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Cases Cited: - Airtourer Co-Operative Ltd v Millicer Aircraft Industries Pty Ltd (subject to a Deed of Company Arrangement) [2004] FCA 393
- Beatty v Guggenheim Exploration Co (1919) 225 NY 380
- CCIG (Australia) Pty Ltd v Amicus Hospitality Group Pty Ltd [2019] QSC 232
- CHEP Australia Ltd v Bunnings Group Ltd [2010] NSWSC 301
- Daewoo Shipbuilding & Marine Engineering Co Ltd v INPEX Operations Australia Pty Ltd (2022) 404 ALR 503; [2022] NSWSC 1125
- Dura (Australia) Constructions Pty Ltd (in liq) v Hue Boutique Living Pty Ltd (2014) 49 VR 86; [2014] VSCA 326
- Grant v YYH Holdings Pty Ltd [2012] NSWCA 360
- Grantham Homes Pty Ltd v Interstate Permanent Building Society Ltd (1979) 37 FLR 191
- Hardy v Fothergill (1888) LR 13 AC 351
- Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64
- John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19
- KAP Motors Pty Ltd v Commissioner of Taxation (2008) 246 ALR 395; [2008] FCA 159
- Kelly (liquidator), In the matter of Halifax Investment Services Pty Ltd (in liq) (No 8) (2020) 144 ACSR 292; [2020] FCA 533
- Kirkalocka Gold SPV Pty Ltd (subject to deed of company arrangement) (recs and mgrs apptd) v SCL AUS Ltd [2025] FCA 1490
- Re BCA National Training Group Pty Ltd (in liq) [2023] NSWSC 366
- Re Courtenay House Capital Trading Group Pty Ltd (in liq) [2021] NSWSC 256
- Re Hastie Group Ltd (in liq) (2022) 410 ALR 531; [2022] FCA 1280
- Re Mudgee Dolomite & Lime Pty Ltd (in liq) [2021] NSWSC 1350
- Re Plutus Payroll Australia Pty Ltd (in liq) (2019) 139 ACSR 536; [2019] NSWSC 1171
- Roy Smith as Trustee of the Smith Investment Trust v Sandalwood Properties Ltd (2019) 344 FLR 278; [2019] WASC 109
- Sandhurst Golf Estates Pty Ltd v Coppersmith Pty Ltd (2014) 285 FLR 267; [2014] VSC 217
- SCL AUS Ltd v Kirkalocka Gold SPV Pty Ltd [2026] FCAFC 60
- The Game Meats Company of Australia Pty Ltd v Farm Transparency International Ltd (2025) 312 FCR 272; [2025] FCAFC 104
- Thiess Infraco (Swanston) Pty Ltd v Smith (2004) 209 ALR 694; [2004] FCA 1155
- Walley, In the matter of Poles & Underground Pty Ltd (admins apptd) [2017] FCA 486
- Wells Fargo Trust Company, National Association v VB LeaseCo Pty Ltd (admins apptd) (2022) 275 CLR 1; [2022] HCA 8

Category: Principal judgment

Parties: Graeme Robert Beattie and Aaron Kevin Lucan as Deed Administrators of Novati Constructions Pty Ltd (subject to a deed of company arrangement) (Plaintiffs)
Hulak Coonanbarra Pty Ltd (First Defendant)
Novati Pty Ltd (Second Defendant)

Representation: Counsel:
Dr A J Greinke (Plaintiffs)
Mr A Byrne (First Defendant)
Mr T O’Brien / Mr A Mohseni (Second Defendant)
Solicitors:
Chamberlains (Plaintiffs)
BCP Lawyers & Consultants (First Defendant)
Vincent Young (Second Defendant)

File Number(s): 2026/199440

JUDGMENT

Nature of the application

1. By Originating Process filed on 14 May 2026, Messrs Beattie and Lucan as deed administrators (“Deed Administrators”) of Novati Constructions Pty Ltd (subject to a deed of company arrangement) (“NCPL”) seek judicial advice under s 90-15 of the Insolvency Practice Schedule (Corporations) (“IPSC”) as to the disposition of original documents (“Documents”) constituting two bank guarantees (“Bank Guarantees”) issued by Australian and New Zealand Banking Group Ltd (“ANZ”) that are in their possession. They specifically seek a direction whether they are required to deliver the Documents to the First Defendant, Hulak Coonanbarra Pty Ltd (“Hulak”) or alternatively to the directors of NCPL, or whether they would be justified in returning the Documents to ANZ for cancellation. The Second Defendant, Novati Pty Ltd (“NPL”), which is the proponent of a deed of company arrangement (“DOCA”) in respect of NCPL was joined to the proceedings and took the contrary position to that advanced by Hulak in the proceedings.

2. The proceedings were conducted on pleadings and each of Hulak and NCP filed Points of Claim and Points of Defence identifying their respective positions and defences. In the event, there is no factual dispute as to the events that occurred and the dispute between the parties is directed to their legal consequences.

Affidavit evidence and factual background

3. The background facts, which are now common ground, emerge from Hulak’s and NCP’s respective Points of Claim and Points of Defence and the affidavit and documentary evidence. The Deed Administrators read the affidavit dated 14 May 2026 of Mr Beattie in support of the application. Mr Beattie referred to his and Mr Lucan’s appointment as joint voluntary administrators of NCPL, the creditors’ approval of the DOCA and the execution of the DOCA in May 2026. He also set out the factual background to the Deed Administrators’ application, which I summarise in the chronology below. Mr Beattie’s evidence (Beattie 14.5.26 [20]) is that:

“Given the conflict between [Hulak and NCPL] as to the proper disposition of the [Documents], as [D]eed [A]dministrators we ask the Court for judicial advice and declaratory relief as to whether we should:

a. deliver the [Documents] to Hulak;

b. deliver the [Documents] to the directors of [NCPL]; or

c. Return the [Documents] to ANZ, for the purpose of cancellation.”

4. Hulak reads an affidavit dated 5 June 2026 of its director, Mr Farr, which referred to Hulak’s appointment of NCPL as builder to construct the development. Mr Farr addressed payments initially made by Hulak and NCPL, where funds were retained by Hulak in accordance with a Design and Construction Contract between NCPL and Hulak entered on 26 February 2024 (“Contract”); the substitution of the Bank Guarantees for retentions in accordance with the Contract, with Hulak’s consent; NCPL’s advice to Hulak that it would deliver the Bank Guarantees on 6 February 2026; and addressed his being provided with a letter and two bank guarantees, which he then understood to be originals and not copies, and the request to give a receipt for them. His evidence is that, had he been told that the documents provided to him were only copies of the Bank Guarantees, he would not have accepted them; he would have required delivery of the originals; and he would not have authorised the release of retention monies that had been held by Hulak. Mr Farr also addressed the subsequent release of retention monies to Hulak and the fact that retention monies were not deducted from further monies paid to Hulak. He also referred to the circumstances in which Hulak subsequently exercised its right under the Contract to take the work under the Contract out of NCPL’s hands; to Hulak’s subsequent attempt to call upon the Bank Guarantees; and to ANZ’s advice that the documents which had been presented by Hulak to ANZ were copies rather than the Documents. Mr Farr was not cross-examined and, as I noted above, it is now common ground that NCPL had, in error, provided copies of the Bank Guarantees rather than the originals of them to Hulak.

5. I now turn to the chronology of events. On or about 20 April 2017, NCPL and others entered into a Deed of Indemnity and Guarantee (Ex J1, 86; Beattie 14.5.26 [8]–[9]), pursuant to which the Guarantors unconditionally indemnified Swiss Re International SE (“Swiss Re”) against all loss arising from bonds issued under a bond facility; and also entered into a General Security Deed, by which NCPL granted a security interest over all of its present and after-acquired property in favour of Swiss Re. On 21 September 2023, Mr Marco Novati was added as a party to the Deed of Indemnity and Guarantee as an additional Contractor and Guarantor (Ex J1, 154; Beattie 14.5.16 [10]).

6. As I noted above, on 26 February 2024, NCPL entered into the Contract with Hulak under which it agreed to design and build an apartment building in Wahroonga, New South Wales, comprising 10 units for a fixed sum of $12,500,000 (Beattie 14.5.26 [11]). By cl 5.1 of the Contract, NCPL agreed to provide Hulak with Security (as defined) in accordance with item 14 in an annexure to the Contract. That item allowed for alternative forms of security, being approved unconditional bank guarantees (with a particular form being approved) without any expiry date, issued by one of the four major Australian trading banks in Australia or retention monies/cash. The security was to be 5% of the contract sum and, if provided as bank guarantees, was to be made up of two bank guarantees, each equal to 2.5% of the contract sum. If retention monies were provided, 10% of each payment schedule amount was to be withheld until the limit of 5% of the contract sum was reached.

7. By cl 5.2 of the Contract, Hulak was entitled to have recourse to the security if it was or claimed (on a bona fide basis) to be entitled to monies from NCPL under, or in consequence of or arising out of the Contract or the relevant works, and that clause further provided that:

“Without limiting and in addition to the foregoing, [Hulak’s] right to have recourse to and utilise the security extends to and includes for the purposes of recovering or obtaining payment of any and all costs, debts, expenses or damages which [Hulak] has incurred, or will incur, under or in consequence of or in connection with this Contract.”

8. Clause 5.3 of the Contract permitted NCPL to substitute another form of security, relevantly the bank guarantees, for retention monies or cash security with Hulak’s consent.

9. It is common ground that, between February 2024 and January 2025, Hulak withheld amounts from payments due to NCPL as retention monies in accordance with the Contract (see, for example, the invoice at Ex J1, 451).

10. On or about 16 January 2025, NCPL renewed its Contract Performance Bond Facility with Swiss Re (Beattie 14.5.26 [12]).

11. It is also common ground that, in January 2025, NCPL and Hulak agreed that NCPL would provide two unconditional bank guarantees without expiry date, issued by one of the four major trading banks in Australia, as permitted by the Contract, and Hulak would release the retention monies that it held to NCPL and not deduct further retention monies from payments due to NCPL under the Contract.

12. An internal document prepared by ANZ, on or about 6 February 2026, referred to the Bank Guarantees and noted that they should be couriered to NCPL and also identified the “delivery collection type” in a manner that suggested that they were to be delivered to the beneficiary, Hulak. That document recorded Swiss Re’s involvement in the issue of the Bank Guarantees.

13. On 6 February 2025, ANZ issued the two Bank Guarantees in favour of Hulak, each in the amount of $312,500 (Ex J1, 482, 484; Beattie 14.5.26 [13]). Each of the bank guarantees identified the applicant as NCPL, the beneficiary as Hulak, the date of issue as 6 February 2025 and the guarantee amount as not exceeding $312,500. The Bank Guarantees also provided that:

“Special Conditions:

Description of Contract/Agreement:

[ANZ] asks [Hulak] to accept this bank guarantee (‘Undertaking’) in connection with a contract or agreement between [Hulak] and [NCPL] for: construction of [the relevant building].

Guarantee Amount

In consideration of [Hulak] accepting this Undertaking and its terms, ANZ undertakes unconditionally to pay [Hulak] on written demand from time to time any sum or sums up to an aggregate amount not exceeding: … $312,500 (‘Amount’).

Undertaking:

ANZ will pay the Amount or any part of it to [Hulak] upon presentation of this original Undertaking (accompanied by a written demand) at [address] without reference to [NCPL] and even if [NCPL] has given ANZ notice not to pay the money, and without regard to the performance or non-performance of [NCPL] or [Hulak] under the terms of the contract or agreement.

…

This Undertaking is personal to [Hulak]. [Hulak] cannot assign, transfer, charge or otherwise deal with its rights under this Undertaking and ANZ will not recognise any purported assignment, transfer, charge or other dealing.”

14. Mr Byrne, who appears for Hulak, submits, and I accept, that the Bank Guarantees here had the character described by Middleton J in Re Hastie Group Ltd (in liq) (2022) 410 ALR 531; [2022] FCA 1280 at [270]–[273], as follows:

“…unlike a true contract of guarantee or suretyship, under an unconditional bank guarantee or undertaking, the bank assumes a primary obligation to make payment pursuant to its own terms, rather than a secondary or collateral obligation to answer for the debt or to perform the obligation of another on their default.

Indeed, the form of “bank guarantees” in this proceeding is more accurately described as an unconditional performance bond — that is, a covenant by the bank to pay money on demand up to a stated maximum amount, unqualified by the terms of the underlying contract between the party obliged to arrange the bank guarantee and the party entitled to call on it: Wood Hall [Ltd v Pipeline Authority (1979) 141 CLR 443] at 445 (per Barwick CJ), 451 (per Gibbs J); Simic [NSW Land and Housing Corporation (2016) 260 CLR 85] at [2] (per French CJ). …

Bank guarantees have been described as “as good as cash” or “providing an equivalent to cash”, awaiting only a demand before materialising as cash: Wood Hall at 457 (per Stephen J); Simic at [6] (per French CJ). Further, it has been said “such securities ‘create a type of currency’ and are … essential to international commerce and, in the absence of fraud, should be allowed to be honoured free from interference by the courts”: Simic at [88] (per Gageler, Nettle and Gordon JJ).

Bank guarantees are of particular significance in the construction industry as “a means of guaranteeing the performance of the head contractor to the proprietor or, alternatively, the performance of a sub-contractor to the head-contractor”: O’Donovan J & Phillips J, Modern Contract of Guarantee (Lawbook Co, subscription service) at [15.100] — the latter being the context of these proceedings. …As Murphy J in Wood Hall stated at CLR 461 in relation to the unconditional undertaking or bank guarantee in that case:

‘If undertakings in this form were construed so that a Bank must or might have regard to rights and liabilities arising from the performance of a contract between an owner and a contractor before it was required or entitled to pay an owner, then the commercial effectiveness of such undertakings would be destroyed: all the legal and factual complexities of a building dispute would be injected into an otherwise straightforward unconditional undertaking.’”

15. I also have regard to Rees J’s observations as to the character of such a document, to similar effect, in Daewoo Shipbuilding & Marine Engineering Co Ltd v INPEX Operations Australia Pty Ltd (2022) 404 ALR 503; [2022] NSWSC 1125. Mr Byrne also rightly points out that the Bank Guarantees here expressly contemplated that they could be called upon, notwithstanding any objection by NCPL, by delivering the Documents and a demand for payment. The only reason that has not occurred here is by reason of the error which both parties accept occurred, by which copies of the Documents rather than the Documents were delivered to Hulak.

16. Returning to the chronology of events, by email dated 6 February 2025 (Ex J1, 486), Mr Barba of NCPL advised an employee of Hulak that he would “head out to Hornsby today and drop [the Bank Guarantees] off to [an employee of Hulak]”. By letter dated 6 February 2025 from NCPL to Hulak (Ex J1, 495), NCPL advised that, pursuant to cl 5 and item 14 of the Contract, NCPL submitted the two Bank Guarantees “as security”, and Mr Farr of Hulak acknowledged receipt by signing a copy of that letter. NCPL and Hulak now accept, and I proceed on the basis, that NCPL intended to deliver the Documents, being the originals of the Bank Guarantees to Hulak, but retained possession of the Documents in error and instead delivered colour copies of the Documents to Hulak.

17. An invoice dated 28 February 2025 (Ex J1, 497) issued by NCPL to Hulak recorded the provision of the bank guarantees of $625,000 in lieu of cash and recorded that the cash retention had then been reduced to nil.

18. NCPL was placed in voluntary administration following a resolution of its directors on 8 February 2026. On 11 February 2026, Hulak gave notice under cl 39.4 of the Contract (Ex J1, 508) that it was taking the work out of NCPL’s hands on the basis that the voluntary administrators had been appointed to NCPL and that NCPL had ceased trading and would not carry out further works at the site.

19. In March 2026, Mr Beattie became aware that the Documents had not been delivered to Hulak and were held by Mr Alberto Novati, and Mr Beattie subsequently obtained possession of the Documents from Mr Alberto Novati. On 24 March 2026, Hulak gave notice to NCPL, through the Deed Administrators, of its intent to call on the Bank Guarantees. On the same day, the Deed Administrators wrote to Hulak contending that the Documents remained the property of NCPL and notifying Hulak of its intention to return them to ANZ for cancellation (Beattie 14.5.26 [15]–[16]). On 8 April 2026, Hulak demanded delivery of the Documents from the Deed Administrators (Beattie 14.5.26 [18]). On 28 April 2026, the solicitors for NPL requested the delivery of the documents by the Deed Administrators to the director of NCPL (Beattie 14.5.26 [19]).

20. At a second meeting of creditors on 14 April 2026, NCPL’s creditors approved the entry into the DOCA and, on 6 May 2026, NCPL entered into the DOCA. Clause 4.3 of the DOCA provides that, following execution of the DOCA and the satisfaction of conditions precedent (which have been satisfied), management of NCPL would revert to its director, who would thereafter be solely responsible for the conduct of its business affairs, subject to the Deed Administrators’ power to deal with, collect and otherwise administer the “available property and the Deed Fund [(as defined)]”.

21. Clause 5 of the DOCA provides that:

“For the purposes of s 444A(4)(c) of the Act, all Claims against [NCPL] will be subject to a moratorium throughout the Deed Period.”

22. The term “Claims” is broadly defined in cl 1.1 of the DOCA. Clause 5.2 of the DOCA prevents a person who has a “Claim” against NCPL beginning or continuing any legal proceedings against NCPL, unless with leave of a Court. Ultimately, nothing turns on that provision here, because the issues arising in these proceedings need to be determined in the application for directions brought by the Deed Administrators and NCPL is a necessary party to their determination. Clause 6 of the DOCA in turn qualifies the moratorium in cl 5, in respect of the position of Secured Creditors (as defined).

23. Clause 7.1 of the DOCA requires the Deed Administrators to collect and provide specified property as the Deed Fund, but excluding any “Unavailable Property” (as defined) of NCPL. Clause 8.7(a) of the DOCA in turn provides that, subject to the Court’s leave granted under s 444E of the Corporations Act 2001 (Cth) (“Act”), Creditors (as defined) (other than Secured Creditors, again as defined) will not have any other recourse to pursue their claims against the Companies (as defined) other than by lodging a proof of debt against the Deed Fund in accordance with cl 8. Clause 10.1 of the DOCA sets out the proof of debt process. Clause 11 of the DOCA provides for the manner in which the Deed Fund would be distributed.

The Court’s power to give directions under s 90-15 of the IPSC

24. Dr Greinke, who appears for the Deed Administrators, submits that the Court has power to determine the issues in this application and give a direction to the Deed Administrators under s 90-15 of the IPSC, which empowers the Court to make such orders as it thinks fit in relation to the external administration of a company, including an order determining any question arising in the external administration. The Court may give directions under this section that provide guidance to a liquidator on matters of law and the reasonableness of a contemplated exercise of discretion by a liquidator, although it typically will not do so where a matter relates to the making and implementation of a business and commercial decision, where no particular legal issue is raised and there is no attack on the propriety or reasonableness of the liquidator’s decision. The Court’s power to give directions under this section has been noted in, for example, Walley, In the matter of Poles & Underground Pty Ltd (admins apptd) [2017] FCA 486 at [41]; Re Plutus Payroll Australia Pty Ltd (in liq) (2019) 139 ACSR 536; [2019] NSWSC 1171 at [4]; in Re Courtenay House Capital Trading Group Pty Ltd (in liq) [2021] NSWSC 256 at [2]; and In Re Mudgee Dolomite & Lime Pty Ltd (in liq) [2021] NSWSC 1350 at [4].

25. Dr Greinke also rightly points out that s 90-15 of the IPSC also allows the binding determination of a substantive question arising in an external administration where proper contradictors are, as here, before the Court: Kelly (liquidator), In the matter of Halifax Investment Services Pty Ltd (in liq) (No 8) (2020) 144 ACSR 292; [2020] FCA 533 at [51]; Wells Fargo Trust Company, National Association v VB LeaseCo Pty Ltd (admins apptd) (2022) 275 CLR 1; [2022] HCA 8; Re BCA National Training Group Pty Ltd (in liq) [2023] NSWSC 366. I recognise that, as I noted above, the case law indicates that the Court will not generally give a direction as to a business or commercial decision to be made by a liquidator or deed administrator. It seems to me that this application plainly does not concern such a decision, where the Deed Administrators instead face contrary claims put by Hulak and NPL as to the legal effect of somewhat unusual facts. I am satisfied that the Court has power to, and should, give a direction to the Deed Administrators as to how they should deal with the Documents.

The positions put by the parties

26. Dr Greinke, who appears for the Deed Administrators, took a neutral position in the application, and Hulak and NPL put the competing arguments. Dr Greinke rightly notes that Hulak sought delivery up of the Documents on several grounds; and that NPL contended that the Documents were property of NCPL, to be dealt with under the DOCA and that they should be delivered to NCPL’s directors. He rightly identifies a first question whether Hulak had established an entitlement to the Documents, on the several bases for which it contended. Dr Greinke rightly also draws attention to the decision in CCIG (Australia) Pty Ltd v Amicus Hospitality Group Pty Ltd [2019] QSC 232 at [34]–[36] (“CCIG”), where a contractor’s obligation to provide a complying unconditional bank guarantee was enforced by a declaration and order for specific performance. He also points to a second question as to whether Hulak’s entitlement to the Documents is displaced by the provisions of the Personal Properties Securities Act 2009 (Cth) (“PPSA”) and/or barred or constrained by the DOCA.

27. Hulak in turn identifies, in its Points of Claim filed on 9 June 2026, a claim in detinue in respect of the Documents constituting the Bank Guarantees; claims that NCPL held the Documents on institutional or remedial constructive trust for it; and alternatively claims that Hulak was, from 6 February 2025, the assignee of the Documents and NCPL held the Documents as equitable assignor, subject to Hulak’s equitable interest. On that basis, Hulak seeks, inter alia, an order for specific performance of NCPL’s obligation to deliver the Documents to Hulak. It may be that the latter claim was sufficiently wide, in its terms, to support a claim for specific performance of NCPL’s obligation to provide the Documents or the Bank Guarantees in accordance with the Contract and the parties’ agreement that that security should be provided in the form of the Bank Guarantees. In any event, Hulak also puts its claim on that basis in the course of oral submissions; and Mr O’Brien, with whom Mr Mohseni appears for NPL, rightly accepted that he could point to no prejudice to NPL arising from that claim being advanced.

28. Alternatively, Hulak sought an order that NCPL held the amount which was the subject of the Bank Guarantees on institutional or remedial constructive trust, from the time of NCPL’s mistaken delivery of copies of the Documents to it on 6 February 2025 and Hulak’s transfer of the retention monies to NCPL on about 10 February 2025, or alternatively from the point at which NCPL realised the Documents had not been provided to Hulak, or the Deed Administrators were informed, in about February 2026, that the Documents had not been provided to Hulak. That claim was put on the basis that it would be unconscionable for NCPL, or alternatively the Deed Administrators, not to deliver the Documents up to Hulak and for NCPL to retain the benefit of the retention monies which would have been held as security, but for NCPL’s mistake in delivering copies of the Documents to Hulak. It is not necessary to determine that claim given the findings that I reach on other grounds.

29. NPL conversely contends, by its Points of Claim filed on 9 June 2026, that:

“In the event the Court is not satisfied that Hulak owns the [Documents], the Court should direct the Deed Administrators to hand over possession of the [Documents] to the director of [NCPL] on the basis that:

(a) the [Documents] are not property of [NCPL] that is capable of forming part of the Deed Fund for distribution to creditors in accordance with clauses 7.11 and 11.1 of the DOCA; and

(b) by operation of clause 4.3 of the DOCA, control of the “business affairs property and financial circumstances” of [NCPL] has returned to [the] director of [NCPL].”

30. The parties, rightly, were alert in submissions to the difference between the Documents on the one hand, and the rights of Hulak against ANZ which arose under the Bank Guarantees but could only be exercised on presentation of the Documents to ANZ on the other.

Hulak’s claim for specific performance

31. As I noted above, Mr Byrne now advances a claim that NCPL’s obligation to deliver Bank Guarantees and the Documents comprising them, arising under the Contract, is enforceable by an order for specific performance. Mr O’Brien rightly accepted that, consistent with the approach taken by Mullins J in CCI**G, that obligation was specifically enforceable.

32. Dr Greinke noted a question might also arise whether the right to delivery of the Bank Guarantees and the Documents arising under the Contract was a personal right and a “claim” precluded by the DOCA. I understand Mr O’Brien also to have raised that question, particularly in his written submissions, although they were not directed specifically to the claim for specific performance which gained greater focus in Mr Byrne’s oral submissions.

33. I have referred to the terms of the DOCA above. Section 444D of the Act in turn deals with the extent to which a deed of company arrangement binds creditors and relevantly provides:

“(1) A deed of company arrangement binds all creditors of the company, so far as concerns claims arising on or before the day specified in the deed under paragraph 444A(4)(i).

(2) Subsection (1) does not prevent a secured creditor from realising or otherwise dealing with the security interest, except so far as:

(a) the deed so provides in relation to a secured creditor who voted in favour of the resolution of creditors because of which the company executed the deed; or

(b) the Court orders under subsection 444F(2).

(3) Subsection (1) does not affect a right that an owner or lessor of property has in relation to that property, except so far as:

(a) the deed so provides in relation to an owner or lessor of property who voted in favour of the resolution of creditors because of which the company executed the deed; or

(b) the Court orders under subsection 444F(4). … “

34. Section 444H of the Act deals with the release of a company’s debts and provides:

“A deed of company arrangement releases the company from a debt only in so far as:

(a) the deed provides for the release; and

(b) the creditor concerned is bound by the deed.”

35. Section 553(1), contained in Pt 5.6 of the Act, which deals with winding up, in turn deals with debts or claims that are provable in a winding up and provides:

“… in every winding up, all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date, are admissible to proof against the company. … ”

36. I recognise that, in Airtourer Co-Operative Ltd v Millicer Aircraft Industries Pty Ltd (subject to a Deed of Company Arrangement) [2004] FCA 393 (“Airtourer”), Beaumont J held that, although a contingent right to payment was provable under a deed of company arrangement, the corresponding right to specific performance was not affected by that deed of company arrangement. In Thiess Infraco (Swanston) Pty Ltd v Smith (2004) 209 ALR 694; [2004] FCA 1155 (“Thiess”), Finkelstein J referred to the decision of the House of Lords in Hardy v Fothergill (1888) LR 13 AC 351 as recognising that provisions for the proof of debt possibly excluded “contracts which had an object different from the payment of money and any others for which the proper remedy was an injunction or specific performance”. In Roy Smith as Trustee of the Smith Investment Trust v Sandalwood Properties Ltd (2019) 344 FLR 278; [2019] WASC 109 (“Sandalwood”), after a full review of the case law including Airtourer, Vaughan J observed, partly by reference to a concession made by counsel in that case, that a deed of company arrangement there affected the claim for breach of the primary obligation, rather than the contractual obligation itself and that “[i]t might be that coercive relief remains available in a particular case”, although his Honour did not express a final view as to that question.

37. The question was again considered at first instance in Kirkalocka Gold SPV Pty Ltd (subject to d**eed of c**ompany arrangement) (recs and mgrs apptd*) v SCL AUS* Ltd [2025] FCA 1490 and on appeal in SCL A**US Ltd v Kirkalocka Gold SPV Pty Ltd [2026] FCAFC 60 (“Kirkalocka Appeal”). At first instance, Jackson J referred to case law, including Sandalwood and Thiess, and observed (at [126]) that the observations in Thiess could suggest that, if the proper remedy for a claim for breach of contract is an injunction or specific performance, then the claim will not be extinguished by force of s 444D of the Act. His Honour then noted (at [129]), referring to Airtourer, that:

“identifying that specific relief is available for breach of a given obligation is not the end of the inquiry. It is also necessary to consider whether the claim for breach is connected to a debt that is released by the operation of the deed of company arrangement.”

38. His Honour also observed (at [147]) that:

“whether enforceable by specific performance or not, an obligation will still be released by force of s 444D of the [Act] (or s 553) to the extent that it is ancillary to a monetary obligation that is released, in the sense that it secures, protects or otherwise supports that obligation.”

39. His Honour there held that a covenant to lodge a consent caveat and not to remove or cancel that caveat, without the other party’s consent, was, ancillary to or security for the relevant claim in respect of an obligation to pay a royalty and those rights were also released by the deed of company arrangement that was in issue in that case.

40. On appeal in Kirkalocka Appeal, the Full Court of the Federal Court (at [75]–[80]) summarised the applicable principles as follows:

“The following principles are well established and were not in dispute.

First, insofar as s 444D of the [Act] provides that a deed of company arrangement binds all creditors of the company, so far as concerns “claims” arising on or before the day specified in the deed, the “claim” must exist at the relevant date: Brash Holdings Ltd v Katile Pty Ltd [1996] 1 VR 24 at 34 (Brooking, J D Phillips and Hansen JJ). …

Second, the expression “claims arising on or before the day specified in the deed” must be read in the same way as the expression “debts or claims the circumstances giving rise to which occurred before the relevant date” in s 553(1): Brash at 34. In other words, the claims for the purpose of Pt 5.3A should be the same debts or claims had the company gone into liquidation: Brash at 34, 36; Sandalwood at [76] (Vaughan J). Thus, the “creditors” for the purposes of Pt 5.3A are those who would have been the creditors of the company had the company gone into liquidation at the relevant date, for the purposes of s 553(1), being the day specified in the deed of company arrangement: Lehman Brothers Holdings Inc v City of Swan (2010) 240 CLR 509; [2010] HCA 11 at [38] (French CJ, Gummow, Hayne and Kiefel JJ); Sandalwood at [76].

Third, for the purposes of s 444D, “claims arising on or before the day specified in the deed” includes future or contingent debts or claims: Brash at 28, 34 and 36; Lehman Bros at [38], [51], Sandalwood at [83], [162].

Fourth, s 444D, like s 553, is concerned with a claim founded on an existing legal right to participate in the division of the assets of the company: BE Australia WD Pty Ltd v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414 at [105] (Campbell JA); [PK Riddell Investments Pty Ltd v Onwards Up and Gone Pty Ltd (2024) 73 VR 219; [2024] VSC 159] at [37], [78] and [105] (Waller J).

Fifth, the claims that may be compromised by a deed of company arrangement are claims in the nature of monetary claims, or at least something that may be valued and taken into account in a winding up: BE Australia at [105]; Riddell at [78].”

41. The Full Court there held that a covenant to lodge a consent caveat and not to remove or cancel that caveat, without the other party’s consent, was part of the relevant claim in respect of an obligation to pay a royalty, rather than ancillary to or security for that claim. On that different reasoning, the Full Court reached the same result that those rights were also released by the deed of company arrangement that was in issue in that case.

42. If the approach taken in Airtourer and Thiess were correct, then the DOCA here would likely not affect Hulak’s acknowledged right to specific performance of the obligations to deliver the Documents arising under the Contract and the parties’ arrangements to exchange the retentions for the Bank Guarantees. However, the question whether that approach has now been overturned, or substantially qualified, is of some complexity; they were not fully addressed by the parties in submissions; and it is preferable not to determine it where the case may be determined on other grounds.

Hulak’s claim in detinue

43. Alternatively, Hulak brings a claim in detinue in respect of the Documents. Mr Byrne submits, and I accept, that in order to succeed in that claim, Hulak must show that, first, it had a right to immediate possession of the Documents at the time it demanded they be provided; second, that demand was specific and unequivocal; and, third, the party holding the Documents, whether NCPL or the Deed Administrators, wrongfully refused or neglected to provide them to Hulak following the demand: CHEP Australia Ltd v Bunnings Group Ltd [2010] NSWSC 301 at [183]; Grant v YYH Holdings Pty Ltd [2012] NSWCA 360 at [43]. I understand only the first of those requirements to be in dispute here. I also have regard to the matters taken into account to determine a right to possession, in that case as to cheques, in Grantham Homes Pty Ltd v Interstate Permanent Building Society Ltd (1979) 37 FLR 191 at 206–207.

44. Mr Byrne here relies on cll 5.1–5.3 of the Contract, to which I have referred above, as providing a basis for Hulak’s right to immediate possession of the Documents. He submits that Hulak had an immediate right to possession of the Documents, once the Bank Guarantees were offered by NCPL as security and accepted by Hulak as security, to allow Hulak to obtain the benefit of the Bank Guarantees by calling upon them in the future. In response to Hulak’s claim in detinue, Mr O’Brien submits that a mere contractual right to immediate possession of the Documents is not a sufficient interest to support an action in detinue, and that Hulak would not have a proprietary or possessory interest to support an action in detinue until the Documents were delivered to it. I do not accept that submission, where the facts here establish more than a mere contractual right to immediate possession of the Documents, arising out of the mistake made by NCPL and the release of the retention monies to NCPL on the basis that the Documents had in fact been delivered to Hulak.

45. It seems to me that the course of conduct to which I have referred above, comprising NCPL’s offer of the Bank Guarantees; the release of them by ANZ to NCPL; NCPL’s (mistaken) advice to Hulak that they would be and had been delivered; Hulak’s (mistaken) receipt for their delivery, and Hulak’s subsequent conduct in releasing the retention monies on the basis that the Documents had in fact been delivered, was sufficient to give rise to a right to possession of the Documents. On that basis, the elements of a claim in detinue are established and this claim succeeds, subject to NPL’s defence in relying on the PPSA, which I address below. I do not understand NPL to contend that the terms of the DOCA prevent Hulak from bringing a claim in detinue to recover the Documents, on the basis that it has a right to possession of them.

Hulak’s claim in trust

46. Second, Hulak contends that NCPL holds the Documents on trust for it, by reason of NCPL’s mistake in providing colour copies rather than the Documents to Hulak on 6 February 2025. I will assume, without deciding, that NCPL owned the Documents at the point ANZ delivered them to NCPL on or about that date, and immediately before NCPL purported to deliver them to Hulak but in fact delivered colour copies of the Documents to Hulak. It is not necessary to decide that question because, if a trust arose, that occurred as a result of NCPL’s conduct after it had obtained the documents from ANZ and mistakenly delivered copies of them rather than the Documents to Hulak.

47. Mr Byrne refers to the observations of Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 at 108; [1984] HCA 64, where his Honour referred to Cardozo J’s observation in Beatty v Guggenheim Exploration Co (1919) 225 NY 380 at 386 that:

“When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee.”

48. In KAP Motors Pty Ltd v Commissioner of Taxation (2008) 246 ALR 395; [2008] FCA 159 at [41], Emmett J referred to that observation as authority for the proposition that:

“A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property to assert his own beneficial interest in the property and deny the beneficial interest of another. … ”

49. In The Game Meats Company of Australia Pty Ltd v Farm Transparency International Ltd (2025) 312 FCR 272; [2025] FCAFC 104 at [21]ff, Jackman J also referred to the circumstances in which constructive trusts may be imposed without a pre-existing fiduciary relationship, and referred to the “Pallant v Morgan equity” as an example of a constructive trust that is imposed where the circumstances in which a defendant retains control of property make it unconscionable for it thereafter to assert a beneficial interest in the property. His Honour also noted (at [27]) that the High Court did not disagree with that approach, as a matter of principle, in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 at [78]ff.

50. Mr O’Brien responds that general assertions of unconscionability are not enough to constitute a constructive trust, and that a remedial constructive trust is imposed in accordance with established principles, not by untethered notions of unconscionability. It seems to me that Hulak’s claim here, based on the matters which are common ground between the parties, cannot be described as relying on “untethered notions” of unconscionability, where the relevant unconscionability arises from the particular facts.

51. Here, NCPL intended to deliver the Documents to Hulak; its mistake had the result that it did not do so, but instead delivered colour copies; and it thereby obtained the benefit of the release of the retention funds, on the basis that it had in fact delivered the Documents to Hulak. I accept that, from the point at which NCPL became aware that it had delivered the colour copies rather than the Documents to Hulak, it was unconscionable for it to rely on that error to defeat Hulak’s right to obtain the Documents and the Bank Guarantees, where Hulak had released the retention funds on the basis of NCPL’s representation to it that it had been provided with the Bank Guarantees, which necessarily implied that it had been provided with the Documents necessary to call upon the Bank Guarantees. Where it is unconscionable for NCPL to assert its ownership of the Documents and not now deliver the Documents, once it became aware of its error, a constructive trust arises in those circumstances by operation of law. I address NCPL’s reliance on the PPSA in response below.

Equitable assignment

52. Hulak advances a third claim to delivery of the Documents, on the basis that the equitable title in the Documents passed to Hulak by way of equitable assignment, at least by the time that Hulak paid the retention monies to NCPL on 10 February 2025. It is not necessary to determine that claim, where Hulak has succeeded in its claims in detinue and in trust.

NPL’s reliance on the DOCA

53. Mr O’Brien submits that Hulak’s claims are barred by the DOCA. Mr Byrne responds, and I broadly accept, that Hulak’s claims in detinue and by way of constructive trust in respect of the Documents are proprietary in nature and are not within the scope of the moratorium in, and are not extinguished by, the DOCA. No need for any leave for Hulak to commence proceedings arises, because the issue raised by Hulak must be determined in order to determine the Deed Administrators’ application for judicial advice under s 90-15 of the IPSC.

54. I have referred to the terms of the DOCA above. It seems to me that Hulak has not here taken any of the steps prohibited by cl 5.2 of the DOCA, to which I referred above, where it has rightly been joined in proceedings brought by the Deed Administrators to seek a direction as to their position and is a necessary contradictor to those proceedings. However, even if it had done so, I would readily grant leave for it to participate in the proceedings, both because it asserts proprietary rights in the Documents and because it is a necessary contradictor in the application brought by the Deed Administrators, which could not fairly be determined without its participation. It seems to me that Hulak does not here seek to pursue a claim against NCPL falling within the scope of cl 8 of the DOCA, to which I also referred above. Instead, it seeks to be placed in a position where it can pursue its claim against ANZ under the Bank Guarantees, by a determination of the Deed Administrators’ application in a manner that will be to its practical advantage. Clause 10.1 of the DOCA in turn provides for the release of claims against NCPL. Again, I recognise that Hulak does not here seek to pursue a claim against NCPL, but instead seeks to be placed in a position that it can pursue its claim against ANZ, by reason of advice that is given in the Deed Administrators’ application.

55. Mr O’Brien submits, by reference to the terms of the DOCA, that Hulak’s sole remedy is to prove against the Deed Fund. I do not accept that submission. As I have noted above, the DOCA does not prevent Hulak’s participation in these proceedings as a necessary contradictor in the Deed Administrators’ application, and I would grant leave for it to participate if it were necessary to do so; the DOCA does not prevent the Court making an order that the Deed Administrators are justified in delivering the Documents to Hulak and would not be justified in taking any other course, where Hulak has established both a right to possession and equitable ownership of the Documents; and the DOCA does not have any effect upon claims which Hulak has against ANZ, once it is in a position to present the Documents to ANZ. NPL’s reliance on the DOCA therefore does not assist it.

NPL’s reliance on the PPSA

56. In further answer to Hulak’s claims, Mr O’Brien submits that, even if the Bank Guarantees gave Hulak a proprietary right in the Documents or an immediate right to possession of them, that was an unperfected security interest for the purposes of s 12 of the PPSA, which vested in NCPL on the appointment of administrators under s 267 of the PPSA. I recognise that, as Mr O’Brien points out, the term “security interest” is defined in s 12(1) of the PPSA as:

“an interest in personal property provided for by a transaction that, in substance, secures payment or performance of an obligation (without regard to the form of the transaction or the identity of the person who has title to the property).”

57. I also recognise that, in determining whether a security interest exists, the Court will have regard to the commercial or economic reason for which the interest is granted.

58. However, it seems to me that, first, the premise of Mr O’Brien’s submission is not established. The right to possession that supports Hulak’s claim in detinue and its claim for a trust arose, not from the Contract or from any contractual right arising under the Bank Guarantees, but from the circumstances in which NCPL mistakenly delivered colour copies rather than the Documents to Hulak, and drew down the retention on the basis that it had delivered the Documents. To the extent that that conduct could be characterised as a “transaction”, it was not one that secured payment or performance of an obligation in any relevant sense, so as to fall within the definition of “security interest” in s 12 of the PPSA. Second, and in any event, the rights on which Hulak now relies arise under the general law, and are excluded by s 8 of the PPSA from the registration requirements under the PPSA: Dura (Australia) Constructions Pty Ltd (in liq) v Hue Boutique Living Pty Ltd (2014) 49 VR 86; [2014] VSCA 326 at [127]ff; Sandhurst Gol**f Estates Pty Ltd v Coppersmith Pty Ltd (2014) 285 FLR 267; [2014] VSC 217 at [100]. It is not necessary to address Mr Byrne’s further submissions as to the scope of the PPSA, where those matters are sufficient to avoid any vesting of Hulak’s rights in NCPL under s 267 of the PPSA.

Orders and costs

59. In these circumstances, I will make orders that direct the Deed Administrators that they would be justified in delivering the Documents to Hulak, and would not be justified in delivering them to any other person.

60. Costs should follow the event, as between NPL and Hulak, and NPL should pay Hulak’s costs of the proceedings, as agreed or as assessed. The Deed Administrators seek an order that their costs of the proceeding be costs in the deed administration of NCPL, and such an order is authorised by s 90-15(3)(d) of the IPSC. They disclose, as a matter of candour, that they have been provided an indemnity from NPL in respect of their costs of the application and have a further indemnity under cl 10.1 of the DOCA. They submit and I accept, that that is not reason to depart from the usual position as to costs, although I recognise that it may assist the Deed Administrators if their costs are not otherwise recoverable against the assets of NCPL. I am satisfied that the order sought by the Deed Administrators is properly made, where this dispute involved issues of some complexity and the Deed Administrators properly approached the Court for a direction to determine the dispute.

61. I therefore make the following orders:

62. Pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations), the Plaintiffs are justified in delivering original Bank Guarantees issued by Australia and New Zealand Banking Group Ltd to Hulak Coonanbarra Pty Ltd and would not be justified in delivering those documents to any other person.

63. The Second Defendant pay the First Defendant’s costs of the proceedings, as agreed or as assessed.

64. Costs of the Plaintiffs be costs in the deed administration of Novati Constructions Pty Ltd (subject to a deed of company arrangement).

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