STATUTORY POWER
28 Sections 283HA and 283HB of the Act provide:
283HA General Court power to give directions and determine questions
If the trustee applies to the Court for any direction in relation to the performance of the trustee's functions or to determine any question in relation to the interests of the debenture holders, the Court may give any direction and make any declaration or determination in relation to the matter that the Court considers appropriate. The Court may also make ancillary or consequential orders.
Note: Under this section, the Court may order a meeting of debenture holders to be held, see section 283EC.
283HB Specific Court powers
(1) If the trustee or ASIC applies to the Court, the Court may make any or all of the following orders:
(a) an order staying an action or other civil proceedings before a court by or against the borrower or a guarantor body;
(b) an order restraining the borrower from paying any money to the debenture holders or any holders of any other class of debentures;
(c) an order that any security for the debentures be enforceable immediately or at the time the Court directs (even if the debentures are irredeemable or redeemable only on the happening of a contingency);
(d) an order appointing a receiver of any property constituting security for the debentures;
(e) an order restricting advertising by the borrower for deposits or loans;
(f) an order restricting borrowing by the borrower;
(g) any other order that the Court considers appropriate to protect the interests of existing or prospective debenture holders.
(2) In deciding whether to make an order under subsection (1), the Court must have regard to:
(a) the ability of the borrower and each guarantor to repay the amount deposited or lent as and when it becomes due; and
(b) any contravention of section 283GA by the borrower; and
(c) the interests of the borrower's members and creditors; and
(d) the interests of the members of each of the guarantors.
Note: The Court may order a meeting of debenture holders to be held (see section 283EC).
29 I have previously observed the following matters concerning the above provisions' construction and operation.
30 First, the scope and exercise of any power under either provision must be considered in the context of Chapter 2L generally and its purpose and object.
31 Second, s 283HB confers on the Court a broad remedial and protective jurisdiction and associated powers, with the debenture holders as the principal beneficiaries thereof. Nevertheless, the powers are confined by those enumerated in s 283HB, albeit that s 283HB(1)(g) from one perspective may be seen to be a plenary power.
32 Third, the Court's powers under s 283HB are intended, inter alia, to supplement the armoury of relief available to the Trustee under the general law and under the specific terms of the Trust Deed.
33 Fourth, although s 283HB(1) contains a broad discretionary power, the Court must have regard to the enumerated matters in s 283HB(2). As to such enumerated matters:
(a) The fact that various factors must be considered does not entail that other factors not mentioned may not be considered.
(b) Further, the structure of s 283HB indicates that the mandatory factors and their weight take priority over any non-mandatory factors.
(c) Further, in terms of the priority or weight to be given to the matters referred to in s 283HB(2) inter se, strictly no weighting or priority is expressed. Nevertheless, the structure, context and purpose of the provisions would tend to suggest that the consideration referred to in s 283HB(2)(a) should be accorded greater weight than, say, s 283HB(2)(c) or (d), assuming, in relation to (c), that one is dealing with creditors other than debenture holders. But overall, the structure and purpose of Chapter 2L is to protect debenture holders. Moreover, this is reflected in the text of s 283HB(1)(g).
34 Fifth, once the Court has considered the matters in s 283HB(2), it is open to the Court to make any order under s 283HB(1) that is calculated to protect the interests of debenture holders. So much may also be said concerning the making of ancillary or consequential orders under s 283HA, although I have not been requested to exercise any power thereunder in terms of the procedures for the 11 August 2016 meeting.
35 Sixth, s 283HB(1)(g) confers power on the court to order the convening of a meeting of debenture holders and to regulate the procedure as to the conduct of such a meeting including the form and propounding of any resolution, who can vote and the manner of voting including any poll to be conducted, providing that such an order is appropriate to protect the interests of debenture holders. Indeed, this is confirmed in one sense by s 283EC, albeit that in the present case I am only considering the exercise of power under s 283HB.
36 Seventh, in addition to the power under s 283HB that can be exercised concerning the convening and conduct of any meeting of debenture holders, s 1319 is also of assistance. Section 1319 provides:
Where, under this Act, the Court orders a meeting to be convened, the Court may, subject to this Act, give such directions with respect to the convening, holding or conduct of the meeting, and such ancillary or consequential directions in relation to the meeting, as it thinks fit.
37 Now as I have said, I have ordered that a further meeting of debenture holders be convened for 11 August 2016. I have also made orders affecting the voting at such a meeting, particularly in respect of proxy voting. I accept that in doing so I have made orders inconsistent with the terms of the Trust Deed with respect to such matters, particularly Schedule 3.
38 An issue has been raised as to whether I have the power in such circumstances to vary the operation of the Trust Deed. I consider that I have the power to make the orders sought for reasons that include the following:
(a) First, as a matter of construction, the statutory powers when construed in the context of the relevant statutory objects are sufficiently broad to empower the orders that I have made. Moreover, any such exercise of statutory power necessarily overrides the Trust Deed. Indeed, at a more general level, the Trust Deed and the parties' rights, duties and obligations thereunder are subordinate generally to Chapter 2L and the Court's supervisory role thereunder; ss 283AA, 283AB, 283BA, 283DA, 283HA and 283HB make this readily apparent.
(b) Second, it may be queried as to whether I have, by the making of these orders, expressly or impliedly varied the terms of the Trust Deed as such, as opposed to varying or suspending the application of its terms to the particular meeting that I have ordered to be convened.
(c) Third, whether or not I have effected such a variation, I consider that I have power to do so under the statutory provisions that I have identified and also under more general statutory provisions (see for example the Trustee Act 1925 (NSW)) or equitable principles applying to the Court's exercise of jurisdiction over trustees and trusts (see In the matter of Banksia Securities Limited (in liquidation) [2016] NSWSC 357 at [34] and [35] per Black J). Moreover, in relation to the orders that I have made, there is some analogy with the types of orders dealt with in Amcom Telecommunications Limited, in the matter of Amcom Telecommunications Limited (No 3) [2015] FCA 596 (at [14], [36], [38] and [57] to [63] per McKerracher J) applying s 1319 in the context of a scheme meeting concerning a scheme of arrangement.
(d) Fourth, in any event, I could in the exercise of and given the breadth of the said relevant statutory powers, in advance of the meeting otherwise excuse foreshadowed non-compliance with the terms of the Trust Deed. But if I have the statutory power under Chapter 2L to achieve this indirect result, there is no good reason to deny the existence of the power to achieve the result directly. To distinguish such scenarios would be a triumph of form over substance.
(e) Fifth, let it be assumed that I have no such statutory power supporting the 3 August 2016 order so that what I have ordered would not be capable of producing, depending upon the result of the voting, an "Extraordinary Resolution" within the meaning of the Trust Deed. Nevertheless, in substance, the resolution produced would still be a fact relevant to the exercise by the Court of any power or discretion in considering the final relief sought by the Trustee in its originating application or the relief sought by Angas to facilitate or implement the Amended Run-Off Proposal.