Air Express Ltd v Ansett Transport Industries

Federal Court of Australia|2024-06-18|Before: Ms J, Derrington J

Counsel for the Plaintiff in QUD 185 of 2024: Mr C Withers SC

Solicitor for the Plaintiff in QUD 185 of 2024: Quinn Emanuel Urquhart & Sullivan

Counsel for the Plaintiff in QUD 155 of 2023 and the First to Third and Sixth to Fourteenth Defendants in QUD 185 of 2024: Mr A Pomerenke KC with Ms B Chen

Counsel for the Fourth and Fifth Defendants in QUD 185 of 2024: Mr B O'Donnell KC with Ms J Sargent

Solicitor for the Fourth and Fifth Defendants in QUD 185 of 2024: White & Case

Counsel for Callide Energy Pty Ltd and CS Energy Limited: Mr D Clothier KC with Mr S Walpole

Solicitor for Callide Energy Pty Ltd and CS Energy Limited: Clayton Utz

ORDERS QUD 155 of 2023 IN THE MATTER OF IG ENERGY HOLDINGS (AUSTRALIA) PTY LTD ACN 090 996 142 (ADMINISTRATORS APPOINTED) & ORS GRANT DENE SPARKS AND RICHARD JOHN HUGHES IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF EACH OF THE SECOND TO FIFTH PLAINTIFFS First Plaintiff

IG ENERGY HOLDINGS (AUSTRALIA) PTY LTD ACN 090 996 142 (ADMINISTRATORS APPOINTED) Second Plaintiff

IG POWER HOLDINGS LIMITED PTY LTD ACN 082 413 876 (ADMINISTRATORS APPOINTED) (and others named in the Schedule) Third Plaintiff

QUD 185 of 2024 BETWEEN: SEV.EN GAMMA A.S. Plaintiff AND: IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 (and others named in the Schedule) First Defendant

order made by: DERRINGTON J DATE OF ORDER: 18 June 2024

The application is dismissed.
The parties be heard on the question of costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Overview 1 This is an application which was made by the general purpose administrators of the "IG Power" group of companies consequent upon a proposal being made to defer, by six days, the concurrent hearing of three applications filed in two separate proceedings. 2 The general purpose administrators contended that, if the hearing of one of their applications filed in QUD 155 of 2023 (being their "Daisytek application") was to be delayed, that delay should be conditioned on Sev.en Gamma a.s. (Sev.en) (being the plaintiff in QUD 185 of 2024) giving the Court an undertaking as to damages, supported by security "adequate to protect the companies' creditors from the potential consequences of that delay". 3 A case management hearing was held on 13 June 2024, at which it was determined that the appropriate course was to defer the hearing of the three applications from 18 June 2024 to 24 June 2024. The determination of the question whether Sev.en ought to be required to proffer an undertaking as to damages was reserved. 4 For the reasons which follow, the deferral of the hearing does not necessitate the proffering of an undertaking by Sev.en.

Background 5 On 29 January 2024, the Court made orders on the application of Sev.en for the appointment of special purpose administrators of IG Power (Callide) Pty Ltd (Administrators Appointed) (IGPC). The purpose of that appointment was so that appropriate investigations might be undertaken as to the nature and extent of IGPC's assets - that being an important matter in its administration and in its creditors' consideration whether to vote in favour of a deed of company arrangement (DOCA), should one be proposed. More specifically, the special purpose administrators were to investigate the cause of two catastrophic failures of certain equipment at the Callide Power Station, namely the unit C3 cooling tower and the unit C4 turbine. IGPC has an interest in unit C3 and unit C4, which are operated by it together with Callide Energy Pty Ltd (CEPL) pursuant to a joint venture. It is likely that any cause of action that IGPC has against any entity responsible for the failure of unit C4 or unit C3, would be one of its most substantial assets. 6 The failure of unit C4 in May 2021 caused substantial damage and loss of revenue for IGPC, which was ultimately placed into administration. It is possible, or even likely, that the failure of unit C4 resulted in IGPC's insolvency and administrators being appointed to it. Sev.en, which has a substantial financial and economic interest in IGPC, was dissatisfied with the efforts of the then administrators to investigate the cause of unit C4's failure, and sought the appointment of special purpose administrators to properly perform the investigative task. It was successful, and, as mentioned, orders were made for the appointment of the special purpose administrators. 7 A necessary consequence of the appointment of special purpose administrators was an extension to the convening period for the holding of the second meeting of creditors under Pt 5.3A of the Corporations Act 2001 (Cth) (Corporations Act), and on 26 February 2024 orders were made to that effect. 8 Subsequently, on 11 April 2024, orders were made for the further extension of the time for the holding of that second meeting. Relevantly, Order 7 provided: 7. Pursuant to s 447A(1) of the Act, Pt 5.3A of the Act is to operate in relation to the IG Companies as if: (a) the period for the General Purpose Administrators to convene the second meeting of creditors of the IG Companies under s 439A of the Act (the Meeting) is the period ending at 11:59 pm on: (i) 7 May 2024; or (ii) the day after the Sev.en and GPA Applications are finally determined, whichever is later. (b) the Meeting may be held within 5 business days after the end of the convening period as extended by subparagraph (a). 9 Orders were also made for the hearing of an application for final relief filed by Sev.en on 10 April 2024; being an application seeking the removal of the general purpose administrators (the "Sev.en application"). It was listed for two days, commencing on 18 June 2024, with the consequence being that the effect of Order 7 above would be that the second meeting of creditors would not occur until at least 19 June 2024. 10 Subsequently, on 19 May 2024, the general purpose administrators made an application to vary the orders made on 11 April 2024, so that they may call a meeting at any time during or within five days after the end of the convening period as has been extended. That application is referred to in the material as the "Daisytek application". The identified purpose behind that application is to enable the general purpose administrators to call the second creditors' meeting before the Court determines the application to remove them. If that was to occur, it is quite likely that Sev.en's application to remove them would become redundant, although the general purpose administrators have previously sought to suggest that it would not. 11 The general purpose administrators had also earlier filed an application seeking judicial advice to the effect that they are justified and would otherwise be acting properly and reasonably in putting to the creditors of the companies in administration a DOCA proposed by CEPL and CS Energy Limited (CSEL) (CEPL DOCA). That application was set down to be heard alongside the Sev.en application. It does not appear to be in dispute that if the CEPL DOCA is put to the creditors, it is likely that it will pass. CEPL and CSEL are IGPC's largest creditors and possibly have effective control of a majority of the other related party creditors. There are some non-related creditors whose interests must not be overlooked, but it is doubtful that they would be able to make a difference to the outcome of a vote. 12 Shortly after the Daisytek application was filed, the general purpose administrators made an application for it to be heard urgently and in advance of the Sev.en application and the application for judicial advice. That application was refused for reasons given on 23 May 2024. Orders were made listing the Daisytek application for hearing at the same time as the Sev.en application and the application for judicial advice. Initially, the dates for the hearing of those applications were 18 and 19 June 2024. 13 For the purposes of the joint hearing, Sev.en issued subpoenas to several persons, but applications were made to set them aside or to vary them. After the applications were heard, the parties were informed that the trial dates of 18 and 19 June 2024 might be imperilled by reason of the time needed to prepare a decision on the challenges to the subpoenas. It was indicated that the hearing might be adjourned to dates in July. 14 The general purpose administrators opposed an adjournment of the hearing claiming that they held concerns about prejudice to creditors which might flow from the diminution of the assets in the administration if the hearing was delayed until July. They asserted that the potential delay of the hearing of the applications prompted them to make an application for an order that Sev.en provide an undertaking as to damages in respect of any damage suffered by reason of the delay in the calling of the second meeting of creditors. 15 In substance, their submission is that, by its actions in having the Daisytek application heard alongside the Sev.en application, Sev.en has effectively enjoined the general purpose administrators from calling a second meeting of creditors. They also point out that, had a person obtained such an order in the usual course, they would have been required to provide an undertaking as to damages as the necessary price for that injunctive relief. 16 To give substance to the submission that damage will be caused to the creditors of IGPC and its related entities by reason of the deferral of the second meeting of creditors, the general purpose administrators referred to the CEPL DOCA which they intend to put to the creditors. In its initial iteration, it provided for the creation of a Deed Fund, the size of which would be sufficient to pay IGPC creditors 100 cents in the dollar. Necessarily, the creditors could not achieve a better return on a winding up and, moreover, by voting for the CEPL DOCA they would receive payment of their debts almost immediately. 17 However, presently, money is being spent by CEPL and IGPC on returning unit C4 (as well as unit C3) to working capacity. Under the joint venture agreement between CEPL and IGPC, the participants are required to pay what are referred to as "cash calls" for the operation of the joint venture business, including the payment of amounts which are to be applied for the rebuilding of units C3 and C4. The sums which have been paid and which will become payable are considerable. The evidence shows that the cash calls which IGPC will pay in June 2024 total around $19.3 million and that substantial additional amounts will be called for in July and August 2024, totalling about $38 million by the end of that month. The calls for payment are made by Callide Power Management Pty Ltd (CPM), which is an operational company and part of the corporate operational structure used by the joint venturers, IGPC and CEPL. It was unclear on the application whether CPM was jointly controlled by IGPC and CSEL or by IGPC and CEPL. Ultimately, it does not matter as CEPL is effectively controlled by CSEL. At present, as IGPC is in default under the joint venture agreement, it lacks any vote or influence in relation to the operation of the joint venture affairs. Therefore, in a broad sense, CSEL and CEPL have control over CPM. 18 Whilst the CEPL DOCA initially provided for the payment in full of IGPC's creditors, that is subject to a diminution to the extent to which CEPL is required to pay cash calls under the joint venture. To the extent of those payments, a similar sum will not be contributed to the Deed Fund, with the result being that the payments to creditors will be correspondingly reduced. 19 Until recently, CPM had been making monthly calls on IGPC and CEPL, and, on earlier occasions, that had been relied upon as indicating to the Court that an urgent hearing in this matter was required. That submission was not inappropriate as the potential diminution of funds available to meet the debts of IGPC's creditors was, and remains, an important consideration. Indeed, due to that feature and other matters, the hearing of the applications was expedited and the matters were accorded hearing dates in priority to other pressing actions. 20 On the present application to require Sev.en to provide an undertaking as to damages in relation to the orders which effectively prevent the holding of the second creditors meeting, the general purpose administrators rely upon the fact that CPM has increased the demands on the joint venturers by requiring the payment of cash calls to be weekly. This, it is said, will further diminish the amount available for IGPC's creditors. 21 There was no evidence before the Court as to why CPM has increased the demands on the joint venturers which has the collateral effect of increasing the rate of diminution of the money which will be available to creditors under the CEPL DOCA. There may be perfectly legitimate commercial reasons for it doing so. Nevertheless, it cannot be overlooked that the effect of CSEL's conduct increases the commercial pressure for the holding of the second meeting of creditors so that the CEPL DOCA can be accepted. That is a commercial outcome which CSEL would desire. Further, for present purposes, it is relevant that it also possibly increases the force of the submission that the delay in the hearing of the Daisytek application will cause IGPC's creditors damage through a reduced distribution under the CEPL DOCA, with the result being that it is more appropriate that Sev.en provides an undertaking as to damages. 22 It needs to be reiterated, however, that there is no evidence to suggest that CSEL has caused CPM to increase the demands on the joint venturers for the purposes of generating urgency or pressure in relation to the hearing of the applications. On the other hand, where CPM's conduct is relied upon and there is an obvious benefit to it doing so in the context of the present dispute, an explanation for its conduct might have been of assistance. That is especially so where, as it is so closely tied to one of the main protagonists, one might have expected that it would not have been difficult to secure some evidence of that.

Ability to require an undertaking as to damages 23 It is undoubted that the Court can require a party to provide an undertaking as to damages in response to a concern it may have when its interlocutory orders might lead to damage for which there might be no redress except for an order as to costs. This was articulated by the High Court in European Bank Ltd v Evans (2010) 240 CLR 432, 439 [15] - [17]. There, the following was observed: 15 The undertaking as to damages and its origins in equity practice of the nineteenth century, if not earlier, were explained by Aickin J in Air Express and by Gleeson CJ, Gummow, Kirby, Hayne and Crennan JJ in Mansfield v Director of Public Prosecutions (WA). The authorities discussed in Mansfield included Russell v Farley, where Bradley J had explained the requirement of the undertaking as a response to the anxiety entertained by the court that otherwise its interlocutory order might lead to damage for which there could be no redress except by an order for costs. 16 In Air Express, Mason J said that there was little to be gained from an examination of the authorities dealing with causation of damage in contract, tort and other situations; the Court was better advised to look to the purpose which the undertaking as to damages is to serve and to identify the causal connection or standard of causal connection which is most appropriate to that purpose. 17 A party seeking an equitable remedy is required to "do equity" and this is the origin of the requirement that the party giving an undertaking as to damages submit to such order for payment of compensation as the court may consider to be just. Given its origin and application to varied circumstances in particular cases, the process of assessment of compensation cannot be constrained by a rigid formulation. (Footnotes omitted).

The circumstances in which the application was made 24 The application by the general purpose administrators for orders that Sev.en provide an undertaking as to damages was brought on with some haste. It was served the night of 12 June 2024, to be heard the following morning. There is no criticism in that observation, and it was explained that it was brought on due to the apprehension that the hearing of the combined applications might be adjourned for a not insignificant period of time. As it was, the adjournment will now only be for a period of 6 days. To a large degree, that reduces the level of potential detriment which might flow from any delay in the hearing. Indeed, it might be thought of as being minimal, save that CPM has now increased the financial pressure on CEPL and IGPC. 25 Unfortunately, due to the haste at which the matter was brought on, the scope of the material on which the parties relied became somewhat uncertain. During the hearing of the application reference was made to material from a range of affidavits, none of which were formally read, although no party opposed that course. In essence, the background to the application involved those facts of which the parties were generally aware from the multiplicity of claims, applications and associated affidavit material already filed in the several proceedings.

Delay in making the application 26 For Sev.en, it was submitted that the application should be refused as a result of the delay in bringing it, in circumstances where the general purpose administrators have been aware since, at least, April 2024 that the convening of the second meeting of creditors would be delayed pending the determination of the application to remove them. Orders delaying the hearing of the second creditors' meeting were made on 11 April 2024, being some two months previously and the application for the provision of an undertaking as to damages is now made approximately a week before the hearing is to take place. 27 Since the matters were set down for hearing, a large amount of work has been undertaken by the parties, including by Sev.en and the special purpose administrators, in preparation for the proceedings. It may have been the case that, had Sev.en been required to give an undertaking earlier it would not have done so, and it may be that if one is required now it will refuse to give it with the consequence that the orders of 11 April 2024 will be discharged. That will result in the hearing of its application not proceeding and the loss of a large amount of work and wastage of costs. 28 It was said that the making of the current application was prompted by the possibility of the hearing of the applications being adjourned for some time. Whilst that might be accepted, it does not explain why an application of this type had not been advanced previously. The general purpose administrators claim that the amount of the Deed Fund under the CEPL DOCA will diminish further, though it has always been the case that a reduction in the amounts received by the creditors was a feature of the CEPL DOCA. That being so, on the case being advanced by the general purpose administrators, there was always a foundation for seeking an order that an undertaking as to damages or some other security should be given, or there was from at least when the terms of the CEPL DOCA became known. Indeed, the concept of an undertaking being given was raised briefly on the general purpose administrators' application to have the Daisytek application determined separately. As mentioned, that application was dismissed on 23 May 2024, for reasons given on the same day. 29 In these circumstances, the delay in the making of the application weighs against the making of the order sought.

The cause of the delay in the administrations 30 The general purpose administrators suggested that the cause of the delay in the administration of IGPC and the other IG Power companies was the making of the application by Sev.en to appoint the special purpose administrators and its application to remove them from their position as administrators. In a broad sense, that is correct. Had it not been for Sev.en's actions, it is likely that the general purpose administrators would have called the second meeting of creditors by now and a DOCA would have been entered into. 31 However, when the issue of why the administrations of IGPC and its related companies are in the state they are is considered in more detail, the true cause of the delay in finalising them is not the conduct of Sev.en. As was submitted by Mr Withers SC on its behalf, it is blameless in relation to the delay in the administrations, and the real cause of the delay lies at the feet of Messrs Sparks and Hughes, as the general purpose administrators. 32 In the decision in which it was determined that special purpose administrators should be appointed: Sev.en Gamma a.s. v IG Power (Callide) Pty Ltd (Administrators Appointed) [2024] FCA 30: findings were made as to the general purpose administrators' failure to perform the statutory duties required of them by Pt 5.3A of the Corporations Act. Some of those findings were: (a) That the general purpose administrators' conduct revealed "a lack of attention to the requirements of the administration" (at [133]). (b) That the general purpose administrators had not undertaken any adequate inquiries into the cause of the failure of units C3 and C4 at the Callide Power Station (at [171]). (c) That, prima facie, the investigations undertaken by the general purpose administrators for information vital to the administration of IGPC had "fallen well below the standard required" (at [154]). (d) That the administrators had "failed to make any substantial assessment of any claim that IGPC might have against CSEL in relation to the latter's possible failure to meet its contractual or tortious obligations in relation to the maintenance of units C3 and C4" (at [131]). (e) That the failures of the general purpose administrators to perform their obligations necessitated the making of the application to appoint the special purpose administrators to perform those obligations (at [117]). (f) That the administrators had failed to explain their lack of action (at [131]). 33 It should also be observed that, in that case, it was found (at [132]) that the general purpose administrators had dissembled in the evidence which they gave at the hearing as to why they had failed to perform their statutory duties and, especially, why they had failed to undertake any or any adequate investigation of the causes of the failure of unit C4 and unit C3. The evidence before the Court revealed that they made no real attempt to undertake those investigations. 34 It was the consequence of the general purpose administrators' neglect of their obligations that forced Sev.en to take the action which it did. It is true that the action was pursued by it in the protection of its own interests. However, the protection of those interests should have followed from the performance by the general purpose administrators of their statutory duties and, when that did not occur, it was required to act. 35 Once the special purpose administrators were appointed, they were required to undertake the investigations which the general purpose administrators had failed to do. Necessarily, that has taken some time and it will take more time to complete. Had the general purpose administrators performed their statutory duties, it may have been that appropriate investigations into the cause of the failure of units C3 and C4 would have been completed either before the application to appoint special purpose administrators or before the present application. It is, of course, difficult to speculate too much about that, but it can be assumed that by now knowledge of what happened and the identification of those who were responsible for it would have been well progressed. 36 In these circumstances, the submission by Mr Withers SC on behalf of Sev.en that the substantial cause of the delay in the completion of the current administrations is a consequence of the conduct of the general purpose administrators, should be accepted. This conclusion provides a cogent basis for rejecting the general purpose administrators' application. Had the issue of whether an undertaking as to damages been raised earlier in the proceedings, such as on the determination of the application to appoint special purpose administrators, it is more than possible that this would be one of those "special circumstances" where no undertaking would have been required: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249, 260. 37 It should also be accepted, as Mr Withers SC further submitted, that the cause of the more immediate delay in the hearing of the applications are the actions of CSEL and CEPL in wrongly objecting to produce the documents required by the subpoenas issued to them. The general purpose administrators submitted that the application for Sev.en to provide an undertaking for damages or security was prompted by the potential adjourning of the hearing of the applications which were initially set down for 18 June 2024. On that basis, the reason for that potential delay was CSEL and CEPL's opposition to the subpoenas which were served on them. A claim for privilege was made which was rejected: Sparks, in the matter of IG Energy Holdings (Australia) Pty Ltd (Administrators Appointed) [2024] FCA 613: and some time was required for the reasons for judgment to be prepared with the result being that the potential for an adjournment arose.

The detriment which might be suffered 38 The general purpose administrators submitted that the unsecured creditors of IGPC and the related entities will suffer prejudice by reason of the continued operation of Order 7 of the orders made on 11 April 2024. The foundation for that submission is that pursuant to the CEPL DOCA as presently proposed, the amount of funds paid as cash calls and spent by them, in part, in rebuilding unit C4 and unit C3 at the Callide Power Station, will be deducted from that which would otherwise be paid into the Deed Fund. As mentioned, until recently, the amounts paid by CEPL as cash calls have been monthly, but CPM, which is controlled by CSEL, has demanded further payments and that they be paid weekly. It is said that a consequence of this is that there will be further and greater diminution in the amount which CEPL will provide for the meeting of creditors' claims. 39 On the assumption that the creditors will suffer a reduced distribution from the Deed Fund, on the basis of the findings made above, the functional cause of those losses is the conduct of the general purpose administrators and not the conduct of Sev.en. 40 Even if it can be assumed that the alleged reduction in the amounts which might be received by the creditors is really caused by the interlocutory orders rather that the defaults which lay behind them, it is impossible on the available evidence to ascertain the nature and extent of it. That is largely because of the generally fluid nature of the circumstances. 41 On behalf of the general purpose administrators, it was submitted that the reduction will occur because that is the manner in which the CEPL DOCA will operate. However, the CEPL DOCA has not yet been put to the creditors let alone voted on, and the creditors are not obliged to agree to it. If it transpires that the amount that CEPL chooses to offer under the CEPL DOCA continues to diminish commensurately with CEPL's payment of cash calls, it may be that the creditors, assuming that they are voting in their own interests qua creditor, will reject it. In that sense, the reduction in the amount which they will receive as alleged, will only occur if they choose to vote in favour of the CEPL DOCA. 42 Alternatives are or may be available to the creditors. It is possible that a winding up of IGPC will return 100 cents in the dollar to the creditors. Whether that is the case may depend upon the value of any claims which IGPC and CEPL have against CSEL, being something which the general purpose administrators chose not to investigate. It is not, by any means, certain that liquidation of IGPC will result in a full return to the creditors, but this is the difficulty of the current circumstances and the uncertainty about the claims which might be pursued against CSEL and, perhaps CEPL - an uncertainty which is likely to be a consequence of the general purpose administrators' conduct referred to above. 43 It may also be that CEPL will revise its offer under the DOCA. It is not to be forgotten that large amounts of money are being expended by IGPC and CEPL in the restoration of the power units at the Callide Power Station. On one view, it might be expected that the assets will become more valuable as money is spent on them and they are closer to being returned to full production. On the basis that CSEL would be acquiring a more valuable asset under the CEPL DOCA, it might be expected that it will be prepared to pay an appropriate price. Under the present version of the CEPL DOCA, there is no provisioning for an increase in the payment of the Deed Fund despite the continued apparent increase in the value of the interest in the power station. If, therefore, there is a reduction in the Deed Fund despite the expected increase in the value of the interest in the power station, any losses sustained by the creditors might be said to have been caused by the acceptance of a DOCA which does not provide a good deal for the creditors. So much was submitted by Mr Withers SC on behalf of Sev.en and there is some force in his contention. 44 The general purpose administrators also submitted that there is a very limited market for the interests in the Callide Power Station, and that CSEL is the only viable bidder such that the offer in the CEPL DOCA is the only opportunity for the creditors to receive a return on their debts. It is possible that this is correct, though the current material does not permit a finding to be made to that effect. 45 In the course of the hearing, reference was made to the position of an unrelated creditor, Arcadia Energy Trading Pty Ltd, which, as its name suggests, appears to be an energy trading company. It is said to be owed in excess of $10,000,000 and it intends to appear at the hearing of the applications in support of the general purpose administrators in their attempt to obtain approval for the putting of the CEPL DOCA to the creditors. As to this point, it is undoubted that there are individual creditors whose interests are vitally important and which must be kept in mind in the making of any orders. However, as mentioned, if such creditors receive a diminution in the dividend payable, it is far from clear that the responsibility for that lies at the feet of Sev.en. 46 The difficulty in relation to this application is that, on the available material, there is insufficient evidence on which any determination can be made that the creditors will suffer a loss or are at serious risk of a loss, by reason of any delay in the holding of the second meeting of creditors. The possibility that this will occur exists and that should not be forgotten. On the other hand, this is not a case where it has been shown to be likely. Rather, it is possible. This conclusion renders it less likely that an order for an undertaking as to damages should be made.

What might the undertaking cover? 47 As indicated above, the nature of the damages which might be suffered by any party as a consequence of the delay in the calling of the second meeting is unclear. It was suggested that the damage would equate to the reduction in the amounts received by creditors under the CEPL DOCA on the assumption that it was approved by a subsequent creditors' meeting. In broad terms, that measure may well be appropriate. 48 However, whether that is so is dependent on a number of different factors and events occurring. In particular, it is dependent upon the Deed Fund offered under CEPL DOCA not being revised upwards, and the creditors voting for it, even if to do so may not be in their own interests as creditors. It is possible that the damage might not occur if the creditors vote to put IGPC into liquidation. 49 Whilst one can accept that the manner in which a court assesses compensation payable by a person who has given an undertaking as to damages is not constrained by rigid formulation, in this case, even the nature of the damage by the delay which might be sustained is opaque at best. That weighs against requiring Sev.en to provide any undertaking. A court ought to be slow to place a litigant in a position whereby it must choose whether to pursue its claim or to provide an undertaking as to damages in circumstances where the nature and the extent of the damages which might be payable is obscure and indeterminate. That would be putting far too high a burden on the litigant. In most cases, such an issue does not arise as the nature of the damage which the other party or other interested persons might suffer is apparent, as is its extent. This is not the case here and that too weighs against granting the relief sought.

The merits of the case 50 Some attempt was made to delve into the merits of the general purpose administrators' applications, especially that in which they seek directions that they are justified and would otherwise be acting properly and reasonably in putting the CEPL DOCA to IGPC's creditors. In essence, it was submitted that the CEPL DOCA will be the only DOCA available in the unusual circumstances of the interests held in the Callide Power Station. In particular, that CSEL has significant control and interests in the power station infrastructure and it has no intention of dealing with Sev.en in the future. Moreover, it was submitted that the joint venture will expire in May 2028 and the leases in respect of the power stations expire in 2029. Therefore, there are limited interests which might be secured by any purchaser and, in the case of Sev.en, it would be required to deal with an antagonistic partner in CSEL which has no present intention of dealing with it. In these circumstances, it was submitted that any Court would be unlikely to reject CEPL's DOCA. 51 Reference was also made to the fact that the CEPL DOCA preserves the causes of action which IGPC and CEPL might have against CSEL in relation to the failure of units C3 and C4 and that this provides an additional justification for accepting the general purpose administrators' claim that they are justified and otherwise acting properly and reasonably in putting it to the creditors. There is force in that submission. 52 Whilst those propositions were contested on the part of Sev.en, it is not possible to reach any conclusion about them on a hearing such as the present. There is simply insufficient information on which to make an analysis of the merits of the issues, even on a preliminary basis. In addition, the circumstances of this case are exceptionally fluid and are constantly changing. 53 It follows that the question of the merits of either of the general purpose administrators' applications are neutral in the circumstances.

Conclusion 54 Though the application of the general purpose administrators to require Sev.en to provide an undertaking as to damages initially appeared to be attractive, on deeper consideration it should be refused. On any view, the difficulties with the administrations of the IG Power companies arise as a result of the general purpose administrators' initial failure to perform their statutory duties over a period of some ten months. Though it is difficult to speculate, had they done so it is quite possible that the administrations would have been completed by now. As it was, Sev.en was required to act to protect its interests by having special purpose administrators appointed so that the administrators' statutory duties would be performed. Necessarily, that has caused the administrations to be delayed whilst the investigations which should have been undertaken by the general purpose administrators are pursued. It is true that these circumstances have necessitated the delay of the second meeting of creditors, but on any fair view, that is not a matter for which Sev.en can be held responsible. 55 Taking the above matters into account, it is not appropriate, at this late stage, to require Sev.en to provide an undertaking as to damages. 56 The orders which should be made are that the application be dismissed and the parties are to be heard on the question of costs. 57 As these reasons were expedited, they are being delivered subject to review and correction at a later time. I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington.

SCHEDULE OF PARTIES QUD 155 of 2023 Plaintiffs Fourth Plaintiff: IG POWER MARKETING PTY LTD ACN 082 413 867 (ADMINISTRATORS APPOINTED) Fifth Plaintiff: IG POWER (CALLIDE) LTD ACN 082 413 885 (ADMINISTRATORS APPOINTED) Supporting Creditor: SEV.EN GAMMA A.S. Supporting Creditor: ARCADIA ENERGY TRADING PTY LTD

QUD 185 of 2024 Defendants Second Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Third Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Fourth Defendant: JOHN RICHARD PARK IN HIS CAPACITY AS JOINT AND SEVERAL SPECIAL PURPOSE ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Fifth Defendant: BENJAMIN PETER CAMPBELL IN HIS CAPACITY AS JOINT AND SEVERAL SPECIAL PURPOSE ADMINISTRATOR OF IG POWER (CALLIDE) PTY LTD (ADMINISTRATORS APPOINTED) (SPECIAL PURPOSE ADMINISTRATORS APPOINTED) ACN 082 413 885 Sixth Defendant: IG POWER HOLDINGS LIMITED ADMINISTRATORS APPOINTED) ACN 082 413 876 Seventh Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER HOLDINGS LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 876 Eighth Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER HOLDINGS LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 876 Ninth Defendant: IG POWER MARKETING PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 867 Tenth Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER MARKETING PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 867 Eleventh Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG POWER MARKETING PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 082 413 867 Twelfth Defendant: IG ENERGY HOLDINGS (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 090 996 142 Thirteenth Defendant: RICHARD J HUGHES IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG ENERGY HOLDINGS (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 090 996 142 Fourteenth Defendant: GRANT D SPARKS IN HIS CAPACITY AS JOINT AND SEVERAL ADMINISTRATOR OF IG ENERGY HOLDINGS (AUSTRALIA) PTY LIMITED (ADMINISTRATORS APPOINTED) ACN 090 996 142 Interested Person: CALLIDE ENERGY PTY LTD ACN 082 468 746 Interested Person: CS ENERGY LIMITED ACN 078 848 745 Interested Person: SEAN BRADY Interested Person: ARCADIA ENERGY TRADING PTY LTD ACN 121 803 638

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Judgment (26 paragraphs)

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