QB4 Capital Pty Limited v Guardian Securities Limited

Australian Corporation Law Principles & Practice (LexisNexis Australia, January 2022) James Allsop, 'The nature of the trustee's right of indemnity and its implications for equitable principle' (Society of Trust and Estate Practitioners, Sydney, 18 July 2012) James Edelman, 'The New Doctrine of Partial Failure of Consideration' (1996) 15 Aust Bar Rev 229 Mason K, Carter J and Tolhurst G, Mason and Carter's Restitution Law in Australia (4th ed, Butterworths, 2021)

Division: General Division

Registry: New South Wales

National Practice Area: Commercial and Corporations

Sub-area: Commercial Contracts, Banking, Finance and Insurance

Number of paragraphs: 261

Date of last submissions: 22 September 2021

Date of hearing: 4-5 May; 21 June; 13, 17 August; 10 September 2021

Counsel for the Applicants: Mr F M Douglas QC with Mr J K Carter and Mr J B Douglas

Solicitor for the Applicants: Law and Commerce Partners

Counsel for the First to Fourth Respondent in NSD470/2020 and the First to Fourth Cross-Claimant in NSD99/2021: Mr L Livingston SC with Mr C S Rogers

Solicitor for the First to Fourth Respondent in NSD470/2020 and the First to Fourth Cross-Claimant in NSD99/2021: Resolve Litigation Lawyers

Counsel for the Receivers in NSD470/2020: Ms V Whittaker SC with Mr C Street

Solicitor for the Receivers in NSD470/2020: Colin Biggers & Paisley

Counsel for the First and Second Respondent in NSD99/2021: Mr G W Dietz

Solicitor for the First and Second Respondent in NSD99/2021: K2 Law

17 June 2022 In paragraph 167, "$23,996.70" has been replaced with "$11,758.38".

In paragraph 167, "$3,912.66" has been replaced with "$3,912.14".

In paragraph 167, "$82,618.90" has been replaced with "$70,380.06".

BETWEEN: QB4 CAPITAL PTY LIMITED First Applicant

ALEXANDER MIGUNOV AND ELENA MIGUNOVA Second Applicant

QB4 CAPITAL ASSET MANAGEMENT PTY LTD (ACN 605 013 803) (and others named in the Schedule) Third Applicant

AND: GUARDIAN SECURITIES LIMITED First Respondent

VENTURECROWD HOLDINGS PTY LIMITED Second Respondent

VENTURECROWD PROPERTY AUSTRALIA PTY LIMITED (and others named in the Schedule) Third Respondent

AND BETWEEN: GUARDIAN SECURITIES LIMITED (ACN 106 187 731) First Cross-Claimant

VENTURECROWD PROPERTY AUSTRALIA PTY LIMITED Second Cross-Claimant

AND: QB4 CAPITAL PTY LIMITED First Cross-Respondent

FUNDUS MANAGEMENT PTY LIMITED Second Cross-Respondent

SEAN WENGEL AND MICHAEL BRERETON IN THEIR CAPACITIES AS JOINT RECEIVERS AND MANAGERS OF FUNDUS MANAGEMENT PTY LIMITED AND TRUSTEES OF FUNDUS TRUST NO. 1 AND FUNDUS TRUST NO. 2 Third Cross-Respondent

order made by: LEE J DATE OF ORDER: 22 March 2022

1. Pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth), the whole of the proceedings be referred to mediation to be conducted by a Registrar of the Court in person and, to the extent the mediator considers it desirable, without the presence of lawyers, with such mediation to take place within 28 days.
2. In the event other orders resolving the dispute cannot be agreed at the mediation, within seven days of the conclusion of the mediation, the parties file an agreed minute or competing minutes of order to reflect these reasons. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BETWEEN: QB4 CAPITAL PTY LIMITED First Applicant

ALEXANDER MIGUNOV AND ELENA MIGUNOVA Second Applicant

AND: CE LITIGATION LAWYERS PTY LIMITED (ACN 639 090 609) First Respondent

GUARDIAN SECURITIES LIMITED (and others named in the Schedule) Third Respondent

AND BETWEEN: CE LITIGATION LAWYERS PTY LIMITED (ACN 639 090 609) TRADING AS CE LAWYERS First Cross-Claimant

AND: GUARDIAN SECURITIES LIMITED (ACN 106 187 731) First Cross-Respondent

VENTURECROWD HOLDINGS PTY LTD (ACN 164 416 040) Second Cross-Respondent

VENTURECROWD PROPERTY AUSTRALIA PTY LTD (ACN 159 744 386) (and others named in the Schedule) Third Cross-Respondent

AND BETWEEN: GUARDIAN SECURITIES LIMITED First Cross-Claimant

VENTURECROWD HOLDINGS PTY LTD Second Cross-Claimant

VENTURECROWD PROPERTY AUSTRALIA PTY LTD (and others named in the Schedule) Third Cross-Claimant

AND: FUNDUS MANAGEMENT PTY LTD First Cross-Respondent

QB4 CAPITAL PTY LIMITED Second Cross-Respondent

ALEXANDER MIGUNOV AND ELENA MIGUNOVA Third Cross-Respondent

order made by: LEE J DATE OF ORDER: 22 March 2022

1. Pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth), the whole of the proceedings be referred to mediation to be conducted by a Registrar of the Court in person and, to the extent the mediator considers it desirable, without the presence of lawyers, with such mediation to take place within 28 days.
2. In the event other orders resolving the dispute cannot be agreed at the mediation, within seven days of the conclusion of the mediation, the parties file an agreed minute or competing minutes of order to reflect these reasons. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A INTRODUCTION 1 This is a complex matter concerning, in very broad terms, the propriety or otherwise of certain payments made from trust property under a registered managed investment scheme, The Guardian Investment Fund (TGIF). Although a dramatis personae would identify numerous actors, the underlying dispute revolves around two protagonists and their agents: Guardian Securities Ltd (Guardian), the responsible entity of the TGIF; and QB4 Capital Pty Ltd (QB4), the fund's former investment manager. 2 The matter involves a long and almost impenetrable procedural history, attributable in no small part to the parties' approach to litigation across numerous proceedings, which is difficult to reconcile with the overarching purpose of civil proceedings in this Court. The applicants, including QB4, seek equitable compensation and declaratory relief in relation to expenses charged to the trust by Guardian, along with orders appointing a replacement trustee. In addition to the applicants' various claims, the respondents have filed a cross-claim in each proceeding seeking, among other things, the necessary relief which would permit them to be reimbursed from the trust funds for outstanding invoices and legal costs charged to the trust. 3 As will become clear, in the process of litigating these issues, considerable fees have been spent. One question that falls for the Court to decide is who ultimately is to settle the bill.

B BACKGROUND 4 Before turning to the relevant factual background, it is useful to detail at the outset the context surrounding the confined issues that now fall for determination. As I indicated above, the procedural history of this matter is byzantine. Although the only proceedings that remain are NSD470/2020 and NSD99/2021, the matter (to use that word in its Constitutional sense) has involved the following proceedings: (1) proceeding NSD415/2020 (Pre-action Relief Application); (2) proceeding NSD470/2020 (Principal Proceeding); (3) proceeding QUD226/2020 (Judicial Advice Proceeding); (4) proceeding QLD3617/2020 (Queensland District Court Proceeding); and (5) proceeding NSD99/2021 (Legal Costs Proceeding). 5 Upon the commencement of the hearing on 4 May 2021, I raised with the parties the difficulties with the tsunami of issues that appeared to arise from the miscellany of pleadings and written submissions, the most obvious of which was that it was unclear to me, and perhaps also to the parties, what precisely it was that the Court was being asked to determine: T2.19-26. Accordingly, I directed the parties to identify each of the issues that remained relevant and to provide an agreed list of issues for determination. I made clear that this document would replace, or at least refine, the pleadings to the extent the pleadings identified the issues to be resolved. Apart from anything else, such a course was desirable because some issues raised in the pleadings plainly relate to positions that have long since been abandoned or neglected, including, for instance, that the applicants sued in a representative capacity under r 9.21 of the Federal Court Rules 2011 (Cth). 6 Although that initial list was provided on 5 May 2021, its relevance was fleeting. A series of procedural developments, to which I will return below, led to a significant reformation of the applicants' case and, therefore, a new suite of issues for determination. Accordingly, it was not until 17 August 2021 that the parties provided a final agreed list of outstanding issues for determination, in respect of which the Court expressly noted, by consent, the following: The balance of the issues in proceeding NSD 470/2020 and proceeding NSD 99/2021 are reflected in the agreed list of issues for determination dated 17 August 2021 and marked as MFI18 (Agreed Issues) and represent the entirety of the balance of the matters required to be determined in both proceedings. (Emphasis in original). 7 Those issues are as follows: Proceeding NSD 470/2020 1. Is Guardian Securities Limited (Guardian) liable to pay equitable compensation in respect of amounts alleged to have been paid or accrued in breach of trust? 1a. Do the QB4 Parties (and in particular the Migunovs) have standing to seek equitable compensation against Guardian for the pleaded breaches? In that regard, who is / are the beneficiaries of FT1 and FT2? 1b. Did Guardian relevantly commit a breach or breaches of trust? 1c. If no to 1b, were the expenses properly incurred by Guardian as trustee? In respect of that issue, a relevant implied issue is whether Guardian validly terminated the Investment Management Agreement, having accepted the termination of the Responsible Entity Agreement by QB4 Capital Pty Ltd (QB4 Capital) on 16 March 2020? 1d. If no to 1b and yes to 1c, are the expenses within the scope of Guardian's right of indemnity from the PIF and ELF under cll 22, 23.7, 23.12 and/or 23.13 of the Constitution of TGIF, s 6 of the PDS of the PIF, s 7 of the PDS of the ELF and/or s 72 of the Trusts Act 1973 (Qld)? 1e. If there was a breach or breaches of trust, is Guardian entitled to be relieved from liability under s 76 of the Trusts Act 1973 (Qld) or entitled to a just allowance for time, energy, work, skill and judgment? 2. Are the QB4 Parties entitled to declaratory relief in respect of amounts alleged to have been paid or accrued in breach of trust? 3. Is QB4 Capital liable to repay the amounts it received under cl 5.1 of the Settlement Deed? 3a. Is there a liability in contract to repay the amounts under cl 10.1 of the Settlement Deed? 3b. If no to 3a, is Guardian entitled to restitutionary relief? 3c. If repayment is required, to whom is payment to be made? 4. Is the remedy of set-off available to Guardian? [5. Is QB4 Capital liable to Guardian for damages for breach of the provisions pleaded in the SCC at [17]?] 5a. Did QB4 Capital breach the provisions pleaded in the SCC at [17]? 5b. Is QB4 Capital liable to Guardian for damages for breach of any of the above provisions pleaded in the SCC at [17]? If so, what damages? 6. To what extent is Guardian entitled to recover outstanding invoices from Fundus Trust No 1 and Fundus Trust No 2 for invoices issued before and after the appointment … of Receivers accrued in the accounts? 7. Is Fundus liable to make payment of $135,000 plus interest to VentureCrowd Property Australia Pty Ltd under the loan agreement dated 16 November 2020? If so, is Fundus precluded from having recourse to the assets of FT1 and FT2 to satisfy that liability? 8. What costs orders should be made in the proceedings generally, including the costs reserved in paragraph 6 of the orders of Lee J made on 13 August 2020? In the context of costs of the proceeding, given that Guardian has accepted as valid, the termination of the [RE Agreement] by QB4 Capital, was its termination of the [IM Agreement] valid? - refer also 1c above? 9. Should Mr Maarbani, as a non-party, be jointly and severally liable for the costs of QB4 from the event which led to the termination of the settlement deed? 10. What orders should be made in respect of the future of Fundus Trust No 1 and Fundus Trust No 2? 10a. Should QB4 Capital Asset Management Pty Ltd be appointed as replacement trustee of Fundus Trust No 1 in place of the Receivers and, if so, what consequential orders should be made? 10b. If not, what orders should be made? In particular, should orders be made to cause the receivers to realise the assets of Fundus Trust No 1 and distribute the net proceeds rateably to unitholders of the ELF? 10c. What form of order should be made in respect of Fundus Trust No 2? 10d. Should the Receivers be required to apply to pre-fix their remuneration for the purposes of any such orders with respect to ELF and PIF? Proceeding NSD 99/2021 1. Is Guardian Securities Ltd entitled to the declaratory relief sought in the Second cross-claim? 2. What costs orders should be made in the proceedings? 8 It is worth noting again: the express agreement of the parties was that this list constituted the universe of issues the Court was required to resolve. Despite their length, the determination of the agreed issues can be relatively confined to the legitimacy or otherwise of certain payments, made from, or charged to, the trust property, along with various other payments and costs that have arisen. To provide context to these issues, however, it is necessary first to outline the background to this extensive dispute. This, itself, is no easy task. 9 The approach I propose to take in this segment of the judgment is to outline a condensed timeline of events and the uncontroversial facts relevant to the determination of the agreed issues. In doing so, I do not consider it necessary or desirable to wade into what I might describe as the deluge of allegations raised in the submissions as to the history leading up to this matter, the breakdown in the relationships between the parties (mainly, QB4 and Guardian), and the subsequent conduct of the parties; nor do I consider that the determination of the agreed issues requires such an approach. Rather, to the extent that any facts are disputed, it will be necessary to return to them only where relevant to the determination of the agreed issues.

B.1 The Guardian Investment Fund 10 The nature of a managed investment scheme was outlined by McKerracher J in Saker, in the matter of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liquidation) [2010] FCA 1080; (2010) 190 FCR 501 (at 503 [5]): Under [a managed investment scheme (MIS)] people contribute funds to have an 'interest' in the MIS. When money is pooled with other investors for the common enterprise, it is on the basis that a 'responsible entity' [(RE)] will operate the MIS. The investors leave the day to day operation of the scheme to the RE. For this arrangement to be functional, schemes must be registered with the Australian Securities and Investments Commission (ASIC) before they can operate. An RE under a scheme capable of being registered with ASIC must be a registered Australian public company and must hold an Australian financial services licence authorising it to operate the scheme. An MIS must have a constitution as defined by s 601GA of the Corporations Act 2001 (Cth) (the Act) which will be examined further below. It must also have a compliance plan as defined under the Act and a statement signed by the directors of the proposed RE that the scheme's constitution complies with s 601GA and s 601GB and that the compliance plan complies with s 601HA. These documents are detailed but the resolution of the dispute arising as to the proper ownership of funds in an account conducted by the RE on retirement or removal of the RE is to be determined by application of the Scheme documents (and their predecessors) as well as consideration of statute and authority. (Emphasis in original). 11 The TGIF is a managed investment scheme registered with the Australian Securities and Investments Commission in accordance with Part 5C.1 of the Corporations Act 2001 (Cth) (Corporations Act). Relevantly, the TGIF constitution was contained in a "Replacement Constitution" made on 27 April 2016, and subsequently amended on 22 May 2019 (TGIF Constitution). 12 Guardian is the trustee and responsible entity of the TGIF: see s 601FC(2) of the Corporations Act. As the trustee and the responsible entity of the TGIF, Guardian holds the assets of the scheme on trust for the members of the scheme (unitholders), subject to the standards applicable to the trust under the Corporations Act and the provisions of the TGIF Constitution itself. 13 There are several separate classes of units within the TGIF. Those presently relevant are the two classes of units known as the Enhanced Land Fund (ELF) and the Premium Income Fund (PIF). In accordance with Pt 7.9 of the Corporations Act, the TGIF discloses any offers in terms of a Product Disclosure Statement (PDS). The PDS of the ELF is dated 9 June 2017 and the PDS of the PIF is dated 29 August 2018. 14 The ELF was promoted as an investment in land sites suitable for property investment. The relevant projects related to the ELF include the Yamanto Property and the Lawnton Property. The PIF was promoted as a vehicle for investors to have exposure to property developments as an equity interest via preference shares. Funds were invested in special purpose vehicles that were responsible for the property development. The relevant projects related to the PIF include the Griffin Mews Project, the Wattlebird Project, and the Pimpama Project. 15 Until 2 December 2020, the assets of the ELF and PIF were held on trust, via a custodian, by Fundus Management Pty Ltd (Fundus). Specifically, the assets ultimately referable to the ELF are held in Fundus Trust No 1 (FT1) and the assets of the PIF are held in Fundus Trust No 2 (FT2). The ELF unit class within the TGIF is the only investor in FT1 and the PIF unit class is the only investor in FT2: see ELF PDS Part 2 at [7]; PIF PDS Part 2 at [15]. 16 In respect of the above, it is important to foreshadow that there is some dispute concerning the identities of the proper beneficiaries of FT1 and FT2. The QB4 Parties submit, on various alternative bases, that the proper beneficiaries of FT1 and FT2 are, respectively, the unitholders of the ELF and PIF. In contrast, the Guardian Parties submit that Fundus in its capacity as trustee of FT1 and FT2 holds all of the assets within those two trusts solely for the benefit of Guardian in its capacity as the responsible entity and trustee of the TGIF. It will be necessary to return to this dispute below (at Section C).

The responsible entity 17 As stated above, Guardian is the trustee and responsible entity of the TGIF. As the responsible entity of the TGIF, Guardian was required to operate the TGIF as a managed investment scheme and perform the functions conferred upon it by the Constitution and the Corporations Act. 18 Mr Guy Hasenkam has been a director of Guardian since 2003. Mr Hasenkam was also formerly the sole director of Fundus until February 2020. 19 On 22 January 2020, VentureCrowd Holdings Pty Ltd (VentureCrowd) acquired a controlling interest in Guardian. On 24 January 2020, following VentureCrowd's acquisition of Guardian, Mr Maarbani became the managing director of Guardian. Mr Maarbani is also the chief executive officer and director of the following companies: (1) VentureCrowd; (2) VentureCrowd Nominees Pty Limited (VCNA); (3) VentureCrowd Property Australia Pty Limited (VCPA); and (4) VentureCrowd Services Australia Pty Limited (VCSA), (together, the VentureCrowd Group). 20 Guardian, VentureCrowd, VCPA, and VCNA are the first to fourth respondents in the Principal Proceeding (Guardian Parties). 21 Australian Executor Trustees Limited (AETL) was the custodian of the ELF and PIF. Pursuant to a Deed of Novation of Custodian Agreement dated 18 December 2019, AETL retired and was substituted as custodian by Sargon CT Pty Ltd, later operating as Certes CT Pty Ltd (Certes).

Relationship with QB4 22 In May 2017, QB4 was appointed by Guardian to the roles of investment manager and corporate authorised representative. Specifically, QB4 was the investment manager of the ELF and PIF until, supposedly, 13 March 2020. 23 Mr Rod Mackay is a director of QB4 and CODA Asset Management Pty Ltd (CODA). Ms Charlotte Wong is a director and the sole shareholder of QB4, as well as a director of QB4 Capital Asset Management Pty Ltd (QB4CAM) and Griffin Mews No. 8 Pty Ltd. Mr Michael Wong is also a director of QB4CAM. Mr Alexander Migunov and Ms Elena Migunova are unitholders of both the ELF and PIF (Migunovs). 24 QB4, the Migunovs, QB4CAM, and CODA are, respectively, the first to fourth applicants in the Principal Proceeding (QB4 Parties). 25 Cloud Capital Pty Ltd (Cloud Capital) is a consulting firm that provides services to QB4 with respect to the investment management of the ELF and PIF. Mr Paul Duncan is the director of Cloud Capital. 26 On or around 19 May 2017, Guardian and QB4 entered into two separate agreements: (1) the Investment Management Agreement (IM Agreement); and (2) the Responsible Entity Agreement (RE Agreement). 27 Pursuant to cl 1.1 of the IM Agreement, Guardian appointed QB4 as the investment manager of unit classes of the TGIF which were to be established by agreement between them. Those unit classes were ultimately the ELF and PIF. By cl 7.1 of the IM Agreement, QB4 was entitled to charge "management fees" to Guardian and was required to pay "access fees". On or around 13 November 2018, Guardian appointed QB4 as its authorised representative pursuant to the terms of a Corporate Authorised Representative Agreement (CAR Agreement). 28 On 22 January 2020, VentureCrowd acquired a controlling interest in Guardian. Following this, the board of Guardian was reconstituted and VCPA and VCSA, under the instruction of Guardian, completed a full review of the operation and management of the TGIF, including an assessment of each of its classes of units. In 2020, Guardian issued a number of invoices to Fundus relating to work that was said to have been undertaken by VCSA, VCPA, and Mr Maarbani on behalf of Guardian in conducting this full review of the ELF and PIF. These invoices are the subject of significant dispute. 29 On 12 March 2020, Guardian sent a letter to QB4 requesting copies of the periodic reports regarding the ELF and PIF, which were required to be sent to Guardian by QB4 pursuant to the IM Agreement. On 16 March 2020, QB4 responded by sending a letter to Guardian, attaching a formal notice of termination of the RE Agreement. On 18 March 2020, Guardian responded in kind by sending a letter accepting QB4's termination of the RE Agreement, and giving notice of the termination of the IM Agreement and the CAR Agreement. It is unnecessary to detail here the motivations behind this correspondence and the events that followed. It suffices to say that the termination of these agreements, along with other details, were contested, and proceedings were subsequently commenced.

B.2 The Principal Proceeding 30 QB4 initially commenced proceedings on 9 April 2020 by filing an urgent application before the start of a proceeding seeking freezing orders in relation to the TGIF bank accounts and orders for the appointment of an interim receiver (that is, the Pre-action Relief Application). On 15 April 2020, Farrell J, in her Honour's capacity as Commercial and Corporations Duty Judge, made orders including that QB4 is to commence any proceeding by 22 April 2020. Those proceedings were commenced on 28 April 2020 by originating application (that is, the Principal Proceeding) and, subsequently, the Pre-action Relief Application was finalised on 5 May 2020. 31 When the matter first came before me as Duty Judge, the applicants claimed that Guardian had breached the TGIF Constitution and its duty to invest, including its obligation to manage assets and perform other obligations. A claim was also made that Guardian's purported termination of the IM Agreement was, in effect, invalid and unlawful and that Guardian remained liable to pay management fees to QB4. The applicants also sought what one might describe as a smorgasbord of both interlocutory and final relief. The final relief included: (1) declaratory relief as to various breaches by Guardian of the IM Agreement, RE Agreement, CAR Agreement, and the TGIF Constitution; (2) damages for the breach of the IM Agreement; (3) restitution of the fees paid or payable to Guardian under the RE Agreement during the relevant period; (4) equitable compensation by repayment of unauthorised investments into the relevant trusts (or an account of profits); (5) damages pursuant to s 12GF(1) of the Australian Securities and Investments Act 2001 (Cth) and/or s 601MA(1) of the Corporations Act for the loss and damage caused by the loss of the benefit of the opportunity of having the invested funds; (6) equitable compensation or an account of profits for the unauthorised management fees paid to Guardian under the TGIF Constitution and for Guardian's breaches of the TGIF Constitution; (7) an order for specific performance of the RE Agreement; and (8) a mandatory injunction directed to Guardian requiring it to make payment of amounts said to be due and owing under a contract related to the Griffin Mews Project. 32 The range of interlocutory relief sought, including orders appointing an interim receiver and manager plus injunctions, were eventually resolved, at least on a temporary basis prior to the hearing, by the provision of undertakings.

The settlement deed 33 On 13 August 2020, after the matter had been docketed to me and, following a series of lengthy case management hearings, I indicated to the parties that the matter was crying out for a commercial resolution and made orders referring the Principal Proceeding to mediation prior to the commencement of the hearing under s 53A of the Federal Court of Australia Act 1976 (Cth) (FCAA). Pursuant to those orders, the parties attended a mediation on 18 September 2020, at which a heads of agreement was signed by the parties' solicitors and a formal settlement deed was subsequently executed on 1 October 2020 (with the exception of the Migunovs, who later executed a counterpart) (Settlement Deed). At the time, it was the intention of the parties that this would resolve the issues in dispute and bring the proceedings to an end. Alas, this agreed resolution miscarried. 34 Clause 5.1 of the Settlement Deed provided: By 1 October 2020: (a) the distributions presently owing and outstanding to unitholders in the PIF must be paid by cleared funds into the LACP Trust Account in the sum of $174,617.57; (b) the following must be paid by cleared funds into the LACP Trust Account: (i) payment of QB4's outstanding management fees and invoices from Cloud Capital Group (as claimed in the Matter, (b)) for PIF in the sum of $488,744.89; (ii) payment of outstanding costs and expenses incurred in relation to the Griffin Mews Project in the sum of $865,686.55 as set out in Schedule B to this Deed, by way of monies to be held as described in clause 5.2 of this Deed for the purpose of the further subscription for shares in Griffin Mews No 8. 35 On 1 October 2020, pursuant to cl 5.1, Guardian caused or permitted Fundus (via the custodian, Certes) to pay a series of amounts from the assets of FT2 to the trust account of the QB4's solicitor, Legal and Commercial Partners, for the benefit of QB4. The parties agree that those payments included: (1) $174,617.57 pursuant to cl 5.1(a) of the Settlement Deed for distributions to unitholders; (2) $488,744.89 pursuant to cl 5.1(b)(i) of the Settlement Deed, for allegedly outstanding QB4 management fees and invoices from Cloud Capital; and (3) $865,686.55 pursuant to cl 5.1(b)(ii) of the Settlement Deed, in respect of costs and expenses in relation to the Griffin Mews Project. (together, the Settlement Payments). 36 Following Guardian's payment of the Settlement Payments, the parties consented to orders to vacate the trial dates pursuant to cl 6.1 of the Settlement Deed, which provided: 6. Dismissal of proceedings 6.1 Upon the execution of this Deed, and following the payment by 1 October 2020 of the monies due to be paid as set out in clause 5.1, the Parties will consent to orders to vacate the trial dates. 37 On 2 October 2020, I made self-executing orders dismissing the proceedings, with such orders to take effect on 18 January 2021, shortly after the final terms of the deed were scheduled to be performed. I also granted the parties liberty to relist the proceedings on notice to the Court prior to 17 January 2021. 38 Following this, a dispute arose as to Guardian's supposed default of cl 6.3(b) of the Settlement Deed. Clause 6.3(b) provided as follows: 6.3 … (b) if, and to the extent that, the Respondents (other than Certes CT), have paid any of their legal costs from any of the funds mentioned in clause 6.3(a), then the Respondents (other than Certes CT) must reimburse those amounts to the relevant fund(s) by 9 October 2020. 39 A lengthy series of correspondence details QB4's demands as to remedying the default and Guardian's attempts to extend the time with which to comply with cl 6.3(b). As of 13 November 2020, however, Guardian was still in default as to its obligation to reimburse the relevant funds, and the QB4 Parties wrote to the Guardian Parties terminating the Settlement Deed by reason of Guardian's default. The letter of termination included the following: In these circumstances: 1. QB4 Capital and the Migunovs (as defined in the Settlement Deed) hereby accept the Respondents' (other than Certes CT) repudiation of the Settlement Deed; 2. The Settlement Deed has come to an end; 3. QB4 Capital and the Migunovs (as defined in the Settlement Deed) elect to continue with their rights as if the Settlement Deed had not existed. 40 The QB4 Parties provided an ex parte interlocutory application to my Associate for an urgent listing, seeking, among other things, to restrain Guardian, Fundus, and Certes from accessing the Fundus bank accounts, which I heard later that day. I considered that it was appropriate that I give the parties who would be affected by the proposed orders the opportunity to be heard in relation to it, and so I stood the application down until later that day. However, given those parties were not able to secure counsel for the urgent listing, I made orders vacating the self-executing orders made on 2 October 2020, adjourning the interlocutory hearing until 23 November 2020, and, to preserve the status quo in the meantime, restraining Guardian, Fundus, and Certes from making transfers or withdrawals from the Fundus bank accounts for administrative costs, management fees, responsible entity fees, and legal fees or legal costs. 41 To cover Fundus' legal fees, on 16 November 2020, VCPA (as the lender) entered into a loan agreement with Fundus (as the borrower) for the amount of $135,000 to be transferred from its bank to the trust account of CE Lawyers at the direction and for the benefit of Fundus with a term of 30 days (Loan Agreement). On 17 November 2020, VCPA paid the amount of $135,000 to CE Lawyers, in accordance with the Loan Agreement. That amount has not been repaid by Fundus to VCPA and remains an issue of dispute.

The receivers' reports 42 Following further interlocutory hearings, orders were made, eventually by consent, on 2 December 2020 appointing Messrs Sean Wengel and Michael Brereton as receivers and trustees of the property of Fundus, including the trust property of FT1 and FT2 (Receivers). Those orders expressly provided that the Receivers' expenses and remuneration would be payable from the assets of the ELF and PIF. 43 The consent orders made on 2 December 2020 required the Receivers to do the following: 5. The Receivers must, within 60 days of the date of this Order, provide to the Court and the parties a report as to the receivership of Fundus Management, including: (a) the identification of the assets and liabilities of Fundus Management; (b) accurate profit and loss statements for the period 1 January 2020 to date; (c) accurate balance sheets as at the date of the report; (d) the costs and expenses (including but not limited to legal costs, disbursements and the payments identified at paragraph 272 of the Further Amended Statement of Claim) charged by, and paid to or at the direction of, the first to fifth respondents in relation to the ELF and the PIF during the period 1 April 2020 to the date of these Orders. 6. For the purpose of preparing the report identified at Order 5 above, and in particular that part of the report that addresses the matters identified at Order 5(d) above, the Receivers are at liberty to engage the assistance of experts in the field of managed investments schemes and/or legal costs consultants as they in their discretion see fit. 44 At that time, it was the consensus between the parties that the Receivers were appointed, as officers of the Court, not only to resolve the contentious issue of ongoing control, but also to make inquiries and report to the Court upon payments made by or from the trust property held by Fundus while it was under the control of Mr Maarbani. Furthermore, there was a consensus among those appearing that the appointment of the Receivers was likely to quell the dispute concerning the relevant costs and charges. As a consequence of this, the Receivers were not appointed as referees pursuant to s 54A of the FCAA to inquire into and report upon specific issues. 45 Consistently with the orders made by the Court, the Receivers retained Mr Scott MacKenzie, a director of William Buck (the Receivers' firm), with extensive knowledge of managed investment schemes to assist their investigations. On 29 January 2021, the Receivers filed their first report (First Receivers' Report). In the report, the Receivers indicated (at 3) that they had "serious concerns regarding the large quantum of fees and costs applied to Fundus Trust No. 1 and Fundus Trust No. 2 by the Responsible Entity". It was further contended that the records provided to the Receivers to substantiate certain fees and charges were insufficient to explain properly all the tasks completed and charged to the trust. The Receivers' reviews identified transactions, processed through the Fundus bank accounts and financial statements during the review period totalling almost $4.4 million which, according to the Receivers, required further analysis to determine who was responsible for bearing the cost. This included a costs assessment by a legal costs assessor, to determine precisely what each charge related to and whether it was reasonably incurred. 46 On 8 April 2021, orders were made requiring the Receivers to complete an analysis regarding the reasonableness and propriety of costs and expenses charged by and paid to or at the direction of, the Guardian Parties, in relation to the ELF and PIF during the period of 1 April 2020 to 2 December 2020. To assist the Receivers in the review of the costs, and for the purposes of engaging with experts, a formal request was sought to obtain information relating to costs incurred. The Receivers engaged Cowell Clarke Commercial Lawyers (Cowell Clarke) to assist them in determining whether certain costs incurred by the Guardian Parties were permissible with regard to relevant legislation and managed investments. Further, the Receivers engaged Global Billing Legal Costs Consultants (Global Billing) to conduct a costs assessment of the legal costs charged by the Guardian Parties' solicitors, AG Edwards Solicitors (AG Edwards), during the relevant period and further sought advice from Mr MacKenzie. 47 On 16 April 2021, the Receives filed their second report (Second Receivers' Report). Relevantly, the conclusions of the Second Receivers' Report included the following (at 6-7): (1) Guardian is entitled to be indemnified from the PIF and the ELF for the legal expenses incurred by AG Edwards, however, those costs should be reduced from $169,941.69 to $146,193.69. (2) It was appropriate for Guardian to use funds from the PIF to satisfy the ELF costs in instances where the cost incurred were not specific to either fund, in accordance with the TGIF PDS. (3) Guardian is entitled to charge management fees respectively to the PIF and the ELF which are calculated as a percentage of the Gross Asset Value of each fund. Guardian charged and/or was paid a total of $495,524.02 for management fees from 1 April 2020 to 2 December 2020. (4) The basis of Guardian's calculation of its management fees is flawed as it relies on improper calculations of the Gross Asset Value, thereby misstating the management fees charged. It is not feasible to recalculate an accurate Gross Asset Value on a daily or monthly basis as required by the relevant PDS so the Receivers have estimated a discount rate to be applied to historic calculations. In applying the discount rate and methodology detailed in this report, the Receivers determine Guardian is entitled to be indemnified $269,728.48 in respect to those costs. (5) Guardian is entitled to be indemnified from the ELF and PIF for expenses incurred as the responsible entity, however, it must provide evidence to substantiate those expenses. Guardian charged the PIF for unbilled management fees and fund expenses totalling $149,384.57, of which fund expenses were charged as 1% of the Gross Asset Value of the fund (as calculated by Guardian). Guardian did not provide any evidence to substantiate that those expenses were properly incurred and therefore is unable to claim such expenses. (6) Guardian is entitled to be indemnified for the costs incurred by PKF International Limited (PKF) in completing the audit of the TGIF, however, the apportionment of the liability between the sub-funds of the TGIF has been improperly calculated and therefore the amounts invoiced to each of the PIF and the ELF, being $3,855.39 and $2,514.48 respectively, are misstated. The misstatement is likely immaterial and because Guardian is entitled to be indemnified for those costs to some extent, the costs claimed may be allowed. (7) Upon acquiring a controlling interest in Guardian in January 2020, VentureCrowd (under the instructions of Guardian) completed a review of the operations and management of the TGIF including an assessment of the investments of each fund to form a conclusion regarding their feasibility. Additionally, in response to the termination of the RE Agreement in March 2020, Guardian completed a review of the various constituent and investment documents to determine its legal obligations to the PIF and the ELF. (8) The costs incurred by VentureCrowd and Guardian in completing these reviews totalled $626,134.22; while Guardian is entitled to be indemnified for these costs, due to the lack of detailed, itemised records for the work undertaken, the Receivers are unable to determine the reasonableness of the quantum of such costs. 48 On 29 March 2020, I made further orders which required the Receivers to complete an analysis concerning the reasonableness and propriety of the costs and expenses charged or incurred at the direction of QB4 and Cloud Capital in relation to the ELF and PIF. That further analysis was the subject of a third report dated 22 April 2021 (Third Receivers' Report), in which the Receivers concluded: (1) QB4 engaged the consultancy services of Cloud Capital to support investment management services, which it was entitled to do. Amounts paid to QB4 and Cloud Capital have been paid via Guardian in its role as the responsible entity. (2) Only the responsible entity provides directions to the custodian of the bank accounts of FT1 and FT2 to make payments. It is incumbent upon the responsible entity to review the management fee calculations and expense claims submitted by the investment manager (QB4) for accuracy, reasonableness and relevance to the TGIF Constitution and the PDS. (3) Insufficient documentation was provided by QB4 to Guardian to substantiate the reasonableness and relevance of the majority of fees and expenses claimed. (4) Guardian has, by way of payment of invoiced amounts to QB4 or by way of entering the Settlement Deed, provided the invoices claimed by QB4 and Cloud Capital for payment. (5) Guardian is required to satisfy itself that the management fees and expenses it approves and pays are reasonable and in accordance with the TGIF Constitution and the PDS in order to be reimbursed for these approved fees and expenses from the scheme assets. (6) The Receivers have not been provided with sufficient supporting documentation to evidence that Guardian was sufficiently satisfied that all of the management fees and expenses paid to QB4 and Cloud Capital were reasonable and in accordance with the TGIF Constitution and the PDS. (7) QB4 and Cloud Capital is entitled to issue invoices for management fees to Guardian, in accordance with the IM Agreement, which are to be calculated as a percentage of the Gross Asset Value of each fund. (8) The basis of QB4 and Cloud Capital's calculation of management fees is flawed as it relies on an improper calculation of the Gross Asset Value, thereby misstating the management fees charged. (9) It is not feasible to recalculate an accurate Gross Asset Value on a daily or monthly basis as required by the relevant PDS, so the Receivers have estimated a management fee to be applied to historic calculations. (10) QB4 and Cloud Capital are entitled to be reimbursed by Guardian for expenses incurred, however, it must provide evidence to substantiate those expenses. (11) Insufficient evidence was produced to demonstrate that Guardian took steps to satisfy itself that some expenses were properly incurred and therefore is unable to claim reimbursement of such expenses from the scheme assets. (12) The Receivers are not aware of any related party relationship between Guardian and QB4/Cloud Capital. (13) The Receivers have determined that a portion of the management fees and expenses paid by Guardian to QB4 is unclaimable as against the assets of the PIF and the ELF, as follows: Fund Total Assessed Outcome of Assessment Difference (unclaimable) ELF Total $75,727.52 $15,734.20 $59,993.32 PIF Total $488,744.89 $147,110.93 $341,633.96

49 It was by this very lengthy series of events, and the receipt of the three reports (together, the Receivers' Reports) that one came to a conclusion of the process that had been commenced in December 2020, whereby the Receivers were to report on the total costs incurred across both the ELF and PIF. 50 It is worth pausing here to address the parties' reception of the Receivers' Reports. Given the consistent methodology applied across the three reports, it is fair to say that the Receivers' conclusions produced something of a double-edged sword that has prevented either party from weaponising any favourable conclusions in the Receivers' Reports without similarly reducing the quantum of their own claims. It is, perhaps, for this reason that an issue was raised as to the extent that the conclusions of the Receivers' Reports ought to be accepted by the Court. In their written submissions, the Guardian Parties surprisingly contend that there has been no process for the parties to be heard as to the extent to which findings in the Receivers' Reports should be accepted, as would be afforded in respect of the report of a referee. Accordingly, Guardian submits that it would be procedurally unfair for the Court to proceed on the basis that the views of the Receivers provide evidence or conclusive determinations. 51 Although I agree that the conclusions of the Receivers are not determinative as a matter of law, I reject the premise of these submissions. It is ahistorical and does not reflect what occurred. I recognise that the Receivers were not appointed as referees and I have set out above the reasons why this did not occur. However, the purpose of the appointment of the Receivers was initially identified by Mr Campbell QC for the Guardian Parties at the interlocutory hearing on 2 December 2020 (at T113.46-114.5): [W]e think that isolating [the incurred costs] and reporting on them separately, as though the receiver was a referee, would be useful because the actual issues would be identified. Our concern is that the powers of the receiver at the moment are, really, to … identify assets and liabilities and to prepare a profit and loss statement, effectively. And we think that the receivers should be a little bit more detailed than that and for the purpose of determining a resolution between the parties. 52 Accordingly, when making the orders for the appointment of the Receivers, I indicated my views as to the role of the Receivers to the parties as follows (at T116.46-117.08): [HIS HONOUR]: I think I am inclined for there to be … one report which deals exclusively with the issue of the expenses incurred by Guardian from a particular date. And in respect of that, [the Receivers] are directed by me to obtain such expert assistance they think is necessary or appropriate for the purposes of preparing that report, say, without notice to the parties. A bit like the power [a] referee has to make such enquiries as he regards as appropriate in order to provide a report to the Court. So I think I will just beef up the report order, in order to provide that … 53 In any event, the orders appointing the Receivers were made by the consent of the parties, with the whole point of this exercise being to ensure that the controversy that had been agitated concerning the ELF and PIF would be resolved. That included an analysis regarding the reasonableness and propriety of costs and expenses charged by and paid to or at the direction of, Guardian, in relation to the ELF and PIF during the period 1 April 2020 to 2 December 2020, which was produced in the Second Receivers' Report. At the hearing on 5 May 2021, the Guardian Parties sought an order pursuant to s 136 of the Evidence Act 1995 (Cth) limiting the use of the Receivers' Reports as evidence of the state of mind, findings and analysis of the Receivers. Although I made a s 136 limitation, I further clarified the position as to the Receivers' Reports at follows (at T133.0-6): HIS HONOUR: Well, unless there's any evidence adduced to the contrary, though, aren't I going to proceed on the basis that's what's stated in the receiver's report as accurate? MR LIVINGSTON: Not necessarily, your Honour. No. But only, obviously, in relation to matters that your Honour receives submissions about. 54 This issue was raised again at the hearing on 21 June 2021, this time by Mr Douglas QC when seeking leave to amend the QB4 Parties' pleadings (at T243.43-244.15): MR DOUGLAS: And I raised it, and your Honour said that could be easily dealt with. We will have a report as to whether those expenses are properly incurred. HIS HONOUR: Yes. MR F. DOUGLAS: Now, we have received a report from the - which goes part of the way, I think, towards outlining what was properly incurred and what was not properly incurred, but my recollection - and again, I'm just - there are just a few integers which have not clicked into place from the last hearing to this hearing, but the - is it for - our figures largely coincide with the figures the receivers have come to, except that we take a different view to how you determine a remuneration that they were entitled to because their report is based on their view about net assets, not gross assets, and is based upon an interpreted view as to what management fees - HIS HONOUR: Yes, because I thought the parties had pragmatically agreed, effectively, to leave this to an independent person to come to assess on what was regarded as reasonable, and this is the problem because you're seeking to have you cake and eat it, too, because I put in place that the receiver did the work, has now come back with the assessment of what is - including what is reasonable for the work, a subjective view, and now you're seeking to revisit that issue again? 55 Having considered the way in which the Receivers' Reports were received by the Court and their content, I am satisfied that, although not conclusive or determinative, nor without their own errors, unless disturbed by other evidence, the Receivers' Reports are prima facie cogent and persuasive reflections of their analysis and opinion and, on the basis of this opinion evidence, ought to be accepted as highly relevant as to the propriety of the costs incurred (in the absence of countervailing evidence I accept). This is because the analysis of the Receivers appears generally to be persuasive. Consistently with the s 136 limitation made, I have not used the contents of the Receivers' Reports as evidence of the underlying truth of factual assertions contained in the reports. Further, I should note that the parties have not been constrained from adducing any evidence to the contrary, and it is simply wrong to assert that any issue arises as to procedural fairness. 56 Further to the above, the Receivers' costs were also hotly contested, particularly by the QB4 Parties. On 21 June 2021, I gave ex tempore reasons determining the issues raised as to the remuneration of the Receivers, in which I noted that it was ultimately the QB4 Parties that sought the appointment of the Receivers. One of the reasons why receivers are regarded by the Courts traditionally as a relatively drastic remedy is that there is always a chance, even with the best will in the world, that the costs undertaken during the course of a receivership will be significant and disproportionate to any amount in dispute. It suffices to say that, although the costs incurred by the external legal representatives of the Receivers and the Receivers' own costs were much higher than, I think, the parties would have contemplated (and certainly much higher than I had contemplated at the time of making the orders), the extent of the costs was explained by Mr Wengel appropriately. I ordered that the Receivers' outstanding remuneration and disbursements be indemnified out of the assets of the ELF and PIF in accordance with the orders made on 2 December 2020. My views on this issue, upon reflection, have been reaffirmed. The Receivers' Reports have provided significant clarity to the extensive, and sometimes ill-defined, issues in this case and have been of great assistance.

The parties' claims 57 When I gave my ex tempore reasons regarding the remuneration of the Receivers, I indicated to the parties that it was initially my intention to resolve all of the outstanding issues that day and bring this matter to an end. Unfortunately, this was not possible. 58 On 1 July 2021, the QB4 Parties filed their further amended originating application and fourth further amended statement of claim (4FASOC), in which they seek equitable compensation in respect of various invoices charged to the funds, declaratory relief that Guardian is not entitled to payment in respect of those sums (amongst others), orders for the appointment of QB4 as trustee of FT1 and CODA as trustee of FT2, and further orders as to the management of the ELF and PIF assets. 59 On 13 July 2021, Guardian and VCPA filed a cross-claim in the Principal Proceeding against QB4, Fundus, and the Receivers (First Cross-Claim). By way of a broad summary, Guardian and VCPA seek the following relief in the First Cross-Claim: (1) an order that QB4 repay the Settlement Payments, with interest, to Guardian, Fundus, or the trustee of FT2; (2) a declaration that Guardian is entitled in equity to set-off the amount of $1,529,049 against any amount otherwise payable by it in respect of the claims in the Principal Proceeding for breach of the RE Agreement, the IM Agreement, and/or the CAR Agreement; (3) orders that the trustee of FT1 and FT2, or alternatively, Fundus, pay to Guardian the amounts specified in a series of outstanding invoices issued to Fundus for work Guardian claims it completed in connexion with the ELF and PIF or, alternatively, an amount representing reasonable remuneration for the services the subject of the outstanding invoices; and (4) an order that Fundus pay to VCPA the amount of $135,000, pursuant to the Loan Agreement dated 16 November 2020, together with interest on the Loan calculated at the rate of 10% per annum pursuant to clause 4.2 of the Loan Agreement. 60 On 17 August 2021, as I have outlined above, the agreed outstanding issues for determination were amended to reflect the substantive changes to each party's case. Ultimately, the hearing of these outstanding issues did not conclude until 10 September 2021. 61 On the afternoon of the final day of the hearing, however, the QB4 Parties responded to criticism of their claim for equitable compensation, and indicated their intention to seek leave to amend their further amended originating application and 4FASOC. In substance, of course, this amounted to an application to augment the agreed issues the Court was required to resolve. It will be necessary to return to this issue below.

B.3 The Legal Costs Proceeding 62 The Legal Costs Proceeding has its genesis in the Queensland District Court Proceeding commenced on 18 December 2020 by CE Lawyers, relevantly concerning its claim for amounts owing under a costs agreement it had with the Guardian Parties (and Fundus) and a deed of acknowledgment of debt. 63 This was an extraordinary state of affairs. On 22 December 2020, CE Lawyers served the originating application and statement of claim that it had filed in the Queensland District Court Proceeding on Fundus at its registered office. It is not clear why CE Lawyers did not serve these documents on the Receivers, despite being aware that the Receivers had been appointed in the Principal Proceeding. Nor is it clear why this proceeding was commenced in the District Court of Queensland, given that it involved costs that were the subject of the Principal Proceeding and sought against the trust which was subject to the control of the Receivers. It was only when the QB4 Parties noted the issue, sought the proceeding to be relisted, and drew it to my attention that remedial steps could be taken in order to resolve the issue. However, in the meantime, and upon becoming aware of the Queensland District Court Proceeding, the Receivers neglected to file a defence to the claim. For reasons that are unnecessary to canvass, default judgment was then entered. 64 The Queensland District Court Proceeding was later superseded by the Legal Costs Proceeding commenced by QB4 and the Migunovs, against CE Lawyers and the solicitor with carriage of the matter, Ms Alyce Corbutt. QB4 sought an array of declaratory relief that, in essence, sought to undo the effects of the Queensland District Court Proceeding. The Guardian Parties and Fundus were later joined to the Legal Costs Proceeding. 65 On 3 March 2021, CE Lawyers filed a cross-claim against the Guardian Parties and Fundus, seeking the relief that was initially claimed in the Queensland District Court Proceeding. This notice of cross-claim was subsequently amended on 6 April 2021, removing the claim regarding the deed of acknowledgment of debt. On 7 April 2021, the Guardian Parties filed a cross-claim (Second Cross-Claim) against CE Lawyers, QB4, and the Migunovs, seeking, by way of a broad summary, declaratory relief that it be entitled to be indemnified for "all past, current and future legal costs incurred by Guardian" in the various proceedings on a full indemnity basis. 66 On 21 June 2021, I made the following orders: 2. Judgment in favour of the cross-claimant (CE Litigation Lawyers) against the first cross respondent (Guardian Securities) in respect of the First Cross-claim filed on 6 April 2021 (First Cross-claim) in the amount of $32,614.68. 3. Judgment in favour of CE Litigation Lawyers against the first to fifth cross-respondents (Guardian Parties) in respect of the First Cross-claim in the amount of $151,390.46. 4. Orders 2 and 3 be stayed until determination of the Second Cross-claim, or further order of the Court, subject to the Guardian Parties providing security for the amount set out in orders 2 and 3, together with interest pursuant to the Federal Court of Australia Act 1976 (Cth) from the date of these orders, by providing to the solicitors for CE Litigation Lawyers, within 7 days of the date of these orders, a bank guarantee from an Australian trading bank in the amount of $190,000 (Bank Guarantee), where: (a) the beneficiary of the Bank Guarantee is CE Litigation Lawyers; and (b) the Bank Guarantee will not expire before 21 June 2022. 67 The effect of these orders was to order judgment in the favour of CE Lawyers, with that amount pending the resolution of the outstanding issues in the Second Cross-Claim, which fall for determination in this judgment.

C EQUITABLE COMPENSATION 68 I first turn to consider the QB4 Parties' claim for equitable compensation for the amounts paid or accrued by Guardian from the trust, which are said to have been incurred in breach of trust. By way of an overview, those amounts fall into two categories: (1) fees paid or accrued to Guardian in respect of invoices issued by it to Fundus in relation to the ELF and PIF (Guardian Invoices); and (2) amounts comprising various legal fees paid from the assets of the ELF and PIF to AG Edwards and CE Lawyers (Legal Invoices). 69 The Guardian Invoices are itemised in the 4FASOC as follows (at [18]): Invoice Date Amount (inc GST) (a) Paid Inv-0419 18/05/2020 $296,079.30 (b) Paid Inv-0699 15/05/2020 $177,279.30 (c) Paid Inv-0434 28/09/2020 $252,892.20 (d) Paid Inv-0735 01/10/2020 $132,069.30 (e) Paid Inv-0026 01/10/2020 $120,822.90 Total $548,971.50 (f) Accrued Inv-0451 01/12/2020 $77,162.72

70 One does not need a calculator to realise that there are issues with the total amount represented in this table. Guardian ultimately clarified, however, that a number of those invoices include disbursements from VCPA and VCSA for work said to have been performed on behalf of the trust as part of their review of the TGIF, as follows: (1) invoice 0419 includes charges for work done by Mr Maarbani and a disbursement from VCPA (invoice 0699); (2) invoice 0434 includes charges for disbursements from VCPA (invoice 0735) and VCSA (invoice 0026); and (3) invoice 0451 includes a disbursement from VCPA (invoice 0777) and a charge in the amount of $65,786.60 for work said to have been completed by Mr Maarbani. 71 Relevantly, therefore, the Guardian Invoices include invoices 0419, 0434, and 0451. Invoices 0419 and 0434, which amount to $548,971.50 and have been paid, are the subject of the claim for equitable compensation, and all three invoices are the subject of the claim for declaratory relief, to which I will return below. 72 The Legal Invoices are comprised of various legal fees paid from the assets of the PIF to AG Edwards and CE Lawyers totalling $509,941.69. The relevant invoices issued by AG Edwards identified in the 4FASOC are as follows (at [21A]): Invoice Date Amount (inc GST) (a) Paid Invoice no. 1216 17/04/2020 $38,859.70 (b) Paid Invoice no. 1232 06/05/2020 $67,883.32 (c) Paid Invoice no. 1259 16/06/2020 $60,580.67 (d) Paid Invoice no. 1290 28/07/2020 $2,618.00 Total $169,941.69

73 The amounts paid to CE Lawyers are described in the 4FASOC (at [21B]): CE Lawyers' costs which total of $550,000 (incl GST) and that, by the Orders of Lee J dated 21 June 2021 in NSD99/2021, Guardian Securities is to pay and of which $190,000 is unpaid and is to be secured by way of bank guarantee provided by Guardian Securities. 74 Based on this, the AG Edwards legal costs ($169,941.69 (inc GST)) and the paid legal costs of CE Lawyers (said to total $340,000 (inc GST)) are the subject of the QB4 Parties' claim for equitable compensation, and the total amount is the subject of the claim for declaratory relief. 75 The QB4 Parties submit Guardian is liable to pay to FT2 by way of equitable compensation, the amounts of these invoices, which are alleged to have been paid or accrued by Guardian in breach of trust for work that was not done "within the spirit of its powers as trustee." This argument is developed by reference to the authority of Walker v Stones [2001] QB 902, in which Sir Christopher Slade stated (at 916): It is true that the powers of investment and charging trust assets conferred by the trust deed are very wide. However, the mere fact that a trustee is acting within the letter of his powers does not necessarily absolve him from a charge of breach of trust. Subject to the operation of any exemption clause contained in the trust deed, his powers must be exercised reasonably and in good faith and for the purposes for which they were created; he must exercise them in a proper way for the legitimate purposes of the trust: Halsbury's Laws of England, 4th ed, vol 48 (1995), pp 452-453. (Emphasis added). 76 It is necessary to address two issues as to this claim immediately. The first is that the issues as agreed by the parties, although encompassing the issues in dispute, are somewhat misleading. Specifically, issues 1b and 1c are as follows: 1b. Did Guardian relevantly commit a breach or breaches of trust? 1c. If no to 1b, were the expenses properly incurred by Guardian as trustee? (Emphasis added). 77 The issue with this drafting is that issues 1b and 1c are, in effect, the same issue: whether Guardian relevantly committed a breach or breaches of trust by improperly incurring expenses as alleged. This issue requires an analysis as to whether the specified costs fall within the scope of Guardian's right of indemnity. Whether this issue is raised in relation to the rights of indemnity, or in relation to the somewhat vague submission as to the "spirit of the trust", the resulting analysis is the same. This has always been my understanding as to the breach of trust case, which was not disputed on the final day of the hearing: see T453.40-454.43. What, at the end of the day, is being disputed is the propriety of the Guardian Invoices and the Legal Invoices. This was the subject of the Receivers' Reports, much of the evidence, and central to the Principal Proceeding. This issue, which has generated so much controversy, must be resolved pragmatically. 78 The second issue is that the claim for equitable compensation has deficiencies, not the least of which is an issue as to whether the QB4 Parties have the necessary standing to bring the claim. Although the issue as to standing was raised promptly by the QB4 Parties, and expressly identified in the agreed issues for determination by the consent of the parties, the consequences of the standing issue were only confronted by the QB4 Parties on the final day of the hearing, after which the QB4 Parties' sought to amend their pleadings by introducing an alternative derivative claim. Accordingly, as I understand it, I am left with three alternative bases upon which the QB4 Parties, specifically the Migunovs, are said to have standing to bring the claim for equitable compensation: (1) as beneficiaries of FT1 and FT2 (Beneficiary Case); (2) as beneficiaries of a co-extensive trust under s 601FC(2) of the Corporations Act (Statutory Trust Case); or (3) by means of a derivative claim, which is the subject of the application to amend (Alternative Beneficiary Case). 79 I will address each of these cases.

C.1 Beneficiary Case 80 As outlined above, Guardian submits that the QB4 Parties do not have standing to seek equitable compensation in respect of amounts alleged to have been paid or accrued in breach of FT1 and FT2, as they are not beneficiaries of any trust of which Fundus is a trustee. 81 The 4FASOC states (at [18]) that, on various dates, Guardian paid or accrued a series of sums, or caused them to be paid from the trust bank accounts. The QB4 Parties plead (at [20]) that those payments were: (a) made in breach of trust; (b) made in breach of undertakings to the Court; (c) … not payments that Guardian Securities was authorised to pay under the product disclosure statements of ELF and PIF; and (d) … made in breach of the fiduciary duty of the Guardian Securities owed to the unitholders because they were not reasonable in the circumstances. 82 However, the payments the subject of the claim for equitable compensation were made (or caused to be made) by Fundus as trustee of FT1 and FT2, not by Guardian. Since the unitholders of the ELF and PIF, including the Migunovs, are said not to be beneficiaries of any trust of which Fundus is the trustee, Guardian submits that they lack standing to bring a claim for equitable compensation against Guardian for the payments made by Fundus. 83 A trustee who has committed a breach of trust may be sued in respect of that breach either by a beneficiary (including someone representing his estate) or by a co-trustee or successor trustee: Young v Murphy; Swinbank v Murphy [1996] 1 VR 279 (at 281 per Brooking J). QB4 itself has no standing to bring an action to vindicate any relevant right given its relationship with the TGIF was purely contractual as the investment manager and corporate authorised representative in respect of the ELF and PIF. Any relationship it has with the ELF and PIF unitholders does not confer standing upon it to bring an action of this kind for their benefit. Therefore, the QB4 Parties' claim for equitable compensation rests on the Migunovs having standing by reason of being beneficiaries of FT1 and/or FT2. 84 The FT1 and FT2 constitutions each provide a mechanism for the identification of the proper beneficiaries of the respective trust. Those constitutions are in relevantly identical terms and operate as follows: (1) Recital A states: "This Constitution establishes the Trust for the benefit of all Members." (2) Clause 1.1 defines "Member" to mean "a person for the time being registered under the provisions of this Constitution as a holder of Units". (3) Clause 7.1 obliges the trustee to keep and maintain, or cause to be kept and maintained, an up-to-date register of members. (4) Clause 7.3 states: "The Trustee is entitled to regard the Register as conclusive proof as to who is a Member at any given time. The Trustee is not required to recognise any beneficial interest held in any Unit." 85 From this mechanism, it is clear that the proper beneficiaries of FT1 and FT2 are those persons identified in the register of members that the trustee is obligated to maintain. The trustees of FT1 and FT2, by reason of the orders I made on 2 December 2020, are the Receivers. 86 On 21 April 2021, the solicitors for the QB4 Parties emailed the Receivers, requesting copies of the register of members for each of FT1 and FT2. In response, on 22 April 2021, the Receivers sent the QB4 Parties' solicitors the following email: Please find attached unit registers for ELF and PIF which incorporate the discrepancies between the unit registers provided by QB4 and Guardian. These have been compiled based on the information that we have been provided and we do not warrant the accuracy of same. We also attach the unit registers provided by Guardian and QB4 for your reference. Further, we note that these documents are confidential and request that they are not distributed to any party other than yourself and QB4. 87 Attached to the email were spreadsheets setting out the unitholders in the ELF and PIF. The QB4 Parties submit that this is "conclusive proof" that the unitholders in the ELF and PIF are the members of FT1 and FT2 and, therefore, the proper beneficiaries. 88 As is evident from the Receivers' email dated 22 April 2021, there was an apparent misunderstanding between the Receivers and the solicitors for the QB4 Parties as to what was being requested. Despite the request for copies of the Register of Members for each of FT1 and FT2, the Receivers' responded by sending an email attaching documents identified as the "unit registers for the ELF and PIF". The attachments contain no reference to FT1 or FT2. Rather, the attachments reference the unitholders of the ELF and PIF, and contain unit holder reference numbers, all of which use a "TGIF code". This indicates that the attached document records unit holdings in the TGIF, rather than unit holdings in FT1 or FT2. Mr Livingston, counsel for the Guardian Parties, provided the following explanation as to what occurred (at T445.17-30): [MR LIVINGSTON: Y]our Honour will see that from the terms of the email from the receivers, which is properly quoted in paragraph 16 of my friend's aide-memoire. What they attached were unit registers for ELF & PIF, and what those unit registers are on their face, clearly on their face, are the unit registers for 20 unit holdings in the TGIF, that is, the entire registered managed investment scheme, The Guardian Investment Fund. … And those registers make clear, which is common ground, that the ELF & PIF unit holders were unit holders in the TGIF, the registered managed investment scheme, and within that managed investment scheme, they held units within this subclass of that managed scheme, which is designated as ELF & PIF. That is, in a sense, the receiver has answered the wrong question. 89 It is clear the documents that the Receivers provided to the QB4 Parties are not copies of the register of members for each of FT1 and FT2 for the purposes of their respective constitutions. As Mr Livingston said, despite the QB4 Parties asking the right question, "the receiver has answered the wrong question": T445.30. 90 The Guardian Parties claim that, as opposed to the ELF and PIF unitholders, Guardian is, in fact, the proper beneficiary of FT1 and FT2. In support of this submission, they rely on the evidence of Mr MacKenzie (which was relied upon in the Second Receivers' Report) and the evidence of Mr Maarbani, who were both of the understanding that Guardian was the sole beneficiary of FT1 and FT2: see Mr Maarbani's affidavit sworn 21 July 2021 (at [6]); First Receivers' Report (at Annexure E). However, this evidence similarly does not support a finding as to the identity of the proper beneficiary of FT1 and FT2. The statements made in Mr Maarbani's affidavit and the Receivers' Reports are the subject of a s 136 limitation and are merely evidence as to their opinions as to the identity of the proper beneficiary. 91 Given the state of the evidence before me, I am not satisfied as to the identity of the proper beneficiary of FT1 and FT2. This conclusion, unfortunately, raises more questions than it answers. The first is whether there was a register of members for FT1 and FT2 that was kept and maintained for the purposes of the respective constitutions. The second question is: if those registers were kept and maintained, where are they now? The moving party bears the onus. At no stage have the QB4 Parties sought to obtain a copy of the relevant registers of members by way of subpoena or notice to produce, in order to tender the register, or to tender the process served (and called upon) as proof of the fact that the register does not exist. The evidence to which I was directed at the hearing is inconclusive on this point. 92 Despite the deficiencies as to this evidence, which were made clear on the final day of the hearing, if not earlier, the parties appeared content to proceed on the basis of it. There was no attempt to direct my attention to any further evidence as to the identity of the beneficiaries from within the mass of documents that I have been provided. Whatever else is unclear in this case, one thing is clear: these were highly complex commercial structures, and it is not to be assumed that all paperwork was accurate and complete. Therefore, although I have my suspicions, I am simply not in a position to be reasonably satisfied to the requisite standard, on the evidence to which I was taken, that the unitholders of the ELF and PIF are beneficiaries of any trust of which Fundus is the trustee; nor can I be satisfied that Guardian itself is a beneficiary of FT1 and FT2.

C.2 The Statutory Trust Case 93 In the alternative, the QB4 Parties propose that the Migunovs have standing to make a claim against Fundus because it was relevantly acting as an agent of Guardian under s 601FB(2) of the Corporations Act. This "Statutory Trust Case" first appeared in the QB4 Parties' reply to the defence to the 4FASOC, which was filed on 6 August 2021 (Reply), and was detailed as follows (at [13(b)]): (b) say further that the applicants [sic] have standing to bring claims for breaches of trust and other breach of duty in respect of the trust constituted by FT1 and FT2, and that the proper defendant to any such claim is Guardian, because: (i) Guardian was, at all material times, and is the responsible entity of The Guardian Investment Fund (TGIF); (ii) the PIF and the ELF are classes of units in the TGIF; (iii) Guardian did and does, by s 601FC(2) of the Corporations Act 2001 (Cth) (Corporations Act), hold "scheme property" on trust for scheme members; (iv) the unitholders in the ELF and the PIF are, within the definition of "member" in s 9 of the Corporations Act, persons who hold an interest in the scheme; (v) the trust assets of FT1 and FT2 constituted "scheme property" within the meaning of that expression in s 9 of the Corporations Act because: (i) the moneys held by Fundus Management (by its custodian Certes) were and are either: (A) contributions of money to TGIF; or (B) money raised by Guardian for the purposes of TGIF; or (C) income derived, directly or indirectly, from such contributions or money raised; (ii) the other property held by Fundus Management was and is either: (A) property acquired, directly or indirectly, with, or with the proceeds of, such contributions or money raised; (B) property derived, directly or indirectly, from such contributions or money raised or such property acquired; (vi) in the premises, notwithstanding the trusts mentioned in paragraph 3(d) of the Defence, Guardian was, at all material times, trustee under a coextensive trust recognised by and under s 601FC(2) of the Corporations Act; (vii) the coextensive trust recognised by and under s 601FC(2) of the Corporations Act continued during such time as Guardian is the responsible entity of TGIF; (viii) the members of the TGIF, which include the unitholders of the ELF and the PIF, are included among the beneficiaries of the trust created and recognised by and under s 601FC(2) of the Corporations Act; (ix) Mr Maarbani, who was the sole director of Fundus Management at all material times, caused Fundus Management to engage in the conduct alleged against it; (x) Fundus Management, in engaging in such conduct, acted as the agent of Guardian as principal, insofar as such conduct was engaged in by Fundus Management (through Mr Maarbani) at the direction of Guardian for the purposes of the ELF and the PIF within the TGIF; (xi) in the premises, Guardian is the proper defendant to claims of breach of trust or other breach of duty in respect of that coextensive trust that subsists with respect to the trust assets of FT1 and FT2 because such trust assets are also "scheme property" of which Guardian was and is itself a trustee. 94 Although the Reply refers to the applicants generally, as I understood it, the QB4 Parties suggest the Migunovs have a direct claim for breach of trust against Guardian because Guardian charged, or purported to charge, those fees and expenses to FT1 and FT2 in breach of its obligations as trustee pursuant to the trust recognised under s 601FC(2) of the Corporations Act. 95 This argument was almost wholly undeveloped, in writing or orally. At present, I find the argument, at best, difficult to understand. The scope and terms of the "coextensive trust" and the property that is said to be subject to it are unclear. No authority is identified by the QB4 Parties for its approach. 96 Needless to say, a contravention of the duties of the responsible entity mentioned in s 601FC of the Corporations Act is a contravention of a civil penalty provision, by reason of s 601FC(5). Yet, no claim for statutory compensation is made. It seems to be suggested that there is some sort of freestanding equity floating around, arising upon breach of a statutory trust, allowing the Migunovs to seek monetary relief at general law (in circumstances where they would not otherwise have standing to seek equitable compensation). I raised my lack of understanding in respect of this case with the QB4 Parties, but the nature of the statutory/coextensive trust case remains obscure: T473.42-474.45. 97 Ultimately, I do not consider it necessary to deal with the Statutory Trust Case, at least at this time, given the approach that I propose to take as to the declaratory relief sought (as outlined in the following section). If these reasons and the findings contained in them do not allow the parties to formulate relief to resolve this controversy, it may be necessary to revisit questions of standing at the time I am resolving any contested questions of relief, but at present, it suffices to note that I do not understand the statutory/coextensive trust case.

C.3 The application to amend 98 It is now necessary to turn to what was characterised as the QB4 Parties' application for leave to amend their further amended originating application and 4FASOC in the Principal Proceeding. Of course, as should already be clear, this was in substance an application to augment in some way the agreed issues which had been identified by the parties and had been reflected in an earlier consent order of the Court. 99 The amendment application is a further illustration of the focus by both parties, at times, on form rather than substance in this dispute. 100 The application to amend was raised on the final day of hearing during reply oral submissions when it became apparent to counsel for the QB4 Parties that their 4FASOC contained deficiencies as to their standing to bring a claim for equitable compensation (T475.1-3): [MR F. DOUGLAS:] Your Honour, it seems to us, in light of what has been said, that we should avail ourselves of the opportunity to amend the claim to bring it into accordance with the evidence … 101 With some misgivings, I made orders on 10 September 2021 for the QB4 Parties to file and serve, before 15 September 2021, any proposed fifth further amended statement of claim (proposed 5FASOC) and any further amended originating application, together with any submissions and evidence in support of leave being granted, which was to be determined on the papers. By their application filed on 15 September 2021, the QB4 Parties sought leave to file a proposed second further amended originating application and a proposed 5FASOC. Unsurprisingly, this was opposed by the Guardian Parties, who filed their submissions and evidence on 22 September 2021.

The proposed amendments 102 By their application, the QB4 Parties seek to amend their originating application by adding the following new prayer for relief: 2A. To the extent necessary, an order that the second applicants, the Migunovs, are granted leave nunc pro tunc to bring the proceedings to seek the relief claimed in Orders 1 and 2 [i.e. equitable compensation and declaratory relief]. 103 The QB4 Parties further seek to amend their 4FASOC by: (1) adding the following new paragraphs: 7A. At all material times, Steven Maarbani was the managing director of Guardian and the sole director of Fundus Management. … 9A. Further, or in the alternative, to paragraph 9 above, Guardian is the beneficiary of FT1. … 10A. Further, or in the alternative, to paragraph 10 above, Guardian is the beneficiary of FT2. … 15A. Further, or in the alternative, to paragraphs 14 and 15 above, in the premises of the further and alternative matters alleged in paragraphs 9A and 10A above: (a) Guardian, to the extent it is the beneficiary of FT1 and FT2, holds that beneficial interest on trust for the unitholders of ELF and PIF; (b) Guardian must exercise the rights attaching to that beneficial interest in the best interests of the unitholders of ELF and PIF; (c) it is in the best interests of the unitholders of ELF and PIF that any payments made or sought to be made from the trust bank accounts in breach of trust should be restored or replenished; (d) such allegations of breach of trust with respect to such payments involves and impugns both Fundus Management and Guardian; (e) Guardian has not sought to sue with respect to (and, to the contrary, has denied) such allegations of breach of trust; (f) in the premises, there are exceptional or special circumstances that warrant the Migunovs bringing the proceedings to claim relief for those alleged breaches of trust; (g) to the extent necessary, the Migunovs should be granted leave nunc pro tunc to bring the proceedings. … 22A. In the premises of paragraphs 1, 2, 3, 7 and 7A herein, the Migunovs have standing to bring claims for breaches of trust and other breach of duty in respect of the trust constituted by FT1 and FT2, and that the proper defendant to any such claim is Guardian, because: (a) Guardian did and does, by s 601FC(2) of the Corporations Act 2001 (Cth) (Corporations Act), hold "scheme property" on trust for scheme members; (b) the unitholders in ELF and PIF are, within the definition of "member" in s 9 of the Corporations Act, persons who hold an interest in the scheme; (c) the trust assets of FT1 and FT2 constituted "scheme property" within the meaning of that expression in s 9 of the Corporations Act; (d) in the premises, notwithstanding FT1 and FT2, Guardian was, at all material times, trustee under a coextensive trust recognised by and under s 601FC(2) of the Corporations Act; (e) the coextensive trust recognised by and under s 601FC(2) of the Corporations Act continued during such time as Guardian is the responsible entity of TGIF; (f) the members of the TGIF, which include the unitholders of ELF and PIF, are included among the beneficiaries of the trust created and recognised by and under s 601FC(2) of the Corporations Act; (g) Mr Maarbani, in his capacity as the sole director of Fundus Management at all material times, caused Fundus Management to engage in the conduct alleged against it; (h) Fundus Management, in engaging in such conduct, acted as the agent of Guardian as principal, insofar as such conduct was engaged in by Fundus Management (through Mr Maarbani) at the direction of Guardian for the purposes of ELF and PIF within the TGIF; (i) in the premises, Guardian is the proper defendant to claims of breach of trust or other breach of duty in respect of that coextensive trust that subsists with respect to the trust assets of FT1 and FT2 because such trust assets are also "scheme property" of which Guardian was and is itself a trustee. (2) amending the following paragraphs (as underlined): 18. On various dates, Fundus Management or Guardian Securities paid or accrued the following sums or caused them to be paid from the trust bank accounts … 24. In the premises of paragraphs 18 to 22A herein, Guardian Securities is not entitled to payment of the amounts of $267,352.72 $267,352.72 accrued in the accounts of FT1 and FT2. 104 The QB4 Parties state that aspects of the proposed amendments are reflected in the QB4 Parties' current pleadings. Specifically, the amendments made at [7A], [18], and [22A] of the proposed 5FASOC, are said merely to repeat the matters already alleged in [13(b)] of the Reply, and the other paragraphs allege uncontroversial facts in support of those matters, being the Statutory Trust Case. 105 The heart of the dispute, however, concerns the QB4 Parties seeking to introduce for the first time an application for leave for the Migunovs to pursue a derivative claim on behalf of the trustee of the TGIF, Guardian, against Fundus. The QB4 Parties submit that the amendments at [9A], [10A] and [15A] of the proposed 5FASOC, however, plead the "legal consequences that follow from the Guardian Parties' case that Guardian is the sole beneficiary of FT1 and FT2" (that is, the Alternative Beneficiary Case).

Consideration 106 The principles are not in dispute, but the fact that the issues to be determined have long been identified by a document that sought to replace the joinder of issue on the pleadings is an important matter of context and must be taken into account in assessing the utility of amending the pleadings yet again. 107 The QB4 Parties submit s 22 of the FCAA is said to maintain the historical distinction between "the discretion of a court to allow a party to amend its pleading on that party's motion and the requirement to make all such amendments as may be necessary to determine the real questions in controversy": Aon Risk Services Australia Ltd v Australia National University [2009] HCA 27; (2009) 239 CLR 175 (at 185 [14] per French CJ). The power in s 22 of the FCAA is to be applied "on such terms and conditions as [the Court considers] just": EPU19 v Minister For Home Affairs [2020] FCA 541 (at [56] per Steward J). 108 Although it may be the general approach that an application to amend a pleading should be granted so that the real questions between the parties may be tried, the Court now has power under s 37P(2) of the FCAA to fix upon a mode for identifying issues that require resolution and to ensure the real questions in controversy are solved. Such case management orders must be the course which best facilitates the overarching purpose: s 37M(3) of the FCAA. As I have been at pains to emphasise above, this was done, and throughout the course of these proceedings, I have attempted, with the assistance of the parties, to identify with precision those issues that I need to determine. 109 If leave were to be granted, the Guardian Parties contend they would be facing a different case to the one against which they have been required to defend. Such was the evidence of Mr David Hing, the solicitor with conduct of the proceedings on behalf of the Guardian Parties. To overcome this prejudice, it was said it was necessary to reopen the matter for further written submissions. Be that as it may, this claim for monetary relief has always been on the table, albeit not articulated with clarity or precision. 110 Given the procedure adopted for identifying the issues and the lateness and lack of utility of the amendment in identifying the real issues, I do not think the amendment proposed is necessary. However, my refusal to grant leave does not foreclose from determination what has always been a central issue under dispute; that is, the propriety and proper quantum of the Guardian Invoices and the Legal Invoices. I do propose to deal with the claim made for declaratory relief in relation to the Guardian Invoices and the Legal Invoices because to fail to do so would be to ignore the substance of an important aspect of the dispute that has long been understood by the parties to be squarely in the arena, notwithstanding any pleading deficiencies. If a point is taken when the parties bring in short minutes that declaratory relief is not an appropriate or available mode for resolving this important and underlying dispute between the contending parties, I will return to questions of standing and mode of relief at that time. At bottom, this is a commercial dispute between two "camps", and I do not propose to allow form to triumph over the underlying justice of the case in granting relief as between those "camps" (if the terms of relief cannot be agreed between them in the light of these reasons).

D DECLARATORY RELIEF 111 In their amended originating application, the QB4 Parties seek declaratory relief in the following terms: A declaration that Guardian Securities Ltd is not entitled to payment in respect of the sums of $548,941.69 (incl GST) and/or $509,971.50 (incl GST) and/or amounts accrued in the sums of $77,162.72 (incl GST), $550,000 (incl GST) and $267,352.72. 112 The QB4 Parties' 4FASOC further provides (at [34(2)]) that the relief sought includes the following declaration: That Guardian Securities is not entitled to payment in respect of the sums of $548,941.69 and $509,971.50 identified above and sums accrued in the accounts identified in paragraphs 18 (f), 21 B and 24 above. 113 The declaratory relief sought is not a model of legal drafting. The amounts to which the declaration relate lack the necessary specificity and appear to overlap significantly. The identified amounts the subject of the claim for declaratory relief appear to relate to: (1) the Guardian Invoices ($548,941.69); (2) the Legal Invoices ($509,971.50); (3) invoice 0451 ($77,162.72); (4) the total amount of CE Lawyers' costs ($550,000); and (5) the sum of the unpaid amount of CE Lawyers' costs ($190,000) and invoice 0451 ($267,352.72). 114 Notwithstanding any deficiencies in the prayers for relief, s 21 of the FCAA confers a wide discretionary power on the Court as to the making of a declaration and the terms in which it should be framed: see, e.g., AWB Limited v Honourable Terence Rhoderic Hudson Cole (No 6) [2006] FCA 1274; (2006) 235 ALR 307 (at 308 [5] per Young J). 115 However, the vague terms of the declaratory relief as outlined in the 4FASOC place me in a difficult position. In relation to those payments that have already been made, absent some sort of sensible resolution between the parties, such a declaration would be of no practical effect without a properly framed claim for equitable compensation, or orders for the repayment of the amounts that are found not to have been properly incurred. 116 As noted above, despite the way the QB4 Parties have run this case, it is pellucid that the propriety of the Guardian Invoices and the Legal Invoices have always been in dispute. This was part of the reason why both parties fastened upon the Receivers' Reports as a means by which the appropriateness of these amounts would be the subject of inquiry by the Receivers. Clearly, it is desirable that there should be an authoritative resolution of this aspect of the dispute presented to the Court, with any declarations made by the Court reflecting (as best one can) the final outcome of the case with certainty and precision: see AWB v Cole (at 308 [5] per Young J). 117 Accordingly, I propose to make findings as to the propriety of each of the relevant invoices in the context of dealing with the somewhat related claims of Guardian for relief as to indemnity. 118 To give effect to these findings (which are identified in Section E below), the parties are to provide an agreed minute or competing minutes of order.

E INDEMNITY CLAIMS 119 As stated above, central to many of the agreed issues is the question of whether certain expenses were properly incurred for the purposes of the trust. As can be seen from the following, there is significant overlap as to the 4FASOC, the First Cross-Claim, and the Second Cross-Claim: (1) in the 4FASOC, the QB4 Parties seek declaratory relief to the effect that Guardian is not entitled to the amounts of the Guardian Invoices or the Legal Invoices; (2) in the First Cross-Claim, Guardian claims it is entitled to be repaid in respect of amounts specified in various outstanding invoices relating to responsible entity fees, audit fees for work undertaken by PKF, and invoice 0451 for services rendered by VCPA and Mr Maarbani (Outstanding Invoices); and (3) in the Second Cross-Claim, filed in the Legal Costs Proceeding, the Guardian Parties seek declaratory relief that Guardian be indemnified from the trust property for all past, current and future legal costs incurred in respect of each of the proceedings. 120 Before turning to each of these, however, it is first necessary to outline the rights of indemnity upon which Guardian relies.

E.1 Rights of indemnity 121 A registered investment scheme is required to have a constitution that makes adequate provision for the powers of a responsible entity in relation to dealing with scheme property in accordance with s 601GA of the Corporations Act. Relevantly, s 601GA provides: 601GA Contents of the constitution (1) The constitution of a registered scheme must make adequate provision for: (a) the consideration that is to be paid to acquire an interest in the scheme; and (b) the powers of the responsible entity in relation to making investments of, or otherwise dealing with, scheme property; and (c) the method by which complaints made by members in relation to the scheme are to be dealt with; and (d) winding up the scheme. (2) If the responsible entity is to have any rights to be paid fees out of scheme property, or to be indemnified out of scheme property for liabilities or expenses incurred in relation to the performance of its duties, those rights: (a) must be specified in the scheme's constitution; and (b) must be available only in relation to the proper performance of those duties; and any other agreement or arrangement has no effect to the extent that it purports to confer such a right. … 122 Any right of indemnity must satisfy the two requirements of s 601GA: it must be specified in the scheme's constitution; and it must be available only in relation to the proper performance of those duties. Clearly, s 601GA(2) does not, in and of itself, create or confer any right of indemnity of a responsible entity out of scheme property. As McKerracher J observed in Great Southern Managers Australia Ltd (at 512 [44]): The two requirements of s 601GA must be satisfied. The effect of s 601GA is to require a right to fees to be specified in the Constitution. It does not give the power to insert any new fees or a power of confiscation or some other benefit not already agreed between the parties. Any other amendments could only be made under the terms of the original Trust Deed and then under the strict terms of the Trust Deed by the Trustee joining with the Manager and not by the Manager alone. 123 The TGIF Constitution confers express rights of indemnity and reimbursement on the Manager of the TGIF. The TGIF Constitution was amended on 22 May 2019 and has been in force at all relevant times since that date. Accordingly, any rights of indemnity and reimbursement conferred by the TGIF Constitution remained constant throughout the relevant period. The relevant rights of indemnity are contained in cll 22.1, 22.6, and 23.7 of the TGIF Constitution dated 22 May 2019. They provide: 22.1 Indemnification (a) The Manager is indemnified out of the Trust for: (i) all expenses, losses, damage and liabilities (whether actual, contingent, prospective or otherwise) incurred, arising out of or in connection with acting in connection with the Trust or in connection with any of the matters listed in clauses 22.2. (ii) all liabilities incurred by it in relation to the proper performance of its duties or exercise of its powers as Manager under this Constitution (including, without limitation, in connection with any acts or omissions by the Manager in relation to clauses 4.3A, clause 28.3 or Schedule 1); and (iii) all other liabilities incurred by it in relation to the operation of the Trust other than liabilities incurred as the result of breach of trust, recklessness or fraud on the part of the Manager (b) This indemnity: (i) is without prejudice to any indemnity allowed by law; (ii) survives the termination of this document; and (iii) may be claimed from the assets, but the indemnity is not available where the indemnity is not permitted under the Applicable Standards. (c) The Manager has a lien on and may use the Assets for the purpose of this indemnity and generally for the payment of all legal and other costs, charges and expenses of administering or winding up the Trust and otherwise properly performing its duties to the Trust. … 22.6 Manager's indemnity additional to those at law and is a continuing one The indemnity under clauses 22.1 is: (a) in addition to any indemnity the Manager may have at law or in equity; and (b) a continuing indemnity and, subject to the Corporations Act, applies to the Manager after it retires or is removed as manager or responsible entity of the Trust. … 23.7 Reimbursement of costs, charges and expenses The Custodian (provided it is external and independent of the Manager) and the Manager must be paid or reimbursed on a full indemnity basis out of the Trust for all expenses and liabilities which they each incur in connection with the Trust or in performing their obligations or exercising their powers under this document including: … (d) the acquisition, holding, management, maintenance, valuation or disposal or attempted or proposed acquisition or disposal of or any other transaction in relation to investments and the investigation and research of markets, including travel and accommodation expenses, investment or portfolio manager's fees and advisor's and consultants' fees incurred in carrying out the functions of the Manager or the Custodian, taxes and rates; … (g) establishing the Trust and any restructuring of the Trust including costs of preparation of this document and any supplemental deed and the cost of legal, accounting, tax, financial and other services; … (k) any court proceedings, arbitration, or dispute and obtaining legal advice; … 23.8 Payment to Associates Payments under clauses 23.7 may be made to an Associate of the Manager or Custodian. 124 The QB4 Parties submit that, in respect of the various rights of indemnity in the TGIF Constitution, s 601GA of the Corporations Act is not satisfied. The basis for this submission is that if the purported right of indemnity is not "available only in relation to the proper performance of those duties", then it is not a right of indemnity authorised to be given to the responsible entity, by way of specification in the relevant constitution, under section 601GA(2). That is, where any right of indemnity in a scheme's constitution does not restrict its availability "only in relation to the proper performance of those duties", the entire clause is of null effect and no right of indemnity, whether in relation to the proper performance of those duties or not, is conferred. 125 This submission should not be accepted. Section 601GA(2) does not prevent a responsible entity from relying on a broadly expressed right of indemnity clause in order to be indemnified for liabilities or expenses which it incurs "in relation to the proper performance of those duties". The provision provides that "any other agreement or arrangement has no effect to the extent that it purports to confer such a right" (emphasis added). Similarly, where the constitution of an investment management scheme provides a right of indemnity that extends beyond that prescribed by s 601GA(2)(b), it will similarly be of no effect to the extent that it purports to confer such a right. The effect of s 601GA(2)(b) was discussed in Australian Corporation Law Principles & Practice (LexisNexis Australia, January 2022) (at [7.12.0075]): The right to be paid such amounts is only available in relation to the proper performance of those duties and any other agreement or arrangement has no effect to the extent that it purports to confer such a right: s 601GA(2). … With respect to liabilities or expenses there is a question whether the section would be satisfied by a comprehensive clause indicating that the responsible entity is entitled to be indemnified out of scheme property for every liability or expense incurred in relation to the performance of its duties without limitation, or whether it is necessary to list in the constitution every type of expense which can be recovered. Although in practice not many fund managers have been brave enough to abandon the "listing" approach, it suffers from the serious defect that occasionally liabilities or expenses which otherwise might legitimately be claimed cannot be recovered because they fall outside the specific wording of the list. Even where the "listing" approach is adopted, the "list" usually includes a safety net provision expressed in wide terms to catch anything which might have been missed. The restriction under s 601GA(2) does not appear to prevent a responsible entity from being indemnified for liabilities or expenses which it incurs other than "in relation to the performance of its duties". Even where the relevant liabilities or expenses are incurred in relation to the performance of its duties, if the right arises other than under an "agreement or arrangement", for example, as a result of a court order or statutory right of indemnity, it would appear that s 601GA(2) would not prevent the responsible entity from recovering even if the expenses or liabilities were of a kind not specified in the constitution. (Emphasis added). 126 Dealing with a similar issue in Bruce & Anor v LM Investment Management Limited & Ors (No 2) [2013] QSC 347, Dalton J stated (at [27]): If, and in so far as cl 19.1 purports to allow the responsible entity of the FMIF an indemnity in circumstances where, short of negligence, fraud or breach of trust, it has acted improperly, or not for the purpose of the trust, then my view is that clause of the constitution does not so operate by reason of the provision at s 601GA(2)(b). (Citations omitted). 127 Put simply, a clause that purports to indemnify the responsible entity of an investment management scheme for costs that were not incurred in relation to the proper performance of its duties will not operate to the extent that it purports to do so. It does not invalidate the conferred right to indemnity entirely. 128 Accordingly, in determining the issue of Guardian's right to indemnity, it is necessary to determine whether the relevant costs were "properly incurred". This expression has been the subject of much discussion and is in no way unique to managed investment schemes and s 601GA(2)(b) of the Corporations Act. The terms arise in the case law concerning a trustee's right under general law to be indemnified for certain expenses, as well as the statutory recognition of the indemnity in s 59(4) of the Trustee Act 1925 (NSW) and its equivalents. Undoubtedly, s 601GA(2) is to be interpreted against the background of the place of the trust as an institution of equity, with nothing set out in s 601GA(2)(b) or the relevant terms of the scheme constitution modifying the pre-existing law: Saker, in the matter of Great Southern Managers Australia Ltd (Receivers and Managers Appointed) (in liquidation) (No 2) [2011] FCA 958 (at [51] per McKerracher J); see also Re Gunns Finance Limited (in liq) (recs & mgrs apptd); and Re Gunns Plantations Limited (in liq) (recs & mgrs apptd) (No 2) [2013] VSC 365; (2013) 281 FLR 121 (at 148-151 [152]-[161], 152 [170] per Robson J). 129 From the outset, the Chancery principle was that only expenses that are "properly incurred" are the subject of a trustee's indemnity: Re O'Donoghue [1998] 1 NZLR 116 (at 121 per Hammond J). In analysing the meaning of "properly incurred", Lindley LJ observed in Re Beddoe [1893] 1 Ch 547 (at 558): I entirely agree that a trustee is entitled as of right to full indemnity out of his trust estate against all his costs, charges, and expenses properly incurred: such an indemnity is the price paid by cestuis que trust for the gratuitous and onerous services of trustees; and in all cases of doubt, costs incurred by a trustee ought to be borne by the trust estate and not by him personally. The words "properly incurred" in the ordinary form of order are equivalent to "not improperly incurred." This view of a right of a trustee to indemnity is in conformity with the settled practice in Chancery and with Turner v. Hancock, the latest decision on the subject. (Citation omitted, emphasis added). 130 This passage was relied upon by Ormiston JA in Nolan v Collie Nominees Pty Ltd (in liq) [2003] VSCA 39; (2003) 7 VR 287, who stated (at 304-306 [46]-[47], [50], with whom Batt and Vincent JJA agreed): 46. To my way of thinking the conventionally stated test as to expenses "properly incurred" is merely a convenient shorthand to describe those restraints applicable to trustees who would seek to look to trust funds for the payment of their expenses and other trust liabilities. It also has the advantage of succinctly expressing the notion of propriety as underpinning a trustee's relationship with the trust estate and the beneficiaries. One must not forget, moreover, that in Re Beddoe, seen as one of the leading authorities, Lindley, L.J. explained that in cases of doubt the trust estate should bear the trustee's costs, and that: "The words 'properly incurred' in the ordinary form of order are equivalent to 'not improperly incurred'". The proposition was converted by another respected judge, Bowen, L.J., who was perhaps more familiar with courts of common law, into "a proposition in which the word 'properly' means reasonably as well as honestly incurred". His Lordship added that, while trustees ought not to bear expenses and liabilities personally "on account of mere errors in judgment which fall short of negligence or unreasonableness", nevertheless "mere bona fides is not the test". A.L. Smith, L.J. concurred with the other members of the Court. 47. Re Beddoe or the principles stated therein have been cited and applied in Australia on numerous occasions. In the High Court it was used in National Trustees Executors & Agency Co. of Australasia Ltd. v. Barnes as the basis for Rich, A.C.J. and Williams, J. to support the proposition that a trustee is entitled to be indemnified out of the trust estate "against all his proper costs charges and expenses incident to the execution of the trust". Starke, J., who approached the matter slightly differently, nevertheless espoused a proposition that a trustee had a right to be recouped as of right all that he had "expended properly" in that role. Subsequently, in a judgment in which Dixon, J. formed part of the majority, his Honour said in Vacuum Oil Co. that, where an executor has acted under appropriate authority, the executor had a "right to be indemnified out of the assets in respect of liabilities he has incurred in the proper performance of his duties or exercise of his powers". … 50. Perhaps the rule will not pose difficulties where the issue relates merely to costs and expenses, although even in that area it has frequently been said that trustees should not be deprived of their right of reimbursement unless they have clearly been shown to have acted improperly, with the onus resting on those who seek to deny the right. But the rule relating to indemnification also applies to the incurring of liabilities and, by necessity, a considerable proportion of those must be incurred where in some way a trustee has been found to have acted in error. (Emphasis added, citations omitted). 131 The following broad examples were also usefully outlined in Re O'Donoghue (at 121-122 per Hammond J): The notion that a trustee must act "reasonably" is necessarily qualified in various ways. First, it has never been thought unreasonable for a trustee to hire a properly qualified person to carry out work which the trustee is not qualified to undertake. Second, the trustee does not have a limitless ability to resort to the law: his function is to assert the interest of the beneficiaries only to a point where there is a judicial ruling on something that is properly required, such as the construction of a fairly debatable point in an instrument, or whether the trustee ought to take a certain course. And, it has been said that a trustee has to have very good grounds before that trustee can justify an appeal, especially if costs were awarded against the estate in the Court below (see for instance Smith v Beal (1894) 25 OR 368). Third, a trustee is not entitled to expenses arising out of his own misconduct. 132 By reference to these principles, I now turn to determining whether, and to what extent, Guardian is entitled to rely on its rights of indemnity.

E.2 The Guardian Invoices 133 Upon its acquisition of a controlling interest in Guardian in January 2020, VentureCrowd was instructed by Guardian to complete a review of the operation and management of the TGIF, including an assessment of the investments of each fund to form a conclusion regarding their feasibility. Furthermore, following the termination of the RE Agreement in March 2020, Guardian completed a review of the various constituent and investment documents to determine its legal obligations to the ELF and PIF. This legal review appears to have been conducted predominantly by Mr Maarbani in his capacity as a director of VCSA and as a solicitor. 134 The costs incurred by Guardian, VCPA and VCSA in completing this review totalled $626,134.22. By way of a broad overview, those invoices, and their disbursements, were itemised as follows: Invoice No. Disbursements Amount (inc GST) Invoice 0419 Cost Recovery - VCPA Invoice 0699 $177,279.30 ($296,079.30) Services rendered by Steven Maarbani $26,400.00 Audit Property Portfolio Services rendered by Steven Maarbani $80,300.00 Manage Security Services rendered by Steven Maarbani $12,100.00 Cashflow Management Invoice 0434 ($252,892.20) Cost Recovery - VCPA Invoice 0735 $132,069.30 Cost Recovery - VCSA Invoice 0026 $120,822.90 Invoice 0451 ($77,162.72) Recovery - VCPA Invoice 0777 $11,376.12 Services rendered by Steven Maarbani $65,786.60

135 As explained above, these costs are the subject of the QB4 Parties' claim for declaratory relief. Furthermore, in the First Cross-Claim, Guardian seeks orders for invoice 0451, which remains outstanding, to be repaid by trustees of FT1 and FT2 or, alternatively, by Fundus. 136 These invoices cause me considerable disquiet. Mr Maarbani's affidavit evidence is said to explain the relevant work that was undertaken in relation to the Yamanto Property, the Griffin Mews Project, and the Wattlebird Project, and charged in the Guardian Invoices: Maarbani Affidavit 21 July 2021 (at [21]-[48]). By way of a broad overview of these invoices, Mr Maarbani states (at [52]): As is apparent from the description I have provided above, much of the work under these three invoices involved review and consideration of legal documents, preparation of detailed correspondence in relation to Guardian's rights (in its capacity as responsible entity of PIF and ELF) in respect of QB4 Capital and GM8, consideration of the provisions of the Corporations Act 2001 and preparation of notices of meetings and explanatory statements for unitholders. 137 The process for recording the work completed by the staff working at VCPA and VCSA (including Mr Maarbani) was to record their time spent on this work for the ELF and PIF on a centralised "Google Sheets" document in reference to specific "work streams", such as "Audit Property Portfolio", "Manage Security", "Cashflow Management", "Investor Management", "Borrower Management", and "General Admin". 138 The Receivers reviewed these invoices, including the descriptions of the relevant work streams, and provided their findings in the Second Receivers' Report. The Receivers stated the information available to them to assess the propriety of the Guardian Invoices was insufficient because "Guardian and VentureCrowd had not provided any substantive detail as to the time or costs incurred to undertake an assessment of these fees charged." The deficiencies as to the information regarding the Guardian Invoices were identified in the Second Receivers' Report (at 45-46) as follows: There is insufficient detail on the invoices to support the work Guardian and VentureCrowd claim to have carried out. We have not been provided with detailed timesheets which explain in detail the work performed to accrue these fees. The timesheets provided do not correspond with the invoices issues in respect to that time. The timesheets provided to us simply set out: • Date work carried out; • Name and position of employee; • Which fund work was attributed to; and • Total weekly hours allocated to each of 6 categories comprising Audit Investment Management terms and Agreement, Manage Security, Cashflow Management, Investor Management, Borrower Management, and General Admin. The level of detail provided by Guardian and VentureCrowd to evidence the work undertaken by their staff is not sufficient to appropriately assess: • The individual tasks performed within each of the 6 categories of work undertaken; • The time taken by each staff member to complete each individual task; • That staff with the appropriate level of seniority and expertise were allocated to undertake each individual task; and • That appropriate management oversight was provided to staff allocated to undertake the tasks performed. While it is acknowledged that the work undertaken by Guardian and VentureCrowd is not considered professional legal or accounting services, there is no apparent time cost recording system or software used by Guardian or VentureCrowd to accurately record the units of time spent on particular tasks such as what would be expected of a professional service firm like a legal or accounting practice. … Detailed timesheets, such as what would be produced by a legal or accounting practice, would allow for a thorough costs assessment process to be undertaken on the time spent. There is no possibility of conducting a costs assessment on the timesheets produced as they are grossly deficient for that purpose. It is not clear that a time-based charging approach was the most appropriate method of charging for the work completed in the circumstances. … While the invoices provided do categorise the costs to broadly defined categories of services, sufficient information does not appear to exist to substantiate the time spent dealing with the tasks. Whilst Guardian argue that the substance of the work performed may be gleaned from the numerous documents which were produced, any assessment on this basis would be far too objective [sic] to reasonably support the amount claimed. Further, in order to measure specific output from the service provided, it would need to be clear from the various documents provided by Guardian, how many of those were produced specifically by Guardian and VentureCrowd rather than just relied on to complete their assessment. The value of the work undertaken by Guardian and VentureCrowd is unable to be assessed objectively. It is unclear who benefited most from the work undertaken by Guardian and VentureCrowd, whether it is Guardian, VentureCrowd, QB4, or the Unitholders. It is unclear whether Guardian should have been aware of all of the issues investigated in the due diligence review already, by virtue of its role as Responsible Entity of the funds. We are not able to determine whether it might have been possible to obtain the services provided from an independent third party as there is no engagement documentation between Guardian and VentureCrowd and there is no detailed supporting documentation to evidence the actual tasks undertaken by Guardian and VentureCrowd when providing the services. 139 The Receivers concluded (at 45) that, although Guardian had an entitlement to recover fund expenses from the assets of the trust, due to the insufficient detail provided, the Receivers were unable to form a reasonable view of the services provided and whether they were properly incurred. I raised this at the hearing during the cross-examination of Mr Wengel (T139.46 -140.11): HIS HONOUR: What do you mean by that? You have an insufficient basis upon the material that has been provided to you in order to form a view of whether they've been properly charged?---Yes, that's right. There wasn't sufficient evidence presented to me to satisfy me that these expenses had been properly incurred and were properly - and were completely justifiable. So you asked them for the material?---I did. But by the end of your report you formed the view that you had been provided with insufficient material to justify it; would that be a fair characterisation of your position?---That's correct, yes. All right, thank you?---And I did ask multiple times. 140 On this basis, the QB4 Parties argue that it is improper for Guardian to have not taken the opportunity to inform the Receivers properly of the matters to sustain any claim to the payments, and to hold back the necessary information to be dealt with now in relation to the Guardian Invoices. Alternatively, to the extent that, as Mr Maarbani's evidence suggests, the materials provided to the Receivers were identical to that relied upon by Guardian to support its current indemnity claim, it is abusive for it to re-litigate the question before the Court. 141 This last submission makes no sense and can be put to one side. No question of re-litigation arises. 142 Returning to issues of significance, although written in a more expansive narrative form, it appears that much of the information contained in Mr Maarbani's affidavit was also before the Receivers when drafting the Second Receivers' Report, including the timesheets for the work that was undertaken by VSCA and VCPA. Perhaps this is why I have come to a similar view as the Receivers: it is not presently explicable on the evidence in Mr Maarbani's affidavit (or in other evidentiary material) how the fees were properly incurred. For the following reasons, on the state of the evidence adduced, I am affirmatively satisfied that only a proportion of the claimed fees were claimed properly. 143 First, the evidence regarding the Guardian Invoices does not provide real insight into the work that was performed or its propriety. The Receivers indicated that they were unable to form a reasonable view of the services provided by VentureCrowd and Mr Maarbani and whether they were properly incurred because of the insufficient details as to the work that was performed, including the fact that there is no information as to the time that was spent on each task, the specific tasks that were performed, or whether staff at an appropriate level of seniority and expertise were allocated to undertake each individual task: Second Receivers' Report (at 46). To my mind, given the nature of the work performed and the activities that one would expect to be undertaken, to the extent that the contents of Mr Maarbani's affidavit do provide evidence that was not provided to the Receivers, it does not adequately address the deficiencies identified in the Second Receivers' Report. Mr Maarbani's description of the general nature of the work that was performed is merely a high-level summary and does not specify the tasks performed, the time spent on those specific tasks, or how that work relates to the amounts charged. It is exceedingly difficult to reconcile the work that is said to have been performed with the amounts charged. Although I note that when one calculates the hours worked by each employee at their individual hourly rate during the relevant periods in the timesheets, there appears to be some alignment between the amounts charged in the invoices and the hours recorded in the timesheet, much of the work that was charged for in the invoices that were issued (including the disbursements) does not correspond with the work that was recorded in the timesheets. 144 Secondly, there are unsettling inaccuracies between the amounts charged in the relevant invoices, the times recorded in the timesheets, and the evidence of Mr Maarbani. For example, Mr Maarbani's affidavit provides that Mr Hasenkam, Mr Walker, Mr Walters, and Mr Withnall undertook work with assistance from VCSA staff that was the subject of the time charged in invoice 0451: see Maarbani Affidavit 21 July 2021 (at [46]-[48]). However, only Ms Taylor, Mr Walker and Ms Milne (all of whom are employees of VCPA) appear to have recorded any time during the relevant period and no charge is made for work performed by VCSA staff apart from that of Mr Maarbani. Furthermore, the timesheets do not record that Mr Maarbani worked any hours during the period of 28 September 2020 to 2 December 2020. Despite this, Mr Maarbani has charged for 159.5 hours (calculated based on his hourly rate of $375) in invoice 0451 for legal work undertaken by him from 28 September 2020 to 2 December 2020. Accordingly, the evidence upon which the fees were said to have been calculated appears obscure and, in some respects, inconsistent. 145 Thirdly, the amount being charged to the trust in the Guardian Invoices appears excessive when regard is had to the similar fees being charged to the ELF and PIF during the relevant period. In the Second Receivers' Report, Cowell Clarke opined (at 8 [4.33]): Given the substantial amounts of those invoices overall, the claim by [Guardian] for Management Fees for the same period and the related party nature of [Guardian] and VCPA, we consider that the invoices contain insufficient detail for [Guardian] to properly assess the services that is the subject of the invoices and the amounts claimed. 146 Further, given that Mr Maarbani's work, and his hourly rate, were justified on the basis of his legal knowledge, there appears to have been a substantial duplication of the legal work performed and charged in the relevant invoices. At the time, AG Edwards was acting for Guardian and appeared to be performing substantive amounts of work relating to the charges in the Guardian Invoices at the instruction of Mr Maarbani: see, e.g. Affidavit of Mr Maarbani sworn 18 November 2020 (at [83]-[100]); Maarbani Affidavit 21 July 2021 (at [51]-[52]). It is also far from clear what overlap there was between the work charged for under the Guardian Invoices and other fees charged by Guardian during the course of discharging its duties as the responsible entity: see Second Receivers' Report (at 46). 147 Fourthly, in addition to having little confidence in the affidavit evidence (such as it was), Mr Maarbani's oral evidence to the extent it related to the issue of the work performed did not provide any further detail or leave me with any feeling of confidence that the amount charged reflected a proper scope of work or the time required to do the work. When cross-examined as to whether he saw a potential for a conflict of interest between Guardian and VCPA, Mr Maarbani stated "of course" (T60.26) and that they "were absolutely in a position of conflict" (T66.45-47) but nevertheless concluded that "at the end of the day we were best placed to do that work": T60.38-39. I share the concern expressed in the Cowell Clarke report that insufficient detail was provided to Guardian to assess for themselves, at arm's length, the services for which were being charged, given the substantial amounts of the Guardian Invoices overall, the claim by Guardian for management fees for the same period, and the related party nature of Guardian and VCPA. It is a significant concern that, despite multiple requests, sufficient detail was not provided to the Receivers or the Court to assess properly the services that are the subject of the Guardian Invoices and other fees charged. 148 There is one further issue to address regarding the Guardian Invoices. Both parties sought to deploy the termination of the IM Agreement in support of their case regarding the Guardian Invoices. For the reasons I will explain, I do not find either argument convincing. 149 First, the QB4 Parties submit that Guardian's "purported" termination of the IM Agreement was unlawful and invalid and, as such, Guardian exposed itself to liability in damages and engaged in self-dealing by purporting to do the work formerly done by QB4 that QB4 was ready, willing and able to perform. In my view, this submission misses the point. The issue of whether the IM Agreement was validly terminated is something of a red herring. Whether QB4 was strictly in breach of the IM Agreement, and whether the IM Agreement was validly terminated, are issues between QB4 and Guardian. They do not relate to the relevant analysis; that is, whether the charges for the work performed were expenses that were properly incurred with respect to the interests of the beneficiaries. The fact that Guardian assumed the investment management role for itself, and shut QB4 out, does not, in and of itself, justify a conclusion as to the propriety of that work in relation to the Guardian Invoices. 150 Secondly, the Guardian Parties advance an argument that, to the extent that Guardian is not entitled to indemnity for the expenses it has incurred from the assets of the ELF and/or PIF, the un-indemnified amount represents expenses that have been incurred by Guardian arising from QB4's breach of various contractual obligations under the IM Agreement and RE Agreement. These are said to include, by way of a general overview, obligations to provide monthly, quarterly, and annual reports, including valuation reports of all assets held by the trust and compliance reports, to Guardian. Further, QB4 was said to be obligated to provide records relating to the ELF and PIF upon request, within a reasonable amount of time, and upon the termination of the IM Agreements. There is significant dispute as to whether QB4 breached these obligations. Guardian claims that, due to the supposed breaches of the IM and RE Agreement, the Guardian Parties were required to perform the work instead of QB4, which was charged for in invoices 0419, 0434, and 0451. On this basis, Guardian claims it is entitled to the difference between the amount of invoices 0419, 0434 and 0451 and the aggregate amount to which Guardian is ultimately held to be entitled by way of indemnity from FT1 and FT2. 151 This claim should fail for similar reasons. The only damage that is claimed is the amount that Guardian is found not to be entitled to by way of indemnification. The crux of this claim is that Guardian has not been indemnified for work that was "reasonably necessary having regard to Guardian's obligations as responsible entity and trustee of the PIF and the ELF": see Guardian Parties written submissions (at [104]). However, for the reasons outlined above, the work said to be performed does not align with the work that was reasonably necessary to be performed, and that Guardian is not entitled to be indemnified for the full amount of the Guardian Invoices. Those reasons are entirely divorced from any conduct of QB4, and relate only to the propriety and necessity of the work that was conducted by Mr Maarbani, VCPA and VCSA. 152 Ultimately, although I am satisfied that Guardian has a right to be indemnified for most of the work charged in the Guardian Invoices, I have reached an affirmative state of satisfaction that the total amount of those invoices was not properly incurred in relation to the trust. Given the nature and extent of the necessary and proper work to be performed as explained by the Receivers, the imprecise evidence upon which the fund expenses were charged, the inconsistencies between the explanations for the work performed and the invoices that were charged to the fund, and the significant fees that were being paid at the time for similar work, I consider that the charges should be significantly discounted. Precisely how much this discount should be cannot, on the present state of the evidence, be an exercise in precision and necessarily involves taking a broad brush view as to where the just result lies informed by an assessment of the evidence as to what work was necessary and the other charges that were incurred. It seems to me, doing the best I can, that 60 per cent of the amount charged should be regarded as being properly incurred. Given a just amount will be retained in relation to payments already made to discharge the Guardian Invoices, I do not consider it necessary to consider the alternative quantum meruit claim.

E.3 The Outstanding Invoices 153 In the First Cross-Claim, Guardian and VentureCrowd seek payment of the Outstanding Invoices with interest from the Receivers in their capacity as trustees of FT2 and FT1 respectively, or from Fundus. Alternatively, upon a quantum meruit, Guardian claims reasonable remuneration for work performed by Guardian for, or for the benefit of, Fundus in respect of the ELF and PIF, being work performed by or at the direction of Guardian as claimed in the Outstanding Invoices, plus interest. 154 The Outstanding Invoices are itemised as follows: Fund Invoice No. Description Date Amount ELF 0399 RE Fee to March 2020 01/07/2020 $25,645.08 ELF 0414 RE Fee to June 2020 29/09/2020 $23,996.70 ELF 0434 RE Fee to October 2020 02/11/2020 $7,983.96 ELF 0435 RE Fee to November 2020 30/11/2020 $7,985.03 PIF 0436 RE Fee to October 2020 02/11/2020 $21,540.51 PIF 0437 RE Fee to November 2020 30/11/2020 $21,415.44 PIF 0444 PKF Audit Fee (apportioned) 02/12/2020 $3,855.39 PIF 0440 PKF Audit Fee (apportioned) 02/12/2020 $2,514.48 PIF 0451 Outstanding Invoice 01/12/2020 $77,162.72 Total $192,099.31

155 The "RE Fees" (Responsible Entity Fees) are said to have been issued to Fundus in connexion with the ELF and PIF and cover responsible entity fees payable to Guardian for the period prior to the appointment of the Receivers. Further, invoices 0444 and 0440 represent fees for the statutory audit of the ELF and PIF conducted by PKF (Audit Fees). Lastly, invoice 0451 relates to charges for work completed by VCPA and Mr Maarbani, which I have addressed above.

Responsible Entity Fees 156 The remaining invoices relate to Responsible Entity Fees charged to the ELF and PIF by Guardian as the responsible entity of the TGIF. 157 Clause 23.2(a) of the TGIF Constitution provides for Guardian to be paid a management fee "equal to the sum of up to 5% per annum of the Gross Asset Value of the Class Assets". Under the terms of the ELF PDS (section 7.5) and the PIF PDS (section 6.5), Guardian, as the responsible entity, is entitled to charge management fees at a rate of 2.2% of the "Gross Asset Value" of the ELF, and 3.5% of the "Gross Asset Value" of the PIF. 158 Gross Asset Value is defined in the TGIF Constitution as follows: Gross Asset Value of an Asset means the value of the Asset excluding debt incurred by the Trust in respect of the Asset plus any other amounts which the Manager reasonably considers should be included for the purpose of making a fair and reasonable determination of the value of the Trust on an undiscounted basis having regard to the Applicable Standards. 159 Mr Maarbani provides his views as to the calculation of the Responsible Entity Fees payable to Guardian in respect of the ELF and PIF. The fees in respect of the ELF were calculated at 2.2% per annum of approximately $4,360,000.00 which was the gross asset value attributed to ELF, in accordance with section 7.5 of the ELF PDS. Invoices 0399 and 0414 appear as larger amounts than the other invoices in respect of the ELF because they were calculated on a quarterly, rather than a monthly, basis: see Maarbani Affidavit 21 July 2021 (at [75]). The fees in respect of the PIF were calculated as 3.5% per annum of approximately $7,340,000.00 which was said to be the Gross Asset Value attributed to the PIF, in accordance with section 6.5 of the PIF PDS. 160 In respect of the Responsible Entity Fees, the QB4 Parties accept that the fees are properly payable to Guardian, but dispute the quantum of those fees: First Cross-Claim filed on 6 August 2021 (Cross-Claim Defence) (at [16(b)]). The QB4 Parties suggest an alternative methodology for calculating the Gross Asset Value upon which those invoices ought to be calculated, the application of which is said to produce the following: Invoice No. Date Invoice Fee QB4's alternative Discounted Fee Invoice No. 0399 01/07/2020 $25,645.08 $11,250.00 Invoice No. 0414 29/09/2020 $23,996.70 $11,250.00 Invoice No. 0434 02/11/2020 $7,983.96 $3,750.00 Invoice No. 0435 30/11/2020 $7,985.03 $3,750.00 Invoice No. 0436 02/11/2020 $21,540.51 $14,875.00 Invoice No. 0437 30/11/2020 $21,415.44 $14,875.00 $108,566.72 $59,750.00

161 The basis upon which QB4 calculated these amounts is unclear. The Cross-Claim Defence provides (at 16(ii)-(iii)]) a general process that is to be followed when calculating responsible entity fees, however, it is not clear how this process can be applied so as to arrive at the amounts suggested. Nor was this alternative method clarified in QB4's written submissions. 162 The QB4 Parties further rely on the affidavit of Rodney MacKay sworn on 5 August 2021 (at [33]-[34]), in which Mr Mackay provides a "simple analysis" by way of a table of figures that purports to show that, from July 2019 to January 2021, Guardian has "claimed $1,013,218.37 more than they were entitled to." This "analysis" is of no assistance. The figures have not been updated to include the costs identified by the Receivers since their appointment: McKay Affidavit 5 August 2021 (at [35]). As far as I can tell, this table appears to be similar, if not identical, to a table of fees charged to the PIF that was provided to me at the hearing on 5 May 2021: T150.1-5. I raised issue with this table at the hearing on 21 June 2021 (at T237.31-41): [HIS HONOUR:] I have to understand simple things about this. One is … I've got page 3853, which seems to be the wash-up of what I asked the receiver to do, and that is to identify the analysis of the total costs incurred across both ELF and PIF, and an assessment has been done, and the difference claimable in respect of ELF is $59,993.32, and PIF is $341,633.96. Now, I've got MFI14, the document which, with great respect, I don't understand, and I don't understand how it relates to that figure. So … you say … you've got an equitable compensatory claim. I want to know who it's against and what it's for precisely by reference to the receiver's report. Unless you ask me to reject what the receiver has done in that analysis, then I intend to accept what the receiver has done. 163 Despite these concerns, the figures provided are not explained by reference to the Receivers' Reports. No explanation as to the source of the figures (which only relate to the PIF) or the means by which they were calculated, is provided. Indeed, any attempt to reconcile the figures relied upon with the evidence available, or even the discounted fees proposed by the QB4 Parties, raises more questions than it answers. 164 Accordingly, I am not satisfied that the evidence relied upon by the QB4 Parties is sufficient to suggest I should do anything other than accept the evidence of the Receivers in relation to this specific issue. 165 The Second Receivers' Report concluded that the basis of Guardian's calculation is flawed as it relies on an improper calculation of the Gross Asset Value, thereby misstating the responsible entity fees charged. The Receivers suggested it was not feasible for them to recalculate an accurate Gross Asset Value on a daily or monthly basis as required by the relevant ELF PDS and PIF PDS, so the Receivers, in the Second Receivers' Report, estimated a discount rate to be applied to historic calculations. In applying the discount rate and methodology, the Receivers asserted that it was appropriate that Guardian is entitled to $269,728.48 in respect of those costs. The basis for that conclusion was the following (Second Receivers' Report (at 31)): (1) From the Receivers' review, there was no indication that debt had been excluded from the calculation of the Gross Asset Value for ELF and PIF and, accordingly, this would imply that the Gross Asset Value, upon which the responsible entity fees were subsequently calculated, had been overstated. (2) Guardian, as the responsible entity, should have undertaken an internal valuation of the assets annually, at a minimum, with external valuations to be conducted every two years. While valuations were undertaken, there was no evidence before the Receivers that such valuations were conducted on an annual or bi-annual basis. (3) It is not possible to conduct a retrospective recalculation of the Gross Asset Value as a means of testing the accuracy of the Responsible Entity Fees charged by Guardian, due to the lack of historic valuation reports. (4) The approach taken by Guardian in the calculation of the Gross Asset Value was not consistent with the appropriate industry general practice identified by Mr MacKenzie. 166 So as to provide the Court with a basis to estimate an appropriate Gross Asset Value upon which the responsible entity fees might be assessed, the Receivers calculated the net asset value of the funds as of the date the Receivers were appointed (2 December 2020). The Receivers then conducted a comparative analysis of the net asset value as of 2 December 2020 with the Gross Asset Value as of 30 November 2020 that was provided by Guardian: Second Receivers' Report (at 26). The results of this analysis were as follows: Fund Receivers' Net Asset Value Guardian's Gross Asset Value Difference PIF $6,507,459.07 $7,342,435.61 11% ELF $2,142,184.08 $4,354,973.03 51%

167 Upon this methodology, the Receivers concluded that the following discounts should be applied to the Outstanding Invoices, corresponding to a discount of 51% of the responsible entity fees issued to the ELF, and an 11% discount to those issued to the PIF: Invoice No. Date Invoice Fee Discounted Fee Invoice No. 0399 01/07/2020 $25,645.08 $12,566.09 Invoice No. 0414 29/09/2020 $23,996.70 $11,758.38 Invoice No. 0434 02/11/2020 $7,983.96 $3,912.14 Invoice No. 0435 30/11/2020 $7,985.03 $3,912.66 Invoice No. 0436 02/11/2020 $21,540.51 $19,171.05 Invoice No. 0437 30/11/2020 $21,415.44 $19,059.74 $108,566.72 $70,380.06

168 Mr Wengel was cross-examined at length about whether he used the correct integer in the Second Receivers' Report in the calculation of one aspect of the responsible entity fees charged by QB4, being a percentage of the asset value in the ELF and PIF. The reason for this calculation is that there appeared to be no evidence that the Gross Asset Value was being calculated in the manner required by the ELF PDS and the PIF PDS (T155.3-13): [MR F. DOUGLAS:] And did you ever speak to Mr Mackay and say, "Look, we're puzzled about this fact. Both you and Guardian seem to have been charging your fees on the basis of a gross asset value of the funds under management. What's the basis you've got for doing 5 this?" or give them a copy of Mr MacKenzie's report and ask them to comment?---Well, there was no evidence provided to me by either Guardian or QB4 that showed they had gone to any effort to actually calculate the gross assets - the gross asset value as would be required under the PDS. I was simply given a spreadsheet which wasn't reconcilable to any assets that would - any - any assets of 10 the - the company - the fund at that point in time. In fact, it seemed more apparently it was the QB4 gross asset value or the funds under management was referenced to the contributions of the unit holders 169 Although I recognise that this approach does not produce a precisely accurate evaluation of the Gross Asset Value, in all the circumstances and adopting a broad view as to what I consider to be reasonable, given the nature of the evidence, I accept that it provides the most accurate indication as to what the actual Gross Asset Value was at that time. On the basis of the Second Receivers' Report, therefore, I am satisfied Guardian is entitled to recover the responsible entity fees as expenses properly incurred by Guardian as trustee, in the discounted amount of $82,618.90.

Audit fees 170 The total Audit Fees were said to be allocated across the classes of units in the TGIF by reference to their respective proportion of the total assets of the TGIF: see Maarbani Affidavit 21 July 2021(at [77]). 171 In the Second Receivers' Report (at 35), the Receivers conclude that they were satisfied the Audit Fees were valid expenses and should be paid from the trust assets accordingly. In any event, the QB4 Parties admit in the Cross-Claim Defence (at [16(a)]) that the Audit Fees comprise or reflect expenses reasonably incurred by Guardian in its capacity as responsible entity and trustee in respect of the ELF and PIF. 172 Accordingly, I am satisfied that the Audit Fees were expenses properly incurred by Guardian as trustee and that Guardian is entitled to be indemnified for these amounts.

E.4 The legal fees 173 The residual issue is whether Guardian is entitled to be indemnified from the TGIF in relation to its legal fees incurred in the proceedings. These legal costs are the subject of the claims for declaratory relief in the Principal Proceeding and by Guardian in the Second Cross-Claim. 174 The relevant legal fees were charged by the various solicitors engaged by the Guardian Parties in each of the proceedings. The Guardian Parties and Fundus engaged AG Edwards to act on their behalf in the Pre-action Relief Application and the Principal Proceeding from 9 April 2020 to 28 July 2020, after which, on 30 June 2020, the Guardian Parties engaged CE Lawyers to represent them in the Principal Proceeding and the Judicial Advice Proceeding. On 14 January 2021, the Guardian Parties engaged Macpherson Kelley to act on their behalf in the Queensland District Court Proceeding, including a costs assessment of the fees charged by CE Lawyers. On 18 January 2021, the Guardian Parties engaged Resolve Litigation Lawyers Pty Ltd to represent them in the Principal Proceeding and, subsequently, the Legal Costs Proceeding. As of 19 April 2021, the legal costs totalled approximately $1,049,446.45 and significant further costs have continued to be incurred since that time: Maarbani Affidavit 19 April 2021 (at [29]-[36]). 175 In the Principal Proceeding, the QB4 Parties challenge whether the Legal Invoices were properly incurred in the performance of Guardian's duties as responsible entity and trustee of the TGIF, specifically the ELF and PIF. 176 In the Second Cross-Claim, Guardian claims all of the legal fees and disbursements rendered to the Guardian Parties in respect of each of the proceedings commenced in relation to this matter. The declaratory relief sought in Second Cross-Claim is in the following terms: A declaration that the first Cross-Claimant, Guardian Securities Limited (Guardian), be indemnified from the trust property held by it on behalf of the [sic] The Guardian Investment Fund (TGIF) for all past, current and future legal costs incurred by Guardian (either paid or due and payable) and whether jointly and severally or otherwise in relation to matters in connection with or arising from the proper performance of Guardian's obligations or exercise of its powers under the TGIF Constitution, including, but not limited to, all of the legal fees and disbursements rendered to the Guardian Parties (and any interest payable thereon) in respect of Proceedings NSD415/2020, Proceedings NSD470/2020, Proceedings QUD226/2020, Proceedings QLD3617/2020 and the present proceedings, on a full indemnity basis. (Emphasis in original). 177 Before addressing the propriety of the costs incurred in each of these proceedings, it is first convenient to turn to the relevant principles informing when a trustee may rely on a right of indemnity for costs incurred in the defence or prosecution of litigation. 178 The Guardian Parties rely on the authority of Kirwan v Cresvale Far East Ltd (in liq) [2002] NSWCA 395; (2002) 44 ACSR 21, in which Giles JA observed (at 84 [259], with whom Meagher JA agreed at 24 [3]): On the view I have come to, it was reasonable for Mr Gould actively to defend the proceedings brought against Securities and against himself as administrator. He was entitled to indemnity for costs reasonably and honestly incurred (re Beddoe; Downes v Cottam (1893) 1 Ch 547; National Trustees Executors and Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268; [1941] ALR 58; Adsett v Berlouis (1992) 37 FCR 201; 109 ALR 100). It does not matter that at the same time Mr Gould was "defending his own character" (Walters v Woodbridge (1878) 7 Ch D 504). Whether particular costs were reasonably incurred may arise, but there was not impropriety in the administration amounting to misconduct whereby, because defending his own misconduct, Mr Gould did not incur the costs reasonably and honestly. 179 Although those observations were made in the context of allegations of bias and improper conduct made against an administrator, and not a responsible entity, they are apposite. It seems to me that, where a responsible entity is actively defending proceedings concerning an investment management scheme, the relevant question is whether the costs of that litigation were reasonably and honestly incurred in connexion with the trust. In circumstances where that is so, the fact that the responsible entity was defending its own character at the same time as defending those proceedings will not matter, in and of itself. 180 The case of Bruce v LM Investment Management Ltd (No 2) is one example where such legal costs were found not to have been reasonably incurred. Dalton J considered the construction of s 601GA(2)(b) and, in particular, the meaning of the word "proper". Her Honour stated (at [28]-[30]): 28. The words of s 601GA(2)(b) very much reflect the common law formulation of costs being recovered when they are "proper", or "not improper" - see Lindley LJ in Re Beddoe. Costs will be improperly incurred if they are in furtherance of the trustee's own interests rather than in furtherance of the interests of the members: Miller v Cameron. In Adsett v Berlouis the Full Court of the Federal Court said, "In this context, [of a trustee's indemnity] 'properly' means work reasonably and bona fide undertaken for the purpose of administering the estate or performing any public duty imposed by the [Bankruptcy Act], conformably with the trustee's duty to perform the work with reasonable care and skill and in an efficient and economic way." 29. In examining the propriety or otherwise of a trustee's conduct it is relevant to have regard to the nature of the trust, and trustee, in question. See for example the Full Court in Adsett at the paragraph beginning, "A number of observations must be made about these submissions." The Court examined the nature and obligations attaching to a trustee appointed to a bankrupt estate, contrasting that, for example, with the duties of a gratuitous trustee, and referring to the public nature of the duty of a trustee in bankruptcy. 30. In my opinion, the administrators of the first respondent occupied a position of trust which was distinct from a traditional trustee at general law because first, the trust of which the responsible entity was trustee was established by the Corporations Act in respect of a managed investment scheme that was essentially a vehicle for commercial investment; second, because the responsible entity was well‐remunerated for its skill in performing the duties which amounted to performing the trust, and thirdly, because the administrators appointed to this responsible entity trustee were appointed to a fund which was financially stricken and which is now being wound up. In Adsett the Court referred to the general law duty that a trustee has to exercise judgment so as to save the estate unnecessary expenditure of money and, in terms of the role of a trustee in bankruptcy, emphasised that that duty was one to administer the estate in such a manner as to maximise the return from estate assets. In my view that is very much applicable to the current case. The FMIF differs from many other failed investment schemes in that there does remain a large surplus of assets to be administered. The administrators of the trustee responsible entity here should have squarely understood that their role was to maximise the amount of assets available to investors and creditors. Instead I found that, "the conduct of the first respondent in this litigation was combative and partisan in a way which I see as reflective of the administrators acting in their own interests to keep control of the winding-up of the FMIF, rather than acting in the interests of the members."… (Emphasis added, citations omitted). 181 In Adsett v Berlouis (1992) 37 FCR 201 (at 213 per Northrop, Wilcox and Cooper JJ), the Full Court, in the context of an application by a bankrupt for the costs of proceedings against his trustee, stated (at 213): If Mr Adsett thought the application unmeritorious, he was justified in his initial decision to resist it. On that hypothesis, any costs incurred by him prior to the creditors' meeting were reasonably incurred. But these costs must have been minimal. And, whatever the position before the meeting, the decisions at that meeting ought to have changed the trustee's attitude. The composition had been approved, so there was a substantial prospect of an early termination of the bankruptcies. Even more importantly, the creditors had voted decisively in favour of the trustee's removal from office. Except in the most unusual of circumstances - as, for example, where there is a question about the conduct or representativeness of the vote - a trustee who has lost the confidence of the majority of creditors ought not to cling to office, but make way for someone else. For a trustee to involve the estate in litigation about his or her past performance … is to incur unnecessary expense. 182 Distilling these authorities, the primary consideration in assessing whether legal costs were properly incurred is whether the relevant proceedings were likely to benefit the members of the investment management scheme: see Park & Muller (liquidators of LM Investment Management Ltd) v Whyte No 3 [2017] QSC 230; [2018] 2 Qd R 475 (at 496 [79] per Jackson J). It is therefore necessary to assess whether the defence or prosecution of each of the proceedings was in the interests of the trust and for the benefit of the members.

Support of the unitholders 183 In response to the legal costs incurred by Guardian in each of the proceedings, the QB4 Parties make an overarching submission that the cause for the extensive litigation was, at its core, because Guardian had lost the support of unitholders and "clung" to office. For this reason, the legal costs in each proceeding are said to have not been properly incurred: see Adsett. 184 First, unlike the circumstance in Adsett, there is no persuasive evidence before me that Guardian had lost the support of all unitholders in defending and prosecuting these proceedings. Indeed, there has not been a vote by unitholders indicating a loss of confidence in Guardian. Although the affidavit of Mr Mackay sworn on 17 June 2021 indicates that consent letters were provided by a majority of the unitholders seeking the appointment of QB4CAM - an entity of which Mr Mackay is a director - as trustee of FT2, that evidence came very late in the proceedings and is not indicative of the propriety of Guardian incurring legal costs in defending the proceedings up until 17 June 2021. 185 Secondly, in the context of the contention that Guardian had "clung" to office, it is appropriate to have regard to a letter sent to the QB4 Parties' solicitor on 11 May 2020, in which the lawyers for the Guardian Parties confirmed that Guardian was content to retire as responsible entity of the ELF and PIF. That letter set out a proposed resolution of the dispute, which included the effective separation of the ELF and PIF from the TGIF by means of the unitholders of the ELF and PIF signing a deed consenting to the retirement of Guardian as the responsible entity of the ELF and PIF, subject to a suitable mechanism for that to occur: see Maarbani Affidavit 9 April 2021 (at [42]). 186 Thirdly, the somewhat selective disclosure that was made to the unitholders in procuring those consent letters is less than helpful. For instance, no alternative to the proposal put forward to the unitholders of the ELF by Mr Wong, such as winding up the fund or appointing a new independent trustee. Nor were the comparative advantages and disadvantages of alternative proposals described to the ELF unitholders. Under cross-examination, Mr Wong stated (at T396.31-38; T397.6-397.10): [MR LIVINGSTON]: you chose not to put that alternative to the [ELF] unitholders, didn't you, Mr Wong?---Yes. Yes, I chose that because this is the fastest way. They are related to us. They know us intimately. They know me, right? They know their investment was stopped and they need a fast way out of this. So having a - they have this sell licence to look after the trust is - they're content with that because there's no need for them to introduce or for me to introduce another third party, unknown vehicle, unknown entity, to them. So, naturally, yes, it's - it's the only choice I will give to them. … And can I just put this to you. You have not put before ELF unitholders the alternative possibility of the ELF fund being wound up or liquidated, have you?---No. And that was a choice that you made; correct?---Yes, to some extent. 187 In any event, the issue of whether Guardian has "clung" to office was not one of the specific agreed issues and was raised towards the end of these proceedings. I do not consider it necessary to the resolution of the issues framed by the parties to deal with it in terms and I would not regard it as an important discretionary consideration when it comes to dealing with costs in any event.

The Pre-action Relief Application and the Principal Proceeding 188 The costs incurred in the Pre-action Relief Application and the Principal Proceeding include the Legal Invoices charged by CE Lawyers and AG Edwards, among others. 189 Although the invoices charged by CE Lawyers were outside the scope of the Second Receivers' Report, the Receivers engaged Global Billing for the purpose of assessing the reasonableness of the costs paid to AG Edwards. In considering the reasonableness of the legal fees charged by AG Edwards, Global Billing state in their report (at [5.1]) that they did not include allowances for the following issues or work claimed by AG Edwards: (a) Duplicated costs associated with multiple Lawyers or staff undertaking the same work (including working on the same documents, where it was not reasonable to do so); (b) Internal conferencing between Lawyers of AG Edwards Solicitors conferring and providing an update in relation to the proceedings and the work to be performed; (c) Excessive preparation fees charged by Counsel in circumstances where charging preparation fees (to the extent charged) is unreasonable; (d) Unnecessary and unreasonable communication between Counsel and AG Edwards Solicitors (as a result of piecemeal communication and conduct of the proceedings); and (e) Duplicated costs associated with more than one (1) Lawyer attending for telephone conferences and/or conferences with the Client, Counsel, and other parties in circumstances where it was a luxury for two (2) Solicitors to be involved. 190 On the basis of these issues, Global Billing provided a summary of the amounts they considered to be unreasonable in respect of each of the AG Edwards invoices, which was adopted by the Receivers (at [7.1.3]). A simplified version of that table is as follows. Invoice No. Date Amount (inc GST) Reduced Amount Professional Fees Counsel 1216 17/04/2020 $38,859.70 $2,845.25 $3,773.00 1232 06/05/2020 $67,883.32 $8,720.25 $1,925.00 1259 16/06/2020 $60,580.67 $6,484.50 Nil 1290 28/07/2020 $2,618.00 Nil Nil $18,050.00 $5,698.00 Total $169,941.69 $146,193.69

191 Given the extensive review conducted in the Second Receivers' Reports, particularly the review undertaken by Global Billing, I find that it is appropriate that amounts of the AG Edwards invoices be reduced in accordance with these findings. 192 The QB4 Parties sought to characterise Guardian's defence of the Principal Proceeding as only serving to defend itself from allegations of misconduct or wrongdoing, rather than furthering the interests of the unitholders. With respect, this is not an entirely apt characterisation. 193 In the Principal Proceeding, the QB4 Parties had, prior to the filing of the 4FASOC on 29 June 2021, sought relief which went to the heart of the future management of the ELF and PIF. Although I recognise that an aspect of this proceeding involved Guardian defending claims relating to its own right of indemnity, this was merely one aspect of the proceeding, which later became more substantial as the proceeding continued, in particular, following the appointment of the Receivers. Accordingly, it seems to me that Guardian acted reasonably in responding to the initial claims brought by the QB4 Parties and is entitled to rely on its right of indemnity in doing so. 194 The same cannot be said, however, for the expenses incurred following Guardian's default under the Settlement Deed. The Guardian Parties submit that it is highly doubtful whether, irrespective of the payment or non-payment by Guardian under cl 6.3(b), the resolution embodied in the Settlement Deed would have been affected. 195 In support of this contention, the following events are relied upon: (1) By letter dated 28 October 2020, the lawyers for Guardian indicated that they expected the legal fees would be repaid by 9 November 2020. (2) From at least 1 November 2020, QB4 was in breach of the Settlement Deed in that it: (a) failed to obtain a valuation of the Yamanto land for the purposes of, and as required by, cl 4.3 of the Settlement Deed; (b) failed to nominate a purchaser for the Yamanto land for the purposes of, and as required by, cl 4.4 of the Settlement Deed; and (c) failed to obtain releases from unitholders of the PIF and ELF in favour of Guardian for the purposes of, and as required by, cl 8.1(a) of the Settlement Deed. (3) By 4 November 2020, Guardian was concerned that QB4 had not complied with the requirements of the Settlement Deed or would be unable to perform its obligations in a timely way. On 4 November 2020, Mr Maarbani sent an email suggesting that the parties consider extending the dates for the completion of the steps contemplated by the Settlement Deed, in view of apparent delays. (4) Mr Mackay (in answer to a question from the Court) was unable to identify any specific reason for rejecting Mr Maarbani's practical suggestion: (T367.27-37). Nor could Mr Wong: T401.39-46. (5) Instead of engaging with Mr Maarbani's suggestion, on 13 November 2020, QB4 proceeded to serve a notice terminating the Settlement Deed. 196 The crux of this submission is that in the absence of agreement between the parties to amend the Settlement Deed so as to extend the dates for performance by each party of their respective obligations thereunder, there was a high likelihood that the proceedings would be re-enlivened regardless of whether or not Guardian reimbursed the legal costs under cl 6.3(b). 197 This submission must be rejected. First, the claim that the QB4 Parties were in breach of the Settlement Deed as of 1 November 2021 is not accurate. There was no obligation upon QB4 to obtain releases from the unitholders by a certain time. Clause 8.1(a) of the Settlement Deed required QB4 to use its "best endeavours" to obtain or provide a release from all the ELF and PIF unitholders with regard to the "Claims the subject of the Matter". Clause 8.1(b) stated that, to the extent that such release cannot be obtained or provided, QB4 and its directors were to indemnify the Guardian Parties. Further, QB4 had not failed to take steps to value the Yamanto land. Clause 4.3 of the Settlement Deed provides: The market price is to be as determined by a Certified Practising Valuer nominated and paid for by QB4 Capital and instructed in accordance with the existing valuation protocol within 30 days of the date of this Deed. 198 It is admittedly unclear whether the stipulated period of "within 30 days of the date of this Deed" applies to the time at which the market price was to be determined or to the relative clause stipulating the giving of instructions by QB4 to the valuer. At the time of the breach, QB4 had instructed the valuer in accordance with the Settlement Deed, but had not yet obtained a valuation: T363.14-18. 199 In any event, the submission is not to the point. Whether or not there was a likelihood that the proceedings would be re-enlivened even if Guardian had reimbursed the legal costs under cl 6.3(b) is irrelevant. The circumstances justifying and warranting the termination of the Settlement Deed by the QB4 Parties arose directly from the decision of Guardian not to make the payment it was obliged to make under cl 6.3(b). As the cross-examination of Mr Maarbani at the hearing revealed, Mr Maarbani caused the Guardian Parties to be in default under the Settlement Deed, notwithstanding the consequences of that inaction on the settlement (T63.1-36): [MR F. DOUGLAS:] But in actual fact, you entered into a settlement to do that and you deliberately canned it?---We canned it. Are you sure? … Do you deny that you canned it?---Yes. Right. Because you said to me on a previous occasion … that you had the money to meet your obligations under the contract, but you had decided, for commercial reasons, not to proceed?---Yes, but who terminated the settlement deed? HIS HONOUR: Mr Maarbani, if you could just understand listen to the question and respond to it. As I understood your evidence on the last occasion - please correct me if I'm wrong. I understood the position was a commercial decision was taken not to pay the amount that was payable pursuant to the terms of the agreement?---That's correct. Thus, putting you in breach?---That's correct. Right. And I think what you're trying to say in respect of your last answer is that you were in breach, but the other party in the agreement is the one that took the steps to accept that breach and proceed to terminate the deed?---Yes. The only thing I would add to that is we offered an opportunity to meet and discuss an extension to all the timeframes, which was rejected. So we didn't can it. We were quite happy to continue with the settlement deed. It was canned by QB4, and that's an important nuance. 200 Guardian had available to it the money to comply with that obligation; however, Mr Maarbani chose not to cause it to make the payments and instead sought an extension of time within which to comply with the obligations under the Settlement Deed. It is difficult to view this as anything other than a conscious and intentional decision to breach the Settlement Deed and allow disputation to continue. 201 On any view, the legal costs incurred in the proceedings that arose from the date of the termination of the Settlement Deed cannot be said to have been reasonably incurred in the interests of the trust. In any event, I consider the conduct identified above to be contrary to the facilitation of the overarching purpose and, in the broad exercise of my discretion as to costs, Guardian should not be entitled to its costs (or be able to rely on its right of indemnity to be reimbursed for its costs) incurred from 13 November 2020.

The Judicial Advice Proceeding 202 In May 2020, Mr Maarbani instructed CE Lawyers to prepare the necessary documentation to commence a judicial advice application in respect of the Guardian Parties' defence, and prosecution, of the proceedings in this Court. 203 The application for judicial advice was filed in this Court on 23 July 2020 and designated as proceeding QUD 226 of 2020. In the application, Guardian and Fundus sought judicial advice as to whether they were justified in defending the Principal Proceeding and commencing their own cross-claims, as well as whether it was entitled to rely on its rights of indemnity in relation to its legal costs incurred in the proceedings in this Court. 204 On 4 September 2020, however, in the light of ongoing settlement negotiations, the proceeding was adjourned by consent to a date to be fixed. Ultimately, it was never pursued. 205 Mr Maarbani states that his rationale for pursuing the Judicial Advice Proceeding was as follows (Maarbani Affidavit 9 April 2021 (at [54]-[62])): 54. After the Urgent Application was made, I engaged lawyers to represent the Guardian Parties in relation to the Urgent Application, [the Principal Proceeding] and other related proceedings and accordingly the Guardian Parties started to incur legal costs. 55. Under clauses 22.1 and 23.7 of the TGIF Constitution dated 22 May 2019, Guardian has a right to indemnity in respect of expenses incurred in the performance of its role as RE. A right of indemnity in respect of the ELF is contained in clause 12.4 of the ELF Constitution and a right of indemnity in respect of the ELF [sic] is contained in clause 12.4 of the PIF Constitution. 56. Accordingly, I took the view that Guardian had a right to be indemnified from the ELF and the PIF for the legal expenses incurred by Guardian in relation to the Urgent Application, [the Principal Proceeding] and other related proceedings. 57. In May 2020, I instructed CE Lawyers to prepare the necessary documentation to commence a judicial advice application seeking advice in respect of the Guardian Parties' defence of these proceedings and NSD 415 of 2020. 58. As I have explained … in the period from May 2020 to July 2020, the parties were engaged in without prejudice communications with a view to resolving the proceedings. 59. While I was conscious to progress the preparation of the judicial advice application during this period, I did not consider it to be a priority, because I was hopeful that a negotiated resolution of the proceedings could be reached. I believed that, if such a resolution could be achieved, the interests of unitholders would best be served by minimising expenditure in seeking judicial advice. 60. As I have explained at paragraph 48 above, by around 19 July 2020 I had formed the view that it was unlikely a commercial resolution of the proceedings could be reached. As I then expected Guardian would not be able to avoid the need to defend the proceedings, the application for judicial advice (Judicial Advice Application) was filed on 23 July 2020 and designated as proceedings QUD 226 of 2020. 61. On 13 August 2020, the court made orders requiring the parties to attend a further mediation by 30 September 2020 and for Guardian to file a Defence. The Defence was filed on 25 August 2020. 62. On 4 September 2020, the Judicial Advice Application was adjourned by consent to a date to be fixed. I considered that was appropriate given there was a significant potential that the proceedings may settle at the mediation. Again, I considered that it was in the best interests of unitholders for the parties to seek a commercial resolution of the proceedings before further costs were incurred in prosecuting the Judicial Advice Application. 206 The rationale for a trustee to obtain judicial advice as to litigation involving the trust is explained in Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; (2008) 237 CLR 66 (at 92 [67], 93-94 [71]-[72], [74] per Gummow ACJ, Kirby, Hayne, Heydon JJ): 67. … Where there is a non-charitable private trust involving a conflict between beneficiaries, or between beneficiaries alleging a breach of trust out of which a trustee has profited and that trustee, and where the defendants in those proceedings have a personal capacity to fund the defence, it might not be correct to give the trustee an opinion, advice or direction. … … 71. In short, provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee's duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee's fear of personal liability for costs. 72. It is, therefore, not right to see a trustee's application for judicial advice about whether to sue or defend proceedings as directed only to the personal protection of the trustee. Proceedings for judicial advice have another and no less important purpose of protecting the interests of the trust. … 74. A necessary consequence of the provisions of s 63 of the Act is that a trustee who is sued should take no step in defence of the suit without first obtaining judicial advice about whether it is proper to defend the proceedings. In deciding that question a judge must determine whether, on the material then available, it would be proper for the trustee to defend the proceedings. But deciding whether it would be proper for a trustee to defend proceedings instituted about the trust is radically different from deciding the issues that are to be agitated in the principal proceeding. The two steps are not to be elided. In particular, the judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings. 207 I have already accepted that the Principal Proceeding, and therefore, the Judicial Advice Proceeding, raised issues beyond Guardian's right to indemnity and alleged breaches of trust. Further, I accept that, the fact that the Judicial Advice Proceeding was adjourned in the light of pending settlement negotiations, which ultimately led to the Settlement Deed being agreed between the parties, does not imply that, at the time it was commenced, it did not represent a reasonable step by Guardian. The fact that the proceeding was unsuccessful does not foreclose the answer to the question of whether the legal costs were properly incurred: see Whyte No 3 (at [72] per Jackson J). Although there remain real questions as to whether the application was necessary, doing the best I can, I accept that some of the costs incurred by Guardian were reasonable and proper. 208 For the above reasons, it is appropriate for Guardian to be indemnified from the TGIF, but only to the extent of 50 per cent of its costs of, and incidental to, the Judicial Advice Proceeding.

The Queensland District Court Proceeding and the Legal Costs Proceeding 209 The Queensland District Court Proceeding was a costs assessment proceeding commenced by CE Lawyers against Guardian on 2 February 2021 in respect of their outstanding legal fees. The reason for defending these proceedings was that Mr Maarbani believed: (1) that Guardian had the benefit of indemnity from the ELF and PIF in respect of those fees; and (2) that the fees charged by CE Lawyers were excessive for the work performed: Maarbani Affidavit 19 April 2021 (at [23]-[28]). Accordingly, the defence of the District Court Proceeding and the prosecution of a costs assessment application filed in the Queensland District Court are said to be steps that a reasonable trustee would prudently take in the circumstances. 210 The Guardian Parties submit that, if Guardian is entitled to recover the amounts payable to CE Lawyers from the assets of the ELF and/or PIF, it is also entitled to recover the costs of the defence of the Queensland District Court Proceeding. I do not agree. Whether or not legal costs were incurred in connexion with the TGIF does not mean that fees incurred in pursuit of those funds were properly incurred in connexion with the TGIF. 211 These fees were not properly incurred in connexion with the trust at all. The proceeding was wholly misconceived and directed to defending the Guardian Parties' obligations under the Costs Agreement, and Guardian relying on its rights of indemnity to be paid out of the trust. The proceeding was not for the benefit of the beneficiaries under the TGIF. Furthermore, given that Guardian's right of indemnity was the subject of dispute in the Principal Proceeding, it was both unnecessary and imprudent to litigate in the District Court. Guardian is not entitled to be indemnified for the costs incurred in the Queensland District Court Proceeding or the Legal Costs Proceeding.

The VentureCrowd Group 212 The Guardian Parties, specifically, the VentureCrowd Group, lastly claim that the costs of the VentureCrowd Group should be considered as costs properly incurred by Guardian in its capacity as responsible entity of the ELF and PIF and similarly indemnified. The VentureCrowd Group were joined to the Principal Proceeding by the QB4 Parties, presumably on the footing that they were considered necessary parties. The relief sought against them was (at best) ancillary to the relief which was sought in respect of Fundus. The QB4 Parties have not asserted any separate entitlement to relief against the VentureCrowd Group in that proceeding. In circumstances where they have been joined as necessary parties, Guardian claims that, if it is entitled to be indemnified in respect of its costs of the proceedings, the costs of the VentureCrowd Group should be considered as costs properly incurred by Guardian in its capacity as responsible entity of the ELF and PIF and be similarly indemnified. 213 For the reasons stated above, I have found that Guardian may not rely on its right of indemnity in relation to some of the costs claimed. Nevertheless, I see no reason why the VentureCrowd Group would be entitled to be indemnified out of the trust for any of the costs incurred in relation to those proceedings.

F SETTLEMENT DEED REPAYMENTS 214 The First Cross-Claim includes a claim by Guardian regarding the payments made under the Settlement Deed executed on 1 October 2020. As I have previously indicated, the Settlement Deed provided for the settlement and discontinuation of these proceedings upon the terms of the deed being performed. This did not occur. Guardian now seeks an order for QB4 to repay the Settlement Payments made under that deed.

F1. Is there a liability in contract to repay the amounts under cl 10.1 of the Settlement Deed? 215 This aspect of Guardian's cross-claim is said to involve a "relatively straightforward" contractual claim. They point to cl 10 of the Settlement Deed (default clause), which provides: 10. Default 10.1 Subject to the following dates being varied as agreed by the parties modifying this Deed in accordance with clause 16.3, in the evidence that: (a) the payments mentioned in clause 5.1 are not paid by 1 October 2020; (b) the Respondents, on and from the date of this deed, have recourse to the funds of the ELF and the PIF Unit Classes (or the funds of FT1 or FT2) despite clause 6.3(a) but excluding any payment made in accordance with clause 4.5, 4.6(d), 4.10 and 6.4 (subject to any agreement or order to the contrary); (c) any legal fees required to be reimbursed by clause 6.3(b) are not reimbursed and paid by 9 October 2020; (d) the non-cash PIF assets are not converted to cash in the manner prescribed in clause 4.6 by 17 November 2020; (e) the Yamanto Property and the Lawnton property are not sold by 16 January 2021; (f) the redemption requests mentioned in clauses 5.4 and 5.5 are not paid in accordance with the PDS within 21 days of them being properly made by all unitholders of PIF and ELF; this Deed shall come to an end and the Parties may continue with their Rights as if this Deed had not existed, including that the releases and indemnities given in clause 8.1, 8.7 and 9.3 shall not apply. (Emphasis added). 216 "Right" is defined in cl 1.1 of the Settlement Deed to include any legal, equitable, contractual, statutory or other right, power, authority, benefit, privilege, immunity, remedy, discretion or cause of action. 217 The division between the parties concerns two issues: the first is the proper construction of cl 10.1 of the Settlement Deed and its application to the parties' rights following the termination of the Settlement Deed; and the second is the extent to which cl 10.1 applies to those rights. 218 As for the first issue, QB4 contends that, upon the proper construction of cl 10, the effect of a default clause is prospective only: it does not restore the parties to the position they occupied as if the Settlement Deed had not existed. I agree that the effect of the default clause is not to treat the Settlement Deed as if it had never existed. This is made clear by the prospective words of cl 10.1: "this Deed shall come to an end"; and "the Parties may continue with their Rights as if this Deed had not existed" (emphasis added). However, the construction proffered by Guardian does not envisage the clause to have the effect that the Settlement Deed is taken to have never existed. There must be caution in taking words to this effect literally. In this respect, the observations of Giles CJ Comm D in FAI General Insurance Co Ltd v Ocean Marine Mutual Protection & Indemnity Association Ltd (1997) 41 NSWLR 559 (at 563-564) are to the point: Sometimes words are used to the effect that a contract avoided ab initio is taken never to have existed. … The words are sufficient for most purposes, but they should not be taken literally. Neither rescission by a party nor a judge's say so can turn the clock back to have that literal effect, and a contract avoided ab initio is not in Newspeak an uncontract. There was a contract, and there cannot be avoidance ab initio unless the avoiding party is in a position to restore the other party to the pre-contractual position, at law with some exactitude but in equity by substantial restoration with allowances: see Alati v Kruger (1955) 94 CLR 216 at 223-224. Avoidance ab initio means that the parties are to be restored substantially to the positions they would have been in had there not been a contract, but it remains that there was a contract. 219 A similar logic applies to cl 10.1. Upon its true construction, the occurrence of any of the circumstances itemised in cl 10.1(a)-(f) re-enlivens any right of a party which was compromised by the deed to its fullest extent, as it would have existed but for the Settlement Deed. Conversely, any right conferred by the Settlement Deed would no longer exist for the benefit of any party. The language of the Settlement Deed is prospective, as the relevant rights are being prospectively restored, rather than retrospectively re-enlivened. The default clause thus operates so that, upon the deed coming to an end, any benefit conferred by the Settlement Deed, including any right QB4 had to the Settlement Payments, is restored substantially to the position in which the parties would have been had the Settlement Deed not been executed; that is, the benefit conferred by the payments made to QB4 (via their solicitor) under cl 5.1 was no longer a benefit to which QB4 had any right under the Settlement Deed. 220 As for the second issue, QB4 submits that the rights to the Settlement Payments are, in essence, severable and are therefore not "undone" by the Settlement Deed's termination. Clause 6.1 made the QB4 Parties' consent to the vacation of the then-pending trial dates subject to Guardian's payment of the Settlement Payments. Upon Guardian's payment of the Settlement Payments to QB4, the QB4 Parties proffered consent orders "to vacate the trial dates (and associated programming orders)". Clauses 6.1 and 6.2 of the Settlement Deed draw a distinction between the vacation of the existing trial dates, and the dismissal of the entire proceeding. On this construction, those clauses are said to make clear that the Settlement Payments were in exchange for the vacation of the trial dates. Those promises are both wholly executed. Accordingly, QB4 claims that they are not to be undone by the termination given the Settlement Payments were expressly made the "price" for that consent. 221 The applicable principle is said to be that stated in Larratt v Bankers & Traders Insurance Co Ltd (1941) 41 SR (NSW) 215 (at 225-226 per Jordan CJ): Where [a contract] is avoided by virtue of an express right of avoidance, the consequences which flow from an avoidance depend on the intention of the parties, actual or imputed, and, in the absence of some express or implied indication of an intention to the contrary, are governed by the ordinary law applicable to the avoidance of contracts for breaches of essential promises. (Citation omitted). 222 This construction is unconvincing. Upon the proper construction, cll 6.1 and 6.2 are machinery clauses specifying the timing of events upon which the terms of the Settlement Deed were to be performed. Clause 6.1 is not expressed as being given in exchange for the payments under cl 5.1. The word "following" does not entail any quid pro quo. It is wrong to suggest that, because cl 6.1 requires the vacating of trial dates to follow the Settlement Payments, the Settlement Payments were therefore "expressly the price for that consent". It would be odd to interpret the word "following" as indicating that the "price" for the parties consenting to vacate the hearing dates was that Guardian would make payments to QB4 in excess of $1.5 million. No such intention is apparent from the terms of the Settlement Deed. 223 The better view is that the Settlement Deed does not contain a mechanism that obligates QB4 to repay amounts to Guardian; that is, Guardian does not have a cause of action in contract that would give it the right to be repaid the Settlement Payments. The Settlement Deed does not contain a mechanism to restore the status quo ante that would give Guardian the right to be repaid the Settlement Payments. Rather, the default clause simply restores the parties' rights as they were before the Settlement Deed was executed. No common law claim in contract exists and accordingly, it is necessary to consider Guardian's alternative claim for restitutionary relief in relation to the Settlement Payments.

F2. Is Guardian entitled to restitutionary relief? 224 Guardian's claim for restitutionary relief is premised on the notion that it would be contrary to conscience for QB4 to retain the payments it received under the Settlement Deed, either because there has been a total failure of consideration or because those payments were made under a mistake of fact or law, namely that the Settlement Deed would remain on foot for the benefit of Guardian. 225 It is convenient to outline briefly the applicable principles as to restitutionary relief and unjust enrichment. A two-stage analysis is to be applied: first, the identification of an unjust, qualifying or vitiating factor that causes enrichment such as mistake or failure of consideration; and secondly, consideration of the recipient's entitlement to retain the enrichment (including whether any "defences" are available, such as change of position): Roxborough v Rothmans of Pall Mall Australia Limited [2001] HCA 68; (2001) 208 CLR 516 (at 527 [20] per Gleeson CJ, Gaudron and Hayne JJ). 226 In Australian Financial Services and Leasing Pty Limited v Hills Industries Limited [2014] HCA 14; (2014) 253 CLR 560, Hayne, Crennan, Kiefel, Bell and Keane JJ outlined (at 596-597 [78]) that the relevant enquiry "in Australia is directed to who should properly bear the loss and why" with that enquiry being "conducted by reference to equitable principles". It is no objection to restitution on the ground of total failure of the agreed return that the contract was discharged for the plaintiff-payer's breach: Mason K, Carter J and Tolhurst G, Mason and Carter's Restitution Law in Australia (4th ed, Butterworths, 2021) (at [1125]). As Dixon J outlined in McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457 (at 478, with whom Rich J agreed at 467, and McTiernan J agreed at 486), it is "now beyond question that instalments already paid may be recovered by a defaulting purchaser when the vendor elects to discharge the contract".

Failure of consideration 227 With regards to Guardian's submission that there has been a "total" failure of consideration, QB4 advances a number of submissions across a wide front. For the reasons that follow, I am satisfied that there has been a failure of consideration. 228 First, it is contended that cl 6.1 of the Settlement Deed expressly nominated the QB4 Parties' consent to the vacation of then-extant trial dates as the "agreed return" for the Settlement Payments. Baltic Shipping Co v Dillon (1993) 176 CLR 344 was relied upon to support this assertion, in which Mason CJ stated (at 351, with whom Brennan J agreed at 367, and Toohey J agreed at 383): [T]he receipt and retention by the plaintiff of any part of the bargained-for benefit will preclude recovery, unless the contract otherwise provides or the circumstances give rise to a fresh contract. 229 One must approach the references to a "total" failure of consideration with some caution. Searching for some aspect of bargain, however minor, that might be said to be performed and then asserting that, as a consequence, there is no relevant vitiating factor is a common approach adopted by those resisting restitutionary claims. But as James Edelman (as his Honour then was) explained in 'The New Doctrine of Partial Failure of Consideration' (1996) 15 Aust Bar Rev 229 (at 233): The traditional requirement in the doctrine of failure of consideration, considered above, was that the failure be total. That is, the defendant must completely fail to confer any of the "bargained for benefit" on the plaintiff. This requirement that a failure be total was based in the principle that it was against "natural justice and equity" for a defendant to retain a benefit conferred without conferring any counterperformance on the plaintiff. Some commentators in this area continue to refer to the doctrine as "total failure of consideration". However, this phrase is misleading. A failure of consideration need not always be total; there are clearly recognised exceptions to this requirement and the movement of the law in the last 10 years is clearly toward recognition of a universal doctrine of partial failure of consideration. Hence, the doctrine is referred to as simply failure of consideration. (Citations omitted). 230 The seminal cases as to this area of the law, along with their application, were canvassed in Rover International Ltd Cannon Film Ltd [1989] 3 All ER 423 (at 433-434 per Kerr LJ); cited with approval in Australia and New Zealand Banking Group Ltd v Londish [2013] NSWSC 1423 (at [25] per Hall J): In Rowland v Divall [1923] 2 KB 500, [1923] All ER Rep 270 the plaintiff bought a car from the defendants. He had the use of it for several months but then discovered that the seller had no title, with the result that he had to surrender the car to the true owner. He sued for the return of the price on the ground that there had been a total failure of consideration. The defendant denied this, pointing out that the plaintiff had had the use of the car for a substantial time. This contention succeeded at first instance, leaving the plaintiff only with a claim for damages, but this court unanimously upheld the plaintiff's claim. The consideration for which he had bargained was lawful possession of the car and a good title to it, neither of which he got. Although the car had been delivered to him pursuant to the contract and he had had its use and enjoyment for a considerable time, there was a total failure of consideration because he had not got any part of what he had bargained for. The decision of Finnemore J in Warman v Southern Counties Car Finance Corp Ltd (W J Ameris Car Sales, third party)[1949] 1 All ER 711, [1949] 2 KB 576 was to the same effect. The plaintiff was buying a car on hire purchase when he became aware that a third party was claiming to be the true owner of the car. But he nevertheless went on paying the remaining instalments and then the necessary nominal sum to exercise his option to purchase. When the true owner then claimed the car he surrendered it and sued the finance company for the return of everything he had paid. He succeeded on the ground that there had been a total failure of consideration. He had not bargained for having the use of the car without the option to purchase it. The position of Rover in the present case is a fortiori to these cases. Admittedly, as the judge said, they had several films from the respondents. But the possession of the films was merely incidental to the performance of the contract in the sense that it enabled Rover/Monitor to render services in relation to the films by dubbing them, preparing them for release on the Italian market and releasing them. These were onerous incidents associated with the delivery of the films to them. And delivery and possession were not what Rover had bargained for. The relevant bargain, at any rate for present purposes, was the opportunity to earn a substantial share of the gross receipts pursuant to cl 6 of the schedule to the agreement, with the certainty of at least breaking even by recouping their advance. Due to the invalidity of the agreement Rover got nothing of what they had bargained for, and there was clearly a total failure of consideration. This equally disposes of counsel for the respondents' ingenious attempt to convert his concession of a quantum meruit, in particular the element of reasonable remuneration, into consideration in any relevant sense. Rover did not bargain for a quantum meruit, but for the benefits which might flow from cl 6 of the schedule. That is the short answer to this point. It follows that in my view Rover's claim for the repayment of the five instalments of the advance totalling $US312,500 succeeds on the basis of a total failure of consideration. 231 For the reasons stated above, the QB4 Parties' consent cannot be seen as an "agreed return" for the Settlement Payments. Such consent was merely a machinery clause specifying the timing of events. Furthermore, such a clause was necessary to allow for the terms of the Settlement Deed to be performed without the proceedings progressing to a hearing which would have been rendered unnecessary upon the performance of those terms. The consent to vacate the hearing dates is, therefore, to be seen as the parties performing their obligations under s 37M of the FCAA. Any benefit that flowed from the QB4 Parties' consent to the vacation of the hearing dates was purely incidental to the Settlement Deed, which was executed in order for the proceedings to be dismissed. 232 Secondly, in the alternative, QB4 submits that Guardian nonetheless had received and retained the benefit of that consideration, being the dismissal of the proceedings, by reason of the orders I made on 2 October 2020. Those orders are, relevantly, as follows: 2. The proceeding be dismissed. 3. Order 2 is not to take effect until 18 January 2021 and liberty is reserved to the parties to relist the proceeding on notice to the Associate to Justice Lee, provided such liberty is exercised prior to 17 January 2021. 233 Those orders were self-executing and, by reason of Order 3, did not take effect until 18 January 2021, being the date upon which it was estimated that the terms of the Settlement Deed were to be completed. To suggest that this provided any consideration for the Settlement Payments is unpersuasive. 234 Thirdly, QB4 relies on DFCT v Hadidi (1994) 51 FCR 453 for the proposition that consideration executed under a settlement agreement that had been discharged from the other party's breach is not held on trust or in escrow to make it liable to be repaid to the defaulting party, citing Dixon J's observations in McDonald v Dennys Lascelles Ltd (at 477): Rights and obligations which arise from the partial execution of the contract and causes of action which have accrued from its breach alike continue unaffected. … [w]hen a contract, which is not void or voidable at law, or liable to be set aside in equity, is dissolved at the election of one party because the other has not observed an essential condition or has committed a breach going to its root, the contract is determined so far as it is executory only and the party in default is liable for damages for its breach. 235 However, these authorities are not apposite to the current circumstances. The Settlement Deed provides that the rights and obligations that have been performed are to be treated as if the Settlement Deed had not existed. This is unlike a contract that is not void or voidable at law, or liable to be set aside in equity, such that it is to be determined so far as it is executory only. 236 I am satisfied that a vitiating factor has been identified and it is, therefore, unnecessary to go on to consider Guardian's submissions as to a mistake of law or fact.

Unjust retention 237 I will now move to consider QB4's entitlement to retain the enrichment. QB4 submits that Guardian has sought to disregard the express terms of the Settlement Deed by seeking to circumvent the risk that was allocated to them by way of the obligation to make the Settlement Payments in exchange for the QB4 Parties' consent to vacate the hearing dates. In this respect, it is said that it is impermissible for Guardian to seek now to depart from that bargain by recourse to restitution. I do not agree. To the extent that this is a repetition of QB4's submission regarding the Settlement Payments being the "express price" for the QB4 Parties' consent to vacate the hearing dates, it ought to be rejected for the reasons outlined above. In any event, the insertion of the default clause into the Settlement Deed negates any supposed intention that the parties were to bear the risks of their obligations. 238 Finally, QB4 advances a change of position "defence". Once again, this was not raised in their pleadings, and only surfaced in the QB4 Parties' written submissions towards the final days of the hearing. Understandably, counsel for the Guardian Parties raised issue with this, submitting that it would be procedurally unfair for the defence to be entertained: T458.25-26. The question of whether QB4 ought to be able to rely on a change of position defence was the subject of extensive dispute. Despite this, however, the submissions as to the defence itself are limited to the following two points (at [105]): (a) QB4 Capital paid over the Settlement Payments to its contemplated recipients in good faith on the assumption that it was entitled to deal with them; (b) QB4 Capital would be placed in a worse position if it was ordered to make restitution of the Settlement Payments than if it had not received the Settlement Payments at all. 239 Contrary to QB4's submissions, the defendant bears the onus of pleading and establishing a change of position: see David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353 (at 384 per Mason CJ, Deane, Toohey, Gaudron, McHugh JJ); Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd (at 622 [150] per Gageler J). 240 In Australian Financial Services and Leasing Pty Ltd v Hills Industries Ltd, Gageler J stated (at 625 [157]) that the "defence of change of position is established where a defendant proves the existence of two conditions." The first is that (at 625 [157]): [T]he defendant has acted (that is, done something the defendant would not otherwise have done) or refrained from acting (that is, not done something the defendant would otherwise have done) in good faith on the assumption that the defendant was entitled to deal with the payment which the defendant received. 241 The second is that (at 626 [157]): … by reason of having so acted or refrained from acting, the defendant would be placed in a worse position if ordered to make restitution of the payment than if the defendant had not received the payment at all. … It must, in every case, be shown by the defendant to be substantial. 242 To support this claim, QB4 relied on the cross-examination of Mr Mackay (T371.14-25): MR LIVINGSTON: Mr Mackay, when you terminated the settlement deed on 13 November 2020, you did so for the purpose of ensuring that QB4 could keep the $1.5 million that had been paid into the solicitors' trust account without the need for QB4 to perform its obligations under the settlement deed?---Absolutely not. If we dissect those payments, a portion of it was to go to unit holders, which it did. A portion of it was for the payment of outstanding invoices that Guardian had refused to pay to GM8, and the other portion was outstanding invoices that Guardian refused under the new leadership to pay. So it wasn't - and so, QB4 did not receive 1.5 million or whatever the number is you've chosen to pick out. Unit holders received some, a development that deliberately was stopped to function received, and some outstanding invoices were paid. There was no great payment to QB4, and it's a disgrace to even suggest that, because you know better. 243 Even if I were to consider it appropriate to allow QB4 to rely on its change of position defence, the evidence does not indicate the amount of the Settlement Payments that was ultimately retained by QB4 or whether the payments were made following the termination of the Settlement Deed. Nor is it explained how the payment of such debts leaves QB4 in a position that is worse than if the Settlement Payments had never been received. This submission was made without the support of any documentation. Given that the defence was again raised so late, it is probably unsurprising that there is insufficient evidence to be satisfied that QB4 have done something they would not otherwise have done in good faith on the assumption that they were entitled to do so, or are placed in a worse position if ordered to make restitution of the Settlement Payments than if they had not received the Settlement Payments at all. 244 It is clear from the language of the Settlement Deed that, in the event a party sought to rely on the default clause, the Parties were to continue with their Rights as if the deed had not existed. Indeed, upon informing the Guardian Parties of their election to terminate the Settlement Deed, the QB4 Parties wrote a letter stating: "QB4 Capital and the Migunovs (as defined in the Settlement Deed) elect to continue with their rights as if the Settlement Deed had not existed." Given the QB4 Parties elected to proceed on such a basis, it seems to me that it would be a most unsatisfactory outcome for them to seek to retain their benefit under the Settlement Deed when Guardian responded in kind. I am satisfied that Guardian is entitled to restitutionary relief.

G LOAN AGREEMENT 245 The final substantive issue concerns a simple debt claim by VCPA against Fundus. As stated above, on 16 November 2020, VCPA entered into a loan agreement with Fundus for the amount of $135,000 to be transferred from its bank to the trust account of CE Lawyers at the direction, and for the benefit, of Fundus with a term of 30 days. On 17 November 2020, VCPA paid the amount of $135,000 to CE Lawyers, in accordance with the Loan Agreement. That amount has not been repaid. 246 It is submitted that the loan was properly obtained by reason of Fundus' role as trustee of FT1 and FT2 in order to discharge its financial obligations incurred in that capacity, namely the payment of legal fees associated with these proceedings to CE Lawyers. Accordingly, Fundus (now subject to the management of the Receivers, who are also trustees of FT1 and FT2) ought not to be precluded from having recourse to the assets of FT1 and FT2 to satisfy this liability. 247 The QB4 Parties accept that Fundus is liable to repay the moneys advanced to it under the Loan Agreement, but contend that Fundus is personally liable. 248 Ultimately, given my findings above, this issue falls away. VCPA accepts that, to the extent that Guardian (and/or VCPA) is successful in obtaining relief in the Second Cross-Claim to the effect that it is entitled to indemnity from the assets of the ELF and/or PIF in respect of the amounts paid to CE Lawyers for the underlying invoices, it would not press this contractual claim, insofar as it would result in a potential double recovery of those fees. As I have determined that Guardian is entitled to recover its legal fees by way of indemnity, although at a discounted rate, the loan is to be taken to be discharged.

H COSTS 249 It now falls to determine the question of costs. The substantive result is a very mixed bag. The Receivers were appointed and it was necessary for litigation to be commenced for this to occur and relief was obtained to reduce amounts paid away from the TGIF; but as can be seen from the above, the Guardian Parties have had some success. However, any victory by either party is pyrrhic: the parties have all incurred substantial costs and, more importantly, the assets of FT1 and FT2 have been significantly depleted by these proceedings and the conduct of the parties in bringing them. As I stated as far back as 13 August 2020, this matter was crying out for a commercial resolution. That solution was not achieved. I cannot ignore that, on the evidence, the Guardian Parties, particularly Mr Maarbani, is responsible for these proceedings continuing because of the "commercial decision" that was made not to comply with obligations under the Settlement Deed. One thing, however, that is equally plain is that these proceedings have been hampered by the inefficient way the QB4 Parties litigated this matter. 250 For these reasons, and again adopting a broad-brush approach consistent with what I perceive to be the interests of justice, Guardian should pay 50 per cent of the QB4 Parties' legal costs in the Principal Proceeding. Further, Guardian is entitled to its costs to be paid on the ordinary basis by the QB4 Parties in respect of the application for leave to amend specified in the orders I made on 10 September 2021. It may be necessary for further consequential orders to be made to reflect this outcome given some legal costs of Guardian have already been paid. For completeness, I note that the costs in relation to the Pre-action Relief Application were ordered by Farrell J on 5 May 2020 to be costs in the Principal Proceeding, such that they do not arise for separate consideration from the Principal Proceeding. As for the Legal Costs Proceeding, each party is to bear its own costs. 251 Lastly, I do not find that the circumstances of this case warrant for Mr Maarbani, a non-party, to be personally liable for any costs in the proceedings. The relevant principles were comprehensively set out by the Full Court of the Federal Court in Dunghutti Elders Council (Aboriginal Corporation) RNTBC v Registrar of Aboriginal and Torres Strait Islander Corporations (No 4) [2012] FCAFC 50; (2012) 200 FCR 154 (at 169-171 [82]-[85], [88]-[90] per Keane CJ, Lander And Foster JJ): 82. In Kebaro Pty Ltd v Saunders [2003] FCAFC 5 the Full Court said at [103], after referring to Bischof v Adams in support of a proposition that an order for security for costs against a non-party is extraordinary: … the categories of case are not closed, although in order to warrant its exercise, a sufficiently close connection, or as Gobbo J expressed it, a "real and direct and ... material" connection with the principal litigation, must be demonstrated … 83. In FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWCA 340, Basten JA (with whom Beazley JA agreed) said at [210]: [210] … What is significant from a survey of the cases in which orders have been made against non-parties is that they tend to satisfy at least some, if not a majority, of the following criteria: (a) the unsuccessful party to the proceedings was the moving party and not the defendant; (b) the source of funds for the litigation was the non-party or its principal; (c) the conduct of the litigation was unreasonable or improper; (d) the non-party, or its principal, had an interest (not necessarily financial) which was equal to or greater than that of the party or, if financial, was a substantial interest; and (e) the unsuccessful party was insolvent or could otherwise be described as a person of straw. 84. This Court has jurisdiction to award costs against a non-party, at least in the circumstances identified by Mason CJ and Deane J in Knight v FP Special Assets Ltd. … 85. Costs have been awarded against a director of an impecunious applicant company on the basis that the director was the "real party" to the litigation: Oz B and S Pty Ltd v Elders IXL Ltd (1993) 117 ALR 128; Re Talk Finance and Insurance Services Pty Ltd [1994] 1 Qd R 558; Yates Property Corporation Pty Ltd v Boland (No 2) (1997) 147 ALR 685. … 88. The Court has power to make an order for costs against a non-party where the non-party is connected with the unsuccessful party to the proceeding, and has caused that party to start, continue or prosecute the proceeding in circumstances where the non-party's conduct makes it just and equitable that the non-party be visited with an order for costs in favour of the successful party either in addition to such an order against the unsuccessful party or in substitution for such an order. As Gobbo J said in Bischof v Adams, a statement which the Full Court has approved, the categories of cases are not closed. 89 We think that the only precondition to the exercise of power would have to be that the non-party has a sufficient connection with the unsuccessful party and the litigation to warrant the Court exercising its jurisdiction. The connection between the non-party and the unsuccessful party and the litigation must be material to the question of costs: Vestris v Cashman (1998) 72 SASR 449 at 467 per Lander J. In that case Lander J attempted to identify some of the matters to which the Court might have regard in the exercise of the Court's discretion: at 468. 90 An order for costs against a non-party is only made in exceptional circumstances: Vestris v Cashman. … 252 Although Mr Maarbani's conduct in relation to the Settlement Deed was regrettable, having regard to Dunghutti Elders Council and the authorities cited therein, in my view, Mr Maarbani's conduct does not warrant the exceptional response of an order for costs against a non-party, nor is such an order required in the interests of justice: see Knight v FP Special Assets Ltd (1992) 174 CLR 178 (at 192-193 per Mason CJ and Deane J).

I ORDERS AS TO THE TGIF 253 The final outstanding issue is what to do now with the ELF and PIF. 254 In relation to FT2, the parties accept that orders should be made for the Receivers to realise the assets of the PIF and to distribute them rateably to the unitholders of the PIF, upon completion of which the Receivers are to report to the Court and the parties. 255 Accordingly, the primary point of contention is whether the same approach ought to be adopted in respect of FT1 and the ELF. The QB4 Parties seek the appointment of QB4CAM as replacement trustee of FT1 in the place of the Receivers. Guardian submits that the assets of both the ELF and PIF ought to be realised by the Receivers and rateably distributed to the respective unitholders. 256 At the hearing, I indicated that it was appropriate to consider this issue from first principles. To my mind, those principles are encapsulated in the aphorism of Jack Lang: "In the race of life, always back self-interest; at least you know it's trying." It seems to me that the ultimate beneficiaries of FT1, being the ELF unitholders, motivated by self-interest, just want this to be resolved in the quickest, most efficient and cheapest way possible. Although the parties provided extensive submissions as to the appropriateness of QB4CAM as trustee of FT2, some of which were directed towards whether Mr Mackay was of a suitable character so as to justify the appointment (noting that Mr Mackay is not directly associated with QB4CAM), these are peripheral issues. At the end of the day, my primary concern is understanding which of those two present alternatives produces an outcome as quickly, inexpensively and efficiently as possible. 257 To my mind, given the hostility of the extensive disputes involving both FT1 and FT2, the significant costs incurred, and the financial burdens that the trust assets are likely to incur if I find otherwise, the appropriate resolution is to order the Receivers to take steps to realise the assets of both FT1 and FT2 (being assets ultimately attributable to the ELF and PIF) and to distribute the net proceeds rateably between the ELF and PIF unitholders respectively. The sale of all of the existing trust property would bring the trusts to an end as there will no longer be trust property. Accordingly, upon completion by the Receivers of the realisation and distribution, Guardian is to cancel all of the units of the ELF and PIF. 258 Part 5C.9 of the Corporations Act contains provisions relevant to the winding up of managed investment schemes. Section 601ND of the Corporations Act provides for the winding up of a scheme where the Court thinks it is "just and equitable to do so". This manifests a legislative intent that, given the nature of managed investments schemes as a distinct sub-set of trusts which are regulated by the Act, schemes are liable to be wound up on the "just and equitable" ground. Although I do not consider it appropriate to wind up the TGIF, given that Guardian has expressed that it is no longer willing to have ongoing involvement in respect of the ELF and PIF, and I do not consider that appointing a replacement trustee is appropriate in the circumstances, it seems to me that it would be just and equitable that the ELF and PIF be dissolved by realisation and distribution: see Rubicon Asset Management Ltd (admin apptd) [2009] NSWSC 1068; (2009) 77 NSWLR 96 (at 100-101 [21]-[25] per McDougall J). 259 Lastly, having fulfilled their responsibility to the Court, the Receivers seek to be discharged and contend that they should retain control of trust assets until they have paid themselves from those assets pursuant to the orders of the Court dated 5 March 2021 and 21 June 2021. This seems appropriate. The only dispute in regards to this is whether the Receivers ought to be required to apply to pre-fix their remuneration for the purposes of any such order with respect to the ELF and PIF. QB4 contends that the Court should apply its power to cap the future remuneration of the Receivers by requiring them to apply to pre-fix their remuneration: see, e.g., Freeman, in the matter of Blue Oasis Holdings Pty Ltd (In Liquidation) (No 2) [2019] FCA 118. The Receivers, however, state that their preference would be to apply retrospectively for their remuneration and expenses to be approved, rather than adopting the speculative pre-fixed approach advanced by the QB4 Parties. 260 Despite the disputes over the Receivers' costs in relation to the Receivers' Reports, I found those costs to be appropriate given the tasks they were burdened with and the reports produced. Accordingly, I consider it appropriate that the Receivers apply retrospectively for their remuneration and expenses to be approved. But costs should be minimised.

J CONCLUSION & ORDERS 261 This long and sorry saga should be brought to an end. I propose to make an order referring the parties to mediation. It is unclear to me why this case, crying out for resolution, has not resolved. The parties should be apprised by a Registrar of the Court as to the mutually destructive nature of the ongoing disputation, which ends up resulting in unnecessary legal fees being incurred. If armed by these reasons the parties cannot belatedly resolve their differences sensibly, then the mediation process at least might serve to reduce the ambit of any dispute over the relief to reflect my findings and these reasons. Absent a commercial resolution, the parties are to file an agreed minute or competing minutes of order reflecting these reasons within seven days of the completion of the mediation. I certify that the preceding two hundred and sixty-one (261) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Lee.

Associate: Dated: 17 June 2022 SCHEDULE OF PARTIES NSD 470 of 2020 Applicants Fourth Respondent: CODA ASSET MANAGEMENT PTY LTD (ACN 143 291 678) Respondents Fourth Respondent: VENTURECROWD NOMINEES PTY LIMITED Fifth Respondent: FUNDUS MANAGEMENT PTY LIMITED Seventh Respondent: SARGON CT PTY LIMITED

NSD 99 of 2021 Respondents Fourth Respondent: VENTURECROWD HOLDINGS PTY LIMITED Fifth Respondent: VENTURECROWD PROPERTY AUSTRALIA PTY LIMITED Sixth Respondent: VENTURECROWD NOMINEES PTY LIMITED Seventh Respondent: FUNDUS MANAGEMENT PTY LIMITED Cross-Respondents Fourth Cross-Respondent: VENTURECROWD NOMINEES PTY LIMITED (ACN 166 599 140) Fifth Cross-Respondent: FUNDUS MANAGEMENT PTY LIMITED (ACN 619 573 456) Second Cross-Claimants Fourth Cross-Claimant: VENTURECROWD NOMINEES PTY LIMITED