TRUSTS AND TRUSTEES - identification of an express trust - principles from Korda v Australian Executor Trustees

Registry: Australian Capital Territory

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 126

Counsel for the Applicant: M L Rose

Solicitor for the Applicant: Chamberlains Law Firm

Solicitor for the supporting creditor (Negawatts Electrical) Negawatts Electrical did not appear.

ORDERS ACD 37 of 2019 IN THE MATTER OF RENEWABLE ENERGY TRADERS PTY LTD (IN LIQ) ACN 140 736 849 BETWEEN: STEPHEN JOHN HUNDY IN HIS CAPACITY AS LIQUIDATOR OF RENEWABLE ENERGY TRADERS PTY LTD (IN LIQUIDATON) ACN 140 736 849 Applicant

AND: GARY PHILLIPS & SHARON LOCKMAN, TRADING AS NEGAWATTS ELECTRICAL (ABN 93 645 960 085) Supporting Creditor

JUDGE: GRIFFITHS J DATE OF ORDER: 1 NOVEMBER 2019

1. Within 14 days hereof, the applicant is to file proposed short minutes of order which give effect to these reasons. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GRIFFITHS J: 1 The applicant is the liquidator of Renewable Energy Traders Pty Ltd (the Company). The applicant seeks directions and declarations with respect to the liquidation of the Company and, more specifically, in relation to certain assets known as Renewable Energy Certificates (RECs), and a sub-set of RECs known as Small-Scale Technology Certificates (STCs). There is a primary issue as to whether the STCs are held on trust, separately from the general assets of the Company, for the benefit of third party beneficiaries. The applicant seeks orders which would have the effect of declaring that the STCs and other assets of the Company are all Assets Held on Trust. If they are held on trust, the applicant seeks orders concerning the identification of persons or entities who are entitled to those assets, and how the proceeds should be distributed. Directions are also sought by the applicant on the question whether the applicant was justified in cancelling STC registrations that were pending at the time the Company's administration began. 2 The applicant seeks additional orders, including the appointment of the current liquidator, Mr Hundy, as receiver and manager and that the costs of the present proceeding be recoverable from the Assets Held on Trust. 3 As will shortly emerge, many of the issues which arise in this proceeding were raised previously, in a different factual setting and in relation to a different liquidation, in Hundy (Liquidator); In the matter of Enviro Friendly Products Pty Ltd (In Liq) [2013] FCA 852 (Hundy No 1). One difference between the cases is that in Hundy No 1, the business of the company in liquidation was the sale and installation of various solar products, unlike the business of the Company here (see further below).

The relevant legislative scheme summarised 4 The following summary of the Renewable Energy (Electricity) Act 2000 (Cth) (REE Act) draws heavily on the helpful summary provided by Foster J in Hundy No 1. 5 On 18 January 2001, the REE Act came into force. As part of a program to increase the generation of electricity from renewable energy sources, two schemes were established by this legislation. These are: (a) the Large-Scale Renewable Energy Target; and (b) the Small-Scale Renewable Energy Scheme. 6 Part 2 of the REE Act creates a scheme whereby persons who generate renewable electricity may create RECs. Under the REE Act, where a liable entity does not have enough RECs to surrender, the liable entity will have to pay a renewable energy shortfall charge. RECs are used to avoid or reduce the amount of renewable energy shortfall charges that liable entities who acquire electricity have to pay. The liable entities will generally acquire certificates by purchasing them. 7 A person who, during a year, makes a relevant acquisition of electricity is called a liable entity (ss 5 and 35 of the REE Act). A relevant acquisition of electricity is a wholesale acquisition of electricity, subject to the exclusion in s 31(2) or a notional wholesale acquisition of electricity (ss 5, 31(1), 32 and 33 of the REE Act). 8 Large-Scale Generation Certificates (LGCs) are created by persons or entities who generate power from accredited power stations using eligible energy sources where the amount generated exceeds the relevant 1997 eligible renewable power baseline. STCs are created for approved installations of solar water heaters and small generation units as defined in s 5. RECs are created based upon the amount of electricity generated from renewable energy sources. The higher the output from such sources, the more RECs are created. Small generation units and solar water heaters are devices that generate electricity and heat water that satisfy conditions specified in the Renewable Energy (Electricity) Regulations 2001 (Cth) (Regulations). The solar power generation systems sold and installed by the company in Hundy No 1 were small generation units and solar water heaters within the meaning of the REE Act. 9 A person needs to be registered under Pt 2, Div 2 of the REE Act before that person can create a REC. A REC is not valid until it has been registered (s 26(1)). Every transfer of a REC must also be registered. The initial registration of RECs is done online through an Internet-based registry managed by the Clean Energy Regulator (CER). 10 When a REC has been surrendered by a liable entity, it ceases to be valid. 11 Part 2, Divs 1-4 of the REE Act govern the creation, trading and extinguishment of RECs. 12 RECs may be transferred after they have been registered by the CER. 13 Part 3 and Pt 4 of the REE Act impose a proportional liability on wholesale purchasers of electricity to hold a prescribed number of RECs in each year (ss 35, 39 and 40A of the REE Act). 14 The intention of the legislature in creating the scheme described at [5]-[13] above is to put in place a market incentive to create renewable energy through the creation, registration, transfer and surrender of RECs in accordance with the statutory scheme. 15 From 2001 to 2010, there was a single certificate commodity, the REC. Since 1 January 2011, RECs have been reclassified into two types of certificate: LGCs and STCs. 16 Although the Company created some LGCs prior to 31 December 2010, these are no longer in the Company's possession or control. The present application concerns only STCs.

The STC scheme summarised 17 Justice Foster referred in Hundy No 1 to a booklet published by the CER entitled "Increasing Australia's Renewable Electricity Generation" which the following summary of the creation, assignment and sale of STCs draws upon: (a) The number of STCs an eligible installation is entitled to own is dependent upon the amount of electricity generated by a solar panel or solar hot water system over a given period of time (ss 22 and 23B). (b) The STCs must be created within 12 months of the installation of the solar panel or solar hot water system (ss 21(2), 23A(3) and reg 19D(2) of the Regulations). (c) All STCs must be created through the online Renewable Energy Certificate Registry (the REC Registry) before they can be traded, transferred or sold (s 26). The REC Registry is maintained by the CER. (d) The right to create STCs vests with owners of the relevant small-scale technologies at the times specified in the Regulations, but the right to create STCs can be assigned to another person (such as an installer or supplier who is described as a "registered agent" in the booklet: ss 21, 23, 23A and 23C), with the customer then receiving a financial benefit such as a discount on their invoice in exchange for the agent having the right to create and sell the STCs. A person, be they an owner or assignee, must be registered under the REE Act to create an STC (ss 23(3) and 23C(3)). (e) A customer wishing to assign his or her right to create STCs to an agent must complete an STC Assignment Form for the assignment to be effective (s 28(2)). These forms are available from the CER's website. (f) Once the STC Assignment Form is complete, the agent can then create the STCs through the online REC Registry and list them for sale through the STC market or the CER-managed STC Clearing House (the Clearing House). (g) STCs sold on the STC market can be made available for sale to an interested buyer once they have been created and validated in the REC Registry. (h) STCs managed through the Clearing House are added to the end of the Clearing House transfer list. The STCs remain there until sold or withdrawn. The Clearing House operates on a "first in first out" basis (s 30L(2)(a)). Existing STCs in the transfer list must be sold before subsequently added STCs are eligible for sale through the Clearing House. (i) The price achieved on the sale of an STC depends on the way it is sold. If sold through the open market, the price will depend on demand and supply. If sold through the Clearing House, a statutory guarantee of $40 (excluding GST) applies per STC, which is called the "clearing house price". The market price for STCs on 29 April 2019 was $36.50 exclusive of GST. (j) The demand for STCs is created by liable entities (commonly electricity retailers and wholesalers) who are encouraged by the scheme to buy and surrender STCs each year. Surrendered STCs are invalidated by the CER and cannot be bought or sold again. The scheme is intended to operate such that when there are no STCs available on the open market, the liable entities must purchase their STCs from the Clearing House at $40 each.

Summary of background facts 18 The following summary draws heavily on affidavits filed on behalf of the applicant by Mr Hundy on 29 April 2019 and 26 July 2019 respectively, as well as an affidavit dated 13 June 2019 by a paralegal employed by the applicant's instructing solicitor, Mr Patrick Jamieson. 19 On 19 March 2018, Mr Hundy and Mr Jason Bettles were appointed as the joint administrators of the Company. A meeting of creditors was held on 2 May 2018, where it was resolved that the Company be wound up under s 446A(1)(a) of the Corporations Act 2001 (Cth). Mr Hundy and Mr Bettles were appointed joint liquidators, but Mr Bettles resigned as a joint liquidator on 26 June 2018, leaving Mr Hundy as the sole liquidator. 20 The directors of the Company were Mr Craig Anthony Walsh and Ms Danielle Hope Walsh, who were also the only two shareholders and who substantially ran the business. 21 Mr Hundy's investigations have revealed a number of significant shortcomings with the adequacy of the Company's books and records, including: (a) no bank statements have been retained for the period prior to 2012; (b) the Company's records concerning the creation, registration, sale and purchase of RECs do not adequately show which particular STCs are being dealt with by the Company; (c) the REC Transaction Ledger does not specifically identify the particular RECs that are the subject of a transaction entry and merely contains details of the date of the transaction, the party initiating it, the certificate type and the quantity the subject of the transaction; (d) the Company's available bank records and other papers do not allow Mr Hundy to reconcile cash payments or receipts against particular transactions concerning RECs; and (e) various Excel spreadsheets kept by the Company are unique and difficult to follow insofar as they relate to the Company's transaction.

The Company's operations summarised 22 Although the Company's primary business was the registration and trading of all RECs, particularly STCs, Mr Hundy's investigations indicate that the Company did not itself install or otherwise supply eligible solar products. Instead, it generated revenue and income by: (a) being engaged by the owners and/or installers of solar products to apply for, and to register, STCs in relation to solar products for which the Company was paid a commission out of the proceeds (Registration Business); or (b) purchasing from or selling to third parties STCs, where the Company achieved profits or incurred losses based on differences in the sale and purchase prices of STCs from time to time (Trading Business). 23 The investigations indicate that the commission or fees charged by the Company on registration of STCs: (a) was agreed prior to registration; (b) usually involved an assignment fee of $59.95 plus $1.00 per STC registered; and (c) was usually deducted from the amounts the Company paid owners/installers for STCs. 24 The liquidator's investigations indicate that the Company does not currently hold any LGCs even though, as previously mentioned, there is material to indicate that the Company previously made transactions with LGCs. Of the 1,097 entries in the REC Transaction Ledger with respect to LGCs only 22 entries occurred after February 2012. Prior to January 2011, all RECs were classified as LGCs in the Company's REC Transaction Ledger. The parties who are claiming against the Company (whether as creditors or as beneficiaries of a trust) are not claiming with respect to LGCs or non-payment of funds with respect to LGCs. 25 Mr Hundy's investigations indicate that the owners of solar products sometimes assigned the right to create STCs to a person or entity that is a registered person for the purposes of the REE Act. Mr Hundy believes that the registered person creates STCs, and sells or trades them on behalf of the relevant owners such that the relevant owner is not required to apply to become a registered person for the purpose of the legislation. 26 The Company was a registered person for this purpose as at the date of administration. 27 Mr Hundy's understanding is that the number of STCs that may be created in relation to the installation of a solar product is calculated by the amount of electricity that the solar product is expected to produce, being one STC per MWh of electricity. 28 Mr Hundy's investigations further indicate that: (a) Persons or entities that make "relevant acquisitions" of electricity, known as Liable Entities, are required to acquire a certain amount of electricity from renewable energy sources. (b) Liable Entities can evidence the amount of electricity acquired from renewable energy sources for the purposes of the SRES [Small-Scale Renewable Energy Scheme] by completing quarterly returns and surrendering STCs. (c) If Liable Entities fail to surrender the required amount of STCs, the REE Act together with the Renewable Energy (Electricity) (Small-Scale Technology Shortfall Charge) Act 2010 (Cth) impose a Small-Scale Technology Shortfall Charge on the Liable Entity, calculated at a current rate of $65 per MWh in relation to the shortfall of STCs. (d) STCs which have been registered in the REC Registry may be transferred between persons directly under section 27 of the REE Act. (e) Pursuant to Pt 2A of the REE Act, the CER also establishes and operates a Clearing House where: i. a person may place registered STCs in its REC Registry account (and offer those STCs for sale) and other parties may purchase those STCs for a maximum of $40 exclusive of GST pursuant to s 30LA of the REE Act; ii. once STCs are placed in the Clearing House, STCs are sold or transferred on a "first in, first out" basis as between all STCs placed in the Clearing House, regardless of who placed the STCs in the Clearing House; and iii. as a result of sub-sub-paragraph ii above, if the Company places STCs in the Clearing House, the Company has no control over which STCs are or will be sold, or the timing of any sale. (f) A Liable Entity may surrender STCs which it creates itself and/or are acquired from another person (whether directly or via the Clearing House). (g) The Small-Scale Technology Shortfall Charge (on a per MWh basis) is higher than the price at which Liable Entities are usually able to acquire STCs for the purposes of covering any shortfall, as: i. the market 'spot' price for registered STCs as at 29 April 2019 is approximately $36.50 exclusive of GST; and ii. the price at which STCs may be acquired through the Clearing House is fixed at $40 exclusive of GST. (h) Liable Entities tend to acquire STCs to cover any shortfall they may have under the REE Act, rather than pay the Small-Scale Technology Shortfall Charge. 29 It is appropriate to say something more about the Company's Registration Business and Trading Business, drawing on Mr Hundy's first affidavit. 30 Mr Hundy understands that after the installation of solar products where the Company is engaged to create STCs for an owner, forms would be provided to the relevant owner and installer to complete, in order to assign their rights to create STCs to the Company (Company Assignment Form). Once done, and the requisite fee was paid to the CER, those STCs would be registered to the Company, and the Company would be able to deal with them. 31 According to Mr Hundy's first affidavit, an owner assigning rights to the Company had three options for payment and lodgement of the relevant STCs: (a) first, to submit the STCs to the Clearing House. If this option were selected, the amount payable by the Company to the assignor would be an amount equal to the number of STCs to be placed in the Clearing House multiplied by the fixed clearing house price ($40 exclusive of GST); (b) secondly, to trade STCs at market value. If this option were selected, the amount payable by the Company to the assignor would be an amount equal to the market value of the STCs created pursuant to the transfer. That amount was ascertained by reference either to the current "spot" market price, or by the Company selling an equal number of STCs held in its REC Registry Account and remitting the proceeds to the assignor (or a combination of both methods); or (c) thirdly, to use the "Quote Protect" cover (if purchased). If this option were selected, the amount payable by the Company to the assignor was calculated on a similar basis to the second option above, unless that price was less than a fixed "Quote Protect" price which would be payable instead. The "Quote Protect" service operated as a form of insurance to guarantee a particular minimum price for the assignor. 32 Once the amount payable by the Company was determined according to one of the above methods, the Company paid those funds less a deduction under the Company Assignment Form for any commission or other fees payable to the Company on account of creating, selling and paying for STCs. Where owners agreed to direct payment for their STCs to installers, that was because the installers usually provided the owners a point-of-sale discount on the cost of solar products, with the owner effectively receiving a discount equivalent to the value of the STCs transferred. 33 Mr Hundy deposes that, based upon his investigations, it appears that most owners who assigned STC creation rights to the Company decided to direct payments to their installers in exchange for point of sale discounts. In economic effect, this meant owners received the value of the STC creation rights at the point of installation (in the form of an installation discount), before any STCs had been created, while the installer assumed the price fluctuation risk associated with the value of the STCs once created. This meant that, in practice, the Company's interactions with owners for the purposes of creating STCs was rare, and most correspondence with respect to the registration aspect of the Company's business was with installers. 34 The Company was also engaged in trading in STCs, by selling and buying STCs from third parties under commercial contracts (i.e. the Trading Business). 35 Those contracts obliged the Company either to sell to, or to purchase from, the other party tranches of STCs for a fixed contract price at a future date or dates. Where the Company sold STCs, those STCs might comprise any of the STCs in the Company's REC Registry Account, including STCs created by the Company on account of its Registration Business or STCs acquired by the Company through trading contracts. The Company did not engage in any particular system or conduct to differentiate the STCs that the Company held as a result of its Registration Business or those acquired through trading contracts. 36 Further, the funds received by the Company for the sale of STCs under trading contracts were commingled with funds from other sources, and were used by the Company for a number of other purposes, including to purchase STCs under trading contracts, pay amounts owing on account of STCs created by the Company in respect of solar product installations, and to pay for the general expenses and liabilities of the Company. 37 Where the Company purchased STCs, it did so with funds from the general pool of cash held by the Company, which included cash from any source where the Company received funds, in respect of either the Trading Business or the Registration Business.

STCs currently held by the Company 38 As at the date of the liquidators' initial appointment, the Company's REC Registry Account indicated that the Company held 8,163 registered STCs, and 9,687 STCs which were "pending approval" for registration (comprised of 8,838 STCs which were pending "audit", and 849 STCs which were pending "creation fee payment"). This appears to refer to the fee that must be paid to the CER in order to create or register an STC (s 26(3A)). 39 Of the 8,163 registered STCs, 1,643 STCs were created by the Company (presumably on account of the Company's Registration Business), and the balance of 6,520 STCs were created by third parties unrelated to the Company (presumably acquired via the Trading Business). All such STCs remain in the Company's REC Registry Account. In relation to the STCs pending approval, Mr Hundy explained that, as a result of his correspondence with the CER, the CER's position in relation to such STCs is that the 8,838 STC registrations which were pending audit could be cancelled by the CER, such that the original owners may seek to register those STCs via another agent or registered person, and could be subject to extensive audit or waiting periods. In Mr Hundy's view, this could produce uncertainty as to whether such STCs could be registered at all, and if so, the timing of such registration. Of the 849 STC registrations which were pending "creation fee payment", as they had already advanced to a point in the STC creation process where the CER could not revoke the registration, those STCs would be fully created and registered upon payment of the creation fee for those STCs (totalling $306.60). 40 Mr Hundy explained that, in respect of the 8,838 STC registrations pending audit, he considered that the uncertainty with respect to whether these STC registrations could be approved and registered (and the associated costs), outweighed the benefits that might be obtained by continuing that process. Consequently, Mr Hundy asked the CER to "fail" the creation and registration process of these STCs, which it did so on or about 7 June 2018. Of the 849 STCs pending 'creation fee payment', the liquidator has since paid the relevant creation fee (totalling $306.60) such that the creation and registration of those STCs may be finalised and the STCs registered. The liquidator seeks directions from the Court, nunc pro tunc, that he was justified in taking these steps. 41 As at 29 April 2019, there were 9,012 STCs in the Company's REC Registry Account, comprising: 1,643 STCs registered as at 19 March 2018 and recorded as being created by the Company (Pre-Existing Company STCs); 6,520 STCs registered as at 19 March 2018 and recorded as being created by third parties (Pre-Existing Third Party STCs); and 849 STCs registered as a result of the payment of the payment creation fee and recorded as being created by the Company (Creation Fee STCs). 42 Mr Hundy said that he does not believe it is appropriate or necessary to treat the Creation Fee STCs separately or differently from the Pre-Existing Company STCs. In brief, this is because he believes that there is no material difference between them and it would be unfair to treat owners of those classes of STCs differently in the circumstances. It would also increase the administrative burden on the Company. 43 As Mr Hundy further explained, there is a significant shortfall between the Company's records as to how many STCs it should hold, as against the number of STCs held by the Company in the REC Registry. His opinion as to the reason for that shortfall is, in summary, that the Company sold, dealt with, and otherwise traded STCs without any regard for the provenance of any particular STCs, such as those of a particular owner or installer, either in the Trading Business or the Registration Business. And whilst STCs in the REC Registry are separately identifiable, the Company did not so identify them, rather it treated them as fungible commodities. 44 The total number of STCs that are owed to parties claiming or who may be entitled to claim an interest in the STCs and other assets of the Company is 40,366 STCs, which represents a total estimated claim value of $1,473,359 (assuming $36.50 per STC). There is a net shortfall of 31,354 STCs (viz 40,366 STCs claimed or which may be claimed by parties less 9,012 STCs currently held by the Company).

Other creditors of the Company and the Company's bank accounts 45 Following the suspension of the Company's REC Registry Account, the Company was unable to meet contractual obligations to purchase and/or sell to parties with whom it had entered into Trading Contracts. Consequently, the Company was issued with default notices. 46 In his first affidavit, Mr Hundy set out the results of his investigations regarding the Company's creditors. Not all creditors have lodged proofs of debt, but Mr Hundy deposes that claims of parties with Trading Contracts with the Company are in the order of at least $3,653,939. The Company also has outstanding superannuation liabilities of $51,775 and other creditors have claims of at least $145,608. The following table summarises the number of creditors or parties claiming an interest in the Company's assets: Creditor/Claimant Type Number of Creditors/ Claimants STCs claimed Value of Claim (assuming $36.50 per STC where claim is against STCs) Installers or owners (proof of debt) 8 40,267 $1,469,745.50 Installers or owners (no proof of debt) 3 99 $3,613.50 Trading contract creditors (proof of debt) 2 N/A $386,760 Trading contract creditors (no proof of debt) 4 N/A $3,267,179 (noting 2 creditors' claims unknown) Directors' superannuation 1 N/A $51,775 General creditors (proof of debt) 3 N/A $140,413 General creditors (no proof of debt) 2 N/A $5,195 Totals 23 40,366 $5,324,681

47 The Company maintained two bank accounts (the Receipt Account and Payment Account). Mr Hundy's investigations have revealed that when the Company sold STCs (in either its Trading Business or Registration Business), the Company would receive funds into the Receipt Account. When funds were needed to make payments, the Company would transfer funds from the Receipt Account into the Payment Account. It is not, however, readily apparent to what most of the payments made from the Payment Account relate (nor whether they relate to any particular STC payment). 48 Mr Hundy states that payments were made to and from the Company's accounts and a personal mortgage offset account held by Mr Walsh. The purpose of these payments was to reduce Mr Walsh's interest payments on his personal mortgage. Mr Walsh would transfer funds back to the Company's Payment Account when the Company required the funds. Mr Hundy's investigations, including recovery of amounts during the administration and liquidation process, indicate that any amounts transferred to Mr Walsh in the fashion described have now been repaid in full. 49 Finally, Mr Hundy explained in some detail his conclusions regarding how the STCs held by the Company should be treated and his reasons for seeking the orders sought in the originating application.

Notice of the proceeding and communications with interested persons 50 Mr Jamieson's affidavit describes the steps taken by the applicant's instructing solicitors to advise potentially interested parties of these proceedings after they were commenced on 1 May 2019. In particular, on 8 May 2019, Mr Hundy caused notice of the originating application and supporting affidavit to be sent to persons who claimed to be creditors of the Company.

Negawatts' intervention 51 The only creditor to participate in the proceeding is Negawatts Electrical, acting in its own right and representing two other parties. Negawatts is a supporting creditor. Negawatts is the trading name of a partnership known as Gary Phillips & Sharon Lockman. Mr Phillips provided an affidavit dated 30 August 2019 in support of Negawatts. He said that Negawatts is a solar installation business which is owed 2866 STCs, valued at $104,609, in its dealings with the Company. He said that his affidavit was prepared in conjunction with two other installer creditors of the Company, namely Horan and Bird Energy Pty Ltd (which is owed 28,449 STCs valued at $1,038,388) and Planet Care Pty Ltd (which is owed 7551 STCs valued at $277,611). Mr Phillips explained that those other two entities had shared the legal costs incurred by Negawatts in its involvement in the proceeding. Mr Phillips was not able to be present at the hearing and he relied upon his affidavit as presenting his case and those of the other two installer creditors. 52 Mr Phillips' affidavit may be summarised as follows: (a) From at least 28 March 2018, Mr Phillips told Mr Hundy that he considered that 2866 STCs were held by the Company in trust for Negawatts and were not an asset of the Company and that this view was reiterated in Negawatts' solicitor's letter dated 1 May 2018 which was sent to Mr Hundy. (b) Negawatts relied on the fact that Mr Hundy had taken a similar position in Hundy No 1 as was pointed out in correspondence to him from Negawatts' solicitor. It is evident from that correspondence that Mr Hundy's initial position was that the STCs were not held on trust by the Company for owners or installers. (c) There was a need to include among the trust assets an amount of $1.15m, representing the value of 31,354 STCs (the net shortfall of STCs described at [43]-[44] above) if they were sold at $36.50 each, but this amount had not yet been accounted for by Mr Hundy. (d) Mr Hundy had a duty to ensure all assets of the Company's directors which could be used to satisfy the Company's liability were quarantined. In this regard, Mr Phillips referred to the sale of a property by the Company's directors for $1.7m on 26 September 2018. Mr Phillips stated that he only became aware of the sale and the practice of applying Company funds to Mr Walsh's mortgage offset account on reading Mr Hundy's first affidavit. Mr Phillips says that Mr Hundy should have conducted a full audit of all bank accounts, mortgages and assets of both the Company and its directors to determine if any STC funds held in trust were misappropriated and the steps that should have been taken to recover those funds. (e) Contrary to Mr Hundy's evidence that no STCs were held in the Clearing House for the Company, Negawatts had received emails from the Company in December 2017 and February 2018 which indicated that the Company was holding in the Clearing House on trust 2866 STCs for Negawatts with a value of $104,609. (f) The Court should order that the shortfall of 31,354 STCs, valued at $1.15m, be considered as monies held in trust which had been misappropriated by the Company and that Mr Hundy be directed to recover that amount from the sale of the assets and property associated with the Company's business operations, including the proceeds of the sale of the directors' property on 26 September 2018 as referred to above. (g) The Court should direct that the full balance of any recovered trust money, after deducting commissions, be added to the pool of monies held in trust for installers and owners. (h) Mr Hundy's request for approval of his fees should not all be taken from the value of the assets held on trust and, instead, should be recovered from the sale of the assets and property associated with the Company's business operations. (i) Otherwise, Negawatts said that it agreed with orders 1 to 7 as sought by the liquidator, apart from order 6 concerning the liquidator's remuneration and expenses. 53 Mr Hundy responded to these issues in an affidavit sworn 28 October 2019. He submitted that the issues raised by Mr Phillips do not provide any basis not to make the orders and directions sought by him. He added that the issues raised by Mr Phillips would be investigated in the ordinary course. Mr Hundy also gave oral evidence in which he described the steps that he proposed to take in relation to the other issues raised by Mr Phillips. He said that, as matters stood at present, there was little more that could be done regarding the mortgage and directors' loan. He stated that he intended to pursue the debt owed to the Company from Waltech Energy Saving Pty Ltd. Mr Hundy added that he also proposed to seek legal advice on options which were available to him in respect of any breach of trust by the directors.

The liquidator's submissions summarised 54 The liquidator cited Foster J's judgment in Hundy No 1 and Austin J's judgment in Bastion v Gideon Investments Pty Ltd [2000] NSWSC 939; 35 ACSR 466 as summarising the relevant principles. Justice Austin said in Bastion at [33] to [38]: 33. The present applications have been made on the basis that the liquidator must decide whether there is a trust governing the investors' rights. The issue being uncertain, he properly seeks the protection of directions. 34. If there is no trust, the investors became unsecured creditors of the company when they deposited money with it. The liquidator must wind up the company and distribute its assets rateably to the unsecured creditors. The legal position is comparatively straightforward. 35. If there is a trust, the investors have equitable proprietary rights as beneficiaries and the company has the duties of a trustee, to be discharged by its liquidator. Those equitable proprietary rights are to be asserted against the trust fund and any assets into which the fund can be traced. It appears that there is no trust fund, but the company has acquired assets (the two insurance policies, the unit in Melbourne, and the shares) which might arguably be trust assets. The question becomes whether the beneficiaries can trace into those assets. 36. The evidence about the financial affairs of the company and the Trust is very slim, and the position is unlikely to become much clearer through further investigations (given the thorough work that has already been done). However, we do have the statements by Ms Byrnes, which are consistent with information supplied by Mr Charlton, that the company did not maintain separate bank accounts for the Trust or for moneys received from investors, and that Mr Bastion moved money in and out of accounts without any regard to the nature of the accounts or the sources of the money. Therefore (assuming there is a trust) the company has mixed all of the trust money received from investors with its own money, and has made some investments from the mixed fund and then dissipated the remainder. In such a case equity allows the beneficiaries to trace into the investments: Re Oatway [1903] 2 Ch 356; see Jacobs' Law of Trusts in Australia (6th ed, 1997), p 746. It follows, on this analysis, that of the company's remaining assets are trust assets which it holds for the benefit of the investors as beneficiaries. 37. The evidence does not point to any identified voidable transactions which might be attacked by the liquidator. However, any recovery of this nature would probably augment the trust assets rather than the company's own property, since on the tracing analysis presented above, money or assets used by the company in any such transaction would be presumed to be trust money or trust assets. It is likely that the company as trustee has a claim against Mr Bastion's estate for misappropriation of trust assets by him, but it appears that the estate is insolvent. I am unable to say, on the evidence, whether there is any basis for recovery from Mrs Bastion as the remaining director and if so, whether the proceeds of recovery would be for the benefit of the investors. 38. If there is no trust, the five 'non-trust' creditors rank as unsecured creditors with the investors, unless they have statutory liens or other similar protection. If there is a trust, the debts to the 'non-trust' creditors are best regarded as debts incurred by the trustee in the course of management of the affairs of the Trust. That would be so as regards debts connected with ownership of the Melbourne unit, and while the Telstra account is less clear, the trustee would be justified in treating it in the same way. Although the debts might have been incurred in the course of unauthorised activity, the trustee probably has a right of recoupment or exoneration out of trust assets for these debts, having regard to the nature of the debts and the terms of the Trust Deed. Consequently the debts are to be paid in full out of company's assets (all of which are trust assets, on the present analysis). 55 In light of the matters outlined above, including the obscurity of some of the details of the Company's treatment of STCs and the Company's use of funds, including those of third parties, the applicant submitted that it is appropriate that the Court give directions, particularly in respect of assets which Mr Hundy considers are held on trust by the Company. 56 As noted above, Mr Hundy has explained how he proposes to treat the STCs. He has also explained why he considers that STCs held by the Company which are recorded as having been created by the Company are held by it for the benefit of either the owners or installers for whom they were created. He has also explained why he considers that STCs which are recorded as being created by third parties should also be treated as being held by the Company on trust, either for the benefit of owners or installers having a claim against the STCs of the Company which were in fact created by the Company.

(a) The liquidator's proposed treatment of other assets of the company 57 Apart from the STCs held by the Company, the Company holds cash at bank of $654,889.14 (comprising cash at bank as at the date of the liquidator's appointment, plus cash from recoveries, sales of shares in MYOB, GST refunds and interest, less payments made), a debt with an estimated recoverable value of $40,000, and a potential claim against a third party company for submission of purportedly fraudulent STC Assignment Forms. 58 Mr Hundy considers, as he explained in further detail in his affidavit, that the cash at bank, and in particular, cash held by the Company as at the date of administration, is held by the Company on trust for those beneficiaries determined to be entitled to STC assets of the Company. This is because the cash held by the Company is, in effect, the proceeds of STCs sold by the Company on behalf of those beneficiaries. For similar reasons, he considers that the other assets of the Company should also be treated as held on trust for those beneficiaries. 59 This then leads to the question of for whom those assets are held on trust.

(b) The beneficiaries of the trust 60 As explained by Mr Hundy in his affidavit, he has concluded that the STCs held by the Company should be treated as Assets Held on Trust for the benefit of either the owners or installers. 61 Mr Hundy has further concluded that, at least in the first instance, the owners would be the persons beneficially entitled to the STCs held by the Company as the owners are primarily entitled to create STCs, they are the persons 'assigning' the right to create STCs to the Company, and they appear, based on the Company Assignment Forms, to retain the ability to change the manner in which the Company is directed to deal with STCs and to direct where the proceeds of STCs are to be paid. 62 Where, however, the owners have in their Company Assignment Forms directed payment for STCs to the relevant installer, Mr Hundy has concluded that the installers ought to be beneficially entitled to those STCs, as the owner and installer have effectively agreed that, in consideration for a point of sale discount by the installer to the owner, the owner will grant to the installer the rights under the STCs to payment. As Mr Hundy further explained, even if there was no valid assignment or transfer of owners' beneficial interest in STCs in the Company to the relevant installers, and the owners still retain that beneficial interest, the Company would be contractually bound to pay the owners for their STCs as directed, which would mean making payment for STCs directly to the installers such that, commercially and in practice, there would not be any difference in treating the relevant installers as being beneficially entitled to STCs or proceeds thereof. 63 Further, where an owner and/or installer has been paid in full by the Company for STCs, Mr Hundy considers that the owner or installer ceases to have a beneficial interest in those particular STCs. 64 Mr Hundy considers that where owners (who have not directed payment for STCs to an installer) and installers (where an owner has directed payment for STCs to them) have not been paid for STCs, they have a beneficial interest in the STCs held by the Company, and should therefore be regarded as beneficiaries of what he described as the Assets Held on Trust. 65 In this connection, Mr Hundy submits that the STCs, and the other assets which are Assets Held on Trust, should be dealt with as a single pool of assets (as proposed in order 4 of the originating application). Mr Hundy provides a number of reasons for this. In summary, having regard to the number of STCs held by the Company, the significant shortfall in the amount of STCs held by the Company, the inability to identify accurately for whom STCs are held, the impossibility or impracticability of tracing STCs and their underlying transactions, and the manner in which the STCs appear to have been treated, Mr Hundy considers that the approach proposed by him is appropriate in all the circumstances.

(c) Proposed appointment of a receiver and manager 66 Mr Hundy further submits that, having regard to the high likelihood that the STCs are held on trust (and thus are not assets which are available to the general pool of creditors of the Company), and where there is a substantial shortfall in trust assets arising from the Company's possible breach of trust as trustee, any persons claiming to be a beneficiary would be entitled to pursue the Company as trustee for any shortfall (making them creditors of the Company to the extent of the shortfall). 67 If that is so then, without more, the directions sought by Mr Hundy may not be sufficient to allow the trust to be managed and brought to an end. In particular, the liquidator cannot, without more, exercise any power of sale in respect of the STCs: Jones v Matrix Partners Pty Ltd; Re Killarnee Civil & Concrete Contractors Pty Ltd (in liq) [2018] FCAFC 40; 260 FCR 310 at [44] per Allsop CJ. 68 On this basis, Mr Hundy seeks that he be appointed as receiver and manager of the STCs still held by the Company. For similar reasons to those given by Austin J in Bastion at 478-480, Mr Hundy submits that this appointment is justified, particularly where the affairs of the trust are in disorder. Moreover, Mr Hundy may have duties as trustee to the beneficiaries, requiring the Company to ascertain, protect and ultimately distribute trust assets to them, but the existence and scope of those duties is unclear (see also Hundy No 1 at [72]).

(d) Liquidator's remuneration and disbursements 69 Mr Hundy's second affidavit, which is dated 26 July 2019, provides information in support of his application for approval of his remuneration and disbursements in acting as administrator and liquidator of the Company and, if so appointed, as receiver and manager of the Assets Held on Trust. Mr Hundy explained that, because the potential existence of any trust was not known to him during the early stages of his appointment, he also seeks orders under ss 63 and 85 of the Trustee Act 1925 (ACT) (ACT Trustee Act) and ss 76 and 96 of the Trusts Act 1973 (Qld) (Qld Trusts Act), which would have the effect of relieving him and the Company from any liability for any breach of trust occasioned by dealing with assets which might otherwise be trust assets.

Consideration and determination 70 On one view it might be thought that this proceeding raises a serious question whether the Court is being asked to exercise judicial power in circumstances where much of the relief sought is by way of guidance to the liquidator. As McLelland J stated in Re G B Nathan and Co Pty Ltd (In Liq) (1991) 24 NSWLR 674 at 679-680, the Court's equivalent power under s 479(3) of the then Corporations Act "does not enable the court to make binding orders in the nature of judgments"; rather the function of a liquidator's application for directions "is to give him advice as to his proper course of action in the liquidation; it is not to determine the rights and liabilities arising from the company's transactions before the liquidation" (citing Re Security Provident Fund Ltd (In Liq) (1984) 73 FLR 264 at 265). However, as the plurality observed in CGU Insurance Ltd v Blakeley [2016] HCA 2; 259 CLR 339 at fn 26, the "long-standing power of courts to give directions to trustees, administrators and executors" constitutes an established category of judicial power (R v Davison (1954) 90 CLR 353 at 368-369 per Dixon CJ and McTiernan J). 71 Nevertheless, the relevant power should be exercised cautiously, not the least because, despite the limited involvement of Negawatts in this proceeding, there is no true contradictor to all the relief sought by the liquidator. Apart from Negawatts and the other two entities referred to by Mr Phillips in his affidavit, none of the other 24 owners, installers, creditors and known interested parties specified in Sch 1 to the originating application have sought to participate in the proceeding. That is not to suggest, however, that entities other than Negawatts and the other two entities referred to by Mr Phillips were not aware of the proceeding. I am satisfied by Mr Jamieson's affidavit that all persons identified in Sch 1 to the originating application were given adequate notice of the proceedings after they were commenced (but see further [114] below). 72 Before addressing the orders sought by Mr Hundy, it is desirable to say something further regarding the significance of Hundy No 1 to the present application. As noted above, although there are some similarities, the outcomes of the liquidators' investigations in that case are not on all fours with those here. In particular: (a) the evidence there suggested that the company had made representations through its employees and published material to its customers that ownership of STCs would remain with customers, noting that many of the assignment forms were returned to the company with the mandatory declaration sections concerning the assignment of the STCs to the company left blank, which caused the liquidators to conclude that the company never suggested that it would be the beneficial owner of STCs created by its installation activities for customers; (b) the liquidators there encountered numerous difficulties because of the inadequacy of the company's books and records and there was a significant shortfall in the STCs compared with customers' entitlements; (c) the company had, at one time or another, created or was in the process of obtaining 51,216 STCs; (d) most of the STCs were registered in the STC Clearing House in the company's name, even though there was no formal assignment of entitlements to the company by customers; (e) the company had already sold approximately 15,158 STCs with an estimated current value of approximately $465,350; and (f) there was a shortfall of 15,158 STCs between the actual number of STCs in the STC Clearing House and the number of STCs that ought to be there. 73 On the basis of the evidence before him, Foster J concluded that, with the exception of a relatively small number of STCs (418), the company held the STCs on trust for the named customers as beneficiaries, with the consequence that the assets held on trust were not available for distribution to the general body of creditors. Justice Foster was not prepared to accept the submission of several of the company's customers that the Court should direct that the 418 STCs be sold and the proceeds of sale be added to the general pool of funds available for the eligible beneficiaries. That is because general corporations law principles required that they be regarded as part of the assets of the company to be made available for the general body of creditors and not for the beneficiaries alone. 74 Justice Foster's reasons for concluding that there was an express trust in Hundy No 1 are reflected at [28] and [29] of his Honour's reasons for judgment: 28. The liquidators' investigations indicate that, when a customer approached the company with a request for installation of a solar power generation system or a solar hot water system, the company provided the customers with a quotation in which it detailed the cost of installation and the number of STCs for which the company considered the customer would become eligible. The company also provided customers with a document entitled "Small Scale Technology Certificate (STC) Your option (sic) explained" in which the company set out the customer's options in respect of the creation, assignment and trade of STCs. 29. After the solar power generation systems and solar hot water systems were installed at the customers' premises, the customers would complete the relevant assignment form for the creation of the STCs that related to their installation. The liquidators' investigations have led them to believe that the company, through its representatives and by means of information published on its website, represented to customers that the ownership of the STCs would remain with the customers. The liquidators based their conclusions to this effect upon a consideration of the company's brochure to which I have referred at [28] above, upon information furnished to them by former employees and upon the circumstance that most of the STC Assignment Forms were completed and returned by the customers with the mandatory declaration sections concerning the assignment of the STCs to the company having been left blank. 75 Although the liquidators in Hundy No 1 proposed various options to progress the matter, Foster J selected what was presented as "Option 2". This involved treating the STCs (apart from the 418 STCs described above) as a single pool of trust assets to be sold and distributed rateably between the eligible beneficiaries and the Company STCs forming part of the general pool of assets of the company to be divided between the general creditors of the company. This meant that the general creditors were given access to the proceeds of the sale of the 418 STCs. The Court also ordered that the liquidators be appointed receivers and managers of the STCs held on trust by the company. 76 On the issue of the liquidators' costs, Foster J applied the principles in Re French Caledonia Travel Services Pty Ltd (In Liq) [2003] NSWSC 1008; 59 NSWLR 361 and 13 Coromandel Place Pty Ltd v C L Custodians Pty Ltd (In Liq) [1999] FCA 144; 30 ACSR 377 at 385 per Finkelstein J. Those authorities stand for the proposition that, as long as a liquidator is acting reasonably, he or she is entitled to be indemnified out of trust assets for his or her costs and expenses in carrying out such activities as identifying or attempting to identify trust assets, recovering or attempting to recover trust assets, realising or attempting to realise trust assets and distributing trust assets to the person beneficially entitled to them. 77 It is convenient now to address in turn each of the orders sought by Mr Hundy in the originating application.

Order 1 - STCs as Trust Assets 78 Some of the relevant principles regarding the question whether there is an express trust are set out in Korda v Australian Executor Trustees (SA) Limited [2015] HCA 6; 255 CLR 62. They may be summarised as follows: (a) although there should be no reluctance in inferring the existence of an express trust, it is necessary to establish by admissible evidence or inference that such an intention exists (at [49]-[50] per French CJ); (b) unless an intention to create a trust "is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention" (Parq LJ in In re Schebsman [1944] Ch 83 at 104 quoted with approval at [208] per Keane J); (c) where the issue of whether there is an express trust arises in the context of a statutory regulatory framework, it is important to pay close attention to that framework as it provides the context for the relevant relationships (at [92]-[94] per Hayne and Kiefel JJ); (d) where a fiduciary or trust relationship is said to be based on an underlying contractual relationship, it is important to pay close attention to the terms of the contract so as to avoid any inconsistency between the fiduciary relationship and the contractual terms (at [106]-[108] per Gageler J); (e) where parties to a contract do not use the terminology of trust, an intention to create a trust will be imputed to them only if, and to the extent that, a trust is the legal mechanism which is appropriate to give legal effect to the relationship, as between the parties or between a party and a third party, as established or acknowledged by the express or implied terms of the contract (at [109] per Gageler J); and (f) although an intention that money be held in a separate fund is an important indicator, although not conclusive, of an intention to create a trust over that money, a failure in fact to hold the money in a separate fund need not negate the existence of an express trust which is otherwise conclusively established (at [111] per Gageler J). 79 In circumstances where the Company Assignment Form does not explicitly speak of any trust, Mr Hundy urged the Court to infer an express trust from the circumstances of the parties' relationship, relying in particular on: (a) the fact that the Company Assignment Form only refers to assignment of the "right to create STCs" and "not necessarily the benefits or rights attaching to the STCs after their creation"; (b) the payment options provided to assignors indicated that the owner or installer had the ability to direct how the particular STCs created by the Company under a Company Assignment Form should be dealt with, and where the proceeds of the sale of STCs should go; (c) except where the Quote Protect service is used, the risk or uncertainty with respect to the price and timing of the sales of STCs lay with the owner/installer; and (d) the existence of a trust was said to be consistent with Hundy (No 1). 80 As Mr Phillips and Mr Hundy pointed out in their affidavits, there is an additional reason why the Court should infer an express trust in the circumstances here. It relates to the fact that the Company published on its website, along with the Company Assignment Form, a copy of a private ruling dated 20 June 2012 provided by the ATO to the Company. The private ruling relates to the GST and RECs. As might be expected, the private ruling reflects, and is based upon, information provided to the ATO by the Company. On page 1-2 of the reasons for the private ruling the following is stated (emphasis added): There are no goods and services tax (GST) consequences for you when you are assigned the right to create the renewable certificates (RECs) or when you trade the RECs and pay the installer. You hold the RECs in trust for the installer. … Under a verbal agreement with the installer: • you are not required to pay for the assignment but are required to create the RECs and hold them in trust for the installer. You have no discretion regarding the use and disposal of the RECs and deal with the RECs solely at the direction of the installer • the assignment gives you legal title over the right to create the RECs. However, it is the installer who has control over when the RECs are traded, that is, the installer will instruct you to either trade the RECs immediately or to hold the RECs and trade them at a later date, hopefully to increase their value, and • you pay the installer once the RECs have been traded. This amount can vary from the original agreed prices it depends on the value of the RECs when traded. It is the installer, however, who accepts any monetary gain or loss. Given this agreement, your role is as a facilitator in the transaction between the installer and purchaser (that is, it is you that has the necessary skills and registration requirements to enable the RECs to be acquired and traded as directed by the installer). It is the installer who enjoys the benefits of ownership of the RECs and is therefore the beneficial owner. A copy of the private ruling was exhibited to Mr Hundy's first affidavit. 81 Applying the relevant principles to the facts and circumstances here as outlined in [61], [62], [79] and [80] above and [94] and [95] below, I accept Mr Hundy's conclusion that there is sufficient evidence to conclude that there is an express trust as asserted by him. Furthermore, although not raised by either Mr Hundy or Mr Phillips, it is significant that the "Owner Declaration" section of the Company Assignment Form made repeated reference to the STCs created pursuant to the assignment as "my STCs" (that is the owner's STCs). These references combined with the fact that the payment options specify how the particular STCs are to be dealt with (rather than merely providing for calculation of a price to be paid in exchange for the STCs) support the conclusion that it was the mutual intention of the owners and the Company, as reflected in the contract, that the STCs created pursuant to the assignment would not be at the free disposal of the Company (Twinsectra Ltd v Yardley [2002] 2 AC 164 at [82] per Lord Millett). I am also satisfied that the trusts were completely constituted by an agreement to assign supported by consideration which is effective in equity (Associated Alloys v ACN 001 452 106 Pty Ltd [2000] HCA 25; 202 CLR 588 at [28] and [42] per Gaudron, McHugh, Gummow and Hayne JJ). 82 The STCs held by the Company as at 29 April 2019 comprised 9012 STCs in the Company's REC Registry Account (comprising 1643 Pre-Existing Company STCs, 6520 Pre-Existing Third Party STCs and 849 Creation Fee STCs: see above at [41]). 83 I accept Mr Hundy's explanation as to why it is neither appropriate nor necessary to treat the Creation Fee STCs differently from the Pre-Existing Company STCs, particularly having regard to the nature and extent of the investigations already carried out by Mr Hundy and the administrative burden for the Company and uncertain benefits to it of conducting further investigations. 84 I also accept Mr Hundy's view that the significant shortfall between the Company's records as to how any STCs it should hold as opposed to those recorded in the REC Registry is probably because the Company conducted its business without proper regard to the claims of the persons who were entitled to the STCs, whether in the Trading Business or the Registration Business. 85 I accept that the total number of STCs which are owed to parties who claim or may be entitled to claim an interest in the STCs and other assets of the Company is 40,366 STCs, with an estimated value of $1,473,359. Thus there is a net shortfall of 31,354 STCs, being 40,366 STCs which are claimed or may be claimed by parties less 9012 STCs currently held by the Company. 86 In these circumstances, having regard to the tracing principles in Re Oatway [1903] 2 Ch 356 applied in Bastion at [36], the beneficiaries of the various STCs trusts created through the Registration Business are entitled to trace into the STCs acquired through the Trading Business. Therefore the 6520 Pre-Existing Third Party STCs should also be treated as trust property and, accordingly, are not assets which are available to the general pool of creditors of the Company. 87 I also find that it appears that the Company sold STCs without authorisation from beneficiaries and then applied the proceeds to its own account, thereby producing a substantial shortfall in trust assets. In these circumstances, the beneficiaries would, as the liquidator pointed out, be entitled to pursue the Company as trustee for the shortfall (and potentially the directors as third parties) and make them creditors to the extent of the shortfall. 88 Finally, although the STCs created pursuant to assignment by different owners form separate trusts, I accept Mr Hundy's evidence that the operations of the Company, described above at [21] and [35]-[37], are such that it would be inappropriate to require him to trace exactly the STCs created for a particular owner or installer and their traceable proceeds. Given the unsatisfactory state of the Company's books such an exercise would be extremely time consuming to implement, if not impossible in practice, and would introduce significant additional cost and delay to the orderly winding up of the Company. In those circumstances, the fairest and most commercially sound course is to treat the STCs held on trust as a single pool of assets to be distributed rateably among the various beneficiaries to the trusts forming the pool (see [100]-[102] below). 89 For these reasons an order along the lines of order 1 in the originating application should be made.

Order 2 - Other assets as Assets Held on Trust 90 I accept Mr Hundy's evidence that the other assets held by the Company apart from the STCs are: (a) Cash at bank, $654,889.14 comprising: (i) cash at bank as at the date of Mr Hundy's appointment as joint administrator of the Company; (ii) $143,154.94 recovered from Mr Craig Walsh on account of 'Directors' Loans'; (iii) $3,723.68 from the sale of shares in MYOB held by the Company; (iv) miscellaneous refunds of GST; (v) interest received on the funds held since appointment; (vi) less amounts paid in the administration and liquidation of the Company; (b) A debt owed from Waltech Energy Saving Ply Ltd with an estimated realisable value of $40,000; and (c) A potential claim against a third party company in relation to the submission of purportedly fraudulent STC Assignment Forms to the Company which were the cause of the Company's REC Registry account initially being suspended. 91 As to cash at bank and, in particular, cash held by the Company as at the date of administration, applying the principles in Re Oatway, I accept Mr Hundy's view that the cash at bank should be regarded as being held by the Company on trust for those beneficiaries determined to be entitled to assets of the Company which are held on trust. That is so far the following reasons. (a) To the extent that STCs are held by the Company as Assets Held on Trust, if those STCs were sold by the Company, the proceeds thereof would also be held on trust if the Company did not remit those proceeds to the relevant beneficiary. (b) To the extent that the cash proceeds from a sale of STCs as Assets Held on Trust were used to purchase further or additional STCs, those additional STCs should also be proceeds of the original STCs and therefore also be included in the Assets Held on Trust. (c) The STCs acquired and sold by the Company, whether in the course of its Registration Business or its Trading Business, were treated by the Company as fungible commodities without regard to the source of those STCs and without separating the Company's dealings with STCs on account of its Registration Business or its Trading Business. (d) Cash of the Company was used and treated, whether in the course of its Registration Business or its Trading Business, as a general pool of cash funds without separation as between: (i) different beneficiaries of any trust; and (ii) any cash which was the proceeds of STCs as Assets Held on Trust or cash beneficially owned by the Company. (e) The cash of the Company has therefore become intermingled. (f) The intermingled funds of the Company were used (without reference to their source) to: (i) conduct further dealings with STCs on account of the Company's Registration Business and Trading Business; (ii) pay the Company's general trade and statutory creditors; and (iii) make loans or payments to Mr Craig Walsh and Waltech Energy Saving Pty Ltd. (g) From the books and records of the Company (including bank records), there is insufficient information to reconcile every particular payment or receipt of cash to a sale or purchase of STCs, and in particular, the specific owner or installer that may be beneficially entitled to those STCs or proceeds thereof. (h) In particular, there are no accounts or records that would allow, in any practical sense, tracing of, for example, the proceeds of sale of one STC into the purchase of another STC which is then sold again, etc. (i) The costs and expenses of attempting any exercise to trace the proceeds of STCs may exceed and outweigh the commercial benefits to the creditors without any certainty that such exercise would be successful in accurately tracing such proceeds. (j) To undertake such exercise would unduly delay the winding-up of the Company and distribution of assets amongst those parties claiming against the Company or its assets. (k) It is reasonable to presume that, to the extent the Company expended the intermingled funds, it expended any of its own funds first. (l) From Mr Hundy's investigations: (i) it appears that the Company did not generate income from any operations other than the trading of STCs (or RECs, generally); and (ii) there do not appear to be material capital investments made by the directors or shareholders of the Company. (m) Given the claims or potential claims of parties who may have a beneficial interest in the STCs or the proceeds thereof exceed the total of the cash at bank of the Company (and the STCs held by the Company), it logically follows that the Company must have expended all its own assets and then some of the Assets Held on Trust, and the assets it still holds are wholly held as Assets Held on Trust for the beneficiaries of the trust. 92 With regard to the other assets of the Company, including the: (a) loan to Mr Craig Walsh; (b) loan to Waltech Energy Saving Pty Ltd; and (c) shares in MYOB, and the recoveries thereof, I accept Mr Hundy's view that such assets are held by the Company as Assets Held on Trust for the relevant beneficiaries as it is likely that these assets were purchased or acquired by using funds from the sale of STCs or RECs. It should be noted however, that the same cannot be said of the potential claim against a third party referred to at [90(c)] above. 93 For these reasons, an order along the lines of order 2 should be made.

Order 3 - Beneficiaries of the Trust 94 In brief, Mr Hundy has explained that he considers that the STCs held by the Company should be treated as Assets Held on Trust for the benefit of the owners or installers. In brief those reasons are as follows. (a) The owners are primarily entitled to create STCs pursuant to ss 23 and 23C of the REE Act. (b) The owners are the persons assigning the right to create STCs to the Company. (c) The Company Assignment Forms indicate that the owner retains the ability to change the manner in which the Company is directed to deal with STCs. (d) The owner may direct where the proceeds of STCs are to be paid. 95 In brief, Mr Hundy's view that the installers are beneficially entitled to STCs where owners have in their Company Assignment Forms directed payment for STCs to the relevant installer is based on the following matters. (a) In circumstances where the owner directs payment of STCs to the installer, the installer provides the owner with a point of sale discount on the relevant solar products. (b) The owner, by receiving the point of sale discount, effectively receives the benefit of the STCs to be created in relation to their relevant solar products immediately on the purchase, installation and payment for the solar product. (c) The installer, by granting the point of sale discount, effectively provides consideration to the owners in exchange for the right to receive payments and proceeds with regard to STCs in relation to particular solar products supplied by the installer. (d) By completing the Company Assignment Forms in a manner that directs payment for STCs to installers, the owner has effectively directed the Company that the benefits or proceeds of those STCs should be passed to the relevant installer. (e) As per the owner declaration at the end of the Company Assignment Form, where the owner directs payment to an installer, the owner acknowledges that the installer has the ability to change the payment option with regards to the relevant STCs, and therefore the installer has a degree of control over the relevant STCs or the proceeds thereof. (f) By publishing the private ruling referred to above on its website, the Company may be making representations to installers that where payment for STCs has been directed to the relevant installer, the Company holds those STCs on trust for the relevant installer. (g) The Company's conduct with respect to STCs, and in particular, the regular and consistent manner in which the Company complied with directions of installers with regards to how to deal with STCs, suggest that there is, by conduct or agreement, some acknowledgement by the Company that the installers should have an interest in the STCs held by the Company. (h) Consequently, Mr Hundy is satisfied that, where an owner has directed payment for STCs to an installer under a Company Assignment Form, the owner has effectively assigned any beneficial interest he or she may have in STCs held by the Company to the relevant installer. (i) Even if there was no valid assignment or transfer of owners' beneficial interest in STCs in the Company to the relevant installers, and the owners still retain that beneficial interest, the Company would be contractually bound to pay the owners for their STCs as directed, which would mean making payment for STCs directly to the installers. Consequently Mr Hundy is satisfied that commercially and in practice, there would not be any difference in treating the relevant installers as being beneficially entitled to STCs or the proceeds thereof as compared to the owners being beneficially entitled, but directing payment of the proceeds to the relevant installers. 96 Mr Hundy has also explained why he considers that, where an owner and/or installer had been paid in full by the Company for their STCs, the owner and/or installer has ceased to hold a beneficial interest in those STCs, including where the Company still holds those STCs. In brief, that is because: (a) STCs, once created, are treated as fungible commodities where one may replace the other, and the value of STCs are the same regardless of for whom they are created. (b) Where an owner has not directed payment for STCs to an installer, and the owner has been paid for those STCs, then despite the Company still holding such STCs: (i) the owner would have received the full benefit that the owner expected to receive in relation to such STCs; (ii) to the extent that the Company paid the owner from its own funds, or those which are proceeds from the sale of other STCs, the Company and/or the person(s) beneficially entitled to those other STCs would have lost the benefit of those funds or STCs; (iii) it does not appear to be possible nor commercially viable to seek repayment of the amounts previously paid to such owners, and then make payment to them in relation to their specific STCs; and (iv) in the circumstances where owners who have been paid for their STCs, but those STCs are still held by the Company, to find that those owners still had a beneficial entitlement to such STCs would result in those owners receiving a windfall profit, to the detriment of other owners or installers whose STCs may no longer be held by the Company and who have not been paid, is an unreasonable and inequitable position. (c) Where the owner has directed payment for STCs to an installer, and that installer has been paid for such STCs, but the Company still holds such STCs: (i) the owner would have received the benefit of the STCs at the point at which the installer supplied the relevant solar products; and (ii) the installer should also not be entitled to claim the benefit of STCs still held by the Company for the reasons described in sub-paragraph (b) above in relation to the owners. 97 I accept Mr Hundy's conclusions, although not necessarily all the reasons given by him for reaching those conclusions. As explained earlier when identifying the trust, the contractual documents reveal an intention that in the first instance the STCs created pursuant to the assignment are to be held for the benefit of the owners. Where owners have directed payment for the STCs to their installer, the installer should be regarded as beneficiary. This occurs either through constitution of a new trust by the owner's direction to the Company to deal with the relevant STCs for the benefit of the installer (Comptroller of Stamps (Victoria) v Howard-Smith (1936) 54 CLR 614 at 622 per Dixon J) or an agreement to assign in equity the owner's beneficial interest in the STCs, supported by consideration in the form of the point of sale discount (Associated Alloys at [28]). 98 I also agree with Mr Hundy that once an owner or an installer has been paid in full for their STCs, they cease to hold any beneficial interest in them. Discharge of the trust in this way is provided for in the contract (Associated Alloys at [32]). As to installers and owners paid with proceeds from STCs beneficially owned by other installers and owners STCs, I accept Mr Hundy's evidence that it would be inappropriate to attempt to seek repayment of amounts previously paid and then make distribution of the proceeds of the specific STCs owned beneficially by each owner or installer. These conclusions have the following consequences. (a) Owners (who have not directed payment for STCs to an installer) and installers (where an owner has directed payment for STCs to them) who have not been paid for those STCs have a beneficial interest in the STCs held by the Company. (b) To the extent that other assets of the Company are proceeds of STCs which should have been treated as part of the Assets Held on Trust, the owners and installers identified in paragraph (a) above would have a beneficial interest in those other assets of the Company as proceeds of STCs which should have been held on trust by the Company. (c) Those owners and installers identified in paragraph (a) above should therefore be the beneficiaries of the Assets Held on Trust. 99 For these reasons, an order should be made along the lines of order 3 in the originating application.

Order 4 - Disposal of Trust Assets 100 Mr Hundy has explained the basis upon which he has come to the view that STCs, and the other assets which should be regarded as Assets Held on Trust, should be dealt with as a single pool of assets. In brief, that is for the following reasons. (a) The number of STCs currently held by the Company which were actually created by the Company (2,492 STCs out of 9,012 STCs) represents approximately 28% of the total STCs held by the Company. (b) There is a significant shortfall in the amount of STCs held by the Company and the amount that it should hold (9,012 STCs rather than a claimed 40,267 STCs). (c) Only those STCs which were created by the Company can be identified as being created for or in relation to particular owners or installers who are creditors of the Company. (d) Of those STCs which were created by the Company, a large number of those STCs were created for or in relation to particular owners or installers who are not creditors of the Company and who have not submitted claims or proofs of debt in the liquidation of the Company (i.e. those owners or installers have been paid in full). (e) The Company does not hold STCs referable to the majority of owner or installer creditors who are claiming an interest in the STCs. (f) It is not possible or practical to trace every transaction that may have been made by the Company with respect to STCs that should be held on trust or the proceeds thereof. (g) In the current circumstances, and given the way that STCs are traded or sold by the Company (generally on a first-in first-out basis, and without reference to the owner or installer in relation to particular STCs), it would be inequitable to prefer the interests of owners or installers where the Company still holds STCs referable to them, as the reasons why the Company holds such STCs (as opposed to creditors where the Company does not hold STCs referable to them) are merely: (i) timing; or (ii) random chance. 101 With particular reference to order 4(e) in the originating application, Mr Hundy provided the following supporting explanations. (a) Installer and owner creditors claiming an interest in the STCs are claiming an interest in the STCs as a particular asset. (b) The prices that the Company had agreed to pay installer and owner creditors with respect to STCs are different for each installer and owner, and for different tranches of STCs. (c) The proceeds of STCs which should have been held as Assets Held on Trust for each installer and owner will also vary as between the installers, owners and different tranches of STCs. (d) In those circumstances, it is appropriate that once STCs held by the Company are sold, those proceeds (less the costs and expenses of sale) be distributed between the installer and owner creditors on a pro-rata basis in accordance with the number of STCs that they are claiming they have an interest in (rather than the dollar amount they claim they are entitled to). 102 I accept these reasons. Accordingly, an order should be made along the lines of that sought in order 4 of the originating application.

Order 5 - Appointment of receiver and manager 103 Mr Hundy's submissions in support of his application that he be appointed receiver and manager of the Assets Held on Trust are set out at [66] to [68] above. I accept those submissions. Accordingly, an order should be made along the lines of order 5 in the originating application.

Order 6 - Liquidator's remuneration and disbursements 104 In the course of his oral address, Mr Rose (who appeared for the applicant) obtained instructions that proposed order 6 was no longer sought. He indicated that an application in respect of the liquidator's remuneration and disbursements might be made at a later date. These instructions were obtained after I raised several concerns relating to proposed order 6. For convenience and future guidance, I will now set out those concerns. 105 Prior to amendments made by the Insolvency Law Reform Act 2016 (Cth), which introduced the new Insolvency Practice Schedule as Sch 2 to the Corporations Act, the Court's power to approve a liquidator's remuneration was sourced in s 473(3) of the Corporations Act. Relevant factors to the exercise of that power were specified in s 473(10). The meaning and application of those provisions was discussed in cases such as Sanderson as Liquidator of Sakr Nominees Pty Limited (in liquidation) v Sakr [2017] NSWCA 38; 93 NSWLR 459 and Royds v Royds, in the matter of Caloola Holdings Pty Ltd (in liq) [2017] FCA 731. 106 Division 60 of Pt 3 of Sch 2 (The Insolvency Practice Schedule) now contains general rules relating to external administrations, including provisions dealing with the remuneration of an external administrator (which is defined in s 5-20(c) to include the liquidator of the company). It also includes provisions relating to the review of the external administration by the Court. The simplified outline in s 60-1 states that the external administrator is entitled to receive remuneration for necessary work properly performed by him or her in relation to the external administration and that the amount of remuneration will usually be set by a remuneration determination which, in most cases other than a member's voluntary winding up, will be made by the creditors or a committee of inspection. If there is no remuneration determination, the external administrator is entitled to receive "a reasonable amount for the work up to a maximum amount of $5,000 (exclusive of GST)". The simplified outline also states that the Court may review the remuneration of an external administrator and make orders under Div 90 about remuneration. 107 The detailed provisions which give effect to the outline are in s 60-5 ff. Section 60-10 provides that a remuneration determination may be made by a resolution of the creditors or a committee of inspection (if there is one) for necessary work properly performed by the external administrator in relation to the external administration. Significantly, this provision also empowers the Court to make such a remuneration determination if, relevantly, there is no such resolution of the creditors or a committee of inspection (s 60-10(1(c)). 108 Relevantly, in making a remuneration determination under s 60-10(1)(c) the Court must have regard to whether the remuneration is reasonable, taking into account any or all of several specified matters in s 60-12. It is desirable to set out the provision in full: 60‑12 Matters to which the Court must have regard In making a remuneration determination under paragraph 60‑10(1)(c) or (2)(b), or reviewing a remuneration determination under section 60‑11, the Court must have regard to whether the remuneration is reasonable, taking into account any or all of the following matters: (a) the extent to which the work by the external administrator was necessary and properly performed; (b) the extent to which the work likely to be performed by the external administrator is likely to be necessary and properly performed; (c) the period during which the work was, or is likely to be, performed by the external administrator; (d) the quality of the work performed, or likely to be performed, by the external administrator; (e) the complexity (or otherwise) of the work performed, or likely to be performed, by the external administrator; (f) the extent (if any) to which the external administrator was, or is likely to be, required to deal with extraordinary issues; (g) the extent (if any) to which the external administrator was, or is likely to be, required to accept a higher level of risk or responsibility than is usually the case; (h) the value and nature of any property dealt with, or likely to be dealt with, by the external administrator; (i) the number, attributes and conduct, or the likely number, attributes and conduct, of the creditors; (j) if the remuneration is worked out wholly or partly on a time‑cost basis - the time properly taken, or likely to be properly taken, by the external administrator in performing the work; (k) whether the external administrator was, or is likely to be, required to deal with one or more controllers, or one or more managing controllers; (l) if: (i) a review has been carried out under Subdivision C of Division 90 (review by another registered liquidator) into a matter that relates to the external administration; and (ii) the matter is, or includes, remuneration of the external administrator; the contents of the report on the review that relate to that matter; (m) any other relevant matters. 109 The Court is also empowered under s 60-11 to review a remuneration determination where, for example, such a determination has been made by the resolution of the creditors. 110 A Court review of a remuneration determination may, subject to the exception in s 60-11(5), be sought by ASIC, a person with a financial interest in the external administration of the company or an officer of the company (s 60-11(1)). 111 The effect of these provisions is that the Court may itself make a remuneration determination under s 60-10(1)(c) but only if no remuneration determination has been made, relevantly, by resolution of the creditors or a committee of inspection. Where, however, the creditors have made such a resolution, an eligible person may apply to the Court for a review of that remuneration determination. In the present proceeding, the creditors have made a remuneration determination and no review has been sought of that remuneration determination. Rather, what the liquidator sought initially was effectively the Court's approval of the existing remuneration determination. For reasons which will now be developed, I consider that the Court does not have the power to grant the order sought initially by the liquidator in relation to his remuneration and disbursements. 112 First, I will explain why I consider that the provisions in Div 60 do not empower the Court to make order 6. The matters specified in s 60-12 to which the Court must have regard to in making a remuneration determination are similar to, but not identical with, the matters previously specified in s 473(10). One notable difference in the current list of matters when compared with the previous list is that the concept of whether the work performed by the liquidator was "reasonably necessary" has been now replaced by the matter of "the extent to which the work by the external administrator was necessary and properly performed" (emphasis added). Such differences may be relevant to the issue of the extent to which cases such as Sakr and Royds remain relevant to the current list of matters. It is unnecessary to determine that question in the present proceeding. That is simply because, for the following reasons, the Court has no power to make order 6 as sought by the liquidator. 113 Where (as noted above) the liquidator's remuneration was approved at the second creditors' meeting and no review has been sought by any eligible person of that remuneration determination, the Court has no power under Div 60 to make, in effect, a separate remuneration determination as sought by the liquidator (see [111] above). 114 Even if (contrary to the above), I was satisfied that the Court had power to make a remuneration determination under s 60-10(c), in the terms sought by the liquidator, there is insufficient material before the Court to indicate that the liquidator has complied with the requirements of rule 9.2 of the Federal Court (Corporations) Rules 2000 (Cth). In particular, although there is evidence that the liquidator arranged for copies of the originating process and affidavit in support dated 29 April 2019 to be served on the various entities specified in Sch 1 to the originating application after they had been filed, there is no evidence that the liquidator served a notice on those persons at least 21 days before filing the originating process, as required by rule 9.2(2). 115 Order 6 relates not only to the liquidator's remuneration, but also to costs or expenses (i.e. disbursements) incurred by the liquidator in conducting the liquidation, including legal fees. For the reasons given above, I do not consider that the Court has the power to make such a determination in relation to those matters having regard to the distinction which is drawn in Sch 2 between the external administrator's "remuneration" and "a cost or expense incurred by the external administrator". I respectfully agree with what Rees J said in In the matter of Day & Night Online Transport Pty Ltd [2019] NSWSC 292 at [22]: 22. However, a liquidator's remuneration does not include disbursements: In the matter of Stockford Limited (subject to Deed of Company Arrangement); (2005) 52 ACSR 279; [2004] FCA 1682 at [50] per Finkelstein J. As Brereton J explained In the matter of Sakr Nominees Pty Ltd [2016] NSWSC 709 at [8]: (footnotes omitted) Ordinarily, the Court approval of a liquidator's remuneration does not include disbursements: the liquidator's right to indemnity in respect of out-of-pocket expenses depends on the general law relating to a trustee's right of indemnity. Whether, and to what extent, a liquidator is entitled to recoup a disbursement from the estate, ordinarily arises upon the taking of a trustee's accounts, or upon a misfeasance summons arising from a liquidator's accounts. Sometimes, a liquidator may seek a direction that he would be justified in paying certain disbursements in order to obtain prior protection in respect of such a disbursement. This was not the subject of the appeal in In the matter of Sakr Nominees Pty Ltd [2017] NSWCA 38, nor further considered when the matter was remitted to Black J in In the matter of Sakr Nominees Pty Ltd [2017] NSWSC 668. See also In the matter of AAA Financial Intelligence Ltd (in liquidation) (No 2) [2014] NSWSC 1270 at [14]-[15]; Austin & Black Annotations to the Corporations Act (LexisNexis, looseleaf) at [5.IPSC.60] citing Venetian Nominees Pty Ltd v Conlan (1998) 20 WAR 96; 16 ACLC 1653; GIS Electrical Pty Ltd v Melson [2001] WASC 314 at [55]; In the matter of Stockford Limited (subject to Deed of Company Arrangement); (2005) 52 ACSR 279; [2004] FCA 1682 at [50]-[51]; Re Huxtable Timeshare Resort Club Ltd (2010) 187 FCR 13; [2010] FCA 673 at [36]-[37]; Deputy Commissioner of Taxation v Starpicket Pty Ltd (No 2) [2013] FCA 699 at [15] cf. Re Solfire Pty Ltd (in liq) (No 2) [1999] 2 Qd R 182; (1998) 16 ACLC 1156. 116 For completeness, I should add that even if, contrary to the above, the Court had the power to grant order 6, insufficient material has been provided by the liquidator to determine whether or not his remuneration and/or the disbursements are reasonable. As to remuneration, the liquidator has provided some limited information, including that contained in a Statutory Report to Creditors dated 2 August 2018. Reference is made there to the creditors approving on 2 May 2018 remuneration for the liquidation up to the amount of $44,044. Reference is also made in the report to an estimate that the total remuneration for the liquidation will be approximately $66,000, inclusive of GST. Although further information is provided in respect of the figure of $44,044, no information is provided as to how the estimate was arrived at for future remuneration to complete the liquidation. The information provided is even more glaringly deficient in respect of the liquidator's disbursements in respect of legal costs. He has simply annexed multiple invoices from his solicitor which provide no particulars at all regarding the nature of the legal services provided, who provided them and what, if any, fee arrangement had been struck. The need for the liquidator to provide adequate material has been emphasised in numerous cases, including in Royds and In the matter of Plutus Payroll Australia Pty Ltd (in liquidation) [2018] NSWSC 1092 at [14]-[15] per Black J. 117 Secondly, I shall now explain why I consider that the Court is not empowered by the provisions in Div 90 to make Order 6. This Division contains provisions concerning the review of the external administration of a Company. The simplified outline in s 90-1 states that the Court may inquire into the external administration of a company either on its own initiative, on the application of the company, the external administrator, ASIC or a person with a financial interest in the external administration of the company, such as a creditor. 118 Section 90-15 provides for the orders which the Court may make in conducting such a review. Relevantly it provides: 90‑15 Court may make orders in relation to external administration Court may make orders (1) The Court may make such orders as it thinks fit in relation to the external administration of a company. … Examples of orders that may be made (3) Without limiting subsection (1), those orders may include any one or more of the following: … (f) an order in relation to remuneration, including an order requiring a person to repay to a company, or the creditors of a company, remuneration paid to the person as external administrator of the company. 119 A non-exhaustive list of the matters which the Court may take into account in determining whether or not in its discretion to make an order under s 90-15 is set out in s 90-15(4). 120 In determining the proper construction of "remuneration" and whether it extends to include disbursements, it is relevant to consider Div 90 as a whole and to note in particular some of the provisions in Subdiv C of Div 90 which relate to review not by the Court, but by another registered liquidator. Such a review may look at a range of matters, including whether the remuneration of the external administrator is reasonable and whether costs and expenses have been properly incurred, as described in the simplified outline in s 90-1. Of particular relevance, however, is s 90-24, which provides that a registered liquidator may be appointed to carry out a review into either or both of the following matters: (a) remuneration of the external administrator of the company; (b) a cost or expense incurred by the external administrator of the company. 121 The significance of this provision lies in the fact that it is evident from the specification of the two limbs there that the expression "remuneration of the external administrator of the company" does not include "a cost or expense incurred by the external administrator". Rather, separate provision is made for what plainly is regarded as separate concepts. 122 The significance of this bifurcation is that, having regard to Div 90 as a whole, the provisions in Div 90 concerning the Court's power to make an order in relation to remuneration of an external administrator does not extend to making an order in respect of a cost or expense incurred by the external administrator save to the extent that express provision is made to the contrary. This view is supported by the authorities referred to at [113] above.

Order 7 - Liquidator's actions with respect to "pending" STCs 123 In his affidavit dated 29 April 2019, Mr Hundy has explained why he cancelled or caused to be cancelled STC registrations as at the date of the administration of the Company which were "pending audit" and why he has since paid the relevant creation fee in the total amount of $306.60 so that the creation and registration of the 849 STCs may be finalised and registered. As noted above at [39], his decision to "fail" the registration of the STCs pending audit was, in part, based on advice from the CER that the original owners would be able to seek registration of those STCs via another agent or registered person. Having regard to the terms s 23(2), I have some doubts about whether that advice is correct. Nevertheless, in acting on the advice of a statutory regulator, there can be no doubt that the applicant acted honestly and reasonably and should be given relief under s 85(1) of the ACT Trustee Act and s 76 of the Qld Trusts Act if his actions did constitute a breach of trust. 124 I accept Mr Hundy's explanation for his actions with respect to the pending STCs and consider that an order should be made along the lines of that sought in order 7 of the originating application.

Costs of the proceedings 125 Mr Rose sought an order that the applicant's costs of the proceedings be paid from the Assets Held on Trust. He did not at this stage seek any order concerning the quantum of those costs. I note Mr Phillips deposed that a distinction should be drawn between trust assets and assets associated with the Company's business operations, albeit with respect to order 6 which is no longer pressed. Nevertheless, having regard to In re Universal Distributing Company Limited (in liquidation) (1933) 48 CLR 171 at 174-175 per Dixon J, I am prepared to make the more limited order sought by the applicant.

Conclusion 126 I will direct that the applicant provide within 14 days hereof proposed short minutes of order which give effect to these reasons. I certify that the preceding one hundred and twenty-six (126) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.