Trustees refused judicial advice

Don’t ask a court to vindicate a proceeding that puts a creditors trust at risk for a modest return.

That’s the lesson learned by Cameron Shaw and Richard Albarran last week after their failure to convince a court that they’d be justified in commencing a proceeding against Victory Minerals (Victory), operator of the Ballarat Gold Mine and a party to the creditors trust established in November 2023 when what was then known as Balmaine Gold Pty Ltd entered into a deed of company arrangement (DoCA).

“As an impression on the basis of experience, I would consider that there may be a fine line between the potential benefit of proceeding with the Proposed Enforcement Proceeding and the potential risks and costs to which it exposes the Trust, noting that the evidence does not permit me to conclude whether the benefits outweigh the risks.” Justice Lisa Nichols.

As trustees of the resultant creditors trust the Hall Chadwick pair sought judicial advice in the Supreme Court of Victoria following a prolonged dispute with Victory about earnings before interest, tax, depreciation and amortisation (EBITDA) and quarterly amounts Victory had paid, supposedly in compliance with the terms of the trust and an agreed EBITDA formula.

While Supreme Court of Victoria judge Lisa Nichols found that Shaw and Albarran had acted in good faith she concluded that they’d failed to demonstrate that the risks to the creditors trust of their proposed proceedings were outweighed by the potential benefit, quantified as a modest $451,155.69.

That failure rested largely on the fact that the trustees first needed to successfully prosecute what is described in Shaw & Anor [2026] VSC 344 as the enforcement proceeding.

This proceeding related to a so-called “Expert Deed” the trustees and Vicory entered into.

This was essentially an agreement entered into whereby the counterparties would jointly retain independent experts to determine the correct application of the EBITDA formula.

But despite nominating Neil Pace and Peter Gray of Moore Australia Corporate Finance (WA) Pty Ltd as the joint independent experts the trustees and Victory couldn’t come to an agreement about the scope of work.

“Throughout 2025, they exchanged correspondence about the issue but could not reach agreement,” Justice Nichols said.

“The experts advised that in view of the dispute they would need an agreed scope of works and access to documents in order to carry out their assignment. Because the parties remained in dispute, the experts were unable to commence their work.”

Shaw and Albarran were convinced their interpretation of the disputed Expert Deed terms was correct and so decided to ask the court to vindicate their interpretation and to enforce Victory’s compliance. But not before they had obtained judicial advice confirming they would be justified in bringing the proceeding. And Victory it seemed had as many flies as Shaw and Albarran had ointment.

Not long after the trustees commenced their application for judicial advice Victory upped and paid what remained of the balance owing under the terms of the trust deed in two tranches. Job done. Dispute gone.

But not according to Shaw and Albarran.

They reasoned that because earlier quarterly underpayments were less than they should have been it meant more interest owing to a secured creditor was accrued and Victory was obliged to pay it in the form of damages.

However Albarran and Shaw wanted to adjourn pursuit of the damages proceeding until after the judicial advice and expert determination questions had been resolved in their favour. And that was a bridge too far for her honour.

” … the likelihood of success in the Proposed Enforcement Proceeding does not by itself determine that it should be pursued,” she said.

“The sole benefit sought to be obtained by pursuing the Proposed Enforcement Proceeding (a payment by way of agreed compensation or a damage award that the Trustees presently assess at a relatively modest $451,155.69) cannot be obtained unless the Trustees succeed in taking one or more additional steps.

“Let it be assumed that the Proposed Enforcement Proceeding succeeds. If it does, what the Trust will have gained is the opportunity to have the experts determine the calculation of EBITDA in their favour.

“The value of that opportunity is to be evaluated not only by reference to the estimated value of the damages claim but by reference to the likelihood of it being obtained. There is insufficient evidence on which to assess (for present purposes) the likelihood of the expert determination producing a favourable result for the Trust.

“Furthermore, were a favourable outcome obtained, realising it in the form of damages would require the Trustees to succeed either in a negotiation with Victory Minerals or in the proposed Damages Claim. Each is attended by the uncertainties discussed

“As an impression on the basis of experience, I would consider that there may be a fine line between the potential benefit of proceeding with the Proposed Enforcement Proceeding and the potential risks and costs to which it exposes the Trust, noting that the evidence does not permit me to conclude whether the benefits outweigh the risks.

“Given the modest quantum of the potential damages award, it is certainly not obvious or self-evident that any risks of proceeding will be outweighed by the potential benefit. More relevantly, the evidence does not allow me to be positively satisfied that there are sufficient prospects of a benefit being realised by the pursuit of the Proposed Enforcement Proceeding, to advise the Trustees that they are justified in pursuing the proceeding,” the judge said.