FEDERAL COURT OF AUSTRALIA Super Art Australia Pty Ltd v Foden [2014] FCA 1168 Citation: Super Art Australia Pty Ltd v Foden [2014] FCA 1168 Parties: SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION), MORGAN LANE AS JOINT AND SEVERAL LIQUIDATORS OF SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 099 614 294 and MICHAEL PELDAN AS JOINT AND SEVERAL LIQUIDATORS OF SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 099 614 294 v JEFFREY HENRY FODEN File number: VID 1024 of 2011 Judge: DAVIES J Date of judgment: 6 November 2014 Catchwords: CORPORATIONS – application for Court to make orders about voidable transactions pursuant to s 588FF of the Corporations Act 2001 (Cth) – whether certain transactions were uncommercial transactions, insolvent transactions, unreasonable director-related transactions, unfair loans or circulating security interests for the purposes of ss 588FE and F885J of the Corporations Act 2001 (Cth) – whether defence in s 588FG of the Corporations Act 2001 (Cth) applies in relation to any of the transactions Legislation: Corporations Act 2001 (Cth) ss 9, 266, 588FA, 588FB, 588FC, 588FD, 588FDA, 588FE, 588FF, 588FG, 588FJ, 513A, 1504 Cases cited: Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363 Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535; [1997] FCA 1220 Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384; [2010] NSWSC 233 Austin Australia Pty Ltd v De Martin & Gasparini Pty Ltd [2007] NSWSC 1238 Re Damilock Pty Ltd (in liq); Lewis and Carter as liquidators of Damilock Pty Ltd (in liq) v VISA Australia Pty Ltd (2008) ALR 533; [2008] FCA 1801 Crema (Vic) Pty Ltd v Land Mark Property Developments (Vic) Pty Ltd (2006) 58 ACSR 631; [2006] VSC 338 Australian Securities and Investments Commission v Plymin (2003) 175 FLR 124; [2003] VSC 123 Cussen v Sultan (2009) 74 ACSR 494; [2009] NSWSC 1114 Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 Date of hearing: 23 July 2014 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 92 Counsel for the Applicants: Mr J Kohn Solicitor for the Applicants: Frenkel Partners Counsel for the Respondent: Mr A Burtt IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1024 of 2011 BETWEEN: SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) First Applicant MORGAN LANE AS JOINT AND SEVERAL LIQUIDATORS OF SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 099 614 294 Second Applicant MICHAEL PELDAN AS JOINT AND SEVERAL LIQUIDATORS OF SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 099 614 294 Third Applicant AND: JEFFREY HENRY FODEN Respondent JUDGE: DAVIES J DATE OF ORDER: 6 November 2014 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The Loan agreement and Mortgage Debenture Agreement entered into between the First Plaintiff and the Defendant are uncommercial transactions pursuant to section 588FB of the Act and are void against the Second and Third Plaintiff pursuant to section 588FE(3) of the Act. 2. The Loan agreement and Mortgage Debenture Agreement entered into between the First Plaintiff and the Defendant are unreasonable director related transactions pursuant to section 588FDA of the Act and are void against the Second Plaintiff and Third pursuant to section 588FE(6A) of the Act. 3. The payment of $215,000 from the First Plaintiff to the Defendant is an unfair preference pursuant to section 588FA and is void pursuant to sections 588FC and 588FE(4) of the Act. 4. The Defendant pay the sum of $215,000 to the Plaintiffs pursuant to section 588FF of the Act together with interest pursuant to statute from the date of the transaction in the sum of $106,513.29. 5. The Defendant pay the Plaintiffs' costs of the proceeding on a party party basis up to 23 August 2013. 6. The Defendant pay the Plaintiffs' costs of the proceeding on an indemnity basis from and inclusive of 23 August 2013 to the date of this order. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 1024 of 2011 BETWEEN: SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) First Applicant MORGAN LANE AS JOINT AND SEVERAL LIQUIDATORS OF SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 099 614 294 Second Applicant MICHAEL PELDAN AS JOINT AND SEVERAL LIQUIDATORS OF SUPER ART AUSTRALIA PTY LTD (IN LIQUIDATION) ACN 099 614 294 Third Applicant AND: JEFFREY HENRY FODEN Respondent JUDGE: DAVIES J DATE: 6 November 2014 PLACE: MELBOURNE REASONS FOR JUDGMENT the claims 1 Application is made by the second and third plaintiffs ("the liquidators"), the liquidators of the first plaintiff ("SAA"), for orders against the defendant ("Mr Foden") under s 588FF of the Corporations Act 2001 (Cth) ("the Act"). Mr Foden is a former director, secretary and shareholder of SAA. Mr Foden was also SAA's accountant before it was ordered to be wound up in insolvency on 10 December 2008. By reason of ss 9 and 513A of the Act, the relation back day in relation to the winding up of SAA is 6 November 2008 ("the relation back day") and the six month relation back period for the purposes of Part 5.7B Division 2 of the Act is 6 May 2008 to 6 November 2008 ("the relation back period"). 2 The liquidators allege that during the relation back period, SAA paid Mr Foden the following amounts: Payment Number Date Amount ($) 1 18 June 2008 215,000 2 24 September 2008 14,000 3 30 September 2008 200,000 Total: 429,000 3 The liquidators further allege that during the relation back period SAA (as borrower), and Mr Foden and a Mr Douglas Clark (as lender), executed a loan agreement ("loan agreement") by which, relevantly, Mr Foden agreed to lend SAA the sum of $215,000, and Mr Clark agreed to lend SAA the sum of $750,000. Further, that SAA executed a debenture agreement which charged all of the company's undertaking and all of its assets in favour of Mr Foden and Mr Clark to secure the repayment of the loan amounts ("the mortgage debenture agreement"). 4 The liquidators allege that: a. the loan agreement, the mortgage debenture agreement and the three payments are "uncommercial transactions" (s 588FB of the Act), "insolvent transactions" (s 588FC), and/or "unreasonable director-related transactions" (s 588FDA of the Act); b. the loan agreement is an "unfair loan" (s 588FD of the Act); and c. the mortgage debenture agreement is a circulating security interest in property of SAA (ss 588FJ, 266 and 1504 of the Act). 5 The liquidators allege that the agreements and payments are voidable as against the liquidators and seek declarations and orders under s 588FF that the agreements are void as against the liquidators and that they are entitled to recover the amounts that SAA paid to Mr Foden; an order that the mortgage debenture agreement be removed as a charge from the records of SAA; and an order that Mr Foden pay the liquidators the sum of $429,000 plus interest. 6 Mr Foden disputes the claims made against him by the liquidators. LEGISLATIVE SCHEME 7 Division 2 Part 5.7B of the Act deals with "voidable transactions". Section 588FF: the power to make orders about voidable transactions 8 Section 588FF of the Act confers power on the Court to make orders about "voidable transactions". Those orders relevantly include: a. an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction: s 588FF(1)(a); and b. an order declaring an agreement constituting, forming part of, or relating to, the transaction, to have been void at and after the time when the agreement was made: s 588FF(1)(h). Section 588FE: transactions that are voidable under s 588FF 9 Section 588FE identifies "voidable transactions". Relevantly a transaction is voidable if: a. it is an "insolvent transaction" of the company and was entered into during the six months ending on the relation back day: s 588FE(2)(i); or b. it is an "insolvent transaction" and also an "uncommercial transaction" of the company and was entered into during the two years ending on the relation back day: s 588FE(3); or c. it is an "unfair loan" to the company made at any time on or before the day when the winding up began: s 588FE(6); or d. it is an "unreasonable director-related transaction" of the company and was entered into during the four years ending on the relation back day: s 588FE(6A). Section 588FG: transactions that are not voidable under s 588FF 10 Section 588FG provides a statutory defence to the making of an order under s 588FF. The elements of the defence differ depending on whether the person was, or was not, a party to the transaction. Also, if a person was a party to the transaction, the statutory defence is only available if the transaction in question is not an unfair loan to the company or an unreasonable director-related transaction of the company. Section 588FJ: circulating security interest is void as against the liquidator 11 Section 588FJ voids a "circulating security interest" as against a company's liquidator in certain circumstances. EVIDENCE relating to the "TRANSACTIONS" 12 The evidence on which Mr Foden relied was set out in an affidavit that he swore in June 2013. The time of making the affidavit is relevant because Mr Foden suffered an acute stroke in January 2014, and the medical evidence before the Court raised serious doubts about the capacity of Mr Foden to participate effectively in the hearing. An application to vacate the trial date was made by Mr Burtt, solicitor, on behalf of Mr Foden but was refused as the medical evidence indicated that it was unlikely that Mr Foden's condition would improve. 13 The Court acknowledges the assistance of Mr Burtt in appearing at the trial for Mr Foden, who had been proposing to represent himself. Mr Burtt's representation of Mr Foden greatly assisted the Court by the comprehensive submissions on the facts and law made on Mr Foden's behalf and in ensuring a fair trial for Mr Foden. 14 Mr Foden attended to give evidence and generally appeared to be able to understand and respond to the questions asked of him, although he had obvious difficulties recalling events and his answers were often vague and imprecise. Where there was other evidence which assisted to assess the reliability of Mr Foden's oral evidence, I have tended to place greater weight on that other evidence but, ultimately, the factual findings in this case have turned more upon issues of sufficiency of proof, rather than upon issues of reliability. Background facts 15 These background facts are taken largely from Mr Foden's affidavit. 16 Mr Foden is a chartered accountant and has his own accounting practice which trades under the name "Jeff Foden & Associates". In mid-September 2007, Mr Foden was retained by Mr Timothy Clark ("Mr Clark") to provide accountancy services in relation to a business venture that Mr Clark was setting up involving the importation of mass produced artwork from China for sale at staged events and public venues throughout Australia (such as the Royal Adelaide Showgrounds and Melbourne Exhibition Centre). The accounting services included maintaining the books and records for the business, and providing general business consulting and taxation advice. Mr Clark also retained Mr Foden to handle payments and receipts on behalf of the business because, as Mr Foden explained, Mr Clark would be frequently away, travelling to China and around Australia. Mr Foden deposed that it was agreed that he would be paid $150 per hour for his services, which was his standard professional charge rate at the time. 17 SAA was originally a shelf company that Mr Foden had set up in 2002, with himself as the director, company secretary and shareholder. As the company had never traded, Mr Foden thought it would be suitable to use it as the corporate vehicle for the venture. He changed the company's name to SAA, which was Mr Clark's choice of name, but not the directorship or shareholding. Mr Foden deposed that: It was intended that Mr Clark would be the sole director, company secretary and shareholder by the time the company commenced the business of selling artwork. 18 The first sales event was planned at the Royal Adelaide Showgrounds in late 2007. Mr Foden deposed that because Mr Clark was absent in China organising the production and importation of artwork, the documents for the changes to the director, company secretary and shareholder of SAA were not completed. He further deposed that: [A]s far as Timothy Clark and I were concerned, he was the 100% owner of SAA and the person who made decisions for it. If something needed to be done then I would take instructions from him. 19 A bank account was set up for SAA and Mr Foden was made a signatory. Mr Foden deposed that: I did not however make decisions as to how SAA would spend its money. Timothy Clark would provide the information to me about debts that had to be paid or money that needed to be transferred. He made the decisions about how SAA spent its money. I saw my role as the accountant responsible for the paperwork, rather than making the financial decisions. 20 Mr Foden deposed that he did not have any financial interest in SAA and was not paid any remuneration as a director or company secretary, nor did he receive any dividends as a shareholder. He further deposed that from September 2007 to about October 2008 he worked an average 25 hours per week providing accounting services to SAA. Mr Foden did not, however, invoice SAA for that work. Mr Foden explained that he did expect to be paid accounting fees: However, I knew that it would take time for SAA to become profitable. It needed to spend large amounts of money to produce and import the artwork from China and sell it to earn money. I was prepared to wait. 21 Mr Foden deposed that he "did a lot of work [for SAA] on the assumption that SAA would succeed and be able to pay [him] in the future". He estimated that he was owed at least $140,000 in accounting fees by October 2008. 22 According to the ASIC company extract, Mr Foden was: a. a director of SAA between 10 April 2002 and 29 February 2008; b. a secretary of SAA between 18 February 2002 and 1 September 2008; c. a shareholder of SAA between 18 February 2002 to 7 October 2008; and d. Mr Foden's office address was recorded as the company's registered office from 18 February 2002. 23 The liquidators allege that Mr Foden was a de-facto director of SAA after 29 February 2008, an allegation which is denied by Mr Foden who maintained that he was only acting as SAA's accountant at the direction of Mr Clark who became the sole director of SAA after 29 February 2008. Payment (1): $215,000 on 18 June 2008 24 Mr Foden admitted that SAA paid $215,000 into his account at the National Australia Bank ("NAB"), which he identified as the "Maximiser Account", but says that the payment was made by SAA in repayment of loans made by Mr Foden's clients to SAA. He deposed that: Those moneys were received by me as a trustee. I had no personal entitlement to them. 25 In his affidavit, Mr Foden explained that in 2007, as part of his accounting practice, he operated two bank accounts that he used for trust monies that belonged to clients or third parties – the Jeff Foden & Associates Trust Account No 2 ("the Trust Account"); and the J Foden Business Cash Maximiser Account ("the Maximiser Account"). Mr Foden deposed that he did not use either account for his own monies or personal transactions. 26 Mr Foden deposed that he opened the Maximiser Account on 18 September 2007 on the recommendation of the NAB because it had a better interest rate than the account which he then used and that the opening balance of $1 million consisted of "trust funds" that were transferred from the superseded account. Mr Foden deposed that: I have checked my business records and have been able to confirm that the $1,000,000.00 relates to the client funds that were held in trust at the time. Those business records were not put into evidence. 27 Mr Foden deposed that six amounts (which total $215,000) were transferred from the Maximiser Account as follows: a. $50,000.00 on 7 April 2008 b. $10,000.00 on 18 April 2008 c. $5,000.00 on 23 April 2008 d. $50,000.00 on 29 April 2008 e. $85,000.00 on 8 May 2008 f. $15,000.00 on 12 May 2008 - and that each amount was lent to SAA on or about the date to which the amount refers. The bank statements of SAA were exhibited showing the crediting of those amounts. 28 The evidence showed that amounts were paid out of the Maximizer Account to SAA and that SAA repaid $215,000 back into that account. However the claim that the funds in the Maximizer Account were client funds was no more than a bare assertion by Mr Foden unsupported by any evidence to show that there was a factual foundation for that assertion. No business records were produced to show that the moneys held in the Maximizer Account were client funds, nor were any trust or client records produced to show that the funds lent and repaid were client funds. Absent the production of any accounting records of any kind, or any evidence which might otherwise substantiate that the funds in the Maximizer Account were client funds, Mr Foden's unsupported assertion that the funds in the Maximizer Account were client funds is not probative of the finding of fact which the Court was urged to make. 29 Furthermore, Mr Foden's evidence that the $215,000 payment was made by SAA in repayment of loans made by Mr Foden's clients to SAA was inconsistent with the evidence that he gave in an examination of him conducted by the liquidators pursuant to s 596A of the Act in 2011 ("the examination"). During the course of that examination, Mr Foden was asked whether the $215,000 was his "personal money" to which he replied "yes". He was also asked whether the $215,000 was money that he "had lent to the company" to which he replied "yes" and he agreed that he had been repaid that money. Mr Foden did not say that the payment of $215,000 lent to SAA were client funds and not his personal funds. 30 In view of the inconsistent evidence given by Mr Foden in his examination which contradicts his evidence in this proceeding, and the lack of evidence in this proceeding to support his bare assertion that the funds lent and repaid were client funds, I am not satisfied that the $215,000 received by Mr Foden was in repayment of client loans to SAA, as contended by Mr Foden. I find that the $215,000 was received by Mr Foden in repayment of amounts that he lent to SAA. Payment (2): $14,000 on 24 September 2008 31 The source of the claim that SAA paid $14,000 to Mr Foden on 24 September 2008 is a document headed "Super Art Australia Pty Ltd Accounts Transactions [Accrual]" ("the ledger") recording debit and credit transactions from 1 July 2007 to 13 September 2009. For 24 September 2008 the ledger records a debit entry for $14,000 described as "Int Tfr CD 24/09/08 Jeff Foden Trust Account repa". The bank statements for Mr Foden's Trust Account record a cash or cheque deposit of $13,570.45 on 24 September 2008 and the bank statements for SAA show that $20,000 was withdrawn on 24 September 2008. The cheque was not in evidence but the Court was asked by counsel for the liquidators to draw the conclusion that the deposit of $13,570.45 on 24 September 2008 came out of SAA's account. 32 Mr Foden admitted in his Defence that he was to receive $14,000 from SAA which he claimed was in reimbursement of monies that he paid to a bookkeeper who he engaged to prepare SAA's books of account. Pleaded also was that he did not recall, and was unable to say, whether the payment was made or, if it was made, by whom and when it was made. He gave evidence to similar effect in his affidavit. 33 In cross examination Mr Foden contradicted his affidavit evidence and said that SAA had paid him $14,000 on an invoice that he raised for that amount but as no such invoice was in the records of SAA held by the liquidators, I place no weight on that answer. Moreover, in response to further questioning on this topic, Mr Foden's evidence was again that he did not know whether the $14,000 was paid to him. In response to other questions, Mr Foden then said that the deposit of $13,570.45 on 24 September 2008 would have come from SAA to pay subcontractors, but there was no proof of this. 34 I do not accept that the deposit of $13,570.45 on 24 September 2008 did come out of SAA's account. First, the figures do not match: SAA's statement shows that $20,000 was withdrawn by cheque no 278 whereas Mr Foden's Trust Account statements show a "cash and/or cheques" deposit of $13,570.45. Secondly, the ledger records that the payment of $14,000 was by internet transfer, not paid by cheque; and, thirdly, there is no corresponding entry of an internet transfer in either of Mr Foden's accounts. In view of the inconsistencies in the material, I do not regard the ledger as sufficient proof that Mr Foden received $14,000 from SAA on or about 24 September 2008, or as sufficient proof that the deposit of $13,570.45 on 24 September 2008 came from SAA's funds. 35 Accordingly I reject the liquidators' claim that Mr Foden received a payment of $14,000 from SAA on or about 24 September 2008. Payment (3): $200,000 on 30 September 2008 36 Mr Foden has also admitted that he received payment (3) but says that the payment was made by SAA to repay loans that SAA owed to Esel Investments Pty Ltd ("Esel") and Bayit Nominees Pty Ltd ("Bayit"). Mr Foden has again deposed that the monies were received by him as a trustee and that he had no personal entitlement to them. 37 A payment of $200,000 is recorded in the Maximiser Account bank statement on 30 September 2008 and there is a corresponding debit from the SAA account. In the same Maximiser Account bank statement there is also a debit of $198,000 by internet transfer with the notation "Super Art" on 6 October 2008. The bank statements show that this was actually a transfer to the Trust Account. The Trust Account bank statement also records a deposit of $148,054.25 by "DM Clark" on 1 October 2008. Mr Foden stated that this is a reference to Timothy Clark's parents, Douglas Clark and Melanie Clark. Mr Foden deposed that he was directed by Mr Clark to use the funds from Mr Clark's parents and the $198,000 from SAA to repay loans owed by SAA to Esel and Bayit and that on 6 October 2008, using those funds, there was a payment of: a. $271,600 to Esel; and b. $78,180 to Bayit 38 No loan documents are in evidence, nor did Mr Clark give evidence. However, the bank statement evidences both the payment in, and payment out, of the funds and it was not put to Mr Foden in cross examination that the $200,000 was not used to pay Esel and Bayit. Nor was Mr Foden challenged in cross examination that the payments to Esel and Bayit were not in repayment of a loan owed by SAA. 39 Mr Foden's claim that the monies were received by him to apply to the repayment of loans owed by SAA receives some support in the insolvency report prepared by the second respondent, Mr Lane. Mr Lane made reference in that report to a short term loan of $250,000 made to SAA in September 2008 by a company called Nell Todd Pty Ltd, and noted that the payments to Esel and Bayit on 6 October 2008 were in repayment of that debt. The state of the evidence left unexplained why Esel and Bayit received the funds. Nonetheless, it appears that Mr Lane accepted that the payments to Esel and Bayit on 6 October 2008 were in repayment of that debt and the payments to Esel and Bayit explain the deposit of $200,000 in the Maximiser Account. 40 In the circumstances, I accept that the payment of $200,000 by SAA to Mr Foden was made for the purpose of disbursement to Esel and Bayit in repayment of monies that SAA owed to a third party. No contrary evidence was adduced on behalf of the liquidator in relation to the purpose for which the payment was made to Mr Foden. The loan agreement and mortgage debenture agreement 41 The making of these agreements was not in dispute, although it is disputed that the transactions are void or voidable. Whether the "TRANSACTIONS" were UNCOMMERCIAL transactions 42 A transaction is an "uncommercial transaction" of the company if it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to: a. the benefits (if any) to the company of entering into the transaction; and b. the detriment to the company of entering into the transaction; and c. the respective benefits to other parties to the transaction of entering into it; and d. any other relevant matter: s 588FB(1). 43 Section 588FB(2)(a) provides that a transaction may be an uncommercial transaction of a company whether or not a creditor of the company is a party to the transaction. 44 The principles to be applied under s 588FB were not in controversy and may be summarised as follows: a. It is an objective standard to determine whether a transaction is uncommercial for the purposes of s 588FB: Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363 at 367; b. Four criteria are to be considered, being the four factors listed in s 588FB: (1) the benefits enjoyed by the company; (2) the detriment to the company; (3) the respective benefits others received; and (4) any other relevant matter; c. The objective criteria are not considered in some vacuum but by reference to "the company's circumstances", which must include the state of knowledge of those who were the directing mind of the company, such as its controlling director or directors: Tosich (1997) 78 FCR 363 at 367; d. For a transaction to be "uncommercial" for the purposes of s 588FB, the transaction must result in "a bargain of such magnitude that it could not be explained by normal commercial practice": Demondrille Nominees Pty Ltd v Shirlaw (1997) 25 ACSR 535; [1997] FCA 1220. e. The fact that a transaction is entered into when a company is insolvent "is not of itself sufficient to make the transaction an uncommercial transaction within the meaning of s 588FB": Buzzle Operations Pty Ltd (in liq) v Apple Computer Australia Pty Ltd (2010) 238 FLR 384; [2010] NSWSC 233 at [222]. The loan agreement and the mortgage debenture agreement 45 It was uncontroversial that SAA entered into a loan agreement with Mr Foden and Mr Clark on 8 October 2008 for Mr Foden to lend SAA $215,000 and for Mr Clark to lend SAA $750,000. It is also uncontroversial that SAA, on the same date, charged its assets to Mr Foden and Mr Clark to secure the repayment of both amounts. The loan agreement records that the loans were made at the request of "the Guarantor" who is defined as Mr Clark. Mr Clark was a director of SAA at the time. 46 The only evidence about the circumstances of the entry into both agreements came from Mr Foden. Mr Foden's evidence was that no monies were lent by him to SAA pursuant to those agreements and that he only signed the documents because he thought they were to secure him for unpaid professional fees for the accountancy services that he had provided to SAA since September 2007, but for which he had not received any payment. He deposed as follows: The Loan Deed and Mortgage Debenture ... were prepared by solicitors engaged by Timothy Clark. I did not have any involvement in the preparation of those documents. To the best of my recollection Timothy Clark and his father Douglas Clark travelled to Melbourne on about 8 October 2008 and took me to the solicitor's office where I was asked to sign the documents. I did not read the documents or obtain legal advice in respect of them. I did not notice that the Schedule to the loan deed referred to a loan of $215,000.00 by me to SAA. I do not know where that figure came from. I can only infer that Timothy Clark was under the misapprehension that I had personally lent the monies to SAA and they had not been repaid. I signed the documents simply because I thought they would provide security to me for the payment of accounting fees. As stated above, there was at least $40,000.00 of accountancy fees owed by SAA to me. I saw this as something that SAA would have to pay in due course. However, I did not render invoices for accountancy fees and did not advance monies to SAA under the Loan Deed before it went into liquidation. 47 That evidence provides a sufficient basis on which to conclude that both agreements were "uncommercial". First, no was benefit obtained by SAA in relation to the dealing with Mr Foden as no loan funds were advanced pursuant to the loan agreement. Secondly, if the purpose was to secure the payment of the fees owed to Mr Foden, as Mr Foden thought was the case, that liability had already been incurred by SAA and the effect of the charge was to convert that liability from an unsecured debt that the company owed to Mr Foden to a secured debt. If that be the case, the benefit to Mr Foden was significant in that it secured an existing indebtedness to Mr Foden, with no corresponding commercial benefit for SAA. In either circumstance, it may be concluded that a reasonable person in the company's circumstances would not have entered into those transactions. 48 I therefore consider that the entry into the loan agreement and the mortgage debenture in relation to the dealing with Mr Foden were uncommercial transactions for the purposes of s 588FB of the Act. Payment (1): $215,000 49 The payment of $215,000 cannot be viewed in isolation from the loans that the payment discharged: Tosich (1997) 78 FCR 363. Undoubtedly, Mr Foden received a benefit, being the repayment of moneys lent. On the other hand, the payment discharged an indebtedness to Mr Foden. 50 Whether the payment was an uncommercial transaction is to be looked at from the point of view of SAA and, looking at the transaction as a whole, I would not conclude that a reasonable person in the company's circumstances would not have made the payment. It is difficult to see how this payment falls within the terms of s 588FB, given that the payment made was in repayment of monies lent to the same amount. Payment (2): $14,000 51 As this payment was not established, it is unnecessary to consider it. Payment (3): $200,000 52 I have accepted that the payment of $200,000 was paid by SAA to Mr Foden for the purpose of disbursement to Esel and Bayit in repayment of monies that SAA owed to a third party. Why SAA did not pay Esel and Bayit directly was not explained in the evidence and there might have been other matters which could have been explored in the evidence about the circumstances of the payment. According to the insolvency report, SAA entered into a loan agreement with Nell Todd Pty Ltd on 4 September 2008 for $250,000 to be repaid in 30 days together with interest of $100,000 (which equates to interest payable of 480% per annum). There is clearly a question about whether that loan agreement is an uncommercial transaction and whether the loan is an "unfair loan", given the interest payable. However, it is not the loan or the loan agreement that is in issue. The issue here relates to the payment of $200,000 under that loan agreement in discharge of SAA's indebtedness. As the amount of $200,000 which the company repaid was less than the loan amount and paid by SAA in reduction of the debt owed, and the balance of the funds came from a third party, I would not conclude that the transaction constituted by the payment of the $200,000 was an uncommercial transaction. WHETHER THE "TRANSACTIONS" WERE UNREASONABLE DIRECTOR-RELATED TRANSACTIONS 53 A transaction of a company is an "unreasonable director-related transaction" of the company if, relevantly: a. the transaction is a payment made by the company, or the issue of securities by the company, or the incurring by the company of an obligation to make such a payment or issue; b. the payment or issue is, or is to be, made to a director of the company; and c. it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction, having regard to: i. the benefits (if any) to the company of entering into the transaction; and ii. the detriment to the company of entering into the transaction; and iii. the respective benefits to other parties to the transaction of entering into it; and iv. any other relevant matter: s 588FDA(1). 54 Section 588FDA(2) provides relevantly that "[t]o avoid doubt", if the transaction is a payment or issue and the transaction is entered into for the purpose of meeting an obligation the company has incurred, the test in s 588FDA(1)(c) applies to the transaction taking into account the circumstances as they exist at the time when the transaction is entered into (rather than as they existed at the time when the obligation was incurred). 55 Section 588FDA(3)(a) relevantly provides that a transaction may be an unreasonable director-related transaction because of subsection (1) whether or not a creditor of the company is a party to the transaction. Was Mr Foden a director of SAA after 29 February 2009? 56 The first question that needs to be addressed is whether Mr Foden was a "director" of SAA at the time of any of the "transactions". The definition of "director" in s 9 includes a person who is not validly appointed as a director if that person acts in the position of a director. 57 Mr Foden's case is that he ceased to be a director on 29 February 2008 and that thereafter he was acting as SAA's accountant subject to the direction of Mr Clark. I do not accept that contention, which is refuted by a substantial body of evidence to the contrary. First, in evidence is a credit application form completed for SAA by Mr Foden in June 2008 which he signed as a director. Mr Foden asserted in evidence that this was a mistake but I do not accept that assertion to be credible, given that he handwrote his title as "director". Secondly, in evidence are three hire agreements signed by Mr Foden on behalf of SAA: in June 2008, September 2008 and October 2008 respectively; and in relation to each of those hire agreements, Mr Foden authorised the hiring company to debit his personal American Express credit card with the monthly hiring fees. Thirdly, Mr Foden was, and continued to be, the sole signatory on the company's account and to write cheques and send correspondence on behalf of the company. Finally, although Mr Foden asserted in his affidavit that from the outset he left the financial decisions to Mr Clark and if something needed to be done took instructions from him, the evidence does not indicate that anything changed in the way in which the business operations were conducted by Mr Foden after his resignation as a director. The evidence all points in the direction of Mr Foden continuing to have, and exercise, significant control over the management of the company, exercising discretion of his own, and to continue to act as a director after 29 February 2008. Moreover, critically and tellingly Mr Clark was not called as a witness and it may be inferred that his evidence would not have assisted Mr Foden. 58 Accordingly I find that Mr Foden continued to act in the position of a director after 29 February 2008 and relevantly, was so acting at the time of each of the transactions sought to be impugned by the liquidators. The application of the test 59 The test in s 588FDA is relevantly expressed in the same terms as s 588FB. Accordingly I find that the loan agreement and mortgage debenture are unreasonable director-related transactions for the same reasons that I found that they are uncommercial transactions. It also follows that payments (1) and (3) were not unreasonable director-related transactions. WHETHER THE "TRANSACTIONS" WERE INSOLVENT TRANSACTIONS 60 A transaction is an "insolvent transaction" of the company if it is an "unfair preference" given by the company or an "uncommercial transaction" of the company and, relevantly, the transaction was entered into when the company is "insolvent": s 588FC(a)(i). As I have concluded that payments (1) and (3) were not "uncommercial transactions", it becomes necessary to consider whether they are "unfair preferences". Whether payments (1) and (3) were unfair preferences 61 A transaction is an "unfair preference" given by the company to a creditor of the company if, relevantly: (a) the company and the creditor are parties to the transaction (even if someone else is also a party); and (b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company: s 588FA. 62 For the reasons given earlier, I am not satisfied that the $215,000 received by Mr Foden was in repayment of client loans. Accordingly I reject Mr Foden's claim that he was not a creditor of SAA in relation to the loan of those funds to SAA. As the liquidators' evidence is that no return to the creditors of the company is expected, the elements of s 588FA are therefore satisfied in relation this payment. I therefore find that payment (1) was an unfair preference. 63 Section 588FC does not apply to payment (3) however because Mr Foden was not a creditor of the company in relation to any debt owed by SAA to Mr Foden for which this payment was received. I therefore find that payment (3) was not an unfair preference. Whether SAA was insolvent as from June 2008 64 SAA was wound up in insolvency on 10 December 2008 on the application of a creditor, Kings Express Pty Ltd. The creditor relied on a presumption of insolvency as a result of the company's failure to comply with a statutory demand served on it in October 2008. The debt claimed was $68,126.64 for goods sold and delivered and no application was made by SAA to set the demand aside. 65 Before the Court is a report and analysis of solvency prepared by the liquidator, Mr Lane, in November 2012. It is the liquidator's view that SAA was insolvent as at 31 December 2007 and remained insolvent from that point in time up to the date when it was placed into liquidation. The liquidator's analysis led him to conclude that there was no evidence to suggest that the insolvent position of SAA was due to a temporary lack of liquidity but, rather that the evidence indicated that the insolvency of the company was due to an ongoing and significant lack of liquidity. In the liquidator's view the following factors contributed to the company's failure: inadequate working capital the company was trading at significant losses and further was recognising revenue through sales in advance where customers had paid in advance for orders which had not yet been fulfilled the company did not hold significant assets with which it could satisfy its liabilities the company's stock was being held by various parties, including creditors who had exercised liens over the stock and the company did not have sufficient working capital to secure the release of the same; and the company was undercapitalised, was unable to access finance on commercial terms and did not have the ability to raise further equity capital. 66 Mr Burtt, who appeared for Mr Foden, was critical of the report and the findings, contending that it was not impartial, was not based on the cash flow approach, did not refer to the "usual indicia of insolvency" identified in Austin Australia Pty Ltd v De Martin & Gasparini Pty Ltd [2007] NSWSC 1238 and was a forensic reconstruction that was incomplete. I do not accept these submissions. 67 Mr Lane was not cross examined on his report which was admitted into evidence without objection. There is nothing to indicate that Mr Lane did not conduct an impartial examination of the company's financial position. Nor is there is any basis for the claim that Mr Lane did not apply a cash flow approach or wrongly approached the determination of solvency. 68 In Austin Australia [2007] NSWSC 1238, Barrett J stated at [9] that an inquiry into whether insolvency existed at a particular time is generally assisted by searching for what are described as "the usual indicia" of insolvency. They are: 1. a history of dishonoured cheques; 2. suppliers insisting on COD terms; 3. the issue of post-dated or "rounded sum" cheques; 4. special arrangements with creditors; 5. inability to produce timely, audited accounts; 6. unpaid group tax, payroll tax, workers compensation premiums or superannuation contributions; 7. demands from bankers to reduce overdraft and other evidence of deteriorating relations with bankers; 8. receipt of letters of demand, statutory demands and court processes for debt. 69 Reference to such indicia may assist to determine whether a company is insolvent at a given time, but the question of solvency depends on whether the company "is able to pay all [its] debts, as and when they become due and payable": s 95A of the Act. In Re Damilock Pty Ltd (in liq); Lewis and Carter as liquidators of Damilock Pty Ltd (in liq) v VISA Australia Pty Ltd (2008) ALR 533; [2008] FCA 1801, Mansfield J observed at [16] that: In any particular case, one or more of those factors, or other factors, may have particular significance and one or more of them may not exist. The absence of one or more of those factors does not, of itself, establish solvency. Whilst those factors are indicators of insolvency, the question for determination is whether the company is able to pay its debts as and when they fall due. 70 It is well settled that the test for solvency under s 95A is a cash flow test that looks at liquidity and the company's ability to meet its expenses and liabilities, when payable, out of its available resources, though a balance sheet test can provide context for the application of the cash flow test: Crema (Vic) Pty Ltd v Land Mark Property Developments (Vic) Pty Ltd (2006) 58 ACSR 631; [2006] VSC 338 at [141]; Australian Securities and Investments Commission v Plymin (2003) 175 FLR 124; [2003] VSC 123. In the present case, the liquidator's analysis of the cash resources available to SAA to meet its current liabilities as detailed in the company's books and records led him to conclude that SAA had a significant net cash deficiency throughout the whole of the period from the end of December 2007 to December 2008. No error in the liquidator's approach has been demonstrated. 71 Nor is there any substance in the contention that the report was a forensic reconstruction that was incomplete. Specifically, it was argued that no allowance had been made for stock which was a significant asset of SAA. To make good that proposition, Mr Burtt sought to rely upon the evidence that Mr Clark gave at his public examination about the value of the stock when: (1) Mr Clark's examination was not in evidence; (2) Mr Clark was not called to give evidence; and (3) Mr Lane was not cross examined. The contention is tendentious and without substance. 72 It was further submitted for Mr Foden that the company did not become insolvent until after 18 June 2008 when payment (1) was made. Reliance was placed on the analysis of ageing trade creditor debts which appears in Mr Lane's report, which showed a sharp increase in the ageing of creditor debts after 30 June 2008 but before then at lower levels. The submission was made that the company did not become insolvent until after 30 June 2008 but it was not however put to Mr Lane that the company did not become insolvent until after 30 June 2008 and this contention is also tendentious. 73 I find on the strength of Mr Lane's report that the company was insolvent as from December 2007. Accordingly, the loan agreement, mortgage debenture and payment (1) were all insolvent transactions. WHETHER THERE WAS AN UNFAIR LOAN 74 A loan to a company is "unfair" if, relevantly, the interest on the loan was "extortionate" when the loan was made: s 588FD(1). In determining whether interest on a loan was "extortionate", regard is to be had to the following matters as at that time: a. the risk to which the lender was exposed; b. the value of any security in respect of the loan; c. the term of the loan; d. the schedule for payments of interest and charges and for repayments of principal; e. the amount of the loan; and f. any other relevant matter: s 588FD(2). 75 The short answer is that as it was common ground that no loan was in fact made by Mr Foden to SAA pursuant to the loan agreement, s 588FD is not engaged. SUMMary of CONCLUSIONs ON whether the TRANSACTIONS were voidable 76 In summary, I have found for the purposes of s 588FE of the Act that: a. the loan agreement and mortgage debenture were uncommercial transactions and also insolvent transactions of the company; b. the loan agreement and mortgage debenture were unreasonable director-related transactions; c. there was no "unfair loan" made to SAA pursuant to the loan agreement; d. payment (1) was an unfair preference and an insolvent transaction; e. the making of payment (2) was not proved; f. payment (3) was not proved to be an unfair preference given by SAA to Mr Foden, or an uncommercial transaction, or an unreasonable director-related transaction, and therefore was not proved to be a voidable transaction in relation to Mr Foden. THE DEFENCE 77 Section 588FG(1) protects a person "other than a party to a transaction" against the making of an order under s 588FF if it is proved that: a. the person received no benefit because of the transaction; or b. in relation to each benefit that the person received because of the transaction: i. the person received the benefit in good faith; and ii. at the time the person received the benefit: A. the person had no reasonable grounds for suspecting that the company was insolvent or would become insolvent because of entering into the transaction; and B. a reasonable person in the person's circumstances would have had no such grounds for suspecting. 78 Section 588FG(2) protects a party to an unfair preference or an uncommercial transaction against the making of an order under s 588FF if it is proved that: (a) the person became a party to the transaction in good faith (s 588FG(2)(a)); (b) at the time when the person became such a party: (i) the person had no reasonable grounds to suspect that the company was, or would become, insolvent; and (ii) a reasonable person in the person's circumstances would have no such grounds for so suspecting (s 588FG(2)(b)(i) and (ii)); and (c) the person provided valuable consideration under the transaction or has changed his, her or its position in reliance of that transaction. 79 The defence under s 588FG does not apply to protect a person if the transaction is an unreasonable director-related transaction. As I have held that the loan agreement and mortgage debenture were both unreasonable director-related transactions, it is only necessary to consider whether Mr Foden can establish this defence in relation to payment (1). Mr Foden has the onus of proof under s 588FG. 80 Mr Foden contended that he was not a "party" to the transaction constituted by payment (1) because the payment was received by him as trustee. I have not accepted that claim but in any event I do not consider that it would mean that Mr Foden was not a party to the transaction if he had received the payment as trustee. In my opinion, the fact that he received the payment, albeit in his capacity as trustee for and on behalf of third parties, would be sufficient to make him a party to the transaction because the payment was made to him on behalf of those third parties: cf Cussen v Sultan (2009) 74 ACSR 494; [2009] NSWSC 1114 at [84]. Accordingly, s 588FG(1) is not available to Mr Foden, and to obtain the protection of s 588FG he must establish the requirements in s 588FG(2). Did Mr Foden become a party to the transaction in good faith? 81 This part of the test requires Mr Foden to prove that he became a party to the transaction in good faith. The onus is not on the liquidators to prove the absence of good faith. This element is a subjective inquiry directed to the Mr Foden's state of mind, with regard to his knowledge and belief about the nature of the transaction at the relevant time: Cussen v Sultan (2009) 74 ACSR 494 at [33] and the authorities cited. 82 Mr Foden deposed that the monies were lent on the understanding that they would be repaid within about a week, which: … was a verbal understanding that I had with Timothy Clark from the beginning but further amounts were lent. However, all the loans were short term and I expected them to be repaid. I did not think this unusual or out of the ordinary because of the nature of the business operated by SAA… 83 In the event the loans were not repaid within the week, although they were all repaid by SAA on 18 June 2008 "by way of a single transfer of $215,000.00 to the Maximiser Account". Mr Foden deposed that: … although SAA took longer than anticipated to repay the loans I did not express any concern about the delay or seek repayment during intervening period. As I have stated above SAA used and received large amounts of cash over short periods and I expected repayment would be made as a matter of course upon the completion of whatever sales event it was then conducting. It was therefore not something about which I had or expressed any concern. 84 Mr Foden was cross examined on this aspect of his evidence and gave evidence to similar effect. I accept that evidence and on the strength of that evidence that Mr Foden became a party to the transaction in good faith, whether the "transaction" is defined as the composite transaction comprised of the loans and payment, or just the payment itself. No reasonable grounds for suspecting that the company was insolvent at the time and a reasonable person in the person's circumstances would have had no such grounds for suspecting. 85 Two questions arise in relation to this part of the defence: first, whether Mr Foden had "no reasonable grounds for suspecting" that SAA was insolvent; and, secondly, whether "a reasonable person" in his "circumstances" would have had no such grounds for suspecting. The first of these inquiries is concerned with the existence of reasonable grounds for the formation of a suspicion by Mr Foden, whilst the second is concerned with the existence of reasonable grounds for the formation of a suspicion by a reasonable person in Mr Foden's circumstances. The meaning given to "suspicion" is well settled. In Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 at 303 Kitto J stated: A suspicion that something exists is more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to "a slight opinion, but without sufficient evidence", as Chambers's Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence. The notion which "reason to suspect" expresses in sub-s (4) is, I think, of something which in all the circumstances would create in the mind of a reasonable person in the position of the payee an actual apprehension or fear that the situation of the payer is in actual fact that which the subsection describes — a mistrust of the payer's ability to pay his debts as they become due and of the effect which acceptance of the payment would have as between the payee and the other creditors. The defence is only available if both aspects of the test are satisfied. 86 No evidence was led from Mr Foden as to his state of mind on whether SAA was insolvent when he received payment of the $215,000, apart from his evidence as to his expectation that repayment would be made "as a matter of course" upon the completion of the sales event that SAA was then conducting. In examination in chief he elaborated that he was not concerned about the delay in payment because: … Mr Clark, when he was running these shows, would often keep the funds for up to about six to eight weeks after the venue was held and then, subsequently, they would come through and go into the bank again. Where he kept it, I don't know. But we're talking significant moneys. 87 In cross examination Mr Foden was asked whether he had known what the company's liabilities were as at June 2008. Mr Foden stated that he was unable to recall whether he had known, though in response to the same question shortly afterwards he answered "not specifically". Mr Foden was then asked whether as at June 2008 he knew what the company's assets were. Mr Foden replied that he believed that he did. The following exchange then occurred in cross examination: MR KOHN: At the – at June of 2008, did you know what the company's assets were?---I believe that I did. You believe you did. Were you given any documents about the company's assets?---Yes, that I was aware of were a huge amount of stock of paintings - - - How did you - - -?--- - - - which I kept – which I kept being told were there. And those assets: did Mr Clark give you any documents in relation to those assets?---There would have been listings of what painting was held. Do you know how the assets were valued – sorry, did you know back in 2008 how the assets were valued?---I never saw invoices for the purchase of 5 them, so I don't know. The paintings were done in China, which Mr Clark took control of totally and looked after that. In June of 2008, did you know what the company's debts were?---Not specifically. And in - - -?---But they would have been available through the MYOB program. Sorry, they were available on MYOB? And in September 2008, did you know what the company's liabilities were at that stage?---No, I didn't. Now, in June 2008, did you know if the company's paintings could be sold quickly?---I was informed by Mr Clark that they could. Okay. And did he tell you how much could be realised from selling them?---I would only be guessing if I said a figure. HER HONOUR: Don't guess, Mr Foden?---Yes. All I was informed was that the stock of paintings on hand was sufficient to clear any debts that were owing by the company. MR KOHN: Okay. Did you receive any documents in June 2008 to substantiate that?---No. Did you receive any documents in September 2008?---No. Did you ask Mr Clark any questions about how those assets could be realised to pay the debts?---Yes, because as he was organising his places where he sells them. Right. And where was Mr Clark getting the money to conduct those exhibitions or shows? Do you know that in 2008?---I didn't know exactly, no, but I believe he was borrowing from private sources. Okay. And in 2008, in June 2008, did you know if the company had enough money to pay – to put on those exhibitions?---No. Did the company ever make a profit?---I was informed by Mr Clark they had made a profit in earlier sales periods. When did Mr Clark tell you that?---It would have been after the South Australian sales. When was that?---I don't recollect. Did the company make a profit any time after those – the South Australian sales?---I'm led to believe it did in Melbourne. Okay. When was the Melbourne sales?---I don't know. And did the company make a profit at any other stage?---I could never substantiate anything, because I never knew what the value of stock was. 88 Mr Foden's lack of knowledge in June 2008 about the company's financial position does not mean that he had no reasonable grounds for suspecting that the company was insolvent as at June 2008 or that a reasonable person in his circumstances would have had no such grounds for suspecting. Mr Foden had helped to set up SAA and knew that SAA was a start-up company. As at June 2008, he had withheld from charging SAA for his accounting services because he knew that the company did not have the funds to pay his fees. He also knew that the company needed to borrow from him in April and May 2008 to meet expenses. Mr Foden was the company's accountant, but he did not know the value of the stock held by SAA, nor what the sales income figures were, or were projected to be, nor whether SAA was actually making any profit from its sales. In that context, the fact that SAA had failed to repay the loans within a timely fashion and, moreover, had needed to borrow more money called for an inquiry as to its capacity to pay its debts as and when due. Significantly, there was no evidence from Mr Foden that there was absent from his mind any suspicion that the company was insolvent when he received payment of the $200,000. Moreover, a reasonable person in his position would, in my opinion, have "reason to suspect" insolvency at the time on the basis that an inquiry was called for into SAA's capacity to pay its liabilities as and when due having regard to its default in repayment of the monies lent and the further borrowings which were needed. Accordingly, the defence under s 588FG fails. 89 For the sake of completeness, I consider that Mr Foden would have established a defence under s 588GF(1)(a) in respect of payment (3), had the payment of $200,000 been an unfair preference or uncommercial transaction by reason that Mr Foden was not a party to the loan transaction that the $215,000 repaid in part and received no benefit from the payment. whether the MORTGAGE debenture is void as a CIRCULATING SECURITY interest 90 "Circulating security interest" is a defined term in the Act and relevantly includes a floating charge: s 51A. Section 588FJ applies in relation to a circulating security interest if a company is being wound up in insolvency and the company created the circulating security interest in its property during the six months ending on the relation back day. By s 588FJ(2), a circulating security interest is void as against the liquidator except in so far as it secures, relevantly, an advance paid to the company at or after that time and as consideration for the circulating security interest. Section 588FJ(2) does not apply however if it is proved that the company was solvent immediately after that time: s 588FJ(3). Section 266 (to be read in conjunction with s 1504) is a correlative provision. 91 The mortgage debenture is expressed to be a fixed and floating charge and is a circulating security interest for the purpose of s 588FJ. As it was created during the six months ending on the relation back day, and it did not secure an advance paid to the company by Mr Foden at or after that time, the charge is void as against the liquidators in so far as it charged the assets of the company to secure repayment of the loan to Mr Foden. conclusion 92 The liquidators are entitled to the relief that they seek with respect to the loan agreement, mortgage debenture and payment (1). The claims in relation to payments (2) and (3) fail. The parties are directed to file minutes of proposed orders giving effect to the reasons within seven days. I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Davies. Associate: Dated: 6 November 2014