iPartners Nominees Pty Ltd v BNY Trust Company of Australia Ltd

1. [1]

   LEEMING JA: Declaratory relief under s 418A of the Corporations Act 2001 (Cth) is sought concerning the validity of the appointment by the first plaintiff noteholder of the second and third plaintiffs as “receivers and managers over the Collateral” of certain trusts known as the Marketlend Trust CC1 and Marketlend Trust CC2. A little unusually, this is not a case where there have already been allegations that the receivers have been invalidly appointed. However, the appointment of the receivers is but one aspect of a broader commercial dispute, and has some unusual features, notably that (speaking loosely) the first plaintiff is standing in the shoes of the second defendant to exercise a power purportedly conferred upon it by a deed to which it is not party. For that reason this application has been made, very promptly, in the immediate aftermath of the appointment. The application is not opposed by the defendants.

2. [2]

   In what follows, I shall first address the structure pursuant to which the first plaintiff acquired notes issued by the first defendant to fund the acquisition of receivables which are the assets of two trusts. I shall then address the contractual provisions which are said to give rise to the doubt as to the receivers’ appointmentS. I then turn to s 418A and the principles applicable to it, and their application to the present case.

Parties and contractual background

1. [3]

   The first plaintiff, iPartners Nominees Pty Ltd, is the legal owner of all of the Class A notes issued by the first defendant, BNY Trust Company of Australia Ltd, as trustee of each of two trusts known as the “Marketlend Trust CC1” and the “Marketlend Trust CC2”. Save for the number of notes and the extent of unpaid interest, the trusts are relevantly identical, and I shall refer in what follows to the “Marketlend CC1 and CC2 Trusts” to mean each of those two trusts (there are other Marketlend Trusts but they are not relevant to this application). iPartners Nominees in fact itself holds those notes as trustee of two separate trusts, but nothing turns on that for present purposes. The second and third plaintiffs, Mr Barry Frederic Kogan and Mr Damien Mark Pasfield, were (purportedly) appointed as receivers over the “Collateral” of each of the Marketlend CC1 and CC2 Trusts around a fortnight ago.

2. [4]

   Today, and ever since iPartners Nominees acquired notes, the Secured Trustee and the Security Trustee for each of the Marketlend CC1 and CC2 Trusts are and have been the first and second defendants, BNY and Permanent Custodians Ltd, although previously different companies had held those offices. I shall return to the applicable provisions of the Master Security Trust Deed, including the power to appoint receivers, and how those provisions apply to the Marketlend CC1 and CC2 Trusts, below.

3. [5]

   Before descending to the detail of the transaction, it may help to state at the outset, as Mr Barnett SC who with Ms Doyle-Markwick appeared for the plaintiffs stated at the outset of his submissions, that BNY as trustee of each of the Marketlend CC1 and CC2 Trusts had issued notes to noteholders, and with the proceeds had acquired equitable interests in receivables which were held on trust. The trustee was obliged to make payments to noteholders, and had granted security over the trust assets to secure those obligations. The security was granted in favour of Permanent. Subsequently, there was a failure by BNY to make payments of interest to noteholders, who directed Permanent to appoint a receiver, and in light of a dispute concerning Permanent’s indemnity, have purported to do so directly.

4. [6]

   The most important transaction document is the “Marketlend Trusts Master Security Trust Deed” dated 23 December 2014. This document is between different parties, and was executed more than seven years before the Marketlend CC1 and CC2 Trusts came into existence. The Marketlend Trusts Master Security Trust Deed contemplates a number of trusts coming into existence in the future, in which event, speaking generally, its terms will apply.

5. [7]

   There was also a Master Trust Deed entered into in 2014. Clause 7.1(i) of the Master Trust Deed confirmed that a Noteholder is entitled to compel the trustee (that is to say, the Secured Trustee) to comply with its duties and obligations. The subclause went on to provide that:

6. [8]

   For each of the Marketlend CC1 and CC2 Trusts, BNY has entered into a General Security Deed, in which it charges all its present rights, title and interests in the “Collateral” to the Security Trustee, Permanent. The Collateral is defined to mean all the assets of the Secured Trust.

7. [9]

   In May 2021, BNY and Permanent replaced the previous Secured Trustee and Security Trustee. By cll 3.1 and 3.2 of the Deed of Amendment, Accession, Release and Retirement, BNY and Permanent assumed all the obligations, duties and liabilities of their predecessor under each “Accession Document”, which included the Master Security Trust Deed and the Master Trust Deed.

8. [10]

   In the following month, a new trust known as the “Marketlend Trust CC1” was created, with BNY as trustee of nominal trust property. Then, by the “Marketlend Trust CC1 Series Supplement” (a document which was contemplated from time to time under the Marketlend Trusts Master Security Trust Deed), executed on 7 September 2022, that trust (namely, the Marketlend Trust CC1) was specified as a “Secured Trust” for the purposes of the Master Security Trust Deed. The document was multi-partite, but was executed as a deed poll by BNY. In it, BNY covenanted that “[t]he obligations of the Trustee under this Deed and the Notes (amongst other things) will be secured to the Noteholders (among others) by the Master Security Trust Deed and the General Security Deed which, together, are a Security Trust Deed relating to the Trust for the purposes of the Master Trust Deed” (cl 1.6). The same Deed provided, in cl 7.8, that the Trustee covenanted for the benefit of each Noteholder to make all payments of interest in respect of the Notes held by that Noteholder on each relevant payment date and to comply with the terms of this Deed and the transaction documents to which it was a party.

9. [11]

   Also on 7 September 2022, BNY and Permanent entered into the Marketlend Trust CC1 General Security Deed, whereby BNY charged “all its present and after-acquired, right, title and interest in the Collateral” to the Security Trustee, relevantly for “the due and punctual performance and observance and fulfilment of the Obligations and the payment in full of the Secured Moneys in relation to the Secured Trust on the terms and conditions contained in the Master Security Trust Deed”.

10. [12]

    iPartners Nominees agreed, by the Marketlend Trust CC1 Class A Note Subscription Agreement, to subscribe for the issue of Class A notes in accordance with a drawdown notice. Relevantly, by cl 7.3 of the Subscription Agreement, BNY made “each representation and warranty set out in Schedule 4”, and Schedule 4 included an obligation to “duly and punctually perform its obligations under the Transaction Documents”. Thus, as it happens, because BNY was the Secured Trustee when the notes were issued, and iPartners Nominees is an original noteholder rather than a transferee, there is a direct promise made by BNY to iPartners Nominees that it will perform its obligations under the Master Security Trust Deed and the relevant General Security Deed. Further, by cl 8.1, each party undertook that whilst any amounts were due and payable by the trustee in respect of the Class A notes held by iPartners Nominees, it will comply with undertakings, in the case of BNY, as set out in Schedule 4.

11. [13]

    Ultimately, iPartners Nominees subscribed to some $51,640,000 in CC1 Class A notes. It is the only Class A noteholder of notes issued by the trustee of that trust.

12. [14]

    There were materially identical provisions in relation to the Marketlend Trust CC2. Ultimately, iPartners Nominees subscribed to some $30,069,597 in CC2 Class A notes. Again, it is the only Class A noteholder, and again there is a promise to duly and punctually perform BNY’s obligations under the Transaction Documents made by BNY to iPartners Nominees.

13. [15]

    Schedule 2 of the General Security Deed provides that each Noteholder is a Secured Creditor, and the Master Security Trust Deed is a Transaction Document for the purposes of the subscription agreements.

14. [16]

    Clause 3.1 of the Master Security Trust Deed provides that the Security Trustee will hold the security trust fund on trust for the Secured Creditors. Clause 3.4 provides that the provisions of this deed and the relevant General Security Deed are binding upon every Interested Person of a Secured Trust, as well as the Security Trustee, and the Secured Creditors are defined to be interested persons. Clause 3.6 provides that no Secured Creditor has any equitable or proprietary interest in the Collateral or the Charge or any rights held by the Security Trustee under cl 3.1, “and only has a mere right of action against the Security Trustee to properly perform its covenants under this Deed and to account to the Secured Creditors in relation to the Secured Trust in accordance with this Deed and the relevant General Security Deed”.

15. [17]

    Clause 7 deals with the rights and obligations of the Security Trustee following an “Event of Default”. Clause 7.1 concerns an obligation to notify Secured Creditors and for there to be a meeting of Secured Creditors, at which one or more of the extraordinary resolutions identified under cl 7.2 may be voted on. Clause 7.2(b) authorises the Voting Secured Creditors to resolve by extraordinary resolution that a receiver be appointed over the Collateral of the trust in accordance with cl 9 and if so to determine the amount of the receiver’s remuneration. As the sole “Class A Noteholder” and “Class A Subscriber”, iPartners Nominees is the sole “Voting Secured Creditor” in respect of each of the Marketlend CC1 and CC2 Trusts for the purposes of the relevant General Security Deeds and the Master Security Trust Deed.

16. [18]

    Clause 7.3(a) requires the Security Trustee to take all action necessary to give effect to any extraordinary resolutions. However, that obligation is expressly subject to cl 7.3(b)(iii) which, relevantly, entitled it in its absolute discretion to be adequately indemnified from the Collateral in a form reasonably satisfactory to the Security Trustee. Clause 7.4 is headed “Security Trustee must receive indemnity”, although that heading is less than wholly accurate. That is because if the Security Trustee requires an indemnity, but the voting Secured Creditors refuse to grant it, then the clause provides as follows:

17. [19]

    Pausing there to anticipate what occurred a fortnight ago, cl 7.4 contains the power purportedly exercised by iPartners Nominees to appoint Messrs Kogan and Pasfield as receivers of the Collateral of the Marketlend CC1 and CC2 Trusts.

18. [20]

    Clause 8.4 provides as follows:

19. [21]

    Finally, cl 16.10 of the Master Trust Deed provides the following:

Factual background leading to the appointment of the receivers

1. [22]

   The evidence before me establishes that there have been underpayments of interest between June and October 2025, and no payments of interest whatsoever since November 2025, to iPartners Nominees as a Class A Noteholder of either of the Marketlend CC1 and CC2 Trusts. As at 13 February 2026, iPartners Nominees’ solicitors wrote advising that there was an “Event of Default” subsisting in respect of each trust due to non-payments in respect of interest, in the amounts of $2,287,963.96 in respect of CC1 Trust and $1,605,238.50 in respect of CC2 Trust.

2. [23]

   On 19 February 2026, iPartners Nominees as sole Class A Noteholder and therefore sole Voting Secured Creditor, acting pursuant to cll 7.2 and 7.3 of the Master Security Trust Deed, proposed to appoint receivers over the Collateral over both trusts, nominating the second and third plaintiffs, and offering Permanent an indemnity capped at $20,000 exclusive of GST. That proved not to be satisfactory. By letter dated 27 February 2026, the solicitors for Permanent stated that the indemnity was inadequate and that their clients required a funded indemnity in the amount of $250,000 per trust or “$500,000 in total across each trust”.

3. [24]

   On 3 March 2026, iPartners Nominees as the sole Voting Secured Creditor of the Marketlend CC1 and CC2 Trusts notified Permanent of an Event of Default and directed them to take all necessary steps to appoint and instruct receivers.

4. [25]

   Passing over the dispute concerning the indemnity, by letter dated 24 March 2026, iPartners Nominees as the Voting Secured Creditor of each trust exercised its entitlement to decline to grant Permanent’s requested indemnity, and supplied a resolution appointing the second and third plaintiffs as receivers, pursuant to cl 7.4.

5. [26]

   Proceedings were commenced in this Court the following day. The only defendants joined were BNY and Permanent, being the Secured Trustee and Security Trustee, in their capacities as such in relation to the Marketlend CC1 and CC2 Trusts.

6. [27]

   When the matter was returnable on 30 March 2026, BNY and Permanent advised that while they were neutral as to the orders sought in the originating process, there were other parties affected who might either be necessary parties or alternatively were parties who had a right to participate. The plaintiffs did not accept that any other parties should have been joined, but there was no opposition to the defendants’ proposal that there be a short, 72-hour, adjournment until Maundy Thursday for the purpose of notifying those companies so as to provide them with an opportunity to apply to be joined or to be heard on the relief sought under s 418A.

7. [28]

   Directions were made for the service of the originating process, supporting affidavits and written submissions, later that day. I am satisfied on the evidence that that has, in large measure, occurred. One of the companies, Marketlend Pty Ltd, was served electronically and around 5:35pm on that day, shortly after documents had been left physically at its registered office, and its solicitors advised by email sent at 6:25pm on 31 March 2026 that “we confirm that Marketlend does not intend to file an appearance in these proceedings, nor appear at the hearing on Thursday, 2 April 2026”. Another of the companies, Tyndall Capital Pty Ltd, was not served physically, but an ASIC search tendered by the plaintiffs establishes that it has the same director and shareholder as Marketlend Pty Ltd. A third company, AMAL Management Services Pty Ltd, had formerly been the trust manager. The evidence establishes that it was served physically at that company’s registered office. It did not seek to be joined or to be heard when the matter was listed for final hearing.

8. [29]

   The course outlined above may have been taken out of an abundance of caution, and/or in accordance with an appreciation that non-parties may be heard as to and may challenge orders made by the court in certain circumstances (see Garden Mews-St Leonards Pty Ltd v Butler Pollnow Pty Ltd (No 2) (1984) 9 ACLR 117 at 119) and perhaps also by (loose) analogy with what is contemplated by s 63(8), (10) and (11) of the Trustee Act 1925 (NSW), although s 418A unlike s 63(11) makes no provision as to the binding effect of the Court’s order. These reasons should not be understood as expressing any view of the necessity or appropriateness of the joinder of additional parties, or as to the consequences of the non-participation of the other companies’ in the hearing of the application under s 418A.

9. [30]

   The evidence and submissions identified the following matters said to give rise to doubt to the validity of the appointment of the receivers.

   1. (1)

      First, one of the receivers, who was a partner of McGrathNicol and a registered liquidator with extensive corporate insolvency experience, states that from his knowledge and experience as a registered liquidator it is unusual for a document to confer a right on a third party to appoint a receiver to assets. As noted above, iPartners Nominees is not a party to either the Master Security Trust Deed or the General Security Deed, although the charge of the Collateral of each trust is itself held on trust by Permanent for its benefit.

   2. (2)

      Secondly, cl 3.6 of the Master Security Trust Deed makes it clear that Secured Creditors have no equitable or proprietary interest in the Collateral or the Charge and instead have only a “mere right of action against the Security Trustee”.

   3. (3)

      Thirdly, cl 8.4 of the Master Security Trust Deed, which is expressed to be subject to cl 7.4, provides that “no Voting Secured Creditor is entitled to enforce a Charge or the provisions of this Deed or that General Security Deed exercisable by the Security Trustee or to appoint or cause to be appointed a Receiver to any of the Collateral”.

   4. (4)

      Fourthly, cl 16.10(h) of the Master Security Trust Deed provides that no party may sue the trustee personally or seek the appointment of a liquidator, administrator or receiver or similar person to the trustee.

10. [31]

    It is not difficult to foresee that the issues of characterisation and construction to which the plaintiffs advert would be capable of giving rise to questions going to the validity of the appointment of the receivers. Appointments of receivers following default are often contentious. Mr Pasfield’s evidence was that the receivers have already begun to act on their appointment, including notifying partners of their appointment, freezing bank accounts and advancing the collection of loan receivables. The amounts involved are large. There is evident merit in the rapid determination of the application under s 418A.

Section 418A and the principles relevant to it

1. [32]

   Section 418A provides as follows:

2. [33]

   For present purposes, which concern the appointment of Messrs Kogan and Pasfield as receivers, it is only paragraph (a) of s 418A(1) and (2) which is relevant, and for concision I shall mostly refer only to the purported appointment of a receiver.

3. [34]

   The construction of s 418A begins and ends with the statutory text understood in context and in light of the statutory purpose insofar as that purpose is discernible from the statutory text and context: Palmanova Pty Ltd v Commonwealth [2025] HCA 35; 99 ALJR 1362 at [4]-[5].

4. [35]

   The provision was recommended in 1988 by the Harmer Report (see the “General Insolvency Inquiry” ALRC Rep No 45 at paragraphs 201-203). The explanatory memorandum accompanying the Corporate Law Reform Bill 1992 (Cth) which inserted s 418A in its originally form provided:

5. [36]

   The explanatory memorandum is opaque concerning the relationship between s 418A and the general jurisdiction of superior courts to issue declaratory relief. This was addressed in more detail in the Harmer Report. Paragraph 201 referred to an application being made “under the general rules of court” but said that it was desirable for there to be an express power in the companies legislation. It was said:

6. [37]

   Although the Harmer Report recommended the inclusion of the section which was subsequently enacted as s 418A (see proposed section R3, in ALRC Rep No 45), it did not state whether and the extent to which the provision would cut across the limitations identified in the paragraph reproduced above. I shall return to this.

7. [38]

   As a matter of ordinary English, the precondition to the provision is that there be doubt on one or more specified grounds concerning the validity of the appointment of a receiver. The singular “a” specified ground in the opening words of subs (1), and the corresponding singular “on the ground specified” in the closing words of subs (2), both include the plural: Acts Interpretation Act 1901 (Cth), s 23(b). If so, declaratory relief may be given, on the ground(s) specified in the application or some other ground or grounds.

8. [39]

   “[T]he ground specified in the application” in s 418A(2) refers back to the “doubt, on a specified ground” in the opening words of s 418A(1). This is an ordinary and familiar use of the definite article later in a provision to refer to the same noun preceded by the indefinite article earlier in the provision; see for example Haertsch v Whiteway (2020) 102 NSWLR 386; [2020] NSWCA 133 at [18] and David & Ros Carr Holdings Pty Ltd v Ritossa (2025) 117 NSWLR 528; [2025] NSWCA 108 at [103]. Indeed, “a provision” and “the provision” in the preceding sentence is an example.

9. [40]

   Thus it is not sufficient merely that there be doubt; both doubt and one or more specified grounds are preconditions to the availability of the section. I mention this in part because of the emphasis in aspects of iPartners’ written submissions upon the existence of “doubt”. It was said that “[t]he question then is whether the putative appointment is attended by a relevant doubt”, and then, by reference to what had been said in some of the cases by reference to a dictionary definition, whether there was a “feeling of uncertainty”. However, in oral submissions, any notion that the “doubt” might be divorced from a specified ground was disavowed. “I completely accept it’s not a general feeling of uncertainty, it’s a feeling of uncertainty in relation to the specific ground that is relied upon” (Transcript, 2 April 2026, 21.18-19). That clarification was properly made.

10. [41]

    The main reason to focus upon the link between the specific grounds which are the precondition to the availability of the section and the grounds specified at the conclusion of the section is to make the point that the power conferred by the section is not open-ended; instead, it is confined to declarations relating to specified grounds. This is not mere pedantry on my part. As will be seen below, it goes directly to the formulation of relief.

11. [42]

    There is a danger in using a dictionary definition instead of the statutory language. For one thing, the particular definition may not have been selected disinterestedly having regard to the particular context in which the word is used, but rather because it favours the litigant’s forensic goal. For another, there is nothing unclear about “doubt” as a matter of ordinary English in the context of s 418A, and departing from the statutory language runs the risk that rather than attending to the compound term “doubt on a specific ground” which appears in that form or in a cognate form at the beginning and end of the section, one may focus merely on the existence of some generalised doubt and lose sight of the link between the doubt and the ground that gives rise to that doubt.

12. [43]

    I have so far passed over the words “as the case may be” at the conclusion of subs (2). Those words tend against the suggestion that the section authorises an unqualified declaration of validity. That is so notwithstanding that subs (2)(a) speaks of an order whether or not “the purported appointment was valid”. That is because the words “as the case may be” make it plain that they apply to both paragraphs of subs (2). This has an important consequence. The concluding words of the subsection must also apply to both paragraphs of sub (2). When a sentence has more than one limb, English can be ambiguous whether a subsequent clause applies only to the immediately preceding limb or to all preceding limbs (a similar ambiguity was discussed in Zhang v ROC Services (NSW) Pty Ltd; National Transport Insurance by its manager NTI Ltd v Zhang (2016) 93 NSWLR 561; [2016] NSWCA 370 at [67]-[70]). But because the words “as the case may be” make it plain that they apply to both limbs, so too must the ensuing words. That is confirmed by the sense of the subsection, for there could be no good reason for the concluding words to apply only to orders concerning the validity of the appointment of a person who has entered into possession or assumed control, and not to a receiver.

13. [44]

    Accordingly, there is a very powerful inference grounded in the text of the provision that the concluding words of the subsection “on the ground specified in the application or on some other ground” apply to both paragraphs of subs (2). That is to say, the concluding words apply distributively. In every case, they qualify the power to issue declaratory relief.

14. [45]

    Once it is seen that s 418A authorises the making of a declaration whether or not an appointment is valid on a specific ground, then it is natural to read the provision as at least primarily directed to two classes of orders: orders that an appointment is invalid on a particular ground, and orders that an appointment is not invalid on a particular ground. Read literally, s 418A authorises a declaration that an appointment is valid on a particular ground, but that is problematic, because in many circumstances it does not make sense. It does not follow from the rejection of, say, a submission that there was no event of default that the appointment of a receiver is necessarily valid, and it will as a matter of law be invalid if other preconditions to the exercise of the power are not made out. On the other hand, if all interested parties have been joined and it is agreed that the only potentially invalidating grounds to the receiver’s appointment are those raised in the proceedings, then if all those grounds are rejected, an unqualified declaration of validity may properly be made.

15. [46]

    Suppose, say, the company seeks a declaration that a receiver’s appointment is invalid on a particular ground, and at the hearing that ground is not made out. It is one thing for the Court to declare that the appointment is not invalid on that specified ground. It is, on one view, another thing entirely to declare that the receiver’s appointment is valid without qualification. It is fairly plain that a negative declaration that an appointment is not invalid on a specified ground may prevent relitigation of a challenge to validity on the same ground, but does not (at least, of itself) prevent a further challenge to the validity of the appointment on different grounds. For example, an unsecured creditor who was unaware of the earlier litigation could scarcely be prevented from bringing proceedings that the receiver’s appointment was invalid on some other ground (whether the same is true of the company itself will in part turn on questions of Anshun estoppel). I incline to the view that the same is true even if the declaration is issued in unqualified terms. Instead, s 418A permits issues of validity to be argued and determined quickly, without necessarily attending to the complexities of parties and representative orders, but without binding persons who have not been heard and who may be wholly unaware of the litigation.

16. [47]

    It may assist to set out how the section operates in the two main classes of case to which it applies: applications by persons affected by the appointment of a receiver, and applications by the receiver.

    1. (1)

       In many instances, it will be the corporation to whose property a receiver has purportedly been appointed which will invoke s 418A to establish the invalidity of the appointment, although it may also be a creditor of the corporation.

    2. (2)

       Whoever the person challenging the appointment be, it is incumbent upon the challenger to specify at least one ground supporting that contention (indeed, it should be stated in the originating process). It is to be borne in mind that the requisite “doubt on a specified ground” presents a low threshold. Especially at an early stage, it may be difficult to assess whether the risks raised are likely or merely theoretical (see the observations noted in Oswal v Burrup Fertilisers Pty Ltd (Receivers and Managers Appointed) [2011] FCAFC 117; 85 ACSR 531 at [41]).

    3. (3)

       If that ground is made out, then there will be a prima facie case for a declaration of invalidity. If during the course of the litigation, other grounds for invalidity become apparent and are relied on and established, then they too may give rise to a prima face case for a declaration of invalidity; hence the closing words “on some other ground” in subs (2). It may not greatly matter whether a receiver’s appointment is invalid on one or more than one ground; if any ground is made out, the likely consequence (save for statutory and discretionary defences) is the invalidity of the appointment and the liability of the receiver for acts done without authority.

    4. (4)

       If none of the grounds advanced by the challenger is made out, then s 418A authorises a declaration that the receiver’s appointment is not invalid on any of those grounds.

    5. (5)

       However, it does not follow from the fact that the particular grounds propounded are not made out that the receiver’s appointment is valid on all bases and in relation to all persons who might seek to challenge it.

    6. (6)

       There may be cases where an unqualified declaration of validity is appropriate. An example might be a receiver whose appointment has long since ceased, who in that office entered into certain transactions which are challenged in litigation where all parties are present (an example may be seen in Newtronics Pty Ltd (recs & mgrs appd) (in liq) v Atco Controls Pty Ltd (in liq) & Ors [2008] VSC 566; 69 ACSR 317, where proceedings were commenced in 2006 challenging the appointment of receivers in 2002 who sold the business of the company to which they had been appointed shortly thereafter (the background is described in Stewart v Atco Controls Pty Ltd (in Liquidation) (2014) 252 CLR 307; [2014] HCA 15 at [3]-[6])). But that is the exception rather than the rule. In many cases – and especially in a case such as the present which has been commenced the day after appointment with a view to obtaining relief very promptly – there will be no sound basis for such an unqualified order. Indeed, I am of the view that if an unqualified declaration is made, not connected with a specified ground, then it is best seen as an exercise of the general power of a superior court to issue declaratory relief (s 418A only applies to superior courts, noting the definition of (capitalised) “Court” in s 58AA of the Corporations Act) rather than the qualified power conferred by s 418A.

17. [48]

    On this approach, s 418A authorises a speedy determination concerning the validity of an appointment as between the parties most directly concerned by the issue, without the delay that may be associated with equity’s traditional concern for joinder of all parties and the making of representation orders. That accords with the purpose stated in the explanatory memorandum and the Harmer Report. It does not follow that s 418A authorises bare declarations of validity unconnected with any specified or other ground. I do not regard this as turning upon any unduly pedantic reading of the statutory language; to the contrary, it is the natural reading of the concluding words of the subs (2), which dovetail with the opening words of subs (1), and are reinforced by the words “as the case may be”, which reading accords with general principles of the effect of declaratory relief.

18. [49]

    I have hitherto addressed the text, context and purpose of the provision from first principles. However, the result reached also accords with authority. It is to be borne in mind, as Le Miere J explained in Martin Bruce Jones and Darren Gordon Weaver and Andrew John Saker as receivers and managers of Narrogin Beef Producers Pty Ltd (Receivers and managers appointed) v Narrogin Beef Producers Pty Ltd (Receivers and managers appointed) [No 2] [2010] WASC 365 at [10]:

19. [50]

    That approach was endorsed by M Osborne J in National Australia Bank v Redside Pty Ltd (2023) 69 VR 539; [2023] VSC 145 at [42].

20. [51]

    Section 418A also extends to cases such as the present where the receiver is the moving party (for a receiver purported appointed within the meaning of s 418A(1)(a) is “the person” identified in the concluding clause of s 418A(1) who is authorised to apply to the Court). Here it is necessary for the receiver to identify the ground or grounds which give rise to doubt. And here the considerations against granting an unqualified declaration of validity are even stronger. I do not consider that s 418A authorises the receiver to obtain a declaration which will settle the issue of the validity of his or her appointment against all parties on all grounds, merely by specifying one ground and persuading a court that it is not made out. No useful purpose would be served by such a power, which could also operate harshly against the company and its unsecured creditors.

21. [52]

    Once again, the narrower operation of s 418A is at least implicit in the Narrobin Beef Producers litigation. Le Miere J concluded his judgment at [28] as follows:

22. [53]

    As it happens, there was subsequent litigation in the Federal Court against the receivers, and in Thompson v Department of Environment and Conservation [2011] FCA 617, Barker J said:

23. [54]

    Barker J proceeded to observe that Le Miere J had explicitly recognised he was not determining certain additional allegations.

24. [55]

    Likewise, and by way of further example, the rejection of a submission that a receiver’s appointment was invalid did not result in a declaration that he was validly appointed; instead, the result was that the proceedings be dismissed: Constantinidis v Equititrust Ltd [2010] NSWSC 299. The same occurred, following moderately elaborate argument on a question of statutory construction of the Farm Debt Mediation Act 1994 (NSW), in Musumeci Property Investments Pty Ltd in its capacity as the trustee of the ABC Discretionary Trust v National Australia Bank Ltd [2024] NSWSC 43. Specialised Welding Australia Pty Ltd v Disselkoen [2024] FCA 1184 is another example, and no doubt they could be multiplied.

25. [56]

    It is true that there are decisions, to which the plaintiffs referred, where unqualified declarations of validity of the appointment of a receiver have issued following the rejection of the doubt, including In the matter of Aqua Botanical Beverages (Australia) Pty Ltd (receivers and managers appointed) [2021] NSWSC 1214 and Page v Conneely, in the matter of Shyzi Pty Ltd (Final relief) [2026] FCA 294. Those reasons do not suggest that any submissions were made, let alone resolved, concerning the making of a declaration that was tied to a specific ground (ie, that the appointment was not invalid by reason of that ground), nor do their Honours appear to have been taken to Narrogin Beef Producers (No 2) or Redside. Decisions are not authority for what is not argued (the authorities may be found in David & Ros Carr Holdings Pty Ltd v Ritossa at [88]). It follows that those decisions are not authority for a broader proposition concerning unqualified declaratory relief.

26. [57]

    I respectfully follow the approach in Narrogin Beef Producers (No 2) and Redside reproduced above, which are directed to this point, which attract the deference associated with Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 492; [1993] HCA 15 and which are, in my respectful opinion, correct in principle.

27. [58]

    In summary, where the challenge to validity fails, in the ordinary case the appropriate declaration authorised by s 418A is that the appointment is not invalid by reason of the specified ground or grounds.

Application to the purported appointment of Messrs Kogan and Pasfield

1. [59]

   Applying those principles to the purported appointment of Messrs Kogan and Pasfield, the starting point is express language in cl 7.4 of the Master Security Trust Deed, by which the defendants are bound. Clause 7.4 is not expressed to be a general power conferred upon the voting Secured Creditors to appoint a receiver. To the contrary, it provides that, in certain circumstances, the voting Secured Creditors exercise such powers “of” the Security Trustee as they determined by extraordinary resolution. That is to say, on its face, in circumstances where the Security Trustee has requested but not obtained the indemnity contemplated under cl 7.3, then cl 7.4 authorises the voting Secured Creditors independently and unilaterally to exercise certain powers of the Security Trustee.

2. [60]

   Interpreting a commercial document requires attention to the language used by the parties, the commercial circumstances which the document addresses, and the objects which it is intended to secure: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [15]. It is also necessary to construe the contract so as to avoid it making commercial nonsense or working commercial inconvenience, and its commercial purpose is relevant: Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82].

3. [61]

   The underlying commercial purpose is probably clearer than the legal characterisation. The Security Trustee itself would be required to exercise such powers at the direction of the Voting Secured Creditors in the event that a satisfactory indemnity had been granted, and in that case there would be no question that the power being exercised was that of the Security Trustee. Clause 7.4 provides that where there is a dispute of the adequacy of the indemnity, the Security Trustee need not expose itself to the risk and liability attaching to the exercise of power such as the appointment of the receiver, and indeed obtains such benefit as may be conferred by the concluding sentence in cl 7.4, but the voting Secured Creditors themselves may exercise those powers at their own risk. All of this tends to confirm that the power being exercised is that conferred upon the Security Trustee.

4. [62]

   The legal characterisation of what cl 7.4 authorises is less clear. That is for two reasons. In part, it is a consequence of the rules of privity, which save in special areas have not been abrogated in this State (cf Property Law Act 1974 (Qld), s 55). In part it is because, like much in law, there are multiple available legal institutes which are apt to achieve a commercial purpose. Thus a business may be run by a partnership or a company or the trustee of a trading trust. iPartners Nominees proposed two different characterisations of cl 7.4: agency and trust.

5. [63]

   BNY executed each Series Supplement as a deed poll. Each document contained covenants expressed to be for the benefit of a noteholder. A person to whom a covenant or grant contained in a deed poll is made can enforce it, as was explained by Barrett J in Wily as Liquidator of Anglican Insurance Ltd [2009] NSWSC 696 at [7], a passage quoted with approval in Wollongong Coal Ltd v Gujarat NRE India Pty Ltd (2019) 100 NSWLR 432; [2019] NSWCA 135 at [56]:

6. [64]

   Ward CJ in Eq referred to the explanation given in N Seddon, Seddon on Deeds (Federation Press, 2015) of a multi-party deed poll in Cong v Shen (No 3) [2021] NSWSC 947 at [1249]:

7. [65]

   Her Honour framed the issue at [1291] as whether, as a matter of substance, objectively construed, one or more of the parties to the deed intended to use the document to make unilateral promises to or create rights enforceable by third parties, as opposed to intending to make promises to the other parties to the deed.

8. [66]

   Viewed in this way, cl 7.4 confers authority on the Voting Secured Creditors to exercise a power of the Security Trustee in circumstances where the Security Truste is dissatisfied with the indemnity proposed by the Voting Security Creditors. That may be seen as authorising the Voting Secured Creditors to act as the Security Trustee’s agent, or it may be the conferral of a separate power upon the Voting Secured Creditors. Either way, I see no legal obstacle to its efficacy. A non-party to enforce a right conferred upon it by a deed poll, and moreover, as it happens, the Secured Trustee directly covenanted to iPartners Nominees in the subscription agreement.

9. [67]

   iPartners Nominees also submitted that the provision might be regarded as creating a trust of the chose of action represented by the power to appoint a receiver, which Permanent held for the benefit of iPartners Nominees. Of course, there is no explicit declaration of trust, but iPartners Nominees noted the somewhat generous basis on which courts would impute an intention to create a trust for the benefit of third parties in cases such as this. As French CJ observed in Korda v Australian Executor Trustees (SA) Ltd (2015) 255 CLR 62; [2015] HCA 6 at [10]-[11], by reference to Wilson v Darling Island Stevedoring and Lighterage Co Ltd (1956) 95 CLR 43 at 67; [1956] HCA 8, Bahr v Nicolay (No 2) (1988) 164 CLR 604 at 619; [1988] HCA 16 and Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107 at 121, 147-148 and 156-157; [1988] HCA 44, “if the parties to a contract intended to create or protect an interest of a third party and the trust relationship is the appropriate means of creating or protecting that interest, there is no reason why in a given case an intention to create a trust should not be inferred”. Here there was, so it was said, the plainest intention to confer a benefit upon the Voting Secured Creditors in the event that an indemnity could not be agreed.

10. [68]

    Those submissions are also sound. But the same provision is unlikely simultaneously to confer an agency or a power, and also to create a trust. There is no need for the latter if the former is effective, and vice versa.

11. [69]

    iPartners submitted, correctly in my view, that it was neither necessary nor appropriate to reach a firm conclusion on the precise legal characterisation of cl 7.4. All that matters is that it empowers a non-party (iPartners Nominees) to exercise the power to appoint the receivers. I agree with that approach. Either because of agency or power or because there is a trust of the chose in action, I am satisfied that the power is exercisable by iPartners itself, when the preconditions to cl 7.4 (namely, where the Security Trustee rejects the indemnity proffered by it), unless that is undercut by some other provision in the transaction documents. I turn to the provisions to which iPartners referred.

12. [70]

    Clause 3.6. Whatever be the effect of the limitation in cl 3.6 of the Master Security Trust Deed which denies to any Secured Creditor “any equitable or proprietary interest in the Collateral or the Charge”, it is plain that they do enjoy an entitlement to compel the Security Trustee to properly perform its covenants under the Deed. That includes, without any undue straining of the language, an entitlement to exercise the power enjoyed by the Security Trustee to appoint a receiver. This accords with cl 7.1 of the Master Trust Deed.

13. [71]

    Clause 8.4. This clause speaks directly to the rights exercisable against the Security Trustee. However, it is expressly subject to cl 7.4. “Subject to” does not imply that there is a conflict between the clauses, but it does mean that if there is a conflict, cl 7.4 is to prevail: see Wass v Director of Public Prosecution (NSW) (2023) 111 NSWLR 210; [2023] NSWCA 71 at [52]. Accordingly, nothing in that clause detracts from the exercise of power under cl 7.4.

14. [72]

    Clause 16.10(h). Clause 16.10(h) is directed to the appointment of a liquidator, administrator, receiver or other external management to the Trustee. That is distinct from what is contemplated here, namely, the appointment of the receiver over the Collateral. Enforcing a security against assets held on trust is very different from appointing external management to the trustee.

Conclusion and form of orders

1. [73]

   Putting to one side s 418A, pure declaratory relief of the nature sought by iPartners Nominees has been available in this State since at least 1965. The position was explained in Director of Public Prosecutions (NSW) v President of the Legislative Council of New South Wales [2026] NSWCA 20 at [34]:

2. [74]

   The non-opposition of the defendants to relief does not stand in the way of granting declaratory relief. Although there is no active contradictor, BNY has been joined and has a true interest in iPartners Nominees’ claim: see the authorities collected in Catholic Metropolitan Cemeteries Trust v Attorney General of New South Wales (2024) 116 NSWLR 314; [2024] NSWCA 30 at [26].

3. [75]

   However, I do not think it is appropriate to grant unqualified positive relief that Messrs Kogan and Pasfield were validly appointed, either pursuant to s 418A or in the exercise of this Court’s general jurisdiction. I am doubtful that that would bind anyone, including the defendants, in relation to some factual or legal submission which has not been articulated before me, and therefore such an order would not accurately reflect the outcome of the proceeding. That approach accords with what occurred in Narrogin Beef Producers (No 2) and other cases mentioned above.

4. [76]

   Substantially in accordance with prayer 2 of the proposed short minutes of order, I will declare that the appointments of the second and third plaintiffs as Receivers of the Collateral of the Marketlend Trust CC1 and the Marketlend Trust CC2 are not invalid on the ground that clause 7.4 of the Marketlend Trusts Master Security Trust Deed dated 23 December 2014 was ineffective to authorise their appointment by the first plaintiff. That declaration reflects the substance of the submissions that have been advanced in this Court.

5. [77]

   The plaintiffs also seek an order that the Receivers’ reasonable costs and expenses of and incidental to this application (including their fees) be paid from the Collateral as costs of the receivership. I do not know what those costs are claimed to be. More importantly, it is not entirely clear what is meant, in the facts of this case, of “costs and expenses of and incidental to this application”. The same solicitors and counsel have appeared for iPartners as well as Messrs Kogan and Pasfield, and that is apt to give rise to a need to allocate costs between the plaintiffs. Experience suggests that that may be contestable; it may also be affected by the terms of the retainer. It seems to me that there is more than a possibility that an order in the form sought may give rise to dispute, which may be avoided by a more precise formulation.

6. [78]

   I am satisfied that the reasonable costs for the time of Messrs Kogan and Pasfield in relation to this application (notably, in preparing affidavits and giving instructions) are properly recoverable as costs of the receivership. I note that while it has taken some time to present the evidentiary basis for the relief that has been obtained, there is every prospect that doing so may in the longer run save time in disputation on the issues addressed in these reasons. The orders I will make will entitle the receivers to the cost for that time. I am doubtful that any broader order is appropriate. The receivers are indemnified by iPartners Nominees for all that they do in the course of the receivership, and that carries with it the result that any order entitling the receivers to recovering their costs out of the Collateral is to that extent a benefit to iPartners Nominees. Bearing that in mind, I am inclined to doubt that it would be appropriate to apportion any of the other costs of and occasioned by this application to the receivers for the purposes of making an order that the receivers’ costs may be paid from the Collateral as costs of the receivership. To take an extreme example, I am presently disinclined to accept the proposition that insofar as there was a joint retainer by iPartners Nominees and the two receivers, two thirds of the costs of solicitors and counsel are attributable to the receivers and recoverable as their costs (nor, insofar as the two receivers ought to count as one client and iPartners Nominees count as the other client, for one half of the costs of solicitors and counsel to be attributable to the receivers and recoverable as their costs). Nonetheless, I shall permit the parties to be heard as to any other form of costs order, should they so wish.

7. [79]

   For those reasons, I make the following orders: