Owen, in the matter of RiverCity Motorway Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) v Madden

Solicitor for Amicus Curiae: Australian Securities and Investments Commission (Sydney)

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 60 of 2011

IN THE MATTER OF RIVERCITY MOTORWAY PTY LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) (AND EACH OF THE COMPANIES LISTED IN THE ATTACHED SCHEDULE)

BETWEEN: MICHAEL ANDREW OWEN, STEPHEN JAMES PARBERY AND CHRISTOPHER CLARKE HILL IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF RIVERCITY MOTORWAY PTY LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN 116 665 304 (AND EACH OF THE COMPANIES LISTED IN THE ATTACHED SCHEDULE)

AND: MARTIN MADDEN AND DAVID MERRYWEATHER (RECEIVERS AND MANAGERS)

JUDGE: LOGAN J DATE OF ORDER: 17 FEBRUARY 2012 WHERE MADE: BRISBANE

1. Pursuant to s 447D of the Corporations Act 2001 (Cth) (Corporations Act) that the applicants, by reason of their appointment as administrators of RiverCity Motorway Management Limited, which is the responsible entity of the RiverCity Motorway Investment Trust and the RiverCity Motorways Holdings Trust, are not "officers" of RiverCity Motorway Management Limited for the purposes of ch 5C of the Corporations Act. THE COURT ORDERS THAT:
2. Pursuant to s 447A of the Corporations Act that, until further order, when performing their function and exercising their powers as administrators of RiverCity Motorway Management Limited under Pt 5.3A of the Corporations Act, in particular under s 437A, the applicants may perform that function and exercise their powers as if ss 292(1), 298(1), 302, 306(1), 314, 319 and 320 of the Corporations Act had no application to RiverCity Motorway Management Limited in any capacity it undertakes in respect of the RiverCity Motorway Investment Trust or the RiverCity Motorways Holding Trust or otherwise. Costs of application
3. The applicants' costs of and incidental to the interlocutory application filed on 25 January 2012 as concerns the relief sought at paragraphs 9 and 10 of that application, including reserved costs (and GST thereon), be costs in the administration of RiverCity Motorway Management Limited, and be paid out of the assets of RiverCity Motorway Management Limited, the RiverCity Motorway Investment Trust or the RiverCity Motorways Holdings Trust. Notice of orders
4. The applicants inform: (a) the creditors of the orders made upon this hearing by means of a circular forwarded by post, facsimile or email (as the case may be); and (b) all creditors of the companies for whom the applicants do not have a current post, facsimile or email address, of the orders made upon this hearing by making the orders available on the 'Creditor Information' section of the website maintained by the applicants' firm PPB Advisory (http://www.ppbadvisory.com/creditor-information), within seven days after the making of this Order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 60 of 2011

IN THE MATTER OF RIVERCITY MOTORWAY PTY LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) (AND EACH OF THE COMPANIES LISTED IN THE ATTACHED SCHEDULE)

BETWEEN: MICHAEL ANDREW OWEN, STEPHEN JAMES PARBERY AND CHRISTOPHER CLARKE HILL IN THEIR CAPACITY AS JOINT AND SEVERAL ADMINISTRATORS OF RIVERCITY MOTORWAY PTY LIMITED (ADMINISTRATORS APPOINTED) (RECEIVERS AND MANAGERS APPOINTED) ACN 116 665 304 (AND EACH OF THE COMPANIES LISTED IN THE ATTACHED SCHEDULE)

AND: MARTIN MADDEN AND DAVID MERRYWEATHER (RECEIVERS AND MANAGERS)

JUDGE: LOGAN J DATE: 14 FEBRUARY 2012 PLACE: BRISBANE

REASONS FOR JUDGMENT 1 I have stood over for separate consideration two issues raised by Mr Owen, Mr Parbery and Mr Hill, in their capacities as the joint and several administrators of RiverCity Motorway Pty Limited (Administrators Appointed) (Receivers and Managers Appointed), and related companies, which may collectively be described as the RiverCity Motorway Group. The questions which fall for consideration are those set out in paragraphs 9 and 10 of the interlocutory application. The administrators there seek the following: 1. Pursuant to s 447A(1) or s 447D(1) of the Corporations Act 2001 (Cth) (Corporations Act), an order or direction that when performing their role as administrators of RiverCity Motorway Management Limited (RCMML), and when exercising their powers under Pt 5.3 of the Corporations Act, the applicants are entitled to rely on the authority of Norman and others v FEA Plantations Ltd (2010) 191 FCR 39 (Norman's Case), for the proposition that the applicants are not "officers" of RCMML for the purposes of ch 5C of the Corporations Act. 2. Pursuant to s 447A(1) or s 447D(1) of the Corporations Act, an order or directions that when performing their role as administrators of RCMML and when exercising their powers, under Pt 5.3A of the Corporations Act, the applicants need not cause RCMML, the RiverCity Investment Trust (RCMIT) or the RiverCity Holding Trust (RCMHT) to comply with their obligations under some or all of ss 292(1), 298(1), 302, 306(1), 314, 319 and 320 in Pt 2M.3 of the Corporations Act. 2 The administrators, by one of their number, Mr Owen, have provided a detailed affidavit deposing to the factual circumstances attending the administration and why, having regard to that administration, and taking into account the coincident appointment of receivers and managers, the circumstances presently attending the units in the two managed investment schemes referred to in the application and the costs of financial accounting, the application has been brought. 3 The application comes as a sequel to an order which I made in March 2011, extending the convening period for each of the companies in the RiverCity Motorway group until 18 December 2012. These reasons for judgment must be read against the background of the circumstances set out in the earlier reasons for judgment as to why such an extension was, in the particular peculiar and extraordinary circumstances of this matter, considered warranted: see Owen, in the matter of Rivercity Motorway Pty Limited (Administrators Appointed) (Receivers and Managers Appointed) v Madden [2011] FCA 295. Suffice it to say, in all material respects, those circumstances remain. 4 In particular, critical to the worth of the group and also to the two managed investment schemes units, is the worth of the core business, which is the operation of the Clem7 tunnel. It remains the case that there is an expectation that the worth of the core business, which is cash flow sensitive and in turn sensitive to traffic volumes, will be increased for the better once the Airportlink comes on-stream in mid-this year, and once a reasonable period thereafter has elapsed, by reference to which computations may be made of the capital value of the core business. 5 Since their appointment, the administrators have engaged in extensive and intensive dealings with the Australian Securities and Investment Commission (ASIC), the Australian Stock Exchange, the receivers, unit holders and Link Market Services. The latter maintains the management investment schemes' registers of members and processes applications to change details and to transfer units in the schemes off-market. It should be added that the units are suspended from market quotation, of which more later. Also since March of last year, the administrators have engaged in extensive investigation of the property affairs and financial position of the group. They have compiled their findings in preparation for a report to creditors. The making of such a report is an obligation which falls upon administrators under Pt 5.3A of the Corporations Act. 6 The administrators have also been engaged in the preparation of business activity statements, a consideration of the group's tax position, and considering potential litigation against an adviser who had provided advice in respect traffic forecasts for the tunnel. More particularly, the administrators have attended to the day-to-day affairs of the group and traded on the core business. In the course of all that activity, the administrators have faced a number of complex legal issues, not the least of which provides the occasion for the issues which fall for consideration today. The administrators have encountered difficulties in the reconciliation of provisions in ch 5C of the Corporations Act, concerning responsible entities and officers, with the provisions in Pt 5.3A of the Corporations Act, concerning companies under administration. 7 Yet further, the managed investment schemes, themselves, are not corporations. The schemes sit outside the administration of RCMML, their responsible entity. Part 5.3A of the Corporations Act does not, in terms, apply to the schemes as opposed to that responsible entity along with others in the RiverCity Motorway Group. The long and the short of this, and as Mr Owen deposes, is that this has made it difficult to maintain the schemes in their "dormant present state" in order to increase the prospect of achieving a better return for the group's creditors. 8 Given this, the administrators initially made an application to ASIC for relief from some of the obligations imposed by: (a) RCMML's Australian Financial Services licence, the conditions attaching to it, and Pt 7.6 of the Corporations Act; (b) part 2M.3 of the Corporations Act; (c) chapter 6CA of the Corporations Act; and (d) chapter 5C of the Corporations Act. 9 Units in the managed investment schemes have been suspended from quotation since the administration began. Mr Owen opines, and it is tolerably clear on the material before me, that the suspension of those units is unlikely to be lifted during the course of the administration. The units last traded at $0.007 cents before their suspension from quotation on 25 February 2011. 10 On the information presently available to the administrators, it appears that there is a large deficit between the estimated value of the group's assets and the secured debt. 11 Mr Owen deposes, based on his dialogue with the solicitors for the banking syndicate, the secured creditors, that the deficit as at 25 February 2011 was approximately $1.38 billion. Based on this information, and again at the present stage, and in the absence of some form of deed of company arrangement of a kind for which Pt 5.3A of the Corporations Act provides, or some trust scheme or other proposal, it seems that there will not be a return to unit holders. Thus he further opines their financial position may not be affected by the outcome of the administration as units in the schemes have been suspended from quotation on the Australian Stock Exchange. 12 Mr Owen further deposes, and for that matter, I accepted as a fact when deciding to extend the period of the administration, that it is difficult accurately to value the group's most significant asset, the tunnel. 13 At the time of that earlier proceeding, and now, having regard to an opinion furnished by Mr Madden, who is, with Mr Merryweather, one of the joint and several receivers and managers of the companies in the RiverCity Motorway Group, it is unlikely that a "true" value, or put another way, intrinsic value to the tunnel, or for that matter, the business of which the tunnel is the core asset, can be given without heavy discounting for uncertainties in traffic volume data. That will remain the position at least until matters referred to by Mr Madden, principally the Airportlink completion, come to pass towards the end of this year. Those were factors which intruded persuasively on the extension of the convening period. 14 Yet further, again for reasons deposed to by Mr Madden and Mr Owen, there are, at least at present, sound commercial reasons in terms of optimising the worth of that core asset, why it would be imprudent to attempt to give a value, at least in terms of wider public dissemination. 15 The costs of preparing the group's financial accounts would necessarily involve the combined efforts not only of the administrators and their staff, the receivers and their staff and another accounting firm to assist in the preparation of accounts, but also an independent accounting firm to conduct an audit of the group's financial reports. A candidate, or candidates, for the latter role may perhaps be Deloitte or KPMG, the group's accountants and auditors respectively before it went into administration. It is unnecessary to pass any observation upon whether one or the other of those firms would be suitable for that role. What is patent, just from the recitation of accounting firms necessarily concerned, as well as the very nature and interwoven extent of the companies in the group, is that considerable costs would be involved in the preparation of these financial reports. 16 It was against that background that Mr Owen conferred with Mr Madden on the subject of the costs of preparation of such financial reports. Mr Owen had also caused his staff also to confer with staff at the RiverCity Motorway Group's head office concerning this subject. Drawing on the results of these conferrals, Mr Owen's estimate is that the total cost to the group to prepare and audit the group financial accounts would include at least: 1. up to approximately $50,000 in external accounting fees per set of reports prepared; 2. costs and fees for the financial reports to be reviewed by the administrator's office and the receivers' office; and 3. costs and fees for the financial reports to be reviewed and considered by the solicitors of the administrators and receivers respectively, ie Mallesons and Allens Arthur Robinson. 17 Mr Owen also deposes that it is possible, in addition to the annual and half yearly reports, that the Australian Stock Exchange may require the group to prepare and lodge, quarterly reports also, in that case, the costs to which he has referred would be incurred four times per year. 18 Mr Owen deposes that he and his fellow administrators consider there is no utility in preparing financial reports for the group as this cost is one which would ultimately be borne by the banking syndicate. The banking syndicate represents over 99.9% of the group's total known indebtedness. Further, the banking syndicate can command the preparation of any special purpose financial reports it requires. 19 There is substance in this particular opinion voiced by Mr Owen. Another factor which intrudes upon the preparation of accounts is that Mr Owen's investigations to date have disclosed that a number of transactions within the group were not fully documented. Thus, it would be a difficult, time-consuming and costly process to attempt to reconstruct those transactions in order to prepare the group's financial accounts such that those accounts represented a fair and true view of the group's position. 20 Mr Owen also makes reference to there being no directors to sign off on financial reports or give declarations required by Pt 2M.3 of the Corporations Act as all directors of the group's entities resigned immediately after the appointment of administrators of the group. Whether this is, indeed, a difficulty is moot given the role consigned to administrators under s 437A of the Corporations Act. It is not, in any event, a matter to which I give particular weight, nor need it be, having regard to the other considerations which I have already mentioned. 21 In summary, the administrators believe that the administrative burden and associated costs relating to the preparation of group financial reports are unreasonable and, insofar as this would entail a need to assign a value to the tunnel, potentially prejudicial. 22 Another factor to which they point is that there are no end users for such financial reports. The major party interested in the administration, the banking syndicate, is able to and does command the preparation of whatever financial information it requires in relation to the group from the information readily available to the receivers who continue to operate the tunnel. I accept that each of those factors is present in this case. They are not mere matters of opinion on the part of Mr Owen and his fellow administrators alone. 23 Mr Owen further opines that it is impractical to ask the administrators to cause RCMML, the responsible entity, to comply with its obligations under its financial services licences, pursuant to Pt 7.6 and ch 5C of the Corporations Act in circumstances where the schemes are dormant. Accordingly, he deposes there appears to be no regulatory benefit in requiring strict compliance. The administrators, understandably, wish to do no more and no less than to maintain the current state of the schemes in the hope that it may allow greater flexibility in any sale process, thereby increasing the chances of the best possible return to creditors. The administrators believe that this is in conformity with the spirit of Pt 5.3A of the Corporations Act and the orders previously made which extended the administration period. 24 To all of those ends, the administrators have earlier engaged with ASIC. The end result of that is that ASIC has declined to afford the administrators any exemption from particular provisions of the Corporations Act imposing obligations on responsible entities. There is also a difference of views as between the administrators and ASIC as to whether, having regard to the Corporations Act, an administrator is, for the purposes of provisions concerning managed investment schemes, an "officer" as defined. It will be necessary later in these reasons to refer in more detail to some provisions of the Corporations Act of particular relevance in that regard. Suffice it to say, ASIC's exemption refusal decision is one able to be reviewed in the Administrative Appeals Tribunal. Such a review application has been made. It is yet to be heard and determined in that Tribunal. It has not been suggested in any way by or on behalf of ASIC that the existence of that administrative review process provides occasion, even as a matter of discretion, for the refusal of the relief sought; nor in the particular and peculiar circumstances of this case do I separately consider that it provides such occasion. 25 Something now much be said about the representation before me in respect of the questions for consideration. In that regard, though the application was widely publicised in ways which conformed with orders made by the Court, there was no appearance by any person seeking to be made a respondent to the application. Instead, ASIC appeared and sought to be heard as amicus curiae. That was so even though s 1330 of the Corporations Act affords ASIC an ability to intervene in any proceeding relating to a matter arising under the Corporations Act. Intervention would make ASIC a party, and expose it to the potential of a costs liability: see s 1330(2) of the Corporations Act. 26 Recently, in Roadshow Films Pty Ltd v iiNet Pty Ltd [2011] HCA 54, the High Court had occasion to make observations upon the subject both of intervention and leave to appear as amicus curiae. The Court's observations as to intervention concerned whether to allow non-party intervention. It is not necessary to refer to these, having regard to the statutory right of ASIC to intervene. The Court's observations at paragraph 6 in relation to an amicus appearance are germane. The Court there observed, in considering whether any applicant should have leave to intervene in order to make submissions or to make submissions as amicus curiae: [I]t is necessary to consider not only whether some legal interests of the applicant may be indirectly affected but also, in this case critically, whether the applicant will make submissions which the Court should have to assist it to reach a correct determination. Ordinarily then, in cases like the present where the parties are large organisations represented by experienced lawyers, applications for leave to intervene or to make submissions as amicus curiae should seldom be necessary or appropriate and if such applications are made it would ordinarily be expected that the applicant will identify with some particularity what it is that the applicant seeks to add to the arguments that the parties will advance. The latter part of the passage quoted from Roadshow finds resonance in r 9.12 of the Federal Court Rules 2011 (Cth) as to factors to which the court may have regard in deciding whether to permit intervention. 27 Again though, ASIC has a statutory right to intervene. There is a difference between intervention and granting a person leave to act as amicus. An amicus is not a party to the proceedings. Where an person's interests are directly affected, and that person wishes to undertake an active role as a contradictor in respect of matters of factual controversy, intervention would be the appropriate course for that person to take. Here though, ASIC expressly disavowed any role of factual contradictor. Instead, the role sought to be undertaken by ASIC was to assist the Court in respect of what undoubtedly are novel issues arising under the Corporations Act, and difficult ones at that. 28 The position taken by ASIC was, given its role of day to day administration of the Corporations Act, with respect, principled and welcome. I granted leave for ASIC to appear as amicus in relation to particular issues of statutory construction and powers which the Court had or did not have in respect of the granting of the relief sought. 29 I turn then to consideration of the particular issues which are raised by the application. In essence, there are three: 1. Is an administrator an officer for the purposes of provisions concerning managed investment schemes? 2. Does the Court have power under either or each of s 447A and s 447D of the Corporations Act to grant any of the relief sought? 3. In any event, if there is such power, should the relief sought be granted in whole or in part?

Is an administrator an officer for the purposes of provisions concerning managed investment schemes? 30 The administrators rely upon observations, acknowledged to be obiter, made by Finkelstein J in Norman's Case at [20] - [44]: 20 The foundation upon which the growers build their case, namely that the receivers owe them a duty superior to the duty they owe to the banks, is two provisions (and their associated definitions) in Ch 5C of the Corporations Act 2001 (Cth), which deals with managed investment schemes. The relevant provisions are ss 601FC and 601FD. Relevantly they provide that the responsible entity of a managed investment scheme must "act in the best interests of the members and, if there is a conflict between the members' interests and its own interest, give priority to the members' interests" (s 601FC(1)(c)) and that an "officer" of a responsible entity must "act in the best interests of the members and, if there is a conflict between the members' interests and the interests of the responsible entity, give priority to the members' interests" (s 601FD(1)(c). 21 The way the argument runs is as follows: Step 1: The receivers have been appointed to receive the assets of the responsible entity (FEAP) other than the scheme assets; Step 2: Each receiver therefore is a receiver of "the property of the corporation" and hence an "officer" within the definition in s 9 of the Corporations Law. This step assumes that a person appointed to receive only some of the property of a corporation is a receiver of "the property" of that corporation, a proposition which is not self-evidently correct but has not been put in issue; Step 3: Being an officer in accordance with the definition in s 9, it follows that each receiver is an "officer" of a responsible entity for the purposes of s 601FD, owing the duties therein imposed (including the duty to act in the best interests of the members of the managed investment scheme (ie the growers)). This step assumes that there is "no contrary intention" to the application of the s 9 definition, a proposition which is very much in dispute; Step 4: The performance of the statutory duty imposed by s 601FD(1)(c) relates not only to acts done, or not done, by the receivers on behalf of the responsible entity but also to acts done, or not done, by them in any other capacity (eg as receivers of the assets of another corporation) provided those acts may adversely affect the interests of members of the managed investment scheme. This step has not been expressly articulated but is a necessary step in the grower's argument, for what they complain about is the receivers' proposed actions as receivers of FEA, which is not the responsible entity of any of the schemes; Step 5: It would be a breach of the receivers' statutory duty to do any act which adversely impacts on the growers; and Step 6: There would be an adverse impact on the interests of the growers if the receivers of FEA were to take any of the suggested steps with the land for the purposes of reducing (or discharging) the debt due to the banks. It would adversely impact on their interests as it would diminish the growers' rights or make it more difficult for them to find a substitute responsible entity. 22 Bold as this line of reasoning may be, it breaks down in several of the steps. The most significant flaw is step 3 and the assumption that the "officers" of the responsible entity who owe duties imposed by s 601FD(1) include receivers. This assumption would be correct if the s 9 definition of "officer" applies to s 601FD(1) without modification. In my view, however, the enacting history of Ch 5C (a history that occurs before the Corporations Law was repealed and replaced by the Corporations Act) shows a contrary intention. 23 In 1991 the Commonwealth Attorney-General referred to the Australian Law Reform Commission (ALRC) and the Companies and Securities Advisory Committee for review and report the questions whether the regulation of collective investment schemes was efficient and effective and whether a different operating structure should be provided for those schemes. A "collective investment scheme", a somewhat loose expression, was intended to refer to investments in which the investors' contributions were pooled to acquire an asset from which they would share the profits or losses. At the time the most popular forms of collective investment schemes were "prescribed interests", which were regulated by Ch 7 of the Corporations Law (the securities chapter). A prescribed interest covered a diverse range of investments but, in essence, was a right to participate in the profits of a financial or business undertaking or the profits from any common enterprise. 24 In October 1992 the ALRC and the Advisory Committee published a discussion paper entitled Collective Investment Schemes (Discussion Paper 53), which contained a proposed regulatory regime for collective investment schemes. A key proposal of this regime was that the operation of a collective investment scheme be the responsibility of a single entity. Another proposal was that the Corporations Law contain a minimum set of duties that the responsible entity must comply with. In that regard it was suggested that the responsible entity be subject to the following statutory duties: (1) to hold property for the benefit of investors; (2) to become familiar with the constituting documents and to interpret the rules fairly; (3) to act honestly in all matters concerning the scheme; (4) to avoid conflicts of interest; (5) to act always in the best interests of the investors; (6) to exercise care and diligence; (7) to keep scheme money and assets separate from the responsible entity's money and assets; (8) to exercise discretions only after proper consideration; (9) to act personally and not to delegate; and (10) not to make a profit from the collective investment scheme other than as provided for in the constituting document: see Discussion Paper 53 proposal 4.7. 25 It was also proposed that parallel duties be owed to investors by each member of an unincorporated responsible entity and by each director of an incorporated entity: Discussion Paper 53 proposal 4.8. 26 Following a consultation process, in 1993, the ALRC and the Advisory Committee published their report, Collective Investments: Other People's Money (Report No 65) (the Report). The Report recommended sweeping changes to the existing regulation of collective investment schemes. The Report was accompanied by a draft Bill and a suggested Explanatory Memorandum. 27 As regards the regulation of schemes, the recommendation was that only a public corporation should be the responsible entity in charge of managing a scheme: Report at [10.2]. The Report recommended that the Corporations Law should be amended to set out the obligations that were to be owed by the operator of a collective investment scheme: Report at [10.6]. One obligation was a duty to act in the interests of investors. This was explained (at [10.8]) in the following way: "Investors in collective investment schemes rely heavily on the operator to act in their best interests. Nevertheless, there will often be a potential for conflict between their interests and those of the operator ... [c]onflicts of interest between scheme operators and investors are inevitable. The Review has concluded that the appropriate formulation of the test is that operators must prefer the interests of investors over their own interests where any conflicts arise. The Review recommends that the Corporations Law should impose an obligation on the operator of a collective investment scheme to exercise its powers and perform its duties as operator in the best interests of investors rather than in its own, or anyone else's, interest, if that interest is not identical to the interests of the scheme investors." 28 The Review also recommended that investors should have obligations owed to them by the officers of the operator: Report at [10.16]. Investors would be entitled to take action against officers to enforce those rights directly, without first proceeding against the company. Those rights were to be modelled on s 232 of the Corporations Law: Report at [10.16]. In summary, s 232 imposed upon an officer of a corporation the obligations to act honestly in the exercise of his/her powers, to exercise a reasonable degree of care and diligence in the exercise of his/her powers, not to make improper use of information acquired by his/her position, and not to make any improper use of his/her position to gain an advantage for himself/herself. 29 In the draft Bill which accompanied the Report, cl 232AA dealt with the additional duties of officers of responsible entities. This is the clause upon which s 601FC was modelled. The duties mentioned in cl 232AA are: (1) to take reasonable steps to ensure that the operator complies with the obligations of the operator; (2) in relation to the exercise of powers, to use the degree of diligence and care that a reasonable person in a like position would exercise; (3) to act honestly; (4) not to exercise his/her powers in the interest of himself/herself; (5) not to use his/her position to gain advantage for himself/herself. 30 Clause 232AA(8) contained a definition of "officer" for the purposes of cl 232AA, which was in the following terms: ""Officer", in relation to a body corporate, means a director, secretary or other executive officer of the body corporate." 31 Chapter 5C was introduced in 1998 by the Managed Investments Act 1998 (Cth). Broadly speaking, the new chapter adopted the Review's proposals in relation to what came to be called managed investment schemes. In particular, provision was made for the responsible entity, which was to be a public company (s 601FA), to operate a managed investment scheme (s 601FB). In exercising its powers, the responsible entity was required to observe the duties set out in s 601FC(1). Relevantly s 601FC(1) provided that the responsible entity must: "(a) act honestly; and (b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the responsible entity's position; and (c) act in the best interests of the members and, if there is a conflict between the members' interests and its own interests, give priority to the members' interests; and ... (e) not make use of information acquired through being the responsible entity in order to: (i) gain an improper advantage for itself or another person; or (ii) cause detriment to the members of the scheme; and ..." The duties of the responsible entity imposed by s 601FC(1) overrode any conflicting duty an officer or employee of the responsible entity owed under Pt 2D.1: s 601FC(3). Part 2D.1 was where the general duties of directors and other officers were to be found. 32 The new Chapter also adopted the proposal that duties be imposed upon officers of the responsible entity. That is the function of s 601FD(1), which relevantly provided that an officer must: "(a) act honestly; and (b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the officer's position; and (c) act in the best interests of the members and, if there is a conflict between the members' interests and the interests of the responsible entity, give priority to the members' interests; and (d) not make use of information acquired through being an officer of the responsible entity in order to: (i) gain an improper advantage for the officer or another person; or (ii) cause detriment to the members of the scheme; and (e) not make improper use of their position as an officer to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the members of the scheme; and ... " The duties of an officer overrode any conflicting duties the officer has under Pt 2D.1: s 601FD(2). 33 There was no provision in Ch 5C which contained a definition of "officer". Instead the definition of "officer" in s 9 was amended so that officer: "(a) in relation to the responsible entity of a registered scheme - means a person who is a director, secretary or executive officer of the responsible entity; or (b) in any other case - has the meaning given by section 82A." 34 Paragraph (a) of this definition closely followed the language of cl 232AA(8) of the draft Bill. It may be contrasted with the definition of "officer" of a corporation in s 82A of the Corporations Law. That definition included as an "officer" receivers and managers, administrators of the body or entity, administrators of a DOCA and liquidators, but expressly excluded, among others, receivers who are not managers, receivers and managers appointed by the court and liquidators appointed by the court. 35 So, with the introduction of the new regime, including the requirement that a public company be the responsible entity of a managed investment scheme and the imposition of duties on the company and its officers, the duties in s 601FD were not imposed on privately appointed receivers. Now it is argued that this position changed when a new definition of "officer" was introduced by the Corporate Law Economic Reform Program Act 1999 (Cth). By that Act (Item 113 of Pt 3 of Sch 3) the definition of "officer" in s 9 was repealed and replaced by a new definition. That definition includes as an officer: "... (c) a receiver, or receiver and manager, of the property of the corporation; or (d) an administrator of the corporation; or (e) an administrator of a deed of company arrangement; or (f) a liquidator; or ... " 36 The question that arises is whether each of those persons is an officer for the purposes of s 601FD(1). In particular, in this case the issue is whether a receiver (not a receiver who is also a manager) of the property of a responsible entity is an "officer" and hence bound by the duties imposed by s 601FD(1). 37 Once again the answer will be found in the enacting history of the provisions of which the new definition forms a part. In March 1997 the Treasurer announced that as part of the Government's new Corporate Law Economic Reform Program (CLERP), reviews would be undertaken in key areas of corporate law policy. One of those areas was directors' duties and corporate governance. Proposals for the reform of directors' duties were contained in CLERP Paper No 3 (Directors' Duties and Corporate Governance) published in late 1997. The proposals included amendments to the Corporations Law that would clarify key aspects of the duties owed by directors and officers in areas such as the duty to exercise care and diligence, the obligation to act honestly and the duty to avoid conflicts. 38 The proposals relating to directors' duties contained in the Paper were enacted by the Corporate Law Economic Reform Program Act as were other CLERP proposals. According to the "Commentary on Draft Provisions" published by the Department of Treasury (at 56): "71. The draft provisions rewrite the duties of officers and employees in current section 232 of the Law to make it easer for company officers to know what is expected of them. 72. The draft provisions define officer to include a director or secretary as well as certain other persons who may manage the company, but not employees (proposed subsection 1(2)). Where an obligation imposed by the Law applies to employees, as well as officers, the Law will state this." 39 The draft provisions contained the new definition of "officer", which was substantially the same as the definition in s 82A of the Corporations Law. That definition (ie the s 82A definition) was not intended to apply to a responsible entity, as the original legislation made plain. 40 Against this background, it is, in my view, clear that the new legislation did not intend to bring about a change in the regulation of managed investment schemes. Moreover, neither the CLERP reviews nor the recommendations which were adopted by the amendments introduced in the Corporate Law Economic Reform Program Act, concerned the effectiveness of the operation of managed investment schemes. Indeed, neither these schemes nor Ch 5C were mentioned in any review. For that reason I do not accept that such an important change as is here suggested would be made to Ch 5C effectively by a sidewind. 41 Finally, the conclusion is confirmed by what I see as the object of s 601FD(1). The object is to complement the duties owed by the responsible entity. That is achieved by imposing duties on persons who control the responsible entity's activities in the administration of a managed investment scheme and its dealings with scheme assets. A receiver, particularly a receiver who is not also a manager, plays no part in the administration of a scheme nor in the decisions regarding the investment of scheme assets. 42 A party appointed receiver has different functions. They are, as I have said, to take possession of the charged assets (which in this case do not include scheme assets) and realise them to pay out the debt due to the chargee. There is no reason to bring such a person under the operation of s 601FD(1). A fortiori in the case of court appointed receivers and liquidators who, being court officers, owe their duties to the court that appointed them. Indeed those duties may be in conflict with the duties set out in s 601FD(1). 43 Step 3 is not the only flaw in the growers' case. Another problem is Step 4 - the proposition that the duties imposed on officers of a responsible entity are transported to actions they may take in some other capacity (eg as officers of another corporation). That is not the effect of s 601FD(1). Its operation is simple enough. The section establishes a norm of conduct for officers of a responsible entity. That standard applies to that officer only when he/she is acting in that capacity: ie when the officer's action or non-action can be attributed to the responsible entity by operation of law or can bind the responsible entity under principles of agency. There is no basis for reading into s 601FD(1) an intention to regulate the conduct of an officer when acting in some other capacity. 44 There is yet another false step. The last step - that it is not in the interests of the growers to deal with the leases and profits - is far from obvious. It may be accepted that if there is a real possibility that a new responsible entity could be found to take over the schemes it would be in the growers' interests to maintain the status quo. But the status quo could only be maintained for a short period. Sooner or later the group's debts must be paid and, because the banks hold security for this debt, the security will be realised. 31 In particular, the question which arises is whether in ch 5C, and more particularly s 601FD, an administrator is an "officer". At first blush, the answer to this appears to be "yes", but that is no more than a reflection of the way in which the definition of "officer", in s 9 of the Corporations Act is cast, and without having regard to the overriding qualification, "unless the contrary intention appears". As Finkelstein J demonstrates in Norman's Case, there is a sound basis for believing that there is just such a qualification. 32 It was put, though, on behalf of ASIC that the approach found there is at odds with the way in which any amendment to a definition section of an Act must be approached, as described by Young CJ in equity, in Hawkesbury City Council v Sammut (2002) 119 LGERA 171 at [68]. It was submitted that a vice in the reasoning of Finkelstein J, which I have set out, was that it refused to give prospective operation to the amendment of the definition of "officer" made by the Corporate Law Economic Reform Program Act 1999 (Cth) (CLERP Act) insofar as it concerned s 601FD. 33 There is nothing in any of the secondary materials which underpin the CLERP Act, referred to by Finklestein J in the passage quoted, which provides any occasion for concluding that the Parliament turned its mind at all to how the provisions of ch 5C and in particular a definition of "officer" which, unless the contrary intention appeared, included an administrator, might interact with Pt 5.3A in circumstances where the responsible entity, as is permissible under the Corporations Act, was placed in administration. That is a subject which appears to have passed completely unnoticed and unattended to by the Parliament. 34 That is not to say that the legislation must be construed, as the administrators submitted, as evincing a contrary intention. In Commissioner of Taxation v Multiflex Pty Ltd [2011] FCAFC 142 at [1], the Full Court made reference to extra judicial observations made by Hill J concerning the limits, so far as revenue statutes are concerned, on the purposive construction of legislation so as to address what are said to be unintended consequences. Those observations apply with equal force in relation to amendments to the Corporations Act which are said to be "reforms". Whilst full measure must be given to a purposive of approach to construction, if the language employed by Parliament is intractable, then the problem, if it be one, albeit unintended, is one of Parliament's creation and one for Parliament to address. 35 That there may be a problem in terms of practical effect is eloquently put in Mr Owen's affidavit having regard to the features of this administration which I have mentioned. When one looks to s 601FD and the paramountcy of obligation it imposes on an officer, and compares and contrasts that with the obligation of control which falls on an administrator under s 437A and the other duties entailed in the conduct of an administration, one sees immediately potential for conflict. In effect, an administrator, if truly he is an officer, as defined, is faced with a kaleidoscope of mirrors. Who is paramount, the members of the investment scheme or the creditors generally? 36 In his reasons for judgment in Norman's Case, Finkelstein J provides a powerful basis for concluding that there is a contrary intention evinced such that an officer "is not to be regarded for the purposes of ch 5C including s 601FD as including an administrator". So to do is not, in my opinion, to commit the vice of refusing to give prospective operation to the definition. Rather, it is giving the definition such operation but recognising that that the definition, nonetheless, entails in its amended form the qualification "unless the contrary intention appears". 37 As to how a contrary intention is discerned, Mahoney JA in Deputy Commissioner of Taxation v Mutton (1988) 12 NSWLR 104 at 108 collects pertinent authority. His Honour observes that there is no simple formula for determining what is "a contrary intention". That is something of an understatement. His Honour states, and I agree, that a contrary intention may be inferred from a particular provision if, were the definition to be applied, the provisions of or the procedure established by the section would not appropriately work. That is this case. It may also be, as his Honour opines, that a contrary intention is present where if the definition applied it would require a person to take steps where he had in that case no such business. His Honour further opines that it is not necessary that what is laid down by the section in question be impossible of operation. It is sufficient if the result of the application of the definition to a section results in the operation of the section in a way which clearly the legislature did not attend. To adopt the language of Lord Justice Harman in Dealex Properties Limited v Brooks (1966) 1 QB 542 at 551, if "fearful confusion" is the result of an application of the statutory definition, that may provide occasion for a conclusion that there is a contrary intention present. That also is this case. 38 In short then, having regard to the observations made by Finkelstein J in Norman's Case at [20] to [44], I am persuaded that "officer" does not include "administrator" in ch 5C. There is no relevant distinction to be drawn, in my opinion, having regard to the reasoning there found between a position of a receiver and an administrator. It is true that later in his reasons for judgment, his Honour provides an alternative foundation for the conclusion he reached in that case but that does not detract from the force of his earlier reasoning. 39 There was some debate before me as to what to make of the reference by the Full Court in a later chapter of Norman's Case, Norman; Re Forest Enterprises Ltd v FEA Plantation Ltd and Another (2011) 280 ALR 470, to Finkelstein J's earlier decision. The passage concerned is to be found at [207] and [208]: [207] Those grounds included the contention that the receivers have duties to the growers as well as a contention that FEA is estopped from impeding the rights of the growers to tend and harvest the timber. [208] Those contentions are misconceived. First, in a related matter Norman v FEA Plantation Ltd (2010) 191 FCR 39; 80 ACSR 517; [2010] FCA 1274, Finkelstein J determined that the receivers do not owe duties to the growers under s 601FD(1)(c) of the Act. His Honour also determined that, even if the receivers were under the duties imposed by s 601FD(1), that would not assist the growers because a duty to act in the best interests of the growers could not be a justification for the responsible entity or its officers to ignore bargains freely entered into: see also in that regard Re Exceel; Worthley v England (1994) 52 FCR 69 at 86-7; 124 ALR 281 at 297-8; 34 ALD 85 at 99-100; 14 ACSR 407 at 422-3; Australian Securities and Investment Commission v Lanepoint Enterprises Pty Ltd (2006) 64 ATR 524; [2006] FCA 1493 at [39]; Forest Marsh Pty Ltd v Pleash (2011) 82 ACSR 164; [2011] FCA 134 at [81]. The growers were a party to that application and did not appeal from his Honour's orders. Moreover, we are not persuaded that his Honour erred in the ultimate conclusion to which he came. 40 In my view, the passage concerned is neutral. It neither expressly supports nor does it expressly refute the reasoning to be found in Finkelstein J's judgment in Norman's Case at [20] through to and including [44]. It certainly does not bind me to hold that a Full Court has disapproved that reasoning. Finding, as I do, that reasoning compelling, and for the additional reasons that I have given, I propose to provide a direction to the administrators that they are not officers for the purposes of ch 5C and, in particular, s 601FD.

Does the Court have power under either or each of s 447A and s 447D of the Corporations Act to grant any of the relief sought? 41 There is no doubt that one or the other of s 447A and s 447D provides ample authority for the resolution of the question as to whether the administrators are "officers". What is more moot is whether either provides any foundation for the other relief sought. As to s 447D, it was submitted on behalf of ASIC that there was a distinction between: (a) providing advice to an administrator as to what is a legal or appropriate course to follow; and (b) excusing an administrator from performing obligations to which he or she is subject under the Corporations Act or other legislation. It was put that s 447D is a source of power for the Court to do the former but not the latter. I agree. Providing advice or a direction to an administrator that he or she is not an "officer" for the purposes of ch 5C and, in particular, s 601FD falls within s 447D jurisdiction. That section does not, though, for precisely the reason identified by ASIC, provide a basis for granting the relief sought in paragraph 10 of the application, even if it were factually warranted. Hard facts do not provide jurisdiction. 42 That then leaves consideration of s 447A. As to this, it is necessary to recall what was said by the High Court in relation to this section in Australasian Memory Pty Limited v Brien (2000) 200 CLR 270 (Australasian Memory v Brien). The High Court, at [2], made reference to the object of Pt 5.3A as inserted originally into the then Corporations Law by the Corporate Law Reform Act 1992 (Cth) (Corporate Law Reform Act). That object, as set out in s 435A, was said to provide for the business property and affairs of an insolvent company to be administered in a way that: (a) maximises the chances of the company or as much as possible of its business continuing in existence, or (b) if it is not possible for the company or its business to continue in existence results in a better return for the company's creditors and members than would result from an immediately winding-up of the company. 43 In my reasons for judgment in Australian Securities and Investments Commission, in the matter of Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) v Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) (2009) 71 ACSR 81 (Storm Financial), I made reference to the background to the amendments that introduced Pt 5.3A and, in particular, to the explanatory memorandum to the Corporate Law Reform Act and to the Law Reform Commission's Report No. 45 in respect of the Commission's general insolvency inquiry, popularly known as the Harmer Report. I set out the following part from the Harmer Report at [3] of those reasons: Conservative legislation 52. The Commission is also concerned that, apart from conclusions that might be suggested by statistical evidence, the legislative approach to corporate insolvency in Australia is most conservative. There is very little emphasis upon or encouragement of a constructive approach to corporate insolvency by, for example, focussing on the possibility of saving a business (as distinct from the company itself) and preserving employment prospects. Creative alternatives to insolvency 53. Constructive or creative insolvency is not a myth. However, it requires suitable procedures that encourage and offer a reasonable prospect of achieving that result. A constructive approach to corporate insolvency requires the preservation, if practical and possible, of the property and business of the company in the brief period before creditors are in a position to make an informed decision. 44 When one has regard to what is said in Australasian Memory v Brien concerning s 447A and also to the underlying rationale for Pt 5.3A, as found in the secondary materials to which I refer in Storm Financial, it is patent that the construction and application of s 447A is not to be approached narrowly. 45 Further, and as the High Court observed in Australasian Memory v Brien at [17], it is important to notice that the orders that may be made under s 447A are described as orders about how Pt 5.3A is to operate "in relation to a particular company". The High Court there observed that the power is not cast in terms of a power to make orders to cure defects or to remedy the consequences of some departures from the scheme set out in the other provisions of Pt 5.3A. Its operation is not confined to such cases nor is there anything on the face of s 447A(1) that suggests it should be read down. 46 The reference, as the High Court concludes in Australasian Memory v Brien to "this part" in s 447A, is not a reference to the part as a whole but rather to each of the provisions in it. In Re New Tel Ltd (in liq); Application of Wainter Pty Ltd (2004) 210 ALR 270 at [7], RD Nicholson J stated that: The starting point for section 447A is that the orders must have a nexus with how part 5.3 is to operate in relation to a particular company. I respectfully agree. 47 It was put on behalf of ASIC that there was no such nexus here present in relation to the sections referred to in paragraph 10 of the application. Rather, it was submitted that these were but provisions of general application and that no nexus was present. I disagree. The reason why a nexus exists is that identified in submissions made on behalf of the administrators. The nexus is, in my opinion, to be found in s 437A. That is just as much a provision of Pt 5.3A as any other including those which have, in the past, provided the foundation for the granting of relief under s 447A. Section 437A provides: Role of administrator (1) While a company is under administration, the administrator: (a) has control of the company's business, property and affairs; and (b) may carry on that business and manage that property and those affairs; and (c) may terminate or dispose of all or part of that business, and may dispose of any of that property; and (d) may perform any function, and exercise any power, that the company or any of its officers could perform or exercise if the company were not under administration. (2) Nothing in subsection (1) limits the generality of anything else in it. Note: A PPSA security interest in property of a company that is unperfected (within the meaning of the Personal Property Securities Act 2009) immediately before an administrator of the company is appointed vests in the company at the time of appointment, subject to certain exceptions (see section 267 of that Act). 48 Not only does it fall on an administrator to control the affairs of a company under administration but also it falls on an administrator to "perform any function and exercise any power that the company or any of its officers could perform or exercise if the company were not under administration." 49 In each of the sections referred to in paragraph 10 of the application, one finds there functions and powers which the company, RCMML, as a responsible entity could or indeed must perform. It seems to me, having regard to Australasian Memory v Brien, that it is necessarily a feature of Pt 5.3A, contemplated by the Parliament by the enactment of s 447A, that a court may give direction as to how each provision of Pt 5.3A is to operate in relation to a particular company. In other words, the intention of Parliament was that, in particular circumstances, the court might provide for a particular way in which an administration was to be conducted. 50 There was no question raised before me as to the validity of s 447A. I proceed on the basis that the section is a valid enactment. That being so, the circumstances related by Mr Owen, which I have set out at some length, provide, in my opinion, a compelling foundation for why it is, in respect of this particular administration, the administration should be conducted in a way which does not require the undertaking of those particular obligations referred to in paragraph 10 by the administrators. So to do would necessarily be to burden this administration with costs and expenses that might better be husbanded either to other ends for the purposes of reporting to creditors or otherwise conducting the administration. Further, having regard to the evidence of Mr Owen, I can see no material prejudice to members of the managed investment schemes by the giving of such a direction. 51 To reach such a conclusion is not in any way to gainsay the assistance provided by ASIC in respect of what was undoubtedly a novel and difficult question arising under the Act. Further, the presence of ASIC, in a case of this kind involving, as it does, many disparate interests, in circumstances where there was no active contradictor, was highly desirable. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.