to vote in its own right 72By paragraph 1 of its Interlocutory Process dated 7 March 2014, ASOF sought an order that the Deed Administrator admit ASOF's proof of debt lodged 20 February 2014 for the purposes of voting at meetings of creditors of Metal Storm, including in relation to the voting on any variation of the Initial DOCA. ASOF submits that, on a proper construction of the Convertible Notes Trust Deed and the Security Trust Deed, note holders and ANZ Trustees are each owed a debt by Metal Storm, so that note holders and specifically ASOF are entitled to participate directly in the administration. ASOF has previously sought to prove in the administration on that basis, but the Deed Administrator rejected that proof. Conversely, by paragraph 2D of its Second Further Amended Interlocutory Process, ANZ Trustees sought a declaration under s 283HA of the Corporations Act that it was and is the creditor entitled to vote at meetings of creditors convened under the Corporations Act in respect of debts owed in respect of convertible notes issued under the Convertible Notes Trust Deed. ANZ Trustees contends that it is the creditor entitled to vote and the Deed Administrator has proceeded on that basis by accepting ANZ Trustees' proof of debt for voting purposes at the meeting convened to consider the First DOCA Variation Proposal. 73The provisions in the Convertible Notes Trust Deed recognise a relationship between ANZ Trustees and Metal Storm for some purposes and between note holders and Metal Storm for other purposes and, on occasion, recognise both relationships. The term "Outstanding Moneys" is defined in the Convertible Notes Trust Deed as monies owed in respect of the Notes "payable to, or at the direction of, the Trustee or Note Holders" and recognises both relationships. At least for some purposes, Metal Storm is obliged to deal directly with note holders, although these provisions appear to be directed to payments in the ordinary course rather than the enforcement of rights on default. For example, cl 3.2 of the Convertible Note Trust Deed provides for principal and interest to be paid to note holders in accordance with the terms of the Convertible Notes Trust Deed, with a consequential reduction of Metal Storm's indebtedness to the trustee, and cl 6.2 of the Convertible Notes Trust Deed requires payment to the note holder. 74On the other hand, provisions that focus on the relationship with the trustee include cl 2.2(a) of the Convertible Notes Trust Deed, which provides that Metal Storm's obligations to repay the principal and interest on convertible notes to note holders is held on trust by the Convertible Notes Trustee. ASOF acknowledges the fact that that clause is potentially contrary to its position, so far as it provides that the trustee is appointed to hold, inter alia, the right to enforce Metal Storm's obligation to repay the notes as part of the trust property. ASOF seeks to read this provision as qualifying the trustee as a creditor, while not excluding note holders from having parallel rights. I do not accept that submission. It seems to me that the conferral of the right to enforce Metal Storm's obligation to repay the notes on ANZ Trustees necessarily exclude the exercise of that right by individual note holders, where that right is not specifically preserved for them, by contrast with the right to bring proceedings under cl 19.1 of the Convertible Notes Trust Deed. Clause 3.1 of the Convertible Notes Trust Deed in turn provides that Metal Storm acknowledges that it is indebted to the Convertible Notes Trustee in respect of the Outstanding Moneys. 75Clause 1.11(b) of the Security Trust Deed in turn provides that each Beneficiary and any person claiming under that Beneficiary is bound by the terms and conditions of the Security Trust Deed. Clause 3.1 of the Security Trust Deed in turn provides that ANZ Trustees holds the property within the definition of "Security Trust Fund" under the Security Trust Deed on trust for the Beneficiaries, including the holders of secured notes, pursuant to the terms of the Security Trust Deed. Clause 3.2 provides that the Beneficiaries are not entitled to any equitable or proprietary interest in the property the subject of the Security Trust Fund except the benefits of the Security Trust Deed, any entitlement to the proceeds of enforcement and pro-rata distribution of the Security Trust Fund. Clause 4.18 provides that only ANZ Trustees may exercise rights, powers, authorities, discretions, remedies or privileges under the Security Trust Deed or the Charge or arising at law or equity. 76ANZ Trustees also points to the practical difficulty if individual note holders were entitled to vote, its inconsistency with the regime for appointment of a trustee in Ch 2L of the Corporations Act and, in particular, with s 283AB(1), which requires that a trust deed for debentures must provide that the right to enforce the borrower's duty to repay, and any charge or security for repayment, be held on trust for the benefit of debenture holders. ANZ Trustees contends that the right to enforce would include the right to vote at creditors' meetings. In oral submissions, Mr Hall accepted that the consequence of ASOF's submission was at least that the Deed Administrator might receive competing proofs of debt from the Security Trustee and the note holder in respect of the same debt, and that those persons might also seek to vote differently at a creditors' meeting in respect of the same debt, and contended that that matter would have to be addressed by the Deed Administrator seeking to determine which proof was to be admitted, notwithstanding that both the Trustee and the note holder were entitled to claim in respect of the same debt. With respect, it seems to me highly unlikely that the parties to the Security Trust Deed could have contemplated that highly inconvenient result, and it does not seem to me that the terms of the Security Trust Deed require that result. 77I therefore conclude, by reference to the terms of the Convertible Notes Trust Deed and the Security Trust Deed, that ANZ Trustees rather than note holders is to be treated as the creditor, at least for purposes other than payments made in the ordinary course. It is not necessary to rely on case law dealing with other trust deeds to reach that finding, although ANZ Trustees relies on the decision in Hall, re Australian Capital Reserve Ltd (admin apptd) [2007] FCA 1328 at [14]-[15] as supporting the proposition that a trustee for debenture holders is the legally recognised creditor of the debenture issuer. ASOF in turn seeks to distinguish that decision as reflecting a specific provision in the relevant deed that a note holder was not competent to, and must not institute proceedings for, the enforcement of the deed, and points out that there is no equivalent provision in the Convertible Notes Trust Deed and that cl 19.1 in fact preserves note holders' right to bring proceedings. That distinction is properly drawn but does not affect the conclusion that I have reached above having regard to the terms of the trust deeds, which is consistent with the result reached in that case. 78For these reasons, ANZ Trustees rather than ASOF and other secured note holders is entitled to exercise votes attaching to the secured notes in the course of the administration. 79By paragraph 2E of its Second Further Amended Interlocutory Process, ANZ Trustees sought a direction under s 283HA of the Corporations Act that it was justified in proceeding on that basis or an order under s 85 of the Trustee Act relieving it from liability in that regard. It is not necessary to address that matter where I have determined the substantive question above. Appointment of receiver 80Alternatively to his application in respect of the directions given by ASOF, by paragraphs 3-6 of his Originating Process, the Deed Administrator sought orders for the appointment of a receiver or receivers over the assets and undertakings of Metal Storm (without security) and orders authorising the receivers to sell the assets of Metal Storm and allowing their remuneration. Mr Gray limited his oral closing submissions on behalf of the Deed Administrator to the question whether the Court should appoint a receiver to the assets of Metal Storm with authority to sell those assets and consequential orders. By paragraphs 3-4 of its Second Further Amended Interlocutory Process, ANZ Trustees initially sought orders that specified persons, not the Deed Administrator, be appointed as joint and several receivers of the property of Metal Storm secured by the Charge. ANZ Trustees' position was that it was not appropriate that the Deed Administrator be appointed as receiver because, it contended, he has a close connection with ASOF. Ultimately, ANZ Trustees contended that a proper approach, if receivers were to be appointed, would be to appoint independent insolvency practitioners who had, in the course of the hearing, indicated they would accept that appointment without indemnity. 81The Deed Administrator submitted, in his closing outline submissions, that there was an effective impasse in that it was commercially impracticable for the Deed Administrator to sell the assets subject to the Charge, if ANZ Trustees was not required to act on ASOF's written directions (as I have found, at least in respect of the directions given to date) and ANZ Trustees was not disposed to appoint a receiver and could not, consistently with the terms of the Secured Notes Trust Deed, otherwise release its Charge over the assets of Metal Storm. In oral submissions, Mr Hall for ASOF also accepted that, if cl 4.1 of the Security Trust Deed did not permit ASOF to give a direction of the kind that had been given, then the parties were in deadlock and the appointment of a receiver would be necessary (T141). By paragraphs 3-6 of its Second Further Amended Interlocutory Process, ANZ Trustees also sought orders for the appointment of receivers and consequential orders. Although there was a degree of consensus between all parties that the appointment of receivers would be appropriate if matters had reached a deadlock, there was a dispute as to whether that position had been reached (which depended upon the validity of the directions given by ASOF); whether any such appointment should occur under relevant provisions under the Supreme Court Act 1970 (NSW) or under the Corporations Act; and whether the Deed Administrator or another insolvency practitioner would properly be appointed. 82ANZ Trustees seeks an order from the Court under Ch 2L of the Corporations Act which would bring about an appointment of receivers to Metal Storm. In his opening written submissions, the Deed Administrator contended that it would be inappropriate for the Court to make an order appointing a receiver under that Chapter where ANZ Trustees has, and has had from the date the Initial DOCA was entered into, the power to appoint a receiver under the Charge. I am not persuaded by this submission where ANZ Trustees is presently not prepared to appoint a receiver, absent an indemnity in respect of that appointment, and does not seem to me to be obliged to do so for the reasons that I will note below. 83Section 283HB(1)(g) of the Corporations Act authorises the Court, on the application of a trustee for debenture holders, to make any other order that it considers appropriate to protect the interests of existing or prospective debenture holders. Section 283HB(2) requires the Court, relevantly, to have regard to the borrower's ability to repay the amount deposited as and when due and the interests of the borrower's members and creditors. In Australian Securities and Investments Commission v Bridgecorp Finance Ltd [2006] NSWSC 636; (2006) 58 ACSR 499 at [18], Barrett J noted that section conferred a broad, remedial and protective jurisdiction and that it was open to the Court to make any order that appeared to it to be calculated to safeguard the relevant interests identified under s 283HB(2). In Perpetual Trustees WA Ltd v Elderslie Finance Corporation Ltd [2008] FCA 1068, Lindgren J noted (at [29], [32]) that the appointment of receivers is justified where the company's financial position has deteriorated and will continue to deteriorate and also pointed to the relevance of creditors' interests and the fact that the company could not repay the debentures it had issued. In Australian Executor Trustees Ltd v Provident Capital Ltd [2012] FCA 728; (2012) 203 FCR 461 at [72] and [74], Rares J noted that the Court's powers under s 283HB are "remedial and protective of the interests of those who have lent money to corporations on debentures" and that orders under s 283HB are appropriate where creditors' interests require protection. His Honour also observed (at [78]) that the Court's powers under that section were: "intended by the Parliament to supplement the armoury of relief that the Court could otherwise give either under the general law, the provisions of debenture trust deeds or other provisions in legislation. There are no constraints on the exercise of the powers under s 283HB(1), other than the requirement that the Court have regard to the relevant considerations in subs (2)." His Honour noted that the subject matter, scope and purpose of Pt 2L of the Corporations Act was a relevant matter in considering the exercise of the discretions created by the section: see also Trust Company (Nominees) Ltd v Gippsland Secured Investments Ltd [2013] FCA 1393 at [12]-[23]. 84In the present case, it is plain that Metal Storm cannot repay the debentures it has issued and that the matter specified in s 283HB(2)(a) is established. It also seems to me that - at least where ANZ Trustees is not bound to act on the directions given by ASOF - it is in creditors' interests to make such an appointment, to resolve the present deadlock that is preventing the sale of Metal Storm's assets and exposing note holders to a risk that further value may be lost. As I noted above, the Deed Administrator's evidence is that he has been advised by ASOF that, unless the assets can be sold and the security released, ASOF may no longer be prepared to continue to fund the costs of maintaining and preserving Metal Storm's assets, as it has been doing in the course of the administration and deed administration. The Deed Administrator's evidence is also that, if that funding ceases, it is likely that valuable patents owned by Metal Storm will progressively lapse or be lost which would significantly devalue the realisable value of Metal Storm's assets. That evidence emphasises the necessity of the appointment of a receiver and an order for the release of the Charge, which I will make below, to facilitate the sale of Metal Storm's assets (Shepard 16.12.2013 [44]). The fact that ANZ Trustees, as trustee for the note holders, seeks a receivership under that section is itself a significant indicator of creditors' interests in that regard. The matter specified in s 283HB(2)(c) is therefore established. 85On the other hand, the Deed Administrator contends that receivers could be appointed under s 67 of the Supreme Court Act, which authorises the Court to appoint a receiver to any assets when it is just or convenient to do so. The Deed Administrator notes that, in that situation, s 420B of the Corporations Act empowers the Court to authorise the managing controller of a corporation to sell properties of which it is a controller despite a prior security interest. ANZ Trustees responds that a court-appointed receiver should not be appointed where a prior encumbrancer (here, ANZ Trustees representing the note holders) does not consent: Re GDK Financial Solutions Pty Ltd (in liq) (No 3) [2008] FCA 448; (2008) 246 ALR 580 at [11]. ANZ Trustees also submits that the exercise of the Court's equitable jurisdiction to appoint a receiver has been held to be akin to the grant of an injunction and issues such as the balance of convenience, whether other remedies are adequate, and the provision of an undertaking for damages by the person seeking the order, must be considered: National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 at 555. It seems to me that these submissions have substantial force and, in any event, the Court should incline to take a course that is specifically contemplated by the Corporations Act and supported by the secured creditor, ANZ Trustees, where that course is open rather than relying on its general jurisdiction under the Supreme Court Act. 86I should add, for completeness, that ANZ Trustees also opposed the exercise of the Court's jurisdiction to appoint a receiver under the Supreme Court Act because there was available an avenue for appointment of receivers under the Charge, where, it submitted, cl 4.1 of the Security Trust Deed would permit secured note holders holding 50% or more of the secured notes to instruct ANZ Trustees to appoint a receiver to Metal Storm, provided ASOF indemnified the trustee from liability associated with the appointment. I am not persuaded by that submission, where in fact note holders are not inclined to offer such an indemnity and ANZ Trustees is not inclined to make such an appointment without it. Identity of a receiver 87I have referred to ANZ Trustees' position as to this issue in paragraph 80 above. The Deed Administrator's position is that he is prepared to be appointed as receiver and that, in that event, he would seek to promote the sale of Metal Storm's assets on an open market and discuss the bids received with interested parties, primarily ANZ Trustees and ASOF, and would not sell Metal Storm's assets to an associate of ASOF without taking all reasonably practicable steps to secure the best offer in the market. In oral submissions, Mr Gray confirmed that the Deed Administrator was willing to adopt a process involving collaboration with ANZ Trustees and ASOF to obtain the best possible price for the assets, and would submit to any orders which might be made to ensure the legitimate interests of those parties were appropriately protected; pointed out that the release of the Charge would ordinarily take place at the time that settlement occurred with any buyer or buyers of the asset; and that, in the ordinary course, the proceeds of sale would pass to ANZ Trustees as the charge holder (T117). The Deed Administrator's ultimate position in submissions was that he was neutral as to who was appointed as receiver, so long as such an appointment was made, but he continued to maintain that he was eligible for appointment and would accept that appointment without indemnity if the Court were disposed to appoint him, and would otherwise assist any third party who might be appointed to that role. 88The Deed Administrator pointed to cases where, he contended, the courts have adopted a pragmatic approach to the position where an insolvency practitioner in one capacity seeks to be appointed in another capacity, having regard to the general interests of the company's creditors. The Deed Administrator referred particularly to Advance Housing Pty Ltd (in liq) v Newcastle Classic Developments Pty Ltd (as trustee for the Albans Unit Trust) (1994) 14 ACSR 230, where Santow J (as his Honour then was) held that a prior involvement with the company in liquidation does not necessarily prevent a person's appointment as liquidator. His Honour there cited Re Intercontinental Properties Pty Ltd (in liq) (1977) 2 ACLR 488 for the proposition that a liquidator "must both be and appear to be independent and impartial of the creditors" (at 233) and also noted that a liquidator should be permitted to act unless, relevantly, a prior involvement would give rise to a reasonable apprehension on the part of a creditor that the liquidator might be impeded or inhibited from acting impartially in the interest of all creditors (at 234). His Honour also observed that: "In short the question should be whether there would be a reasonable apprehension by any creditor of lack of impartiality on the liquidator's part in the circumstances, by reason of prior association with the company or those associated with it, including creditors, or indeed any other circumstance." 89The Deed Administrator also referred to Re Orient Power Holdings Ltd [2008] 2 HKLRD 494 at [34] and [38], where the Court of First Instance in Hong Kong cited Advance Housing above for the proposition that the Court would have regard, in such a situation, to whether a conflict of interest or duty could be "effectively managed". Susan Kwan J also referred (at [37]) to a practice recognised by English authorities of appointing liquidators as receivers where debenture holders applied to the Court for the appointment of receivers after the winding up, unless there was a conflict between the interests of the secured creditors and of other creditors. That practice does not assist in this case, because it directs attention back to the question whether there would be a conflict, or at least an appearance of lack of independence, if the Deed Administrator were appointed as receiver. Her Honour was there satisfied that, in the particular circumstances, a receiver should be appointed as liquidator, where additional steps were taken to address potential conflicts on his part, but she also emphasised (at [51]) that proposals to manage potential conflicts should not become the norm rather than the exception and that each case should be closely scrutinised to see whether such a course was in the best interests of all interested persons. There is also authority that, in determining the similar question whether to appoint a liquidator of a company as receiver and manager, the Court will consider whether there was any real possibility of conflict between the duties of the two officers or between duty and interest: Bastion v Gideon Investments Pty Ltd (in liq) [2000] NSWSC 939; (2000) 35 ACSR 466 at [68]. 90ANZ Trustees submits that the Deed Administrator is not an appropriate appointee as receiver given his history in the matter. ANZ Trustees pointed to a number of matters that, it submitted, indicated "extensive collaboration and closeness which is a feature of [the Deed Administrator's] relationship with ASOF". The Deed Administrator had discussed the administration process with ASOF and recommended that ASOF appoint an administrator (in the belief it was a secured creditor in its own right) prior to his appointment as administrator by Metal Storm. The Deed Administrator and his legal representatives have had an active role in documenting the previous DOCA proposals propounded by ASOF, although some involvement in this regard might perhaps be expected, particularly when dealing with an offshore entity, so as to bring such a proposal to fruition. The Deed Administrator's solicitor has consulted with both the Deed Administrator and ASOF in respect of several matters, although that is also not necessarily surprising in the circumstances and I do not accept that, as ANZ Trustees contended, he was acting on "instructions" from ASOF in the strict sense. 91ANZ Trustees also submitted that doubts have been raised by some note holders as to the Deed Administrator's conduct and independence (CB 2/280) and that, in particular, the second largest secured convertible note holder of Metal Storm, Mr Andrew Doyle, had expressed concerns as to the position of the Deed Administrator (CB 3/525). Mr Budnow gives evidence of discussions at the note holder meeting on 19 August 2013, including queries raised by Mr Doyle and concerns raised by other note holders as to the sale process (Budnow 6.2.2014 [45]). That evidence was admitted under s 136 of the Evidence Act as proof of what occurred at that meeting, but not as proof of the asserted facts. There is also evidence of correspondence from various note holders raising concerns as to the Deed Administrator's conduct of the administration, particularly in respect of its dealings with ASOF, also admitted subject to a limitation under s 136 of the Evidence Act that that correspondence is not proof of the asserted facts. ANZ Trustees submitted that the concerns expressed by note holders, in themselves, justified the Court appointing another insolvency practitioner as receiver and referred, by analogy, to SingTel Optus Pty Ltd v Weston [2012] NSWSC 674; (2012) 90 ACSR 225 at [155]-[162]. In that case, Bergin CJ in Eq made orders for the removal of a special purpose liquidator who had been appointed to deal with the conduct of litigation where a loss of confidence by the creditors, on reasonable grounds, was established. Subsequently, in Haulotte Australia Pty Ltd v All Area Rentals Pty Ltd (in liq) [2012] FCA 615; (2012) 90 ACSR 177, Jessup J also held (at [26]) that a liquidator should be removed where that course would be advantageous to the liquidation and those interested in the company's assets, without needing to establish personal unfitness, impropriety or breach of duty on the part of the liquidator. 92Mr Gray responded, in closing submissions, that the number of note holders expressing disquiet was small, that several matters of complaint appeared to be in respect of matters as to which the Deed Administrator had no control and that any concerns as to transparency of the sale process could be addressed by conditions to that process (T120). However, Mr Gray also properly accepted, in the course of oral submissions, that a position might emerge where third party interest in the assets was not sufficient to achieve a sale and that, within a relatively short period, the Deed Administrator might again be putting a proposal for sale of the assets to ASOF on a basis that did not involve any cash payment by ASOF and could well be exposed to the suggestion that he had not devoted sufficient efforts to seeking to achieve a third party sale (T118). 93ASOF did not seek to be heard in respect of ANZ Trustees' submission that the Deed Administrator was "too close" to it, although it did make the submission that there was no relevant obstacle to his appointment as receiver. ASOF submitted that, if a receiver were to be appointed, the Deed Administrator was by far the preferable person to be appointed so far as a saving of costs would be concerned (T123). On the other hand, Mr Austin, who dealt with the question of the suitability of the Deed Administrator as receiver in oral submissions for ANZ Trustees, pointed out that any advantage of the Deed Administrator's familiarity with the assets was of lesser significance given that he had indicated by his Counsel that he would assist any incoming appointee as receiver (T169). 94It does not seem to me necessary to find, and I do not find, that there was any actual loss of independence of the Deed Administrator in respect of any of these matters. However, it does seem to me that the extent of the Deed Administrator's and his solicitors' involvement with the proposals developed by ASOF to date would (in the language of Advance Housing above) give rise to a reasonable apprehension that he might be inhibited from acting impartially in the interests of all creditors in assessing competing proposals that might now be put by other potential bidders for Metal Storm's assets in competition with earlier proposals with which he and his solicitors have been involved. The view that the Deed Administrator should not be appointed as receiver could also be reached on narrower grounds since, as ANZ Trustees points out, s 418(1)(a) of the Corporations Act provides that a person is not qualified to act as receiver of property of a corporation if he or she is a secured party (as defined in s 51B to include a person holding a lien) in relation to property of the corporation. The Deed Administrator has asserted a lien over Metal Storm's property pursuant to s 443F of the Corporations Act in respect of the administration period and also under cl 10.6 of the Initial DOCA, and indeed the status of that lien was an issue in these proceedings, although I have not addressed it in this judgment for the reasons noted below. 95In the course of the hearing, the Deed Administrator filed consents by other insolvency practitioners willing to be appointed as receivers of Metal Storm without requiring an indemnity, namely, Messrs Darin and Malanos on the one hand and Messrs de Vries and Tayeh on the other. The proposition that those persons do not require an indemnity is presently a matter of submission, rather than a matter of evidence. However, where they have provided unqualified consents to appointment to the Court, I can properly proceed to an appointment in accordance with those consents. I propose, subject to addressing any issues as to the termination of the administration in final orders, to appoint Messrs Darin and Malanos as receivers under s 283HB of the Corporations Act. It was common ground between ANZ Trustees and the Deed Administrator that, whoever was appointed receiver, there should be a requirement that the receiver seek directions before completing the sale, so that any residual concerns by ANZ Trustees or other note holders could be raised at that point. The Court can make orders on terms that contemplate that the receiver would seek further directions in respect of a sale under s 424 of the Corporations Act. 96Each of the Deed Administrator, ASOF and ANZ Trustees asserts a lien in respect of expenditure made on behalf of Metal Storm or amounts otherwise payable to them. However, all parties helpfully indicated that they were prepared to undertake that they would not seek to assert any such lien in priority to or in competition with a lien claimed by receivers appointed by the Court in respect of their costs and remuneration. It is difficult to see how such receivers could have been appointed by the Court, absent such a confirmation, given the uncertainty as to the value of the assets of Metal Storm, the extent of existing claims against those assets, and the fact that neither ASOF nor ANZ Trustees is prepared to indemnify a receiver in respect of its remuneration and costs. Confirmation that appointment of receivers would be an appointment for the purposes of the Charge 97By paragraphs 5-6 of its Second Further Amended Interlocutory Process, ANZ Trustees sought a declaration that, on the proper construction of the Security Trust Deed, the appointment of a receiver in this manner would be an enforcement in accordance with a Security Document within the meaning of cl 6.1(c) of the Security Trust Deed with the consequence that ANZ Trustees was entitled to release the Charge upon that appointment. I do not consider that I can make such a declaration, because an appointment of receivers made by the Court, where the process for such an appointment under the Security Trust Deed and the Charge has failed, does not seem to me to be an appointment "in accordance with" those documents. 98Alternatively, ANZ Trustees sought an order under s 283HB(1)(g) of the Corporations Act that, notwithstanding cl 6.1(c) of the Security Trust Deed, ANZ Trustees is entitled to release the Charge upon the appointment of a receiver. It seems to me that such an order is justified, so as to facilitate the sale of Metal Storm's assets and minimise the potential loss to creditors associated with further delay, so far as it is possible to do so. I propose, subject to addressing any issues as to the termination of the administration in final orders, to make such an order. Alternative relief sought by ANZ Trustees and ASOF 99By paragraph 7 of its Second Further Amended Interlocutory Process, ANZ Trustees sought a direction under s 283HA of the Corporations Act that it would be justified in proceeding on the basis that the Second DOCA Variation Proposal "directly or indirectly especially prejudices or affects any class of noteholders" within cl 15.11 of the Convertible Notes Trust Deed, being secured and unsecured noteholders other than ASOF. By paragraph 8 of its Second Further Amended Interlocutory Process, ANZ Trustees sought a direction under s 283HA of the Corporations Act that it would be justified in convening a meeting of three classes of noteholders, namely, secured note holders excluding ASOF, unsecured note holders excluding ASOF, and ASOF at which a poll would be taken in relation to the Second DOCA Variation Proposal. By paragraphs 9-10 of its Second Further Amended Interlocutory Process, ANZ Trustees also sought further directions as to the manner in which it would be entitled to vote in respect of the Second DOCA Variation Proposal at a creditors' meeting of the company held under s 445F of the Corporations Act. Each of these directions deals with the Second DOCA Variation Proposal and is expressly sought in the alternative to ANZ Trustees' application for the appointment of a receiver. It is not necessary to deal with these matters in the alternative where an order for the appointment of receivers will be made. It also does not seem to me that these issues are likely to arise, where ANZ Trustees also seeks a direction in respect of the termination of the Initial DOCA. 100ASOF in turn contended in submissions that ANZ Trustees was required to comply with a direction given by ASOF to vote in favour of the Second DOCA Variation Proposal that would (or might) be put to a further adjourned meeting of creditors. However, that application is hypothetical, since the Second DOCA Variation Proposal is not the subject of any previous direction given by ASOF. It does not seem to me that the Court can or should determine a hypothetical question as to what would occur if ASOF were in future to give a direction by reference to the Second DOCA Variation Proposal, as distinct from the question that has been the subject of dispute between the parties as to the December 2013 Direction in respect of the release of the Charge and the issues raised by ANZ Trustees' Second Further Amended Interlocutory Process and ASOF's Cross-Claim (which I will address below) in respect of other directions given to date. Termination of Initial DOCA and winding up 101By paragraph 11 of its Second Further Amended Interlocutory Process, ANZ Trustees sought an order that, if the Court made orders for the appointment of receivers, the Initial DOCA be terminated under s 445D of the Corporations Act and a direction under s 283HA of the Corporations Act that it would be justified in voting in favour of a resolution that Metal Storm be wound up. It was common ground that it was not necessary to determine that matter at this point, although it may be necessary to do so promptly upon the appointment of receivers. 102ANZ Trustees submits that, if receivers were appointed, the Initial DOCA would need to be brought to an end by the Court under the general power in s 445D(1)(g) of the Corporations Act. This paragraph provides that the Court may order that a deed of company arrangement be terminated if the Court is satisfied that the deed should be terminated for some other reason. By way of analogy, the Court had made orders under this paragraph terminating a deed of company arrangement where a winding up has intervened and made a deed of company arrangement either unworkable or otiose: Re Parker; Strongest Link Pty Ltd (in liq) [2008] FCA 1007; (2008) 169 FCR 559 at [59]; Re Jick Holdings Pty Ltd (in liq) [2009] NSWSC 574; (2009) 234 FLR 22 at [39]. I note, for completeness, that ANZ Trustees' Second Further Amended Interlocutory Process also referred to s 445D(1)(d) of the Corporations Act, which applies where "there has been a material contravention of the deed by a person bound by the deed", but an application on that basis was not pressed. ANZ Trustees also identified a related issue whether, in those circumstances, ANZ Trustees would be justified in voting in favour of a winding up. 103ANZ Trustees identifies a concern that the appointment of receivers to Metal Storm before it enters into liquidation may mean that the receivers are liable to produce outstanding financial reports under Pt 2M.3 of the Corporations Act, which a liquidator would not be required to complete. It appears that Metal Storm last prepared a half-year financial report for the period ended 30 June 2011 and last prepared an annual financial report for the year ended 31 December 2011. ANZ Trustees submits, with substantial force, that the preparation of those reports would be costly and onerous, particularly where senior employees from the relevant period were no longer employed by Metal Storm, and that there is no apparent need to prepare these reports where a sale of its assets is likely to take place. On that basis, ANZ Trustees contended that, if the Court appoints receivers, the existing deed of company arrangement should be terminated under s 445D of the Corporations Act and ANZ Trustees would be justified in voting for Metal Storm's liquidation. 104There is substantial force in these submissions, if the premise that a winding up of Metal Storm would avoid imposing an obligation to prepare outstanding financial reports on receivers appointed over the assets of Metal Storm is correct. However, it seems preferable to defer dealing with this matter until after the Court has delivered judgment and address it in the context of final orders appointing receivers. Both the receivers to be appointed by the Court and the Australian Securities & Investments Commission should be given an opportunity to be heard at that point. The parties' claims to liens 105By paragraph 7 of his Originating Process, the Deed Administrator also sought a declaration that, so far as any asset of Metal Storm had been preserved or maintained by reason of funds advanced to Metal Storm, its administrators or the Deed Administrator and the party or parties which advanced those funds would be entitled to be paid out of the proceeds of sale of such assets in priority to the claim of any secured creditor holding a charge or other security over such asset and the proceeds of sale of them. ASOF also claims a lien for money that it lent to Metal Storm, and ANZ Trustees acknowledges that ASOF's claim in respect of about $80,000 that had been spent on maintaining the patents and other intellectual property rights would have priority over its security. 106By paragraph 12 of its Second Further Amended Interlocutory Process, ANZ Trustees sought a declaration that it was entitled to indemnity secured by an equitable lien, in respect of its fees, costs and expenses in performing its role as trustee on the basis, first, that its fees, costs and expenses were incurred for the benefit of all persons having an interest in the assets and/or under the principles set out in Re Universal Distributing Co Ltd (in liq) [1933] HCA 2; (1933) 48 CLR 171, recently applied by the High Court in Stewart v Atco Controls Pty Ltd (in liq) [2014] HCA 15; (2014) 307 ALR 562 at [11]ff. ANZ Trustees also submitted that, as trustee, it had a right of recoupment, exoneration and indemnity and held an equitable lien over the Charge, secured and unsecured notes issued by Metal Storm, and the other assets the subject of the Security Trust and the Convertible Notes Trust for liabilities incurred in performance of those trusts and also pointed to cl 7.9 of the Convertible Notes Trust Deed and cl 5 of the Security Trust Deed which provide rights for the trustee of Convertible Notes Trust and the Security Trust to retain trust assets to satisfy its right of indemnification. 107It seems to me, and the Deed Administrator and ASOF accepted, that there is little utility in determining the respective claims to liens at this point. ANZ Trustees indicated its preference for this issue to be determined, but Mr Scerri also acknowledged in oral submission that there were reasons why the Court might be reluctant to do so at this point. It may ultimately be common ground between all parties that a lien in accordance with the principle in Universal Distributors above would be available to a party which has undertaken work, incurred costs or advanced funds so as to preserve or maintain the assets of Metal Storm, and that ANZ Trustees has the rights conferred by the trust deeds and the administrators and the Deed Administrator have the rights conferred by the Corporations Act and the Initial DOCA. The real issue between the parties may ultimately be one of priority and the quantum of such claims. There seems to be little utility in determining this issue in the abstract, even if it were possible to do so, in circumstances that the amount of any proceeds which might be available to meet such claims, after a sale of assets by receivers appointed by the Court, is presently unknown and the dispute may be entirely hypothetical if no such assets are available. 108It seems to me to be preferable to defer this issue until it can be determined in a concrete factual context, by reference to the amount of any funds which are then available for distribution after a sale of assets and after the receivers' costs and expenses have been met, and by reference to evidence as to the amounts advanced and expended by particular parties which make a claim for a lien on that basis. The Deed Administrator proposed that issues as to the lien be stood over to 3 November 2014, to allow sufficient time for their factual context to emerge. I will hear the parties as to whether that is a convenient date to address that issue. 109By paragraphs 13-14 of its Second Further Amended Interlocutory Process, ANZ Trustees also sought a declaration that ASOF was liable to pay it 86% of such amount as may be certified as being its fees, costs and expenses in performing its role as trustee, to the extent that such fees, costs and expenses have not been received by it and to the extent that there are no trust assets held or controlled by it from which that remuneration, costs and expenses can be paid; and also sought a direction that the quantum of its remuneration, costs and expenses be referred to the Registrar for determination. 110ANZ Trustees points to case law establishing a principle that beneficiaries must personally indemnify trustees from liabilities incurred in their role in acting on behalf of beneficiaries in administering a trust, where the trust assets are insufficient, including Hardoon v Belilios [1901] AC 118; Causley v Countryside (No 3) Pty Ltd (Court of Appeal (NSW), 2 September 1996, unrep); Toyama Pty Ltd v Landmark Building Developments Pty Ltd (No 2) [2007] NSWSC 55 at [36], [44]; JD Heydon & MJ Leeming, Jacob's Law of Trusts in Australia (7th ed, 2006, LexisNexisButterworths) at [2105]. ANZ Trustees also submits that the trustee may call for indemnification from beneficiaries as soon as the trustee has incurred a liability on behalf of the trust: Dodson v Sandhurst & Northern District Trustees Executors and Agency Co Ltd [1955] VLR 100 at 104. 111I do not understand that issue to have been pressed at this point. If it were pressed, it does not seem to me that it should be determined in the absence of adequate evidence of the specific fees, costs and expenses incurred by ANZ Trustees as to which such an indemnity is claimed. Mr Budnow's evidence is that ANZ Trustees has not been paid fees for acting as Convertible Notes Trustee or Security Trustee since 2011; that fees for 2012 and 2013 amounting to $77,000 remain unpaid and that ANZ Trustees has stopped raising invoices for fees where to do so would create internal write-offs of fees; and that ANZ Trustees has incurred significant legal fees in seeking advice to consider and respond to proposals from ASOF to vary the Initial DOCA and seeks indemnification in relation to its fees, costs and expenses, which ASOF has refused (Budnow 14.5.2014 [16]-[18]). Mr Budnow refers to a spreadsheet which he says sets out "a breakdown [of] the ANZ Trustees' fees, costs and expenses to date" (Budnow 6.2.2014 [77]; Ex MB-42, CB 2/279). That document is a single page that refers to invoices rendered by ANZ Trustees' solicitors, indicating no more than the invoice number and the date of the invoice, without any detail of the work done, and ANZ Trustees' management fees at 30 June 2013 without any detail of the basis on which those fees were calculated or the work which is comprised in them. 112I am not satisfied that I should make an order of the kind sought by ANZ Trustees without better evidence of the work done so as to place the Court in a position to determine whether it would properly be within the scope of such an order. While ANZ Trustees seeks a direction that the quantum of the Trustee's remuneration, costs and expenses be referred to a Registrar for determination, and seeks to have the declaration that ASOF is liable to pay 86% of such amount as be determined by the Registrar made in advance of such a reference, I do not consider that I should make such an order without first being satisfied that the expenses sought to be recovered are properly the subject of such an indemnity. The evidence presently before the Court falls well short of the evidence that would be necessary to establish that matter. Repayment of money paid to ASOF/Deed Administrators 113By paragraph 15 of its Second Further Amended Interlocutory Process, ANZ Trustees sought orders under s 447E(1) of the Corporations Act to recover certain payments made by the administrators and the Deed Administrator for the benefit of Metal Storm. That section authorises the Court to make orders if it is satisfied of specified matters concerning the conduct of the administrator of a company under administration or a deed of company arrangement, on the application of, relevantly, a creditor of the company. This section will apply where there is an act by the administrator of a company under administration or of a deed of company arrangement that is prejudicial to the interests of, relevantly, creditors: GIS Electrical Pty Ltd v Melsom [2001] WASC 314; Re Pan Pharmaceuticals Ltd (admins apptd) [2003] FCA 855; (2003) 47 ACSR 139 at [48]ff. The Court's supervisory jurisdiction under that section is analogous to s 536 of the Corporations Act in respect of the supervision of liquidators. 114There is authority, in respect of the corresponding provision in s 536 of the Corporations Act, that the Court's power to take such action as it thinks fit extends to an order requiring payment of compensation in a proper case: Australian Securities & Investments Commission v Edge [2007] VSC 170; (2007) 211 FLR 137 at [88]. In BL & GY International Co Ltd v Hypec Electronics Pty Ltd [2010] NSWSC 959; (2010) 79 ACSR 558 at [33]-[36], Barrett J referred to that decision and also to authority dealing with similar provisions in the Bankruptcy Act 1966 (Cth) and observed that: "Such an order would not be an order for the payment of damages for negligence or breach of contract or equitable compensation for breach of an equitable obligation. It would be an order founded on the statutory provision - but, of necessity, paying attention to the content of the liquidator's duties, the extent and nature of his or her failure to perform them and an assessment of the extent of the financial detriment occasioned to the estate. General law notions would necessarily contribute to the findings about duty and breach and play a role in determining causation and remoteness ... It is, however, important to note that, by analogy with the approach taken in bankruptcy, a s 536 inquiry should not be the occasion for trying what is really an action for negligence or other breach of duty by a liquidator. ... In summary, s 536 appears capable of supporting a compensatory order where the court finds, upon inquiry, that an order of that kind is necessary to the effectuation of the section's purpose; and, while the court's power in that respect is not otherwise subject to limitation and a s 536 inquiry is not the occasion for trying an action for negligence or breach of duty, general law concepts will necessarily inform the decision whether such an order should be made and the basis on which it should be made." In Arena Management Pty Ltd (recs and mgr apptd) v Campbell Street Theatre Pty Ltd [2011] NSWCA 128; (2011) 80 NSWLR 652 at [34], Campbell JA (with whom McColl and Macfarlan JJA agreed) cited BL & GY International above and observed that s 536 "can result in an order that the liquidator compensate the company for loss caused by his delinquency". 115ANZ Trustees initially sought an order for payment of $81,811 to it or to Metal Storm, being an amount equal to the proceeds of non-circulating assets alleged to have been sold during the administration of Metal Storm but not remitted to Metal Storm; and also for payment of $158,236 to it or alternatively to Metal Storm, which it contended was wrongly paid by the Deed Administrator to ASOF from other assets covered by the Charge. ANZ Trustees contended that these payments were either made from non-circulating assets or were premature distributions by the Deed Administrator. 116The amount claimed in the first of those orders was subsequently reduced to $65,652.90, being the net proceeds of the sale of office furniture, plant and equipment of Metal Storm sold by the administrators on 28 September 2012 for the gross amount of $81,811.01 (CB 6/1334; T52) which were paid to ASOF rather than remitted to ANZ Trustees. ANZ Trustees accepted that it consented to the sale of that office furniture, plant and equipment of Metal Storm by letter dated 17 August 2012, but apparently sent in September 2012 (CB 3/589-590) but submitted that it did not consent to the proceeds being disbursed to any third party. That office furniture, plant and equipment was sold on 8 September 2012 (CB 3/621, 6/1334). Mr Shepard conceded in cross-examination that the property sold was covered by the Charge and that the net sale proceeds were "paid" to ASOF as repayment of monies borrowed from ASOF (T52-53). The latter concession does not seem to have been warranted on the evidence. 117Mr Easton's evidence is that, on 28 September 2012, Lind Partners was "notionally repaid" the sum of $65,652.90 being the net proceeds of that sale by the then administrators (who had not yet been appointed as deed administrators) comprising proceeds of an auction of Metal Storm's fixed assets but that amount was never actually received and was treated as a further cash advance to the voluntary administrators (Easton [14]). That evidence is confirmed by the administrators' Form 524 Presentation of accounts and statement (CB6/1326) for the period 26 July 2012 to 22 November 2012 lodged with the Australian Securities & Investments Commission which records a payment to Lind Partners of that amount on that date, described as "reimbursement of monies advanced for fixed expense", but also records an advance for costs made by Lind Partners in the same amount on the next day, as well as earlier and later advances made by Lind Partners. It seems to me that any "payment" of this amount to Lind Partners was in substance a book entry, albeit it may have had the result that the amount could be treated as falling under the Loan Agreement between ASOF and Metal Storm, or at leats was reversed by the repayment of that amount to Metal Storm on the next day. 118The administrators' supplementary report to creditors under s 439A of the Corporations Act dated 24 October 2012, after that "payment" had been made, stated that: "A deed fund will be established under the DOCA (Deed Fund). It will comprise all asset realisations of the Company's assets, including debtor recoveries and sale of plant and equipment as well as contributions to be made by ASOF." (CB 2/193) The Initial DOCA in turn provided that the deed fund would comprise cash at hand and at bank held by the deed administrators at the commencement of the Initial DOCA (cl 7.1(c)(i)) including "all asset realisations of the Company assets". Clause 7.4 of the Initial DOCA in turn provided that, prior to the transfer of the Deed Fund to the creditors' trust contemplated by the Initial DOCA, the deed administrators were entitled to apply the deed fund in making loan repayments to ASOF of amounts advanced by ASOF to Metal Storm during the voluntary administration and deed administration period. 119ANZ Trustees referred to ss 443D and 443E of the Corporations Act. Section 443D provides that the administrator of a company under administration is entitled to be indemnified out of the company's property for debts for which he or she is liable under Pt 5.3A Div 9 Subdiv A of the Corporations Act, which include liability for the repayment of money borrowed or interest in respect of money borrowed or borrowing costs. Section 443E(5) provides that a right of indemnity under s 443D does not have priority over a debt secured by a circulating security interest in a company's property, except so far as the secured party consents in writing, to the extent that the right of indemnity relates to debts incurred for the repayment of money borrowed, interest in respect of money borrowed or borrowing costs. It does not seem to me that submission takes the matter further where any "payment" of this amount to Lind Partners was, as I noted above, in substance a book entry, or at least was reversed by repayment of the amount to Metal Storm on the next day. 120I am not satisfied that an order for repayment of an amount that was not, as a matter of substance, paid by the administrators to either ASOF or Lind Partners is justified in the exercise of the Court's supervisory jurisdiction under s 445E of the Corporations Act. 121ANZ Trustees also reduced the second component of this claim, initially $158,236, to $92,584.53 or such other amount as had already been repaid to ASOF. The figure of $92,584.53 comprises (CB 6/1326, 1350) $72,498.14 paid to ASOF on 2 January 2013, being an establishment fee under, and interest in respect of, a Deed of Loan under which ASOF had advanced funds to Metal Storm and $5,828.39 repaid on 23 January 2013 and $14,258.00 repaid on 1 March 2013 in respect of amounts previously paid by ASOF or Lind Partners for legal services provided to Metal Storm (Easton 20.2.2014 [15]; CB 6/1326, 1350; Ex D2-2). ANZ Trustees did not press the balance of that claim and acknowledged that the evidence did not show that the balance was repaid to ASOF by Metal Storm. 122I now address the relevant facts in respect of these payments. As I noted above, the Initial DOCA was executed on 22 November 2012 and the former administrators were appointed as deed administrators before the payments were made. Clause 4.2 of the Initial DOCA provided that nothing in it affected the liability of Metal Storm to a secured creditor, relevantly, ANZ Trustees, or the contractual relations between them in respect of any security, even if the secured creditor voted in favour of the Initial DOCA, as ANZ Trustees did. There is accordingly nothing in the Initial DOCA which displaces ANZ Trustees' rights over monies falling within the Charge. The Deed Administrator did not submit that any other aspect of his dealings with ANZ Trustees or ASOF gave rise to any priority of any right of indemnity which they may have over ANZ Trustees' right under the Charge, at least in respect of these payments. 123Metal Storm received a tax refund of $560,000 in respect of research and development expenditure on 28 December 2012 (CB 6/1326). The three payments were then made to ASOF and Lind Partners, funded from that tax refund. The Deed Administrator's Form 524, Presentation of Accounts and Statement, lodged with the Australian Securities and Investments Commission for the period from 22 November 2012 to 21 May 2013 (CB 6/1350) recorded the payment of $72,498.14 made to ASOF on 2 January 2013, described as "payment to ASOF under Company's instructions"; a payment of $5,828.39 to Lind Partners on 23 January 2013 described as "payment under Company's instructions" and a payment of $14,258 to Lind Partners on 1 March 2013 also described as "payment under Company's instructions". Mr Shepard's evidence in cross-examination was that he believed that the payments to ASOF of $72,498.14, $5,828.39 and $14,258.00 were each repayments of funds borrowed from ASOF, and the source of the funds for those payments was the research and development tax refund received by Metal Storm on 28 December 2012, which he accepted was not part of the deed fund under the deed of company arrangement and was property covered by the Charge (T53). Mr Shepard also acknowledged in cross-examination (T54) that each of these payments was actually paid. Mr Easton also acknowledged that ASOF received the payments of $72,498.14 on 2 January 2013, $5,828.39 on 23 January 2013 and $14,258 on 1 March 2013 (Easton 20.2.2014 [15]). 124Sections 443D and 443E of the Corporations Act, to which I referred above, do not apply to these payments since they deal with the position of an administrator of a company under administration and not with that of the administrator of a deed of company arrangement: Wellnora Pty Ltd v Fiorentino [2008] NSWSC 483; (2008) 66 ACSR 229 at [23]-[26]. Although those sections do not apply, a deed administrator may, in some circumstances, have an indemnity and an equitable lien that might prevail over a claim of a secured creditor. However, the arrangements in respect of the Deed of Loan dated 20 December 2012 (CB 2/269) between ASOF and the Deed Administrator do not give rise to any such right of indemnity in respect of monies advanced by ASOF or Lind Partners. That Deed of Loan makes clear that the loan is made by ASOF to Metal Storm rather than to the Deed Administrator (cl 2.1); Metal Storm rather than the Deed Administrator is liable for the loan fee and interest (cll 2.4-2.5); and ASOF has no recourse against the Deed Administrator for repayment and all its rights and remedies are limited to claims against Metal Storm (cl 6.1). The Deed of Loan expressly provides (cl 6.2) that: "Subject to the rights of any Secured Creditor, if any part of the Loan Advances are applied by the Administrators towards payment of Trading Costs and the Administrators subsequently recover any monies, assets or property of [Metal Storm] pursuant to their indemnity under section 443D of the Act which would have been available to pay the Trading Costs, then to the extent those liabilities have been satisfied out of the Loan Advances or under the Indemnity hereby granted, the Administrators will, out of the monies recovered from [Metal Storm] pay those monies to the [ASOF]." [emphasis added] The term "Secured Creditor" is in turn defined in the Deed of Loan as including ANZ Trustees as chargee under the Charge. 125It does not seem to me that the Deed Administrator had any obligation to pay monies to ASOF or Lind Partners in connection with the Deed of Loan or in repayment of monies paid by ASOF or Lind Partners from amounts that were (as the Deed Administrator acknowledged in cross-examination) subject to the Charge, where Metal Storm's repayment obligation under the Deed of Loan was expressly subject to ANZ Trustees' rights under the Charge. Since the Deed of Loan also excluded any right of recovery by ASOF against the Deed Administrator, the Deed Administrator can have no right of indemnity or lien in respect of a payment he was not obliged to make personally in respect of these payments. 126I am satisfied that the order sought by ANZ Trustees in respect of these three payments is properly within the scope of s 447E of the Corporations Act. The Deed Administrator did not contend that an order could not properly be made under that section, if it was otherwise justified. ANZ Trustees' claim - that the Deed Administrator, without legal justification, applied Metals Storm's monies that were subject to the Charge, to a payment to ASOF in a manner that was prejudicial to the interests of Metal Storm's creditors - is not a claim for breach of contract, negligence or breach of duty of the kind that should properly be brought by separate proceedings. ANZ Trustees has established, and indeed the Deed Administrator accepted in cross-examination, that these three payments were made from funds subject to the Charge. The Deed Administrator has not demonstrated any justification for the payments from funds that were not available for that purpose. I will make an order for repayment by the Deed Administrator of the amount of $92,584.53 under this section. 127I note, for completeness, that ASOF contended that an order under this section could not be made against it, ANZ Trustees substantially accepted that position and I do not understand the Deed Administrator to have contended to the contrary. Cross-Claim by ASOF against ANZ Trustees 128By its First Cross Claim Statement of Cross-Claim filed on 9 April 2014, ASOF pleads that ANZ Trustees owed to it a duty to act in good faith and in the best interests of ASOF; a duty to exercise care and skill; a duty to adhere to and carry out the terms of the Security Trust Deed and/or Charge in the best interests of ASOF; and a duty to not act for a purpose collateral to the purposes conferred by the Security Trust Deed and/or the Charge ("Duties"). ASOF points out that ANZ Trustees, as trustee under the Security Trust Deed, had a duty to carry out the terms of the trust which is an essential duty of a trustee: Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 at [32]. Failure to appoint a controller 129First, ASOF contends that ANZ Trustees breached the terms of the Security Trust Deed or alternatively the Duties by failing to appoint a controller to the Secured Property (as defined) of Metal Storm during the decision period following the appointment of administrators to Metal Storm on 26 July 2012. Conversely, by paragraphs 16-17 of its Second Further Amended Interlocutory Process, ANZ Trustees seeks a declaration that it did not breach cl 6.1(b) of the Security Trust Deed by failing to appoint a controller within the applicable decision period or, alternatively, a direction under s 283HA of the Corporations Act that it was justified in not appointing a controller within that period and/or an order under s 85 of the Trustee Act that it should be relieved from liability in that regard. 130There was initially a dispute in the proceedings as to whether the then administrators had given notification to ANZ Trustees of their appointment by the end of 27 July 2012. However, ANZ Trustees now admits that its staff knew of the administration of Metal Storm during the decision period (27 July 2012 to 15 August 2012) and did not take steps to appoint a receiver to Metal Storm in that period. 131Clause 6.1(b) of the Security Trust Deed provides that, if an administrator was appointed to Metal Storm under Pt 5.3A of the Corporations Act and ANZ Trustees did not receive instructions from Beneficiaries in time to enable it to appoint a controller (as defined in s 9 of the Corporations Act) under the relevant Security Document within the "decision period" (also defined in s 9 of the Corporations Act), then ANZ Trustees was obliged to appoint a controller within that decision period despite any provision of the Security Trust Deed. That clause is directed to the exception under s 441A of the Corporations Act which permits appointment of receivers by an all-assets secured party, where the general rule under s 440B of the Corporations Act is that security interests cannot be enforced during the administration period without the consent of the administrators or the leave of the Court. 132ASOF contended that cl 6.1(b) of the Security Trust Deed was an unqualified obligation on the Trustee to appoint a controller during the decision period if the relevant preconditions were satisfied, namely, that an administrator had been appointed to Metal Storm and that no instruction under cl 6.1 had been received by the time the decision period had come to a close. ASOF also contended that the intent of cl 6.1(b) was to operate to bring about a situation in which the holder of a majority of the secured notes could direct the security trustee to release the security unless, in accordance with cl 6.1(a), the note holders acting collectively directed otherwise. I accept that this is a possible consequence of the course contemplated by the clause, although it seems to me its primary commercial purpose is more likely to be to create a default position where a controller appointed by the security trustee, rather than an administrator appointed by the company's directors, would have control of the relevant assets during an administration. 133ANZ Trustees submits that its obligation to appoint a controller under cl 6.1(b) of the Security Trust Deed was qualified by cll 2.1 and 4.11 of the Security Trust Deed and that it was not required by cl 6.1(b) of the Security Trust Deed to appoint a receiver during the decision period because its liability in connection with doing so would not have been limited as contemplated by those clauses. As I noted above, cl 4.11 of the Security Trust Deed provides that ANZ Trustees need not act unless its liability is limited in the manner set out in cl 2. Clause 2 applies to the appointment of receivers under the Charge, since the appointment of receivers is within the "Power[s]" held by ANZ Trustees under the Charge. ANZ Trustees submits that the appointment of a receiver to Metal Storm would expose it to significant potential liability, in connection with the validity of the appointment; the costs, expenses and remuneration of the receiver; and the conduct of the receiver during the receivership, for which it is likely to be necessary for appointors (here, ANZ Trustees) to provide the receivers with indemnification, given that the receivers are otherwise personally liable for their conduct. There is no suggestion that during the decision period any receiver would have been available to act without an indemnity. 134Mr Hall acknowledged in submissions (as it seems to me he had to) that the reference to "party" in cl 2 of the Security Trust Deed, even if given an extended operation to apply to a Beneficiary of the Security Trust Deed, would not apply to a third party (T130) and that acknowledgement has the necessary consequence that it would not apply so far as a receiver appointed by ANZ Trustees had claims against it in respect of its appointment. ANZ Trustees' position in oral submissions was that the words "and not liable to any party" in cl 2.1 at least extended to liability to the parties to the Security Trust Deed and the Beneficiaries. Mr Scerri also submitted, perhaps surprisingly, that it would include any receiver. I am unable to accept the submission that cl 2.1 would extend to exclude liability to a receiver which is not party to the Security Trust Deed. At the same time, ANZ Trustees submitted that its liability was not being limited in respect of the appointment of a receiver which required an indemnity for appointment, where there was a shortfall in Metal Storm's assets and it was not indemnified against liability under any indemnity that it provided to the receiver (T168). It does not seem to me that cl 2, either as a matter of construction or as a matter of fact, limited ANZ Trustees' liability so far as a receiver that it appointed required an indemnity. 135ANZ Trustees in turn submits that cll 2, 4.11 and 6.1(b) conflict with each other when read in isolation, because each expressly applies "despite any other provision of this document". That submission seems to me to be correct, where cl 4.11 provides that ANZ Trustees need not act unless its liability is limited in the specified manner and cl 6.1(b) provides that it must act by the appointment of a controller in the relevant situation, and each are capable of applying to that situation. ANZ Trustees points to several principles applicable to resolving inconsistency within a contractual document, including that, where the different parts of an instrument are inconsistent, effect must be given to that part which is calculated to carry into effect the real intention of the parties as gathered from the instrument as a whole, and that part which would defeat it must be rejected (Walker v Giles (1848) 6 CB 662 at 702; Love v Rowtor Steamship Co Ltd [1916] 2 AC 527 at 535) and that a term may be rejected if it is repugnant to the intention of the parties as it appears from the document (Adamastos Shipping Co Ltd v Anglo-Saxon Petroleum Co Ltd [1959] AC 133). ANZ Trustees submits, and I accept, that it would not make commercial sense for ANZ Trustees to be obliged to act in circumstances that may expose itself to significant liability, such as the appointment of receivers, where it is uncertain that ANZ Trustees would be reimbursed or indemnified against such losses and liabilities and that such a construction would amount to ANZ Trustees being required to risk funding such actions from its own resources, without any certainty of recovering that funding. 136This submission has substantial force and the issue is one of great difficulty. However, I have concluded, with real hesitation, that I cannot accept this submission, because it would substantially deprive cl 6.1(b) of the Security Trust Deed of practical operation in the situation to which the clause is specifically directed. It is likely that, where secured note holders have not provided instructions to ANZ Trustees and that clause would apply, they will also not have indemnified it in respect of the appointment of a controller. The position that ANZ Trustees advances therefore has the consequence that, in the very situation where the clause contemplates the appointment of a controller, that controller would not be appointed. On balance, it seems to me that this clause must prevail in the specific situation in which it applies over the general provision in cl 4.11 of the Security Trust Deed and that ANZ Trustees is obliged to appoint a controller where it has not received an indemnity from the secured note holders in that situation. That course would not always involve commercial risk for ANZ Trustees, because ANZ Trustees' rights to indemnity and a lien against a company's assets might well be sufficient to meet any liability in respect of an indemnity which it is required to provide to the controller that it appoints. Where cl 6.1(b) of the Security Trust Deed takes its present form, it seems to me that ANZ Trustees has assumed the commercial risk that sufficient assets are not available to support such an indemnity, which could readily have been avoided had cl 6.1(b) been expressly qualified to address that risk. 137ANZ Trustees also submits that cl 6.1(b) of the Security Trust Deed should be construed in conjunction with the Convertible Notes Trust Deed, under which ANZ Trustees acts in a similar role in representing all convertible note holders of Metal Storm, not just secured convertible note holders. Mr Hall responds that this was not a single transaction affected by the simultaneous execution of a suite of documents, since the Convertible Notes Trust Deed and the Security Trust Deed were executed three years apart, although the parties to them were the same and although the Security Trust Deed expressly refers to parts of the Convertible Notes Trust Deed, including adopting definitions of terms from that deed (T125). 138ANZ Trustees contends that it had not been indemnified to its satisfaction and, by reason of cl 7.6 of the Convertible Notes Trust Deed, it had absolute discretion to exercise or refrain from so acting; and contends that it was also of the reasonable opinion that it had not been provided with sufficient funds to meet its likely costs and expenses to take any action to enforce the rights of noteholders under the Convertible Notes Trust Deed or the Convertible Note Terms and was not obliged to make such an appointment by reason of cl 7.8 of the Convertible Notes Trust Deed. Clause 7.6 of the Convertible Notes Trust Deed provides that ANZ Trustees has absolute discretion to exercise or refrain from exercising its powers in relation to a Default Event (as defined) or enforce any other rights of the Note Holders under the Convertible Notes Trust Deed, unless it is indemnified to its satisfaction against any actions, proceedings, claims and other matters to which it may thereby be liable, and is requested to enforce performance by Note Holders holding not less than 50% of the nominal value of notes. The term "Note Holder" is defined to include a person entered in the register as the holder of a Note and the term "Note" means a convertible note issued by Metal Storm. Clause 7.8 of the Convertible Notes Trust Deed provides that, subject to cl 7.1, ANZ Trustees is not obliged to take any action to enforce the rights of Note Holders under the Convertible Notes Trust Deed or the Convertible Note Terms unless it is of the reasonable opinion that it has been provided with sufficient funds to meet its likely costs and expenses in so doing, or is satisfied that adequate provision has been made for ensuring that it will be adequately reimbursed for such costs and expenses. It does not seem to me that cll 7.6 and 7.8 of the Convertible Notes Trust Deed assist ANZ Trustees, where they are directed to obligations in respect of the Convertible Notes Trust Deed and there was no necessity either that ANZ Trustees be the trustee of both trust deeds or that any noteholder hold both secured and unsecured notes. 139It also does not seem to me that a term to the effect of cll 7.6 and 7.8 could be implied into the Security Trust Deed. It seems to me that the existence of these express provisions supports ASOF's submission that a requirement for an indemnity should not be implied into the Security Trust Deed. The Security Trust Deed is a detailed and comprehensive document with an elaborate series of protections for the trustee and it does not seem to me that the suggested terms meet the well-known requirements for implication of a term set out by the majority of the Privy Council in BP Refinery (Westernport) Pty Ltd v Shire of Hastings [1977] HCA 40; (1977) 180 CLR 266 at 282-283, as approved by the High Court in Codelfa Construction Pty Ltd v State Rail Authority (NSW) [1982] HCA 24; (1982) 149 CLR 337 at 347, relevantly, that the terms are either necessary to give business efficacy to the contract or so obvious that they go without saying. 140It follows that ANZ Trustees was obliged to appoint a controller in the decision period, although it was not protected against liability under the indemnity that would have had to be given to the receiver to do so. 141ASOF also pleads that ANZ Trustees breached the Duties by not taking steps to seek written consent from the voluntary administrators or leave from a court of competent jurisdiction under s 440B(2) of the Corporations Act to appoint a controller to Metal Storm's Secured Property. ASOF contends that ANZ Trustees also did not meet the duty of care and skill that a trustee is required to exercise in the performance of its obligations under a trust, in failing to take steps to seek the administrators' written consent or leave of the Court under s 440B(2) of the Corporations Act, to appoint a controller after the decision period. ANZ Trustees admits that it did not take those steps but denies that it has, since the expiry of the decision period on 15 August 2012, been under any obligation to do so. ANZ Trustees submits that, after the expiry of the decision period, cl 6.1(b) of the Security Trust Deed ceased to impose any obligation on ANZ Trustees to appoint a controller and, by the express terms of cll 4.1 and 6.1(a) of the Security Trust Deed, ANZ Trustees was neither obliged nor permitted to take any such action without clear instructions from a majority of secured note holders. 142It does not seem to me that this allegation is established. There is no evidence that it would have been in the interests of secured creditors generally, or even of ASOF as the majority secured creditor, to appoint a controller after the decision period, rather than allowing the administration to take that course. That may well depend upon a comparison of, on the one hand, the anticipated outcome for secured creditors and ASOF of the continued conduct of the administration and, on the other, the anticipated outcome had a controller been appointed at some time after the expiry of the decision period. ASOF made no substantive attempt to lead evidence as to those matters. Failure to act on ASOF's directions 143ASOF also contends that ANZ Trustees breached the terms of the Security Trust Deed or alternatively the Duties by failing to comply with written directions from ASOF to vote in respect of a deed of company arrangement to be presented to the creditors of Metal Storm by the voluntary administrators, which if approved would have resulted in ASOF obtaining the Secured Property. ASOF relies on the August 2013 Direction and the February 2014 Direction in that regard. In oral submissions, Mr Hall accepted that the claim for breach of trust in respect of the failure to follow directions would be determined by the construction of cl 4.1 of the Security Trust Deed. The findings that I have reached above mean that a breach of trust is not established in that regard. I would add that, so far as the February 2014 Direction is concerned, it does not seem to me that any breach is established for the further reason that the relevant resolutions have not yet been put to creditors and ANZ Trustees has not yet either complied with, or not complied with, the direction as to how it should vote in respect of them. ANZ Trustees' defences of waiver, estoppel and delay etc 144ANZ Trustees also pleads waiver and acquiescence, estoppel, and delay and laches on the part of ASOF and made detailed submissions in support of these defences. ANZ Trustees points to evidence that ASOF had considered itself appointing a receiver but had not done so and had been involved with the appointment of the administrators, although that appointment was in fact made by Metal Storm's directors. ANZ Trustees points to evidence that ASOF was seeking to develop a deed of company arrangement from an earlier point in the administration, and it did so both before and after the end of the decision period. ANZ Trustees also relies on the fact that ASOF did not offer ANZ Trustees an indemnity in respect of the appointment of a receiver, although I have noted above that ANZ Trustees was then seeking an indemnity extending to past costs in respect of both trusts and not only to expenses and liability in respect of the appointment of a receiver. ASOF responds that these defences are not established, so far as ASOF had no election as between the pursuit of a deed of company arrangement and the appointment of a controller under cl 6.1(b) of the Security Trust Deed, where ANZ Trustees had failed to appoint a controller within the decision period. 145ANZ Trustees contends that ASOF waived any entitlement to complain of any such breach by knowingly pursuing inconsistent courses of action, in the sense identified in Agricultural & Rural Finance Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [56], [68], [88]. I do not accept this submission since, as ASOF points out, it never had a choice of inconsistent courses of action. Although ASOF had considered appointing a receiver, it did not have the entitlement to do so as a note holder and ANZ Trustees did not in fact make such an appointment. ANZ Trustees points out, and I accept, that, ASOF obtained a range of benefits from the Initial DOCA and its involvement with Metal Storm, but that is a matter relevant to whether it has established loss arising from the failure to appoint a controller, not to any waiver arising from a choice between alternative courses of action. 146Second, ANZ Trustees contends that ASOF is estopped from relying on the failure to appoint a controller because it would amount to the unconscionable departure from an assumption it induced on the part of ANZ Trustees that ASOF was actively in favour of a reconstruction by deed of company arrangement and opposed to receivership. I accept that ASOF appeared, for a considerable period, to be pursuing a reconstruction by deed of company arrangement. However, there is no evidence that any representation as to ASOF's views made prior to ANZ Trustees' failure to appoint a controller had any impact on ANZ Trustees' decision-making process in that regard. It does not seem to me that either an assumption on ANZ Trustees' part, at the relevant time, or any conduct of ASOF inducing it, or any unconscionability in ASOF departing from it, has been established. 147Third, ANZ Trustees submits that ASOF has acquiesced and been guilty of laches. It points out that a beneficiary may lose his or her right to seek the rectification of a breach of trust where it can reasonably be inferred that he or she has assented to the breach and that acquiescence may involve the beneficiary remaining inactive with knowledge of the breach. ANZ Trustess points out that relief in equity will be denied to a plaintiff if that party has, by inaction or standing by, placed another party, the defendant or a third party, in a situation in which it would be inequitabIe and unreasonable to place that other party if the remedy were afterwards to be asserted: Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 341. ANZ Trustees points out that a defendant may be able to resist an equitable claim on these grounds if it can demonstrate that a plaintiff, by delaying the institution or prosecution of his or her case and with full knowledge of the material facts or knowledge of circumstances from which the relevant fact is a clear inference, has either acquiesced in the defendant's conduct, caused the defendant to alter its position in reasonable reliance on the plaintiff's acceptance of the status quo, or otherwise permitted a situation to arise which it would be unjust to disturb: Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221; Baburin v Baburin (No 2) [1991] 2 Qd R 240. It does not seem to me that acquiescence or laches has been established, not least because ASOF did not know the material facts of the breach where ANZ Trustees consistently denied that it had received notice of the administrators' appointment so as to be able to appoint a controller, until abandoning that position shortly before the hearing. I am also not satisfied that ANZ Trustees has in any way altered its position by reason of the delay in ASOF bringing this claim. Limitation of ANZ Trustees' liability under the Trust Deeds and ANZ Trustees' claim for relief from liability under s 85 of the Trustee Act 148ANZ Trustees relies on the provisions limiting its liability under cll 7.4 and 7.11 of the Convertible Notes Trust Deed and cll 1.8, 2.1 and 4.15 of the Security Trust Deed. ANZ Trustees alternatively seeks relief from liability in respect of ASOF's Cross-Claim under s 85 of the Trustee Act and also contends that a direction may be made as to justification under s 283HA of the Corporations Act. The parties addressed these issues together in submissions. 149ANZ Trustees did not lead any substantive evidence to explain its reasoning process in respect of that decision. Plainly, there were complexities in the interaction of cl 6.1(b) of the Security Trust Deed, other provisions of the Security Trust Deed and provisions dealing with indemnification of ANZ Trustees under the Convertible Notes Trust Deed. However, ANZ Trustees led no evidence that those complexities had any impact upon its decision whether to appoint a controller within the decision period. 150ANZ Trustees submits that it did not fail to appoint a controller by "fraud", in the sense of doing so with conscious dishonesty, and ASOF did not contend to the contrary. ANZ Trustees also contends that it could not be said that it committed any "wilful act, omission or default" in the sense that it was "conscious that in doing the act complained of, or in omitting to do the act that [it] ought to have done, [it was] committing a breach of [its] duty, or is recklessly careless whether [its] act or omission [was] a breach of duty or not": Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ASCR 642 at 702. ANZ Trustees submits that the same can be said in relation to any breach of trust that may be found to have occurred, in that it was not a breach of trust in relation to which ANZ Trustees was recklessly careless as to whether its act or omission was a breach of trust. ANZ Trustees submits that the most that ASOF could argue is that ANZ Trustees was negligent, in the sense of failing to comply with cl 6.1(b) of the Security Trust Deed. It submits that, where the competing constructions of the relevant provisions are both plausible and open, it could hardly be said that ANZ Trustee acted with a want of care sufficient to be described as "negligent". It submitted that, if ASOF was left with a bare claim that ANZ Trustee committed an inadvertent breach of trust, that places the matter squarely within the relief from liability provisions of the Trustee Act, discussed further below. 151ASOF does not submit that there was moral turpitude on the part of ANZ Trustees during August 2012, but it does submit that its inaction was such that no proper attempt was made to comply with the obligations of the trust, so far as it took no steps to appoint a controller between 1 August 2012, when it was aware of the administrator's appointment and requested internal advice as to its obligations, and 16 August 2012, by which time the decision period had expired. ANZ Trustees itself led no evidence to establish its reasoning in respect of not taking steps to appoint a controller, despite cl 6.1(b) of the Security Trust Deed. ASOF also contends that the trustee's conduct became tinged with impropriety from 16 August 2012, so far as it is suggested, it did not frankly address the question of its knowledge of the appointment of the administrator. 152In oral submissions, Mr Hall submitted that ANZ Trustees had failed to meet the standard of honesty and reasonableness required by the Trustee Act, having regard to correspondence in which an officer of ANZ Trustees, Mr Latham, was (ASOF contended) less than forthcoming as to ANZ Trustees' knowledge of the appointment of an administrator, although he had been involved in correspondence concerning that appointment not long before (Ex D2-3). It is at least possible that a communication from Mr Latham on 19 August 2012 to the then administrators, which stated that notice of the appointment of the administrators sent to the Bank's head office "does not appear to have made its way to us" (CB 2/128) was at best, incomplete, since another employee of ANZ Trustees, Ms Jackson, had become aware of that appointment from 1 August 2012 and Mr Latham had been involved in internal correspondence within ANZ Trustees as to that matter on that date. Mr Latham, who was available to give evidence, was not called and I must assume that his evidence would not have assisted ANZ Trustees in respect of this matter. In closing submissions, Mr Austin for ANZ Trustees contended that ANZ Trustees' conduct after 16 August 2012 was not relevant to relief from liability in respect of its failure to appoint a receiver, because it was not connected with the suggested breach. 153ASOF also criticised an associated aspect of Mr Budnow's affidavit evidence on the basis that he had not made adequate inquiries prior to giving evidence that, to the best of his knowledge, ANZ Trustees had not had notice of the appointment of the administrators during the decision period. Mr Hall made clear that no allegation of dishonesty was made against Mr Budnow, but the criticism that Mr Budnow could and should have made further inquiries before giving evidence of that character has considerable weight. Mr Hall also contended that the question of notice given by the administrators to ANZ Trustees in July and August 2012 remained relevant, so far as ANZ Trustees relied upon s 83 of the Trustee Act or s 283HA of the Corporations Act, and ASOF contended that ANZ Trustees had not been frank with beneficiaries or with the Court in respect of the relevant matters (T23). ASOF also contended that ANZ Trustees has founded its refusal to act on its financial interests, seeking to require additional indemnities and securities for its own costs and disbursements beyond those provided by the Security Trust Deed. It is preferable that I do not express any view as to that matter where it is not necessary to do so to decide this application. 154I first address the question of limitations of ANZ Trustees' liability under the trust deeds. Clause 7.4 of the Convertible Notes Trust Deed provides that ANZ Trustees will, as regards all the powers, authorities and discretions vested in it by that trust deed, have absolute and uncontrolled discretion as to the exercise or non-exercise of those powers and limits its responsibility in that regard. Clause 7.8 of the Convertible Notes Trust Deed provides that, subject to cl 7.1, ANZ Trustees is not obliged to take any action to enforce the rights of Note Holders under the Convertible Notes Trust Deed or the Convertible Note Terms unless it is of the reasonable opinion that it has been provided with sufficient funds to meet its likely costs and expenses in so doing, or is satisfied that adequate provision has been made for ensuring that it will be adequately reimbursed for such costs and expenses. It does not seem to me that these clauses assist ANZ Trustees where its breach of an obligation to appoint a controller in the decision period arose under the Security Trust Deed and was not the exercise of a power under or the taking of action to enforce note holders' rights under the Convertible Notes Trust Deed. 155It does not seem to me that cl 1.8 of the Security Trust Deed assists ANZ Trustees, at least at this point. That clause limits ANZ Trustees' liability for damages awarded for breach of its obligations under the Security Documents, including the Security Trust Deed and the Charge, to the extent that ANZ Trustees obtains final reimbursement from the Security Trust. That limitation is subject to cl 1.8(d), which preserves the right to proceed against ANZ Trustees following fraud, negligence or breach of trust or wilful act, omission or default of ANZ Trustees in relation to the Security Trust or the Security Trust Deed or the Charge. I have addressed the scope of a similar limitation in cl 2.2 of the Security Trust Deed above. That clause does not presently assist ANZ Trustees because, if applicable, it would limit the recoverability of damages against ANZ Trustees in its personal capacity rather than prevent an order for damages against it that would be enforceable to the extent of ANZ Trustees' ability to obtain reimbursement from the Security Trust. 156ANZ Trustees' written submissions in respect of the limitations to its liability under the trust deeds focused on the limitation of liability under cl 2.1 of the Security Trust Deed. It is not necessary to address the other provisions of the Security trust Deed which ANZ Trustees pleaded, but did not address in submissions, given the finding that I reach in respect of the application of cl 2.1 below. Clause 2.1(a) of the Security Trust Deed provides that, subject to cl 2.2, ANZ Trustees is not liable to "any party" for, among other things, any loss or damage occurring as a result of it exercising any Power (as defined) under the Security Trust Deed or in relation to any Security Document, which includes the Charge. Clause 2.1(d) in turn provides that ANZ Trustees shall not be liable to any party for any other matter or thing done, or not done, in relation to the "Security Document", relevantly the Charge. I have addressed that clause above and held, on balance, that the word "party" in cl 2.1 extends beyond the named parties to the Security Trust Deed to secured note holders and that clause potentially applies to limit ANZ Trustees' liability to secured note holders. Clause 2.2 provides that the exclusion of liability is not available where ANZ Trustees or its employees, agents or officers has been guilty of fraud, negligence or breach of trust or wilful act, omission or default. I also accepted the common submission of ANZ Trustees and ASOF above that the fact that an act was intentional did not, without more, trigger the application of cl 2.1 so as to deprive ANZ Trustees of that exclusion of liability. 157Neither party made submissions as to who had the onus of establishing that the limitations in cl 2.2 of the Convertible Notes Trust Deed were or were not applicable. In the present case, the question of onus does not seem to me to be decisive. The limitation on liability under cl 2.1 of the Security Trust Deed is prima facie available to ANZ Trustees and would only be lost where there was some element of fault on its part, including negligence. ASOF's case, so far as ANZ Trustee's failure to appoint a controller in the decision period was concerned, was ultimately no more than that failure was self-evidently negligent. I do not accept that submission, since the complexity of the clauses is such that a party exercising reasonable care and acting with professional advice might well have misunderstood them and failed to comply with them, although I add there is no evidence that in fact occurred in this case. The other matters on which ASOF relies did not occur during the decision period; even assuming there was fault on the part of ANZ Trustees in respect of those matters, that does not seem to me to establish fault on its part of the failure to appoint a controller in the decision period which was completed before they occurred or deprive ANZ Trustees of the benefit of an exemption from liability in respect of the earlier act. This finding has the result that ASOF's claim in respect of the failure to appoint a controller in the decision period must fail. 158Clause 4.15 of the Security Trust Deed in turn provides that ANZ Trustees is not liable to any Beneficiary (defined to include a secured note holder), except, relevantly, to the extent that it is in breach of the Security Trust Deed, for any loss or damage occurring as a result of failing to exercise any power. That clause would not have assisted ANZ Trustees, since the failure to appoint a controller within the decision period was, I have held, a breach of cl 6.1(b) of the Security Trust Deed so the exclusion of liability in this clause is not applicable. 159The question whether ANZ Trustees should be relieved from liability under s 85 of the Trustee Act depends on whether it acted honestly and reasonably in respect of the failure to appoint a controller in the decision period, which is a question of fact to be determined having regard to all the circumstances of the case: H Ford and W Lee, Laws of Trusts (4th ed, 2010, Thomson Reuters) at [18.430]. ASOF refers to the observation of the Supreme Court of South Australia in Maelor Jones Investments (Noarlunga) Pty Ltd v Heywood-Smith (1989) 54 SASR 285 at 295 that the requirement of "honesty" requires that the trustee has: "acted honourably, fairly, in good faith and in a commonsense manner as judged by the standards of others of a similar professional background". ANZ Trustees contends that, in considering whether a trustee has acted reasonably within the meaning of the section, the terms of the instrument creating the trust ought to be taken into consideration and, if an ordinary business man or woman might reasonably entertain a particular view of the construction of the instrument, and the action of the trustee would have been justified if that view had been the true one, the trustee cannot be said to have acted unreasonably merely because this view of the construction of the instrument is wrong: Partridge v Equity Trustees Executors & Agency Co Ltd [1947] HCA 42; (1947) 75 CLR 149 at 165 . ASOF contends that it will be more difficult for a professional trustee, which is remunerated for its work, to make out a case for relief: Elders Trustee & Executor Co Ltd v Higgins [1963] HCA 48; (1963) 113 CLR 426 at 452; National Trustees Executors and Agency Co of Australasia Ltd v General Finance Co of Australasia [1905] AC 373; Port of Brisbane Corporation v ANZ Securities Ltd [2001] 2 Qd R 51; Jacobs Laws of Trusts in Australia above at [2219]-[2220]. 160It is common ground that ANZ Trustees is a professional trustee that was providing its services for reward. The question whether to appoint a controller during the decision period was plainly an important one and, as I noted above, ANZ Trustees did not lead any substantive evidence to explain its reasoning process in respect of that decision. Its earlier claim that it had not received notice of that appointment collapsed when it became apparent that it had in fact received such notice. It seems to me that matter would have provided a strong reason to decline discretionary relief under s 85 of the Trustee Act. In the event, no such relief is required where ANZ Trustees' liability is excluded by cl 2.1 of the Security Trust Deed as I noted above. Causation and loss and damage 161As I noted above, the Court has made an order for the purposes of Pt 28 of the Uniform Civil Procedure Rules 2005 (NSW) that all issues other than the quantum of any loss suffered or claimed by ASOF be determined separately and before any determination of the quantum of that loss. It was common ground between the parties that ASOF needed, in this hearing, to demonstrate causation and the existence of loss that would warrant a later hearing as to quantification. ASOF contends that it has suffered loss and damage by reason of, relevantly, the failure to appoint a controller in the decision period. On the other hand, ANZ Trustees affirmatively contends that any act or omission on its part has not caused any loss or damage to be suffered by ASOF and points to ASOF's active pursuit of proposals for a deed of company arrangement for Metal Storm since the point at which it was placed in administration. It is not strictly necessary to determine this issue since I have held above that the exclusion of liability under cl 2.1 of the Security Trust Deed in respect of the failure to appoint a controller in the decision period, the only breach established by ASOF, means that its Cross-Claim must fail. 162ASOF contends that, had a controller been appointed as required by cl 6.1(b) of the Security Trust Deed, then there would be no room for dispute as to whether there was an "enforcement in accordance with this [deed]" taking place, and it would have been open to ASOF to direct the release of the security in accordance with cl 6.1(c). That proposition is correct so far as it goes, but it does not establish that ANZ Trustees' failure to appoint a controller ultimately gave rise to any loss to ASOF, which must depend upon a comparison of the hypothetical position where a controller had been appointed and the actual position where a controller was not appointed and where ASOF sought to achieve its commercial objectives in the administration and through successive versions of a deed of company arrangement. 163Mr Hall also put in closing submissions that the Court could not be satisfied on the evidence that there was no item of damage or no item of expense incurred by ASOF, and no decay in the value of the assets that might be achieved that could be said to arise from the breach. It seems to me, however, that the question of causation is not to be addressed by asking whether there is any evidence that no damage was caused, but instead by asking whether there is any evidence which would support a finding that damage was in fact caused by ANZ Trustees' conduct. 164It seems to me that the fundamental difficulty with ASOF's claim in this regard is that it made no substantive attempt to establish that it would have been in a better position had ANZ Trustees complied with cl 6.1(b) of the Security Trust Deed by appointing a controller in August 2012, than the position in which it is now in. As ANZ Trustees points out, Mr Easton's affidavit evidence does not suggest that ASOF would in fact have acted differently, in any respect, had a controller been appointed as it contends should have occurred and, so far as the evidence goes, it appears that ASOF was committed to the pursuit of a restructuring utilising a deed of company arrangement throughout the relevant period, which delivered the advantages of a moratorium in respect of claims of creditors and also allowed Metal Storm to receive a substantial research and development rebate which would otherwise not have been available to it. As ANZ Trustees also points out, ASOF had nominated the directors that sit on the Metal Storm board pursuant to the Initial DOCA and has had, since 22 November 2012, full management and operational control of Metal Storm to pursue business opportunities, and also had the benefit of the recovery of amounts from the $562,375 research and development tax refund amount received by Metal Storm on 28 December 2012 and a further $30,000 in GST refunds (CB 6/1326). It seems to me that this is not merely a matter of quantification of loss and involves a more fundamental failure by ASOF to establish that the suggested breaches have in fact been causative of any loss. For these reasons, ASOF's Cross-Claim should therefore be dismissed. Orders and costs 165The parties should bring in agreed short minutes of order to give effect to this judgment within 14 days or, if there is no agreement between them, their respective draft orders and short submissions as to the differences between them. 166In oral submissions, Mr Gray submitted that the institution of the proceedings was justified and probably unavoidable and that the proceedings may have narrowed the issues between the parties and contended that the Deed Administrator should have its costs of the application. My preliminary view is that the Deed Administrator should have an order that his costs of the proceedings be costs in the administration. However, I will hear the parties as to that matter and as to costs generally. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 June 2014