WISE ENERGY GROUP COMPANY LTD -v- ROCKE [2014] WASC 505 (23 December 2014)

3 On 4 November 2014, GNR[3] appointed Mr Rocke and Mr Bumbak (the receivers), from the insolvency accounting firm KordaMentha, as the receivers and managers of Wise's interest in the Joint Venture and the JV Agreement (the Wise Interest).[4] That appointment was made pursuant to an agreement (the Wise Security Deed) by which Wise provided GNR with a security interest in the Wise Interest as security for the due and punctual payment of money, obligations and liabilities owed by Pluton to GNR under a loan agreement entered into by Pluton and GNR (the Pluton Loan Agreement).

4 On 5 November 2014, the receivers and the Pluton receivers, acting on behalf of Wise and of Pluton, entered into a Deed of Variation and Acknowledgement (the JV Variation Deed) by which they varied the JV Agreement.[5] That variation permitted the reappointment of Pluton as the manager of the Joint Venture (the appointment of the Pluton receivers having terminated Pluton's appointment as Manager) and made clear that while Pluton was in receivership, Pluton may remain the Manager of the Joint Venture.

5 There are three planks to the actions brought by Wise.

6 First, Wise says that the appointment of the receivers as the receivers and managers of the Wise Interest was invalid because by the time of their appointment, Wise's liability under the Wise Security Deed had been discharged. Secondly, Wise says that in entering into the JV Variation Deed, the receivers breached a fiduciary duty they owed to Wise, or alternatively a duty they owed to Wise to exercise their powers in good faith, for a proper purpose, and not so as to sacrifice Wise's interests. Finally, Wise seeks an order that GNR provide it with a statement setting out the total amount GNR says must be paid to discharge Wise's liability under the Wise Security Deed, and the calculations and data on which that amount has been calculated (the payout figure). In addition, Wise seeks an order that the receivers provide it with an account in respect of their management (as the Pluton receivers) of the Joint Venture (the account).

7 Wise seeks declaratory and injunctive relief, or relief under s 233 of the Corporations Act 2001 (Cth), to remove the receivers as receivers and managers of the Wise Interest, an order that the receivers provide the account, an order that the receivers compensate Wise for any losses caused by them (as the Pluton receivers) as managers of the Joint Venture, damages from GNR for breach of the Wise Security Deed, and for interference in contractual relations, damages from GNR and from the receivers for trespass and an order that GNR provide the payout figure. In addition, Wise seeks a declaration that the JV Variation Deed is void and of no effect.

8 The defendants say that the appointment of the receivers was valid, that the execution of the JV Variation Deed did not constitute the breach of any duty the receivers owed to Wise, and that the JV Variation Deed is valid. Finally, they say that they provided the payout figure and calculations to Wise on 5 November 2014, and an updated payout figure in the course of the trial, and that there is no basis for concluding that they have failed to do so, or any utility in an order that they should provide a further payout figure.

9 On 5 December 2014, I made orders that there be a separate trial of Wise's actions other than its claim for damages.

10 For the reasons set out below, Wise's claim that the appointment of the receivers was invalid should be dismissed. Wise's claim that the execution of the JV Variation Deed on behalf of Wise constituted a breach of a fiduciary duty, or a breach of the duty of good faith, owed by the receivers to Wise should also be dismissed. Wise's claim for the provision of the payout figure should be dismissed. In so far as it seeks the account, that claim is premature and in any event appeared to have been sought only as relief consequential on a declaration that the appointment of the receivers was invalid. That claim should also be dismissed.

11 In these reasons for decision, I deal with the following matters:

1. The factual and contractual context;
2. Whether the appointment of the receivers was a breach of the Wise Security Deed;
3. Whether the receivers breached a fiduciary duty to Wise by entering into the JV Variation Deed;
4. Whether the receivers breached a duty of good faith to Wise by entering into the JV Variation Deed;
5. Whether GNR is required to provide Wise with a statement of account setting out the total outstanding amount of Wise's liability under the Wise Security Deed; and
6. Conclusion and orders.

12 The factual context was largely not in dispute, and there was no dispute about the existence of various agreements entered into by the parties. What was in dispute was the proper construction of some key clauses in various agreements, which I set out below.

13 On 12 October 2012, Pluton and Wise entered into an agreement pursuant to which Wise agreed to purchase a 50% share in the Mine at Cockatoo Island (the WEG Sale Agreement).[6] That agreement was subject to the satisfaction of some conditions. Those conditions were not met and in December 2012, Pluton issued a termination notice to Wise terminating the WEG Sale Agreement.

14 However, on 26 April 2013, Wise and Pluton entered into a further agreement entitled a Deed of Reinstatement and Amendment WEG Sale Agreement (the Reinstatement Deed) - by which Pluton withdrew its termination notice, and the WEG Sale Agreement was reinstated. The Reinstatement Deed was subject to a number of conditions precedent, including the execution of the Wise Security Deed. That document was executed on 31 August 2013, at which point Wise became the owner of the Wise Interest.

15 Under the Reinstatement Deed, Pluton agreed that it would not agree to any amendment to the Pluton Loan Agreement without Wise's consent.[7]

16 Pluton was the initial Manager of the Joint Venture, and there was no dispute that Pluton remained the Manager until 3 November 2014 when the Pluton receivers were appointed.

17 On 28 February 2013, Pluton entered into an iron ore sales contract (the Sales and Purchase Contract) with General Nice (HK) Ltd (GNR(HK))[8] for the supply of 'Product' referred to as 'Cockatoo fines' (namely iron ore which met certain specifications set out in the Sales and Purchase Contract) from the Mine.

18 Under the Sales and Purchase Contract it was agreed that Pluton would sell to GNR(HK) 10 individual cargoes of Product, each comprising 43,000 tonnes of Product.[9] Clause 4 of the Sales and Purchase Contract required that each shipment be loaded within a period of 14 days from 10 specified loading dates. The price payable for each shipment of Product was to be calculated in accordance with cl 6(b) of the Sales and Purchase Contract. That clause provided:

6(b) The price for each shipment (Shipping Price) shall be determined by application of the following formula:

Shipping Price = (CFR Platts Price less Discount) less US$2.4m prepayment per shipment.[10]

19 The manner and timing of the payment for each shipment of the product was dealt with in cl 15 of the Sales and Purchase Contract. That clause provided:

(a) [GNR(HK)] shall provide ... the amount of USD24.0 million within 24 hours of execution of this Agreement.

(b) [Pluton] shall deduct an amount of USD2.4 million from each shipment of Product made in accordance with clause 4 of this Agreement.

20 Although cl 15.1 contemplated the payment of US$24 million within 24 hours, on 28 February 2013, GNR(HK) and Pluton also entered into an addendum to the Sales and Purchase Contract (the Deed of Addendum)[11] by which they agreed that the prepayment of US$24 million would be made only after a deed of security was provided by Pluton in a form acceptable to GNR(HK)[12] (the Pluton Security Deed) and with a value of not less than US$24 million.[13] The Pluton Security Deed was executed by GNR and Pluton on 26 April 2013.[14]

21 The Sales and Purchase Contract thus contemplated that GNR would pay US$24 million in advance for the supply of the Product, and would be credited the sum of US$2.4 million from the price for each of 10 shipments of Product. The balance of the price for each shipment would be paid by GNR(HK) in accordance with cl 15.3, which provided:

For each individual shipment, [GNR(HK)] must establish at least seven (7) days before the commencement of loading of each shipment of Product, in favour of [Pluton], an irrevocable letter of credit in US$ with a deduction of USD2.4 million calculated in accordance with Clause 6(b) issued by a prime commercial bank ... approved by [Pluton], negotiable in Australia.

Deed of Addendum to the Sales and Purchase Contract

22 In the Deed of Addendum, Pluton and GNR(HK) also agreed that Pluton would provide GNR(HK) with an additional 10 shipments of Product (calculated at the CFR Platts Price less a discount of US$5 per dry metric tonne) which would be transacted on a monthly basis, pursuant to a separate sales and purchase contract which was to be concluded before 30 March 2013. Those additional shipments were to be made no later than December 2014.[15] In fact, no separate sales and purchase contract was entered into. Instead Pluton and GNR(HK) entered into Addenda to the Sales and Purchase Contract which dealt with these additional shipments.

The Pluton Loan Agreement and the Pluton Security Deed

23 There was also no dispute that on 26 April 2013, Pluton entered into an agreement described as a Loan Agreement with GNR (the Pluton Loan Agreement). The Pluton Loan Agreement contemplated that GNR would provide the 'loan' amount of US$24 million to Pluton.[16] The terms on which the 'loan' was to be repaid were set out in cl 6 of the Pluton Loan Agreement, which provided:

6(a) [Pluton] must repay the Loan in equal instalments of US$2,400,000 in the form of delivery of Product to the Lender (Delivery) in accordance with the payment schedule set out in Schedule 1 and otherwise in accordance with the Sales and Purchase Contract.

24 (There was no dispute between the parties that the reference to delivery of Product to the Lender in cl 6(a) was understood by the parties as a reference to GNR(HK) despite the fact that GNR was the Lender under the Pluton Loan Agreement.[17])

25 Although described as a 'loan', the US$24 million 'loan' amount under the Pluton Loan Agreement was in fact a prepayment towards the price of 10 shipments of Product. Hence a credit of US$2.4 million was to be given by Pluton to GNR(HK) from the price of each of 10 shipments of Product.

26 The Pluton Loan Agreement was conditional on the execution of the Pluton Security Deed, which occurred on 26 April 2013.[18]

27 On 16 May 2013, Pluton and GNR(HK) entered into an addendum to the Sales and Purchase Contract by which they amended that contract in a number of respects, including by substituting a new list of the 10 shipment dates in cl 4.[19]

28 On 31 May 2013, Pluton and GNR(HK) entered into a further addendum to the Sales and Purchase Contract by which they amended the Sales and Purchase Contract in a number of respects,[20] including by substituting a new list of shipment dates, comprising 20 shipments instead of 10 shipments, and by amending cl 15.3 of the Sales and Purchase Contract, so that it read:

For each individual shipment, [GNR(HK)] must establish at least seven (7) days before the commencement of loading of each shipment of Product, in favour of [Pluton], an irrevocable letter of credit in US$ with a deduction of USD2.4 million for the shipment #1 to 3, with a deduction of USD1.0 million for shipment #4 to 19 and with a deduction of US$ 0.8 million for shipment #20 calculated in accordance with Clause 6(b) issued by a prime commercial bank ... approved by [Pluton], negotiable in Australia. ...

29 Various other adjustments to clauses of the Sales and Purchase Contract, particularly for the dates of shipments, and for the calculation of the Product Price or of Price Adjustments were made by further addenda to the Sales and Purchase Contract on various dates during the balance of 2013 and during 2014.[21]

30 By Addendum No 7, made on 14 April 2014, cl 15.3 of the Sales and Purchase Contract was amended so that it read:

For each individual shipment, [GNR(HK)] must establish at least seven (7) days before the commencement of loading of each shipment of Product, in favour of [Pluton], an irrevocable letter of credit in US$ with a deduction of USD2.4 million for the shipment #1 to 3, with a deduction of USD1.0 million for shipment #4 to 7, shipment #11 to 14 and shipment #18 to 19, with a deduction of USD2.0 million for shipment #15 to 17 and with a deduction of USD0.8 million for shipment #20 calculated in accordance with Clause 6(b) issued by a prime commercial bank ... approved by [Pluton], negotiable in Australia. ...

31 For completeness, I note that the defendants relied on a number of documents namely minutes of meetings of the Board of Pluton (the Minutes)[22] which they submitted indicated that by mid to late May 2013 Pluton was close to insolvency, and that the Addenda (or some of them) were entered into in order to address that situation. The Minutes (like all of the documents in the trial bundle) were tendered by consent, on the proviso that that did not constitute an acceptance by all of the parties of their relevance. I have not placed any weight on the Minutes, for two reasons. First, the focus of the parties' cases was on the primary contractual documents the Wise Security Deed, the Pluton Loan Agreement and the Sales and Purchase Contract, together with the Deed of Addenda. Secondly, to the limited extent that some of the Addenda to the Sales and Purchase Contract may be relevant, that relevance is confined to the fact that the credit of US$2.4 million per shipment was not applied to each of the first 10 shipments from Pluton to GNR(HK). That fact is not, as I understand it, in dispute. The motivation for Pluton's entry into those addenda with GNR(HK) (as disclosed by the Minutes) is not relevant. In any event, it is not apparent that the contents of the Minutes constitute surrounding circumstances known to Wise at the time when the Addenda were entered into, which could assist in the construction of the Addenda.

32 As I have already noted, Pluton and Wise each held a 50% share in the interests and property of the Joint Venture. The JV Agreement provided that Wise and Pluton would be equally represented on a management committee,[23] the role of which included the supervision of the Manager of the Joint Venture,[24] and approving programmes and budgets for the Joint Venture.[25]

33 Clause 5 of the JV Agreement dealt with the position of the Manager of the Joint Venture. Clause 5 relevantly provided:

The Joint Venturers severally appoint the Manager to be manager of the Joint Venture and agent of the Joint Venturers for the purposes of this agreement from the Commencement Date and the manager accepts that appointment, on and subject to the provisions of this agreement.

(a) until this agreement is terminated for any reason;

(b) until the Manager resigns, having given at least 180 days notice to the Joint Venturers of its intention to resign as Manager;

(c) until the Management Committee unanimously votes to remove it; or

(d) until the Manager suffers an Insolvency Event or commits a material breach or default in the performance of a material obligation under this agreement and fails to remedy the default within 60 days of receipt of a written notice of default served by a Non-Defaulting Joint Venturer.

...

5.4 Appointment of new Manager

(a) Upon the termination of the appointment of the Manager, the Joint Venturers must promptly appoint a new Manager under the terms of this agreement, if this agreement is not otherwise terminated.

34 The Manager was required to report to the Management Committee and amongst other things, was required to manage, direct and control Joint Venture activities as agent for and on behalf of the Joint Venturers, and to exercise its powers and duties in accordance with approved programmes and budgets and decisions made by the Management Committee.[26]

35 On 31 August 2013 Wise and GNR entered into the Wise Security Deed[27] pursuant to which Wise granted to GNR as security 'for the due and punctual payment and satisfaction of the Secured Money' a 'security interest'[28] over the Secured Property.[29] The Secured Money for which the security interest was granted was defined to mean

all money, obligations and liabilities of any kind that are or may in the future become due, owing or payable, whether actually, contingently or prospectively, by Pluton to or for the account of [GNR] ... and in the case of debts and monetary liabilities captured by this definition at any time, the Secured Money is limited to the Liability Cap at that time.[30]

36 The Liability Cap (the Wise Liability Cap) was referred to in cl 2.2 of the Wise Security Deed. Clause 2.2 of the Wise Security Deed provided:

(a) The liability of [Wise] and the total amount of money recoverable by [GNR] under this Deed and any other Transaction Document to which [Wise] is expressed to be a party, excluding costs of execution, is limited to $12,000,000 (the Liability Cap).

(b) The Liability Cap shall reduce by $1,2000,000 upon the delivery of each shipment of Product to [GNR] in accordance with clause 6 of the [Pluton Loan Agreement].

37 If an Event of Default occurred, GNR was entitled to appoint a receiver and manager of the Secured Property on terms that it thought fit.[31] The receiver was able to do any act or thing that may be done or exercised by GNR in relation to the Secured Property.[32] That included the power to take possession and assume control of the Secured Property, to manage the Secured Property, to make agreements and to execute documents on behalf of Wise for any of the purposes of the Wise Security Deed.[33]

38 Under the Wise Security Deed, Wise had the ability to make an election to pay to GNR the amount of the Wise Liability Cap at the time of an Event of Default, by giving GNR at least three days' notice of the date on which the payment would be made.[34] If Wise made that election, and payment was made, then on receiving that payment, GNR was obliged to cease to exercise any of its rights, powers or remedies under the Wise Security Deed, and to discharge the Wise Interest.[35]

39 On 20 August 2014, GNR, GNR(HK), Pluton and Wise entered into an agreement called the Acknowledgement and Amendment Deed (the A and A Deed).[36]

40 What prompted the execution of the A and A Deed was a loan agreement entered into on 9 July 2014 between GNR, Pluton and GNR(HK)[37] by which GNR agreed to loan further funds to Pluton and to convert some of Pluton's outstanding debt to GNR into shares issued to GNR(HK) (the Second Pluton Loan Agreement).

41 The terms of the A and A Deed facilitated that debt conversion in a variety of ways. The terms of the Pluton Loan Agreement were amended to reflect that the Liability Cap to which Pluton was subject (the Pluton Liability Cap) would be reduced not only by the delivery of shipments of Product in accordance with cl 6 of the Pluton Loan Agreement, but by virtue of the debt to equity conversion.[38] The Wise Security Deed was also amended in a similar fashion, to reflect that the Wise Liability Cap would 'reduce by $1,200,000 upon the delivery of each shipment of Product to [GNR] in accordance with cl 6 of the [Pluton Loan Agreement]', and also as a result of the debt to equity conversion.[39]

42 The A and A Deed also contained a number of acknowledgements. Pluton and GNR acknowledged that Pluton's total outstanding liability to GNR under the Pluton Loan Agreement and the Second Pluton Loan Agreement was US$12,804,930.5. The parties to the A and A Deed also acknowledged that once the Wise Liability Cap was reduced to nil, the Wise Security Deed would be deemed to have been discharged.[40]

43 I note that the A and A Deed also acknowledged that Wise and Pluton disagreed about the extent of the reduction in their liability for Pluton's debt under the Reinstatement Deed by virtue of the debt to equity conversion, and consequently the amount of the Wise Liability Cap, and reserved their rights in relation to any matter associated with calculation of the Wise Liability Cap under the Wise Security Deed.[41] The defendants submitted that the precise basis for that disagreement was not relevant to the present dispute.[42]

44 In addition, Wise confirmed that in accordance with requirements of the Reinstatement Deed (see [15] above), it consented to GNR and Pluton agreeing to amend the Pluton Loan Agreement and the Pluton Security Deed.[43]

Reduction of the loan by the conversion of debt to equity

45 There was no dispute that on about 17 October 2014, and pursuant to the Second Pluton Loan Agreement, GNR exercised an option for GNR(HK) to convert a significant portion of Pluton's debt (equal in value to AU$9.4 million of the existing loan to Pluton) into equity, which had the effect of reducing the Wise Liability Cap.[44]

46 On 15 April 2014, Wise and Pluton executed a Deed (the Side Deed)[45] setting out their agreement to negotiate in good faith the sale of the Wise Interest to Pluton, the termination of an agreement by which Wise marketed the Joint Venture for the Joint Venture parties, and the buyback of Pluton shares which were held by Wise, or the sale of Wise, for US$21 million, to occur within 180 days. If that sale agreement was not completed within 180 days Pluton and Wise agreed that (amongst other things) Pluton would resign as Manager of the Joint Venture within 30 days of receipt of written notice from Wise. If that event occurred, the parties agreed to negotiate in good faith to appoint a new Manager, and that Wise would be entitled to give written notice requiring that all operations at the Mine cease and that the parties work together to find a solution to operate the Joint Venture in a profitable manner.

47 Wise and Pluton were not able to reach agreement about the sale of the Wise Interest to Pluton within 180 days of the Side Deed. On 27 October 2014, Wise gave Pluton written notice requiring Pluton to resign as Manager of the Joint Venture within 30 days and to immediately take steps so that operations at the Mine were shut down.[46] Wise sought a meeting so that the parties could discuss the appointment of a new Manager and a solution to operate the Joint Venture in a profitable manner.[47]

48 There was no dispute that between August 2013 and October 2014, Pluton delivered 10 shipments of Product to GNR(HK).[48] There was also no dispute that the first three shipments were delivered by Pluton and accepted as delivery of Product by GNR in accordance with cl 6(a) of the Pluton Loan Agreement.

49 The dispute between the parties concerns whether each of shipments 4 to 10 was made, as Wise contends, 'in accordance with clause 6 of the [Pluton] Loan Agreement' as contemplated by cl 2.2(b) of the Wise Security Deed.

50 In short, the defendants say that shipments 4 to 10 were not shipments made 'in accordance with clause 6 of the [Pluton] Loan Agreement'.

51 The defendants say that only $1 million of the value of the Cockatoo fines in each of shipments 4 to 7 was delivered by Pluton, and accepted as delivery of Product by GNR, in repayment of the 'loan' under the Pluton Loan Agreement. The defendants say that the balance of each of those shipments was delivered by Pluton and accepted as delivery of Product by GNR(HK) in accordance with obligations under Addenda to the Sales and Purchase Contract, especially Addendum No 7.

52 The defendants say that each of shipments 8 to 10 were, in their entirety, delivered by Pluton and accepted as delivery of Product by GNR(HK) in accordance with obligations under Addendum No 7 to the Sales and Purchase Contract, and that none of those shipments was delivered by Pluton, and accepted as delivery of Product by GNR, in repayment of the 'loan' under the Pluton Loan Agreement.

The appointment of the receivers and subsequent events

53 At 4.29 pm on Tuesday 4 November 2014,[49] Wise's solicitors wrote to Kemp Strang, the solicitors for GNR and for the Pluton receivers. They noted that the appointment of the Pluton receivers constituted an Insolvency Event for the purposes of the JV Agreement, and requested an urgent meeting to discuss the appointment of a new Manager to the Joint Venture. In addition, they requested confirmation that the Wise Liability Cap had been reduced to nil, and that consequently the Wise Security Deed was deemed to have been discharged pursuant to the A and A Deed. Failing that, they sought the provision of an account of any amount said to remain outstanding under the Wise Liability Cap.

54 At 7.08 pm on the same date, Kemp Strang forwarded to Wise's solicitors a Notification of Appointment of Controller advising of the appointment of the receivers to the Wise Interest, pursuant to the Wise Security Deed.[50] There was no evidence as to precisely when the receivers were appointed. The letter from Kemp Strang to Wise's solicitors referred to the Notification of Appointment having been emailed (presumably directly to Wise) 'earlier that evening'. Bearing in mind that the letter from Wise's solicitors, which was sent at 4.29 pm Western Australian time, was thus sent at 7.29 pm Australian Eastern Daylight Time, I do not accept Wise's submission that it can be inferred that the receivers were appointed after GNR's solicitors received that letter by email. That is one possible inference, but it is not the only one.

55 At 8.45 am on Wednesday 5 November 2014, Kemp Strang responded to the letter sent to them by Wise's solicitors the previous day. They advised that 'the [Wise] Liability Cap is a substantial amount' and that the reduction of the Wise Liability Cap depended on the delivery of further Product in accordance with cl 6 of the Pluton Loan Agreement.[51]

56 At 11.33 am on Wednesday 5 November 2014, Wise's solicitors wrote to Kemp Strang, contending that the appointment of the receivers was invalid, that GNR had failed to give Wise the option to which it was entitled of paying the outstanding amount of the Wise Liability Cap, and requesting that the receivers take no further action.[52]

57 At 9.37 pm on Wednesday 5 November 2014, Kemp Strang wrote to Wise's solicitors and advised that the outstanding balance of the Wise Liability Cap had been calculated at $336,961.92 (which was 50% of the amount then said to be outstanding under the Pluton Loan Agreement).[53] The basis for that calculation was set out in the letter. Those calculations indicated that there had been 10 shipments of Product made to GNR (HK) but not all of those had resulted in a deduction from the prepayment made by GNR. (Shipments 1 to 3 had each been the subject of a deduction of $2.4 million, shipments 4 to 7 had each been the subject of a deduction of $1 million, while shipments 8 to 10 had not been the subject of any deduction from the prepayment.) In addition, Kemp Strang advised that the debt to equity conversion had resulted in a deduction from the prepayment of $3,939,877.52 and $8,272,000 respectively. Taking into account currency exchange rates and a small fee charged by GNR, the total amount remaining of the prepayment of $24 million to Pluton was said to be $673,923.84.

58 On 6 November 2014, Wise's solicitors wrote to Watpac Limited (Watpac), which provided mining services to Pluton at the Mine, disputing Pluton's authority to act as the Manager of the Joint Venture.[54]

59 On 7 November 2014, Kemp Strang wrote to Wise's solicitors and advised that the receivers and the Pluton receivers had amended the JV Agreement and appointed Pluton as the Manager of the Joint Venture 'so as to ensure the continued operation of the [Joint Venture] for the mutual benefit of Pluton and Wise'.[55] The details of that amendment are set out below.

60 The receivers and the Pluton receivers entered into the JV Variation Deed on 5 November 2014. The JV Agreement was amended to provide that while both Joint Venturers were Defaulting Joint Venturers, they could agree in writing that each Joint Venturer would retain its full entitlement to attend and vote at a meeting of the Management Committee, and they recorded their agreement for that to occur.[56]

61 In addition, the JV Agreement was amended to include a new cl 5.4(g) which provided:[57]

In the event that both Joint Venturers are Defaulting Joint Venturers and the appointment of the Manager has terminated, the Defaulting Joint Venturers may notwithstanding any other term of this agreement:

(a) by written agreement appoint a new Manager;

(b) appoint a Defaulting Joint Venturer as Manager, which Defaulting Joint Venturer may remain as Manager notwithstanding that it has been, and remains, a Defaulting Joint Venturer and that the other Defaulting Joint Venturer later becomes a Non-Defaulting Joint Venturer; and

(c) by written agreement instruct the Manager to take such steps as it deems necessary to facilitate the operation of the Joint Venture, including (but not limited to) undertaking any Joint Venture Activities which are not substantially in accordance with an Approved Programme and Budget.

62 In the exercise of that power, the receivers and the Pluton receivers then appointed Pluton as the Manager of the Joint Venture, confirmed that Pluton may during its period of receivership remain as the Manager in the event that Wise became a non-defaulting Joint Venturer, and instructed Pluton as Manager to take such steps as it deemed necessary to facilitate the operation of the Joint Venture, including steps which were not substantially in accordance with an Approved Programme and Budget.

Operation of the Joint Venture during the receivership

63 The defendants tendered an affidavit of Mr Gavin Rakoczy[58] sworn 8 December 2014 which annexed a number of documents concerning the activities of the receivers in the period immediately following their appointment, including their endeavours to secure the continued operation of the Mine, and to facilitate a shipment of iron ore from the Mine.

64 Those documents indicate that Watpac had issued a notice of suspension of work on 31 October 2014. Following their appointment on 3 November 2014, the Pluton receivers requested that Watpac lift the suspension for the purpose of loading iron ore onto a ship at Cockatoo Island. Over the course of the next week, the receivers negotiated with Watpac regarding the terms on which it would resume its services. For the purposes of resuming its services to re-load the ship, Watpac required the payment of $1.5 million, $500,000 of which was initially required to be paid by 4 November 2014, but that time frame was later extended to 5 November 2014. Although the ship was loaded, Watpac then immediately re-suspended its services, pending further negotiations.

65 One of the issues which emerged in the negotiations between Watpac and the receivers was the question whether the receivers had the authority to engage Watpac to load the ship or provide any other services at the Mine. That issue emerged after Wise's solicitors wrote to Watpac asserting that the receivers had no authority to act as the Manager of the Joint Venture.[59] That issue was resolved by the appointment of Pluton as the Manager of the Joint Venture pursuant to the JV Variation Deed.

66 Another issue which emerged on 7 November 2014 was the need for urgent grout works to a sea wall on Cockatoo Island which was said to be 'vital to maintaining future mining operations'.[60]

2. Whether the appointment of the receivers was a breach of the Wise Security Deed

67 In short, Wise's case is that by 17 October 2014, by reason of the 10 shipments of Product, or alternatively, by reason of the shipments of Product and the conversion of debt to equity, the Wise Liability Cap had been reduced to nil and Wise's security was deemed to have been automatically discharged.

69 Each party's case turned on its construction of cl 2.2(b) of the Wise Security Deed, read in the context of the other related contractual documents, as I explain below.

70 There was no dispute about the principles of contractual interpretation which were applicable in this case.

71 The construction of a written commercial contract involves ascertaining what a reasonable business person would have understood the parties to mean and on the assumption that the parties to the contract intended to produce a commercial result.[61] If the language is open to two constructions, the preferable construction will be one which avoids consequences which appear to be capricious, unreasonable, inconvenient or unjust.[62] The exercise of construction thus involves determining the meaning of the words used by the parties, having regard to the context in which they are used, which includes the surrounding circumstances known to the parties and the commercial purpose of their contract.[63] In order to understand the commercial purpose of the contract, it is necessary to understand the genesis of the transaction, the background, the context and the market in which the parties are operating.[64]

72 Where a commercial transaction is implemented by several contracts or documents, all of the contracts or documents may be read together for the purpose of ascertaining their proper construction and legal effect, at least where the contracts or documents are executed contemporaneously or within a short period.[65]

73 Finally, the words used in a contract must be construed within the context of the contract as a whole. The words of every clause must be construed in a way which permits them to operate harmoniously with one another,[66] and no part of the contract should be treated as inoperative or otiose.[67]

Wise's case in relation to the construction of cl 2.2(b) of the Wise Security Deed

74 Wise essentially advanced three arguments in relation to the construction of cl 2.2(b) of the Wise Security Deed.

75 First, Wise relied upon the ordinary meaning of the text of cl 2.2(b). Counsel for Wise submitted that the meaning of the words used were clear on their face, and that those words meant that once 10 shipments of Product had been made, the Wise Liability Cap was discharged.

76 The planks in that textual argument were as follows. Counsel for Wise submitted that the reference to the delivery being 'in accordance with clause 6 of the [Pluton] Loan Agreement' was intended to refer to the timing and scheduling of each of the 10 shipments as set out in sch 1 to the Pluton Loan Agreement.[68]

77 Wise placed particular reliance on the fact that cl 2.2(b) provided that the 'Liability Cap shall reduce by US$1,200,000 upon the delivery of each shipment of Product'.[69] Counsel for Wise submitted that this indicated that 'the Liability Cap would reduce by US$1,200,000 upon the delivery of each shipment of Product to [GNR(HK)]'.[70]

78 In addition, counsel for Wise submitted that the definition of 'Secured Money' in the Wise Security Deed supported this construction because that definition referred to the Secured Money as 'limited to the [Wise] Liability Cap at that time'. Counsel for Wise submitted that this indicated that Wise's liability was intended to be limited to the amount outstanding under the Wise Liability Cap at a particular point in time having regard to the reductions in the Wise Liability Cap as a result of shipments delivered by Pluton.

79 Counsel for Wise also submitted that the other contractual documents referred to in the Wise Security Deed, and which were relevant in the construction of cl 2.2(b) of the Wise Security Deed namely the Pluton Loan Agreement, and the Sales and Purchase Contract were defined in the Wise Security Deed as the Pluton Loan Agreement dated 26 April 2013, the Sales and Purchase Contract dated 28 February 2013 and the Deed of Addendum dated 28 February 2013, but did not incorporate the Addenda to the Sales and Purchase Contract. Counsel for Wise submitted that this definition indicated that 'it was never within the parties' contemplation that the Wise Security Deed would secure anything other than that which was expressly contained within the definition itself'.[71]

80 Secondly, counsel for Wise submitted that the ordinary textual meaning of the words in cl 2.2(b) was supported by reference to what he submitted was the object of the Wise Security Deed, in light of the Pluton Loan Agreement. Counsel for Wise characterised the object of cl 2.2(b) of the Wise Security Deed in the following way:[72]

GNR was making the prepayment primarily for the purpose of [GNR(HK)] receiving shipments of iron ore and Pluton's primary obligation was to deliver those shipments and repay the loan in kind at a specified amount per shipment rather than to repay the loan in cash.

That concept is evident from the original contractual documents ... being the [Sales and Purchase Contract] and the Deed of Addendum. ...

In the event of default, Wise was agreeing to be liable to GNR for an amount calculated as the difference between US$12 million and the number of shipments which had been delivered to [GNR(HK)] up to the date of default.

Such an agreement makes commercial sense. It provides Wise, as a third party to the sale and purchase arrangements between [GNR(HK)] and Pluton with certainty at any point in time as to the amount of its liability and circumstances in which its liability to GNR would be discharged. It is commercially understandable for Wise to have sought to limit and control its liability in this way (ie by reference to a fixed reduction of its Liability Cap per shipment). It avoids the uncertainty and protects against the risk that would attend Wise's liability under the Wise Security Deed if, for example, the mechanism for calculating the deduction of the Wise Liability Cap had been expressed to be dependent upon the spot price for each shipment or otherwise an amount to be determined for each shipment at the discretion of GNR and Pluton.

81 Thirdly, counsel for Wise submitted that the construction for which he contended produced a sensible commercial outcome. He submitted that the Wise Security Deed was:[73]

a bespoke security instrument granted by a third party ... [as] security for a Loan Agreement between Pluton and GNR, in respect of which Wise was not a party. As between Wise and GNR, the only agreement in place was the Wise Security Deed, in respect of which there was a clearly defined mechanism by which Wise's liability would be capped and reduced at the fixed rate of US$1.2m per shipment.

There is nothing uncommercial about such a construction. It makes sense that Wise, as the provider of a third party security, should (as it has done here) seek to limit its liability by reference to a Liability Cap with a fixed reduction per shipment, in order to avoid the uncertainty and risk that would attend Wise's liability if, for example, the deduction was expressed to be dependent upon an amount to be determined for each shipment at the discretion of GNR and Pluton. The fixed US$1.2m deduction mechanism represents the important and sole overriding protection mechanism for Wise.

The proper construction of cl 2.2(b) of the Wise Security Deed

82 I am unable to accept the submissions advanced on behalf of Wise as to the proper construction of cl 2.2(b) of the Wise Security Deed, having regard to four considerations, namely:

1. The ordinary meaning of the words used in cl 2.2(b) viewed in their contractual context;
2. The object of the Wise Security Deed;
3. The correlation between the words used in the Wise Security Deed and those in the Pluton Security Deed;
4. The A and A Deed.

i. The ordinary meaning of the words used in cl 2.2(b), viewed in their contractual context

83 Clause 2.2(a) of the Wise Security Deed sets out the amount of the Wise Liability Cap. That is, it sets the limit of Wise's total liability for the security provided to GNR, and thus the total amount which may be recovered by GNR from Wise, at $12 million.

84 Turning next to cl 2.2(b), that clause explains how Wise's liability will be reduced. Clause 2.2(b) explains that the Wise Liability Cap will be reduced by a fixed amount ($1.2 million) upon the delivery of each shipment of Product to GNR(HK) 'in accordance with clause 6 of the [Pluton] Loan Agreement'. The latter words are of significance. Clause 2.2(b) does not provide that the Wise Liability Cap will be reduced upon the delivery of each shipment of Product to GNR(HK). Only those shipments which are 'in accordance with clause 6 of the [Pluton] Loan Agreement' will result in a reduction of the Wise Liability Cap.

85 The next question is what is meant by a shipment which is 'in accordance with clause 6 of the [Pluton] Loan Agreement'. The word 'accord' means (amongst other things) to agree, to be consistent or to correspond.[74] The words 'in accordance with' thus refer to something which corresponds with, or which meets the requirements of, something else, in this case cl 6 of the Pluton Loan Agreement.

86 Clause 6 of the Pluton Loan Agreement deals with a variety of matters. The only part of cl 6 of the Pluton Loan Agreement which appears to have any bearing on shipments of Product is cl 6(a), which is set out above at [23]. That clause makes clear that Pluton's repayment of the 'loan' from GNR is to be in equal instalments of US$2.4 million, not in cash, but in the form of delivery of Product to GNR(HK). However, cl 6(a) of the Pluton Loan Agreement also makes clear that it is not any delivery of Product to GNR(HK) which will constitute a repayment of the loan but only delivery of Product which is both 'in accordance with the payment schedule set out in Schedule 1' to the Pluton Loan Agreement, and which is 'otherwise in accordance with the Sales and Purchase Contract'.

87 What is described as a 'payment schedule' in sch 1 to the Pluton Loan Agreement is not a payment schedule at all, but rather a timetable for 10 shipments of Product, required to take place within a period between a proposed and final delivery date. If it were considered in isolation, the requirement for delivery of Product in accordance with the 'payment schedule' in sch 1 to the Pluton Loan Agreement might convey the impression that a repayment of the loan would be effected by the delivery of Product in each of the 10 shipments referred to in sch 1. However, that is not the only criterion for the repayment of the loan in cl 6(a) of the Pluton Loan Agreement.

88 The delivery of Product which would result in the repayment of the loan, and thus in the reduction of the Wise Liability Cap, was the delivery of Product 'otherwise in accordance with the Sales and Purchase Contract'. The proposed delivery dates set out in sch 1 to the Pluton Loan Agreement matched the shipment dates set out in cl 4 of the Sales and Purchase Contract (which required that each shipment be loaded within 14 days of those dates). That correlation provides some support for the view that a shipment within each of those date ranges would result in a reduction of the Wise Liability Cap.

89 However, a consideration which strongly militates against that conclusion is the presence of the word 'otherwise' in cl 6(a) of the Pluton Loan Agreement. The shipments which would result in a repayment of the loan, and thus a reduction in the Wise Liability Cap were those which were 'otherwise in accordance with the Sales and Purchase Contract'. The word 'otherwise' means differently; of another nature or kind.[75] Accordingly, a delivery of Product which is 'otherwise in accordance with the Sales and Purchase Contract' refers to one which accords with, or corresponds to, the Sales and Purchase Contract in ways other than in respect of the timing of the deliveries (the dates for which are referred to in sch 1 to the Pluton Loan Agreement).

90 The Sales and Purchase Contract deals with the requirements for delivery of Product in a variety of ways, including by the specifications for the Product,[76] the quantity of the Product,[77] the calculation of the price to be charged for each shipment,[78] and adjustments able to be made to the price.[79] The requirement that the delivery of Product to GNR(HK) be otherwise in accordance with the Sales and Purchase Contract was not limited to accordance with any particular aspect of that Contract, and I see no warrant for reading down those broad words, for example by construing them so that they are understood to refer only to deliveries which meet the specifications for Product under the Sales and Purchase Contract. In my view, the words 'otherwise in accordance with the Sales and Purchase Contract' refer to deliveries of Product which correspond with, or comply with, all of the terms of the Sales and Purchase Contract. One of those terms, as I have said, pertains to the basis on which the price of a delivery of Product under the Sales and Purchase Contract will be calculated that is, by the application of the formula in cl 6(b) of the Sales and Purchase Contract, which includes the deduction of US$2.4 million prepayment per shipment.

91 Accordingly, the ordinary meaning of the words 'upon the delivery of each shipment of Product ... in accordance with clause 6 of the [Pluton] Loan Agreement' in cl 2.2(b) of the Wise Security Deed refers, amongst other things, to those shipments which meet the requirements of the Sales and Purchase Contract, including the requirement that the price of the shipment be calculated by the application of the formula in cl 6(b) of that Contract, including the deduction of US$2.4 million.

92 The application of that price calculation in delineating those shipments of Product which would result in a repayment of the Pluton Loan Agreement (and thus the reduction of the Wise Liability Cap) was particularly important given that the Pluton Loan Agreement and the Deed of Addendum[80] contemplated that more than 10 shipments of Product would be made by Pluton to GNR(HK).

93 The construction of the words used in cl 2.2(b) of the Wise Security Deed must have regard to the object of that agreement. The object of the Wise Security Deed, viewed within the context of the Pluton Loan Agreement and the Sales and Purchase Contract, supports the conclusion that Wise's construction of cl 2.2(b) of the Wise Security Deed should not be accepted.

94 The object of the Wise Security Deed can be discerned from the purpose for which the Security Interest was granted. Wise granted the Security Interest to GNR for 'the due and punctual payment and satisfaction of the Secured Money'. The Secured Money was defined to mean all money, obligations and liabilities of any kind which were or may be owed by Pluton to GNR. As I have already observed, the Pluton Loan Agreement was an agreement which reflected a prepayment of $24 million by GNR for the delivery of Product by Pluton to GNR(HK). Pending the delivery of the Product, the prepayment was able to be utilised by Pluton for various payments contemplated in the Pluton Loan Agreement.[81] Under the Pluton Loan Agreement, the amount outstanding from Pluton to GNR was to be reduced by the delivery of shipments of Product to GNR(HK) if those shipments met certain criteria. As I have explained, one criterion was that GNR(HK) would not be required to pay the full price for the shipment, but rather the full price less a deduction of $2.4 million.

95 Pluton was required to provide security for that 'loan' pursuant to the Pluton Security Deed, as was Wise once it became a Joint Venturer with Pluton. Wise's liability to GNR was limited to 50% of the total amount of the 'loan' to reflect its own 50% share in the Joint Venture, and its 50% liability for the amount owed by Pluton under the Pluton Loan Agreement, as a Joint Venturer.[82]

96 Accordingly, the object of the Wise Security Deed was to provide a security for 50% of the value of the amount pre-paid by GNR to Pluton, which liability was to reduce as GNR(HK) (and in turn GNR) derived the benefit of the delivery of a shipment of Product in respect of which GNR(HK) had not had to pay the full price.

97 Viewed in the context of the object of the Wise Security Deed, it is not at all surprising that Wise's liability to GNR in respect of that security was not limited to a particular time period, or to a particular number of shipments of Product, but was limited by reference to the overall quantum of the security, reflecting the reduction in the amount of the outstanding 'loan' from GNR to Pluton over time. From a commercial perspective, that is an entirely rational and unsurprising result.

98 Wise's construction of cl 2.2(b), on the other hand, appears irrational from a commercial perspective. The effect of its construction is that the Wise Liability Cap reduced by $1.2 million for each of the first 10 shipments of Product made by Pluton to GNR(HK). However, it was not the case that the price for each of those shipments was calculated by reference to cl 6(b) of the Sales and Purchase Contract. The result of Wise's construction of cl 2.2(b) of the Wise Security Deed is thus that the Wise Liability Cap reduced by $1.2 million for each shipment made, even though GNR(HK) did not receive the benefit of a reduction in the price it paid for each shipment of $2.4 million. The effect of that construction would be that after 10 shipments of Product there would remain 'Secured Money' under the Pluton Loan Agreement, yet GNR would have lost the benefit of the security provided by Wise for that remaining Secured Money.

99 At first blush, one of the more attractive arguments advanced by counsel for Wise was that

[i]f GNR's proposed construction was correct, the Wise Security Deed could, in effect, be preserved indefinitely by agreement between Pluton and GNR (ie by amending the shipping schedule to cover any number of further shipments at whatever nominal loan repayment amount Pluton and GNR agreed). This would be an uncommercial and nonsensical outcome that no reasonable person could interpret cl 2.2(b) to permit.[83]

100 In my view, the answer to this submission is that if the parties had intended that the Wise Liability Cap would reduce upon the delivery of each and every shipment of Product, or upon the delivery of the first 10 shipments of Product, or upon the delivery of 10 shipments of Product within a particular prescribed time frame, that could easily have been made clear. The fact that the deliveries of Product which were to result in a repayment of the loan under the Pluton Loan Agreement, and thus a reduction in the Wise Liability Cap, were those which met additional requirements (namely deliveries in accordance with the Sales and Purchase Contract more generally), suggests that the parties did not intend that the Wise Liability Cap was directed to securing only a particular number of shipments in a particular period of time.

101 Counsel for Wise also submitted that to construe cl 2.2(b) of the Wise Security Deed in the manner advanced by the defendants, which accords with the view I have reached, was 'commercially unrealistic' because

at its core is the proposition that GNR (and Pluton) could manipulate what repayments (if any) would be deducted from Pluton's indebtedness under the Loan Agreement and ultimately the Wise Liability Cap (whether by way of shipments or otherwise) thereby giving GNR (and Pluton) the ability to unilaterally vary Wise's exposure without Wise's consent. If the parties intended the Wise Security Deed to operate in the manner suggested by the defendants it would be expected that they would have done so with unequivocal clarity.[84]

102 Wise submitted that the Pluton Loan Agreement was

not a revolving loan facility with the ability to redraw, where one might understand that the amount of a third party's liability could be varied (without the third party's consent) to cover all present and future advances which were made.[85]

103 In my view, these submissions raised a false issue. The construction of cl 2.2(b) which I prefer does not have the result that Pluton is able to redraw from the 'loan', nor does it permit Pluton and GNR to unilaterally vary Wise's liability under the Wise Security Deed without its consent. As cl 2.2(a) of the Wise Security Deed makes clear, the maximum amount of Wise's liability under the Wise Security Deed was $12 million. That amount could be varied, but only by a reduction of $1.2 million per shipment in accordance with cl 6 of the Pluton Loan Agreement.

iii. The correlation between the words used in the Wise Security Deed and those in the Pluton Security Deed

104 A further consideration which militates against the construction of cl 2.2(b) of the Wise Security Deed which is advanced by Wise is the close similarity between cl 2.2(b) of the Wise Security Deed and cl 2.3(b) of the Pluton Security Deed which provides:

The [Pluton] Liability Cap shall reduce by $2,400,000 upon the delivery of each shipment of Product to [GNR(HK)] in accordance with clause 6 of the [Pluton Loan Agreement].

105 Given the close inter-relationship between the Pluton Loan Agreement, the Pluton Security Deed and the Wise Security Deed, the words used in cl 2.2(b) of the Wise Security Deed and cl 2.3(b) of the Pluton Security Deed should be construed consistently. I am unable to envisage any sensible commercial rationale for the construction advanced by Wise, within the context of the Pluton Security Deed. The construction advanced by Wise as applied to the Pluton Security Deed would have the result that the Pluton Liability Cap would reduce in respect of each shipment of Product to GNR(HK), irrespective of whether part of the $24 million prepayment was applied to the purchase price paid by GNR(HK) for that shipment. In other words, the effect of Wise's construction of the words used would be that the Pluton Liability Cap would reduce irrespective of whether the amount of the 'loan' to Pluton also reduced.

106 The terms of the A and A Deed provide some support for the conclusion that the parties to the Wise Security Deed intended that cl 2.2(b) should have the meaning I have outlined above.

107 As I observed at [40] [41], the A and A Deed facilitated an agreement between GNR and Pluton to convert some of Pluton's debt to GNR to equity. The A and A Deed amended both the Pluton Security Deed and the Wise Security Deed to reflect the fact that the Liability Cap in each case would be reduced to reflect the conversion of debt to equity (and in Wise's case, would be reduced by 50% of the amount of debt converted to equity in Pluton).

108 I observed at [42] that GNR and Pluton acknowledged that at the date of the A and A Deed (20 August 2014) the amount of the Pluton Liability Cap (that is, the amount remaining of the prepayment of US$24 million) was US$12,804,930.50, and that after the reduction attributed to the debt to equity conversion, Pluton's outstanding liability was $8,865,052.98. The total outstanding liability acknowledged by Pluton and GNR in the A and A Deed appears to be consistent with the balance of the 'loan' remaining after taking into account the discount applied to the price paid by GNR(HK) in respect of each of the seven shipments of the Product which were made prior to the A and A Deed.[86] The invoices tendered in evidence for those seven shipments indicate that in respect of three of the shipments, GNR(HK) received the benefit of $2.4 million credit from the prepayment, while in respect of the remaining four shipments prior to 20 August 2014, GNR(HK) derived the benefit of only $1 million credit from the prepayment.

109 Counsel for Wise emphasised that Wise itself did not acknowledge the total outstanding debt from Pluton to GNR under the A and A Deed. That is clearly correct. However, in the context of a deed entered into by GNR, GNR(HK), Wise and Pluton, which referred to the amount of Pluton's outstanding liability to GNR, for which Wise as a Joint Venturer bore a 50% liability, it is difficult to envisage any explanation for why Wise would enter into that Deed without making clear that it did not accept the quantum of Pluton's outstanding liability to GNR as referred to in that Deed. In contrast, Wise specifically reserved its rights in relation to the calculation of the Wise Liability Cap, because of a dispute about the reduction in the Wise Liability Cap by virtue of the debt to equity conversion.[87]

3. Whether the receivers breached a fiduciary duty to Wise by entering into the JV Variation Deed

110 Counsel for Wise submitted that the interests of joint venturers are not necessarily aligned, and that that was so in this case.[88] He submitted that in that circumstance, the receivers were subject to a fiduciary duty to act in the best interests of Wise. He submitted that by accepting an appointment to the assets of both Wise and Pluton, by continuing to act as the receiver in respect of the Wise Interest and the Pluton Interest, and by executing the JV Variation Deed, the receivers acted in breach of a fiduciary duty to Wise to avoid a conflict in the duties they owed. Counsel for Wise submitted that the only way that the receivers could cure this conflict of interest was by refusing to act, or by obtaining fully informed consent to their continuing to act.[89] Counsel for Wise submitted that as a consequence of the receivers' breach of their fiduciary duty to Wise, the JV Variation Deed should be set aside.

111 Counsel for Wise acknowledged that the usual position is that receivers appointed out of court are not subject to a fiduciary duty to the company in respect of whose assets they are appointed. However, he submitted that what took this case out of the ordinary position was the conflict of interest to which the receivers were subject in acting in respect of both the Wise Interest and the Pluton Interest in the Joint Venture.

112 In order to establish that the receivers were subject to a fiduciary duty to Wise, to avoid a conflict between a duty to act in the best interests of Wise, and a duty to act in the best interests of another party (that is, Pluton), Wise must first establish that the receivers were in a fiduciary relationship with it. I do not accept that the relationship between Wise and the receivers can be described as a fiduciary relationship, for four reasons.

113 First, counsel for Wise was unable to point to any authority for the proposition that a receiver appointed out of court is subject to a fiduciary duty to the company or mortgagor in respect of whose assets it is appointed. There is no doubt that a receiver is in a fiduciary relationship with his or her appointor, and is subject to certain duties which arise from the nature of that relationship, such as the duty to keep the appointor informed about the progress of the receivership.[90] However, it is well established that there is no general fiduciary relationship between a receiver and the company to whose assets the receiver is appointed.[91] The position may be contrasted with that of a court-appointed receiver, who owes fiduciary obligations to all persons interested in the corporate assets in respect of which he or she is appointed.[92] In that circumstance, the function of the receiver is to preserve the assets of the company and its potential to earn future profits.[93] The receiver appointed out of court is in a different position because he or she is appointed, not for the benefit of the company, but for the purpose of realising the security held by the appointor.[94]

114 For completeness, I note that the receivers in this case are, pursuant to the Wise Security Deed,[95] the agents of Wise.[96] That is the orthodox position, and does not take the receivers out of what has been described as the special position of a receiver which acts as an agent, namely that of the only genuinely non-fiduciary agency.[97]

115 Secondly, counsel for Wise relied upon Australia and New Zealand Banking Group Limited v Bangadilly Pastoral Co Pty Ltd[98] as supporting the proposition that in a case in which a receiver or mortgagee is in a position of a conflict of interest, a fiduciary duty is imposed so as to preclude the receiver or mortgagee acting while subject to that conflict of interest. Bangadilly is not authority for that proposition, nor for any more general proposition that a receiver or mortgagee may owe a fiduciary duty to the mortgagor. Instead, Bangadilly is an instance of the application of the well established duty to which a mortgagee is liable, namely to exercise its powers in good faith, especially in the context of the exercise of the power of sale.[99]

116 Thirdly, the application of general principles concerning when a fiduciary relationship will come into existence leads to the conclusion that the receivers are not in a fiduciary relationship with Wise, and thus not subject to a fiduciary duty to act in its best interests. The law on fiduciary duties in Australia is not yet settled. There is no precise or comprehensive set of circumstances or criteria by reference to which fiduciary obligations will be imposed.[100] A variety of circumstances may point towards a fiduciary relationship. These include the existence of a relationship of confidence, inequality of bargaining power, a dependence or vulnerability on the part of one party that causes that party to rely on another, and the scope for one party to unilaterally exercise a discretion or power which may affect the rights or interests of another.[101]

117 Counsel for Wise relied in particular on the latter factor as indicating the existence of a fiduciary relationship between the receivers and Wise, because the exercise by the receivers of their powers could affect Wise's rights and interests. However, neither that vulnerability nor any of the other circumstances or criteria to which I have referred is individually determinative of the existence of a fiduciary duty.[102] Furthermore, if the vulnerability of a mortgagor to the exercise of power by a receiver were sufficient to give rise to a fiduciary relationship, there would exist a fiduciary relationship in every case where a receiver was appointed to the assets of a mortgagor.

118 What is clear from the authorities is that a critical feature which must be present in order to give rise to a fiduciary relationship is that the fiduciary undertakes or agrees to act for or on behalf of another person, in the interests of that other person, in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense, and to the exclusion of the fiduciary's own interest.[103] There was nothing in the facts of this case to suggest that the receivers had agreed to act on behalf of Wise, and in the interests of Wise, in the exercise of their powers and duties as receivers, and more particularly, in relation to the exercise of their powers in entering into the JV Variation Deed. In addition, it is difficult to see how the receivers could have undertaken to act in the best interests of Wise in a way which would have been consistent with their duty to act in the best interests of GNR. Any undertaking to act in Wise's best interests would, perhaps inevitably, have given rise to an actual or possible conflict with the receivers' duty to act in the best interests of GNR in order to realise the security Wise had offered to GNR.

119 Fourthly, it is difficult to see how the possibility of a conflict between the receivers' roles in acting as the agent for Wise and for Pluton could of itself have founded the existence of a fiduciary relationship between the receivers and Wise. Under the Wise Security Deed, Wise accepted that any receiver (appointed by Wise as one of its attorneys[104]) was entitled to exercise its powers 'even if the exercise of the power constitutes a conflict of interest or duty'.[105]

120 There is a further reason why Wise's case fails. As discussed below, it is well established that a receiver is subject to a number of equitable duties to a company or mortgagor in respect of whose assets the receiver is appointed. By way of example, a receiver holds any proceeds from the sale of those assets, after the satisfaction of the claims of the mortgagee and subsequent creditors, on trust for the mortgagor,[106] and is subject to a duty to exercise the powers of a receiver in good faith and for a proper purpose. In addition, there are certain statutory duties which apply to receivers. These include the duty to exercise reasonable care to obtain market value or the best price otherwise reasonably available when selling the secured property, and duties of care and diligence and good faith.[107] Equity will not intervene to impose fiduciary duties if the law adequately protects the interests to which the fiduciary duties would apply. In my view, the equitable and statutory duties to which I have referred adequately protect the interests of the mortgagor, and in a way which is not inconsistent with the receiver's primary duty to the mortgagee. There is no need for equity's intervention to impose a fiduciary duty on the receivers in the circumstances of this case.

121 I turn next to consider Wise's case that the receivers breached their duty to Wise to exercise their powers in good faith, in entering into the JV Variation Deed.

4. Whether the receivers breached a duty of good faith to Wise by entering into the JV Variation Deed

122 As I have already mentioned, a receiver, as the donee of a power, is subject to a duty imposed by equity to exercise the powers and duties granted to him or her in good faith, and for a proper purpose.[108] The content of that duty has been explained as a duty to act in good faith, without wilfully or recklessly sacrificing the interests of a mortgagor.[109]

123 Accordingly, the position is that while the primary duty of a receiver is to realise the security provided by the mortgagor, an exercise of the receiver's powers which wilfully sacrifices the interests of the mortgagor or subsequent creditors, will be viewed as an exercise of those powers in bad faith. Examples include where a receiver fails to pursue bids in excess of what is necessary to satisfy the debt of the mortgagor, or where the receiver's powers have been exercised in such a deficient fashion as to impugn the sincerity of his or her desire to obtain the proper price for the assets of the mortgagor.[110]

124 Wise's case was that in entering into the JV Variation Deed, and appointing Pluton to be the manager of the Joint Venture, the receivers exercised their powers in bad faith and for an improper purpose. Counsel for Wise submitted that the 'compelling inference' in this case was that the receivers executed the JV Variation Deed for the improper purpose of entrenching Pluton as Manager of the Joint Venture.[111]

125 Wise's case in relation to this breach of duty had two planks. First, counsel for Wise submitted that it was not necessary for the receivers to enter into the JV Variation Deed at all, and that the receivers' decision to do so 'was not a legitimate attempt by the receivers to satisfy their obligations to GNR because the receivers were able to realise the assets and repay the secured debt without the purported amendment'.[112] Counsel for Wise submitted that the receivers could have sold either the Pluton Interest or the Wise Interest (or part thereof) to repay any outstanding indebtedness, without amending the JV Agreement to reinstate Pluton as Manager of the Joint Venture.[113]

126 The second plank of Wise's case was that it was not necessary to appoint Pluton to be the Manager of the Joint Venture, as another person could have been appointed the manager of the Joint Venture. Further, it was Wise's case that by entering into the JV Variation Deed and in amending the JV Agreement as they did, the receivers removed Wise's protection against an insolvent manager operating the Joint Venture and left Wise in the position where it was rendered powerless to seek the removal of Pluton as the Manager of the Joint Venture in the future, even if Wise repaid the amount outstanding under the Wise Liability Cap.

127 Counsel for Wise submitted that upon the appointment of the Pluton receivers, Pluton automatically ceased to be the manager of the Joint Venture, and that that required Pluton and Wise to meet to choose an alternative manager. Wise submitted that

this created a most inconvenient problem for the receivers as the [Pluton receivers]. They were aware that Wise would not agree to re-appoint Pluton as the manager of the Joint Venture and as a result they would only be the receivers of a hopelessly insolvent company with no ability to manage the Cockatoo Island Project or access its income stream.[114]

128 Wise submitted that the improper purpose behind the exercise of the power to execute the JV Variation Deed should be inferred from the following circumstances:[115]

(a) In the morning of 4 November 2014, Wise's solicitors wrote to GNR's solicitors noting (amongst other things) that Pluton's appointment as manager of the Joint Venture had automatically been terminated upon the appointment of the Pluton receivers and requesting an urgent meeting to discuss and decide on the appointment of a new manager;

(b) Without responding to that letter or otherwise engaging with Wise, GNR proceeded later that afternoon to appoint the receivers as the receivers of the Wise Interest;

(c) On 5 November 2014, the receivers then varied the JV Agreement by executing the JV Variation Deed which reinstated Pluton as the manager of the Joint Venture; and

(d) There was nothing to suggest that the receivers took any advice or properly considered (as they should have done) any of the other options available to them for the purposes of realising the secured property and repaying the primary indebtedness.

129 I am not persuaded that the receivers acted in bad faith or for an improper purpose in entering into the JV Variation Deed, and appointing Pluton to be the manager of the Joint Venture, for the following reasons:

1. The circumstances do not support an inference that the receivers acted for an improper purpose;
2. The JV Variation Deed did not entrench Pluton as the Manager of the Joint Venture;
3. Evidence in relation to GNR's conduct does not assist in drawing an inference as to an improper purpose by the receivers.

i. The circumstances do not support an inference that the receivers acted for an improper purpose.

130 It is necessary to assess the conduct of the receivers in the context of the circumstances in which they were operating. As I noted at [63] [66] the defendants tendered documentary evidence of those circumstances, which was not challenged. What that evidence demonstrated was that in the few days immediately following the receivers' appointment, they faced three pressing problems. First, there was a shipment of iron ore from the Mine ready to be loaded onto a ship. Arrangements needed to be put into place to enable the ore to be loaded. Secondly, immediately following their appointment, the receivers were advised that Watpac had refused to continue to provide services without the immediate payment of a significant sum of money, and without clarification of the receivers' authority to make arrangements for the shipment of ore. Thirdly, within a few days the receivers were advised of a possible breach of the sea wall at Cockatoo Island, which required an urgent repair. All of those pressing problems arose in circumstances where very limited cash reserves appear to have been available to the Joint Venture.

131 There was no evidence whatsoever to support Wise's contention that the sale of the Wise Interest or the Pluton Interest, or any part thereof, was an option which was open to the receivers in the days immediately following the receivers' appointment when they had to deal with the three problems set out above. That is particularly so given the obligations which would apply to any potential purchaser, having regard to cl 10.5 of the JV Agreement. (That clause provided that a sale or transfer of part or all of a Joint Venture Interest would not be effective unless and until the assignee executed and delivered a deed agreeing to assume the obligations of the assignor under the JV Agreement, which would include the liabilities of that Joint Venture.)

132 Further, I do not accept that the evidence supports the drawing of an inference that the receivers' powers were exercised for an improper purpose, namely to entrench Pluton as the Manager of the Mine. In my view, the evidence set out at [63] [66] above supports the conclusion that faced with a number of pressing problems relating to the continued operation of the Mine, the receivers took steps to deal with an issue central to dealing with all of those problems, namely to appoint a Manager of the Joint Venture.

133 In circumstances where both Joint Venturers were in receivership, and where urgent steps needed to be taken by the Manager of the Joint Venture in relation to the operation of the Mine, the receivers took steps to facilitate the appointment of Pluton, which had previously acted as the Manager of the Joint Venture, and could continue to do so immediately under the guidance of the Pluton receivers. That step permitted arrangements to be made to secure the immediate payment of Watpac and its agreement to load the ship. There was no evidence that any other person could have been appointed as the Manager of the Joint Venture with such expedition. Nothing in these circumstances suggests any improper purpose on the part of the receivers.

134 Counsel for Wise submitted that a further difficulty with the receivers' appointment of Pluton as Manager was that it required Wise to cease to be a Defaulting Joint Venturer before it could participate in a decision to terminate Pluton's appointment and to appoint a new manager. He submitted that quite apart from the payment of the sum outstanding under the Wise Liability Cap there may be other reasons why Wise may be a Defaulting Joint Venturer, and that the receivers should have considered that possibility before entering into the JV Variation Deed so as to appoint Pluton as the Manager. Given the time frame, and circumstances, in which the decision by the receivers was made, I do not accept that the receivers' failure to consider that hypothetical possibility (if indeed they failed to do so) can be construed as an indication that the decision was made in bad faith or for an improper purpose.

ii. The JV Variation Deed did not entrench Pluton as the Manager of the Joint Venture.

135 I do not accept Wise's submission that in entering into the JV Variation Deed, the receivers entrenched the position of Pluton as the Manager of the Joint Venture. Accordingly, I do not accept the submission by counsel for Wise that the receivers sacrificed

a valuable right of Wise to jointly appoint a manager with Pluton and to protect itself from management of the Joint Venture by an insolvent company. These were clearly important contractual rights under the [JV Agreement] that had value and which, unless set aside, have now been lost.[116]

136 Counsel for Wise submitted that Pluton had been entrenched as the Manager of the Joint Venture because the appointment and removal of the Manager of the JV Agreement required a unanimous decision by the Management Committee for the Joint Venture. He relied on cl 5 of the JV Agreement which deals with the position of Manager of the Joint Venture. The relevant paragraphs of cl 5 are set out at [33] above.

137 Counsel for Wise submitted that cl 5 dealt specifically with the appointment and termination of the Manager of the Joint Venture, and thus that cl 5, rather than the provisions of the JV Agreement dealing with the making of decisions for the Joint Venture more generally, applied in this case. He submitted that the removal of a Manager required the unanimous vote of the Joint Venture's Management Committee, and that the reference in cl 5.1 to the Joint Venturers severally appointing the Manager indicated that the Manager had to be unanimously appointed.

138 I note that counsel for the receivers submitted that the JV Variation Deed did not amend the JV Agreement in such a way as to entrench the position of Pluton as the Manager. Why counsel for Wise maintained the contrary argument in the circumstances was not entirely clear.

139 I do not accept the submissions made by counsel for Wise, for the following reasons.

140 First, cl 5.1 of the JV Agreement deals with the appointment of the initial Manager of the Joint Venture. That much is apparent from the reference to the Commencement Date in cl 5.1, and to the fact that the term 'Manager' is defined in the Dictionary in cl 1 of sch 1 to the JV Agreement as:

the person or entity named as Manager in sch 1 or such other person or entity as may be engaged or appointed by the Management Committee as Manager from time to time under this agreement.

141 The Dictionary in sch 1 must also be read in conjunction with the 'Basic Particulars' in sch 1 (which refers to 'the particulars of a party and the Joint Venture'[117]). The Basic Particulars specified that Pluton was the initial Manager of the Joint Venture from the commencement of the Joint Venture.

142 Secondly, cl 5.2(c) of the JV Agreement refers to the appointment of the Manager being terminated when the Management Committee 'unanimously votes to remove it'. Counsel for Wise relied upon the definition of 'Unanimous Vote' in the Dictionary in sch 1 to the JV Agreement. That term is defined to mean:

a resolution approved [by] all representatives entitled to vote and be present at the meeting but including for this purpose the votes held by a Defaulting Joint Venturer.

143 A Defaulting Joint Venturer is defined to mean:

a Joint Venturer which has committed a breach of this agreement, whether as an Unpaid Monies Default Event or a Breach Default Event or to which (or to a Related Body Corporate of which) a Breach Default Event relates, which breach has not been remedy by the Joint Venturer.[118]

144 A Breach Default Event includes the happening of an Insolvency Event in relation to a Joint Venturer.[119] An Insolvency Event includes the appointment of a controller, as defined in s 9 of the Corporations Act, to the assets of the Joint Venturer.[120]

145 Counsel for Wise submitted that the effect of cl 5.2(c) of the JV Agreement was that on a unanimous vote of the Management Committee in relation to the termination of Pluton's appointment as Manager, the representatives of both Pluton and Wise would be permitted to vote and that Pluton could not be expected to support its own removal as Manager, hence entrenching its position as Manager.

146 I am unable to accept this argument. Clause 5.2(c) refers to the termination of the Manager's appointment when the Management Committee 'unanimously votes' to remove it. The key words are not capitalised, unlike the definition of 'Unanimous Vote' in the Dictionary. The term 'Unanimous Vote' (with capitalisation) is referred to in cl 4.5(c) of the JV Agreement which provides that:

all decisions of the Management Committee must be determined by Majority Vote except the decisions specified in sch 1, which must be determined by Unanimous Vote.

147 Schedule 1 sets out six types of decision which require a Unanimous Vote. Those decisions do not include a decision of the Management Committee to terminate the appointment of a Manager, or, for that matter, to appoint a new Manager. The common theme of the decisions specified as requiring a Unanimous Vote are those which are capable of affecting the extent of Joint Venture property, the extent of Joint Venture liabilities, or matters fundamental to the continued operation of the Joint Venture (namely the Joint Venture Activities). The rationale for requiring a Unanimous Vote in respect of those decisions that is, one in which Defaulting Joint Venturers are entitled to participate is that such decisions will affect their proprietary rights or their rights and liabilities as Joint Venturers. A decision to terminate the appointment of the Manager of the Joint Venture under cl 5.2(c) of the JV Agreement is not a decision of that kind. Given the nature of the decisions requiring a Unanimous Vote, it is not surprising that a decision to terminate the appointment of a Manager does not require a Unanimous Vote.

148 For completeness, I note that even if one of the Joint Venture parties becomes a Defaulting Joint Venturer, the remaining Joint Venturer will have two representatives on the Management Committee. The requirement that the Management Committee must 'unanimously vote' to terminate the appointment of the Manager still has work to do in that circumstance: each of the representatives of the non-Defaulting Joint Venturer on the Management Committee must vote in favour of the decision to terminate the appointment.

149 Thirdly, the definition of 'Manager' in the JV Agreement makes clear that managers of the Joint Venture (other than the initial Manager) will be appointed by the Management Committee for the Joint Venture. Clause 5.4(a) of the JV Agreement deals with the appointment of a new Manager. It does not expressly require a Unanimous Vote, or even that the Management Committee 'unanimously votes' on that decision. Instead, the new Manager must be promptly appointed 'under the terms of this agreement'. Counsel for Wise submitted that those words enlivened the operation of cl 5.1. However, for the reasons already stated, in my view cl 5.1 states the position in relation to the appointment of the initial Manager of the Joint Venture.

150 In my view, cl 5.4(a) requires a decision to be made by the Management Committee of the Joint Venture pursuant to cl 4 of the JV Agreement. Other than for adjournments under cl 4.4(c), a quorum for the Management Committee requires that 'both representatives of each Joint Venturer (other than a Defaulting Joint Venturer) are in attendance'.[121] On any resolution or at any meeting of the Management Committee, a Joint Venturer (other than a Defaulting Joint Venturer) may cast, through its representatives, the number of votes equal to its Percentage Share at the date of the meeting.[122] (Ordinarily, Wise would be entitled to cast two out of a total of four votes (reflecting its 50% share in the Joint Venture.) Finally, as I have already noted, all decisions of the Management Committee must be determined by Majority Vote except those specified in sch 1.[123] A Majority Vote is defined to mean:

A resolution approved by a simple majority of the representatives entitled to vote and be present at the meeting, excluding for this purpose the votes held by a Defaulting Joint Venturer.

151 Fourthly, cl 5.4(g) of the JV Agreement (as inserted by the JV Variation Deed) (see [61] above) permitted a Defaulting Joint Venturer to remain as Manager notwithstanding the other Joint Venturer later becomes a nonDefaulting Joint Venturer. That clause did not mandate the continued role of Pluton as Manager even if Wise became a nonDefaulting Joint Venturer.

152 Accordingly, if Wise were to cease to be a Defaulting Joint Venturer, but Pluton remained a Defaulting Joint Venturer, I do not see any reason why the Management Committee, constituted by a quorum of Wise's representatives only, could not convene to consider whether to terminate Pluton's appointment as Manager. That decision would have to be made by a unanimous vote by the Management Committee members present at the meeting. The decision on the appointment of a new Manager would be required to be made by a Majority Vote of a meeting of the Management Committee, namely by a simple majority of Wise's representatives entitled to vote and be present at the meeting.

iii. Evidence in relation to GNR's conduct does not assist in drawing an inference as to an improper purpose by the receivers.

153 Much of the evidence relied upon by Wise as founding an inference of an improper purpose on the part of the receivers was in fact evidence which related to GNR's decision to appoint the receivers in the first place. I do not see any basis on which that evidence supports an inference that the receivers' decision to enter into the JV Variation Deed was made by them for an improper purpose. Wise did not contend that the appointment of the receivers was invalid by virtue of an improper purpose on GNR's part.

5. Whether GNR is required to provide Wise with a statement of account setting out the total outstanding amount of Wise's liability under the Wise Security Deed

154 At the commencement of the second day of the trial, counsel for Wise sought leave to amend the Writ and Statement of Claim to elaborate on its claim that GNR provide the payout figure. Unfortunately, the proposed amendment used the language of an account and appeared to travel beyond a claim for an order that GNR provide the payout figure and the basis for its calculation, which created some confusion as to the purpose of the proposed amendment.

155 I would refuse leave to make the amendment, having regard to the late notice, and to the fact that the proposed amendment introduced a new issue not previously identified as forming part of the issue relating to the payout figure (in so far as the proposed amendment appeared to conflate Wise's claim for an account from the receivers with its claim for a payout figure from GNR).

156 In so far as the existing Statement of Claim seeks that GNR provide Wise with the payout figure, I would refuse to make the order sought because there would be no utility in that course. Assuming for present purposes that an obligation exists on GNR to provide a payout figure either at common law,[124] or pursuant to the Personal Property Securities Act 2009 (Cth)[125] at least in respect of such of the Wise Interest as was subject to that Act - GNR's solicitors have provided an unequivocal statement of the payout figure to Wise on two occasions. First, as I have already observed, a statement of the payout figure was provided by GNR's solicitors to Wise's solicitors on 5 November 2014. Secondly, a revised statement of the payout figure was provided by GNR's solicitors to Wise's solicitors on 10 December 2014 in the course of the trial.[126]

157 Wise submitted that if there is an outstanding amount under the Wise Liability Cap then GNR should be compelled by the Court to provide Wise with a payout figure so that Wise can properly exercise its rights at law and under cl 5(b) of the Wise Security Deed to payout all outstanding secured moneys and discharge the Wise Security Deed and the receivership.[127] It is now open to Wise (as it has been since 5 November 2014) to exercise its rights under the Wise Security Deed to pay the amount outstanding under the Wise Liability Cap. Counsel for GNR acknowledged that that course was open. In those circumstances, no purpose would be served by the making of an order requiring the provision of a further payout figure.

158 For completeness, I note that in so far as Wise sought that the receivers provide it with an account of their management of the Joint Venture,[128] that relief appeared to be consequential on the termination of the receivership as a result of the other orders Wise sought. Wise did not establish (nor did it seek to establish) that the receivers were otherwise obliged to provide the account at this point. A receiver has a duty to account to the mortgagor after the mortgagee's security has been discharged, not only for the surplus account but for the conduct of the receivership.[129] Furthermore, a claim for the provision of an account by a receiver in the course of a receivership may give rise to difficult questions about the extent of the obligation of a receiver to provide an account, or documents or information, to a company in respect of whose assets it has been appointed.[130]

159 Given the dismissal of its primary claims in the action, Wise's claim for the provision of the account at this point in time should be dismissed. That would not preclude it seeking an account from the receivers if the receivership is terminated in the future.

160 Each of the claims made by Wise which have been the subject of this separate trial should be dismissed. As those claims are determinative of the defendants' liability to Wise, it appears that Wise's action in its entirety should be dismissed.

161 However, I will hear from the parties as to the orders which should be made.

[1] There was no dispute that Wise is a company incorporated under the laws of Hong Kong.

[3] There was no dispute that GNR is a company incorporated under the laws of Macau.

[8] There did not appear to be any dispute that GNR(HK) is a wholly owned subsidiary of GNR.

[10] The CFR Platts Price was calculated by reference to a particular index at a particular time period, while the discount applied was US$10 per dry metric tonne.

[12] Although the security deed was to be provided before 31 March 2013, that date was subsequently extended to 30 April 2013: Exhibit A4.

[17] Plaintiff's Written Submissions dated 4 December 2014 [16] [17]; Defendants' Written Submissions dated 8 December 2014 [19].

[18] An Insolvency Event was defined to include an event where a liquidator, Controller or similar official was appointed to or took possession or control of all or any of Pluton's assets or undertaking: Exhibit A6, cl 1.

[21] Exhibit A15 (Addendum No. 3 made on 6 August 2013), Exhibit A19 (Addendum No. 4 made on 2 December 2013), Exhibit A20 (Addendum No. 5 made on 6 December 2013), Exhibit A26 (Addendum No. 6 made on 8 March 2014), and Exhibit A33 (Addendum No. 7 made on 14 April 2014).

[28] The 'Security Interest' granted was a security interest in any Secured Property to which the Personal Property Securities Act 2009 (Cth) applied, and a fixed charged over all other Secured Property: see Exhibit A17, cl 2.1(a).

[44] Exhibit A43. Although Wise initially pleaded that the quantum of the conversion was US$9.4 million, the documentary evidence indicated that the quantum of the conversion was in fact AU$9.4 million, with the result that the Wise Liability Cap was reduced by AU$4.7 million.

[49] Exhibit B (Attachment SJD1) and Exhibit A45.

[50] Exhibit B (Attachment SJD2) and Exhibit A46.

[51] Exhibit B (Attachment SJD3) and Exhibit A47.

[52] Exhibit B (Attachment SJD4) and Exhibit A48.

[53] Exhibit B (Attachment SJD5) and Exhibit A49.

[61] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656 657 [35] (French CJ, Hayne, Crennan & Kiefel JJ).

[62] Australian Broadcasting Commission v Australasian Performing Rights Association [1993] HCA 36; (1973) 129 CLR 99, 109 (Gibbs J).

[63] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656 657 [35] (French CJ, Hayne, Crennan & Kiefel JJ).

[64] Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640, 656 657 [35] (French CJ, Hayne, Crennan & Kiefel JJ).

[65] EDWF Holdings 1 Pty Ltd v EDWF Holdings 2 Pty Ltd [2010] WASCA 78; (2010) 41 WAR 23, 52 53 [104] (Buss JA, Owen JA & Newnes JA agreeing).

[66] Australian Broadcasting Commission v Australasian Performing Rights Association [1993] HCA 36; (1973) 129 CLR 999, 109 (Gibbs J).

[67] Permanent Building Society (In liq) v Wheeler (1992) 10 WAR 109, [120] (Owen J).

[68] Plaintiff's Written Submissions dated 4 December 2014 [40].

[69] Plaintiff's Responsive Submissions dated 9 December 2014, [7].

[70] Plaintiff's Written Submissions dated 4 December 2014 [41].

[71] Plaintiff's Responsive Submissions dated 9 December 2014 [17].

[72] Plaintiff's Written Submissions dated 4 December 2014 [36] [39].

[73] Plaintiff's Written Submissions dated 4 December 2014 [18] [19].

[74] Macquarie Dictionary, full online edition, definition 10; Oxford English Dictionary, full online edition, definition I.4.

[75] Macquarie Dictionary, full online edition, definition 4; Oxford English Dictionary, full online edition, definition B.

[80] Both the Sales and Purchase Contract dated 28 February 2013 and the Deed of Addendum dated 28 February 2013.

[81] See the definition of 'Loan' in Exhibit A6, cl 1.1.

[83] Plaintiff's Responsive Submissions dated 9 December 2014 [28].

[84] Plaintiff's Responsive Submissions dated 9 December 2014 [26].

[85] Plaintiff's Responsive Submissions dated 9 December 2014 [26].

[86] Exhibit A16, A18, A23, A28, A29, A35 and A36.

[88] Plaintiff's Responsive Submissions dated 9 December 2014 [58].

[89] Plaintiff's Written Submissions dated 4 December 2014 [53] and [55].

[90] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 630 [881] (Einstein J).

[91] Carey v Korda [2012] WASCA 228; (2012) 45 WAR 181, 192 [50] (Murphy JA, Martin CJ & Newnes JA agreeing); Bride v Freehill Hollingdale & Page [1996] ANZ ConvR 593, 596; see also State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 626 [870] (Einstein J).

[92] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 625 [867] (Einstein J) citing Cape v Redarb Pty Ltd (1992) 8 ACSR 67, 78 (Higgins J).

[93] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 625 [867] (Einstein J) citing Duffy v Super Centre Development Corporation Ltd [1967] 1 NSWR 382, 383 384 (Street J).

[94] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 625 [868] (Einstein J), citing Re B Johnson & Co (Builders) Ltd [1955] Ch 634, 644 (Evershed MR) and Ostranger v Niagara Helicopters Ltd (1973) 40 DLR (3d) 161, 167 (Stark J).

[96] There was no suggestion in this case that the receivers were acting as the agent of GNR pursuant to the Wise Security Deed see ts 207 (12 December 2014) and Exhibit A17, cl 9.2.

[97] Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; (1997) 189 CLR 407, 432 433 and 436 (Dawson, Gaudron & Gummow JJ); Visbord v Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354, 381 382 (Williams J); State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 625 [868] [869] (Einstein J) citing Ostranger v Niagara Helicopters Ltd (1973) 40 DLR (3d) 161,167 (Stark J); Oswal v Burrup Fertilisers Pty Ltd [2013] FCAFC 9; (2013) 295 ALR 708, 719 [61] (the Court).

[98] Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd [1978] HCA 21; (1978) 139 CLR 195.

[99] Australia and New Zealand Banking Group Ltd v Bangadilly Pastoral Co Pty Ltd [1978] HCA 21; (1978) 139 CLR 195, 222 227, 228 229 (Aickin J), 199 200 (Stephen J), 201 202 (Jacobs J).

[100] Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 68 (Gibbs CJ), 141 (Dawson J); Breen v Williams [1996] HCA 57; (1996) 186 CLR 71, 92 (Dawson & Toohey JJ), 106 (Gaudron & McHugh JJ).

[101] Breen v Williams [1996] HCA 57; (1996) 186 CLR 71, 107 (Gaudron & McHugh JJ); Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 96 97 (Mason J), 141 142 (Dawson J).

[102] Breen v Williams [1996] HCA 57; (1996) 186 CLR 71, 107 (Gaudron & McHugh JJ); Pilmer v Duke Group Ltd (In liq) [2001] HCA 31; (2001) 207 CLR 165 [136] (Kirby J); Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64; (1984) 156 CLR 41, 69 70 (Gibbs J).

[103] Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6; (2012) 200 FCR 296, 345 [177] (the Court).

[106] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 626 [870] (Einstein J); Visbord v Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354, 384 (Williams J).

[107] See s 420A and s 180 s 184 of the Corporations Act 2001 (Cth) when read with the definition of 'officer' and 'controller' in s 9 of that Act.

[108] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 626 [870] (Einstein J).

[109] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 626 [870] [871] (Einstein J) citing Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295, 312 (Lord Templeman); Kennedy v De Trafford [1897] AC 180, 185 (Lord Herschell), 192 (Lord Macnaghten); Barns v Queensland National Bank Ltd [1906] HCA 26; (1906) 3 CLR 925, 943 (Griffith CJ).

[110] State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 629 [879] (Einstein J) citing Forsyth v Blundell [1973] HCA 20; (1973) 129 CLR 477, 493 494 (Walsh J), 506 507 (Mason J); Pendlebury v Colonial Mutual Life Assurance Society Ltd [1912] HCA 9; (1912) 13 CLR 676, 691 692 (Griffith CJ), 694 (Barton J), 700 703 (Isaacs J).

[111] Plaintiff's Responsive Submissions dated 9 December 2014 [68].

[112] Plaintiff's Written Submissions dated 4 December 2014 [58].

[113] Plaintiff's Responsive Submissions dated 9 December 2014 [66].

[114] Plaintiff's Written Submissions dated 4 December 2014 [26].

[115] Plaintiff's Responsive Submissions dated 9 December 2014 [67].

[116] Plaintiff's Responsive Submissions dated 9 December 2014 [64].

[117] See the definition of 'Particulars' in the Dictionary in Schedule 1 to the JV Agreement.

[118] See the Dictionary in Schedule 1 to the JV Agreement (Exhibit A8).

[119] See the Dictionary in Schedule 1 to the JV Agreement (Exhibit A8).

[120] See the Dictionary in Schedule 1 to the JV Agreement (Exhibit A8).

[124] Project Research Pty Ltd v Permanent Trustee of Australia Ltd (1990) 5 BPR 11, 225; cf Adams v Bank of New South Wales [1984] 1 NSWLR 285, 296 (Hutley JA, Moffitt P & Samuels JA agreeing).

[125] See Personal Property Securities Act 2009 (Cth) pt 8.4.

[127] Plaintiff's Responsive Submissions dated 9 December 2014 [53].

[128] Further Amended Statement of Claim [35].

[129] Expo International Pty Ltd (in liq) v Chant [1979] 2 NSWLR 820, 834 (Needham J); Bride v Australian Bank Ltd [2000] WASC 116 [194] (Parker J); see also State Bank of New South Wales Ltd v Chia [2000] NSWSC 552; (2000) 50 NSWLR 587, 629 [879] (Einstein J).

[130] Cf Smiths Ltd v Middleton [1979] 3 All ER 842; Gomba Holdings (UK) Ltd v Homan [1986] 1 WLR 1301; Re B Johnson & Co (Builders) Ltd [1955] Ch 634; see also Carey v Korda [2012] WASCA 228; (2012) 45 WAR 181; Oswal v Burrup Fertilisers Pty Ltd [2013] FCAFC 9; (2013) 295 ALR 708, 725 [75] [77], 727 [91] [92] (the Court); Re Geneva Finance Ltd; Quigley v Cook (1992) 7 WAR 496, 513 514 (Owen J).