FEDERAL COURT OF AUSTRALIA Lo Pilato (Trustee) v Kamy Saeedi Lawyers Pty Ltd, in the matter of Adzic (Bankrupt) [2017] FCA 34 File number: ACD 68 of 2014 Judge: KATZMANN J Date of judgment: 31 January 2017 Catchwords: BANKRUPTCY AND INSOLVENCY — Transfer of real property by debtor within two years of bankruptcy — whether void as against trustee in bankruptcy under ss 120 and/or 121 and/or 122 of the Bankruptcy Act 1966 (Cth) or s 239 of the Civil Law (Property) Act 2006 (ACT) — whether consideration offered for sale of house below market value — whether vendor insolvent at time of transfer — meaning of "time of transfer" — whether transfer made with intent to defraud or defeat creditors or hinder or delay distribution of assets — extent of relief where house on-sold to purchaser for value BANKRUPTCY AND INSOLVENCY — Transfer of property by debtor within two years of bankruptcy — whether grant by debtor of personal guarantee and charge over real property in each of four costs agreements made with a firm of solicitors void under s 121 of the Bankruptcy Act 1966 (Cth) as a transfer of property made with intent to defraud or defeat creditors or hinder or delay distribution of assets — whether transfer of part of proceeds of settlement to solicitors for the vendor's company void as against trustee in bankruptcy under ss 120, 121 and/or 122 of Act — whether payment made on behalf of debtor's company or in discharge of his obligations under the guarantees — whether transfer for no consideration or for consideration below market value — whether payment made with intent to defraud or defeat creditors or hinder or delay distribution of assets — whether effect of payment to give solicitors a preference, priority or advantage over other creditors JURISDICTION — Cross-vesting of jurisdiction — where applicant seeks order under s 288 of the Legal Profession Act 2006 (ACT) — whether Court has jurisdiction to make such an order COSTS — Lawyers — whether charging provision and guarantee clause in several costs agreements "not fair or reasonable" — failure to comply with disclosure obligations to client and third party payer — intimate relationship between solicitor and client Words & phrases: "time of transfer", "not fair or reasonable" Legislation: Bankruptcy Act 1924–1950 (Cth) s 94 Bankruptcy Act 1966 (Cth) ss 5, 58(1), 82(1), 120, 121, 122, 134(1)(j) Civil Law (Property) Act (ACT) s 239 Corporations Act 2001 (Cth) ss 95A, 601AD(1) Evidence Act 1995 (Cth) s 140 Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) s 9(3) Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT) s 4(1) Land Titles Act 1925 (ACT) ss 73, 77 Legal Practice Act 1996 (Vic) s 103 Legal Practitioners Act 1970 (ACT) s 191 Legal Practitioners Act 1974 (NT) s 130 Legal Practitioners' Act 1893 (WA) s 59 Legal Profession Act 2006 (ACT) ss 222, 223(1)(a), 261A, 262(d), 269, 271, 277(3), 278, 282(6), 281A, 288 Legal Profession Regulation 2007 (ACT) cl 83 The Mercantile Acts 1867–1896 (Qld) s 46 Attorneys' and Solicitors' Act, 1870 (UK) s 9 Cases cited: Alman v Macdonald Rudder [2001] WASC 65 Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako [2012] FCA 889 Anscor Pty Ltd v Clout (2004) 135 FCR 469 Athanasiou v Ward Keller (6) Pty Ltd (1998) 8 NTLR 23 Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10) (2009) 39 WAR 1 Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Brady v Stapleton (1952) 88 CLR 322 Briginshaw v Briginshaw (1938) 60 CLR 336 Burgess v Messrs D'Alessandro [1993] ANZ ConvR 14 Camm v Linke Nominees Pty Ltd (2010) 190 FCR 193 Crosby v Kelly (2012) 203 FCR 451 D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198 Duckworth v Chopra [2001] WASC 146 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Fiorino v Woodgate [1994] FCA 181 Foskett v McKeown [2001] 1 AC 102 Frigger v Shepherd [2014] WASC 477 Harrison v Hocking [2000] WASC 188 Jovetic v Stoddart & Co (1992) 7 WAR 208 Joye v Beach Petroleum NL (1996) 67 FCR 275 Lewis v Doran [2004] NSWSC 608; 208 ALR 305 Lewis v Doran [2005] NSWCA 243; 219 ALR 555 Marchesi v Apostolou [2007] FCA 986; 5 ABC(NS) 131 McInnes v Twigg (1992) 109 FLR 96 McVeigh v Moses (Legal Practice) [2005] VCAT 2917 Moschi v Lep Air Services Ltd [1973] AC 331 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 110 ALR 449 Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372 Passey v Bandarage [2002] ACTSC 105 Peldan v Anderson (2006) 227 CLR 471 Permfox Pty Ltd, in the Matter of Chase v Official Receiver for the Bankruptcy District of New South Wales [2002] FCA 1564 Prentice v Cummins (No 5) (2002) 124 FCR 67 Re Jury; Ashton v Prentice (1999) 92 FCR 68 Re Stuart [1893] 2 QB 201 Sandell v Porter (1966) 115 CLR 666 Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost [2011] FCA 356 Spencer v Commonwealth (1907) 5 CLR 418 Stoddart & Co v Jovetic (1993) 8 WAR 420 Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 Sutherland v Brien [1999] NSWSC 155; 149 FLR 321 Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 The Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278 Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 Trustee of the Property of O'Halloran, in the matter of O'Halloran v O'Halloran [2002] FCA 1305 Tyler v Thomas (2006) 150 FCR 357 Weiss v Barker Gosling (1993) 114 FLR 223 Westpac Banking Corporation v The Bell Group Ltd (In liq) (No 3) (2012) 44 WAR 1 Whitton as Trustee of the Estate of Rose v Regis Towers Real Estate Pty Ltd (in administration) (2007) 161 FCR 20 Williams v Lloyd (1934) 50 CLR 341 Smith LD, The Law of Tracing (Clarendon Press, Oxford, 2003) O'Donovan and Phillips, The Modern Contract of Guarantee (Law Book Co Ltd, 1985) Date of hearing: 6, 7, 8, 11 & 12 April 2016 Date of last submissions: 9 November 2016 Registry: Australian Capital Territory Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 396 Counsel for the Applicant: Mr G Blank Solicitor for the Applicant: DibbsBarker Counsel for the Respondents: Mr B F Katekar Solicitor for the Respondents: Kamy Saeedi Law ORDERS ACD 68 of 2014 IN THE MATTER OF GORAN ADZIC (BANKRUPT) BETWEEN: FRANK LO PILATO, AS TRUSTEE OF THE PROPERTY OF GORAN ADZIC, A BANKRUPT Applicant AND: KAMY SAEEDI LAWYERS PTY LTD (ACN 130 129 878) First Respondent SAEEDI PTY LTD ACN 142 209 845 AS TRUSTEE FOR THE SAEEDI FAMILY TRUST Third Respondent JUDGE: KATZMANN J DATE OF ORDER: 31 JANUARY 2017 THE COURT DECLARES THAT: 1. The transfer of the property at 6 Kuhn Place, Nicholls by Goran Adzic to the third respondent is void as against the applicant. THE COURT ORDERS THAT: 2. The third respondent pay the applicant's costs. 3. The application against the first respondent be dismissed. 4. The applicant pay the first respondent's costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. Table of contents Background facts [7] The $100,000 payment [32] The transfer of the Nicholls Property [34] The bankruptcy [45] Pre-action communications about the Nicholls Property [49] The commencement of the proceeding [58] The case against the Trust [59] The relevant legislative provisions [62] The issues [67] Was there a loan to Mr Adzic for $100,000 on 4 October 2011 (for which Mr Adzic paid $30,000 on 6 October 2011)? [68] Was Mr Adzic's obligation to repay the loan discharged upon settlement by being treated as the deposit? [81] Was the consideration for the purchase less than market value at the time of transfer? [83] Was the transfer made with the intention of defeating creditors? [140] To what relief is Mr Lo Pilato entitled? [205] The case against the Law Firm [241] The issues [248] The $229,879.14 payment and the costs agreements [249] Was the payment made by Mr Adzic to the Law Firm or to Redevelopments and held in the Firm's trust account on Redevelopments' behalf? [262] Was the $229,879.14 the payment of a secured debt? [280] Should the charging clauses and guarantees be set aside under s 288 of the Legal Profession Act 2006 (ACT)? [287] What is the Court's jurisdiction to make orders under s 288 of the Legal Profession Act? [288] What is Mr Lo Pilato's standing to make the application? [293] Should the charging clauses and guarantees be set aside? [320] Were the grants of the personal guarantees and charges in the costs agreements transactions to defeat creditors? [367] Was the payment of $229,879.14 a transfer to defeat creditors? [380] Was the payment of $229,879.14 a preferential payment for the purposes of s 122? [381] Was the payment of $229,879.14 an undervalue transaction under s 120? [383] Does the Law Firm have a defence? [390] To what relief is Mr Lo Pilato entitled? [391] Conclusion [392] REASONS FOR JUDGMENT 1 Goran Adzic was a property developer. In October 2012 he was made bankrupt. The unsecured creditors of his bankrupt estate claim to be owed more than $12 million. In this proceeding, his trustee in bankruptcy, Frank Lo Pilato, seeks to recover money on behalf of the estate from two entities to which Mr Adzic transferred real estate and money within months of his bankruptcy. 2 By legislative enactment, certain transfers of property (including money) made by a bankrupt before his or her bankruptcy are void against the trustee in bankruptcy, that is to say, at the instance of the trustee and to the extent necessary to satisfy the debts of the bankrupt and the costs of the bankruptcy. The provisions invoked in this case are ss 120, 121 and 122 of the Bankruptcy Act 1966 (Cth) and s 239 of the Civil Law (Property) Act 2006 (ACT). These provisions enable transfers of property to be made void against the trustee in bankruptcy if: the transfer occurred within five years before the bankruptcy, and the transferee gave no consideration for the transfer or consideration below market value: Bankruptcy Act, s 120(1); the property would probably have become part of the bankrupt estate or available to creditors if it had not been transferred, and the transferor's main purpose in making the transfer was to prevent the property from becoming divisible among his or her creditors or to hinder or delay the process of making property available for division among them: Bankruptcy Act, s 121(1); the transferor was insolvent, and the transfer was to a creditor, had the effect of giving the creditor a preference, priority or advantage over other creditors, and was made in one of the periods before the bankruptcy described in the table set out in s 122(1) of the Bankruptcy Act; or the transfers (here called "dispositions") were made with the intent to defraud creditors and the trustee is "a person prejudiced by the disposition" (unless the disposition was to an honest purchaser who, at the time of the disposition, did not have notice of the fraudulent intent): Civil Law (Property) Act, s 239. 3 There are several transfers of property that Mr Lo Pilato seeks to have declared void against him. 4 The first is the sale of Mr Adzic's house to the family trust of one of the principals of the law firm, Kamy Saeedi Lawyers Pty Ltd (the Law Firm or the Firm), which acted on behalf of one of his companies (Redevelopments Pty Limited). Mr Lo Pilato says that the house was sold below market value, or alternatively that Mr Adzic's main purpose in transferring the property was to defeat Mr Adzic's creditors. 5 The second is the transfer of $229,879.14, derived from the proceeds of the sale of the house, into an account held by the Law Firm, purportedly on account of fees for legal work performed for Redevelopments. Mr Adzic had guaranteed the payment of these fees personally in the four costs agreements under which the fees were said to have been incurred. Mr Lo Pilato attacks the payment on three bases: first, as an undervalue transaction; second, as a transfer to defeat or defraud creditors; and third, as a preferential payment. 6 The trustee's attack also extends to the giving of the guarantees in the four costs agreements and the charges over the house granted in those agreements to secure the debts. Mr Lo Pilato contends that the grants of the guarantees and charges were themselves transfers of property to defeat creditors. He also contends that the guarantees and charging clauses were not fair and reasonable provisions of the agreements, and seeks orders that they be set aside under s 288 of the Legal Profession Act 2006 (ACT). Background facts 7 At some point in or before December 2007, Mr Adzic became aware of the opportunity to purchase land at the site of the former Jamison Inn in Macquarie, a suburb in the Belconnen district of the ACT. The land was owned at the time by a company known as Enima Pty Ltd (Enima). Mr Adzic wished to develop the land by building apartments on it. But one Daniel McMillan — through Redevelopments, which was then his company — had acquired a call option in respect of it. So Mr Adzic, through a company — Smarthand Pty Ltd —purchased from Mr McMillan the entire share capital of Redevelopments. Smarthand, which changed its name to Space Property Group (ACT) Pty Ltd on 20 October 2009, was the trustee of the Adzic Family Trust. The purchase price was $2.4 million, to be paid by Smarthand in four equal installments. Under the terms of the Share Sale Agreement with Mr McMillan, Mr Adzic personally guaranteed and indemnified Smarthand's obligations. 8 On 8 January 2008 the sale went ahead, Smarthand paying the first installment of $600,000, $300,000 of which came from Mr Adzic's joint venture partner, Kees Veraar. Mr Adzic became Redevelopments' sole director and Smarthand its sole shareholder. 9 Redevelopments then called on the option to purchase the Macquarie land from Enima and paid Enima some $8 million. According to Mr Adzic's evidence, he contributed $300,000 and about $800,000 was put up by another joint venture partner, Emil Bulum. The balance was financed by a loan from Bankwest in the sum of $8,150,000, secured by a registered mortgage over the land and other security, including a fixed and floating charge over the assets of Redevelopment, and several guarantees and indemnities, including a guarantee and indemnity from Mr Adzic for the entire amount of the loan. The sale was completed in July 2008. 10 Mr Adzic's troubles began on 31 July 2008 when Enima lodged a caveat over the land, claiming that it had been underpaid because the true purchase price under the agreement was $10 million. Soon after, Enima sued Redevelopments in the ACT Supreme Court for the $2 million difference. On 16 October 2008, the caveat was dissolved but an injunction granted, preventing Redevelopments from further encumbering the land. 11 In October 2008 Mr Adzic sacked his then lawyer and instructed Tracey Mylecharane, a partner in the Law Firm, to take over carriage of the matter. Doubtless Mr Adzic was happier with her, because they soon began an intimate personal relationship and late in 2008 or early in 2009 she moved in with him. 12 Despite the spark of a new romance, 2009 proved to be a difficult year for Mr Adzic and his business interests. The Enima litigation continued, and its impact on Redevelopments was severe. The company had all but exhausted its funds in procuring the Macquarie land, and Mr Adzic found it impossible to find fresh funds while the injunction prevented him offering the land as security. On 12 May Smarthand (and Mr Adzic, as its guarantor) failed to pay the second of the four instalments due to Mr McMillan under the Share Sale Agreement. At some stage in the middle of the year Mr Bulum decided that he wanted to leave the Macquarie project entirely and requested withdrawal of his equity. The Bankwest facility, which had been issued for a 12 month term, was due to expire on 28 July. And on 14 August the Enima litigation ended in defeat for Redevelopments when Refshauge J handed down judgment in Enima's favour (Enima Pty Ltd v Redevelopments Pty Ltd [2009] ACTSC 95). 13 Faced with this compounding series of setbacks, Mr Adzic fought valiantly to save his company. He caused Redevelopments to appeal the decision of Refshauge J. He persuaded Bankwest to extend the loan to 31 December 2009. On 25 November he reached an accommodation with Mr Bulum, entering into a "Deed of Loan" whereby Mr Bulum's "equity" in the joint venture was converted to a debt of $845,000, to be repaid to him by Mr Adzic, Redevelopments, Kees Veraar, and Keenan Veraar on 29 December 2009 or the expiry, cancellation or termination of the Bankwest facility, whichever occurred sooner. On 9 December 2009 Bankwest approved a second extension of the facility, this time to 28 February 2010. 14 When 28 February 2010 arrived, however, and the Bankwest facility again reached its notional expiry date, Redevelopments was yet to secure any major new funding. 15 Nevertheless, Mr Adzic reassured Bankwest that he was continuing to search for new equity, and on 29 April 2010 he informed the bank that he had found a joint venture partner in Radical Developments Pty Ltd. On 25 May Bankwest granted a further extension of the loan, this time until 26 August 2010. On 25 June Redevelopments was victorious in the Enima appeal (Redevelopments Pty Ltd v Enima Pty Ltd (2010) 174 ACTR 1) and the injunction was dissolved. Shortly afterwards, on 7 July 2010, Radical, Redevelopments, and Space entered into their joint venture agreement. Under the terms of the agreement Radical was to be "responsible for securing and/or providing funds" to the joint venture and for an immediate advance of $750,000. It appears that, at least for a time, funds from Radical were forthcoming. 16 As 2010 progressed, so did the Macquarie development. On 7 September Redevelopments signed a costs agreement with the Law Firm, engaging it to act in relation to off-the-plan sales of units in the development. Under this agreement (the Conveyancing costs agreement), Mr Adzic was named as guarantor and his and Redevelopments' obligations were secured by a charge over Mr Adzic's home at 6 Kuhn Place, Nicholls (the Nicholls Property or the Property). In December 2010 Redevelopments lodged an application with the ACT Planning and Land Authority for the development of the site. 17 Even as things progressed, however, Mr Adzic was fighting on four fronts. 18 On one front, Mr Adzic was engaged in an escalating dispute with Mr McMillan. 19 Space had missed the third instalment due under the Share Sale Agreement on 12 May 2010, and on 20 May it received a creditor's statutory demand from Mr McMillan for $2,006,340. Six days later Mr Adzic was served with a demand for a slightly larger amount. On 9 June 2010 Space applied to set aside the statutory demand. Neither Space nor Mr Adzic paid Mr McMillan what he demanded. On 9 November 2010, after making further demands for payment, Mr McMillan filed an application in this Court seeking to recover the money he said he was owed. 20 In the meantime, on a second front, relations between Mr Adzic and Mr Bulum had also soured. 21 On 18 December 2009 Mr Bulum registered a caveat over the Macquarie land, allegedly pursuant to the Deed of Loan. Redevelopments responded by instituting an action for the removal of the caveat. The evidence in this proceeding does not make entirely clear what this dispute was about or when and how it was resolved. It is significant, however, because of the costs agreement, made on 22 March 2010, under which Redevelopments instructed the Law Firm to act for it in the caveat proceeding. Under this agreement (the Bulum costs agreement) Mr Adzic guaranteed Redevelopments' obligations and both his and Redevelopments' obligations were secured by a charge over the Nicholls Property. 22 The dispute between Mr Adzic and Mr Bulum escalated after 29 December 2009, when repayment was due according to the terms of the Deed of Loan. On 18 May 2010 Mr Bulum made a written demand on Redevelopments, Mr Adzic, and the Veraars for repayment of the loan plus interest. The Law Firm responded, on behalf of Redevelopments and Mr Adzic, asserting that they were not yet required to repay the loan because the time for repayment had been "extended by agreement". 23 On 22 July 2010, after the exchange of further correspondence, Mr Bulum instituted proceedings in the Supreme Court of New South Wales against Mr Adzic, Redevelopments, and the Veraars to recover the $845,000 plus interest. The four defendants pleaded in their defence that the Deed of Loan had been varied orally so that the loan amount would only be repayable when an alternative lender was found. Mr Bulum denied that there had been any variation and the case proceeded. 24 On 30 September 2011 Mr Bulum filed an application for summary judgment. 25 Ultimately Mr Bulum was victorious in the proceeding, but he obtained orders only against Kees Veraar, as by that time Mr Adzic was bankrupt and Redevelopments had been deregistered. 26 The third front related to the development application. 27 The development application was approved, subject to conditions, on 24 June 2011. But on 22 July 2011 a third party lodged an application for review of the decision in the ACT Civil and Administrative Tribunal (ACAT). On 26 July 2011 Mr Adzic engaged the Law Firm to act for Redevelopments in relation to the appeal, and he signed a costs agreement (the ACAT costs agreement) on 12 December 2011. In this agreement, as in the others already mentioned, Mr Adzic was named as guarantor and, once again, his and Redevelopments' obligations were secured by a charge over the Nicholls Property. 28 The fourth front concerned the loan to Bankwest. 29 On 26 August 2010 the bank determined that Redevelopments was in breach of the terms of its loan facility and issued Redevelopments with a default notice, requiring it to repay the loan in full on 26 September 2010. Negotiations between Mr Adzic and the bank ensued, with Mr Adzic seeking additional time to refinance. The negotiations were successful to a certain extent, because over the following months the effective deadline for repayment of the loan was extended several times. On 18 October 2010 the bank demanded that Redevelopments repay the loan in full by 10 December 2010; on 9 March 2011 it demanded repayment in full by 30 March 2011; and on 20 May 2011 it demanded repayment in full by 27 May 2011, this time through its solicitors, Gadens. 30 After receiving the letter from Gadens, Redevelopments briefed the Law Firm and on 26 July 2011 Redevelopments and Mr Adzic entered into a further costs agreement (the Bankwest costs agreement). It contained the same guarantee and charging clause as the Conveyancing, ACAT, and Bulum costs agreements. 31 Negotiations between the Law Firm and Gadens led to an agreement on 31 May 2011, under which, it seems, Redevelopments was obliged to repay the loan in full by 28 July 2011. On 13 July Redevelopments requested an extension of time until 19 August 2011. It is not clear whether this request was granted. In any event on 19 August Redevelopments filed an originating application in the ACT Supreme Court, seeking an order that Bankwest be restrained from taking action on the mortgage over the Macquarie land or the charges given by Redevelopments and Space, on the basis that Bankwest, by its employed Business Development Manager, Stephen Kartsonas, made oral representations to [Redevelopments], by its director Goran Adzic, that the defendant would extend the facility expiry date until [Redevelopments] was able to obtain development approval and secure alternative financing to pay out the loan from [Bankwest] and encouraged [Redevelopments] to continue to expend substantial sums of money and incur substantial liabilities in relation to the development, including pre-selling 198 units. [Redevelopments] did so in reliance on [Bankwest]'s representations and has altered its position to its substantial detriment as a result. That day Penfold J granted the injunction sought by Redevelopments, presumably as an interim measure. On 29 September 2011 that order was amended so as to limit the injunction's operation until 4.00pm on 4 November 2011. On 3 November 2011, however, the injunction was extended again until further order. The $100,000 payment 32 In early October 2011 a series of acts occurred, the nature and significance of which are in issue in this proceeding. 33 What does not appear to be in dispute is that: (1) on 4 October 2011, (a) $100,000 was transferred by Ms Mylecharane, with Mr Saeedi's consent, from a joint account held by Mr Saeedi and his wife to an account held only by Mr Saeedi; (b) $50,000 was transferred from Mr Saeedi's bank account to Ms Mylecharane's bank account with the notation "loan to TM" appearing on Mr Saeedi's account statement and with the notation "loan from KS" appearing on Ms Mylecharane's account statement; (c) Mr Adzic asked Ms Mylecharane to transfer $70,000 into a bank account called "JMA Legal Trust Account"; (2) on 5 October 2011 Ms Mylecharane arranged the transfer of $70,000 to the JMA Legal Trust Account (in payments of $50,000 from Ms Mylecharane's bank account and $20,000 from Mr Saeedi's); and (3) on 6 October 2011 Ms Mylecharane transferred $30,000 from Mr Saeedi's bank account back into Mr and Mrs Saeedi's joint bank account, with the notation "from TM" appearing on Mr Saeedi's account statement. The transfer of the Nicholls Property 34 Mr Adzic's most valuable asset was the Nicholls Property. 35 Mr Adzic purchased land at the site in 1995. He and his father later built the house. In 1998, before the building work had been completed, Mr Adzic moved in. In 2009 Ms Mylecharane moved in with him. The evidence indicated, and it was not in contest, that she paid no rent and made no financial contributions to the mortgage or improvements to the Property. 36 On 26 October 2011, less than a week before the Bankwest injunction was due to expire, Mr Adzic lodged a transfer with the ACT Registrar-General in an attempt to transfer the whole of his interest in the Nicholls Property to both him and Ms Mylecharane as joint tenants in consideration of "love & affection". 37 That transfer did not go ahead. On 5 December 2011 the Deputy Registrar-General issued a requisition on the transfer to Ms Mylecharane, and it was an agreed fact that, two days later, on 7 December 2011, contracts were exchanged for the sale of the Nicholls Property to Saeedi Pty Ltd as trustee for the Saeedi Family Trust (the Trust). The purchase price recorded on the contract of sale was $905,000. No deposit was then paid but the contract included a "special condition" in which the parties acknowledged that a deposit of $100,000 had been paid "by the buyer directly to the seller". 38 I note parenthetically that for the following reasons, although the copy of the contract tendered in evidence carried the 7 December date, were it not for the agreement I would have had trouble accepting that exchange in fact occurred on that date. 39 On 11 April 2012 Ms Mylecharane emailed Amy Beattie, a private banker at the Commonwealth Bank (CBA), copying in Mr Saeedi. The email read (without alteration): Hi Amy As discussed, I confirm Kamy has asked me to liaise with you to get the ball rolling for an investment property he wishes to purchase through his trust. He is in negotiations in relation to purchase price, with the price dependant upon the bank valuation to be obtained. I confirm he will be contributing a cash deposit. Again, the amount will be dependant upon the valuation. The property details are 6 Kuhn Place, Nicholls in the ACT. Details of the property should be kept confidential. Can you kindly confirm the process from here, as Kamy would like to get the valuation process underway as soon as possible. He is keen to agree on a purchase price and exchange contracts without delay. Please let Kamy or I know if you require anything further at this stage. (Emphasis added.) 40 Ms Beattie replied, indicating, amongst other things, that she could order a valuation, and requesting financial records for "the Saeedi Group" in order that a loan could be approved. Ms Mylecharane confirmed Mr Saeedi's instructions to proceed with the valuation and in the same email stated (again without alteration): I cannot confirm the expected price. As previously mentioned that is dependant upon the valuation. I can however confirm the asking price, which is between $850,000 and $910,000. The details for the contact person are Goran Adzic … A contract has not yet issued to Kamy as a price has not been agreed upon … (Emphasis added.) 41 Either Ms Mylecharane was lying, then, or the account given to the Court about the contract for sale is a fabrication. No reason was suggested by either party as to why Ms Mylecharane would set out to deceive the bank in this correspondence. Still, Mr Saeedi maintained that the contract was executed on 7 December 2011 and said that he was "baffled" by the assertion in Ms Mylecharane's email. More importantly, no application was made for leave to withdraw the admission and I must proceed on the basis that exchange took place on the agreed date. 42 In another curious feature of the transaction, settlement occurred nearly six months later, on 31 May 2012, although the contract provided for settlement within 90 days. The transfer was registered a week later, on 7 June 2012. On the day of settlement and from its proceeds Mr Adzic paid the Law Firm by bank cheque the sum of $229,879.14. 43 Despite the sale, little changed. Mr Adzic and Ms Mylecharane continued to live in the Nicholls Property. There was evidence that Mr Adzic moved out at one stage, but the separation was apparently short-lived. Mr Saeedi testified that in about June 2012 Ms Mylecharane approached him apologising for their inability to pay the rent that month. He said that she told him that "the refinance should be through soon and we will pay then". But rent was never paid. Nor was any demand for its payment ever made. Mr Saeedi said, however, that in about June 2013 he told Ms Mylecharane he was not prepared to carry the burden of the mortgage without any rent for much longer. 44 Between June 2013 and early 2014, Mr Saeedi arranged for work to be undertaken on the Property to prepare it for sale at a cost (according to him) of $38,000. On 3 May 2014 he signed a contract to sell it to a third party purchaser for $1.2 million. The sale was completed on 30 May 2014. The bankruptcy 45 On 13 April 2012 judgment was entered by consent against Mr Adzic in the McMillan proceeding in the sum of $2,514,373.45. 46 Mr Adzic failed to pay the amount owing to Mr McMillan under the judgment and a bankruptcy notice was served on him. He failed to comply with the bankruptcy notice and on 15 August 2012 Mr McMillan filed a creditor's petition in the Federal Magistrates Court (now the Federal Circuit Court). On 11 October 2012 the court made a sequestration order against Mr Adzic's estate and Mr Lo Pilato, a chartered accountant and an experienced insolvency practitioner, was appointed his trustee in bankruptcy. The court order bears the notation that "the date of the act of bankruptcy is 14 August 2012". 47 Mr Lo Pilato then began his investigation into Mr Adzic's affairs. 48 In the period June to September 2013 public examinations were conducted of Mr Adzic, Ms Mylecharane, and Mr Saeedi. Pre-action communications about the Nicholls Property 49 In an affidavit sworn on 16 March 2016, Mr Saeedi deposed to a number of conversations with Mr Lo Pilato about the Nicholls Property. 50 The first conversation took place on 12 July 2013, when Mr Saeedi attended the Federal Court for his public examination. He said that he spoke to Mr Lo Pilato either in a break or at the end of his examination, and they exchanged words to the following effect: [Saeedi]: If you think the house at Kuhn Place was worth more than what I paid for it then why don't you just reverse the transaction. [Lo Pilato]: Oh, okay, I will think about that and see what happens. 51 When asked about the alleged conversation in cross-examination, Mr Lo Pilato confirmed that he was present in court on 12 July 2013, but said that he did not recall meeting with Mr Saeedi. When asked to deny that the meeting took place, he demurred. After some obfuscation, he ultimately conceded that it "could have happened" but he said that he could not "remember specifically". 52 According to Mr Saeedi, the next conversation took place at the Loading Zone cafe on Northbourne Avenue, sometime in the second half of 2013. He said that he again said to Mr Lo Pilato: [Saeedi]: If you think the house is worth more than I paid for it then why don't you reverse the transaction? 53 Mr Lo Pilato recalled that meeting. When asked if he remembered Mr Saeedi offering to convey the Nicholls Property to him in return for the purchase price, he did not deny it. Rather, he at first obfuscated and talked around the question, before ultimately agreeing that he could not recall whether or not Mr Saeedi asked him to "reverse the transaction". He said he did not recall whether Mr Saeedi said that he was planning to sell the Property, but he said that he understood that at that time that Mr Saeedi was undertaking work on it. 54 Then, on 12 November 2013, Mr Lo Pilato's solicitors, DibbsBarker, wrote to Mr Saeedi stating that Mr Lo Pilato had "formed the view" that he was entitled to make certain demands, including demands relating to the Property. 55 Finally, Mr Saeedi said that sometime between November 2013 and January 2014, after his public examination, his meeting with Mr Lo Pilato at the Loading Zone Cafe, and his receipt of the letter, he had a conversation with Mr Hill of DibbsBarker. He said that the conversation took place on the phone, but he did not remember who made the call. He said that they first discussed some statements that Mr Lo Pilato had sought from his bank, in order to produce these in compliance with an undertaking he had apparently given at the public examination. The conversation then turned to the Nicholls Property. Mr Saeedi said that he told Mr Hill he was about to sell the Nicholls Property, and that Mr Hill thanked him for the information. 56 This evidence was not contradicted. No affidavit from Mr Hill was read and no application was made to call him to give oral evidence although he was present in court. In these circumstances I infer that nothing he could have said would have assisted Mr Lo Pilato's case. 57 Consequently, I find that by January 2014 Mr Lo Pilato was aware (at least through his solicitors) that Mr Saeedi was proposing to sell the Nicholls Property. Yet, before this proceeding was commenced, no action was taken to "reverse" the transfer of the Property to the Trust or, indeed, to safeguard the trustee's interest in the Property, such as by the lodgment of a caveat. The commencement of the proceeding 58 This proceeding was commenced by the filing of an originating application on 30 July 2014. The application originally sought orders against Ms Mylecharane in relation to her receipt of some of the proceeds of the sale of the Nicholls Property, but the action against her was discontinued after she was made bankrupt. The case against the Trust 59 Mr Lo Pilato contended that the Nicholls Property was sold to the Trust at less than its market value either because: (1) the contract price was not the market value; or (2) the true purchase price was lower than the contract price on the basis that the $100,000 was not a deposit but, either in whole or in part, a loan to Ms Mylecharane. 60 Either way, Mr Lo Pilato maintained that the transfer of the property to the Trust was void under s 120. Alternatively, Mr Lo Pilato contended, the house was sold with the intention of avoiding creditors and so the transfer was void under s 121. He also pleaded that the transfer of the property was a disposition with intent to defraud creditors and is void against him under s 239 of the Civil Law (Property) Act, but he did not advance any submissions on this point separate from those in support of his case under s 121. 61 The Trust, on the other hand, insisted that it bought the property for $905,000, which included "the $100,000 deposit". It submitted that the Court would not be persuaded that $905,000 was less than market value or that Mr Adzic's main purpose in selling the property was to keep it from creditors. In any case, it contended that relief is unavailable because the property was on-sold to a bona fide purchaser before this proceeding was commenced. The relevant legislative provisions 62 Section 120 of the Bankruptcy Act relevantly provides as follows: 120 Undervalued transactions Transfers that are void against trustee (1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: (a) the transfer took place in the period beginning 5 years before the commencement of the bankruptcy and ending on the date of the bankruptcy; and (b) the transferee gave no consideration for the transfer or gave consideration of less value than the market value of the property. Note: For the application of this section where consideration is given to a third party rather than the transferor, see section 121A. … Refund of consideration (4) The trustee must pay to the transferee an amount equal to the value of any consideration that the transferee gave for a transfer that is void against the trustee. What is not consideration (5) For the purposes of subsections (1) and (4), the following have no value as consideration: … (d) the transferee's love or affection for the transferor; … Protection of successors in title (6) This section does not affect the rights of a person who acquired property from the transferee in good faith and by giving consideration that was at least as valuable as the market value of the property. 63 Section 121 relevantly states: 121 Transfers to defeat creditors Transfers that are void (1) A transfer of property by a person who later becomes a bankrupt (the transferor) to another person (the transferee) is void against the trustee in the transferor's bankruptcy if: (a) the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred; and (b) the transferor's main purpose in making the transfer was: (i) to prevent the transferred property from becoming divisible among the transferor's creditors; or (ii) to hinder or delay the process of making property available for division among the transferor's creditors. Note: For the application of this section where consideration is given to a third party rather than the transferor, see section 121A. Showing the transferor's main purpose in making a transfer (2) The transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent. Other ways of showing the transferor's main purpose in making a transfer (3) Subsection (2) does not limit the ways of establishing the transferor's main purpose in making a transfer. Transfer not void if transferee acted in good faith (4) Despite subsection (1), a transfer of property is not void against the trustee if: (a) the consideration that the transferee gave for the transfer was at least as valuable as the market value of the property; and (b) the transferee did not know, and could not reasonably have inferred, that the transferor's main purpose in making the transfer was the purpose described in paragraph (1)(b); and (c) the transferee could not reasonably have inferred that, at the time of the transfer, the transferor was, or was about to become, insolvent. ... 64 Subsections (5), (6) and (8) are identical in substance, if not in terms, to subsections (4), (5) and (6) of s 120. For the purposes of both ss 120 and 121 "transfer of property" is defined to include a payment of money and the "market value" of transferred property as the market value of the property at the time of transfer: see ss 120(7) and 121(9). 65 "Property" is defined in s 5 of the Act to mean: real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property. 66 "Void" in these contexts means "voidable": Anscor Pty Ltd v Clout (2004) 135 FCR 469 at [43] (Lindgren J). As Gummow J explained in Fiorino v Woodgate [1994] FCA 181: The effect of s. 120, as of s. 94 of the Bankruptcy Act 1924, is that a disposition of the description in the section is voidable at the instance of the trustee "as from the time as at which his title accrues" and that the section makes ineffectual every step taken by the bankrupt which would otherwise cause the beneficial title to pass: Williams v Lloyd (1934) 50 C.L.R. 341 at 374. The issues 67 Insofar as the case against the Trust is concerned, the issues as defined by the parties are these: (1) whether there was a loan to Mr Adzic for $100,000 on 4 October 2011 (for which Mr Adzic paid $30,000 on 6 October 2011); (2) if so, whether Mr Adzic's obligation to repay the loan was discharged upon settlement, by it being treated as the deposit; (3) whether the price paid for the Property (that is, the consideration for the transfer) was less than its market value at the time of transfer; (4) whether the contract for sale and the transfer of the Property to the Trust was a transfer made with the main purpose of defeating Mr Adzic's creditors; and (5) in the event that (3) or (4) is made out, to what relief, if any, Mr Lo Pilato is entitled. Was there a loan to Mr Adzic for $100,000 on 4 October 2011 (for which Mr Adzic paid $30,000 on 6 October 2011)? 68 Mr Lo Pilato claims that, despite the "special condition" in the contract for sale (see [37] above), no deposit was paid on the purchase of the Nicholls Property. If he is right, then the Property was sold for $805,000. 69 The Trust relies on the transfer of $100,000 from the joint account of Mr and Mrs Saeedi on 4 October 2011 and the evidence of Ms Mylecharane, Mr Adzic, and Mr Saeedi. Neither Ms Mylecharane nor Mr Adzic was called in this case but Mr Lo Pilato tendered without objection the transcript of their evidence in the public examination. The transcript of evidence taken at a public examination may be used in evidence in any proceeding under the Bankruptcy Act regardless of whether the persons examined are parties to the proceeding (ss 81(17), 255(1)) and, unless an order is made to the contrary, is admissible as evidence of the matters described by those persons (s 255(2)). Neither party requested such an order. 70 Mr Saeedi's evidence was as follows. 71 In early October 2011 he was looking to buy a unit in the eastern suburbs of Sydney, primarily as a weekender, but also as an investment, adding to his property portfolio. To this end he travelled to Sydney to look at a property in Tamarama. While he was there, he received a call from Ms Mylecharane. They had a conversation to the following effect: [Mylecharane]: "Goran is looking to borrow one hundred thousand dollars to fund Redevelopments. It is a short term cash thing as he does not want to sell some of his assets or the land belonging to Redevelopments. There are more than two hundred units in the complex that have already exchanged contracts. It should not be a problem in the bigger picture as there are other potential joint venture participants and more than enough equity, but he needs that cash in the short term. He is looking to pay personal funds into Redevelopments and has been talking about selling his house in Nicholls. He has been talking to short term money lenders." [Saeedi]: "What is happening with Goran's matters? I thought that he had plenty of assets that he could use?" [Mylecharane]: "Redevelopments is fighting a number of claims to get the development to a stage where it can be sold. Redevelopments is paying all other debts apart from these contested ones and needs to get through these matters to realise the development of the Macquarie Units. There are more than enough assets to pay the debts, including the land in Macquarie that should be worth more than $15 million, but he would prefer a short-term loan so that he can keep hold of those assets and make the profit on the development." [Saeedi]: "Okay, I am in Sydney looking to buy an investment property." [Mylecharane]: "What if you buy Goran's Nicholls house instead?" [Saeedi]: "I would prefer not to get locked into a house in Gungahlin. I am pretty set on this house in Tamarama near the beach. As a compromise though, maybe we could set up a short term loan with the security of the Nicholls House if the other funding does not come through?" "If Redevelopments is looking for short-term funding then what terms has Goran been able to find with lenders at the moment?" [Mylecharane]: "The short term loan[s] usually have a fixed rate of interest of 30% that is payable immediately". [Saeedi]: "If you take $100,000 from my home loan account, then that will be on terms that there will be a fixed interest rate of 30% that is repayable immediately, then the $100,000 debt is to be paid within a month or so or else I will require the sale of the Nicholls property to repay the debt. If I am required to buy the Nicholls house, then the $100,000 will be taken to be the deposit for the purchase. We will discuss the market price for the house if that is needed to determine the remaining amount that would need to be paid. I am doing this as a favour for you though and I would prefer not to have to buy the house." 72 Later that day, or the following day, Ms Mylecharane telephoned Mr Saeedi, saying that Mr Adzic had agreed to Mr Saeedi's loan proposal. Mr Saeedi replied: Okay. You have access to my bank accounts. Please make that loan happen. 73 Mr Saeedi explained that Ms Mylecharane knew the passwords to his electronic banking accounts and said, without objection, that she "directly facilitated each of the payments", on the terms discussed with her. 74 Most of this evidence went unchallenged. Still, there are some difficulties with the Trust's position. 75 As Mr Saeedi acknowledged, the contemporaneous records do not suggest that a loan of $100,000 was advanced to Mr Adzic. The bank statements show that: (1) on 4 October $100,000 was transferred from the Saeedis' home loan account to Mr Saeedi's private bank account with the CBA and $50,000 credited to Ms Mylecharane's NetBank account; (2) the next day a further $20,000 was transferred from the private account to another solicitor's trust account (JMA Legal Trust Account); and (3) on 6 October $30,000 was transferred from the private account into the home loan account. 76 The first two transactions are recorded in the bank statements as "TM loan" and "loan to TM" respectively. None of the bank documents refers to a loan to Mr Adzic. No explanation was given for the notations but plainly "TM" denotes Tracey Mylecharane. 77 The bank statement does not indicate that the transfer on 6 October relates to any loan. 78 A bank statement relating to an account held in Ms Mylecharane's name shows a transfer from Mr Saeedi's private account on 4 October for $50,000, described as a loan from "KS" (presumably Mr Saeedi), and a transfer out of the same amount the following day with the notation "RTGS". No evidence was given to explain this notation. No suggestion was made that it had any relationship to Mr Adzic. 79 Exhibited to Mr Lo Pilato's affidavit of 9 June 2015, however, together with the bank records, was an email from Mr Adzic to Ms Mylecharane dated 4 October 2011 asking her to transfer "the $70k" into the JMA Legal Trust Account and emails between the bank and Ms Mylecharane supporting the conclusion that there were two transfers of $50,000 and $20,000 respectively, the first from Ms Mylecharane's account, the second from Mr Saeedi's. So, while the bank statements refer to "TM Loan", and I was not taken to any evidence to show that Mr Adzic actually received any part of the money, $70,000 of the $100,000 withdrawn from the home loan account appears to have been deposited into an account with a firm of solicitors at Mr Adzic's request. At the public examination, Mr Adzic testified that the money "went straight to Redevelopments" and he never saw any of it himself. He said that he asked Ms Mylecharane to "attend to a couple of payments for Redevelopments as a matter of urgency" and that he assumed it went into "the trust account". Not only was this evidence not challenged, it was evidence in Mr Lo Pilato's case. It is reasonable, then, to infer (and I do) that the purpose of the transfer was to procure funds for Redevelopments and that "the $70,000" represented the net amount of the loan after the 30% interest had been paid as agreed. 80 Consequently, I find that in early October 2011 there was a loan of $100,000. I am satisfied that the money was paid to a firm of solicitors at Mr Adzic's direction on behalf of Redevelopments. But the evidence does not indicate that it was the Trust that advanced the money. Rather, the money came from Mr and Mrs Saeedi. Was Mr Adzic's obligation to repay the loan discharged upon settlement by being treated as the deposit? 81 Assuming the obligation to repay the loan was Mr Adzic's, rather than Redevelopments', it is difficult to see how the obligation was discharged by the Trust treating it as the deposit on the purchase of the Nicholls Property when it was Mr and Mrs Saeedi, not the Trust, who provided the funds. It is also difficult to understand the reference to $100,000 when it is common ground that the debt was only $70,000 by the time the contract for sale was drawn up. 82 Be that as it may, the contract contained an acknowledgment that the deposit in that amount had been paid by the Trust directly to the seller (Mr Adzic). Mr Saeedi's evidence was to the effect that, if the debt could not be repaid otherwise than by the sale to him of the Nicholls Property, then the $100,000 would be taken as the deposit. According to him, this was the agreement struck with Ms Mylecharane acting in this respect as Mr Adzic's agent. Further, the settlement sheet refers to the payment of a $100,000 deposit. Mr Lo Pilato did not submit that the contract was a sham. In these circumstances I find that the loan was discharged upon settlement by being treated as the deposit on the purchase. Was the consideration for the purchase less than market value at the time of transfer? 83 Mr Lo Pilato submitted that, if no money was paid by the Trust, then the $100,000 could not form part of the deposit for the Property. That is not necessarily so. A deposit paid by a third party is still a deposit. The real difficulty for the Trust is that s 120(1)(b) is not concerned with the consideration received by the transferor. As is apparent from its terms, s 120(1)(b) is concerned with the consideration, if any, given by the transferee (see Tyler v Thomas (2006) 150 FCR 357 at [112]–[113] (Bennett J), [230] (Graham J)). 84 The transferee here was the Trust. Mr Saeedi did not testify that he directed Ms Mylecharane to pay the money out of an account held in the name of the Trust. Nor did he say that he was paying the money on behalf of the Trust. The Trust's involvement in the purchase only emerges when its name appears on the contract. There was no mention of the Trust before then. Whatever consideration Mr and Mrs Saeedi may have given, the Trust gave Mr Adzic only $805,000. This was the consideration for the purchase. 85 There is an issue about the time of transfer for the purpose of ss 120 and 121. The Trust claims that it is on 7 December 2011 being the date appearing on the contract for sale and the agreed date upon which contacts were exchanged. Mr Lo Pilato's position is not entirely clear but I took him to be contending throughout that it is 12 May 2012 when settlement took place. I will return to this issue in due course. At this stage it is unnecessary to resolve it, because the evidence upon which Mr Lo Pilato relied was to the effect that the market value was no different at these two points in time. 86 As the Trust submitted, the term "market value", as used in s 120, is intended to refer to the value of the property if it were sold to an unrelated purchaser bidding in a market on an ordinary commercial basis for the same kind of property, without any sort of discount or incentive for purchase: Tyler v Thomas at [45] (Branson J), [108] (Bennett J), [200]–[204] (Graham J). In Spencer v Commonwealth (1907) 5 CLR 418 at 432, to which Branson J referred, Griffith CJ said that: [T]he test of value of land is to be determined, not by inquiring what price a man desiring to sell could actually have obtained for it on a given day, i.e., whether there was in fact on that day a willing buyer, but by inquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" It is, no doubt, very difficult to answer such a question, and any answer must be to some extent conjectural. 87 Strange as it may seem, Mr Saeedi's evidence was that it was he who determined a suitable price. He stated that in about late November or early December 2011 he searched the website www.allhomes.com.au, which he said contains research on sales of Canberra properties. He said that he did not recall precisely the properties he used as a guide on prices although one property at 4 Dive Place Nicholls, valued at $1 million, mentioned by a certified practising valuer, James Brennan, qualified on Mr Lo Pilato's behalf, seemed familiar. Properties such as this, Mr Saeedi said, which back onto the golf course and are complete, with backyards and swimming pools, created a benchmark for the Nicholls Property. Mr Saeedi said that his view at the time was that the Nicholls Property was inferior to such properties. He said that he used the data from the allhomes website to settle upon a figure of $900,000 as "a fair value" taking into account the following matters: (a) the state of the Nicholls Property, considering its run-down state and the work that was never completed since it was built approximately 20 years ago; (b) the fact that I would not be able to sell it quickly if I wanted to as I would need trades to attend for the work to complete the construction and take care of the maintenance and repairs; (c) the Nicholls Property did not present well, not just because it was incomplete and rundown, but also because that (sic) the main view from the street was a triple car garage; (d) generally the location of the Nicholls Property away from the golf course or any significant reserve. I saw the houses in Nicholls that were selling for more than $1,000,000 and they all had special aspects that set them apart from this house; (e) the fact that it did not have any real backyard other than small paved areas and it did not have a swimming pool; and (f) I was not overly concerned at bargaining a lower price considering my working relationship with Tracey and that the purchase price would be a benchmark for them to repurchase the house. 88 Then, according to Mr Saeedi, he had a conversation with Ms Mylecharane in which he told her that he had had a look at property values in Nicholls, that he thought "the [P]roperty [was] worth about $900,000 in its current state", and that she replied: "I have been discussing this with Goran recently and he agrees that is about the right price". He said that she undertook to "take care of all the contracts that are needed". 89 This evidence is at odds with evidence Mr Adzic gave during the public examination in which he agreed that in asset and liability statements he had signed he had estimated the value of the Nicholls Property at $1 million in July 2008 and $1.5 million in August 2011. Mr Adzic also said that in 2011 he went to the allhomes website, "made some comparisons", and "made a call" as to where the Nicholls Property sat. He added that he believed that Mr Saeedi "got a valuation", but he did not say when. 90 Mr Saeedi's evidence concerning the background to the purchase was as follows. In about late November or early December 2011 Ms Mylecharane told him that Mr Adzic thought that it would be better if he were able to buy the Nicholls Property "and pay the rest of the purchase price, rather than leaving that as a loan to be repaid". Mr Saeedi agreed on the basis of Ms Mylecharane's assurance that she and Mr Adzic would continue to live in the premises and pay him a commercial rate of rent each month with the ultimate object of buying the Property back. According to Mr Saeedi, it was he who suggested the amount of the rental payment at $800 per week. He said that he then told Ms Mylecharane: Well, if you have the contracts drawn up, then that gives the further security for the loan. Draw out the settlement date. I will not pay the stamp duty unless I have to so let me know as soon as the repurchase can take place. 91 Mr Saeedi recalled having attended the Nicholls Property on three or four occasions in the past when he had been invited to dinner. He said that he knew that the house was incomplete and the Property was looking "quite rundown" and "a lot of work was needed". He referred to the following particular matters: (a) the render was cracking all around the outside and the paint was aged; (b) none of the external landscaping was finished to a good quality; (c) the backyard was full of builders' rubbish. It was a small courtyard and the retaining wall was not complete. The landscaping out the back looked particularly poor; (d) going from the back living area to the back courtyard, the sliding doors on the house were not finished as there was exposed brick around these doors; (e) throughout the inside of the house, it was dated with all finishings, and the paint looked old and in need of repainting throughout; (f) … all of the inside of the house looked like it was 20 years old with worn carpet and all internal finishings; and (g) the garage ceiling was missing and there were only exposed trusses down there. I observed water damage where it seemed as though water was entering from outside which had damaged one wall of gyprock. 92 He said that he was also aware of the fact that Kuhn Place was not "as prestigious" as some of the streets in Nicholls that backed onto the golf course. 93 Mr Saeedi also testified that the Property was in the same condition in July 2013. This testimony was doubtless intended to tie in with evidence from an estate agent, Maria Selleck, who inspected the Property at that time. 94 In her affidavit, Ms Selleck said that when she inspected the Property she found a number of problems. She said that the upstairs verandah was "in a state of disrepair", with a large section of the decking being cracked and rotten, posing a safety risk. She said that builders' debris was scattered around the rear courtyard; the gyprock ceiling in the garage was incomplete; the basement had wet walls, pools of water on the floor and high humidity, and building material was lying around. She said that the house looked like it was 20 years old both inside and out. She referred in particular to the preponderance of marble in the bathrooms and the layout and finishes of the kitchen which, she considered, made them look dated, although she conceded that neither the bathrooms nor the kitchen were refurbished before the 2014 sale. She asserted that the landscaping at the front and rear of the house would be unattractive to buyers and needed a lot of work, and the landscaping at the rear looked unfinished and appeared to have subsided. She felt it was unsafe for her to walk at the back due to the apparent subsidence. She described the paintwork as dated and in poor condition, both inside and out, such that it needed to be redone. She said that the render was cracking and peeling away throughout and on the whole of one side in particular, making the house appear dilapidated. She said that the interior plaster was also cracking. Finally, she said that the motorised blinds needed replacing. 95 Overall, her assessment was that the Nicholls Property "was not totally dilapidated … but a number of things were not completed and a number of items needed to be updated". She said that she told Mr Saeedi that the Property was unsaleable in its current state but with "extensive work to … bring it up to the expected standard for [the] suburb", he "may be able to get within the vicinity of" $1.1 million to $1.25 million, "provided that all works were undertaken and completed in a professional manner". 96 Ms Selleck said that she inspected the Property again on about 21 February 2014. At this time she observed that "considerable" work had been performed, in accordance with her advice. Her opinion was that this had increased the Property's sales potential. She agreed to act as agent, and sold the Property just before auction for $1.2 million, with contracts being exchanged on about 3 May 2014. 97 Ms Selleck deposed that the 2012 price of $905,000 and the 2014 price of $1.2 million were each "a fair market price", considering the state of the Property when she inspected it 2013; her "review of recent sales that was undertaken at the time of marketing"; and her estimate, based on her experience in sales, that the improvements would have increased the value by $200,000–$300,000 or more. 98 She adhered to her opinions in cross-examination. 99 In re-examination Ms Selleck was asked whether she considered it likely that the Property could have sold for $1.1 million in July 2013 in what was then its present condition. She said she considered it impossible, because even in 2014 when the repairs had been undertaken and the "market had … improved by a great deal", she was "getting offers between 1.05 and 1.1", with the highest offer being the $1.2 million for which the Property was ultimately sold. 100 I have some difficulty with Mr Saeedi's evidence. 101 First, it does not explain or, at least, satisfactorily explain, how the precise figure of $905,000 came to appear on the contract. 102 Secondly, there is no evidence that Mr Saeedi ever attended the Nicholls Property for the purpose of inspecting, let alone, valuing it. It stretches credulity that a person who had attended a house as a dinner guest on three occasions would take such particular notice of the defects in the Property, including its surrounds, unless he was minded to purchase it at some stage in the future or he had some relevant expertise, such as a valuer, estate agent, architect, or designer. Mr Saeedi had no such intention at those times and professed no such expertise. 103 Thirdly, Mr Saeedi conceded in cross-examination that, contrary to the representation in his affidavit, he did not go "all around the property" so he could not say whether the render was cracking "all around the outside"; he said he was speaking of what he saw on entering the house. 104 Fourthly, his recollection of his visits to the Property was vague and unreliable. In the public examination in 2013 he could not recall "specifically" when he had attended the Property, but it "would" have been in the six months before October 2011. In his affidavit in this proceeding he deposed to having visited the Property in November 2011. It is unlikely that his recollection of such a matter would be better in 2016 than it was three years earlier. When pressed in cross-examination he was insistent that he had visited the Property in 2011 at least because his son was born in January 2011 and he recalled visiting with his son. Later, however, he frankly acknowledged that the event he had in mind had taken place in November 2012, well after the purchase of the Property. 105 Fifthly, Mr Saeedi's evidence is inconsistent with the evidence of a valuation undertaken on behalf of the CBA shortly after the email from Ms Mylecharane referred to in [40] above. 106 The valuation obtained on behalf of the CBA came from Herron Todd White. The valuer was Angus Howell. Mr Howell inspected the Nicholls Property on 17 April 2012. He described both the internal and external state of the premises as "very good" and he assessed the market value at $1.1 million. The valuation was unchanged in a later report on 30 July 2013. 107 Sixthly, while Mr Saeedi's description of the Property was more consistent with Ms Selleck's than Mr Howell's, Ms Selleck did not inspect the Property in 2011 or 2012, and, apart from Mr Saeedi's statement, no evidence was called to support a finding that the Property was in a similar state in 2013 when Ms Selleck's inspection took place. In the public examination Mr Adzic referred to some unfinished works at the time the price was agreed. But his evidence was vague. He identified an issue with "air conditioning components", which Ms Selleck did not mention. Neither he nor Ms Mylecharane referred to any of the matters raised by Ms Selleck. Nor was any expert evidence adduced to show that, if Ms Selleck's description of the Property in July 2013 was accurate, then the Property was likely to have been in the same or similar condition two years earlier. 108 Seventhly, the CBA valuation was carried out after the Trust applied for a loan of $814,000, being 90% of the contract price, on 21 May 2012. On 24 May 2012 Scott Wallace of the CBA noted in the bank's records: Application is to assist purchase an additional investment property. The PP of $905K was set in 12/2011 (apparently a distressed sale) and as such I will accept the valuation amount for our purposes due to the time span. (Emphasis added.) 109 When he was cross-examined on this note, Mr Saeedi denied using the term "distressed sale" but conceded that he would probably have said that Mr Adzic was under pressure to sell and that it was possible that he had intimated to Mr Wallace that Mr Adzic was willing to accept a lower price in order to achieve the sale. He said that he likely impressed upon him that it was a good deal for the bank. In these circumstances, it seems likely that Mr Saeedi believed that the contract price was low. 110 Having regard to all these matters, I consider that Mr Saeedi's evidence concerning the state of the Property in November 2011 and, indeed, at any time before the sale, is unreliable. It is likely to have been affected by hindsight and influenced by the evidence his firm had obtained for the purpose of the case and his stake in the proceeding. Whether the influence was conscious or unconscious I am unable to say. For these reasons I do not accept his statement that the condition of the house in 2011 was the same as it was in 2013. 111 Mr Brennan, the valuer retained for the case on behalf of Mr Lo Pilato, produced five reports. The first, dated 11 December 2014, followed an inspection of the Property on 8 December 2014. The methodology he employed was to compare the Nicholls Property with other residential properties in the area which had been sold at roughly similar times. As Mr Brennan explained: The most appropriate method of valuation for a property of this nature is direct market comparison whereby the subject property is compared with sales of comparable properties and adjustments made for points of difference. 112 The methodology appears to be orthodox. Certainly, it was never suggested that it was inappropriate. The same methodology was employed by Mr Howell. 113 The second report, dated 28 May 2015, was produced after Mr Brennan had considered a number of documents provided by Mr Lo Pilato's solicitors (approved plans, a certificate of occupancy, a survey, and a title search). In the first report, based on a comparison of the Property with other homes sold in Nicholls during 2011 and 2012, Mr Brennan expressed the opinion that the market value as at 7 December 2011 was $940,000 and that at 31 May 2012 it was $1,200,000. In the second report, the valuations were unchanged. In reaching these opinions Mr Brennan assumed that the house was "constructed in around 2012" (sic), that in December 2011 it was only 95% complete, in "average condition for generally incomplete inclusions" and without "ground improvements", but that by 31 May 2012 a certificate of occupancy had been issued. 114 In August 2015 Mr Lo Pilato's solicitors asked Mr Brennan to consider evidence filed on behalf of the Trust, including the opinions expressed by Ms Selleck, and to give his opinion about the extent, if any, of fluctuations in the market between November 2012 and 2014. 115 In his third report, dated 27 August 2015, Mr Brennan noted that he had not been asked to value the Property as at 2014 and "therefore [could not] comment on the sale price of $1,200,000". He also noted Ms Selleck's description of the Property "regarding what potentially was the condition at 2012" and observed that their "assumptions of value" were made on "two differing levels of condition". He said that he had not been instructed to value the Property in the condition Ms Selleck described. On the question of fluctuations in the market, Mr Brennan said: [T]he market we are dealing in is the upper end of the prestige market in Nicholls. There are limited sales that transact in this market so it is difficult to get a reliable trend through the years. It is believed that this market peaked in 2010. It fell over the course of 2011 and I believe plateaued from about 2012 to 2014. 116 Mr Brennan said that his views as to the market value of the Nicholls Property were unchanged. He emphasised, however, that this was based on his assumption as to the condition of the Property in December 2011 and May 2012, in contrast to the description of the Property in 2013 given by Mr Saeedi and Ms Selleck in their evidence. 117 On 4 September 2015 Mr Lo Pilato's lawyers wrote again to Mr Brennan asking for his opinions based on some new assumptions. The questions posed were: 1. Assuming that: (a) the fair market value of the Property as at 2014 was $1.2 million; and (b) the condition of the Property was not materially altered following the issue of the certificate of occupancy in May 2012 and the subsequent sale of the property in 2014, what (if any) deductions or inferences can be drawn as to the value of the Property as at December 2011 and May 2012. 2. Assuming that: (a) the condition of the Property as at November 2011 and May 2012 was such that the works referred to in paragraph 92 of Mr Saeedi's affidavit needed to be carried out; and (b) the value of those works was approximately $38,000, what is your opinion as to the market value of the Property as at December 2011 and May 2012, and if it is different to your earlier valuations of the Property as at those dates, please explain why. 3. Assuming that: (a) the fair market value of the Property as at 2014 was $1.2 million; and (b) the 'improvements' referred to in Ms Selleck's affidavit were carried out between 2013 and 2014, please provide your opinion as to whether those improvements would have "at least increased the value [of the Property] by anywhere between two and three hundred thousand dollars, perhaps even more depending on the level of interest for this style of home" (Selleck, paragraph 22(c)). 4. If you: (a) do not agree with the opinion expressed by Ms Selleck outlined at 3 above; and (b) assume that there had otherwise been no changes in the value of the Property attributable to capital growth or market movements, please provide your opinion as to how those improvements would have increased or decreased the value of the Property. 5. Please detail how (if at all): (a) maintenance, repairs and other aesthetics works that would usually be undertaken (such as staging and styling) to prepare properties for sale would as a general rule, impact the value of those properties; and (b) specifically in relation to the Property, how (if at all) your market valuations of the Property have taken into account or assumed maintenance, repairs and other aesthetics works undertaken (such as staging and styling) to prepare that Property for sale. 6. Please give your opinion, with reference to empirical evidence where and if available, as to market movements and/or changes in property values in the market for residential properties in the Australian Capital Territory generally, and the suburb of Nicholls specifically, over the periods: (a) December 2011 to May 2012; and (b) December 2011 to May 2014. 7. Please provide a statement as to whether the opinions expressed in your Report otherwise remain true and unaltered as at that date of your reply report. To the extent any corrections or alternations are required, please identify same. 118 Mr Brennan provided his answers to these questions in a further report, dated 9 September 2015: 1. As at 2011 we were advised the property was 95% complete with no Certificate of occupancy. Being incomplete and without a Certificate of Occupancy would have a detrimental effect on the marketability and therefore value of the home. Any potential owner would factor in a cost to complete with risk and hassle factor to get the home to a complete state. As of May 2012 the dwelling was complete with a certificate of occupancy issued. 2. We were advised that the dwelling was incomplete as of December 2011 so to attribute this cost of $38,000 as being all that was required to complete the dwelling would not alter our valuation. The valuation as at May 2012 would change as in my initial evaluation I assumed that the dwelling was complete to a good standard. If the costs were known at the time to repair to be $38,000 then this would be a detriment to the value of the property in the order of $50,000. This would give any potential buyer compensation for the hassle factor of having to get the work completed. This assumes that the $38,000 amount required would bring the home up to a good standard as assumed in my initial report. 3. The state of the market in 2013 I believe was only slightly weaker than that of 2014. It is noted that Maria Selleck refers to comparable sales in her affidavit however I have not seen any of this evidence around my valuation dates of December 2011 and May 2012. 4. Increased market conditions could not have driven the increases as mentioned by Maria Selleck. It is therefore the condition as stated by Maria which has led to the increases which she states. Without knowing exactly what was undertaken it is difficult to believe that: a) If it was only the $38,000 spent on the home in total then it could not have increased the value by so much b) If it was all the items mentioned by Maria in her statement that were rectified th[e]n it is still difficult to substantiate the increase as mentioned by Maria. c) With relatively new homes potential purchasers are generally aware that unless there are structural issues then the cost of refreshing a home is not overly expensive in comparison to an older dwelling. 5. Furnishing and styling homes can sometimes get a small premium in the market. This is because the home is presented in the best possible way and potential purchasers see the dwelling at near its best. It can also lead to having a home on the market for a shorter period of time. My valuation assumes that the dwelling is in a good state of repair and no styling was undertaken. 6. It is reported by reputable real estate analytical companies that there is a slight decrease in values over the whole Canberra market in 2011 of approximately 1.6%, the market then increased by 1.8% in 2012, increased by 2.2% in 2013 and increased by 1.6% in 2014. With Nicholls being an outer Canberra Suburb and the home priced at the higher end of transactions in that particular market it is anticipated that the level of growth over the period of December 2011 to May 2014 would be overall less than that above. 7. The opinions expressed in my Report remain true and unaltered as at 8th September 2015. No corrections and alterations are required. I do reiterate that the condition that is described by Maria Selleck and Kamyar Saeedi differ from the condition assumed in my Valuation report. 119 Then, on 21 March 2016, Mr Lo Pilato's lawyers sent another letter to Mr Brennan. This time they said that they realised he had been briefed with an incomplete copy of the contract for sale and they supplied him with a complete copy. They drew his attention in particular to cl 13, which required the seller to give the buyer a compliance certificate at completion. They asked him to assume that none of the three conditions which would exempt the seller from that obligation applied. Finally, they posed for his consideration the following two questions (as written): 1. Does this contractual obligation on the seller affect your stated opinion as to the market value of the Property as at 7 December 2011? Can you please set out your reasons for why this does, or does not, affect your opinion. 2. If it does change your opinion of the market value at 7 December 2011, please identify what that different market value is and your reasoning in coming to that opinion. 120 Mr Brennan replied on 30 March 2016. On this occasion, he elected to produce a fresh report which was presumably designed to replace all those that preceded it. This time he arrived at a new valuation of $1.2 million as at 7 December 2011 (an increase of $260,000 on the previous valuation of $940,000). Some of the sales evidence referred to in the first report was discussed in this last report, but not all of it, and additional properties were considered. 121 In answer to the lawyers' questions he stated (without alteration): 1. The contractual obligation does affect my value of the property as at 7 December 2011. This is due to the fact that the property is not understood to be 95% complete however is assumed complete. The market value would therefore change substantially as a potential buyer would know that upon settlement they would be purchasing a complete dwelling as opposed to an incomplete dwelling. 2. If a buyer was purchasing the home assuming the improvements were complete to a tradesman like manner and with a certificate of occupancy at settlement the property would have a market value of $1,200,000 (one million two hundred thousand dollars). This is based on evidence of comparable sales around the date of exchange (please refer to this valuation report as supporting evidence of value). … Certain sales have not been included in this report that was relied upon in the past report. This is due to the fact of them not being comparable evidence in this report considering the assumed completed nature of the subject dwelling. There are sufficient sales within Nicholls in a comparable range for the valuer to be confident around the ascribed evaluation amount. There are 8 comparable sales in the report ranging in value from one million and $1,015,000 to $1,300,000 with two in a similar bracket around $1,200,000. The sales are compared based on location within the suburb, age, condition, quality, size, ancillary improvements etc. … 122 Mr Brennan, perhaps misled by the letter from the lawyers, conflated "a certificate of occupancy" with "a compliance certificate". According to the Registrar-General's requisition of the attempted transfer from Mr Adzic to Ms Mylecharane, it was the certificate of compliance that was missing. 123 Mr Brennan's evidence unravelled fairly quickly in cross-examination. 124 First, Mr Brennan laboured throughout under a false assumption that in December 2011 the Property was still under construction and that construction was completed by May 2012 so that his opinion as to its market value at the relevant times was based on the premise that it was "brand new" or "almost brand new". He did not ever value the Property on the basis that it was constructed in around 1998 or 1999, although at least the majority of the building work had been carried out at that time. 125 Secondly, when he was asked to assume that the Property was built in 1998, he clung tenaciously to his earlier opinion. The respondents justifiably described him as a defensive witness. 126 Thirdly, his evidence was at times confusing. 127 Fourthly, he conducted his valuation of the house on the basis that it had five bedrooms. Yet according to Mr Howell's report, based on his inspection on 17 April 2012, the Property had four bedrooms. The discrepancy was explained by the uncontradicted evidence of Mr Saeedi that it was he who added the fifth bedroom after purchasing the house from Mr Adzic. 128 Fifthly, Mr Brennan's original instructions annexed the statement of claim, mentioned the contract price of $905,000 and informed him that Mr Lo Pilato's "position" was that the Property was sold for less than market value. Mr Lo Pilato's "position" was irrelevant, however, to the issue upon which Mr Brennan's opinion was sought and informing Mr Brennan of it was not well calculated to produce an independent valuation. It is difficult to resist the conclusion that Mr Brennan was influenced by this, at least subconsciously. 129 As I have already observed, when Mr Howell inspected the Nicholls Property on 17 April 2012, he assessed the market value at $1,100,000. On 19 April 2012 the CBA wrote to Ms Mylecharane, copying Mr Saeedi, to advise her that it had received the valuation and of the amount. I interpolate that the document came into Mr Lo Pilato's possession after it was discovered in this proceeding, as did his second report. This evidence supports Mr Brennan's evidence-in-chief but in light of the fact that it is ultimately at odds with the evidence elicited in cross-examination of Mr Brennan and there was no opportunity for cross-examination of Mr Howell I give it little weight. 130 When asked to consider the Property on the true basis that it had four bedrooms and was constructed in 1998, Mr Brennan conceded that a house at 27 Sutcliffe Street, which was sold for $910,000, was "approximately comparable". The contract of sale for this property was dated 17 November 2011 and the "transfer date" was 22 February 2012. 131 In the result, and notwithstanding the problems I have with Mr Saeedi's evidence, I am not persuaded that the contract price of $905,000 was less than the market value of the Property. But what about the actual consideration given by the Trust of $805,000? 132 Three of the properties Mr Brennan considered were sold in 2011 for less than $900,000: one for $875,000, one for $858,000, and another for $805,000. 133 The property that sold for $858,000 was located at 81 Sue Geh Circuit. Mr Brennan described this property in his first report as "overall inferior" to the Nicholls Property, with a smaller block. Although it did not back onto the golf course, Mr Brennan considered its location was superior. The land size was smaller at 803 square metres compared to 922 for the Nicholls Property, and the house itself was also smaller at 400 square metres compared to 479 for the Nicholls Property. He described the Property in this way: Conventional designed single storey fully detached dwelling on 803sqm. 4 bedrooms plus a study and 2 bathrooms. Built about 2001. Property presents in well maintained condition. In-slab heating, ducted evaporative cooling, gas hot water system, security system, air conditioning system. Significant ancillary improvements include: large brick double garage, porch, covered pergola over stamped and patterned concrete base, stamped and patterned concrete driveway/paths, stone retaining walls, timber fencing, landscaped grounds in good condition. 134 Contrary to what Mr Brennan had assumed, the house at 81 Sue Geh Circuit was built some three or four years after the Nicholls Property. In cross-examination, however, Mr Brennan claimed that the Nicholls Property was "the best quality and the best architecturally designed property" of all those he considered. Photographs of seven of the properties were tendered together with photographs of the Nicholls Property at the time the Trust offered it for sale. Those photographs tend to bear out Mr Brennan's claim, although the photographs in evidence do not include the house at 81 Sue Geh Circuit and Mr Brennan confessed to having no recollection of it at the time of the hearing. 135 The property that sold for $805,000 was at 22 Ebeling Court, just around the corner from the Nicholls Property. No photographs of this house were in evidence either. Mr Brennan described its features in his 11 December 2014 report in the following way: Conventional designed two storey fully detached dwelling on 933sqm. 4 bedrooms and 2 bathrooms. Built about 1999. Ducted gas heating, split system air conditioning unit, ducted vacuum, intercom system, security system, gas hot water system. Significant ancillary improvements include: brick double garage, timber single carport, porch, balcony, open timber deck, exposed aggregate concrete driveway/paths, timber & brick pier fencing, landscaped grounds in good condition. 136 His comparison with the Nicholls Property reads: 2011 'As Is' basis. Smaller completed residence, similar block. Overall inferior. 137 For these reasons I also accept that the 22 Ebeling property was not comparable to the Nicholls Property. 138 The "conventional design" was obviously a discriminating feature for Mr Brennan, but it might well have had its own appeal. While the house on the Nicholls Property was substantially larger (479 square metres as opposed to 242 square metres), in contrast to the Ebeling Court house, it had little garden. In cross-examination Mr Brennan vigorously denied that on balance the sale price for the Ebeling Court house was "a fair indicator" of the value of the Nicholls Property in 2011 but he did not explain why. He did not put a value on the different internal areas or the differences in landscaping. In re-examination, however, he said that living area was a major contributor to home purchasing decisions and that "the size of a home has a huge impact on the value of a property". He also drew attention to the quality fixtures and fittings and design features of the Nicholls Property. On the other hand, Mr Brennan acknowledged that the Nicholls Property would be unattractive to a keen gardener. Nevertheless, in the absence of expert evidence to the contrary I accept Mr Brennan's evidence as to the impact of the size of a house on home purchasing decisions, and that the quality of the fixtures and fittings and the design features added to the value of the Nicholls Property. 139 On balance, having regard to all the evidence, I consider that it is more likely than not that the market value of the Nicholls Property in December 2011 (and throughout 2012) was greater than $805,000, but how much greater I am unable to say. Was the transfer made with the intention of defeating creditors? 140 It will be recalled that a transfer of property by a person who later becomes bankrupt is void against the trustee in bankruptcy if the property would probably have become part of the transferor's estate or would probably have been available to creditors if the property had not been transferred and the transferor's main purpose in making the transfer was to prevent the property from becoming divisible among the transferor's creditors or to hinder or delay the process of making property available for division amongst his or her creditors (s 121(1)) (the statutory purpose). 141 The Trust submitted that the evidence did not establish that this was Mr Adzic's main purpose in transferring the Nicholls Property to the Trust. To the contrary, it argued that the evidence showed that his sole purpose was to raise money to pay his creditors. 142 In his written submissions Mr Lo Pilato relied on the following circumstances: (1) the Bankwest facility had expired, was incurring default interest at a rate of more than $118,000 per month, and remained on foot only by reason of the injunction; (2) the Bulum debt was the subject of a pending application for summary judgment; (3) the McMillan debt proceeding was being prosecuted against both Mr Adzic and Space, and the Firm had initially acted for Mr Adzic in that proceeding; (4) a debt to Townsend and Associates Architects of $300,000 had been outstanding since 2008, there is no evidence that any steps had been taken to pay it, and Mr Adzic admitted in his public examination that he had forgotten about it and had not included it in his Statement of Affairs to the Trustee; (5) Mr Adzic was insolvent at the date of entry into each of the Costs Agreements, and this was not challenged in cross-examination; (6) a report by CBRE, relied upon by the Trust to show that the Macquarie land was worth in excess of $15 million, was based on a number of incorrect assumptions; and (7) on 26 October 2011 Mr Adzic attempted, unsuccessfully, to transfer the Nicholls Property to himself and Ms Mylecharane as joint tenants and the transfer was requisitioned on 5 December 2011, only two days before contracts were exchanged with the Trust. 143 Yet Mr Lo Pilato did not explain how many of these factors (or the combination of them) supported his contention that the main purpose of the transfer of the Nicholls Property was the statutory purpose. 144 Points (1)–(4) suggest that Mr Adzic was in serious financial difficulty. He might well have been concerned that he was insolvent or about to become insolvent. Item (7) might indicate that Mr Adzic, concerned about his solvency, was seeking in 2011 to do something to put the Nicholls Property, or at least a share of it, beyond the reach of his creditors. It might well suggest that when the requisition came through from the Land Titles Office, he decided instead to transfer the whole of the Property to the Trust. Of course, if the main purpose of the attempted transfer to Ms Mylecharane was to put the Property beyond the reach of Mr Adzic's creditors, it was a remarkably unsophisticated attempt. The consideration noted on the transfer was love and affection, which would have no value as consideration for the purposes of ss 120 and 121 of the Bankruptcy Act (see ss 120(5) and 121(6)), although Mr Adzic might not have appreciated that. Furthermore, if that were his main purpose, why would he not have sought to transfer his entire share in the Property to Ms Mylecharane? 145 In oral argument, Mr Blank of counsel, who appeared for Mr Lo Pilato, referred to three further matters. 146 First, he referred to the long period between the exchange of contracts for sale of the Nicholls Property and settlement and the fact that neither party appeared in any hurry to settle. He said that the long settlement "suggests that a reason for that transfer ... — it can be reasonably inferred — was to delay other creditors ..." But he did not say why this was so. Nor did he describe any logical connection between the long settlement and the purpose of hindering, defeating or delaying Mr Adzic's creditors. Indeed, the delay in settlement rather points in the opposite direction. 147 Secondly, Mr Blank referred to the fact that Mr Adzic and Ms Mylecharane stayed in the Property for six months before settlement and for some 12 months after settlement, yet paid no rent to the Trust in spite of an agreement to do so. This circumstance is undoubtedly suspicious. 148 Thirdly, Mr Blank referred to evidence as to Mr Adzic's belief about the market value of the Property. His evidence at the public examination, reflecting what he had stated in his asset and liability statement, was that: he genuinely believed as at July 2008 that the Nicholls Property was worth in the vicinity of $1 million, possibly $1.1 million; and by August 2011 he believed that the value of the Property had not decreased and had "potentially" increased. 149 This might indicate that Mr Adzic believed himself to be selling the Property for significantly less than its market value, from which it might be inferred that he had an improper motive in making the transfer. Mr Adzic admitted that in October 2011 he knew that if he transferred the house into someone else's name it was harder for his creditors to acquire the equity in it. 150 Mr Katekar for the Trust painted a different picture. His argument was as follows. Mr Adzic's commercial interests were bound up in Redevelopments, of which he was "the principal" beneficial owner. Mr Adzic was chasing a profit through the successful completion of Redevelopments' project. The evidence was that in October 2011 Mr Adzic urgently needed more money to put into Redevelopments, and Mr Saeedi offered to lend him the money, on condition that if Mr Adzic were unable to repay it, the loan would be treated as a deposit on the purchase of the Nicholls Property. In this way the loan would be "secured" by the Trust's ability to complete the transaction and purchase the Property. Thus, Mr Adzic's main purpose in entering into the contract for sale of the Nicholls Property was to obtain urgently needed funds for Redevelopments, in order to prevent its (and his) insolvency. It was because he never wanted to part with the house that there was a delayed settlement. But when he was unable to repay the loan and needed yet more money, he completed the contract and transferred the Property to the Trust. 151 A virtue of this theory is that it draws together the known events into a reasonably coherent narrative. It explains the purpose of the transaction, why the $100,000 was treated as a deposit on the sale of the Property, and the delay between contract and settlement. It also explains why Mr Adzic might have settled for a purchase price of less than what he believed to be the full market value of the Property. The theory is also supported by the evidence of Mr Adzic, Ms Mylecharane, and Mr Saeedi. 152 Of course, the theory is not without its flaws. It does not explain the attempt to transfer the Property into joint ownership with Ms Mylecharane for no valuable consideration or the curious timing whereby the contract of sale to the Trust was signed only two days after the transfer to Ms Mylecharane was requisitioned. Nor does it explain the inconsistencies in Mr Saeedi's account. In his affidavit Mr Saeedi said that in October 2011 he wished the $100,000 only to be a loan, that he hoped not to have to complete the purchase, and that it was not until November or December 2011 that he resolved to do so. On the other hand, earlier, in his public examination, Mr Saeedi had testified that in October 2011 he had already made up his mind to purchase the Property. Moreover, if the transaction was planned as security for the $100,000 loan, there is no good explanation why the money was advanced without security more than a month before contracts were exchanged. 153 Yet the trustee's theory leaves even greater questions unanswered. In particular, it fails to explain why Mr Adzic would want to transfer his interest in the Nicholls Property to Mr Saeedi in order to defeat his creditors. What did he stand to gain from such a transaction? If he sold the house to Mr Saeedi for a sum that he believed to be less than the market value, he might have been hoping to put the difference between the market value of the house and the purchase price beyond the reach of his creditors. But it was never explained how Mr Adzic would benefit from this. It was never put to Mr Saeedi, for example, that the arrangement was designed to "warehouse" the Property until such a time as it could be retransferred to Mr Adzic after the discharge of any bankruptcy. Nor was such a thesis explored with Mr Adzic in the public examination. While Mr Adzic did have the benefit of living in the Property rent-free for some 12 months after the title was transferred to the Trust, it is inherently unlikely that Mr Saeedi would have tolerated the situation indefinitely. After all, the Trust had paid Mr Adzic a substantial sum for the Property. 154 It is also difficult to place any reliance on Mr Adzic's evidence about his belief as to the value of the Property. That evidence was given in the context of an examination about two asset and liability statements bearing his signature. It is at least as likely as not that the value of the Property was inflated for the purposes of his asset and liability statements. They were prepared on Mr Adzic's behalf by his finance brokers, in order to be provided to prospective sources of credit. Moreover, at the time Mr Adzic signed the statements there is no evidence to indicate that he had taken any steps to value the Property, either formally or informally. 155 In order for Mr Lo Pilato to make good the proposition that the transfer was made with the intention of defeating creditors, he must show that "the circumstances appearing in the evidence [give] rise to a reasonable and definite inference, not merely to conflicting inferences of equal degree of probability" that, in transferring the Property to the Trust, his main purpose was the statutory purpose: The Trustees of the Property of Cummins v Cummins (2006) 227 CLR 278 at 292. In deciding whether the inference should be drawn from the primary facts, it is necessary to take into account the seriousness of the allegation and the gravity of the consequences, even though Mr Adzic is not a party to the proceeding: Cummins at 292; Evidence Act 1995 (Cth), s 140. Here the allegation is tantamount to one of fraud, where "clear or cogent or strict proof" is necessary: Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd [1992] HCA 66; 110 ALR 449 at 450. In such a case the reasonable satisfaction of the Court is not to be reached by "inexact proofs, indefinite testimony, or indirect inferences": Briginshaw v Briginshaw (1938) 60 CLR 336 at 362. 156 Ultimately, while the circumstances surrounding the transfer are highly suspicious and while Mr Adzic might well have been actuated by a desire to prevent, hinder or delay the process of making the Property available for division amongst his creditors, I am not satisfied that this was Mr Adzic's main purpose. This aspect of Mr Lo Pilato's case is based on indirect inferences and innuendo. He has not discharged his onus of proof. 157 That is not the end of the matter, however. If it can reasonably be inferred from all the circumstances that the transferor was insolvent or about to become insolvent at the time of transfer then the transferor's actual purpose is immaterial. The effect of s 121(2) of the Bankruptcy Act is that his main purpose is deemed to be the purpose referred to in s 121(1)(b), as Jessup J observed in Marchesi v Apostolou [2007] FCA 986; 5 ABC(NS) 131. 158 Yet the Trust submitted that s 121(2) is not a deeming provision but a presumption, which may be displaced by evidence. It is convenient to deal with this submission immediately. It must be rejected. It appears to have been based on a misreading of some remarks of Sackville J in Prentice v Cummins (No 5) (2002) 124 FCR 67 at [95]. There, his Honour observed that s 121(3) provides that s 121(2) does not limit the ways of establishing the transferor's main purpose and referred to what was said in Re Jury; Ashton v Prentice (1999) 92 FCR 68 at 82 [58]. 159 In Re Jury at 82 the Full Court rejected a submission to similar effect. In Prentice only part of the relevant reasons in Re Jury was reproduced, perhaps contributing to the Trust's misconception. The first sentence of [58] was omitted and the paragraphs before and after were not included. In Re Jury at [57]–[59] the Full Court said this: 57 Counsel for Mr Ashton did not attack his Honour's finding that it could reasonably be inferred from all the circumstances that in August 1995 the bankrupt was insolvent. Rather, he argued that the presumption created by s 121(2) of the Act could be rebutted by direct proof that the transferor's main purpose was other than that described in s 121(1)(b). It was sought to derive support for that interpretation from the language of s 121(3). 58 However, s 121(3) does not weaken or make rebuttable the presumption created by s 121(2). What s 121(3) does is acknowledge that the trustee may resort to modes of proving the transferor's main purpose which are alternative to the presumption afforded by s 121(2). For example, the trustee may prove an admission by the transferee that the main purpose of the transfer was to prevent the property becoming divisible among the transferor's creditors, even though all of the circumstances at the time of the transfer did not permit, or positively contradicted, the inference that the transferor was, or was about to become, insolvent. 59 We are supported in this conclusion that s 121(2) and (3) have independent spheres of operation by the reflection that the transferor's evidence of his or her own subjective intention in making the transfer cannot usually affect the existence of circumstances giving rise to a reasonable inference of insolvency. In other words, even if the Court were to accept that the sole purpose of the transfer had been to effectuate a longstanding charitable or benevolent intention evidenced by a history of similar benefactions, that would not render unavailable the reasonable inference of insolvency required to support the conclusive presumption created by s 121(2). (Emphasis added.) 160 The point the Full Court was making was that s 121(2) created an irrebuttable or conclusive presumption if, in the circumstances, it was reasonable to draw the relevant inference. An irrebuttable or conclusive presumption is the same, or has the same effect, as a deeming provision. Sackville J was under no misapprehension about this. Citing Re Jury, his Honour said at [95] that "if it can be reasonably inferred that the transferor was insolvent at the time of transfer, it will not matter if his or her subjective intention was not to prevent, hinder or delay the process of making property available for division among creditors". "On the other hand", his Honour continued, "if the trustee … does not rely on s 121(2), the trustee will need to prove that the transferor's subjective purpose was that described in s 121(1)(b)". 161 In Sheahan (Trustee) in the matter of Frost (Bankrupt) v Frost [2011] FCA 356 Mansfield J accepted that s 121(2) was a deeming provision and, having found that it was reasonable to draw the inference that the transferor was, or was about to become, insolvent, made a finding (at [127]) that the transferor's main purpose was the purpose described in s 121(1)(b). 162 The question, then, is whether, in the circumstances, it is reasonable to infer that at the time of transfer Mr Adzic was, or was about to become, insolvent. Self-evidently, that does not mean that the trustee must prove that the bankrupt was in fact insolvent or about to become insolvent: Permfox Pty Ltd, in the Matter of Chase v Official Receiver for the Bankruptcy District of New South Wales [2002] FCA 1564 at [94] (Allsop J). As the Full Court explained in Re Jury at [55]: The statutory provision, as a matter of ordinary language, leaves open the possibility that it may also reasonably be inferred that the transferor was solvent. In other words, it is sufficient if the inference of insolvency is reasonably open. An analogy is the leaving of a case to a civil jury. If it can reasonably be inferred from all the circumstances that the defendant was negligent, or that the publication complained of was defamatory of the plaintiff, then the matter must go to a jury. Nevertheless the jury is not required to draw the relevant inference, and may not do so. 163 A person is solvent only if the person is able to pay all his or her debts when they become due and payable; if not, the person is insolvent: Bankruptcy Act, s 5(2) and (3). A person is not insolvent, however, merely for want of immediate access to cash to pay off the debts. Speaking of the position under the Bankruptcy Act 1924–1950 (Cth) (the predecessor of s 120 of the current Act) (the 1924 Act), Barwick CJ explained in Sandell v Porter (1966) 115 CLR 666 at 670: Insolvency is expressed in s. 95 as an inability to pay debts as they fall due out of the debtor's own money. But the debtor's own moneys are not limited to his cash resources immediately available. They extend to moneys which he can procure by realization by sale or by mortgage or pledge of his assets within a relatively short time—relative to the nature and amount of the debts and to the circumstances, including the nature of the business, of the debtor. The conclusion of insolvency ought to be clear from a consideration of the debtor's financial position in its entirety and generally speaking ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability, utilizing such cash resources as he has or can command through the use of his assets, to meet his debts as they fall due which indicates insolvency. 164 If anything, the omission of the words "from his own money" from the definition of solvency in the current Act reinforces this position. It is also consistent with the position under the Corporations Act 2001 (Cth) where the definitions of solvency and insolvency are the same and underwent the same amendment (see s 95A). In Lewis v Doran [2004] NSWSC 608; 208 ALR 305 at [116], which was approved on appeal, Palmer J held that: [Section] 95A requires the court to decide whether the company is able, as at the alleged date of insolvency, to pay all its debts as they become payable by reference to the commercial realities. If the court is satisfied that as a matter of commercial reality the company has a resource available to pay all its debts as they become payable then it will not matter that the resource is an unsecured borrowing or a voluntary extension of credit by another party. 165 On appeal (Lewis v Doran [2005] NSWCA 243; 219 ALR 555), Giles JA (with whom Hodgson and McColl JJA agreed) said at [109]: Particularly when the limiting words are no longer part of the test, there is no compelling reason to exclude from consideration funds which can be gained from borrowings secured on assets of third parties, or even unsecured borrowings. If the company can borrow without security, it will have funds to pay its debts as they fall due and will be solvent, provided of course that the borrowing is on deferred payment terms or otherwise such that the lender itself is not a creditor whose debt cannot be repaid as and when it becomes due and payable. It comes down to a question of fact, in which the key concept is ability to pay the company's debts as and when they become due and payable. (Original emphasis.) 166 This approach has been applied to the assessment of solvency and insolvency under the Bankruptcy Act (Whitton as Trustee of the Estate of Rose v Regis Towers Real Estate Pty Ltd (in administration) (2007) 161 FCR 20 at [35]–[38] per Buchanan J; Marshall and Tracey JJ agreeing at [1]). As the statutory definition in the Corporations Act is the same, there is no reason in principle why the approach should be any different. 167 It is an agreed fact that Mr Adzic was insolvent as at 31 May 2012 but there is no agreement as to the position on 7 December 2011, when contracts were exchanged. 168 But is the relevant time the time of exchange? What is meant by "the time of the transfer"? 169 Surprisingly, there is little authority directly on point. 170 As I have said, Mr Lo Pilato's position on this question is difficult to pin down. In his amended outline of opening submissions, he said: 56 A transfer includes a payment of money. Section 120(7)(b) of the Act refers to a person doing something that results 'in another person becoming the owner'. It is submitted that ownership does not transfer in property until settlement. The exchange of contracts only creates equitable rights for the prospective purchaser. Were the transaction not to complete, there would be nothing for the Applicant to avoid. 171 That rather suggests that his case is that the relevant date is the time of settlement. 172 On the other hand, in his outline of closing submissions, he said: 121 It is submitted the date of 7 December 2011 is the date the beneficial interest passed. Mansfield J, without consideration of principle, accepted this as the correct date in Poumako. 122 Where a new interest is created, the relevant date is the registration of the transfer. 173 It is unclear whether this represents a change of position, although the Trust seemed to think so, arguing in its closing written submissions that the relevant date is the date contracts were exchanged and claiming that: [Mr Lo Pilato], it appears, no longer suggests otherwise: paragraph 121 of his closing submissions. 174 The issue was not addressed at all in oral argument. 175 In the case to which Mr Lo Pilato referred in his closing outline at [121] — Ambrose (Trustee) in the matter of Poumako (Bankrupt) v Poumako [2012] FCA 889 — Mansfield J, without adverting to the issue in the present case and without discussion of principle, treated the date of settlement as the relevant date. 176 The Trust relied only on a passage in the judgment of Lindgren J in Anscor at [34] where his Honour said: [S]ince s 120(1) is triggered by a transfer for less than full consideration, if the transferor (later the bankrupt) sells land having a market value of $1 million for $950,000 at any time in the period beginning five years before the commencement of the transferor's bankruptcy and ending on the date of the bankruptcy, the provision is activated. It matters not that the transferee was a purchaser in good faith and for valuable consideration. 177 The Trust's submissions were apparently based on an assumption that "sells" means exchanges contracts. While this might well have been a reference to the sale price, there is nothing in the reasons to indicate that his Honour had in mind the distinction between exchange and settlement. A sale of real property is not completed until legal title passes and that only happens after settlement. "Sells" is as ambiguous in the present context as "transfers". 178 In Tyler v Thomas, where the contract of sale was dated 10 November 2000 and the sale was not completed until 22 November 2000, Graham J held that, since the beneficial interest in the property passed on the earlier date, the question of whether the consideration given by the bankrupt for the transfer of the subject property was less than its market value was to be determined as at the earlier date. Neither of the other two members of the Court (Branson J and Bennett J) appears to have considered the question, however, and it does not appear to have been an issue in the case. 179 On the other hand, in Camm v Linke Nominees Pty Ltd (2010) 190 FCR 193 (Camm), to which neither party referred, Tracey J reached a different conclusion on the question and his conclusion was not obiter. 180 Camm arose from an attempt by the trustees of the bankrupt estate of Mr Camm to have a transfer of a property to Linke Nominees declared void pursuant to s 121(1) of the Bankruptcy Act. The property was described in a statement of agreed facts as "an estate in fee simple more particularly described as Lot 4, Registered Plan 36729, County of March, Parish of Weyba, Local Government: Sunshine Coast, being Title Reference 12489178". A contract for the sale of the property by Mr Camm to Linke Nominees was executed on 26 October 1995 but settlement did not take place until the end of the following month by which time Mr Camm was bankrupt upon the making of a sequestration order. Mr Camm was discharged from the bankruptcy in 1999, but was made bankrupt again in 2003. It was the trustees of that second bankrupt estate who were seeking to have the transfer of the property set aside. 181 The principal issue was whether the trustees were entitled to apply for orders under s 121(1). The answer turned on whether the transfer of the property occurred before or after the 1995 sequestration order because s 121 operates on a "transfer of property by a person who later becomes a bankrupt". Mr Camm was a person who later became a bankrupt, but if the transfer of property occurred after the making of the sequestration order in the first bankruptcy, he could not have been the person who made the transfer. Upon the making of the sequestration order, any interest Mr Camm held in the land in question was vested in his trustee in bankruptcy by the operation of s 58(1). 182 Tracey J turned first to the High Court's decision in Peldan v Anderson (2006) 227 CLR 471. Although his Honour noted that the issue in that case was not of direct relevance to the case before him, he noted that the plurality held (at 481) that the expression "transfer of property" in the Act takes its ordinary meaning, and that s 121(1)(a) directs attention to "the act taken to be the transfer" and requires the identification of the property which had been in the hands of the transferor prior to that act being taken. While Tracey J acknowledged (at [41]) that an equitable interest in the land passed with the exchange of contracts (Tanwar Enterprises Pty Ltd v Cauchi (2003) 217 CLR 315 at 333), his Honour considered that the property in question (which was — as here — the legal estate) passed only in February 2006, when the instrument of transfer was lodged and registered. That was so because under the Land Titles Act 1994 (Qld) "[t]he title of the registered proprietor comes from the fact of registration, and it is this which is the source of the title" (Peldan v Anderson at 480). 183 The position under the ACT legislation is no different. Section 73 of the Land Titles Act 1925 (ACT) provides for the transfer of an interest in land "by registration of a memorandum of transfer". Section 77 states that the interest in land described in the transfer passes on registration. The memorandum of transfer of the Nicholls Property was not registered until 7 June 2012, one week after settlement. 184 Based on the basis of the reasoning in Camm, then, the time of transfer in the present case was 7 June 2012. 185 For reasons of comity I should follow Camm. While the question is not free from doubt, I am not satisfied that Tracey J was wrong. Although the definition of "property" in the Act includes an equitable interest and, on exchange of contracts, an equitable interest was created, the transfer of property which Mr Lo Pilato seeks to have set aside is the transfer of the legal title. That did not take place until 7 June 2012. I therefore find that the time of transfer was 7 June 2012. 186 Given the agreement that Mr Adzic was insolvent as at 31 May 2012, and the absence of any evidence to suggest that his finances improved after that time, I find that Mr Adzic was insolvent at the time of transfer and so his main purpose is taken to be that referred to in s 121(1)(b). 187 Lest I be wrong, however, I should consider the position as at 7 December 2011, when contracts were exchanged. Can it be reasonably inferred from all the circumstances that, at that time, Mr Adzic was either insolvent or about to become insolvent? 188 The trustee asserted that there were a number of debts due and payable as at 7 December 2011, including those owed to Mr Bulum and Mr McMillan. According to Mr Lo Pilato's affidavit of 12 June 2015, the value of the debt due to Mr McMillan alone was at least $2,011,920. 189 The effect of Mr Lo Pilato's evidence is that Mr Adzic's resources were nowhere near enough to meet these debts. As the Law Firm conceded, Mr Adzic "had virtually no income and virtually no assets". His assets consisted of the Nicholls Property, about $10,000 in shares, and a truck. According to Mr Lo Pilato's analysis (which was not challenged in this respect) and on the assumption that the Nicholls Property was worth $905,000, the value of all Mr Adzic's assets as at 7 December 2011 was just shy of $950,000. Even assuming that the Property and shares could be sold rapidly, Mr Adzic would still have been well short of the necessary funds to repay his debts as and when they fell due. The evidence indicates that he did not file an income tax return for the financial year to June 2012. In his statement of affairs dated October 2012, he said he had earned only $750 in income in the previous 12 months and had received only "irregular" payments from the Adzic Family Trust, the last of which Mr Lo Pilato said was $5,000 in November 2011. The figure appears in handwriting in a document annexed to Mr Lo Pilato's affidavit of 12 June 2015. It looks to me like $15,000, but nothing turns on the difference. 190 Despite this, the Trust did not concede that it could reasonably be inferred that Mr Adzic was, or was about to become, insolvent at 7 December 2011. What is more, it argued that Mr Lo Pilato had not discharged his onus of proof. There were two prongs to its argument. 191 First, the Trust launched a half-hearted attack on the existence of the debts. 192 It submitted that there was no evidence that the McMillan debt was due and payable and that, in fact, there was only evidence of "an alleged debt". That submission must be rejected. An affidavit was sworn in these proceedings by Mr McMillan, himself, in which he deposed to the making of the Share Sale Agreement and the creation of the debt, the last demand for payment of which he made in May 2011. Mr McMillan's affidavit does not state how much was due and payable in December 2011, nor does he mention the size of the debt at the time the May 2011 demand was sent. Presumably the relevant figure could be found in the letter of demand itself, which is said to appear in an exhibit to Mr McMillan's affidavit. But the exhibit was not tendered. Mr Lo Pilato's evidence, however, puts the McMillan debt as at least $2,011,920 as at 7 December 2011 (on the basis that this was the figure in August 2011) and this evidence was not objected to or challenged in cross-examination. Further, in his public examination Mr Adzic accepted he was indebted to Mr McMillan, conceding that as at December 2011, apart from the first instalment, he had not paid any of the amount owing under the Share Sale Agreement. 193 In cross-examination, Mr Lo Pilato was taken to an email from Mr McMillan to Mr Adzic of 25 August 2010, which shows that the two were in negotiations for an extension of time in which to pay the debt. Yet there was no evidence of a concluded bargain. Moreover, if it was the Law Firm's case that Mr Adzic was successful in negotiating an extension and, that as a result, the McMillan debt was not actually due and payable at 7 December 2011, it was at least incumbent on the Firm to put that to Mr Lo Pilato. But it did not do so. All that was put to Mr Lo Pilato about the email was the suggestion that Mr Adzic was "seeking at least to reach some kind of resolution with [Mr McMillan] as far as his debt is concerned". Mr Lo Pilato agreed. 194 In these circumstances, I am satisfied that a debt of at least $2,011,920 was due and payable to Mr McMillan as at 7 December 2011 and that Mr Adzic did not have anywhere near the personal resources required to pay it. 195 The second prong to the Trust's argument was that the Court must look at Mr Adzic's affairs with an eye for the "commercial realities" (Lewis v Doran [2005] NSWCA 243; 219 ALR 555 at [109]). Mr Katekar submitted that, in a practical sense, Mr Adzic's "financial world" was locked up in Redevelopments, that Mr Lo Pilato had failed to take into account Redevelopments' financial circumstances in forming his opinion on Mr Adzic's insolvency, and that there was therefore a "lacuna" in the evidence such that it could not reasonably be inferred that as at 7 December 2011 Mr Adzic was insolvent or about to become so. 196 The trouble with this submission is that the evidence does not suggest that in December 2011 Redevelopments either would or could assist Mr Adzic. In fact, it points in the opposite direction. 197 According to a report to creditors prepared by Redevelopments' administrators in December 2012, the company was in a state of "technical balance sheet insolvency" from at least 30 June 2009 onwards, and was able to continue trading only due to funding from its joint venture partner, Radical. The administrators note that the joint venture with Radical was terminated by Redevelopments in November 2011 after Redevelopments "began to experience cash flow difficulties" because funding promised by Radical was not forthcoming. After the joint venture with Radical fell through, Redevelopments entered into binding heads of agreement with Fulton Transport Pty Ltd, under which Fulton was to provide $12 million to Redevelopments in two instalments, the purpose of which, according to Mr Adzic, was to pay off Bankwest and Mr McMillan. This agreement was made on 1 December 2011 and did indeed, at that stage, hold the promise of putting the company back in funds. But Fulton was not required to make the first instalment under the heads of agreement until six weeks later — on 12 January 2012. In the event, Fulton did not fulfil its obligations and the deal fell through. 198 In these circumstances, it is impossible to see how, on 7 December 2011, Redevelopments could have found more than $2 million to provide to its director to meet his personal debts. There was no evidence to suggest that any further credit would be extended. 199 Moreover, even if the money were available, the Trust did not explain on what lawful basis Redevelopments could have advanced the necessary sum to its director for his personal use, particularly at a time when it was scrambling for funds to avoid its own insolvency. 200 In the result, I am satisfied that it can reasonably be inferred from all the circumstances that, at 7 December 2011, Mr Adzic was, if not insolvent, at least about to become insolvent. 201 It follows then that, regardless of whether the time of transfer was the time of exchange of contracts on the sale or the time the transfer was registered, Mr Adzic's main purpose in transferring the Property to the Trust is taken to be the purpose described in s 121(1)(b). Consequently, the transfer is void against the trustee in Mr Adzic's bankruptcy, unless the exception in s 121(4) applies, that is to say that: (1) the Trust paid at least the market value of the Property; (2) the Trust did not know, and could not reasonably have inferred, that Mr Adzic's main purpose in making the transfer was to prevent the Property from becoming divisible among his creditors, or to hinder or delay the process of making the Property available for division among them; and (3) the Trust could not reasonably have inferred that, at the time of the transfer, Mr Adzic was, or was about to become, insolvent. 202 Each of these matters was pleaded in the defence. 203 For these purposes it is the position of Mr Saeedi, as the controlling mind and will of the Trust, which is relevant. 204 Contrary to the submission made on Mr Lo Pilato's behalf, the onus of establishing all of these matters rests with the Trust: Re Jury at [67]. No submissions were directed to the questions raised by s 121(4), either orally and in writing, and they do not appear in the agreed statement of issues. For this reason, I assume that the defence was abandoned. In any case, in my opinion, the onus has not been discharged, because I am not satisfied that the Trust paid at least the market value of the Property. To what relief is Mr Lo Pilato entitled? 205 Mr Lo Pilato seeks the following relief: (1) a declaration that the transfer of the Nicholls Property to the Trust is void as against the trustee in bankruptcy; (2) a declaration that the Trust holds the proceeds of the sale of the Nicholls Property on trust for the trustee in bankruptcy; (3) orders under ss 120 and 121 of the Bankruptcy Act that the Trust pay to Mr Lo Pilato an amount to be assessed "referable to its receipt of the Nicholls Property in consideration for an amount less than its market value" together with interest from the date of settlement to the date of judgment; (4) an account of all monies derived by the Trust from the sale of the Nicholls Property; (5) upon the taking of the account, an order that the Trust pay to Mr Lo Pilato the proceeds of the sale; and (6) "such further or other orders as are necessary to identify, locate and pay the proceeds of the sale of the Nicholls Property to [him]". 206 The effect of my findings is that the transfer of the Nicholls Property to the Trust is void against Mr Lo Pilato in Mr Adzic's bankruptcy as an undervalue transaction and as a transfer to defeat creditors. A declaration to this effect should be made. The problem here is the Property was sold to a bona fide purchaser for value before the proceeding was started. In these circumstances, the Trust contends that Mr Lo Pilato is not entitled to any relief unless the proceeds of sale are traced into a derivative form, and no tracing claim was mounted on the pleadings or run at the trial. 207 The Trust also submitted that it dissipated the proceeds of sale, "at least by paying out the bank's mortgage ... and over $30,000 in agent's fees and marketing costs" before the proceeding was commenced. 208 It is convenient to deal first with this latter submission. 209 Mr Lo Pilato contended that there was no evidence that any of the proceeds of the sale had been dissipated. The contention was based on the fact that in his affidavit Mr Saeedi did not "directly depose to the sale nor to paying out any mortgage". That is true. But it is an agreed fact that the Property was sold on 30 May 2014 for $1.2 million and exhibited to Mr Saeedi's affidavit was a bank statement from the CBA showing that $993,305.87 was credited to the Trust's account on that day in respect of the mortgage secured over the Nicholls Property. A page from Ms Selleck's sales trust ledger was also exhibited to Mr Saeedi's affidavit, showing that, of the $120,000 deposit, she deducted $22,800 in sales commission and $8,404 for advertising, before remitting $88,796 to the Trust on 2 June 2014. No evidence was given as to what happened to the rest of the money. For the following reasons, however, this does not assist Mr Lo Pilato. 210 In Brady v Stapleton (1952) 88 CLR 322 a trustee in bankruptcy applied to the Federal Court of Bankruptcy to have set aside a large number of dispositions of property allegedly made by the bankrupt on the ground that they were settlements made void under s 94 of the 1924 Act or alienations made with intent to defraud creditors within s 46 of The Mercantile Acts 1867–1896 (Qld) (which reproduces in ss 46 to 48 chapter 5 of the Statute of Elizabeth — 13 Eliz. 1, c. 5). 211 The primary judge (Clyne J) held that none of the dispositions was a settlement caught by s 94 of the 1924 Act and so made no finding that they were void. On the other hand, his Honour held that a number of the dispositions (mainly involving transfers of real estate, racehorses, motor vehicles, shares, and tobacco) made to Canadian Pacific Tobacco Co Ltd — (and later sold to a bona fide purchaser) were alienations made with intent to defraud creditors within the meaning of s 46 of The Mercantile Acts. Clyne J made declarations to this effect but refused to make consequential orders. His Honour held that a right to set aside an alienation under s 46 is lost when the alienated property passes to a bona fide purchaser for value without notice of the fraud and if the alienation cannot be set aside, no incidental relief of the kind sought could be granted. 212 Mr Brady and the other transferees appealed to the High Court but withdrew their appeal before it came on for hearing. But the trustee in bankruptcy had filed a notice of cross-appeal against the refusal by Clyne J to grant him consequential relief. The notice sought an order that Canadian Pacific pay him the proceeds of the sale of the property. In the alternative, the trustee sought a declaration that Canadian Pacific was a trustee for the bankrupt of the relevant items of property, and should, on that basis, have made an order that the company account to the trustee for its disposition of the property and pay him its value. This alternative claim was abandoned at the hearing. Dixon CJ and Fullagar J noted (at 331) that the surviving claim was "not put as a claim to 'follow' or 'trace' the property in question, but, in effect, as a claim for money had and received". 213 The question on the appeal was whether, in the case of a transfer made with intent to defraud creditors, the transferee is liable at law to pay to the defrauded creditors the amount of the proceeds of a sale he made to a bona fide purchaser for value before any steps had been taken to set the transfer aside. The majority (Dixon CJ and Fullagar J) held that he was not and that the primary judge was correct to refuse to grant the trustee consequential relief. Where the proceeds could not be identified, their Honours considered it would be contrary to principle to hold that there was a personal remedy against the company. This is what they said (at 333): The protection given by 13 Eliz. 1, c. 5, to bona fide purchasers for value extends both to the immediate assignee of the fraudulent debtor and to assignees of that assignee. And a fraudulent assignment by a debtor is not held void where the effect of so holding would be to defeat either a purchaser for value without notice from the fraudulent debtor or a purchaser for value without notice from an assignee of the debtor, whether that assignee were himself a purchaser for value without notice or not ... The truth seems to be that, although the statute uses, and most emphatically uses, the word 'void', the courts have always treated a fraudulent assignment as effective unless and until a creditor or creditors intervene by levying execution or taking legal proceedings. (Original emphasis.) 214 Their Honours therefore concluded that there was no basis for a personal liability on the part of the company. They continued (at 334): It is only on the footing that the company sold something to which it had not title or that the sale was otherwise wrongful when made, that a personal liability on the part of the company could be based. But the company, when it sold the assets in question, sold something to which it had a title, albeit a defeasible title. The sale was not wrongful when made. If the company were selling something to which it had no title, it might well be that the trustee in bankruptcy could claim to stand in the shoes of the true owner, the bankrupt, and maintain money had and received. But this is not the position. The company had a title, though a defeasible title. The defeasance has, in the event, taken place, but it cannot relate back so as to make a sale by the company wrongful and impose a personal liability on the company. 215 In Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372 at 426 Wilcox and Cooper JJ held that these principles applied equally to a disposition of property to which s 121 of the Bankruptcy Act applied: Although s 121 states that a disposition to which it applies is void, the courts will treat the disposition as effective until impugned in proceedings brought by the trustee in bankruptcy. Thus, where there is a disposition of property to which s 121 of the Act applies, the title which the donee receives is a defeasible one: see Brady v Stapleton (1952) 88 CLR 332 at 332–335 per Dixon CJ and Fullagar J; Harrods Ltd v Stanton [1923] 1 KB 516 at 520–521 per Bailache J, at 521 per McCardie J. Until the title is defeased by the trustee in bankruptcy calling for delivery up or revesting of the property to the trustee or by instituting proceedings to establish the trustee's entitlement to the property, the donee may deal with the property as owner and is not required to account for any profit made. If the property is sold and the proceeds of sale dissipated by the donee prior to defeasance the donee is not personally liable for the value of the property: Brady v Stapleton at 332–335. (Emphasis added.) 216 Mr Lo Pilato submitted that, although he did not institute proceedings to establish his entitlement to the Nicholls Property before it was sold to a bona fide purchaser for value, he did give notice of his claim to the Property before the sale. He relied on the letter from his solicitors dated 12 November 2013, which he contended was a call for delivery up of the Property to him as trustee, as envisaged in Alvaro. 217 Formalities aside, the letter began with a statement that, in the light of the information Mr Lo Pilato had gathered in his investigation into Mr Adzic's affairs and the public examinations, he had "formed the view" that he was entitled to make certain demands, among them, a demand on the Trust for the payment of "at least $200,000 plus interest". The letter went on to explain in detail the bases upon which the entitlement was said to arise, and then to make an offer of compromise, the terms of which were not before the Court. For present purposes it is sufficient to observe that the letter included the following assertions: that the $100,000 sum advanced by the Trust to Mr Adzic in October 2011 treated as a deposit paid under the contract for sale of the Nicholls Property was recoverable "either on the basis that the entire transfer of the Nicholls Property is a transfer to defeat creditors within the meaning of section 121 of the Act or an undervalued transaction within the meaning of section 122 of the Act"; that, according to Mr Adzic, at the time it was sold the Nicholls Property had a value of at least $1,100,000; and that, "in pursuing a claim under section 120 of the Act we will obtain valuation evidence that supports the contention that the sale of the Nicholls Property to [the Trust] was undervalued in the order of at least $100,000". 218 The letter noted the "factors" Mr Lo Pilato contended supported his claims. They included the fact that the Nicholls Property "does not appear to be listed for sale". 219 The letter also noted that Mr Lo Pilato had procured litigation funding and stated that he was "ready, willing and able to commence recovery proceedings against … [the Firm] and [the Trust] should our impending attempts to resolve this matter informally fail". 220 The Trust contends that the letter does not evince an election to "void" the disposition of the Property to the Trust and that an election was not made until this action was instituted. That contention should be accepted. Whatever else the letter contained, it stopped short of asserting that the transfer of the Property from Mr Adzic to the Trust was void. The letter served two purposes. It notified the Trust of an intention to sue and it made an offer of settlement. It was not a "[call] for the delivery up or revesting of the property to the trustee [in bankruptcy]". 221 The letter is to be contrasted with notices given by the liquidators of the Bell Group companies served upon a number of banks, for example, in which it was clearly and unequivocally stated that "[n]otice is given that these agreements are hereby avoided": Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) and (No 10) (2009) 39 WAR 1 at [9650] (Owen J). No such statement appears in the letter. 222 But does that mean that Mr Lo Pilato is unable to obtain relief over and above the declarations? 223 There is authority which suggests that he is not. 224 In Fiorino the trustee in bankruptcy applied for a declaration that a transfer of a home unit by the bankrupt to his mother was void as against the trustee under s 120(1) or s 122 and an order that she pay him "$60,000 or such other sum as the Court thinks fit". The consideration was expressed in the transfer to be "the love and affection which the Transferor bears towards the Transferee". The transfer also carried a certification for the purposes of the South Australian stamp duties legislation that the value of the land did not exceed $50,000. Mrs Fiorino became the registered proprietor of the property. After the sequestration order was made Mrs Fiorino sold the property to third parties for a consideration shown on the transfer of $50,000. There was no dispute that those third parties were independent, that the transaction was at arm's length, and that they, themselves, were protected by ss 120(7) and 122(2). Some five weeks after the transfer to the third parties, at the behest of the trustee in bankruptcy, the Official Receiver gave notice under s 139ZQ of the Bankruptcy Act requiring Mrs Fiorino to pay to the trustee $55,000 on the basis that she had received money or property as a result of a transaction void against the trustee. Mrs Fiorino applied to the Court for an order setting aside the notice and subsequently the trustee filed his application against Mrs Fiorino. As Gummow J put it (at p 7) "upon his application, the [t]rustee impeaches the transfer of the property to Mrs Fiorino by her son which was effected by the memorandum of transfer …". 225 Gummow J held (at p 17) that the transfer to Mrs Fiorino was not made in good faith and for valuable consideration and so, "by force of" s 120(1), was void as against the trustee. His Honour then considered the effect of s 120 on the position of Mrs Fiorino "as recipient of the value provided by the third parties on the sale by her to them". In this context, he referred to Brady v Stapleton, noting the abandonment at the trial of a claim in equity that Canadian Pacific was accountable to the trustee on a personal claim for the value of the asset. His Honour observed (at p 18) that the effect of s 120 is that a disposition (now referred to as a transfer) of the type referred to in the section is voidable at the instance of the trustee from the time the title accrues, that is, from the date of the act of bankruptcy to which the trustee's title relates back. Consequently, his Honour held (at p 21), that at the time Mrs Fiorino sold the property to the third parties, s 120 operated to make ineffectual (as against the trustee) every step her son had taken which would otherwise cause the beneficial interest in the property to pass to her (see Williams v Lloyd (1934) 50 CLR 341 at 374–5 per Dixon J). The result, his Honour said, was that at the time of the sale to the third parties, Mrs Fiorino held the property on trust for the trustee in bankruptcy. He explained that "[t]he trust was brought about by the interaction of s. 120 and the general law". Thus, Mrs Fiorino came under a personal liability to the trustee in bankruptcy to account, as moneys had and received, for the proceeds of the sale "on the footing that she was selling something to which she had no title and that the Trustee stood in the shoes of the true owner to maintain money had and received". In the result, his Honour declared that the disposition of the property by the bankrupt to his mother effected by the memorandum of transfer "became and is void" against his trustee in bankruptcy and that Mrs Fiorino became trustee of the said property for the trustee in bankruptcy. 226 In Fiorino proceedings were not commenced before the property was sold and there is nothing in the judgment to suggest that a tracing "claim" was made. Although Fiorino was not mentioned in Alvaro, the principle it applied, derived from Williams v Lloyd, was acknowledged: see Alvaro at 387 (Wilcox and Cooper JJ). Fiorino is a straightforward application of the principles in Williams v Lloyd. Moreover, Brady v Stapleton was not concerned with the Bankruptcy Act but with the Queensland iteration of 13 Eliz. c. 5. In Williams v Lloyd Dixon J (with whom Rich J, Evatt J and McTiernan J agreed) said (at 374) of s 94 of the 1924 Act that it makes the "settlement" (defined to include a conveyance or transfer) void against the trustee in bankruptcy and: Such a provision means voidable at the instance of the trustee as from the time as at which his title accrues (In re Brall; Ex parte Norton [[1893] 2 QB 381]; In re Carter and Kenderdine's Contract [[1897] 1 Ch 776]). (Emphasis added.) 227 The Trust submitted that the reasoning in Fiorino can only be correct, however, consistently with Brady v Stapleton and Alvaro, if proceedings were commenced before the Property was sold or if a tracing claim can be established. 228 Contrary to the submissions made on behalf of the Trust, Fiorino is not relevantly distinguishable from the present case. The sale to the third parties in that case occurred before the trustee in bankruptcy issued proceedings and before he gave any notice. The change in the wording of s 120 since Fiorino is immaterial: see the discussion of these changes in Anscor at [29]. 229 The reasoning of the majority in Alvaro appears to be at odds, not only with what Gummow J said in Fiorino but also with Dixon J's analysis of the position under the Bankruptcy Act in Williams v Lloyd at 374. No member of the Full Bench in Alvaro referred to Fiorino. Presumably, it was not drawn to the Court's attention. 230 In Westpac Banking Corporation v The Bell Group Ltd (In liq) (No 3) (2012) 44 WAR 1 (the appeal from Owen J) (Westpac v Bell) Drummond J was critical of what was said in Alvaro at 426, observing (at [2528]), that the only authorities relied upon were Brady v Stapleton and Harrods Ltd v Stanton, both of which were only concerned with the Statute of Elizabeth. 231 Earlier, in Trustee of the Property of O'Halloran, in the matter of O'Halloran v O'Halloran [2002] FCA 1305 at [76] Allsop J (as his Honour then was) drew attention to an important distinction between the position under the two statutes: The continued use of the phrase "void against the trustee" in ss 120 and 121 after the amendments to the Act in 1996 makes relevant the well-known learning on that phrase. The word "void" means voidable, and, in the case of bankruptcy, the transfer is avoided as and from the date of the accrual of the trustee's title — the commencement of the bankruptcy (in the case of the operation of the Statute of Elizabeth (13 Elizabeth c. 5) and its modern equivalents, the avoidance is prospective from the date of the avoidance). 232 Amongst the authorities his Honour then cited in support of this proposition were Brady v Stapleton and Alvaro. Brady v Stapleton is concerned only with the Statute of Elizabeth and Alvaro only with the Bankruptcy Act. In Alvaro, which relied on Brady v Stapleton, there is no acknowledgment of the point of distinction and no discussion of its implications for cases involving transfers of property caught by ss 120–122 of the Bankruptcy Act. 233 In Westpac v Bell, however, Drummond J said at [2535]: There is nothing in the Statute of Elizabeth to trigger its operation unless and until a creditor invokes it, as Dixon CJ and Fullagar J noted in Brady v Stapleton (at 332– 333). In contrast to the position under the Statute of Elizabeth, each of ss 120 to 122 of the Bankruptcy Act is, in my opinion, triggered by the commencement of the bankruptcy of the person who made the disposition in question. Subject to the qualification that ss 120 and 122 only apply to transfers of property made within the periods stipulated in those sections, each of these three sections in its terms comes into operation to avoid the relevant transfer of property if two conditions are satisfied: the transferor must become bankrupt and there must be a trustee in the person's bankruptcy. Both conditions will be satisfied by the making of the sequestration order: see ss 43(2) and 156A(3). The Bankruptcy Act provisions do not in their terms require, as a further condition of their operation, that the trustee in bankruptcy or the liquidator take action eg by electing to challenge the transaction in question, before it will be avoided. Of course, unless the trustee or liquidator challenges a transfer of property that is within the avoidance sections of that Act, the transfer will, as a matter of practical reality, stand, though it will have been avoided by operation of the statute. Only the trustee (or the liquidator) has standing to rely on these statutory provisions. Such transfers are void "only against the trustee and not against anyone else": Re Cummins[; Richardson v Cummins (1951) 15 ABC 185]. (Emphasis added.) 234 There is force in Drummond J's analysis. It is consistent with what was said in both Fiorino and O'Halloran. Trial judges should not depart from decisions on the interpretation of Commonwealth legislation made by intermediate appellate courts in other Australian jurisdictions unless convinced that the interpretation is plainly wrong: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at [135]. So far as I can tell, however, Drummond J was the only member of the Court to consider this question and express these views. More importantly, Alvaro is a decision of the Full Court of this Court which contradicts Drummond J's interpretation of the relevant provisions and I am bound by that decision, whether it be right or wrong. 235 This means that Mr Lo Pilato has no personal claim against the Trust and so the relief sought in para 12 of the Further Amended Originating Application cannot be granted. But does it also mean that he has no entitlement to consequential relief? 236 In Alvaro, Wilcox and Cooper JJ said (at 426–7): [W]here there is a disposition of property to which s 121 of the Act applies, the title which the donee receives is a defeasible one … Upon defeasance, if the property remains in its original form or in some derivative form in the hands of the donee, title to the property revests in the trustee in bankruptcy and the donee thereafter continues to hold the property as trustee for the trustee in bankruptcy and will be ordered to do all necessary acts to revest the property in the trustee in bankruptcy. … Where there has been a disposition of property and that property has not been retained but has been transformed into other identifiable property or mixed with the property of a third party, the court will allow a remedy against the identified specific property in order to give the trustee in bankruptcy an effective remedy upon the avoidance of the original disposition of property … Where the property has altered in form, but remains in the hands of the donee, equity will allow the trustee in bankruptcy to claim the property in its altered form as property to which it is entitled, the original disposition by the bankrupt being void as against the trustee. Where the property has been mixed with property of another person so as to constitute a mixed asset or a mixed fund it becomes necessary to look to equity in order to determine how the interest of the person whose property has come into the mixed fund are to be ascertained and provided for. 237 It is true, as the Trust submitted, that "no tracing claim [was] mounted on the pleadings", nor run against it at the trial. In truth, though, tracing is neither a claim nor a remedy, but a process: "a process of identifying a new asset as the substitute for the old": Foskett v McKeown [2001] 1 AC 102 at 127. See also Lionel D Smith, The Law of Tracing (Clarendon Press, Oxford, 2003) at 11–12. 238 In para 13 of his Further Amended Originating Application, however, Mr Lo Pilato sought an account of all moneys derived by the Trust from the sale of the Nicholls Property, an order for the payment by the Trust to him of those moneys upon the taking of the account, and "such further or other orders as are necessary to identify, locate and pay the proceeds of sale of the Nicholls Property to [him]". While he did not use the word "trace", it is clear enough on the face of the application that the process Mr Lo Pilato was invoking was a tracing process. He sought the proceeds of the sale as a substitute for the Property. 239 Unless it is shown that the proceeds of the sale were dissipated before this proceeding was commenced, there is no reason in principle why an order of this kind could not be made. Certainly in his written submissions Mr Katekar contended that the Trust had dissipated the proceeds of sale, and the evidence shows that a good portion of the proceeds went towards the discharge of the mortgage over the Property and the payment of Ms Selleck's commission and fees. Even so, $175,490 is unaccounted for. True it is, as Mr Katekar also submitted, there is no evidence as to where the rest of the money has gone or whether the Trust still has it. He claimed that "[t]his was not a part of [Mr Lo Pilato]'s case". But the relief that Mr Lo Pilato sought contemplated that this would be the subject of a separate process. 240 The real difficulty for Mr Lo Pilato, however, is that he is obliged to pay to the Trust an amount equal to the value of the consideration it gave him for the void transfer ($805,000): ss 120(4) and 121(5). Having regard to the amount that has been dissipated, there is no utility in making the further or alternative orders sought. It is for this reason that consequential relief must be declined. For the same reason I would not make the second declaration either. Had Mr Lo Pilato brought the proceeding before Mr Saeedi disposed of the Property, or applied for orders to prevent the Trust from disposing of it in anticipation of the proceeding, the result might have been different. The case against the Law Firm 241 The case against the Law Firm concerns the payment of the $229,879.14 from the proceeds of the sale of the Nicholls Property. Mr Lo Pilato contends that the payment was made by Mr Adzic to the Law Firm. The Law Firm, on the other hand, says that the payment was made for Redevelopments' benefit, and subsequently paid to the Firm's office account in satisfaction of Redevelopments' legal fees. 242 If the payment was made for Redevelopments' benefit it is common ground that Mr Lo Pilato has no claim against the Firm. 243 If the payment was made by Mr Adzic directly to the Law Firm, however, Mr Lo Pilato contends that there are four bases on which the payment is void against him. 244 First, he relies on s 120 of the Bankruptcy Act. He alleges that Mr Adzic made the payment without consideration, because Mr Adzic was not liable to the Law Firm at the time the payment was made. He says this is so because it was Redevelopments, not Mr Adzic, who incurred fees and disbursements, and as at 31 May 2012 Mr Adzic was not liable for these because: (a) the guarantees he gave in the costs agreements had not been "triggered"; (b) the guarantees and charging clauses should be set aside under s 288 of the Legal Profession Act; or (c) the guarantees and charging clauses are void against him and should be set aside under s 121 of the Bankruptcy Act. 245 Secondly, he relies on s 121 of the Bankruptcy Act and s 239 of the Civil Law (Property) Act. He says that the payment of the $229,879.14 is void against him because it was made by Mr Adzic with the main purpose of defeating his creditors. 246 Thirdly, Mr Lo Pilato says that the transfer of $229,879.14 should be set aside under s 122 of the Bankruptcy Act as a preferential payment. Mr Lo Pilato acknowledges that this requires Mr Adzic to be an unsecured creditor. That means that this claim can only be made good if Mr Lo Pilato is correct in saying that the charging clauses should be set aside under s 121 of the Bankruptcy Act or s 288 of the Legal Profession Act. 247 Mr Lo Pilato seeks the following relief: (1) orders setting aside the charging clauses and personal guarantees in the costs agreements, pursuant to s 288 of the Legal Profession Act; (2) a declaration that the payment to the Law Firm of $229,879.14 (the sum) is void as against Mr Lo Pilato; (3) an order that the Law Firm pay the sum together with pre-judgment interest to Mr Lo Pilato, whether under ss 120, 121 or 122 of the Bankruptcy Act or, alternatively, a declaration that the Law Firms holds the sum on trust for Mr Lo Pilato; (4) an account of all moneys received by the Law Firm from Mr Adzic; and (5) an order that the Law Firm pay to Mr Lo Pilato all moneys received as a result of the payment of the sum. The issues 248 The issues, as identified by the parties, are as follows. (1) Whether the $229,879.14 was paid on 31 May 2012 by Mr Adzic: (a) to Redevelopments (and held in the Law Firm's trust account on Redevelopments' behalf); or (b) directly to the Law Firm. (2) If the money was paid directly to the Law Firm: (a) was it the payment of a secured debt (and therefore not a preference within s 122(1)(a)), by reason of the charges in the costs agreements for the Bulum, Conveyancing, ACAT and Bankwest matters; (b) if so, whether the personal guarantees and charges under any of those costs agreements should be set aside under s 288 of the Legal Profession Act on the basis that they were not fair and reasonable; (c) whether the grants of the personal guarantees and charges over the Nicholls Property in the costs agreements referable to the four matters were transactions to defeat creditors; (d) whether the payment of $229,879.14 was: (i) an undervalue transaction for the purposes of s 120; or (ii) a transfer to defeat creditors; or (iii) a preferential payment for the purposes of s 122; and (3) if so, whether the Law Firm has a defence. The $229,879.14 payment and the costs agreements 249 It will be recalled that settlement of the sale of the Nicholls Property to the Trust took place on 31 May 2012. 250 According to the settlement statement, after adjustments the net balance due to be paid on settlement was $804,770.09. The statement required cheques to be made out as follows: 1. ACT Revenue Office $ 35,192.60 2. ActewAGL $ 2,032.18 3. Westpac Banking Corporation $ 454,170.30 4. ACT Government $ 29,115.73 5. Kamy Saeedi Lawyers $ 229,879.14 6. Tracey Mylecharane $ 54,380.14 251 In his affidavit, Mr Saeedi referred to the figure of $229,879.14. He said that "on or about" 25 May 2012 the Law Firm issued invoices to Redevelopments, which add up to that amount. He said that the invoices related to four matters, being: (a) $69,095.87 for the ACAT matter invoice #2779 including $64,859.97 in disbursements; (b) $42,693.23 for the Bankwest matter invoice #2778 including $26.51 in disbursements on that invoice and $23,377.14 in disbursements ... ; (c) $24,810.04 for invoice #2793 for the Bulum matter including $18,677.54 in disbursements; and (d) $93,280.00 which was paid towards 212 conveyancing files. This is calculated as $440 for each file including GST. 252 In fact, this part of Mr Saeedi's evidence is misleading in two respects. 253 First, it appears that the Law Firm issued more than four tax invoices on 25 May 2012. It also issued the following invoices: (1) Tax Invoice No 2781 — Claim re Purchase of Jamison Inn in the amount of $204.60; (2) Tax Invoice No 2782 — Dispute with Enima Pty Ltd in the amount of $47,539.14; (3) Tax Invoice No 2777 — Financial Ombudsman Service in the amount of $7,500.00; (4) Tax Invoice No 2780 — "Business Matters" in the amount of $130.35. 254 Secondly, the conveyancing invoices were not issued on 25 May. They are dated 31 May 2012 and appear to have been provided under cover of a letter dated 1 June 2012. 255 The basis on which the invoices referred to in [250] were chosen for payment was revealed by Ms Mylecharane in her public examination. She agreed that the sum of $229,879.14 was paid in satisfaction of "all outstanding legal accounts which had a charging clause attached to them". All four of the costs agreements in question were executed by Mr Adzic both on behalf of Redevelopments and himself as guarantor, and by Ms Mylecharane on behalf of the Law Firm. Each provided that costs were payable within seven days of the issue of an account. 256 The charging and guarantee clauses in the four agreements are identical. The charging clause is in the following terms: 7. Charges Goran Adzic, the guarantor, agrees to charge the property at 6 Kuhn Place, Nicholls in the ACT, with the obligations of both the guarantor and Redevelopments Pty Ltd under this costs agreement. In accordance with this charge Kamy Saeedi Lawyers are entitled to lodge a caveat over the property at 6 Kuhn Place, Nicholls in the ACT at the absolute discretion of Kamy Saeedi Lawyers. 257 The guarantee clause reads as follows: 13. Guarantor The guarantor has requested us to act on behalf of Redevelopments Pty Ltd. In consideration for us agreeing to this request, the guarantor guarantees to us all sums to be paid to us by Redevelopments Pty Ltd which includes all legal fees and all disbursements. The guarantor agrees that we can request payment in full from the guarantor at any time. 258 Each costs agreement also contained two clauses relating to independent legal advice. The first was cl 12: 12. Independent Legal Advice Before you enter into this costs agreement you should consider that it may be against your interest to do so. For example, another firm of solicitors may be prepared to act on your behalf in this matter at a lower cost to you. You should therefore consider seeking independent advice on this costs agreement before you enter into it. … 259 The second was cl 14, which provided: 14. Independent Legal Advice The parties (meaning both Redevelopments Pty Ltd and the guarantor) warrant and represent that they have both had the opportunity to obtain independent legal advice on the terms and effect of this costs agreement. No further explanation is required to be given to the parties in relation to the terms or effect of this costs agreement and the parties have agreed to enter into this costs agreement freely. 260 The agreements also included a clause (cl 2) which relevantly provided: We will issue interim accounts for our fees and expenses at regular intervals with a final bill of costs being rendered at the time of completion of your matter. In the unlikely event that our fees are not met by funds held in our trust account on your behalf, the outstanding balance will be payable within 7 days from the date the account is issued to you. 261 And they included a clause (cl 3), the relevant part of which reads: We will require you to deposit monies into our trust account throughout the matter on account of our fees and any disbursements incurred. Unless advised otherwise, we will assume upon receipt of monies into trust that you authorise us to draw on those monies for our fees and disbursements, as they become due. Was the payment made by Mr Adzic to the Law Firm or to Redevelopments and held in the Firm's trust account on Redevelopments' behalf? 262 The onus of proving that the payment was not paid on behalf of Redevelopments lies with Mr Lo Pilato. The question, then, is whether that onus has been discharged. 263 The trust account records show that the money was paid into the Law Firm's trust account where it was held for Redevelopments. That is prima facie evidence that the money was paid in trust for Redevelopments. Mr Lo Pilato seeks to minimise the significance of this evidence, however, on the basis that whether the funds are paid into the Law Firm's trust account and the attribution of those funds to matters opened in the name of Redevelopments were matters solely within the control of the Firm. In response, the Law Firm points to the terms of s 222 of the Legal Profession Act: As soon as practicable after receiving trust money, a law practice must deposit the money in a general trust account of the practice. 264 This, of course, begs the question. 265 There is no dispute that it was Mr Adzic who made the payment and that he made it to the Law Firm. The dispute concerns whether he did so on Redevelopments' behalf. 266 So on whose behalf was the money paid? 267 Mr Lo Pilato submitted that the money was paid by Mr Adzic directly to the Law Firm and not to Redevelopments. He pointed to the following indications: (1) the absence of evidence of any written authority from Mr Adzic directing that the sum be paid to Redevelopments first; (2) the absence of evidence from Ms Mylecharane, the solicitor with carriage of the matters, that the moneys were paid to Redevelopments; (3) the direction in the settlement statement that the money be paid to the Law Firm, rather than to Redevelopments; (4) distinctions drawn in trust statements issued to Redevelopments between amounts paid by the company and amounts paid by Mr Adzic; (5) the fact that Redevelopments was on the brink of insolvency and so any payment it would make to its lawyers was at risk of being recovered as a preference; and (6) the fact that the proposition that the payment was made by Redevelopments was not made until after the deregistration of Redevelopments had begun. 268 The amended defence pleads that the money was paid by Mr Adzic to Redevelopments and then "directed to be deposited in the trust account of [the Law Firm] where it was held on the company's behalf". Particulars are given of an oral request by Mr Adzic of Ms Mylecharane for an updated set of accounts showing the amounts Redevelopments owed the Firm so that they could be paid and the charge released to enable the Nicholls Property to be sold. 269 I was not taken to any evidence to support the plea concerning the alleged oral request of Ms Mylecharane. Indeed, no submission was made in support of it. Nor was there any evidence of a direction from Mr Adzic that the money be deposited in the trust account to be held on behalf of Redevelopments. Nevertheless, the evidence does tend to show that the money was paid by Mr Adzic on behalf of Redevelopments. 270 The cheque provided at settlement was a bank cheque made out to the Law Firm. The Firm's bank statement shows that the cheque was deposited in the Firm's trust account. Trust account statements relating to each of the four matters were also in evidence. Each statement records the amount attributable to that matter being paid by Mr Adzic on 31 May and credited to the Law Firm's office account a few days later. For the ACAT and Bulum matters, trust account receipts were in evidence, recording those sums being received on Redevelopments' behalf, and trust account cheque requisitions show the two lots of money being paid to the Law Firm by or on behalf of Redevelopments. 271 It is clear then that the Law Firm's own records show that the money was treated as being paid by Mr Saeedi for Redevelopments' benefit, before it was later transferred into the Firm's office account. 272 Mr Lo Pilato's position, however, is based on the absence of evidence of any agreement stipulating that the relevant payment was to be made by Mr Adzic to Redevelopments, rather than Mr Adzic to the Law Firm. The settlement statement sought a bank cheque payable to the Law Firm and not to Redevelopments. Mr Lo Pilato submits that if the payment to the Firm was "truly intended" to be a payment from Redevelopments, then the settlement statement should have specified that the bank cheque was to be payable to Redevelopments not the Firm. A cheque made payable to Redevelopments could have been banked into the Firm's trust account and, if that were his intention, Mr Adzic could have made the cheque payable to Redevelopments on settlement. Mr Lo Pilato insisted that none of Ms Mylecharane, Mr Saeedi or Mr Adzic suggested in their public examinations that the payment was made to discharge Redevelopments' debt. 273 I am not satisfied that Mr Lo Pilato has discharged his onus on this question. 274 The payment was necessary to clear the charge over the Property. The charge secured the obligations under the agreements of both Redevelopments and Mr Adzic. The mere fact that the payment was made by Mr Adzic is neither here nor there. Mr Adzic was a director of Redevelopments and the debts were Redevelopments' debts. As Mr Lo Pilato himself submitted, and as I have found below, Mr Adzic's liability under the guarantees was contingent on Redevelopments being in default of its obligations to the Firm. Yet, at the time of transfer Redevelopments was not in default. The invoices were issued on seven day terms. The invoices for the Bulum, Bankwest and ACAT matters were all issued on 25 May 2012, six days before settlement and the invoice for the Conveyancing matters was not issued until 1 June 2012, the day after settlement. Consequently, Mr Adzic was not then liable. In these circumstances, the more likely inference is that which the Law Firm submitted should be drawn, namely, that Mr Adzic was putting Redevelopments "in funds" to enable Redevelopments to discharge its debts. 275 The absence of evidence of an agreement that the money be deposited into the Redevelopments' trust account is not material. Once the money was in the trust account, it was held exclusively for Redevelopments' benefit: Legal Profession Act, s 223(1)(a). From the trust account it was paid into the Firm's office account, in satisfaction of Redevelopments' outstanding bills. Although there is no evidence of Redevelopments directing the Firm to make the disbursement, there was no need for such a direction because, by its costs agreements, Redevelopments had given a standing authority to the Firm to make disbursements of this kind. 276 The fact that the settlement authority required the money to be paid to the Law Firm is, without more, neutral. The Law Firm operated an office account and a trust account. The authority did not specify to which of these accounts the money was to be paid. Since the purchaser was the family trust of the Firm's principal, that is unremarkable. 277 Ms Mylecharane insinuated that the money was paid pursuant to the charging clauses (presumably to enable the Firm's caveat over the Property to be lifted), but contrary to the submissions of Mr Lo Pilato, neither she nor Mr Saeedi said that they were made pursuant to the guarantees. 278 It follows that I find that the payment made by Mr Adzic to the Law Firm was made for the benefit of Redevelopments. 279 In these circumstances it is strictly unnecessary to deal with the remaining questions but in case I am wrong in the conclusion I have reached I will do so. Was the $229,879.14 the payment of a secured debt? 280 Both parties appear to accept that the payment of $229,879.14 was made in relation to the four debts or alleged debts said to arise under the four costs agreements containing guarantees and charging clauses. 281 Mr Lo Pilato's primary submission is that none of these four payments was the payment of a secured debt (or even, it seems, the payment of an unsecured debt) because Mr Adzic had no liability to the Law Firm on 31 May 2012. He refers to cl 2 of the costs agreements and to the terms of the invoices issued on 25 and 31 May, each of which states that the account is "payable within 7 days". Accordingly, he says that the Law Firm could not have been in default on 31 May 2012, and that Mr Adzic's obligation to pay under the guarantees only arose in the event of the Law Firm's default. 282 The Law Firm did not make any submissions on this question beyond the bare assertions that "[t]he charging clause, and guarantees, under the costs agreements did not require Redevelopments to have defaulted before Mr Adzic was liable to pay the Firm" and that "Mr Adzic guaranteed payment by Redevelopments, without any precondition to his liability independent of Redevelopments'." 283 It is true that the terms of the clause do not spell out any requirement that Redevelopments default before Mr Adzic becomes liable. Indeed, the terms of the clause do not spell out much at all. The first sentence of cl 13 is in the nature of a recital. The only operative word in the second sentence is the word "guarantees" itself: 13. Guarantor The guarantor has requested us to act on behalf of Redevelopments Pty Ltd. In consideration for us agreeing to this request, the guarantor guarantees to us all sums to be paid to us by Redevelopments Pty Ltd which includes all legal fees and all disbursements. The guarantor agrees that we can request payment in full from the guarantor at any time. 284 The word "guarantee" ordinarily denotes "the promise of one person to be answerable for the debt or obligation of another if that other defaults": O'Donovan and Phillips, The Modern Contract of Guarantee (Law Book Co Ltd, 1985) at 8; see also Moschi v Lep Air Services Ltd [1973] AC 331 at 344–5 (Lord Reid), 348 (Lord Diplock); Sunbird Plaza Pty Ltd v Maloney (1988) 166 CLR 245 at 254–5 per Mason CJ (Deane, Dawson and Toohey JJ agreeing). There is nothing in cl 13 which suggests that the word "guarantees" within that clause is intended to have any other meaning. 285 While the third sentence of cl 13 further provides that payment in full can be requested from the guarantor "at any time", even if this is intended to cover a situation in which Redevelopments has not yet defaulted it would not have been engaged here, because there is no evidence that any "request" for payment under the guarantee was made. Indeed, as the evidence regarding the destination of the payment indicates, it is clear that the Law Firm treated the payment as one being made for Redevelopments' benefit, not the payment of a personal liability by Mr Adzic. 286 Accordingly, I find that, if I am wrong and payment was made by Mr Adzic directly to the Law Firm, it was not the payment of a debt owed by Mr Adzic. Should the charging clauses and guarantees be set aside under s 288 of the Legal Profession Act 2006 (ACT)? 287 Before I consider this issue, there are two antecedent questions to be resolved. The first is the question of jurisdiction. The second is Mr Lo Pilato's standing to make the application. What is the Court's jurisdiction to make orders under s 288 of the Legal Profession Act? 288 It will be recalled that s 288 of the Legal Profession Act gives the Supreme Court power to set aside a costs agreement or a provision in a costs agreement. Quite properly, however, the Law Firm accepted that this Court has the same power. Mr Lo Pilato submitted that the jurisdiction is conferred by s 4(1) of the Jurisdiction of Courts (Cross-Vesting) Act 1993 (ACT) (Territory Act). But that is not strictly correct or, at least, it is not the complete story. 289 As the Full Court explained in Crosby v Kelly (2012) 203 FCR 451, the true source of jurisdiction is s 9(3) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth), which provides that the Full Court may (a) exercise jurisdiction (whether original or appellate) conferred on that court by a provision of this Act or of a law of the Australian Capital Territory … relating to cross-vesting of jurisdiction[.] 290 The Territory Act is a law of the Australian Capital Territory relating to cross-vesting of jurisdiction. Section 4(1) of the Territory Act provides that "[t]he Federal Court has and may exercise original and appellate jurisdiction in respect of ACT matters". An "ACT matter" is defined in the Dictionary to the Territory Act relevantly as follows: ACT matter means a matter — (a) in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or of another State… 291 There can be no doubt that the question of whether a costs agreement or a provision in a costs agreement should be set aside pursuant to s 288 of the Legal Profession Act is an ACT matter in that it is a matter in which the Supreme Court has jurisdiction otherwise than by reason of a law of the Commonwealth or a State. 292 In Crosby v Kelly the Full Court held that this Court has jurisdiction to hear and determine defamation claims launched in the ACT registry arising in the ACT under the common law of defamation and Ch 9 of the Civil Law (Wrongs) Act 2002 (ACT). Robertson J, with whom Bennett and Perram JJ agreed, said at [35]–[39]: 35 [Section] 9(3) of the Jurisdiction of Courts (Cross-vesting) Act 1987 itself, together, if necessary, with s 19 of the Federal Court of Australia Act which provides that the Court has such original jurisdiction as is vested in it by laws made by the Parliament, conferred jurisdiction on the Federal Court: Re Wakim [; Ex parte McNally (1999) 198 CLR 511] at [105], [107], [108], [114]. That provision is a law made by the Parliament within s 76(ii) of the Constitution. It picks up, as Commonwealth law, the jurisdiction of the Australian Capital Territory Supreme Court to hear and determine the present dispute: Ruhani [v Director of Police (2005) 222 CLR 489] at 527. 39 … [T]here is no reason why a law made under s 122, here the Jurisdiction of Courts (Cross-vesting) Act 1987, may not confer jurisdiction on this Court by reference to the law of the Australian Capital Territory rather than laws made by the Commonwealth Parliament, assuming the Supreme Court Act and Ch 9 of the Civil Law (Wrongs) Act or the common law to be such territory laws. This is because s 9(3), in my opinion, both confers jurisdiction and creates rights arising under that provision. Those rights have the force of laws of the Commonwealth in respect of which a matter may arise. What is Mr Lo Pilato's standing to make the application? 293 Section 288 of the Legal Profession Act relevantly states: 288 Setting aside costs agreements or provisions of costs agreements (1) On application by a client who is a party to a costs agreement with a law practice, the Supreme Court may order that the agreement or a provision of the agreement be set aside if satisfied that the agreement or provision is not fair or reasonable. Note: Section 277(3) also allows a client to apply under this section for an order setting aside a costs agreement if the law practice concerned has failed to disclose to the client anything required by div 3.2.3 to be disclosed. (2) The Supreme Court may set aside— (a) a provision only of a costs agreement even though the client has applied for the whole agreement to be set aside; or (b) the whole of a costs agreement even though the client has applied only to have a provision of the agreement set aside. (3) In deciding whether a costs agreement is fair or reasonable, the Supreme Court may have regard to any or all of the following matters: (a) whether the client was induced to enter into the agreement by the fraud or misrepresentation of the law practice or of any representative of the practice; (b) whether any Australian legal practitioner or Australian-registered foreign lawyer acting on behalf of the law practice has been found guilty of unsatisfactory professional conduct or professional misconduct in relation to the provision of legal services to which the agreement relates; (c) whether the law practice failed to make any of the disclosures required under division 3.2.3 (Costs disclosure); (d) the circumstances and conduct of the parties before and when the agreement was made; (e) the circumstances and conduct of the parties in the matter after the agreement was made; (f) whether and how the agreement addresses the effect on costs of matters and changed circumstances that might foreseeably arise and affect the extent and nature of legal services provided under the agreement; (g) whether and how billing under the agreement addresses changed circumstances affecting the extent and nature of legal services provided under the agreement; (h) any other relevant matter. … 294 "Law practice" is defined in the Dictionary to the Act to include "an incorporated legal practice". There is no dispute that the Law Firm is an incorporated legal practice. 295 Section 288 comes into operation on the application of a "client". 296 Mr Lo Pilato does not claim to be a client of the Law Firm. Rather, he claims that he "stands in the shoes" of Mr Adzic (relying on ss 58(1) and 134(1)(j) of the Bankruptcy Act). 297 Section 58(1) of the Bankruptcy Act relevantly provides that upon bankruptcy the debtor's property vests in the trustee in bankruptcy. 298 Section 134 gives the trustee in bankruptcy, subject to the Bankruptcy Act, the power to administer the property of the bankrupt and para (1)(j) states that the trustee may "bring, institute or defend any action or other legal proceeding relating to the administration of the estate" (emphasis added). 299 For one thing to "relate to" another, there must be a connection or link between them. In Tooheys Ltd v Commissioner of Stamp Duties (NSW) (1961) 105 CLR 602 at 620 Taylor J described the phrase "relating to" as "extremely wide but … also vague and indefinite". As Beaumont and Lehane JJ observed in Joye v Beach Petroleum NL (1996) 67 FCR 275 at 285: Other decisions of the High Court have acknowledged that, ordinarily, "relates to" is a wide term, and that it will depend upon context whether it is necessary that the relationship be direct or substantial, or whether an indirect or less than substantial connection will suffice (see Re Dingjan; Ex parte Wagner (1995) 183 CLR 323 at 338 per Brennan J, at 347 per Dawson J, 354 per Toohey J and at 370 per McHugh J; PMT Partners Pty Ltd (In liq) v Australian National Parks & Wildlife Service (1995) 69 ALJR 829 at 835-836 per Brennan CJ, Gaudron and McHugh JJ and at 845-846 per Toohey and Gummow JJ; Re Jarman; Ex parte Cook (1996) 70 ALJR 550 at 553 per Brennan CJ, Gaudron J and 240 per Kirby J[)]. 300 In that case the Court was concerned with the meaning of "relating to" in the context of an application under s 581(4) of the Corporations Law for a request to the Supreme Court of Hong Kong for its assistance in "an external administration matter". "External administration matter" was defined for this purpose to include "a matter relating to: (a) winding up … a company". The question on appeal was whether the proceeding in this Court by the liquidator in the name of the company for the benefit of the company's creditors for the recovery of what were alleged to be assets of the company was "a matter relating to … a winding up [of a company] under Chapter 5 …" The Full Court held that it was. Beaumont and Lehane JJ (with whom Spender J agreed) said, at 287–8, that any step taken by a liquidator to recover the assets of the corporation is a step taken in the winding up and that, if litigation is necessary for this purpose, the conduct of the litigation is a matter that relates to the winding up. Their Honours held at 285 that: [T]here is nothing in the present context to suggest that the term "relating to", where used in s 580 and when picked up by s 581(4), was not intended to have a wide operation or that an indirect, but relevant, connection would not be a sufficient relationship for present purposes. 301 There is no reason to take a different approach to the construction of "relating to" when used in s 134(1)(j) of the Bankruptcy Act. Here, there must be a connection or relationship between the application under s 288 and the administration of the estate. The connection may be direct or indirect. The trustee in bankruptcy is seeking an order setting aside certain provisions in agreements made with the bankrupt within three years of the bankruptcy in order to retrieve monies paid by the bankrupt which, had the transfers not been made, would have formed part of the bankrupt estate. The application under s 288 is plainly an application relating to the administration of the estate. Indeed, no argument to the contrary was advanced. 302 Furthermore, I note that in McVeigh v Moses (Legal Practice) [2005] VCAT 2917 the Victorian Civil and Administrative Tribunal, relying on s 134(1)(j), held that a trustee in bankruptcy could bring an application under a similar provision of the (now repealed) Legal Practice Act 1996 (Vic) (s 103), which provided that, on application by a client, the Tribunal may order that a costs agreement be cancelled if satisfied of one of three matters, one of which is that the agreement is not fair or reasonable. 303 I am therefore satisfied that an application for orders under s 288 is an "action or other legal proceeding relating to the administration of the estate" and that, as such, if Mr Adzic could make such an application then so could Mr Lo Pilato as trustee of his bankrupt estate. 304 The more difficult question is whether Mr Adzic had the right to make an application. 305 "Client" is defined for the purposes of s 288 as "a person to whom or for whom legal services are or have been provided": s 288(11). That describes Redevelopments, but not Mr Adzic. Mr Lo Pilato relied, however, on s 282(6), which provides that the word "client" in s 288 can be taken to refer to "the associated third party payer" in relation to a costs agreement between the law practice and an associated third party payer to which a client of the law practice is not a party. The expressions "third party payer" and "associated third party payer" are both defined in s 261A. In short, a "third party payer" is a person who is not the client but who has a legal obligation (arising from contract or legislation) to pay all or part of the legal costs for legal services provided to the client, whether or not that obligation has been discharged. An "associated third party payer" is a person with the same obligation to the legal practice regardless of whether the obligation is also owed to the client or someone else. 306 There can be no doubt that, as guarantor, Mr Adzic was an associated third party payer. But Redevelopments — the client of the Law Firm — was a party to all the costs agreements. That circumstance was apparently overlooked at the hearing and in the written submissions. Consequently, I invited the parties to make further submissions in the event that Mr Lo Pilato maintained that he was entitled to bring the application. 307 In his further submissions, Mr Lo Pilato maintained his entitlement to make the application. First, he continued to rely on s 282(6). Secondly, he said that an alternative pathway was available under s 277(3). 308 In relation to s 282(6), Mr Lo Pilato submitted that Redevelopments was not a party to the costs agreements at the time the application under s 288 was made (30 July 2014) because on 11 May 2014 Redevelopments had been deregistered and as such had ceased to exist: Corporations Act, s 601AD(1). 309 The Law Firm, on the other hand, submitted that this was a "time-shifting" submission, and that deregistration under s 601AD(1) does not have a retrospective effect. It further submitted that it was "nonsensical" for Mr Lo Pilato to attack the costs agreement on the basis of the Firm's conduct towards Redevelopments while at the same time claiming that Redevelopments "was 'not a party'" to the costs agreements at all for the purposes of s 282(6). Finally, it submitted that the effect of deregistration was to extinguish all claims Redevelopments had, including its entitlement to pursue a claim against the Law Firm under s 288. 310 Both parties' submissions skirt around the real issue. There is no doubt that Redevelopments was a party to the costs agreements at the time they were made and at the time the legal work was carried out and the fees incurred. Nor is there any doubt that Redevelopments was no longer a party to the agreement at the time the application under s 288 was made, because it had ceased to exist. The real question is one of statutory construction: do the words "is not a party to the costs agreement" in s 282(6) refer to the time of the making of the application under s 288 or to some earlier time? 311 It is worthwhile setting out s 282(6), as well as subs (1), to which subs (6) makes reference: 282 Making costs agreements (1) A costs agreement may be made— (a) between a client and a law practice retained by the client; or (b) between a client and a law practice retained on behalf of the client by another law practice; or (c) between a law practice and another law practice that retained that law practice on behalf of a client; or (d) between a law practice and an associated third party payer. ... (6) A reference in section 288 (Setting aside costs agreements) and in any prescribed provisions of this part to a client is, in relation to a costs agreement that is entered into between a law practice and an associated third party payer as mentioned in subsection (1)(d) and to which a client of the law practice is not a party, a reference to the associated third party payer. 312 There are two conditions that must be met before s 282(6) brings an associated third party payer within the meaning of "client" for the purposes of s 288. First, the costs agreement in relation to which the application is made must be "a costs agreement that is entered into between a law practice and an associated third party payer as mentioned in subsection (1)(d)". Second, the costs agreement must be one "to which a client of the law practice is not a party". 313 A "costs agreement that is entered into between a law practice and an associated third party payer as mentioned in subsection (1)(d)" is one that is "made … between a law practice and an associated third party payer". Clearly, however, a costs agreement mentioned in subs (1)(d) need not be a costs agreement that is made only between a law practice and an associated third party payer, because that would render otiose the second requirement: that it be a costs agreement "to which a client of the law practice is not a party". 314 All four of the costs agreements met the first requirement. Each was entered into by Mr Adzic personally, as well as Redevelopments. 315 In my opinion, the second requirement was met, too, because that requirement fixes upon the time of the making of the application. 316 There are two reasons which would support this construction. 317 First, it reflects the ordinary meaning of the words used. The agreement must be one to which a client of the practice "is" not a party. Unlike the first requirement, the second requirement does not ask who "entered into" the agreement. 318 Secondly, this construction would promote the policy of the section. As the Law Firm submitted, the evident purpose of the provision is to "impose a limit on the sources of attack on a solicitor's costs agreement under s 288", by preventing an associated third party payer from seeking to have a costs agreement set aside where the client is a party to it. This is an aspect of the "mechanism for the assessment of legal costs and the setting aside of costs agreements", the provision of which is a purpose of that Part of the Act: s 262(d). The obvious good sense behind s 288 is that it prevents a situation in which an associated third party payer seeks to have a costs agreement set aside in circumstances where the client wishes the agreement to remain on foot, and indeed where up until the time the agreement is set aside the client might be entitled to insist on the ongoing provision of services under the agreement. That purpose would not be served, and indeed no evident purpose would be served, in precluding the associated third party payer from bringing an application once the client is no longer a party. The practical effect of that construction would be to preclude anyone in that position from bringing an application under s 288, and nothing in the provision suggests that this was its intended result. 319 For these reasons, I find that Mr Lo Pilato has standing, by the operation of s 282(6), to bring an application under s 288 to set aside the four costs agreements. It is unnecessary to decide whether s 277(3) might also give him standing. Should the charging clauses and guarantees be set aside? 320 Before setting aside a provision of a costs agreement, the Court must be satisfied that the provision is "not fair or reasonable". "Reasonable" imports an objective criterion: see, for example, Jovetic v Stoddart & Co (1992) 7 WAR 208 at 220 (Seaman J); D'Alessandro v Legal Practitioners Complaints Committee (1995) 15 WAR 198 (FC) at 202. 321 Both Jovetic and D'Alessandro concerned costs agreements made under s 59 of the Legal Practitioners' Act 1893 (WA) which also provided for a review of such an agreement and, relevantly, cancellation of it "if in the opinion of the court or judge the same is unreasonable". In Jovetic, which was followed in D'Alessandro, Seaman J held that a costs agreement is unreasonable for this purpose if the client can show objectively that it came into being in circumstances which were unreasonable to him, or that its terms were unreasonable to him, or that its effect upon him was unreasonable. 322 Re Stuart [1893] 2 QB 201 concerned an application for an order setting aside a costs agreement. By s 9 of the Attorneys' and Solicitors' Act, 1870 (UK) the court had the power to enforce the agreement if it appeared that in all respects it was "fair and reasonable". Lord Esher MR, with whom Bowen and Kay LLJ agreed, said at 204–05 that "fair" in this context refers to the mode of obtaining the agreement and "reasonable" to its terms, noting that "if a solicitor makes an agreement with a client who fully understands and appreciates that agreement that satisfies the requirement as to fairness". His Lordship considered that in determining whether an agreement is reasonable, factors taken into account to determine whether it is also "fair" "cannot be re-introduced". 323 Re Stuart was applied in Weiss v Barker Gosling (1993) 114 FLR 223 (Fogarty J) but distinguished in Jovetic on the basis that there was no criterion of unfairness in the Western Australian Act. 324 The question of what is "fair" as opposed to "reasonable" or, more accurately, not fair or not reasonable, under the ACT Act, however, is not circumscribed in the way those terms have been treated elsewhere, including in Re Stuart. As is apparent from the terms of s 288(3), in deciding whether or not a costs agreement is fair or reasonable for the purposes of s 288(1), the Court may have regard to matters that go to the circumstances in which the agreement was made. 325 Mr Lo Pilato contends that the charging clauses and the guarantees in the four costs agreements should be set aside because they are not fair or reasonable. 326 There are two limbs to the argument. 327 The first is the failure by the Law Firm to disclose to Redevelopments or Mr Adzic the following matters listed in para 32 of the Further Amended Statement of Claim: (i) the right to "negotiate a costs agreement with the law practice"; (ii) the right to "receive a bill from the law practice"; (iii) the right to "request an itemised bill if the client receives a lump sum bill for more than the threshold amount"; (iv) an estimate of the total legal costs, or a range of estimates of the total legal costs and an explanation of the major variables that will affect the working out of the costs; (v) the right to progress reports; or (vi) the avenues that are open to Redevelopments if there was a dispute in relation to legal costs (and any time limits applicable to such avenues). 328 With one exception, there is no dispute that the Firm was required under Div 3.2.3 of the Legal Profession Act to make these disclosures (to both Redevelopments and Mr Adzic) and that it failed to do so. 329 The exception is in relation to the Conveyancing costs agreement. The Law Firm says that it was not required to provide a costs estimate because it was agreed that costs would be fixed, at "the agreed rate of $800.00 plus GST plus disbursements for each contract exchanged" (cl 2 of the agreement). 330 The second limb to the argument relates to the failure to make the required disclosures in the peculiar circumstances in which the parties were placed at the time the costs agreements were entered into. Those circumstances are particularised in para 33(b) of the Further Amended Statement of Claim and developed in submissions as follows. 331 Mr Adzic was the sole director of Redevelopments. Ms Mylecharane was a solicitor within the Law Firm with carriage of the litigation and transactional matters on behalf of Redevelopments. Ms Mylecharane and Mr Adzic were in a de facto relationship. Ms Mylecharane lived rent-free in the Nicholls Property from some time in 2009. She and Mr Adzic considered that she had an equitable interest in the Property arising from their domestic relationship and she received $54,380.14 from its sale to the Trust. The Nicholls Property was offered as security for Mr Adzic's obligations as guarantor under the costs agreements with the Firm, of which Ms Mylecharane was a director. 332 The question for the Court's consideration is not whether the charging and guarantee clauses of the four costs agreements are fair or reasonable but whether they are not fair or reasonable. Thus, contrary to Mr Lo Pilato's submission, the onus of proof rests with him, not the Law Firm. As the Firm argued, his reliance on Passey v Bandarage [2002] ACTSC 105 at [30] (Higgins J) for the contrary position is misplaced. That case was decided under s 191 of the former Act, the Legal Practitioners Act 1970 (ACT) (the ACT Act) and, while the wording of the section is relevantly identical to s 288 of the current Act, Higgins J did not decide that the onus under s 191 was on the solicitor, let alone determine the case on that basis. As the Firm put it, the passage at [30] upon which Mr Lo Pilato's submission was based, is "an obiter reference to an obiter statement from a Northern Territory judgment in relation to a now-repealed provision in the context of a solicitor seeking to enforce a costs agreement" (Athanasiou v Ward Keller (6) Pty Ltd (1998) 8 NTLR 23). The provision in that case was s 130 of the Legal Practitioners Act 1974 (NT), which required the Court to be "satisfied that the agreement is not fair and reasonable". In concluding that the onus lay with the solicitor to satisfy the Court that the agreement was fair and reasonable, Mildren J drew on what Fogarty J concluded in Weiss at 258 that "in relation to costs agreements which provide for costs which are greater than the established or understood scale, the presumption of undue influence applies and the onus rests on the solicitor to rebut it". But as Fogarty J made clear, he was not referring to the legal onus. He went on to say: In the ultimate it is a question of degree. Where the deviation from the established or understood scale is relatively minor the evidential onus may be readily satisfied. Where the gap is significant then the evidential onus of persuasion is, and should be, greater. 333 Mildren J also referred, however, to McInnes v Twigg (1992) 109 FLR 96 in which Moss J inferred from Lord Esher's remarks in Re Stuart that the onus of proof was on the solicitor to prove that the agreement is fair and reasonable. His Honour observed: The requirement that the solicitor should carry the relevant onus no doubt reflects the fact that when the agreement was made the solicitor owed to the client a fiduciary duty. No doubt the placing of the onus on the solicitor also reflects the fact that the nature of the proceeding has always been seen as a safeguard for the protection of the client … 334 Assuming Mildren J was speaking of the legal and not the evidential onus, he appears, with respect, to have overlooked the fact that in Re Stuart the question posed by the statute was whether the agreement was fair and reasonable, not whether the court was satisfied it was not fair and/or reasonable. Yet, that is the question raised by s 288(1) of the Legal Profession Act. 335 For completeness, I note that in Schiliro and Gadens Ridgeway (1995) 19 Fam LR 196 at 198 the Full Court of the Family Court considered that it was settled law, for the reasons referred to in Weiss, that the onus rests with the solicitor to prove that the terms of a costs agreement are reasonable but that court was not concerned with a provision in the same or similar terms to s 288(1). 336 In Western Australia where, as I have already observed, the power to cancel depends on "the opinion of the court or judge [that the agreement] is unreasonable", the courts have held that it is the applicant seeking relief who carries the onus of proof (see Jovetic above, not disturbed on appeal: Stoddart & Co v Jovetic (1993) 8 WAR 420; Burgess v Messrs D'Alessandro [1993] ANZ ConvR 14; Harrison v Hocking [2000] WASC 188 at [94] per Hasluck J; Duckworth v Chopra [2001] WASC 146 at [49]). I respectfully agree with the analysis of Hasluck J in Harrison at [92]–[93] and consider that it applies equally to s 288(1) of the ACT Act: [92] It seems to me that although legislation of this kind may have a bearing upon the incidents of the fiduciary relationship between solicitor and client, it does not purport to displace or override the fiduciary relationship which is normally thought to exist between solicitor and client. Nonetheless, when a client applies to the court for relief, it is clear that it will never be enough to point simply to a fiduciary relationship arising out of the solicitor and client relationship and the presence of a signed agreement allowing for charges exceeding the prescribed scale or current determination. The client will have to bring forward evidence showing that the circumstances in which the agreement was entered into, and perhaps the contents of the agreement, are arguably inconsistent with the normal course of a fiduciary relationship and, in the circumstances, can be regarded as unreasonable. This suggests to me that, in the final analysis, the burden of proof lies upon the applicant for relief to establish such a claim. [93] The previously decided cases are not entirely consistent on this question of where the burden of proof lies. In In re Stuart, Ex parte Cathcart [1893] 2 QB 201, the Court of Appeal was concerned with an application under the Attorneys and Solicitors Act 1870 to set aside a costs agreement as unfair and unreasonable. The effect of s 9 of the Act was that if it shall appear to the court or Judge that such agreement is in all respects fair and reasonable, the same may be enforced. According to Lord Esher MR (at 205) this meant that when an agreement was challenged, the solicitor must not only satisfy the court that the agreement was absolutely fair with regard to the way in which it was obtained, but must also satisfy the court that the terms of that agreement are reasonable. This seems to suggest that a burden of proof lies upon the solicitor. It is important to note, however, that the statutory provision in question was concerned with the enforceability of the agreement and, unlike s 59(5) of the Legal Practitioners Act, did not require the court to undertake an inquiry as to whether the agreement was unreasonable. 337 Consequently, I am not persuaded that the legal onus of proof under s 288(1) rests with the solicitor. To the contrary, it seems to me that it is for the applicant (generally the client) to satisfy the court that the agreement or term or terms thereof as the case may be is or are not fair or reasonable. No doubt in particular cases only slight evidence will be required to shift the evidential burden to the solicitor. After all, the court will weigh all the evidence "according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted" (Blatch v Archer (1774) 1 Cowp 63; 98 ER 969). But in my opinion the legal onus is with the moving party. 338 So has Mr Lo Pilato discharged that onus? Further, if he has, should the Court set aside the relevant clauses? 339 I turn to consider the first limb of Mr Lo Pilato's argument: the question of non-disclosure. 340 Section 269 requires a law practice to disclose to a client: (a) the basis on which legal costs will be worked out, including whether a scale of costs applies to any of the legal costs; and (b) the client's right to— (i) negotiate a costs agreement with the law practice; and (ii) receive a bill from the law practice; and (iii) request an itemised bill if the client receives a lump sum bill for more than the threshold amount; and (iv) be notified under section 276 (Ongoing obligation to disclose etc) of any substantial change to the matters disclosed under this section; and (c) that the client is not entitled to request an itemised bill if the bill is for an amount equal to or less than the threshold amount; and (d) an estimate of the total legal costs, if reasonably practicable or, if it is not reasonably practicable to estimate the total legal costs, a range of estimates of the total legal costs and an explanation of the major variables that will affect the working out of the costs. … (g) if the matter is a litigious matter, an estimate of— (i) the range of costs that may be recovered if the client is successful in the litigation; and (ii) the range of costs the client may be ordered to pay if the client is unsuccessful; and (h) the client's right to progress reports in accordance with section 278 … 341 If a law practice is required to make a disclosure to a client, it is also required to make the same disclosure, in writing, to any "associated third party payer for the client", but only to the extent that the details of the matters disclosed are relevant to the associated third party payer and relate to costs payable by that person in relation to legal services provided to the client: s 281A. 342 There are exceptions to the disclosure obligations. Those exceptions are set out in s 272 of the Act and cl 83 of the Legal Profession Regulation 2007 (ACT). But the Law Firm does not rely on any of them. 343 The guarantees can be put to one side. All the arguments were directed to the charging clauses. 344 Section 271 requires disclosure under s 269 to be made in writing before, or as soon as practicable after, a law practice is retained in a matter. Contrary to the obligation imposed by s 269(1)(d), none of the agreements in question contains an estimate of the total legal costs or a range of estimates together with an explanation of the major variables that would affect the calculation of costs. It seems tolerably clear from Ms Mylecharane's evidence at the public examination that she never provided the disclosure required by s 269(1)(d) and the Firm led no evidence to indicate that anyone else had. The Firm seeks to quarantine the conveyancing matters because the agreement provided for each conveyance to be done on "a fixed price basis" but this overlooks the fact that "legal costs" are defined in the Dictionary to the Act to include disbursements and the fixed price expressly excluded disbursements. 345 The other matters which Mr Lo Pilato complains were not disclosed were certainly not included in the costs agreements. In the absence of any evidence from the Firm to suggest that disclosure was made at some other time, I conclude that there was no disclosure as alleged and so the requirements for disclosure were not met in several respects. There is no good reason for the Firm's failure to disclose. 346 It was put to Ms Mylecharane at the public examination that she was aware of the obligation to provide an estimate of "the likely fees". She answered: To the extent we're able to do so. Under the Act we can indicate that, due to the nature of the matter we're not in a position to provide an estimate. I believe that would have formed most of these costs agreements … 347 When it was put to her that she was required to give some indication to the client of the kind of factors that would influence the costs that would be incurred she replied: When requested, yes. 348 This answer was false, possibly disingenuous. It at least reflects a misunderstanding of the statutory requirement. Perhaps Ms Mylecharane had confused this obligation with the obligation in s 269(1)(h) to disclose to the client his right to progress reports in accordance with s 278, which right is only triggered by a "reasonable request". The obligation in s 269(1)(d), however, arises regardless of whether a client requests the information. 349 Clause 2 of all the agreements in question contains, amongst other things, the Law Firm's various hourly rates. In all but the Conveyancing costs agreement, cl 2 also includes a paragraph in the following terms: Your matter Due to the nature of your matter we are unable to provide you with an estimate of likely fees of completing this matter. However, we will provide you with estimates of each stage of the litigation process as the matter progresses. 350 Ms Mylecharane was asked whether estimates were provided as promised and she answered: Not in writing. I don't recall ever writing anything in relation to that. 351 She was not asked, however, whether she provided such estimates orally. Mr Adzic was asked only about the Bulum matter, and he said he could not recall whether he was given a costs estimate. Regardless, the statutory obligation is to provide the necessary disclosures in writing and before, or as soon as practicable after, the law practice is retained in the matter. 352 I accept Mr Lo Pilato's argument that the failure to make the required disclosures is no mere technical breach. I also accept that the failure to make the statutory disclosures was not reasonable. But the fact that it is not reasonable not to make the disclosures does not necessarily mean that the agreement or the provisions in question are not reasonable. 353 Mr Lo Pilato made no submissions as to why the Firm's failure to do so renders the clauses unfair or unreasonable. But ignorance of the extent of the prospective debts Redevelopments would incur means that Mr Adzic agreed to those clauses without a full appreciation of the extent to which his home was in jeopardy if he failed to honour the guarantee. It is not ameliorated by the undertaking to provide periodic estimates. It seems to me that this could render the charging clauses unfair and unreasonable. 354 The difficulty in the present case is that the idea for the charging clause came from Mr Adzic, not the Law Firm. In the public examination both Mr Adzic and Ms Mylecharane testified that it was Mr Adzic who raised the idea of charging the Nicholls Property as security for the payment of the legal fees. Mr Adzic referred to "cash flow delays". He said that he could not guarantee that he would have the funds in the bank each month. He said that if that were an issue for the lawyers, then the charging clause was "the mechanism" to make them happy. Mr Adzic said that Ms Mylecharane had told him that senior counsel might have to be retained and that counsel would need an assurance that "his" fees would be paid. While there is nothing to indicate that alternative options were canvassed, there is no evidence to suggest that any pressure was placed on, or undue influence was exerted over, Mr Adzic to bring about the agreement. Nothing revealed in evidence about the personal relationship between him and Ms Mylecharane would lead to such a conclusion. In all the circumstances, I am not persuaded that the failure to make the statutory disclosures rendered the charging clauses unfair. There is no reason to conclude that, had the requisite disclosures been made, Mr Adzic would not have agreed to them. 355 Nor am I persuaded that the failure to make the statutory disclosures means that the charging clauses were unreasonable. 356 It is certainly true, as Mr Lo Pilato submitted, that there were other ways the Firm could have acquired security. The Bankwest, ACAT and Conveyancing costs agreements were all entered into after the dissolution of the Enima injunction in June 2010. Accordingly, Redevelopments could have granted the Law Firm an equitable second mortgage, notice of which could be given to the world by lodging a caveat on the title (which would be in addition to the Bulum caveat). But I am not persuaded that the existence of an alternative means of acquiring security, from Redevelopments, made the acquisition of security from Mr Adzic unfair or unreasonable, particularly where the alternative security on offer was an equitable second mortgage, subordinated to the registered mortgage of Bankwest and carrying with it the possibility of a contest over priorities with Mr Bulum. 357 Mr Lo Pilato also submitted that the at times large balances of the Redevelopments trust account rendered the granting of the charge unreasonable. The difficulty with this submission is that there was no certainty that sufficient moneys would be in the trust account at the times when fees and disbursements became payable. 358 I now turn to the second limb: the failure to make the required disclosures in the peculiar circumstances in which the parties were placed at the time the costs agreements were entered into. 359 In the pleading no attempt was made to indicate why the particularised matters render the agreements not fair or reasonable and notwithstanding the way in which this matter was pleaded, Mr Lo Pilato contended in his written submissions in chief that the guarantees and charging clauses were not fair or reasonable primarily because Mr Adzic was insolvent at the time he agreed to them. The argument appears to be that these terms were unfair or unreasonable because in these circumstances the Nicholls Property would be unavailable to Mr Adzic's unsecured creditors. Mr Lo Pilato cited no authority, however, to support the proposition that the interests of unsecured creditors have any bearing on the question and, having regard to the subject-matter, scope and purpose of the Legal Profession Act, I cannot see how they would. 360 An additional argument was advanced at the hearing concerning the absence of independent legal advice. 361 Each of the agreements contained the clauses relating to independent legal advice set out above at [257]–[258]. 362 Ms Mylecharane gave evidence at the public examination that she had advised Mr Adzic to obtain independent legal advice and Mr Adzic's evidence was to similar effect. Mr Adzic testified, however, that he did not obtain such advice. 363 No complaint is made in the pleading that the clauses in question were unfair or unreasonable because Mr Adzic did not in fact have such an opportunity or that they were agreed to without Mr Adzic obtaining independent legal advice. Nor was such a proposition advanced in the written submissions in chief. No application was made to amend the pleading to make such an allegation. Yet in oral argument Mr Lo Pilato also complained that, given the personal relationship between Ms Mylecharane and Mr Adzic, it was incumbent on the Firm to ensure that Mr Adzic obtained independent legal advice before entering into the agreements. He did not indicate, however, what more the Firm could or should have done. 364 Similarly, in written submissions in reply, Mr Lo Pilato contended that the Firm was under an obligation to ensure that Mr Adzic properly understood the nature and effect of the guarantees and charging clauses contained in the costs agreements. Once again, this was not a matter raised by the pleading, at least not expressly. Mr Lo Pilato claimed that the evidence that Mr Adzic gave during his public examination showed that the Firm had failed to discharge that obligation and Mr Adzic did not properly understand the effect of the charging clauses. He submitted that Mr Adzic did not demonstrate that he knew that: the charging clauses, protected by a caveat, could prevent any further security being given over the Nicholls Property; an application could be made to the Court to enforce the charging clauses by judicial sale of the Nicholls Property; or if the charging clauses were enforced, an application could be made for the appointment of trustees for sale of the Nicholls Property. 365 That much is true. But the fact that Mr Adzic did not demonstrate a knowledge of these things does not prove that he was never told about them. At the public examination Ms Mylecharane was not asked what advice she gave Mr Adzic about the implications or consequences of the charging clauses, or of the personal guarantees for that matter. Nor was she asked whether she canvassed with Mr Adzic other means of securing its fees. As the allegations concerning the deficiencies in the legal advice were not made until after the close of evidence, it would be most unfair to the Law Firm to enable Mr Lo Pilato to rely upon them and I do not therefore propose to entertain the arguments. 366 In any case, as Mr Lo Pilato acknowledged, the Court has a discretion whether to make an order to set aside a costs agreement or a term of the agreement: cf. Harrison at [79], Alman v Macdonald Rudder [2001] WASC 65 (Wheeler J) at [18]; Frigger v Shepherd [2014] WASC 477 (Jenkins J) at [29]. In this case, Mr Adzic, himself, never complained about the charging clauses. While this circumstance would not necessarily affect the question of unfairness or unreasonableness, it is not irrelevant to the question of whether the clauses should be set aside. Moreover, the inclusion in the agreement of the charging clauses had no adverse consequences for Mr Adzic. The charge was never called upon. On Mr Lo Pilato's own case the payment was made voluntarily. In these circumstances, even if I were satisfied that the charging clauses were not fair and or not reasonable, I would not exercise my discretion to set them aside. Were the grants of the personal guarantees and charges in the costs agreements transactions to defeat creditors? 367 It will be recalled that a transfer of property by a person who later becomes bankrupt is void against the trustee in bankruptcy under s 121(1) of the Bankruptcy Act if the property would probably have become part of the bankrupt's estate or available to creditors if it had not been transferred and the transferor's main purpose in making the transfer was to prevent the property from becoming divisible among his or her creditors or to hinder or delay the process of making the Property available for division among them. 368 Thus, in order to succeed in this respect Mr Lo Pilato must show that: (1) the grant of the personal guarantees and the charging clause in each costs agreement was a transfer of property; (2) but for the grant, that property would probably have become part of Mr Adzic's bankrupt estate or available to his creditors; and (3) Mr Adzic's main purpose was to prevent the Property from becoming divisible among his creditors or to hinder or delay the process of making the Property available for division among them. 369 By granting charges over the Nicholls Property and providing personal guarantees to secure Redevelopments' indebtedness to the Firm, Mr Adzic was doing something that resulted in the Law Firm becoming the owner of property that did not previously exist and so is taken to have transferred the Property to the Law Firm: see s 121(9)(b) and Sutherland v Brien [1999] NSWSC 155; 149 FLR 321 at [15] (Austin J). That disposes of the first element. The second is not in dispute. I now turn to consider the third. 370 Mr Lo Pilato seeks to prove Mr Adzic's purpose in either of two ways. 371 First, he relies on s 121(2), which, it will be recalled, provides that "the transferor's main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, insolvent". 372 The charging clauses were granted at the date of each of the four costs agreements which, as I have said, were: 22 March 2010 (the Bulum costs agreement); 7 September 2010 (the Conveyancing costs agreement); 26 July 2011 (the Bankwest costs agreement); and 12 December 2011 (the ACAT costs agreement). 373 I have already determined that it can reasonably be inferred that Mr Adzic was insolvent, or about to become insolvent, on 7 December 2011. There is no evidence to suggest that he was in any better position on 12 December 2011. For this reason the main purpose in granting the charge in the ACAT costs agreement is taken to be the purpose described in para 121(1)(b) of the Bankruptcy Act with the result that that charge is void against Mr Lo Pilato under s 121 of the Bankruptcy Act. 374 As at 7 September 2010 and 26 July 2011, Mr Adzic's position was relevantly indistinguishable. The McMillan debt was due and payable, and there is no evidence that as a matter of "commercial reality" Redevelopments either could or would have advanced Mr Adzic the money required to pay that debt. For that reason I find that it can reasonably be inferred that Mr Adzic was insolvent, or about to become insolvent, at those dates and the grants of the charge in the Bankwest and Conveyancing costs agreements are void against Mr Lo Pilato under s 121 of the Bankruptcy Act. 375 The position in relation to the Bulum costs agreement is different, however. This is how Mr Lo Pilato described Mr Adzic's asset position as at 22 March 2010: Current Assets Current Liabilities AXA and Lend Lease shares $13,199.72 Credit Card Westpac $15,000.00 Credit Card ANZ $5,000.00 Emil Bulum $866,803.74 Daniel McMillan $600,000.00 Total $13,199.72 Total $1,486,803.74 Non-Current Assets Non-Current Liabilities 6 Kuhn Place, Nicholls $1,100,000.00 Westpac $500,000 Honda/BMW/Toyota Truck $100.00 Townsend and Associates Architects $300,000.00 Total $1,100,100.00 Total $800,000 376 Mr Lo Pilato conceded in cross-examination that he did not know Redevelopments' financial situation at the time the Bulum agreement was entered into. Indeed, there is little evidence about what that situation was. The McMillan debt at that time was only $600,000. Apart from the credit card debts totaling $20,000, the only other debt then current mentioned by Mr Lo Pilato is the Bulum debt, but that was a debt for which Mr Adzic was jointly liable with the Veraars and Redevelopments. 377 Mr Adzic had not yet been served with a demand by Mr McMillan. Nonetheless, according to Mr McMillan's uncontradicted evidence, the second instalment of $600,000 under the Share Sale Agreement had been due and payable since 12 May 2009. 378 Mr Lo Pilato submitted that, according to his unchallenged evidence, Mr Adzic was insolvent as at July 2009 and that his asset position only worsened after this time. This submission accurately reflects the evidence in Mr Lo Pilato's second affidavit. What it does not do, however, is take into account Mr Lo Pilato's concessions in cross-examination to the effect that it was necessary in determining solvency to look at the commercial realities, that they included the fact that Mr Adzic was the beneficial owner of Redevelopments, and that he (Mr Lo Pilato) did not know Redevelopments' true financial position at that time. Still, I am satisfied that it can reasonably be inferred that at this time Mr Adzic was insolvent or about to become so. That inference arises from Mr Adzic's evidence at the public examination. The effect of that evidence is that he was not able to pay the second instalment of the McMillan debt when it fell due and he was not able to raise the funds from other sources. 379 I therefore find that each of the four guarantees and charges was void against the trustee under s 121(1). Was the payment of $229,879.14 a transfer to defeat creditors? 380 On the assumption that the payment was not made on Redevelopments' behalf, the answer to this issue must be resolved in Mr Lo Pilato's favour. The Law Firm contended that the payment was a payment of a secured debt and for this reason was not caught by s 121. But I have found to the contrary. It is an agreed fact that Mr Adzic was insolvent at the time the payment was made. In these circumstances, his main purpose is taken to be the purpose described in s 121(1)(b) (see [157] and following above). Was the payment of $229,879.14 a preferential payment for the purposes of s 122? 381 Section 122(1) of the Bankruptcy Act provides that a transfer of property by a person who is insolvent in favour of a creditor is void against the trustee in the person's bankruptcy if the transfer: (a) had the effect of giving the creditor a preference, priority or advantage over other creditors; and (b) was made, relevantly, in the period beginning six months before the presentation of the creditor's petition and ending immediately before the date of the bankruptcy of the debtor. 382 In his pleading, however, Mr Lo Pilato only alleged that the payment of the $229,879.14 was a "transfer of property by [Mr]Adzic to his creditor" in the event that the payment was paid pursuant to a guarantee. As I have found that the payment was not made pursuant to a guarantee, the question does not arise. Was the payment of $229,879.14 an undervalue transaction under s 120? 383 The payment of the $229,879.14 was a transfer of property by a person who later became bankrupt, within five years before the commencement of his bankruptcy. 384 Mr Lo Pilato contended that the payment was liable to be set aside under s 120 because the Law Firm gave no valuable consideration or consideration of less than market value, because Redevelopments was not yet in default under the guarantee and no demand had been made upon it. 385 The Law Firm's response was threefold. 386 First, it submitted that the obligation to pay under the guarantee arose even without any default by Redevelopments or any demand. I have dealt with this submission above. 387 Secondly, it submitted that, even if the liability under the guarantees had not been triggered at the time of settlement, Mr Adzic was at least contingently liable to the Firm, and his payment of Redevelopments' liability was a reduction of that contingent debt, which would be provable in his bankruptcy (citing Bankruptcy Act, s 82(1)). Even if it be accepted that the discharge of a contingent debt is good consideration, the Law Firm made no attempt to explain why the "market value" of that discharge is the same as the full amount owed by Redevelopments. 388 Thirdly, the Law Firm submitted that the consideration for the payment of $229,879.14 was the release of the charge over the Property. This argument suffers from the same defect as the second. 389 I therefore find that if, contrary to what I have found above, the payment was not made for the benefit of Redevelopments, it would have been made for no consideration or for consideration of less than its market value and so would have been void against the trustee. Does the Law Firm have a defence? 390 The Law Firm did not raise any defence so the question is moot. To what relief is Mr Lo Pilato entitled? 391 Having regard to my conclusion on the first issue, Mr Lo Pilato is not entitled to any relief. Conclusion 392 In summary, in relation to the claim against the Trust, I am satisfied that there was a loan to Mr Adzic in October 2011 of $100,000. I am not satisfied, however, that the loan was made by the Trust. Rather, the loan was made by Mr and Mrs Saeedi. Since Mr and Mrs Saeedi were not the transferees of the Nicholls Property, the loan was not part of the consideration for the transfer for the purposes of s 120 of the Bankruptcy Act. It follows that the Property was transferred for $805,000. I am not satisfied that the contract price of $905,000 was less than the market value of the Property at the time of transfer but I am satisfied that the actual consideration of $805,000 was. I am therefore satisfied that the transfer is void against Mr Lo Pilato under s 120(1) of the Act. 393 I am also satisfied that the transfer is void against Mr Lo Pilato under s 121(1) of the Act as it was a transfer of property which would otherwise have become part of Mr Adzic's estate or available to his creditors and Mr Adzic's main purpose in making the transfer was to prevent the Property from becoming divisible amongst his creditors or, at least, to hinder or delay the process of making property available for division amongst his creditors. I am satisfied that this is so on the basis that it can reasonably be inferred from all the circumstances that, at the time of the transfer, Mr Adzic was, or was about to become insolvent. 394 I would therefore make the first declaration Mr Lo Pilato sought. But Mr Lo Pilato did not file his application until after the Trust had transferred the Property to a third party who acquired it in good faith and for consideration that was at least as valuable as the market value of the Property. Nor did he call for the delivery up or re-vesting of the Property to him. As such he has no personal claim against the Trust and I am bound by the decision of the Full Court in Alvaro to find that Mr Lo Pilato is not entitled to consequential relief on this basis. Although he may make a claim to the traceable proceeds of the sale to the third party, it has already been established that the bulk of the proceeds have been dissipated. In these circumstances, having regard to Mr Lo Pilato's statutory obligation under s 121(5) to pay the Trust the value of the consideration it gave for the purchase of the Property, there is no utility in ordering a taking of an account. For the same reason it would also be futile to make the second declaration. 395 The claim against the Law Firm turns on whether the payment of the amount of $229,879.14 on settlement of the Nicholls Property was made by Mr Adzic on his own behalf and not on behalf of his company, Redevelopments. The claim fails because I am not satisfied that the money Mr Adzic paid to the Law Firm was not paid on behalf of Redevelopments. 396 It follows that Mr Lo Pilato has succeeded against the Trust on all issues save that he has not been able to make out a case for consequential relief, but he has failed against the Law Firm. In each case costs should follow the event. He should have his costs against the Trust but he should pay the Law Firm's costs. I certify that the preceding three hundred and ninety-six (396) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katzmann. Associate: Dated: 31 January 2017