CIP Group Pty Ltd v Watters in his capacity as receiver and manager of GGPG Pty Ltd

The complaints 33 Having regard to their written submissions, the applicants seek an inquiry under s 423 of the Corporations Act into the following acts and omissions of the respondent which are in connection with the performance or exercise of his functions and powers: (1) the acts of the respondent in causing Park Ridge to pay out approximately $8,000,000 owing on the loan from Makro a year earlier than its expiry by taking a new loan from IJ Financial Pty Ltd for $8,000,000 (the refinancing complaint); (2) the acts of the respondent in notifying purchasers under contracts for the sale of lots in the Carver's Reach development that the respondent would not honour those contracts (the stage 6 contracts complaint); (3) the omission of the respondent to sell certain land and the omission of the respondent to accept an offer made to him by HBL Qld Pty Ltd to buy the balance of the development land (the sales and marketing complaints). 34 The applicants relied upon two expert reports of Mr Robert Hutson, an insolvency practitioner at KordaMentha. Mr Hutson provided an expert report dated 11 November 2022 and a further report dated 10 February 2022. Both reports are directed at expressing opinions about what is "orthodox practice" or, on occasion, what is "usual, market standard", "market standard practice" or "prudent". These conclusions were necessarily made with the benefit of hindsight, and with incomplete information (such as the nature of any legal advice received by the respondent or his explanations about all matters raised by them). 35 As to this last point, Mr Hutson (and the applicants) proceeded on an assumption that the respondent had produced all relevant documents which assisted the respondent's case (excluding privileged documents), and encouraged me to draw an inference that this had occurred. However, in circumstances where this application comprises only the first of the three stages under s 423, and there are no issues of fact to be resolved, I am not prepared to draw that inference. 36 The critical issues that must be determined on this application are whether there is conduct "liable to attract sanctions or control for what might broadly be described as disciplinary reasons": Northbourne Developments at 438. Mr Hutson's reports do not contain opinions about whether the concerns he identifies rise to the level of being described as "disciplinary reasons" for attracting sanctions or control. 37 As the detailed facts and issues canvassed in the affidavits filed by both sides in this application demonstrate, the factual and legal questions facing the respondent were complicated. They were not the kind of questions that have a fixed determinate answer. 38 Views expressed by Mr Hutson about "orthodox practice" or what is "usual, market standard" in this context are therefore of limited utility for the purposes of this application. That is because every receivership is unique. There can be no 'one size fits all' approach to conducting receiverships. Receivers (and all external controllers) have to make difficult commercial decisions by reference to the particular circumstances. Even if there is an arguable basis to contend that an alternative and better decision should have been made by a receiver, it does not follow that an inquiry is appropriate or in the public interest.

Specific facts relevant to this complaint 39 Under the Makro Agreement: (1) interest was payable at the rate of 12% without default or 17% in the event of default; (2) in the event of default (which included the appointment of a receiver: cl 5.1(d)), the "Principal Sum" together with "interest on the Principal Sum" would immediately become due for payment (cl 5.1); (3) Makro was permitted to add unpaid interest to the Advance (as defined) (cl 3.1(f)); (4) the borrower was required to pay Makro on demand all costs of exercising or enforcing any Securities (as defined) granted in favour of Makro (cl 3.1(h)). 40 At around the time of the respondent's appointment on 16 December 2021, Makro was owed approximately $8,798,934.023 and had first ranking security (in the form of registered mortgages) over stages 6-11. 41 The effect of the respondent's appointment was to give rise to a default under clause 5.1(d) of the Makro Agreement, which entitled Makro to charge interest at the rate of 17% per annum. 42 According to the respondent, this also had the apparent effect of making immediately due the whole of the interest that was payable under the Makro Agreement for the duration of the term of the loan, and gave Makro the right to capitalise that interest and charge interest upon it. In passing, it is relevant to note that Mr Hutson performed his calculations based on a different construction of the Makro Agreement. Neither party pressed for a ruling in this application as to the correct construction of the Makro Agreement. 43 On the date of his appointment, the respondent contacted a representative of Makro advising of his appointment and inviting it to discuss the potential immediate repayment of Makro's debt. In response, Makro referred the respondent to its solicitors. On the same day, the respondent's solicitors advised the solicitors acting for Makro of the respondent's appointment. Their email repeatedly acknowledged Makro's position as first-ranking security holder (ahead of the respondent's appointor Ultimate). It also invited further discussion and requested an indication as to whether Makro had any particular requirements. 44 At 2.15 pm on 20 December 2021, Makro's solicitors wrote to the respondent's solicitors stating: My client has determined it will appoint Mr Chris Cook of Worrells as receiver and manager of the borrower and guarantor companies. I expect Mr Cook will be in touch with Mr Watters in the near future. 45 At 2.45 pm on 20 December 2021, the respondent's solicitors wrote to Makro's solicitor requesting a payout figure and referring to s 94 of the Property Law Act 1974 (Qld), which empowers a mortgagor to compel a mortgagee to transfer their mortgage to a third party in certain circumstances. 46 At 3.28 pm on 20 December 2021, Makro's solicitor replied with a payout figure and disputing whether s 94 applied. 47 On 21 December 2021, the respondent decided to refinance the Makro debt. 48 The refinancing was effected principally through IJ Financial which entered into an agreement with Park Ridge on 21 December 2021 (the IJ Financial Agreement). 49 The IJ Financial Agreement provided for an $8 million advance by IJ Financial to Park Ridge that would be repayable within 12 months of the commencement of the agreement. The loan was guaranteed by various Carver's Reach Entities and secured by mortgages over property owned by those entities. 50 The effect of the refinancing was to commit Park Ridge (and the guarantors) to at least: (1) full interest (of 12% per annum) under the Makro loan (which had been required to be paid until maturity of that facility on 21 December 2022) and which, according to Makro, was $823,662.50; (2) additional interest to IJ Financial (of 12% per annum) until repayment of that facility, being around $1,000,000 (assuming a 12 month term); and (3) the fees and costs associated with the refinancing (which were almost $16,000), as well as additional liability to Ultimate to fund the additional interest. 51 On 22 December 2021, the refinance transaction under the IJ Financial Agreement settled. The loan advance, together with a further loan from Ultimate of $1,054,793.10, was then used to pay Makro the total amount which it was owed at that date, being $8,798,934.02. 52 On 22 December 2021, IJ Financial registered its mortgages and became the first-ranking secured creditor over the land in stages 6-11.

Explanation given by respondent 53 The respondent explained his reasons for entering into this refinance transaction in his second affidavit as follows: 26. I considered it to be clear [that] Makro was not satisfied with the proposal to make an immediate payment in partial reduction of its debt and were unwilling to simply sit back whilst I undertook the sale of the Properties. 27. Ultimate instructed me that it did not want a situation where there were concurrent appointments. Ultimate instructed me that it wanted its own receiver to have full control of the sale process so that its debt would be repaid in a controlled situation, not a default situation with Makro and with two receivers appointed. Ultimate also wanted to avoid a situation where there was an overlap and/or duplication in costs. In my experience, in situations where there are multiple insolvency practitioners appointed in an external administration context, there are typically considerable fees incurred by all involved. I am not aware of many situations where a consensual agreement is reached between multiple insolvency practitioners as to the realisation of real property and the charging of fees and expenses that would completely avoid duplication. 28. Furthermore, I was advised by Terence So of Ultimate that there was little utility in engaging in discussions with Makro proposing that it appoint me as receiver because Richard Akero (of Makro) had a strong relationship with Marc Clancy (one of the applicants in this proceeding). Indeed, I had been told by both Mr So and Mr Wong during the 29 November 2021 meeting that Makro would not likely be cooperative with me. 29. Notwithstanding these issues, I was advised by Terence So on around 20 December 2021 that Ultimate did not itself have the funds to pay out Makro. The debt to Makro was approximately $8 million. It, therefore, became apparent that an alternative financier was necessary. 30. I was informed by Marc Maskell that he contacted someone known to him who works at a large Australian bank to ascertain whether the bank would be willing to lend funds in this context. Marc Maskell told me that he was informed that the bank would not lend. This was consistent with my views that it would be difficult (if not impossible) to find an Australian bank that would be willing to lend funds given the Companies' situation. Even if they were, this would require weeks of due diligence checks first being completed. 31. IJ Financial had been identified and recommended to me by Paul Wong as a potential financier as early as 29 November 2021. I understand that Paul Wong had previously acted as the solicitor for IJ Financial, however, I am not aware of any other connection between Paul Wong and IJ Financial. I knew that Paul Wong had been in discussions with IJ Financial about the possibility of paying out Makro's debt prior to my appointment and that it was comfortable in lending notwithstanding the receivership of the Companies. I understand that IJ Financial engaged Mullins as their solicitors in respect of this transaction. … 41. On 21 December 2021, I decided to cause Park Ridge Development Management Pty Ltd to borrow money from IJ Financial to refinance Makro's debt because: (a) I did not think there were likely to be many other financiers who would be able to lend on such short notice and favourable terms just prior to Christmas; (b) I knew that Paul Wong had worked them in the past and that IJ Financial came recommended; (c) Ultimate advised me it was supportive of this decision; and (d) I received the terms and conditions of the draft Loan Facility Agreement, General Security Deed, Mortgages and Deed of Priority on 21 December 2022. I was comfortable with the terms as the interest rate was comparable to Makro, there were limited events of default, no personal guarantees and they provided up to a year to repay the loan. The facility provided me with a non-default environment in which to sell the properties and repay the secured debts. I considered that a non-default environment was a benefit to the Companies and my appointor Ultimate. 54 The respondent's assessment of the terms of the agreement is also addressed in his first affidavit as follows: 79. Under the Makro Loan Agreements, the Companies were liable to pay interest calculated up to the loan expiry date regardless of when the financial accommodation was repaid. Ordinarily, that interest rate to Makro would have been 12% per annum, however Makro imposed default interest at 17% per annum from 16 December 2021. 80. As a result, I acknowledge that, by me entering the IJ Financial Loan Agreement and becoming liable for interest (at 12% per annum) to IJ Financial, the Companies incurred that interest in addition to their liability to Makro. 81. However, the Companies' interest liability to Makro would then have been 17% per annum for however long Makro took after December 2021 to enforce its security and recover its debt including enforcement costs etc. However, I note that as part of the refinancing terms, the Companies' liability to Makro for interest post-refinancing until the end of the Makro loan term was limited to 12% per annum (not 17%). Whether or not the Companies at the end of the day incur more or less net costs as a result of the refinancing with IJ Financial requires a balancing of the risk Makro could have charged default interest at 17% per annum for a considerable time (up to and beyond the end of the Makro Loan term), including applying that figure to the costs of Makro's threatened receivership, the costs of multiple receivership appointments with Makro and Ultimate having different but overlapping security, the benefit in avoiding Makro enforcing its security/ having a single receivership appointment and the benefit of a lower 12% per annum interest rate. 82. Separately, I believe my refinancing of the Makro Loan Agreements with IJ Financial was within the scope of my appointment as receiver and Ultimate's indemnity in my favour. 83. I did not consider in any detail or substance alternative financiers other than IJ Financial because: (a) Time was at the essence; (b) The time of the year - the Christmas and New Year break is a notorious "shut down"; (c) As mentioned above, I knew from my professional experience that it would be very difficult in circumstances where the Companies were in receivership to find an alternative financier; and (d) The terms being offered by IJ Financial were comparable to (and better than) those set out in the Makro Loan Agreements. 55 The respondent stated in his second affidavit that: 49. By the time of the settlement of the refinance, my view was that: (a) Ultimate was not prepared to pay out Makro's loan; (b) IJ Financial was prepared to pay out Makro's loan on terms that I considered appropriate (including having regard to the interests of the Companies); (c) an arguable basis to dispute whether Makro could be compelled to transfer its mortgage to an incoming financier under s 94 of the Property Law Act 1974 (Qld) had been raised, and that dispute was unlikely to be able to be resolved without court proceedings; (d) whether Makro could be compelled to transfer its mortgage would make little practical difference in circumstances where IJ Financial intended to (and ultimately did) register a mortgage to secure its loan; (e) Makro had threatened to imminently appoint a receiver which was contrary to the wishes of Ultimate and had at least the potential (and in my view was likely) to result in additional costs, as well as disruption of the receivership. 50. In relation to paragraph (b) above: (a) the interest rate under the IJ Financial Loan Agreement was only 12% per annum compared to a default interest situation; (b) as referred to in My Previous Affidavit, I was aware that Makro's payout figure included an amount for interest, calculated as if Makro's loan was outstanding for the entire loan term. Interest was therefore accelerated and Makro demanded payment of that to not enforce its security. Given the above matters and time not being available to fight with Makro, I decided to proceed to cause the company to pay the Makro payout figure, knowing I wanted to continue investigations about whether I could claw back any amount later on. I am aware that Ultimate contributed to paying some of Makro's payout figure to ensure there was adequate funds. I hadn't had time to complete my investigations into the Makro payout figure when signing the IJ Financial loan agreement and I recall Paul Wong saying to me that, regardless of the outcome of my future dealings with Makro, it would be up to Ultimate to "take care of it" if it ended up that interest was a duplication or not properly payable by the company, and if I couldn't recover it from Makro. I did not document this because I knew Paul acted for Ultimate, I had a level of trust with him and Ultimate was my indemnifier; (c) I was also aware of the Exit Fee payable under the IJ Financial Loan Agreement; and (d) I considered it allowed me a controlled non-default environment of up to a year to realise property and pay down secured debt.

No inquiry warranted 56 Mr Hutson observed in his first report that: … the decision of the Receiver to facilitate the repayment of the Makro circumstances [sic] was orthodox, in the sense that facilitation of repayment of a senior secured creditor by a junior secured creditor can be considered to provide an opportunity for the junior secured creditor to effect a realisation strategy that takes into account or prefers their interests. 57 Mr Hutson also acknowledged in that report that the overall terms of the "IJ Financial facilities are largely orthodox". 58 However, Mr Hutson identified, in his first report, questions which he considered were unanswered by the respondent's explanations about the refinancing of the Makro loan. Mr Hutson then considered the respondent's responses to those questions provided through the respondent's second affidavit and (in effect) found them to be unsatisfactory, including the failure by the respondent to provide any financial analysis which he undertook to justify the decision to refinance. Mr Hutson also questioned the merit of the respondent taking the word of Mr Wong about Ultimate covering interest if it could not be recovered from Makro, especially in circumstances where there was nothing to suggest that the respondent had taken any steps to recoup that money. 59 Based on Mr Hutson's evidence, the applicants submitted that the refinancing complaint raises concerns about the respondent's conduct in circumstances where: (1) the companies became exposed to both the interest on the Makro facility (until maturity, which amount was borrowed from Ultimate at 20% interest) as well as the interest on the IJ Financial loan; (2) there is no evidence that the respondent compared the costs of the refinance with avoiding the costs of a dual receivership whereas Mr Hutson's opinion is that the refinance left the companies in a worse position; (3) there is no evidence that haste was required, or that the costs of a further receivership would imminently be incurred, especially having regard to the Christmas period and in circumstances where he in fact had time to deal more fully with Makro having first found out about its presence on 29 November 2021; (4) the refinance appears to have been implemented for the simple reason that Ultimate did not want an unfriendly first tier mortgagee. However, the respondent did not himself verify that Makro was unfriendly. This is problematic because, on the arrangement struck by the respondent, in order to achieve a cooperative first tier mortgagee, it was the companies, not Ultimate, which bore the costs. 60 Finally, the applicants submitted that: The above circumstances raise the possibility that the [respondent] has acted in breach of duty by sacrificing the interests of the companies and their unsecured creditors or acting other than in good faith or faithfully performing his duties. An inquiry is required to ascertain whether those duties have been breached. 61 However, as submitted by the respondent, an inquiry is not warranted for the following reasons: (1) Determining whether the companies are better or worse off financially as a result of the refinance is not a straightforward mathematical calculation but depends on a prediction about how the receivership would have proceeded under a receiver appointed by Makro - including the costs that it would have incurred and the time that it would have taken to realise the properties. (2) The calculations that are relied upon by the applicants do not appear to take into account the fact that, upon default, it is at least arguable that the future interest under the Makro loan capitalised and would itself have started to accrue interest. If that is correct, then it would also have been payable upon the costs of Makro's threatened receivership. The applicants did not submit that this construction of the Makro Agreement was not arguable. (3) It is not correct to say, as the applicants do, that "there is no evidence that the [respondent] compared the costs of the refinance with avoiding the costs of a dual receivership" because the respondent did conduct such a comparison, including by having regard to the comparative terms of the Makro Agreement and the IJ Financial Agreement, as he explains in his evidence. Further, the complaints made by the applicants about "lack of financial analysis" and Mr Hutson opining that the respondent's responses to questions are lacking do not suggest a need for further inquiry. (4) It is also not correct to say, as the applicants do, that there is "no evidence that haste was required". The respondent reached out to Makro directly. Makro told him to deal with its solicitors. The respondent's solicitors sent Makro's solicitors an email inviting discussion. Makro's solicitors replied on 20 December 2022 stating that Makro had determined it would appoint a receiver (and naming the person who would be appointed). That was, in short, the communication of a decision that had been made, and which was to be (or could have been) implemented forthwith. (5) It is artificial to say, as the applicants do, that the respondent "had time to deal more fully with Makro having first found out about its presence on 29 November 2021". The respondent was not appointed until 16 December 2021. He did not have authority to act as receiver, or the usual indemnity in respect of such role, until he was appointed. The respondent cannot be criticised for not acting as a receiver prior to his appointment. As soon as the respondent was appointed, he sought to make contact with Makro. (6) The respondent is also criticised for not himself verifying that Makro was "unfriendly". However, the respondent had been told that Makro was unfriendly by Ultimate, and had no reason to doubt those instructions. He had been told by Makro to communicate through Makro's solicitors, whose email of 20 December 2022 (in reply to his solicitors' email) was consistent with Ultimate's instructions. It is difficult to imagine a less friendly response than the email of 20 December 2022. (7) It is also not correct to say that "it was the companies, not Ultimate, which bore the costs" of the refinance. The arrangement was that if the additional interest paid to Makro could not be recouped, then the difference would be borne by Ultimate. From the perspective of whether an inquiry should be ordered, that was the respondent's understanding based on what he was told by Mr Wong, a solicitor. The absence of an agreement or contemporaneous documents reducing this understanding to writing is no reason to doubt that this conversation occurred, or that the respondent ought to have doubted those instructions. (8) The matters raised by the applicants do not provide a basis to doubt the respondent's good faith in undertaking his activities. A mortgagee's preference for avoiding duplicate appointments is understandable and Ultimate had a legitimate interest in seeking to maintain control. (9) The allegations do no more than "raise the possibility" that the respondent has breached his duties (using the applicants' own words). A mere possibility of a breach of duty does not provide a compelling justification for an inquiry.

Specific facts relevant to this complaint 62 Operational works approval for the works associated with stage 6 was obtained on 23 November 2021, shortly before the respondent was appointed. It required a significant amount of work to be performed including bulk earthworks and fill, roadworks, drainage, sewerage, water reticulation and landscaping. Certain infrastructure charges also needed to be paid to the local council. 63 Prior to the respondent's appointment, Shadforths Civil Pty Ltd had been engaged to complete the civil works contemplated by the approval. A progress claim from Shadforths indicated that, as at 31 December 2021, approximately 10% of the civil works for stage 6 had been completed. 64 At the time of the respondent's appointment, the intended lots in stage 6 of the development were the subject of contracts of sale with third party purchasers (the stage 6 contracts). These contracts were conditional upon the registration of a survey plan to create the lots in stage 6. Either party could terminate the contracts if the relevant survey plan was not registered within 18 months of the contract date. 65 From 4 January 2022, the respondent was being contacted by Shadforths, which was pressing for payment of outstanding invoices and for instructions about proceeding with the balance of the work. 66 Between 17 and 24 January 2022, the respondent requested three real estate agents (Colliers, Jones Lang Lasalle (JLL) and Ray White) to provide marketing proposals for the sale of the land. Between 28 January 2022 and 3 February 2022, the respondent received marketing proposals from these agents. None of these proposals suggested that, in respect of stage 6, the existence of presales was a matter of significance (with all reports noting the recent rise in sale prices). 67 The Colliers proposal dated 28 January 2022 provided an estimated "mid-point" realisation for stage 6 of $7.13 million. 68 The respondent also obtained independent professional valuation reports by JPM Valuers & Property Consultants dated 19 January 2022, which estimated the value of stage 6 as $4,737,600. 69 On 4 February 2022, Ultimate informed the respondent that it would not provide funds to complete the stage 6 works. 70 On 11 February 2022, the respondent was told that the cost to complete the work would be about $5 million. 71 On 14 February 2022, the respondent decided to repudiate the stage 6 contracts. 72 The respondent's solicitors then wrote to various purchasers of the lots in stage 6, advising that the respondent would not be adopting those contracts. 73 The value of the stage 6 contracts, prior to appointment of the respondent, was estimated at between $10,105,000 and $15,600,000 by Mr Watters and Mr Clancy respectively.

Explanation given by respondent 74 The respondent gave his reasons for his decision concerning the stage 6 contracts in his second affidavit as follows: 76. On 14 February 2022, I decided to repudiate the Pre-Appointment Contracts, A summary of my reasons for doing that is as follows: (a) the funds required to complete Stage 6 were not only for civil construction, but additional funds were required for consultants and statutory costs. I estimated the total costs required to be more than $5million; (b) I considered that the Companies had insufficient funds to complete the works required. Furthermore, my understanding from Terence So was that whilst Ultimate had access to some funds, it was unwilling to provide the funds to complete the works required; (c) I knew that I could approach a private lender, however, my preference was to focus on selling Properties to reduce the debt to my appointor rather than further increasing the Companies' indebtedness; (d) I knew also that it would take a long amount of time to complete the works required (although Shadforth had estimated completion of the works by late March, given they had already been stood down for some time and factoring in contingencies, I thought believed [sic] it would be much later). I could foresee being criticised if I had completed the works; (e) I considered that repudiating the Pre-Appointment Contracts would increase the value of the Stage 6 land. The purchase price under the Pre-Appointment Contracts had been set at a time when the market was not as competitive. Repudiating the Pre-Appointment Contracts would allow a potential buyer to sell the lots for more than their current contracted sale prices. Since the Pre-Appointment Contracts were entered into, my perception was that sale prices had strengthened in Park Ridge, in particular the Carvers Reach precinct; (f) to the extent that the Companies would be exposed to any damages claim by the buyers, I was of the view that any such claims would be unsecured. At this time, I knew that the Companies had significant debts and the sale of the Properties by me would mean that the Companies would not continue to trade and would likely ultimately be liquidated. A return to shareholders seemed unlikely. 77. I decided to repudiate the Pre-Appointment Contracts on 14 February 2022 rather than deferring the decision about whether to do [so] because I had no means to complete the civil works required to finish the subdivision, register the plans and complete the Pre-Appointment Contracts. I was concerned that by leaving the contracts in place I would have been taken to have adopted them. I formed this view after receiving legal advice. 78. My view was that, even if I was later able to get funding to complete Stage 6, it was still worthwhile to repudiate the Pre-Appointment Contracts because I was of the view higher prices could be obtained. 75 The respondent also gave the following evidence in his first affidavit: 60. I decided to not honour, and therefore on behalf of the Companies repudiate, the Pre-Appointment Contracts. I considered the following in making the decision: (a) I understood that a repudiation would entitle each of the buyers to terminate the Pre-Appointment Contracts and also, potentially, entitle them to claim damages against the relevant Company per the Pre-Appointment Contracts. (b) The land being developed by Companies in Stage 6 would be sold as a result of the receivership. Accordingly, there was no prospect of those Companies continuing to trade after the receivership and therefore the repudiation would not affect the goodwill or future trading prospects of the Companies. (c) Those relevant Companies had insufficient funds to complete the works required to discharge the Stage 6 Condition and to complete the Pre-Appointment Contracts. (d) I did not consider that the failure to perform the Pre-Appointment Contracts would negatively impact the ability to recover assets (the only assets of value being the land). (e) Ultimate was unwilling to provide additional loans to complete Stage 6.

No inquiry warranted 76 The essence of this complaint was that the repudiation, including the timing of it, was not justifiable. This was said to form the basis for an inquiry. 77 There are various aspects to the applicants' complaint. First, it is said that the respondent's decision to terminate is not explained adequately. Second, it is said that the respondent should have preserved, or at least considered, the option of selling the land with the stage 6 contracts to a developer. In this respect, the applicants argued that the respondent should have at least taken advice about the possible benefit of the contracts to potential purchasers before terminating them. Third, it is said that the effect of the termination was to expose the companies to claims from the purchasers and real estate agents who were owed commissions on those sales. Fourth, it is said that the respondent should have negotiated increased prices with the existing contract holders. 78 For the following reasons, an inquiry into the conduct by the respondent in repudiating the stage 6 contracts is not warranted. 79 First, by his affidavits, the respondent provided a detailed explanation for his decision to repudiate the stage 6 contracts. His explanation shows that he made a good faith commercial decision about the impact of the stage 6 contracts on the saleability of the land. 80 Second, by virtue of the detailed affidavit evidence provided by the respondent, it is plain that the respondent considered selling the land with the stage 6 contracts but concluded that this option carried its own risks. He could have obtained further advice about the issue but, even if he had, advice about (for example) whether a developer may have placed value on the contracts remaining in place would always involve uncertainty. The respondent would still have had to make a commercial decision, weighing up the competing considerations. Further, the extent to which the respondent took advice (save for disclosing the contents of legal advice) is addressed in the respondent's evidence. An inquiry would not add to the available information. 81 Third, as to the attack on the timing of the repudiation of the contracts, the applicants focused on the fact that the sunset dates enabled termination of those contracts in June 2023. It was submitted that, because of this, the respondent did not need to repudiate the contracts when he did and that, by doing so, he had removed the possibility that a new purchaser could come in and acquire the land with those contracts in place. It was submitted that such a purchaser "would likely" have placed value on having the existing contracts in place, but, as noted above, there is uncertainty about whether that would have occurred. Further, the respondent held a valid concern that if he deferred the decision to repudiate the contracts, he might be taken to have adopted them (a view which he formed after taking legal advice). 82 It was the respondent's view that the repudiation of the contracts would improve the marketability of stage 6 because an incoming purchaser would not have to complete the stage 6 works, and would be free to negotiate fresh prices in what the respondent considered to be a rising market. His view of the market was supported by the marketing appraisals he had obtained which indicated that sales prices were rising sharply. 83 Fourth, in circumstances where the respondent did not have funding to complete the stage 6 works, this would have had the consequence that the survey plan would not be registered within 18 months of the date of each contract. On the applicants' case, the respondent, knowing that the works would not be completed, should have kept the purchasers "on the hook" (to adopt the expression used by Mr McKenna KC for the respondent) and not informed them of this fact, in circumstances where the purchasers were proceeding on the basis that the contracts were on foot, including by obtaining finance. Such a course of action could have had its own problems by reason of potential claims brought by purchasers as a result of such conduct. Further, a claim for damages for breach of contract could have been brought by them if the sale contracts were construed as implying an obligation on the seller to pursue registration of the survey plan. It follows that, irrespective of whether the contracts were repudiated or not, there was an exposure to potential claims from purchasers. 84 Fifth, the applicants' submission that commissions were payable on the contracts, and that the respondent's conduct resulted in an exposure to claims by real estate agents because of those commissions, lacks substance when the foundation of any such claims (being the terms of the agency agreements) is not established by the evidence. The applicants' reliance on an assurance by one agent that such commission is ordinarily payable, and on the existence of standard terms in REIQ sale contracts that refer to payment of commission, is inadequate. The submission that the repudiation had the effect of exposing the companies to claims for commission from real estate agents is therefore speculative at best. 85 Sixth, while the respondent could have sought to renegotiate the stage 6 contracts with the buyers himself, this criticism fails to recognise that there were more than 60 such contracts. Individually renegotiating all of the contracts would have involved incurring substantial costs and taken time. If the respondent had adopted that course, it is just as likely that he would have been criticised for doing so. 86 Finally, the sales campaign for stage 6 commenced on 20 September 2022. By 2 November 2022, 24 offers had been received. The sales campaign completed on 9 November 2022, having yielded over 155 enquiries and 24 offers. The respondent accepted an offer to sell stage 6 for $8.25 million, and the sale settled on 2 December 2022. The sale price achieved by the respondent was higher than Colliers' initial appraisal of $7.13 million and almost double the valuation of $4,737,600 by JPM Valuers dated 19 January 2022. There is no suggestion by the applicants that a better price would have been obtained if the stage 6 contracts had not been repudiated.

Summary of the complaints 87 The applicants described their complaints about the sales and marketing processes undertaken by the respondent in connection with the land in these terms (in summary): (1) The sale process adopted by the respondent lacked consistent direction and was inconsistent with advice which the respondent received from Ray White, JLL and Colliers. The respondent first embarked on a sale process (in accordance with that advice) to sell the properties in one line. However, upon realising that caveats might have frustrated such a sale, he started taking steps to sell the properties sequentially by asking Ray White to market the properties on that basis (without, according to the applicants, obtaining advice about the merits of doing so). Mr Hutson criticised this approach, stating that: [The respondent's] adoption of a strategy for the sale of the Properties sequentially or separately, without any written advice from the marketing agents that such a realisation strategy would achieve the highest possible price (or words to similar effect), may reflect a departure by [the respondent] from the approach required to satisfy the obligations imposed by section 420A of the Corporations Act, which in summary requires that he take all reasonable steps to sell the Properties for market value or the best price that is reasonably obtainable. (2) The respondent rejected an offer from HBL outright without undertaking analysis or seeking advice from his agents. That offer, properly analysed, was of sufficient value to enable him to deal with the caveats which had priority over his appointor's registered mortgages and otherwise sell the properties through his power of sale and his appointor's registered mortgage. (3) The respondent also pursued 202 Park Ridge Road on the basis that it had value if it was sold at a premium with the other properties over which he was appointed. To purchase that property, the respondent caused the companies' debt to his appointor, Ultimate, to increase by more than $2,000,000. (4) The effect of the foregoing is that the receivership has been prolonged at additional cost to the companies.

Specific facts relevant to these complaints 88 The following is a recitation of some, but not all, of the facts related to this complaint. That is because the full chronology of the facts relating to the sale of the land, including the numerous decisions faced by the respondent and the various proceedings in the Supreme Court of Queensland in connection with certain caveats which were lodged over parts of the land development, is lengthy, complex and detailed, and the affidavit material relating to those events (including the respondent's two affidavits) is voluminous. 89 On 4 January 2022, the respondent was made aware that: (1) Wei Wang registered caveat 721384130 over part of the stage 7 land; and (2) Xiaocheng Zi registered caveats 721383897, 721383920, and 721383806 over parts of the stage 8-11 land (94, 96 and 110 Park Ridge Road respectively). 90 On 5 January 2022, the respondent's solicitors sought to have these caveats removed by writing to Mr Wang and Mr Zi giving notice under s 126(2) of the Land Title Act 1994 (Qld) requiring them to start proceedings to establish the interests claimed in the caveats. 91 As noted above, between 17 and 24 January 2022, the respondent requested three real estate agents (Colliers, JLL and Ray White) to provide marketing proposals for the land. 92 On 19 January 2022, Mr Wang and Mr Zi each commenced proceedings in the Supreme Court of Queensland to establish their interests and deposited instruments to that effect with the Registrar of Titles (thus preventing their caveats from lapsing). The proceedings commenced by Mr Wang were settled on 28 November 2022 (following an exchange of pleadings and disclosure by Mr Wang). 93 On 24 January 2022, Joyway Pty Ltd lodged caveats 721429737 and 721429738 over part of the stage 6 land. 94 On 1 February 2022, the respondent's solicitors wrote to Joyway giving notice under s 126(2) of the Land Title Act in respect of the caveats lodged by it. 95 Between 28 January 2022 and 3 February 2022, the respondent received marketing proposals from Colliers, JLL and Ray White. None of these proposals was premised on selling the lots with caveats over the stage 6-11 land. Nor did any suggest that a neighbouring developer, such as HBL, would be the most viable purchaser. The three real estate agents appraised the total land under consideration as having a realisation estimate somewhere between $33 million at the lower end and $43.84 million at the higher end. 96 Around this time, the respondent obtained independent professional valuation reports by JPM Valuers dated 19 January 2022. 97 The Ray White proposal, like the other proposals, recommended a sale by an on-market expressions of interest campaign. It identified "three separate buyer markets for the various components of the holdings as well as a strategy to maximise the value for each parcel and/or apply pressure on the buyers looking at purchasing the entire holding". It recommended offering the land in three parcels - parcel A being the "Carvers [sic] Reach balance development land" (stages 6 and 7-11), parcel B being the "Terrace House Product" (the Vacant Terrace Lots and the Half-complete Terrace Lots) and parcel C being the "Southern Parcel" (125 Park Ridge Road). The strategy was to "make each of these components available individually as a whole or any combination to allow the various market sectors to actively compete and bid for each opportunity". 98 On 7 February 2022, the respondent told the three real estate agents that there would be a delay in marketing the properties due to the caveats, which he would take steps to assess, and, if appropriate, challenge. It was the respondent's evidence in his second affidavit that he had discussions with his legal advisers frequently throughout the course of the receivership, and I infer that such discussions took place (and legal advice was likely to have been received by the respondent) in relation to the caveats which had been lodged, and the associated Supreme Court proceedings. 99 On 14 February 2022, the respondent engaged Ray White to provide a stand-alone marketing proposal for 125 Park Ridge Road. This was one of the properties that did not have a caveat lodged over it. On 16 February 2022, Ray White provided its marketing proposal for 125 Park Ridge Road. 100 On 15 February 2022, the time for Joyway to commence proceedings and deposit an instrument to that effect with the Registrar of Titles lapsed, and its (then) caveats were removed from the relevant title. 101 On 17 March 2022, Joyway: (1) lodged caveats 721553240 and 721553245 over part of the stage 6 land; and (2) lodged caveats 721553247, 721553236 and 721553271 over parts of the stage 8-11 land (94, 96 and 98 Park Ridge Road respectively). 102 On 25 March 2022, the shareholding entities associated with Mr Clancy commenced proceedings in this Court against Mr So, certain entities associated with Mr So, and the Carver's Reach Entities (the Shareholder Proceedings). These proceedings sought relief for oppression and sought leave to commence derivative claims seeking to recover damages, which leave was eventually granted: CIP Group Pty Ltd v So [2022] FCA 1490 (Derrington J). 103 Around this time, the respondent commenced proceedings in the Supreme Court of Queensland claiming an interest in the property at 202 Park Ridge Road which is adjacent to the development site. By way of background, a company called Golden Eagle Property Group Pty Ltd had the benefit of a put and call option over a parcel of land at 202 Park Ridge Road. The circumstances of the entry into the put and call option suggested that it was entered into on behalf of or for the benefit of the Carver's Reach Entities. On 28 March 2022, the respondent commenced the proceedings referred to above on behalf of one of the Carver's Reach Entities seeking a mandatory injunction compelling Golden Eagle to nominate a Carver's Reach Entity so as to enable that entity to exercise the option (which needed to be exercised by 14 April 2022). On 8 April 2022, Williams J made orders compelling Golden Eagle to make the nomination, and this decision was later upheld on appeal. The orders were made on an undertaking by the Carver's Reach Entity (amongst other things) to complete the purchase of the property and then, until trial or earlier order, not to otherwise deal with that property without consent. The Carver's Reach Entity exercised the option and then completed the purchase on 22 April 2022. The undertaking remains in place. 104 On 13 April 2022, Joyway commenced proceedings in the Supreme Court of Queensland to establish the interests claimed in its caveats lodged on 17 March 2022. Following various steps in that litigation, including pleadings and a successful application that Joyway provide security for costs, Martin J ordered that Joyway's caveats be removed on 14 December 2022. 105 On 13 April 2022, the respondent also engaged Ray White to provide a marketing proposal to sell the Vacant Terrace Lots. The respondent gave the following evidence concerning his reasons for the change of strategy in connection with selling the land: Around this time, the options I had were to market all the Properties with caveats in place or start selling properties that were not caveated at the same time as dealing with the caveats on the other properties. I considered that the second option was preferable as it allowed me to pay down debt quicker, thus reducing interest (to the benefit of the borrower) and securing partial repayment faster (to the benefit of Ultimate). I considered that marketing all the properties with the caveats in place was less preferable because: (a) the Caveats would inhibit settlement (unless they were withdrawn prior to settlement); (b) I did not consider that the first registered mortgagee IJ Financial was in a position to exercise a power of sale so as to permit settlement with the Caveats in place; (c) I considered that making the sale contract conditional on removal of the caveats would negatively affect the marketability of the properties; (d) I was involved in litigation with the caveators disputing the existence of their claimed equitable mortgages and I considered that the caveators would be put in a stronger negotiation position if the properties [which were] the subject of their caveats were under offer; and (e) although one option I had was to seek the Caveators' consent to withdraw their Caveats on the basis that the proceeds of sale be paid into Court, given my appointor did not have registered mortgages at the time, the funds that would have been used to pay down its debt would have also needed to be paid into Court. This option would still have resulted in ongoing litigation and was unlikely to result in Ultimate's debt being repaid sooner. I considered that the better option was to defend the litigation brought by the Caveators and in the meantime commence a campaign to sell the properties that were not subject to caveats in order to pay down the secured debt quicker. 106 On 28 April 2022, HBL (a neighbouring developer) sent the respondent a non-binding letter of offer to purchase the Half-complete Terrace Lots, the Vacant Terrace Lots, the balance of the property in stages 6-11, and 125 Park Ridge Road for $37 million including GST. 107 The offer was within the range of the appraisals that the three real estate agents had sent to the respondent in January and February 2022. However, none of the agents had identified HBL as the most promising potential purchaser and all had recommended that a public marketing campaign occur to ensure that competitive market forces could operate. All three agents had advised the respondent that he ought to proceed to a public offer to ensure competition. 108 The respondent replied to HBL on 29 April 2022, stating: At present, I am unable to consider your offer. I intend to engage a real estate agent to sell some of the properties including 125 Park Ridge Road, Park Ridge. When a property is for sale, it will be advertised by the real estate agent and you can present any offers you would like to make directly to the agent. 109 The respondent explains why he responded in that way in his second affidavit: The reason for responding as I did was because I did not yet know market value because I had not yet tested the market by a sale campaign. I knew anecdotally property market was booming and I had been approached by numerous other developers indicating interest in purchasing the same properties so I knew that there would be interest in the properties. This view had also been reinforced in conversations with Ray White. I considered that, under section 420A of the Corporations Act 2001 (Cth), it would be remiss of me to accept the first off-market offer that was received. It is common for a receiver to be approached and receive unsolicited offers from parties looking for an off-market deal. I generally treat these offers in the same manner that I did here, ie. by stating to the effect that "we must put the property to market, you are welcome to be involved in that process when it happens". I had also already decided, for the reasons set out [above], on a sales and marketing strategy which involved selling the properties separately. 110 On 4 May 2022, HBL increased its offer to $38 million. 111 On 6 May 2022, the respondent replied to the revised offer stating that "We have engaged Ray White Special Projects to market and sell some of the properties. Please present any offers that you may have to [certain identified persons at Ray White]". 112 The respondent's evidence is that: Around this time, I called Ray White and advised them that I had received offers from HB Land and requested that Ray White immediately engage with HB Land. In that conversation Ray White confirmed that HB Land were an interested party, they had already spoken to them. Tony Williams (of Ray White) also advised that HB Land got together with the Ray White agents regularly to discuss these particular properties. Ray White told me that HB Land had little interest in the Terrace House Lots, however would be very interested in 125 Park Ridge Road (which was about to hit the market). I instructed Ray White to continue to engage with HB Land regularly in respect to 125 Park Ridge Road and other properties. 113 On 12 May 2022, the respondent requested valuations for all of the properties over which he had been appointed receiver (including 202 Park Ridge Road), as well as a valuation of those properties in one line without the inclusion of 202 Park Ridge Road. 114 From about 4 May 2022 until 4 June 2022, the Vacant Terrace Lots were the subject of a marketing campaign which yielded more than 101 enquiries and 13 offers. They were ultimately sold in one line on 25 July 2022 for $1.558 million, exceeding both Colliers' appraisal of $1.52 million and the May 2022 valuation of JPM Valuers of $849,000. 115 From 17 May 2022 until 5 July 2022, the 125 Park Ridge Road property was the subject of a marketing campaign which yielded more than 108 enquiries and 12 offers. Ultimately, the property was sold on 7 September 2022 for $5.75 million. This figure was both higher than Colliers' appraisal of $5,185,000, and substantially higher than the valuations provided by JPM Valuers of $3.2 million and $3.4 million. However, it was lower than Ray White's appraisal of $5.8 million to $6.1 million. 116 On 18 May 2022, the respondent received a further email from HBL, and responded that same day, advising HBL to contact Ray White. The respondent also prepared rough calculations to compare estimated secured debts to a theoretical offer of $40 million and estimated that there would still be a $365,000 shortfall. The respondent gave the following evidence in his second affidavit: 122. In view of the above, I considered that an offer of $40 million would not result in any surplus to shareholders. If I had accepted HB Land's offer there would not be sufficient funds to pay out all secured claims over the Properties (i.e. including the claims of the Caveators). I could not elevate Zi and Joyway (who, at the time, I had reason to doubt whether they were properly entitled to security) ahead of other unsecured creditors. In these circumstances, I considered it was not necessary that I engage with shareholders regarding the receivership status and realisation strategy. 123. At the time I received the HB Land offer, I was already in the process of selling the Properties as separate parcels rather than in one-line, for the reasons explained above. My strategy was to sell the non-caveated assets first to pay down the secured debt, while attempting to remove the caveats on the other properties. I did not receive any advice from Ray White Special Projects that the marketing and realisation strategy should be reassessed in view of the HB Land offer. 124. I had appraisals from Ray White, Colliers and JLL that had assessed the value of the properties higher than HB Land's offer. JLL had assessed the range from $35.6million - $43.8million. Based on JLL appraisal, I considered the HB Land offer was low. This has proved to be the case considering the sales prices that I have achieved to date. 125. I did not immediately dismiss [the] HB Land [offer], instead I instructed Ray White to engage with HB Land. I understand Ray White did so. As discussed below, HB Land later put in offers for 125 Park Ridge Road and Stage 6. I did not accept HB Land's offers for those properties because I had significantly superior offers. 126. As stated above, I had also not yet undertaken significant steps to market and sell the Properties by this time. I understood my duty under s 420A of the Corporations Act 2001 (Cth) requires that I take all reasonable care in the process of selling the property to obtain market value, whatever the value might be. I understood if a receiver takes the appropriate steps to obtain the market value, it does not matter if the sale is below the estimated market value. That is, a receiver is not required to obtain the best price for an asset. However, if it is proved that the sale price was substantially below the market value of the property, this may be evidence that proper steps were not taken. 117 On 26 May 2022, the respondent received a valuation from JPM Valuers for all of the properties he was appointed to in one line (including 202 Park Ridge Road). The valuation was for a sum of $21.38 million. In his second affidavit, the respondent stated: I did not consider this valuation to be a particularly reliable indicator of value and I considered that the agent's appraisals were a far more reliable indicator of the price that could be achieved for the Properties. This is because I considered the market at the time was in a state of flux and, in my view, the agents seemed to have more of a finger on the pulse being on the ground day to day. Notwithstanding this, the valuation report did suggest to me that a higher price could be achieved by selling the properties separately than in-one-line and gave me further comfort about my decision as to the marketing strategy for the Properties. 118 From 25 July 2022 to 25 August 2022, the Half-complete Terrace Lots were the subject of a marketing campaign which yielded over 178 enquiries and 26 offers. They were sold in one line on 16 September 2022 for $2.375 million. This was higher than Colliers' appraisal of $1.925 million and the valuation of $1.498 million provided by JPM Valuers in May 2022. 119 Since operational works on the stage 6 land had commenced but not progressed very far by the time of the respondent's appointment, it was necessary to perform certain work to level the site and make it suitable for buyers. Shadforths was engaged to do this work in April 2022. The works were still ongoing as at August 2022. 120 This land was also subject to an infrastructure agreement, which required amendment before the lots in stage 6 could be sold. As such, it was necessary to negotiate with the local council to vary certain conditions in these agreements by way of deeds of amendment, which were subsequently entered. 121 The sales campaign for stage 6 commenced on 20 September 2022 and concluded on 9 November 2022, having yielded over 155 enquiries and 24 offers. The respondent accepted an offer to sell stage 6 for $8.25 million, and the sale settled on 2 December 2022. The sale price achieved by the respondent was higher than Colliers' initial appraisal of $7.13 million and the valuation by JPM Valuers of $4,737,600 dated 19 January 2022. 122 On about 10 February 2023, the applicants in the Shareholder Proceedings filed an amended originating process and statement of claim in that proceeding. The statement of claim includes a section titled "conduct during the receivership" and includes allegations regarding the refinance of the Makro loan. The matters pleaded in this section appear to be based on either (1) evidence filed by the respondent in this proceeding and (2) correspondence between the solicitors for the parties in this proceeding. 123 On 15 February 2023, Ultimate terminated the respondent's receivership over the stage 7-11 land. This was effected by deeds of resignation signed that day. Following this, the only land over which the respondent remains appointed is 202 Park Ridge Road (which is the subject of the undertaking given in the Supreme Court of Queensland).

No inquiry warranted 124 It is convenient to deal with each of the complaints in turn, although some of them overlap. 125 The first complaint is, in essence, that the respondent failed to return to the real estate agents for updated advice after caveats had been lodged over various lots in the development, but instead made the decision to sell parts of the land which were not affected by the caveats. 126 However, this complaint fails to take into account the respondent's own breadth of knowledge and experience, including in relation to the sale of land, and that he had the assistance of ongoing legal advice. The respondent could have, but did not have to, obtain updated advice from the real estate agents (assuming that they were in a position to provide advice of the kind suggested). Even Mr Hutson is lukewarm in his criticism of the respondent about this issue, saying that his conduct in this regard "may reflect a departure" from the approach required to satisfy s 420A of the Corporations Act. 127 Further, the respondent provided cogent reasons for adopting the strategy which he did (that is, selling the lots which were not affected by the caveats). As submitted by the respondent (which submissions I accept): [The respondent's reasons] include the inhibitions on certain lots posed by the caveats and the litigation connected with them; his judgment (informed by his experience) as to how potential buyers would respond to those circumstances; and the particular complications of the stage 6 land… If the respondent had instead immediately commenced a marketing campaign for all the lots over which he was appointed and proceeded to sell them en globo immediately, the respondent would be exposed to criticism for selling the properties in a defective condition that was liable to attract a lower price (being subject to caveats and the complications of the stage 6 land). Otherwise he would have to come to terms with the caveators and the council in relation to stage 6 quickly, and would be exposed to criticism for obtaining a bad deal with those parties because his hasty sale process put the company at a disadvantage in the negotiations. He would also have to rush the stage 6 works, and be exposed to criticism for all manner of adverse consequences that might arise from doing so. If he waited for the caveats and stage 6 issues to be resolved before selling en globo so as to get a better price, he would be exposed to criticism for unnecessarily prolonging the receivership and racking up costs. He would be exposed to such criticism even if he obtained advice about what to do; because ultimately he was required to exercise his own judgment. 128 The second complaint relates to the respondent's failure to accept the offers received from HBL. However, this complaint lacks force when one considers that the respondent had not yet tested the market for the properties which HBL offered to acquire. To have sold to HBL without going through a competitive process would have been contrary to the marketing advice he had already received, which emphasised the need for a public campaign to allow competitive market forces to operate. Further, even Mr Hutson's view is that it was "orthodox" for the respondent to decline to accept the offer at that time. 129 A related complaint that the respondent failed to engage with HBL is also without substance. The respondent did not ignore HBL, but responded to each of its communications in a timely way and directed it to Ray White. His evidence was that he also spoke to Ray White about HBL's offers, and requested that Ray White immediately engage with HBL. 130 In respect of this second complaint, the applicants criticised the respondent for not, in response to the offer by HBL, taking additional advice from Ray White on reassessment of marketing strategy. As to this, Mr Hutson stated in his second report that asking for such advice "would have been the usual, market standard or orthodox approach". 131 However, the complaint that the respondent did not obtain updated advice of the kind described also lacks substance when one considers the respondent's experience and expertise, which he was entitled to rely upon without the need to obtain ongoing external advice about every new event which occurred during the receivership (which conduct would cause further delays and incur more costs). Even if he had obtained such advice, it does not follow that he would necessarily need to have accepted it. Further, for the reasons given above, Mr Hutson's opinion that the respondent strayed outside the "usual, market standard or orthodox approach" does not support the need for an inquiry into this aspect of the respondent's conduct. 132 The third complaint relates to the respondent's decision to bring proceedings so as to cause the acquisition of 202 Park Ridge Road which caused Ultimate's debt to increase by $2,000,000. The real complaint appears to be that the respondent has failed to give an explanation as to why he argued in the proceedings against Golden Eagle before Williams J that 202 Park Ridge Road would be more valuable if it could be sold in one line with the other properties under his control but then did not sell the properties in one line. Even if this could be characterised as being a complaint with respect to the conduct of the respondent giving rise to a breach of his duties (which is questionable), an inquiry would not be ordered because of an apparent inconsistency between a submission made in the Supreme Court of Queensland and the sale process in fact undertaken by the respondent. 133 The fourth complaint is that there was an undue prolongation of the proceedings in connection with the caveats. In essence, the applicants contend that these proceedings could have been brought to an end at an earlier time and, coupled with various other steps (such as acceptance of the HBL offer and not causing 202 Park Ridge Road to be acquired), the receivership could have been brought to an end at an earlier time and at less cost. Yet, it is apparent that, taking into account the various issues which the respondent needed to address, and the dispute about whether acceptance of any HBL offer would have had the financial outcome which the applicants claim that it would have, there was no simple pathway to achieve such an outcome. The receivership was complex, and the factual and legal issues to be addressed by the respondent were not straightforward. The respondent was required to make commercial decisions which took into account a myriad of factors. Even if, with the benefit of hindsight, it could be said that a different decision might have resulted in a better outcome (shorter receivership and less cost), it does not follow that an inquiry is warranted. To the contrary, the complexity of the events underlying the receiver's conduct tells against an inquiry. 134 The applicants ultimately complain that the respondent has not provided a complete explanation in this proceeding about all decisions taken by him, and that some of his explanations are "inconsistent" and "confusing"; however, the respondent has provided a detailed chronology of the relevant facts and explained his reasons for the critical decisions which he faced. If the applicants consider that his explanations are inadequate, they have sufficient information to pursue a claim. 135 Lastly, the applicants submitted that an inquiry is required because the respondent "does not know and does not appear to have taken adequate steps to ascertain the amount outstanding to Ultimate". However, this complaint does not justify an inquiry. That is because the applicants can obtain this information by other means and because the respondent's awareness of the exact quantum owing to Ultimate does not speak to the performance of his duties as a receiver.

Additional reasons for refusing to order an inquiry 136 The following are additional overarching reasons for refusing to order an inquiry: (1) contrary to the submissions of the applicants and for the above reasons, the conduct which is the subject of the applicants' complaints does not raise serious questions about breaches of duty by the respondent. In particular, the evidence does not give rise to a "well-based suspicion indicating a need for further investigation": Wily at [36]; (2) the conduct of the respondent which is the subject of the complaints is not such as to be liable to attract sanctions or control for what might broadly be described as "disciplinary reasons": Naxatu at [16]-[17]; (3) to a significant extent, the complaints seek to criticise discretionary commercial judgments of the respondent, being decisions with which courts are traditionally reluctant to interfere: Vink v Tuckwell (2008) 216 FLR 309; [2008] VSC 100 at [82] (Robson J). Further, the respondent's decisions were made in circumstances which were factually and legally complicated. Such conduct is therefore likely to fall outside the range of conduct liable to attract disciplinary sanction or control in any event: see Oswal at [97]; (4) the proposed inquiry is not in the public interest: Hypec at [41]. The applicants' complaints concern the conduct of a receiver during a particular receivership. If that were sufficient to justify an inquiry under s 423 of the Corporations Act, then every complaint made about a receiver alleging breach of duty would justify such an inquiry, which would undermine ordinary litigation processes: Oswal at [63]; (5) the inquiry is sought primarily to vindicate private rights, which is not what s 423 is concerned with: Hypec at [41]. Further, these private rights can be vindicated by other means. In this regard, it is significant that the allegations made in the Shareholder Proceedings overlap with some of the complaints by the applicants in this proceeding. Further, it would be undesirable to have the possibility of conflicting decisions in respect of the same underlying conduct; (6) the respondent's remaining role in the receivership is limited. He has been retired from his appointment over the stage 7-11 land. The only land which he remains in control of is 202 Park Ridge Road (and that is only because of the undertaking offered to the Supreme Court of Queensland). Any inquiry would have limited utility for this reason.

Conclusion and disposition 137 For these reasons, the application should be dismissed, with costs to follow the event. I certify that the preceding one hundred and thirty-seven (137) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Downes.

SCHEDULE OF PARTIES QUD 222 of 2022 Applicants Fourth Applicant: MARC ANDREW CLANCY Respondents Fourth Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF PARK RIDGE 94 PTY LTD ACN 616 893 924 (RECEIVER AND MANAGER APPOINTED) Fifth Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF ROCHEDALE HOLDINGS NO.1 PTY LTD ACN 610 550 199 (RECEIVER AND MANAGER APPOINTED) Sixth Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF PARK RIDGE 96 AND 98 PTY LTD ACN 618 802 618 (RECEIVER AND MANAGER APPOINTED) Seventh Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF PARK RIDGE 180 PTY LTD ACN 616 431 157 (RECEIVER AND MANAGER APPOINTED) Eighth Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF 168 PARK RIDGE PTY LTD ACN 619 549 334 (RECEIVER AND MANAGER APPOINTED) Ninth Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF ROCHEDALE HOLDINGS PTY LTD ACN 610 535 076 (RECEIVER AND MANAGER APPOINTED) Tenth Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF COORPAROO HOLDINGS PTY LTD ACN 609 979 446 (RECEIVER AND MANAGER APPOINTED) Eleventh Respondent: MARCUS JON WATTERS IN HIS CAPACITY AS RECEIVER AND MANAGER OF PARK RIDGE DEVELOPMENT MANAGEMENT PTY LTD ACN 627 401 094 (RECEIVER AND MANAGER APPOINTED)