FEDERAL COURT OF AUSTRALIA 640 The Esplanade Pty Ltd v Splash Bay Pty Ltd (No 2) [2017] FCA 89 File number: QUD 851 of 2015 Judge: MARKOVIC J Date of judgment: 14 February 2017 Catchwords: CORPORATIONS – application by substituted plaintiff to wind up the defendant – applicability of s 459S of the Corporations Act 2001 (Cth) where an application to wind up a company by a substituted plaintiff – whether a defendant company may challenge a substituted plaintiff's statutory demand in a winding up application brought by the substituted creditor Legislation: Corporations Act 2001 (Cth) ss 459A, 459C, 459E, 459F, 459G, 459P, 459S, 465B, 465C Duties Act 2001 (Qld) s 487 Federal Court (Corporations) Rules 2000 (Cth) r 5.2 Cases cited: Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) (2011) 244 CLR 1 Bibby Financial Services Pty Ltd v Wolf Industries Pty Ltd (2004) 49 ACSR 45; [2004] NSWSC 134 Burnitt & Anor v Pacific Paradise Resort Pty Ltd [2004] QDC 218 Caxton Street Agencies Pty Ltd v Korkidas & Anor [2002] QSC 210 Franks v Norfolk Estates Pty Ltd [2004] QFC 301 In the matter of C2C Investments Pty Limited (No 9) [2013] NSWSC 269 In the matter of Gladstone Mortgagee No 1 Pty Ltd [2015] NSWSC 1551 Kelvingrove (1993) Pty Ltd v Paratoo Pty Ltd (1998) 16 ACLC 964 Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262 Mission Development Group Pty Ltd v Rhett Pty Ltd [2004] QSC 359 Vercorp Pty Ltd v Lin [2007] 2 Qd R 180 Assaf F, Statutory Demands and Winding up in Insolvency (2nd ed, Lexis Nexis Butterworths, 2012) Seddon N, Seddon on Deeds (The Federation Press, 2015) Date of hearing: 30 August 2016, 31 August 2016 and 15 September 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 144 Counsel for the Plaintiff: Mr C F O'Meara Solicitor for the Plaintiff: Hillhouse Burrough McKeown Solicitors Counsel for the Defendant: Mr N J Shaw Solicitor for the Defendant: Johanson Lawyers ORDERS QUD 851 of 2015 BETWEEN: 640 THE ESPLANADE PTY LTD ACN 161 057 638 Plaintiff AND: SPLASH BAY PTY LTD ACN 158 274 723 Defendant JUDGE: MARKOVIC J DATE OF ORDER: 14 FEBRUARY 2017 THE COURT ORDERS THAT: 1. The defendant be wound up. 2. William Paul Cotter and William Roland Robson be appointed as joint and several liquidators of the defendant. 3. The plaintiff's costs (including reserved costs, if any) be taxed and reimbursed out of the property of the defendant in accordance with s 466(2) of the Corporations Act 2001 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT MARKOVIC J: introduction 1 Splash Bay Pty Ltd (Splash Bay) is the trustee of the Splash Bay Unit Trust. It holds land at Hervey Bay, Queensland which it initially proposed to develop as a waterpark. Charles Richards (Mr Richards) is the sole director of and shareholder in Splash Bay. 2 640 The Esplanade Pty Ltd (640), the trustee of the 640 The Esplanade Unit Trust (640 Unit Trust), holds land located at 640 The Esplanade, Urangan, Queensland (640 Land), which is adjacent to the land held by Splash Bay and which was intended to be a part of the waterpark development. Until February 2014, Mr Richards was the sole director and secretary of 640 and until March 2014 he was the sole member of 640. 3 Benjamin Plunkett first met Mr Richards in 2012. He invested, through interests associated with him, in a number of Mr Richards' projects including the Splash Bay Unit Trust and the 640 Unit Trust and loaned moneys to 640 for the acquisition of the 640 Land. But the business relationship between Messrs Richards and Plunkett deteriorated, resulting in Mr Plunkett becoming the sole director, secretary and member of 640. 4 As at the time of the hearing of this proceeding, despite Mr Richards' optimism, Splash Bay's proposed development of the site held by it at Hervey Bay had not commenced and Splash Bay had a number of debts, including a debt owing to 640. the application to wind up Splash bay 5 This proceeding commenced on 14 September 2015 when Christopher Rosch, a creditor of Splash Bay, filed an application seeking an order that Splash Bay be wound up pursuant to s 459A of the Corporations Act 2001 (Cth) (Corporations Act) and that a liquidator be appointed based on a failure by Splash Bay to comply with a creditor's statutory demand issued pursuant to s 459E of the Corporations Act. 6 Mr Rosch had served a creditor's statutory demand for payment issued pursuant to s 459E of the Corporations Act on Splash Bay (Rosch Demand) and an affidavit in support on the registered office of Splash Bay by express prepaid post despatched on 5 August 2015. Splash Bay failed to comply with the Rosch Demand or to secure or compound for that amount within 21 days after it was served. 7 On 21 August 2015 a creditor's statutory demand for payment was prepared on behalf of 640 and issued pursuant to s 459E of the Corporations Act and was served by registered post on Splash Bay (640 Demand). The 640 Demand sought payment of $511,080.58, described as the total of loans made by 640 to Splash Bay over the period 23 April 2013 to 21 October 2013 and accrued interest. 8 On or about 11 September 2015 the solicitor for Splash Bay informed the solicitor for 640 that Splash Bay disputed the debt the subject of the 640 Demand on the ground that it had been forgiven by 640. Splash Bay did not file an application to set aside the 640 Demand. 9 640 did not commence proceedings to wind up Splash Bay based on its failure to comply with the 640 Demand because it became aware that this proceeding had been commenced by Mr Rosch. When Mr Rosch reached a compromise with Splash Bay, 640 applied pursuant to s 465B of the Corporations Act to be substituted as a creditor and on 10 December 2015 the Court made an order to that effect. 10 Splash Bay opposes the application to wind it up on grounds that: 640 is not owed a debt or alternatively there is a genuine dispute as to whether it is owed a debt; the winding up proceeding is an abuse of process; the debt claimed by 640 was trust property and 640 is no longer the trustee of the relevant trust; and the Court should exercise its discretion to dismiss the application. 11 The evidence filed on behalf of Splash Bay also suggested that it would raise duress as a ground of opposition to the application to wind it up but that was not pressed by Splash Bay as a separate ground. facts 12 A significant amount of evidence was led by the parties in relation to the history of the dealings between them and how interests associated with Mr Plunkett came to be involved in various projects being promoted by Mr Richards and his business partner, Ian Buckeridge. To the extent that they are relevant or provide context for the consideration of the issues now before me for determination I set out those facts below. Before doing so I make some general observations. 13 The events which led to this proceeding span a period of almost four years. It is clear that the principal protagonists, Mr Plunkett and Mr Richards, have had an irretrievable breakdown in their business relationship. The facts disclose that Mr Richards' desire for Splash Bay to develop its land led him on a path of raising finance from non bank lenders at extremely high interest rates, causing Splash Bay to incur significant debts in order to forestall any action that might undermine the project and to keep the project alive. As at the date of hearing, Splash Bay was at its third iteration of the proposed development on its land and had not yet secured finance to proceed with that development. 14 Both Mr Richards and Mr Plunkett gave evidence by way of affidavit and were cross examined. Neither Mr Plunkett nor Mr Richards impressed me as witnesses. Mr Plunkett's evidence was at times confusing and at other times defensive. Mr Richards is clearly an experienced businessman but I found him to be a most unsatisfactory witness. He was intentionally evasive and, at times, argumentative. On many occasions Mr Richards did not answer the question that was put, despite it being evident that he understood what was being asked. Rather, he attempted to give answers that would suit his version of events and questioned the cross examiner's intent in pursuing lines of questioning. Mr Richards' attitude and demeanour in cross examination left me with the impression that at times he was less than frank in his responses. Mr Plunkett makes his first investment 15 In or about September 2012 Mr Plunkett was approached by Guy Richards, Mr Richards' nephew, who told Mr Plunkett that he was involved in a property development in Queensland; that Mr Richards and Mr Buckeridge were both experienced property developers and fund raisers; and that there was an opportunity for him to become involved in the development and make some money. Mr Plunkett was interested in the investment and was introduced to Messrs Richards and Buckeridge. 16 Mr Plunkett had a series of meetings with Messrs Richards and Buckeridge at which they told Mr Plunkett about some of the developments in which they were involved; explained that in return for his investment Mr Plunkett would become a syndicate member holding units in two unit trusts, 637 The Esplanade Unit Trust and the Splash Bay Unit Trust (collectively, Syndicates), which each held a parcel of land for the syndicate investors located respectively at 637 The Esplanade Urangan, Queensland (637 Land) and 835 Boat Harbour Drive Urangan, Queensland (collectively, Syndicate Land); and provided spreadsheets demonstrating the return to investors and an investment prospectus. Between September and December 2012 Mr Plunkett invested $340,000 in the Syndicates (Mr Plunkett's Syndicate Investment). 17 In late October 2012 Mr Plunkett was approached by Guy Richards and Messrs Richards and Buckeridge, who encouraged him to participate in buying units in a third syndicate, the proposed 640 Unit Trust. Mr Richards told Mr Plunkett that: he had secured the purchase of the 640 Land for $1.4 million plus GST; Mr Plunkett and each other member of the 640 Unit Trust (identified as Guy Richards; Dottax Pty Ltd (Dottax); and Mr Buckeridge and his wife, Ann Buckeridge) would contribute $40,000 and obtain a 25% unit holding in the 640 Unit Trust; the monies for acquisition of the units would be applied towards the acquisition of the 640 Land; and the 640 Land would be developed as a car park for the water park proposed for the Syndicate Land. Mr Plunkett, through Plunkett Developments Pty Ltd (Plunkett Developments) as trustee for the Plunkett Holdings Trust, acquired a 25% holding in the 640 Unit Trust for $40,000. Mr Plunkett's loan to 640 18 In about mid March 2013 Mr Plunkett was contacted by Mr Richards who told him that: the time for settlement of the purchase of the 640 Land was approaching and that he was having difficulty organising finance to settle the purchase; he had identified a lender but his preferred valuer, Opteon, was unable to complete its valuation, a prerequisite to finance, in a timely fashion; and notwithstanding that, Opteon's pre-valuation advice was that the 640 Land would be valued at $4 million. 19 Mr Plunkett initially declined to advance the moneys required to complete the acquisition of the 640 Land. Mr Richards then told Mr Plunkett that: if he loaned 640 the full amount required to settle the 640 Land, $1.35 million, he would receive a return of 2.5% per month and have security over the 640 Land; and 640 only needed the loan for four weeks. After settlement Opteon would undertake its valuation of the 640 Land and the lender, who was "waiting in the wings", would refinance so that Mr Plunkett would be repaid. 20 Mr Plunkett informed Mr Richards that in order to consider loaning the settlement monies for that short period of time he required a 5% return "to make it worth [his] while" and the return of his $40,000 investment in the 640 Unit Trust. 21 On or about 27 March 2013 Mr Plunkett agreed to loan $1.4 million to 640 to settle the purchase of the 640 Land (640 Loan), which according to Mr Plunkett included the return of his $40,000 investment in the 640 Unit Trust. On 27 March 2013 Mr Plunkett received an email from Mr Richards which included the following: Hi Mate, as discussed I have spoken with Ian regarding the amount and we both agree, lets stick with the $1.4m (it can be 2 traunches if need be). I mentioned to Ian that we are looking between the 7th and the 14th, the earlier the better, but we fully understand that part is not in your control. The account details are below. The reference for the transfer should be "640 The Esplanade". 22 During the period in which Mr Plunkett was awaiting the release of the moneys for the 640 Loan, Mr Richards told him that he had secured funding from Benchmark Capital, that a US based company wished to build a hotel on one parcel of the Syndicate Land and that a Canadian consortium was flying to Hervey Bay to negotiate a deal with Mr Richards on the water theme park, all of which gave Mr Plunkett comfort in advancing the 640 Loan. 23 Over the period 23 April 2013 to 27 May 2013 Mr Plunkett paid a total of $1.36 million into a bank account nominated by Mr Richards. Discussions about repayment of the 640 Loan 24 The settlement of the purchase of the 640 Land occurred on 30 May 2013. Until then Messrs Richards and Buckeridge assured Mr Plunkett that they would repay the 640 Loan within four weeks. That period passed without repayment occurring. Mr Plunkett continued to seek repayment of the 640 Loan and was promised that repayment would occur on various alternative dates but it did not. On 25 July 2013 Mr Plunkett received an email from Mr Richards in which he said: Ben, regarding the refinance and settlement of 640 The Esplanade: 1) I have spoken to Rod Johanson, I am signing mortgage documents Friday, I'll express post straight back to Rod. Rod understands the urgency. 2) Rod wants to book it in to settle Tuesday. 3) Rod will communicate with the current mortgagee regarding pay out and settlement. 4) Rod will pay your money straight to your nominated account. 5) Please confirm the details of the relevant account. I will forward to Rod together with my authority to pay the $1.4m directly to you at settlement. 25 After receipt of that email Mr Plunkett arranged for a title search to be undertaken of the 640 Land and discovered that there was a first registered mortgage on its title dated 9 May 2013 in favour of Anthony William Swadling, Allison Dawn Swadling, Shane Maxwell Swadling, Annette Eglia Swadling and Gregwood Pty Ltd securing an amount of $600,000 (Swadling Mortgage). 26 Upon discovering the Swadling Mortgage Mr Plunkett contacted Mr Richards and attempted to meet with him. He also asked Mr Richards to send him a copy of the mortgage documents but he never received them. The only documentation that Mr Plunkett received from Mr Richards was an email forwarded on 8 August 2013, which was from Peter Holland of Private Mortgages to Mr Richards dated 17 April 2013 and annexed a "finance approval letter of offer" from Little Rock Investments Pty Ltd or nominee as lender to 640 for $600,000. 27 At that point Mr Plunkett formed a belief that Messrs Richards and Buckeridge had no intention of repaying the 640 Loan. On 30 July 2013 Mr Plunkett sent an email to Mr Richards in which he said, among other things: … From day 1 you have fed me nothing but lies and false promises and all I have seen is a spectacular display of incompetence and unprofessionalism displayed by yourself and Ian Buckeridge. … After the settlement on 640 has been completed we need to talk about an exit strategy as I no longer wish to have any business dealings with you. … I highly doubt you will come through with your latest promise given you have broken countless promises already, hence I have no choice but to bring in lawyers into the equation from here on in to retrieve what is owed to me as your wish to avoid sitting down with me in person and talking things through is a clear indication you are hiding something and a full investigation into all accounts will be conducted in every detail, including the first mortgage on the 640 block that myself or your nephew had no knowledge of. … 28 Shortly after receiving the email Mr Richards telephoned Mr Plunkett and told him that he used the 640 Loan to pay the arrears on a mortgage from the ANZ Bank on the 637 Land, that the loan from the ANZ was in default and that if he had not made the payment the bank would have taken possession of the 637 Land, causing Mr Plunkett to lose his investment in it. Mr Plunkett informed Mr Richards that, given that was not the purpose for which he provided the 640 Loan, he had no option but to engage lawyers to recover the 640 Loan. 29 A few days later Mr Richards again telephoned Mr Plunkett and said that: Mr Plunkett needed to work with him or he would not get the 640 Loan back; and he had arranged construction finance with Tripod Finance for $14.8 million which would pay out the 640 Land. 30 Mr Richards then provided Mr Plunkett with a copy of a letter from Tripod Finance, upon receipt of which Mr Plunkett informed Mr Richards that he would not engage a lawyer provided he kept him informed of all lending and other activity relevant to the 640 Loan and Mr Plunkett's Syndicate Investment. 31 Mr Plunkett was thereafter provided with correspondence relating to the proposed refinance, as a result of which he learnt that Opteon's valuation of the 640 Land had been rejected by the proposed lender. Mr Plunkett's evidence is that: this caused him to lose faith in Mr Richards; he told Mr Richards that he would only agree to give him more time if 640 executed a mortgage in his favour securing the 640 Loan; and Mr Richards undertook to execute a mortgage provided that Mr Plunkett agreed to forgo the interest on the 640 Loan up to the date of the signing of the mortgage and did not register the mortgage on the title of the 640 Land as to do so might unsettle the proposed incoming financier, Tripod Finance. Mr Plunkett agreed to these terms. 32 On 20 August 2013 Mr Richards sent an email to his solicitor, Mr Johanson, copied to, among others, Mr Plunkett in which he wrote: I acknowledge and confirm that Ben Plunkett put in $1,400,000 towards the purchase and settlement of 640 The Esplanade. Ben has told me this afternoon that he will be registering a mortgage over the site. He has also requested to be added as a Director of 640 The Esplanade Pty Ltd. Ben has agreed that in the event we successfully raise refinance funds to take out the current first mortgage, he will lift the mortgage, providing he is reimbursed the $1,400,000 at settlement. 33 Mr Plunkett instructed his solicitors to prepare a mortgage, which he sent to Mr Richards on or about 22 August 2013. After the terms of the mortgage had been agreed Mr Plunkett attempted to have Mr Richards sign it but Mr Richards kept avoiding him. On 3 September 2013 Mr Plunkett telephoned Mr Richards and told him that he was on his way to Mr Richard's house to get the mortgage signed. As a result of that conversation, later on 3 September 2013 Mr Johanson sent an email to Vincent Berry at Ferguson Cannon Lawyers, Mr Plunkett's solicitors, in which he said: I have heard from Mr Richards that your client is en-route to his dwelling to have him sign the mortgage. This is not at my client's request, but rather your client forcing this position upon my client. As such, any signing would be under duress. Both your office and your client are put on notice in this regard. As you are aware, I have a copy of the mortgage. I can arrange for its execution, without the intervention of your client attending my client's premises. At present, and please pass this on to your client, I have had a discussion with Ian Lazar today. He is working on his final numbers and has promised I will have those details within 2 hours. At that time, the extent and timing of the full refinance will be known. My client has made it clear to your client that it does not want your client's mortgage to suddenly appear on title this late in the proceedings with Lazar, as it may cause the whole refinance, including arrangements for repayment of your client's loan to come undone. My client will agree to sign the mortgage to secure the repayment of your client's debt as soon as the details of the refinance settlement are known. Please confirm with your client that he will withdraw from attending my client's residence today. 34 On 6 September 2013 Mr Richards signed the mortgage. 35 In the period from August to October 2013 Mr Plunkett was repeatedly reassured by Messrs Richards and Buckeridge that they were doing everything they could to secure funding to repay the 640 Loan. More specifically, Mr Richards informed Mr Plunkett: in mid September 2013 that Tripod Finance was not proceeding with the refinance because it had lost confidence in the Opteon valuations; and in mid October 2013 that he had been introduced to a new joint venture partner willing to develop the Syndicate Land. 36 On about 21 October 2013 Mr Richards told Mr Plunkett that: he was trying to obtain finance from a new lender introduced by Little Rock Finance; if he did not secure finance within a couple of months he would resign as director of 640 allowing Mr Plunkett to become the sole director and shareholder of 640 and sole member of the 640 Unit Trust; and he would arrange for the handing over of all of the units in the 640 Unit Trust to Mr Plunkett if he "left him alone to try and sort out the re-finance on the Syndicate Land". Mr Plunkett agreed to this proposal. 37 Also on 21 October 2013 Mr Richards forwarded an email to Mr Plunkett which was addressed to "Steven" at Little Rock Finance, copied to Messrs Buckeridge and Johanson, in which he wrote: Dear Steven, thanks for taking my call this morning. As discussed we have chosen to sell down a portion of our projects to a colleague who is very well known to us. We have made this decision to meet our obligations and move our project positively forward. The JV agreement includes the payout of the 640 mortgage. The email below is a brief update of proceedings: Regards … Mr Plunkett believed that the reference to selling down the 640 Land to a colleague was a reference to him and the agreement that he had reached with Mr Richards. 38 By December 2013 the 640 Loan had not been repaid. Mr Plunkett told Mr Richards that he had had enough and that he wanted Mr Richards to sign over 640 to him but Mr Richards told him to hold off until January 2014 as he had obtained funding from a Chinese consortium known as the China Project. Mr Plunkett becomes the sole director and secretary of 640 39 At the beginning of February 2014, as funding from the China Project had not progressed, Mr Plunkett told Mr Richards that he "had had enough", that Mr Richards had had nearly a year to refinance the Syndicate Land and the 640 Land, that nothing had happened and that his solicitors had obtained all relevant mortgages and there appeared to be a common theme of extremely high and uncommercial interest payable on them. Mr Plunkett asked Mr Richards to provide confirmation of how much was owed on the 640 Land and discussed the mechanism for him to become a director of 640 and to take over the shareholding in 640 and the units in the 640 Unit Trust. 40 On 4 February 2014 Mr Richards copied Mr Plunkett into an email to mark@homecorplending.com.au which, in turn, forwarded an email from Mr Johanson which stated: The Outstanding Sum on the Expiry Date will be $774,372.08. The Expiry Date was 31 January 2014. So I am guessing if you had $780,000, that should be close. Mr Plunkett's evidence is that this email was sent to him in response to his request for a payout figure for the 640 Land and that, after its receipt, he came to an arrangement with Mr Richards to "sign over" the directorship of 640. 41 Mr Richards' evidence is that leading up to 19 February 2014 Mr Plunkett pressured him to sign over his interest in the 640 Unit Trust, calling him between 5 and 20 times per day and meeting with him at various venues. Mr Richards said that the transfer of his interest and control of 640 was in two parts. The first was his resignation as a director of 640, which he says occurred on 19 February 2014. The second was the transfer of units in the 640 Unit Trust. 42 Mr Plunkett's lawyers drafted a letter of resignation of director which Mr Plunkett sent to Mr Richards on 13 February 2014. Mr Richards told Mr Plunkett that he would sign it and return it on the same day. 43 On 13 February 2014 Mr Plunkett signed an "appointment as director and secretary" of 640 in the following terms: I, Benjamin Plunkett hereby offer myself for appointment as a Director and secretary of 640 The Esplanade Pty Ltd ACN 161 057 638, effective on this date. 44 The following day, 14 February 2014, having not received the executed letter of resignation of director from Mr Richards, Mr Plunkett sent him an email asking where it was. In response Mr Richards sent an email, copied to Mr Johanson, in which he said: I told you I sent it. See below. "Below" was an email from Mr Richards to Mr Plunkett dated 13 February 2014 which, in turn, forwarded an email dated 13 February 2014 from admin@splashbay.com.au to Mr Johanson and copied to Mr Richards. According to Mr Plunkett, Mr Richards' email dated 14 February 2014 had a copy of the signed letter of resignation as director attached to it. 45 Mr Richards' signed letter of resignation as director of 640 dated 13 February 2014 provides: I, Charles Stanley Richards, hereby tender my resignation as a Director and secretary of 640 The Esplanade Pty Ltd ACN 161 057 638, effective on this date. I confirm I am owed no fees by the company. 46 On 14 February 2014 Mr Richards sent an email to Mr Johanson in which he wrote: Hi Rod, as discussed earlier, please make the Director changes for 640. 47 Also on 14 February 2014 Mr Plunkett contacted Rowan Astill of Astill Legal Group, solicitor for the lenders whose loan was secured by the Swadling Mortgage, and left a message informing Mr Astill that he had become the director of 640 and that he would like to speak with him about the Swadling Mortgage. Later that afternoon Mr Johanson contacted Mr Plunkett and informed him that he had received an email from Mr Astill concerning Mr Plunkett's call to him. Mr Johanson asked Mr Plunkett what he wanted him to do as the "solicitor on the record" for 640. Mr Plunkett asked Mr Johanson to forward Mr Astill's email. He told Mr Johanson that he could continue to act for 640 to finalise the transfer of the 640 unit holders' units to him and to notify ASIC of the change in director of 640. 48 On 15 February 2014 Mr Johanson forwarded the email from Mr Astill to Mr Plunkett. In his email to Mr Plunkett, Mr Johanson wrote: As promised late yesterday below is the e-mail I got from Rowan Astill. I have also attached a reply I got from the lead broker for Rowan's clients, showing the level of dissatisfaction from his point of view, and my efforts to keep him from acting prematurely. If you wish to keep the site 'alive' then perhaps your present sponsors could be persuaded to advance the $25,000 to buy another month's reprieve. If your only exit strategy for Rowan's client, is that you will take control and market the site, without any payments to keep interest in check, I would see them saying 'no thanks'. They can do that themselves, and they would prefer to be in control of that process. Perhaps if you had an auction campaign lined up, and evidence that whatever marketing budget put forth by the agent, had been paid up front, so it was clear the site was going to receive wide exposure potentially leading to sale, then maybe that might sway them. That said, to put such a thing in place, when the boys are on the precipice of receiving their take out finance letter from the fund manager they have been working with (I have seen the latest e-mail form Friday from the manager) on Tuesday, would be folly. At this stage I am urging all first mortgagees and parties causing grief, to show restraint until Tuesday. I can only suggest the same for you. Equally, changing the directorship of 640 at this time would only cause grief if the fund manager does a check company search before issuing the terms sheet. Of course if the terms sheet is unworkable, and unable to be changed to suit, then I will be the first to say let's crystalize what you guys set about to do yesterday. For then it will be a scramble by all lenders to achieve the best for themselves. Mr Astill's email, which was forwarded by Mr Johanson, included: A gentleman named Ben Plunkett has telephoned me this morning and left a message to say he is an incoming director and asked me to call. Given that you represent the company I will not be returning his call as per ASCR. … 49 In re-examination Mr Richards gave evidence that he provided his signed letter of resignation as a director and secretary of 640 to 640 on 13 February 2014 but that there was an agreement between him and Mr Plunkett that it would not be registered for six or seven days because of the existing mortgage and the need to secure a loan. Mr Richards' view was that he was a director of 640 until 19 February 2014. In cross examination Mr Plunkett did not accept that he and Mr Richards had agreed that Mr Richards would continue as a director of 640 at least until 19 February 2014 despite Mr Richards signing the document by which he resigned as director on 13 February 2014. 50 The Form 484 notifying of the changes to office holders, which was lodged by Mr Johansson with the Australian Securities and Investments Commission (ASIC) on 19 February 2014, recorded the date of Mr Richards' resignation as director and secretary of 640 and of Mr Plunkett's appointment as director and secretary of 640 as 19 February 2014. 51 On 6 March 2014 a meeting of 640 was held at which Messrs Plunkett and Richards were both present. At that meeting it was resolved that: the transfer of one ordinary share in 640 from Mr Richards to Mr Plunkett be approved, the transfer be approved for registration in the register of members, the share certificate in Mr Richards' name be cancelled and a share certificate be issued to Mr Plunkett; 640 accept the resignation of Mr Richards as director and secretary and accept the appointment of Mr Plunkett as director and secretary; and the change in registered office of 640 be approved. 52 Following the commencement of this proceeding, Mr Plunkett became aware that the change in directorship of 640 was recorded as 19 February 2014, rather than 13 February 2014. Mr Plunkett took steps to amend the ASIC register to reflect the date of Mr Richards' resignation and his appointment as director on 13 February 2014, which he believes is the operative date, by lodging a request for correction form with ASIC on 4 July 2016. 53 Notwithstanding the terms of the Form 484 lodged with ASIC, I do not accept Mr Richards' evidence that there was an agreement that his resignation as a director would not take effect until 19 February 2014. The following evidence is inconsistent with there being such an agreement and supports Mr Plunkett's version of events: the terms of the notice of resignation which Mr Richards signed were clear: the resignation was to take effect immediately; Mr Richards provided the notice to 640 on 13 February 2014; and on 14 February 2014 Mr Richards instructed Mr Johanson to "make the Director changes for 640". The minute of resolution of director dated 19 February 2014 54 On 19 February 2014 Mr Richards signed a minute of resolution of the director of 640 (640 Minute) which records that he resolved at a meeting held on that day at midday at Dromana that: All loans by the Company whether in its own right or as trustee of the 640 The Esplanade Trust to: 1. Splash Bay Pty Ltd whether in its own right or as trustee; or 2. 637 The Esplanade Pty Ltd whether in its own right or as trustee are hereby forgiven in light of the proposal to transfer all shareholding and unit holding to Ben Plunkett. 55 The 640 Minute was extracted from Splash Bay's records by Mr Richards. It does not appear in 640's records. Mr Richards says that as at the date of the 640 Minute he was the sole director of 640, that he was able to and did forgive the debt owing by Splash Bay and that the 640 Minute is an accurate record of the resolution that was passed. 56 A copy of the 640 Minute is in evidence. It is unclear and difficult to read and Mr Richards no longer has the computer on which it was created. According to Mr Richards the 640 Minute is unclear because when printing it he used recycled paper which caused lines of the document to repeat in places. The transfer of units in the 640 Unit Trust to Plunkett Developments 57 Following his appointment as director of 640, Mr Plunkett asked Mr Richards to arrange the transfer of the units in the 640 Unit Trust to him. There is a contest on the evidence about the circumstances in which that transfer occurred. 58 According to Mr Richards, Mr Plunkett applied pressure to him to sign over his interest in 640 so that Mr Plunkett could deal with debts he owed to others. 59 In cross examination Mr Richards said that there had been agreement to Mr Plunkett's request that 640 and the units in the 640 Unit Trust would be transferred to him; that as a result, Mr Plunkett would get control of 640 and the units in the 640 Unit Trust; and that the agreement to do that was an important commercial transaction. Mr Richards said that he agreed to the transaction for three reasons: first, to overcome the threat of legal action by Mr Plunkett; secondly, because of the threats made to him personally; and thirdly, because he had read about the "pony club" in which he alleged Mr Plunkett was involved. 60 Mr Richards' evidence is that on 10 March 2014 Dottax transferred its units in the 640 Unit trust to Mr Plunkett. No document is provided in support of this assertion by Mr Richards. Mr Plunkett was not satisfied with this and required that all units in the 640 Unit Trust be transferred to him. Mr Richards asked Guy Richards and Mr Buckeridge to transfer their respective interests' units in the 640 Unit Trust to Mr Plunkett. Mr Buckeridge only agreed to effect the transfer if Mr Plunkett was removed from his involvement in Splash Bay. Mr Richards said he partially achieved this by the loan adjustments that were made by the 640 Minute but that he overlooked the fact that Mr Plunkett still held units in the Splash Bay Unit Trust. 61 The transfer of units in the 640 Unit Trust was effected by a document titled "Transfer of Units" dated 10 March 2014 signed by each of the transferors: Dottax as trustee for the Goodacre Richards Family Trust, Ian Gordon Buckeridge and Ann Buckeridge as trustee for the Buckeridge Superannuation Plan Trust and Guy Richards as trustee for the Guy Richards Family Trust (640 Transfer Deed). By that deed each of the transferors transferred their "right, title and interest" in their respective holding of 25 units in the 640 Unit Trust to the transferee, Plunkett Developments as trustee for the Plunkett Holdings Trust, in consideration of $1 paid by the transferee, receipt of which was expressly acknowledged in the deed. 62 A trust resolution signed by Brigette Lesley Goodacre, the sole director of Dottax, on behalf of Dottax as trustee for the Goodacre Richards Family Trust and by Guy Richards as trustee for the Guy Richards Family Trust records that it was resolved that the following transfers of units be approved: 25 fully paid units from Dottax as trustee for the Goodacre Richards Family Trust to Plunkett Developments as trustee for the Plunkett Holdings Trust; 25 fully paid units from Ian Gordon Buckeridge and Ann Buckeridge as trustees for the Buckeridge Superannuation Plan Trust to Plunkett Developments as trustee for the Plunkett Holdings Trust; and 25 fully paid units from Guy Richards as trustee for the Guy Richards Family Trust to Plunkett Developments as trustee for the Plunkett Holdings Trust. 63 Each of Mr Buckeridge, Guy Richards and Ms Goodacre gave evidence about the circumstances in which they agreed to the transfer of units in the 640 Unit Trust. Each said that they were asked by Mr Richards to transfer their units because he was being threatened by Mr Plunkett and his associates. In addition: Mr Buckeridge said that he agreed to the transfer of the units on the basis that Mr Plunkett would have no financial ties or interest in the Splash Bay Unit Trust and that Mr Richards agreed to this and said he would arrange it; that because of threats made to Mr Richards, rather than "holding out" for a release, he agreed to proceed with the transfer; and that there was no commercial advantage to him in getting involved in the 640 Land: he did not put money into it and he "was happy to go out because [he] put no money into it, so it was no financial loss to [him] whether [he] was in or out of that project"; Guy Richards said that Mr Richards told him that Mr Plunkett would take the asset held by the 640 Unit Trust and that his interests and those associated with Messrs Buckeridge and Richards would retain the assets in the Splash Bay Unit Trust. In cross examination Guy Richards gave evidence that he was aware of the proposal to transfer the units in the 640 Unit Trust to Mr Plunkett before Christmas 2013. He transferred his units to Mr Plunkett for two reasons: first, there were the threats being made to Mr Richards; and secondly, it was a sensible way of resolving the problem concerning the debt owed by 640 to Mr Plunkett. When Guy Richards signed the 640 Transfer Deed he did so freely for the purpose of benefitting Mr Plunkett; and Ms Goodacre said that Mr Richards told her that Mr Plunkett would "get out of the assets of the Splash Bay Trust". 64 Mr Plunkett denies having ever threatened or intended to intimidate Mr Richards. While he agreed that he applied pressure to transfer control of 640 to him that was because, having agreed with Mr Richards that the transfer would occur, there was continuous delay in the implementation of that agreement. Mr Plunkett said that he made phone calls and sent emails to Mr Richards and undertook "all the usual process that would happen when somebody doesn't follow through on a promise they've made". 65 On 25 March 2014 Mr Plunkett, in his capacity as a director of Plunkett Developments, wrote to Mr Richards enclosing a $5.00 note "to distribute to each of the above 640 Unit Holders in consideration for their transferring of their units to Plunkett Developments ATF of the Plunkett Holdings Trust, plus two dollars in consideration for you facilitating the payment to the 640 Unit trust holders". 66 Ms Goodacre on behalf of Dottax, Mr Buckeridge and Guy Richards each assert that they did not receive any consideration for the transfer of the units held by the interests associated with them in the 640 Unit Trust. 67 Mr Plunkett did not take steps to submit the 640 Transfer Deed for stamping or to register the transfer of units in the 640 Unit Trust in the unit holders' register after it was executed. The 640 Transfer Deed was submitted for stamping after the commencement of this proceeding. 68 On 27 March 2015 Plunkett Developments was deregistered. Change in trustee of the 640 Unit Trust 69 On 25 January 2016 Mr Johanson, as solicitor for Splash Bay, wrote to Altius Partners Lawyers, solicitors for 640, noting, among other things, that: … 3. The Transfer of Units form suggested, which was not the case, that $1.00 was paid by Plunkett Developments Pty Ltd ACN 160 961 811 as trustee for Plunkett Holdings to each of the named transferors. As such, there has been no consideration for the said Unit transfers. I am instructed by each of the said transferors to withdraw any offer they may have given to transfer their units to 'Plunkett Developments Pty Ltd ACN 160 961 811 as trustee for Plunkett Holdings Trust' for $1.00 or indeed any sum. 4. That on or about 10 March 2014, Mr Plunkett circulated a Trust Resolution document, purporting to resolve that the transfer of the said 25 units in the 640 The Esplanade Unit Trust from each of: … to 'Plunkett Developments Pty Ltd ACN 160 961 811 as trustee for Plunkett Holdings Trust' be approved. 5. By clause 8.11 of the 640 The Esplanade Unit Trust Deed, before registration of any transfer of units can be effected by the Trustee, the said transfers must be stamped. The transferors doubt the Transfer of Units form has been submitted to the Queensland Duties Office for assessment of duty. Based on the underlying unencumbered value of lands owned by the 640 The Esplanade Unit Trust on or after 10 March 2014, which the transferees believe was $4,000,000, duty of approximately $153,025 would have been then payable on the purported unit transfers. If not paid at that time, the duty will have accrued Unpaid Tax Interest of at least $27,000 to mid-December 2015. It would appear, therefore, that unless your client can now show consideration and duty was paid as outlined above, there has been no effective change of unitholding in the 640 The Esplanade Unit Trust. On the presumption that this is the case, the transferors, as 75% unitholders in the trust, have passed the attached resolutions. Of course if your client can show both consideration and duty have been paid, the attached resolutions are or (sic) no value. 70 Attached to the letter from Mr Johanson was a document titled "Minutes of resolution of the unitholders of 640 The Esplanade Unit Trust" (640 Resolution) recording a meeting of unit holders which took place "by electronic means" on 25 January 2016 and which provides: Pursuant to clause 18.2 of the Trust Deed, the parties present, representing 75% of the Unitholders in the Trust, agree that this meeting can be held on less than 14 days notice. Further, in conformity with clause 18.14 of the Trust, by each party signing these minutes, this will be a written record of the decisions minuted below. Resolutions: 1. That absent evidence of: a. Plunkett Developments Pty Ltd as trustee for Plunkett Holdings having paid any consideration for the unit transfers; b. Plunkett Developments Pty Ltd as trustee for Plunkett Holdings, or any other party, having paid stamp duty on any Transfer of Unit forms that may have been signed by the parties present for this meeting; and c. 640 The Esplanade Pty Ltd having received stamped copies of any Transfer of Unit forms that may have been signed by the parties present for this meeting; the unitholders hereby represented accept that there has been no valid transfer of their units in accordance with the terms of the Trust Deed. 2. As a 75% majority of the unitholders present, the unitholders resolve to remove 640 The Esplanade Pty Ltd as trustee of the 640 The Esplanade Unit Trust and appoint in lieu, Charles Stanley Richards, who hereby offers himself for appointment to that position; 3. That the unitholders hereby present, authorise Charles Stanley Richards as the new trustee to cease any and all actions against Splash Bay Pty Ltd and authorise the Trustee to withdraw any active instruction given by the prior trustee to Altius Partners Lawyers. 4. The unitholders hereby present, acknowledge there is no debt owed by Splash Bay Pty Ltd to 640 The Esplanade Pty Ltd in its capacity as trustee of the 640 The Esplanade Unit Trust. 71 The 640 Resolution is signed by each of Ms Goodacre on behalf of Dottax as trustee for the Goodacre Richards Family Trust, Guy Richards as trustee for the Guy Richards Family Trust and Mr and Mrs Buckeridge as trustees for the Buckeridge Superannuation Plan Trust. 72 Each of Ms Goodacre, Guy Richards and Mr Buckeridge gave evidence to the effect that Mr Richards informed them that there was a problem with the transfer of units in the 640 Unit Trust because the transfer memorandum was not stamped and consideration was not paid. Accordingly they agreed to remove 640 as the trustee of the 640 Unit Trust and to replace it with Mr Richards and thus, voted in favour of, and signed the 640 Resolution. Splash Bay 73 Splash Bay does not trade and earns no income but has substantial debt. The land held by Splash Bay is valued at $11 million. Its proposal to develop a waterpark on that land did not proceed because Messrs Richards and Buckeridge could not secure funding. It was superseded by a proposal to build 150 units on the site but, given market conditions, that proposal was also superseded, this time by a proposal for the construction of 10 units on one part of the land and the development of a relocatable home park on the balance. 74 According to Mr Buckeridge, who attempted to arrange finance for the waterpark and who was, at the time of the hearing, attempting to arrange finance for the relocatable home development, the major creditors of Splash Bay and the amounts which Splash Bay acknowledged it owed to those creditors were: Gokyo No 2 Pty Ltd (Gokyo) - $5.4 million; Nana Finance - $1.9 million; Anscape - $1.1 million; Holtex - $1.6 million; Cajavi Pty Ltd (Cajavi) - $574,000; Hagit Pty Ltd (Hagit) - over $500,000; Mr Rosch - $400,000; and Gold Coast Protection - $400,000. 75 Nana Finance, Mr Rosch and Gold Coast Protection each claimed more than Splash Bay acknowledged it owes to those parties. Nana Finance claimed it was owed $3.7 million, Mr Rosch claimed he was owed $975,000 and Gold Coast protection claimed it was owed $6 million. 76 In cross examination Mr Richards acknowledged that Splash Bay had entered into a deed of settlement on 14 October 2015 with Mr Rosch in which it agreed it was liable to Mr Rosch for $900,000 payable in two instalments, that Splash Bay had failed to comply with the deed of settlement and that it had not paid either of the instalments due to Mr Rosch pursuant to the terms of the deed. In other words $900,000 was owing to Mr Rosch. Despite that, in Mr Richard's sworn evidence, relied on for the purpose of an adjournment application on the first morning of the hearing, Mr Richards only acknowledged that $400,000 was owing to Mr Rosch and made no mention of the deed of settlement. Mr Richards attempted to explain the position in the following exchange: Q: Why did you not say that you acknowledged the $900,000? A: Because we are organising funding and the funding was to what we could pay. We knew we were going to have to enter into a new set of discussions with Chris and that a new settlement deed would have to be struck. Because this settlement deed was based upon a funding proposal with Westpac which we had fully approved - documented; mortgage documented - and when we couldn't proceed with that, when we didn't go ahead with that - because we changed the project to a lifestyle living village –we knew we would have to sit down with Chris at some point, or his lawyers – his representatives - and strike a new deed. 77 According to Mr Buckeridge the total acknowledged debts owing by Splash Bay were about $12 million which, given the value of the land at $11 million, would mean a $1 million deficit in assets over liabilities. Mr Buckeridge gave evidence that Gokyo, Nana Finance, Anscape, Holtex, Cajavi and Hagit were in discussions with Messrs Richards and Buckeridge to take a capital contribution in the relocatable home project and to defer interest. Mr Buckeridge also agreed that if the first mortgagee, who it appears is owed about $5 million, demanded repayment of its loan, Splash Bay would not be in a position to pay it. 78 Mr Richards was cross examined about Splash Bay's creditors. It is also clear from his evidence that Splash Bay owes approximately $12 million to its creditors including parties which he described as family members. Relevantly the following exchange took place between Mr Richards and counsel for 640 about that issue: Q: Right. Well, what I was going to say to you was that on your major creditors you owe about $12 million. Would you agree? A: lf we paid our family members back tomorrow - - - Q: Yes?---Those numbers would be right. A: Yes. Q: Well, you've put them in, so - - -? A: Yes. Absolutely. Q: And you've also got some sundry creditors, haven't you? A: Yes. Rates. Q: Now, you say they're owed about 135,000. What was that? A: Rates . They just came out. We got the rates notices last week. Q: All right. So- - -? A: They just - they come out in August. Yes. Q: All right. So you say rates and land tax? A: We put them in under sundry. Yes. … Q: Okay. The Splash Bay operates by getting funding from its members as required; is that right? A: Correct. Yes. Q: All right? A: Yes. All of us. Yes. Q: It's fair to say - and you're seeking finance at the moment in order to try and? A: We haven 't - we have a fully approved facility with Westpac- - - Q: Yes? A: for the previous residential use for the land. Q: Yes? A: And we are - they are now looking at converting that across from a residential townhouse development - - - Q: Yes? A: across to a lifestyle living village. Q: All right? A: ln situ built. Q: Now, you didn't pay - it's fair to say that Mr Rosch has taken a - has made a statutory demand against Splash Bay for the money that's specified in the terms of settlement; is that right? A: Yes. Q: All right? A: Yes. Q: And you've not paid that. Splash Bay has not paid that, have they? A: No. … Q: All right. Now, it's the case, isn't it, that if the creditors demand their money you don't have the money to pay them, do you? A: Not on this day, no. Q: No? A: No. Q: And, in fact, you would need to seek - - -? A: But we have spoken to all of them other than my -yes. Q: No. No. I - - -? A: And - and they are extremely supportive. Yes. Q: Good? A: Obviously, because we documented it, you know. Q: Yes? A: And that's - that's part of our task. Q: Yes, but you're a director of the company? A: Mmm. Q: You know your obligations as a company director? A: Yes. Q: I take it? A: Yes. Q: You know the definition of solvency under the Corporations Act? A: 1 do. Yes. Absolutely. Q: All right. You know that solvency is being able to pay your debts as and when they fall due; correct? A: Yes. Q: And it's fair to say that the company is not able to pay out its creditors, is it? A: Not on this day. statutory framework 79 Section 459E of the Corporations Act permits a person to serve on a company a demand relating to a single debt, or two or more debts, that the company owes to the person, that is or are due and payable and the amount of which is at least the statutory minimum. If at the end of the period for compliance with the statutory demand it is still in effect and the company has not complied with it the company is taken to have failed to comply with the demand: s 459F(1). In the absence of an application pursuant to s 459G for an order setting aside the demand, the period for compliance with a demand is 21 days after the demand is served: s 459F(2)(b). 80 A creditor may apply for an order under s 459A that a company be wound up in insolvency: s 459P(1). The Court must presume that the company is insolvent if, during or after the three months ending on the day when the application was made, the company failed (as defined by s 459F) to comply with a statutory demand: s 459C. 81 Section 465B permits a person to apply to be substituted as an applicant in an application to wind up a company under s 459P. It provides: 465B Substitution of applicants (1) The Court may by order substitute, as applicant or applicants in an application under section 459P, 462 or 464 for a company to be wound up, a person or persons who might otherwise have so applied for the company to be wound up. (2) The Court may only make an order if the Court thinks it appropriate to do so: (a) because the application is not being proceeded with diligently enough; or (b) for some other reason. (3) The substituted applicant may be, or the substituted applicants may be or include, the person who was the applicant, or any of the persons who were the applicants, before the substitution. (4) After an order is made, the application may proceed as if the substituted applicant or applicants had been the original applicant or applicants. 82 A person cannot oppose an application under s 459P without the leave of the court unless, within the prescribed period, the person has filed and served on the applicant a notice of the grounds on which the person opposes the application and an affidavit verifying the matters in that notice: s 465C. 83 The grounds upon which a company can oppose an application to wind up are limited by s 459S which provides: 459S Company may not oppose application on certain grounds (1) In so far as an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand, the company may not, without the leave of the Court, oppose the application on a ground: (a) that the company relied on for the purposes of an application by it for the demand to be set aside; or (b) that the company could have so relied on, but did not so rely on (whether it made such an application or not). (2) The Court is not to grant leave under subsection (1) unless it is satisfied that the ground is material to proving that the company is solvent. consideration 84 There is no dispute that Splash Bay failed to comply with both the Rosch Demand and the 640 Demand and that it took no steps to have either of those demands set aside such that, by operation of s 459C of the Corporations Act, Splash Bay is presumed to be insolvent. A threshold issue – s 459S of the Corporations Act 85 640 was substituted as a creditor pursuant to s 465B of the Corporations Act. After an order for substitution is made, the substituted applicant may proceed as if it had been the original applicant. That is, a substituted applicant relies on the presumption of insolvency arising from the failure to comply with the statutory demand issued by the original applicant. In this case, 640 relies on the presumption of insolvency arising from Splash Bay's failure to comply with the Rosch Demand in support of its application to wind it up. 86 The grounds raised by Splash Bay in opposition to the application to wind it up concern the debt owing by it to 640, 640's standing as a creditor and, more generally, 640's conduct in pursuing the application. Insofar as the grounds concern the debt owing by 640 or its standing, the parties raised as an issue whether Splash Bay was required to seek leave pursuant to s 459S of the Corporations Act to oppose the application to wind it up in reliance on those grounds. 640 submitted that they were grounds which Splash Bay could have relied on in opposing the 640 Demand and hence it required leave to raise them in this proceeding. Splash Bay submitted that s 459S would not apply to 640's application to wind it up and that it is free to raise all of the grounds included in its amended notice of appearance in opposition to the application without the need for it to seek leave pursuant to s 459S(1). Splash Bay further submitted that, on a proper construction of s 459S, the requirement for leave attaches to disputes that could have been set up in the face of the Rosch Demand, which does not relate to any debt owed to the substituted plaintiff, 640. Splash Bay was unable to take me to any authority squarely in support of that submission but referred to the judgment in Bibby Financial Services Pty Ltd v Wolf Industries Pty Ltd (2004) 49 ACSR 45; [2004] NSWSC 134 (Bibby) as authority for the proposition that the standing of a creditor who applies to be substituted and who has served a statutory demand that has not been satisfied cannot be questioned. 87 I accept Splash Bay's submission that the requirement for leave in s 459S applies to grounds raised in opposition to the Rosch Demand, that being the statutory demand upon which 640 relies to wind up Splash Bay. But it does not follow that Splash Bay is then free to raise grounds seeking to dispute the debt said to be owing to 640 or 640's standing as a creditor in answer to the application to wind it up. While s 459S of itself does not, in this case, operate to constrain Splash Bay vis a vis 640, the scheme of Pt 5.4 of the Corporations Act means that Splash Bay is not free to raise such grounds as it wishes in opposing the application. In my opinion the only grounds it can raise are those that did not exist or could not be raised at the time for compliance with the 640 Demand. My reasons follow. 88 The starting point to consider the operation of s 459S in circumstances where there has been an order for substitution of a new applicant is the policy behind Pt 5.4 of the Corporations Act which, it is well understood, was to introduce efficiency into the winding up process. The purpose of Pt 5.4 was to allow disputes concerning the existence or quantum of a debt to be dealt with quickly and at an early stage so as not to impede the resolution of an application to wind up a company in insolvency: see Assaf F, Statutory Demands and Winding Up in Insolvency (2nd ed, LexisNexis Butterworths, 2012) (Assaf, Statutory Demands) at [1.35]. That policy has been reflected in the approach of courts in their consideration of different aspects of Pt 5.4. It equally impacts upon the approach to the issue now before me. 89 In Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) (2011) 244 CLR 1 the High Court (Gummow, Heydon, Crennan, Kiefel and Bell JJ) said at [27]-[28]: 27. The evident policy of Pt 5.4 is that there be a speedy resolution of applications to wind up in insolvency. To that end, a challenge to a statutory demand is to be made promptly, before the application for the order for winding up in insolvency is determined and, where possible, disputes are to be resolved on the application to set aside the demand. Section 459S provides that where an application to wind up in insolvency relies upon a failure by the company to comply with a statutory demand, the company may not, without leave, oppose the making of an order on a ground which (a) it relied on in an application to set aside the demand or (b) it could have relied on but did not (whether or not it in fact made the application). That leave is not to be granted unless the court is satisfied that the ground is material to proving that the company is solvent. Thus if leave is sought on the basis that the debt is disputed, the existence or amount of that debt must be relevant to a conclusion as to the company's solvency. This requirement of s 459S is consistent with the operation of the presumption of insolvency under s 459C, which applies even if leave is granted to raise a ground of opposition. It applies because there has been a failure to comply with a demand which remains in effect. 28. Under the present statutory scheme, where a demand has not been complied with, the statutory presumption of insolvency applies unless the demand is set aside in proceedings brought for that purpose prior to the hearing of the application for an order to wind up. Unless the demand is rendered ineffective, by an order setting it aside, the company is required to prove to the contrary of the presumption. This may be contrasted with the position which formerly pertained, where the presumption that a company was unable to pay its debts could not arise if the debt the subject of the demand was shown to be the subject of a genuine dispute of substance. (citations omitted) And at [32]-[33]: 32. There is a policy evident in the current statutory scheme that disputes concerning a statutory demand should, where possible, be determined prior to the determination of the winding up application and therefore separately from that application. The requirement of leave, to raise an objection at the hearing of that application which could have been taken in an application to set aside a demand, confirms this. But such a policy says nothing about what is to occur if there remains an issue about a debt at the time the application for an order for winding up in insolvency is heard. Sections 459A and 467(1)(c) make plain that the court retains a discretion to stay proceedings on an application to wind up a company in insolvency. 33. What was said by Gibbs J in In re QBS Pty Ltd about practical considerations, which may attend the resolution of a dispute about the existence or extent of a debt, remains relevant to applications for winding up, subject to some qualifications arising out of the present statutory scheme. The court may consider that although such a dispute may affect a conclusion as to solvency, the dispute may be more conveniently resolved in other proceedings which have been, or will be, brought for that purpose. Much may depend upon the nature of the dispute, and the extent to which it is removed from the central question of solvency. In this regard the court will bear in mind that the question of solvency, which it is required to determine upon an application for winding up in insolvency, is affected by the statutory presumption. The starting point, where the presumption operates, is that the onus is on the company to rebut the presumption, by proof of its solvency. And when considering whether to separate out a dispute from the winding up proceedings, the court will also bear in mind the statutory objective, that such applications are to be determined within six months, subject only to extensions granted in special circumstances. 90 Section 459S(1) relevantly provides that where "an application for a company to be wound up in insolvency relies on a failure by the company to comply with a statutory demand" the company cannot, without the leave of the Court, oppose the application on a ground that it could have relied on for the purposes of "an application by it for the demand to be set aside", but did not so rely. The demand referred to in the chapeau of s 459S, for the purposes of this application, is the demand served by the original plaintiff, Mr Rosch. That is, 640, the substituted plaintiff, relies on Splash Bay's failure to comply with the Rosch Demand. As I have already observed, the grounds which Splash Bay is precluded from raising, without leave of the Court, are those that it could have raised in an application to set aside the Rosch Demand. But that is not the end of the issue. 91 There have been few decisions in which the operation of s 459S has been considered in circumstances where an applicant on the winding up application was substituted pursuant to s 465B. In the earliest of them that I have been able to locate, Kelvingrove (1993) Pty Ltd v Paratoo Pty Ltd (1998) 16 ACLC 964 (Kelvingrove), the respondent argued that the substituted applicant could not bring the application because it was not within one of the categories in s 459P entitled to bring an application pursuant to s 459A as it was neither a creditor nor a contingent creditor. Master Sanderson observed that it seemed to him that the question of whether the applicant was a creditor or contingent creditor fell to be argued at the time the application for substitution was made and that once an order was made the substituted creditor must have standing. Master Sanderson further noted that the main argument by the respondent in opposing the application for winding up was a claim by the respondent that the debt upon which the application was based was subject to a bona fide dispute. During argument on that issue a question arose as to how s 459S would affect the capacity of the respondent to raise that issue. At 967 Master Sanderson observed: Clearly, s 459S is directed at a situation where a company has failed to comply with a statutory demand, a winding up application is made and the company then seeks to argue that there is a genuine dispute as to the debt upon which the statutory demand was based. The section does not appear to allow for the situation where the winding up application, although based on a failure to comply with a statutory demand, is made by a substituted applicant. Here, Paratoo says there is a genuine dispute about whether it is indebted to Kelvingrove. It would seem to me that leave would be required if, as part of its opposition to the winding up application, Paratoo sought to argue that it was not indebted to Mr and Mrs Frizell. But it does not require leave with respect to the substituted applicant. What is clear, however, is that as this is a final application only admissible material, of which the deponent has direct knowledge is to be permitted in affidavits: see O 37 r 6(1). This stands in contrast to an application to set aside a statutory demand. Such applications are interlocutory in nature and affidavits in support of the applications "may contain statements of information or belief with the sources and grounds of that information and belief": see O 37 r 6(2). This puts a corporation seeking to resist an application to wind up by a substituted creditor at somewhat of a disadvantage as against the original applicant. The answer to this is, I think, that the application for the creditor to be a substituted applicant is interlocutory. It is at this stage that the question of whether there is a bona fide dispute ought be considered. … 92 The learned Master correctly identified that leave would be required to raise a ground in opposition to the winding up application that the company could have raised on an application to set aside the original plaintiff's demand. But while on its face it might follow that leave is not required to raise grounds in opposition to the substituted plaintiff's debt or standing, it is, with respect to the learned Master, not a complete answer to leave the matter where it appears he did. The learned Master did not identify what grounds a defendant could properly raise vis a vis the substituted plaintiff in opposition to an application to wind it up. While the learned Master's view on the subject is not clear, if he was suggesting that such grounds were at large then, in my opinion, such a view would not give sufficient consideration to the policy behind, and the effect of, Pt 5.4 of the Corporations Act and its operation. Master Sanderson's subsequent observations that the question of whether there is a bona fide dispute ought to be considered at the stage of the application for substitution are apt and, in my opinion, shed some further light on the issue, although not entirely for the reasons identified by the learned Master. 93 In Bibby Austin J considered an application for substitution by Scottish Pacific Business Finance Pty Ltd (Scottish), which was opposed by the defendant (Wolf). Wolf alleged that there was a genuine dispute as to a part of the indebtedness claimed by Scottish. At [17] Austin J found that subpara (a) of s 465B(2) of the Corporations Act was satisfied because the plaintiff had settled its claim with Wolf and no longer wished to proceed with the application. His Honour noted that he could make the order for substitution if, in the exercise of his discretion, he thought it was appropriate for him to do so, provided that Scottish "had the requisite standing". At [18] his Honour continued: Subsection 465B(1) authorises the Court to make an order substituting, as applicant in an application under (inter alia) s 459P for a company to be wound up, "a person … who might otherwise have so applied for the company to be wound up". According to s 465B(4), after an order for substitution has been made, the application may proceed as if the substituted applicant had been the original applicant. Subsection (1) raises the question whether the applicant for substitution might have applied for the company to be wound up. Subsection 459P(1)(b) authorises a creditor (including a secured, contingent to prospective creditor) to apply to the Court for a company to be wound up in insolvency. The question is whether Scottish is a "creditor" for the purposes of that provision. It has not been suggested that Scottish has standing to seek a winding up order on any other ground. 94 Austin J noted that Wolf challenged Scottish's application on the ground that it had not shown that it was a creditor because there was a genuine dispute as to the existence of its debt. In response, among other things, Scottish relied on its unsatisfied statutory demand and submitted that, for that reason, Wolf could not challenge its standing as a creditor for the purposes of its application for substitution. Austin J held that Scottish was entitled to succeed and to be substituted as a creditor because of the unsatisfied statutory demand. His Honour said that it was not necessary for him to deal with the other bases upon which Scottish answered the allegation that there was a genuine dispute in relation to the debt and that it was undesirable to do so because "the law is structured … so as to make it inappropriate to explore whether there is a genuine dispute undermining the applicant's status as a creditor, in an application for substitution by an applicant who relies on an unsatisfied statutory demand": at [20]. 95 After referring to aspects of Pt 5.4 of the Corporations Act his Honour said at [22] and [24]-[25]: 22. These provisions have the consequence that the proper occasion to raise a genuine dispute about a debt which has been the subject of a statutory demand is in an application to set aside the statutory demand, rather than at the hearing of the winding up application. Subsection 459P(1)(b) confers standing on a "creditor" to make an application for a company to be wound up in insolvency. If it were necessary, at the hearing of the winding up application, for the applicant to prove its status as a creditor, or to rebut a contention by the company that there was a genuine dispute as to the existence of the debt, the scheme of Part 5.4 would be undermined. … 24. In my opinion, it is equally not open to the company to challenge the standing, as a creditor, of an applicant for substitution under s 465B who has served a statutory demand which the company has neither satisfied nor set aside. It would be anomalous if the company were prevented from asserting a dispute in respect of a debt otherwise than by leave under s 459S, where the original applicant for winding up persisted to the hearing, but could raise a dispute by challenging the standing of an applicant for substitution. 25. In my view the words of ss 465B(1) and (4) point to the contrary conclusion. Where the applicant for substitution has itself served a statutory demand that has neither been satisfied nor set aside, it is a person who might have applied for the company to be wound up in insolvency in reliance upon those facts, rather than in reliance upon the fact of the debt. The position of an applicant for substitution who relies on a statutory demand that has not been satisfied or set aside is indistinguishable from the position of the original applicant who relies on such a statutory demand. The latter's standing as a creditor cannot be challenged, and the former is a person who might have applied for the company to be wound up on exactly the same basis as the latter (compare the wording of subsection (1)). Further, substitution will permit the applicant to proceed as if it had been the original applicant (see the wording of subsection (4)), and therefore place it in a position to rely on the statutory demand without any challenge to its standing as a creditor, subject only to s 459S. 96 As submitted by Splash Bay, the effect of the decision in Bibby is that a creditor who has an unsatisfied statutory demand and who applies to be substituted as a creditor in an application to wind up a company on whom that demand was served will have standing, which cannot be disputed, because of the unsatisfied statutory demand. As Austin J notes the appropriate time to raise a dispute about the debt on which a statutory demand is based is in the 21 day period following service of the demand by the filing and service of an application to set aside the demand and the resolution of that application. Once the statutory demand expires, there will be a presumption of insolvency upon which the creditor can rely to bring an application to wind up the company under s 459A. The standing of the creditor cannot be challenged. Equally, the standing of the substituted creditor, who stands in the shoes of and can proceed as if it was the original creditor or applicant and is thus placed in a position to rely on the statutory demand, cannot be challenged, "subject only to s 459S". As the substituted creditor stands in the shoes of the original creditor or applicant, the reference to s 459S must be a reference to the need to seek leave to rely on a ground that was or could have been relied on for the purposes of an application to set aside the demand of the original applicant. 97 In In the matter of C2C Investments Pty Limited (No 9) [2013] NSWSC 269 Black J had before him an application to wind up the defendant (C2C) by the Commonwealth Bank of Australia, which had been substituted as plaintiff pursuant to s 465B. At [3] Black J referred to Bibby at [24]-[25] where Austin J noted that the effect of substitution was to permit the substituted creditor to proceed as if it had been the original applicant and thus placed it in a position to rely on the original applicant's statutory demand without any challenge to its standing as a creditor, subject only to s 459S of the Corporations Act. At [4]-[5] his Honour said: 4. In this matter, C2C initially foreshadowed an application under section 459S of the Corporations Act to seek to oppose the winding up on grounds in respect of the debt claimed by CBA, although that application was not pressed. In my view, the decision not to press it was soundly made, not least because it appeared to misconceive the structure of substitution under the Corporations Act, by seeking to challenge the winding up, not by reason of any challenge to the demand originally served by Community Association, but instead by reference to matters involving dealings between CBA and C2C. 5. It would also have been open to C2C, without leave, to seek affirmatively to establish its solvency in opposition to a winding up application. It has ultimately not sought to do so. In these circumstances, as a unanimous High Court noted in Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) [2011] HCA 18; (2011) 244 CLR 1; (2011) 83 ACSR 126 at [28]: "...where a demand has not been complied with, the statutory presumption of insolvency applies unless the demand is set aside in proceedings brought for that purpose prior to the hearing of the application for an order to wind up. Unless the demand is rendered ineffective, by an order setting it aside, the company is required to prove to the contrary of the presumption." 98 I respectfully agree with the observations of Black J that the structure of substitution of an applicant as mandated by s 465B of the Corporations Act means that, once the substitution order is made, the company the subject of the application to wind up cannot challenge the winding up by reference to issues as between the substituted applicant and the company. The time for determining the substituted applicant's standing is at the time of the determination of the application for substitution. As Austin J held in Bibby, where such an application is based on an unsatisfied statutory demand, there can be no issue about the substituted applicant's standing as a creditor. 99 As a substituted plaintiff stands in the shoes of the original plaintiff and relies on the original plaintiff's demand, the defendant can, subject to leave being granted under s 459S, oppose the application to wind it up on grounds that it could have relied on in an application to set aside the original plaintiff's demand. But where the defendant seeks to challenge the standing of a substituted plaintiff, relying on grounds that it could have relied on in an application to set aside the substituted plaintiff's demand, s 459S has no role to play. While there is no express statutory limitation on the grounds a defendant might seek to rely on in those circumstances, it does not follow that the defendant is free to raise whatever grounds it wishes. 100 The usual time for a defendant to raise issues challenging a substituted plaintiff's standing as a creditor is at the time of the application for substitution. But if the substituted plaintiff relies on an unsatisfied statutory demand as the basis for its application for substitution then a challenge to the proposed substituted plaintiff's standing will fail: see Bibby. In those circumstances, the time for a defendant to raise issues about the substituted plaintiff's standing on the basis of the debt the subject of its statutory demand was in the 21 day period after service of the substituted plaintiff's demand. If it did not raise those issues by way of an application pursuant to s 459G of the Corporations Act to set aside the demand then it cannot subsequently, on an application to wind it up, raise grounds that it could have raised in such an application, with or without leave. 101 For the purposes of this proceeding this means that it is not now open to Splash Bay to raise grounds that it could have and should have raised following service of the 640 Demand. This outcome may be harsh as it, in effect, removes the safety net, as it has been described (see Assaf, Statutory Demands at [10.9]) that is provided by s 459S to a company the subject of a winding up application. But it is, in my opinion, the outcome of the operation of the legislative scheme and is in line with its policy intention. Notwithstanding this outcome, it remains open to Splash Bay, or a company in its position, to lead evidence of its solvency in answer to an application to wind it up. Is 640 owed a debt or is there a genuine dispute as to whether it is owed a debt? 102 The first ground raised by Splash Bay in opposition to the application to wind it up is that 640 is not owed a debt or alternatively that there is a genuine dispute as to whether it is owed a debt. This ground raises the issue of the date of resignation of Mr Richards as a director of 640 and the validity of the 640 Minute by which the debt owing by Splash Bay to 640 was apparently forgiven. The relevant events all occurred prior to issue of the 640 Demand and could have been raised in an application pursuant to s 459G of the Corporations Act to set aside the 640 Demand. No such application was brought. In light of the conclusion I have reached at [99]-[100] above, it is not now open to Splash Bay to raise the ground in opposition to the application to wind it up. Is 640 still the trustee of the 640 Unit Trust? 103 A further ground on which Splash Bay opposes the winding up application is that the debt claimed by 640 was trust property and 640 is no longer the trustee of the 640 Unit Trust. Splash Bay submitted that any debt owed to 640 in its capacity as trustee has passed to the new trustee. 104 In order to consider this ground it is necessary to consider whether the meeting of unit holders which took place on 25 January 2016 was validly constituted and effective to change the trustee of the 640 Unit Trust from 640 to Mr Richards. The resolution of that issue, in turn, depends on whether the transfer of units in the 640 Unit Trust in March 2014 was valid. Splash Bay submitted that if it was not valid then the unit holders, Dottax, Mr and Mrs Buckeridge and Guy Richards, retained a majority of units in the 640 Unit Trust and were entitled to change the trustee of the 640 Unit Trust, as they purported to do, in January 2016. 105 Before proceeding further with a consideration of this ground it is necessary to consider whether it can be raised in light of the conclusion I have reached at [99]-[100] above. Splash Bay submitted that the events giving rise to this dispute arose after the expiry of the 640 Demand and thus s 459S would not operate in relation to this dispute. I accept that submission in part, not because s 459S does not apply, but because the conclusion I reached above would not operate in relation to the meeting which took place on 25 January 2016, well after the expiry of the 21 day period after service of the 640 Demand. 106 The transfer of units pursuant to the 640 Transfer Deed, which Splash Bay now alleges was not effective, took place prior to the service of the 640 Demand. Although it was arguably open to Splash Bay to challenge the effectiveness of the transfer as part of an application to set aside the 640 Demand, in my opinion, the better view is that the question of the validity of the 640 Transfer Deed did not arise as a ground to set aside the 640 Demand. At that stage no steps had been taken to change the trustee of the 640 Unit Trust. A challenge to the effectiveness of the 640 Transfer Deed at that time, even if successful, would not have resulted in setting aside the 640 Demand. The issue only became one that potentially affects 640's ability to apply to wind up Splash Bay because of the subsequent events which took place on 25 January 2016 when the resolution was passed to change the trustee of the 640 Unit Trust. Accordingly I will consider whether the resolution to remove 640 as trustee was effective and, as part of that issue, whether the transfer of units in the 640 Unit Trust in March 2014 by operation of the 640 Transfer Deed was valid. 107 Splash Bay submitted that the 640 Transfer Deed was invalid for three reasons: (1) no consideration passed from Plunkett Developments to the unit holders and thus the transfer fails; (2) the form of transfer was never stamped for duty and cl 8.11 of the deed of trust for the 640 Unit Trust dated 2 November 2012 (640 Trust Deed) was contravened; and (3) the failure to stamp the transfer rendered it void at the time of the meeting of unit holders on 25 January 2016 pursuant to s 487 of the Duties Act 2001 (Qld) (Duties Act). I consider each of these in turn. 108 Splash Bay submitted that the argument as to lack of consideration "speaks for itself". It referred to the "consistent evidence" of its witnesses that no consideration was received and that, while Mr Plunkett gave evidence that he sent a letter to Mr Richards enclosing money for distribution to the other unit holders, there is no evidence of any authority or agreement to this course of action on Mr Richards' part and there is evidence that Mr Richards did not receive the letter. In my opinion Splash Bay's submission fails to take account of the nature of the 640 Transfer Deed. 109 A deed may be a dispositive instrument in that upon satisfaction of the formal requirements it achieves a certain legal result, for example a transfer of title: Seddon N, Seddon on Deeds (The Federation Press, 2015) at [1.9]. The 640 Transfer Deed is of that nature. It transfers the units from each of the transferors to Plunkett Holdings. Nothing more is required to achieve that result. The 640 Transfer Deed does not contemplate or require the parties to undertake any future action. It was properly executed and unconditionally delivered upon execution, making it immediately binding. That the 640 Transfer Deed specifies consideration of $1.00 passing from Plunkett Holdings to each of the transferors does not affect the dispositive nature of the deed and the parties' intention that the deed be immediately effective, whether or not that consideration is provided upon signing of the deed or at all. The inclusion of consideration in a deed is generally directed toward overcoming the issue of whether equitable remedies are available to a volunteer: Seddon at [6.33]. Consideration, though not a requirement to make a deed effective, may defer the point at which its terms become legally binding until such time that the consideration passes between the parties. But here the question of whether the requirement of consideration renders the deed conditionally delivered, in the sense that its terms are not immediately binding, does not arise: the terms of the 640 Transfer Deed expressly acknowledged receipt of the consideration by the transferors. 110 In any event, in my opinion there was consideration which passed from Plunkett Developments to the transferors of their respective units in the 640 Unit Trust. I accept Mr Plunkett's evidence that on 25 March 2014 he sent a letter enclosing $5.00 by way of payment of the consideration referred to in the 640 Transfer Deed. Understandably Mr Plunkett sent the letter and the money to Mr Richards with whom he primarily dealt in relation to the transfer of the units. Mr Richards' evidence is that he never received the $5.00 which Mr Plunkett had sent and that he became aware that the consideration for the transfer of the units in the 640 Unit trust had not been paid, although he does not say when and how he became so aware. It is difficult to accept Mr Richards' evidence particularly given the sequence of events and the timing of the meeting to change the trustee to the 640 Unit Trust, after 640 was substituted as the plaintiff in this proceeding. Having found that the letter was sent, I would infer its receipt. It may be that Mr Richards does not recall its receipt or did not think it important to hand over the amount of $1.00 to each transferor, given its inconsequential amount. 111 Clause 8 of the 640 Trust Deed is titled "transfer of units and rights of pre-emption". In support of its submission that the 640 Transfer Deed is not valid Splash Bay relies on cl 8.11 which provides: Execution of transfer Before registration of the transfer, the instrument of transfer shall be executed by, or on behalf of, both the transferor and the transferee and shall be stamped, if required by law, and left with the Trustee together with the Unit certificate (if any) to which the transfer relates. Upon being satisfied that the provision of this Deed relating to the transfers of Units have been complied with, the Trustee shall make appropriate entries in the Register, cancel the relevant Unit certificate (if any) of the transferor and if requested by the transferee, issue a new Unit certificate relating to those Units in the name of the transferee as Unit Holder. 112 Splash Bay submitted that the 640 Transfer Deed is not valid because the transfer deed was not stamped and the transfer of units not registered. 113 In relation to the alleged failure to register the transfer of units Splash Bay also relies on cl 5.1 of the 640 Trust Deed, which requires the Trustee to "keep and maintain an up-to-date register of the Unit Holders" specifying certain details in relation to their respective "Units". A "Unit Holder" is defined in cl 1.1 as: the person or persons for the time being registered under this Deed as the holder or holders of a Unit and includes persons registered jointly and the Initial Unit Holders, whether or not they are registered, until they dispose of their Units. 114 640 has not registered the transfer of units in the register of unit holders of the 640 Unit Trust. Splash Bay contends that the mere failure to register means that the transfer of units was not effective. I do not accept that submission. 115 By the 640 Transfer Deed each of Dottax, Mr and Mrs Buckeridge and Guy Richards evinced a clear intention to transfer their respective units to Plunkett Holdings and the deed was effective to achieve that outcome. They had, adopting the terms of the definition of Unit Holder in the 640 Trust Deed, disposed of their units. While it may be a breach of the 640 Trust Deed by 640, the registration of the transfer of the units does not affect the validity of the transfer of the units as between each of the transferors and Plunkett Holdings. Plunkett Holdings could have required 640 to register the units in its name but it did not. The fact that the units were not registered as required by the 640 Trust Deed did not mean, in the face of the 640 Transfer Deed, that Dottax, Mr and Mrs Buckeridge and Guy Richards remained unit holders entitled to vote at a meeting of unit holders convened in January 2016. 116 The third basis upon which Splash Bay contends that the 640 Transfer Deed is not valid is the failure to pay stamp duty on that deed at the time it was executed. It is common ground that did not occur. 117 On 16 August 2016, relevantly, the Court made the following orders: 1. Pursuant to s 487(2) of the Duties Act 2001 (Qld) the transfer of units in the 640 Esplanade Trust dated 10 March 2014 (the Transfer document) may be received in evidence in these proceedings. 2. Pursuant to s 487(2) of the Duties Act 2001 (Qld) that the arrangement whereby the applicant submits the Transfer document to the Commissioner of State Revenue (Queensland) for assessment within 7 days of the date of this order and thereafter causes any duty to be paid that is assessed thereon is approved by the Court. On 23 August 2016, pursuant to those orders, 640 submitted the 640 Transfer Deed for stamping to the Commissioner of State Revenue (Queensland). 118 Splash Bay submitted that, notwithstanding the orders made on 16 August 2016, the effect of s 487(1)(a) of the Duties Act remains such that the 640 Transfer Deed is not available for use in law or equity for any purpose and thus could not be used to prove the transfer and the transfer is ineffective. 119 Sections 487(1) and (2) of the Duties Act provide: (1) Unless an instrument or ELN transfer document is properly stamped, it— (a) is not available for use in law or equity or for any purpose; and (b) must not be received in evidence in a legal proceeding, other than a criminal proceeding. (2) However, a court may receive an instrument or ELN transfer document in evidence if— (a) after it is received in evidence, the instrument or ELN transfer document is given to the commissioner as required by arrangements approved by the court; or (b) if the person who produces the instrument or ELN transfer document is not the person liable to pay the duty, the name and address of the person so liable, and the instrument or ELN transfer document, is given to the commissioner as required by arrangements approved by the court. 120 Splash Bay relies on Caxton Street Agencies Pty Ltd v Korkidas & Anor [2002] QSC 210 (Caxton Street), in particular at [14] to [15], to support its submission that the 640 Transfer Deed is void and cannot be relied on by 640 to prove the transfer of units and the transfer is ineffective. In Caxton Street Holmes J (as her Honour then was) had before her an application for summary judgment. One of the arguments put by the defendants was that a particular document was not stamped and could not be relied on to support the plaintiff's cause of action. Her Honour noted at [11] that the defendants' argument was overtaken by events because the plaintiff stamped the document immediately after the hearing but, because of its possible implications for the question of whether the application was properly brought and costs, her Honour dealt with the issue and "how matters might otherwise have been decided". At [14]-[16] her Honour said: 14. Mr Morris QC for the plaintiff tendered at the hearing an undertaking by his client to pay any stamp duty found to be exigible in respect of the document. He argued that s 487(2) contemplated a situation in which a reliance on an unstamped document was permitted subject to an undertaking to pay any stamp duty, and urged me to take a difference course from that suggested in following dicta in Hoggett v O'Rourke: "I do not think that an undertaking to pay stamp duty, at whatever stage offered, would resolve the applicant's difficulties. Section 4A(2) enables the admission in evidence of an unstamped document on such an undertaking, but it does not overcome the fundamental problem that such a document may not be relied on as founding a cause of action." 15. Mr Morris argued that where one of the fundamental issues in the proceedings was whether the instrument was effective, it would be an extraordinary outcome to require a party to pay stamp duty in advance of a determination which might find it void and not dutiable. But while there is some authority for the proposition that a party may refer to an unstamped document in the pleading "not in order to set it up as valid and effectual for any purpose, but only in order to have it solely set aside", the situation is entirely different when the party's cause of action is founded on the effectiveness of the document. It cannot be the case that a plaintiff can on the one hand contend that an agreement is valid and binding, but on the other hand that it is not dutiable. The answer to Mr Morris' conundrum may lie in Division 3 of the Taxation Administration Act 2001, which permits a person who has paid duty to seek a reassessment, and s 37(1), which provides for a refund where liability for tax is decreased. 16. But the document has now been assessed and stamped. Once stamped it becomes "pleadable, receivable in evidence and admissible as good, useful and available [and] its validity and operation as from the beginning [R] to be construed as unaffected by the enactment." Thus the issue of summary judgment is not to be determined on the question of stamping. … (footnotes omitted) 121 The reasoning in Caxton Street has been the subject of later analysis and a divergence of opinion has emerged. In Burnitt & Anor v Pacific Paradise Resort Pty Ltd [2004] QDC 218 (Burnitt) McGill DCJ considered the effect of s 487 of the Duties Act in the context of a costs application. There the defendant had filed an application to have the statement of claim struck out on the basis that it did not disclose a reasonable cause of action. The basis of that application was that the relevant contract on which the plaintiff relied had not been stamped. By the time the application came on for hearing the contract had been stamped so that the relief sought in the application for strike out was not pressed but the question of costs remained for resolution. 122 In considering the issue his Honour undertook an analysis of the relevant authorities but before doing so said at [3]: In my opinion the submission from counsel for the plaintiff is correct, the decisions referred to can be distinguished, and the absence of stamping of the contract was no basis for striking out the statement of claim. A pleading is struck out on this ground only if it is so clearly untenable that it cannot possibly succeed: General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125 at 130. That was the case in that matter because the defendants could claim the benefit of certain statutory defences provided under the Patents Act 1925 which prevented the grant of an injunction, the remedy sought by the plaintiff. But whatever the effect of s 487 of the Duties Act 2001 (the applicable provision), it is capable of being overcome, as it was in this case, by payment of the duty. Once the duty has been paid, any obstacle to the validity or enforcement of the document imposed by that section disappears, and is taken to have done so from the time when the document would have become valid but for that section: Shepherd v Felt & Textiles of Australia Ltd (1931) 45 CLR 359. 123 At [23] McGill DCJ turned to the consideration by Holmes J in Caxton Street of the effect, both under the former Stamp Act 1894 (Qld) and the Duties Act, of the giving of an undertaking to pay the duty and any penalty when a document is tendered at trial in the way provided in s 4A(2) of the former Act and s 487(2) of the Duties Act. His Honour noted that in Caxton Street her Honour had said that although the undertaking would overcome the prohibition on admissibility of the unstamped document "it did not overcome the fundamental problem that such a document may not be relied on as founding an action". However, McGill DCJ was of the opinion that this conclusion was inconsistent with the established practice in Queensland and noted that he had difficulty in reconciling it with the analysis in Shepherd v Felt & Textiles Australia Ltd (1931) 45 CLR 359. 124 After setting out s 487 of the Duties Act McGill DCJ relevantly continued at [25]-[27]: 25. The first thing that can be said about this provision is that it contains two clear drafting errors. In subsection (2)(b), the second "is" should be "are"; and subsection (1), on its face excludes a criminal proceeding from the prohibition in paragraph (b) but not from that in paragraph (a). This is contrary to the practice with these provisions, that the exclusionary provision, whatever its effect, only applies in civil proceedings and not in criminal proceedings. … . The exclusion of criminal proceedings from the operation of whatever effect s 4A of the Stamp Act had was general, and it would be very odd if the legislature had a different intention with s 487. However, that would be the outcome if subsection (1) were read literally. 26. That suggests that the splitting of subsection (1) into paragraphs (a) and (b) was a function not of the true legislative intention, but of the preoccupation with drafting technique in the Office of Parliamentary Counsel. The same consideration might apply to the somewhat anomalous outcome if subsections (2) and (3) are read literally only as overcoming paragraph (b) of subsection (1), but not paragraph (a). It has always been recognised that the whole point and purpose of provisions such as this is to protect the revenue, by ensuring that the stamp duty on these documents is paid. But so long as the duty is to be paid, the purpose of the section has been satisfied. Since the document will clearly be admitted in evidence if the duty has been paid before it is tendered, the only point of provisions such as subsection (2) is to provide a mechanism by which a document may be admitted in evidence notwithstanding that duty has not yet been paid. Paragraph (a) of this section is presumably intended to reflect the previous practice of permitting an undertaking to pay the duty and any penalty to be imposed; paragraph (b) might be seen as a qualification of the traditional rule that the obstacle to enforceability affects even a person not liable to pay the duty, since it would seem that a person can under paragraph (b) tender the document notwithstanding that the duty has not been paid, and will not be paid by that person. 27. It is difficult to see however what useful purpose is achieved by these provisions if the document although received in evidence will remain invalid because of subsection (1)(a). The whole point and purpose of tendering a document is to use it in law or equity or for some purpose. If it cannot be used in law or in equity or for any purpose, it would seem that having the document sitting on the associate's table with an exhibit stamp on the back was no more than a solemn farce. Documents are not put in evidence for the fun of it; they are put in evidence with a view to some use being made of the document by the court, either at law or in equity, or for some purpose. (footnotes omitted) 125 At [28] McGill DCJ concluded that he found Holmes J's proposition that s 487(2) only overcomes the prohibition in s 487(1)(b) and not that in s 487(1)(a) to be unpersuasive and that a preferable construction is that the word "[h]owever" at the beginning of s 487(2) "means that that subsection, where it is satisfied, overrides and excludes the operation of the whole of subsection (1)". At [29] his Honour continued: Whether or not this is the case, the crucial issue is whether subsection (1)(a) renders the instrument invalid or a nullity unless it is properly stamped. That is not what the section actually says. It says it is not available for use. The expression "available for use" seems to me with respect to be a denial of enforceability rather than a denial of validity; it is concerned with the admissibility or availability of the document in evidence, and not with its effectiveness or validity. Section 487 does not provide that the instrument is not effective, and the words "for any purpose" apply to the expression "available for use". … (footnotes omitted) 126 The reasoning of McGill DCJ in Burnitt has been followed in subsequent decisions of the Supreme Court of Queensland: see Mission Development Group Pty Ltd v Rhett [2004] QSC 359 (Mission Development) per MacKenzie J at [11]-[16] and Franks v Norfolk Estates Pty Ltd [2004] QSC 301 (Franks) per Moynihan J at [20]-[23]. Further, in Vercorp Pty Ltd v Lin (2006) 2 Qd R 180 at [77] Douglas J noted that it was not necessary for him to consider the effect of a particular contract which was not stamped because the Commissioner of State Revenue accepted that there was no obligation to stamp it yet. His Honour received it into evidence by arrangements that he had approved so that in his view the contract was available for use in the proceeding. However, in obiter his Honour said that he preferred the view of McGill DCJ in Burnitt to the views expressed by Holmes J in Hoggett v O'Rourke [2002] 1 Qd R 490 and Caxton Street. His Honour also referred to the decisions in Franks and Mission Development. 127 I too prefer the reasoning in Burnitt as adopted in the judgments referred to in [126] above. Section 487(2) is not directed only against the prohibition of receipt into evidence in s 487(1)(b) but is directed towards both limbs of s 487(1). As McGill DCJ observed, s 487 does not render an instrument invalid but is concerned with its use. It does not operate to render the 640 Transfer Deed invalid or void because stamp duty had not been paid on it as at the date of execution. 128 Contrary to Splash Bay's submission, there is evidence that the 640 Transfer Deed has been stamped. Consequent upon and in accordance with the orders made by the Court on 16 August 2016, 640 submitted the 640 Transfer Deed for stamping. While there was no evidence about whether that process was complete by the time of the hearing, which took place very shortly after the 640 Transfer Deed had been submitted to the Commissioner for Revenue, I would infer that it was in train and that the stamping will be completed. 129 Given my findings that the 640 Transfer Deed is valid, Dottax, Mr and Mrs Buckeridge and Guy Richards were not unitholders at the time of the purported meeting of unitholders on 25 January 2016. Therefore that meeting was not validly constituted and the resolution passed was not effective to change the trustee of the 640 Unit Trust to Mr Richards. Splash Bay's third ground of opposition included in its amended notice of appearance should be rejected. Abuse of process? 130 Splash Bay submitted that the Court retains a power to stay or dismiss a winding up proceeding that is found to be an abuse of process and that the Court would infer that the application to wind up Splash Bay has been substantially brought and maintained for collateral and improper purposes. 131 In In the matter of Gladstone Mortgagee No 1 Pty Ltd [2015] NSWSC 1551 (Gladstone Mortgagee No 1) Black J considered opposition to a winding up application on the basis that it was brought for an improper purpose. At [56] his Honour said: …In David Grant & Co Pty Ltd (rec apptd) v Westpac Banking Corp (1995) 184 CLR 265; 18 ACSR 225 at 234, Gummow J (with whom the other members of the Court agreed) observed that: No doubt, in some circumstances, the new Pt 5.4 [of the Corporations Act] may appear to operate harshly. But that is a consequence of the legislative scheme which has been adopted to deal with perceived defects in the pre-existing procedure in relation to notices of demand. It also may transpire that a winding-up application in respect of a solvent company is threatened or made for an improper purpose which amounts to an abuse of process in the technical sense of that term, as explained in Williams v Spautz. However, in an appropriate case, injunctive relief may then be available to the company in a court of general equity jurisdiction. This comment is directed to the possibility that a winding up application may be an abuse of process where the company is solvent. It is not shown that GM1 is solvent for reasons that I have indicated above. In TS Recoveries Pty Ltd v Sea-Slip Marinas (Aust) Pty Ltd [2007] NSWSC 1410 ("TS Recoveries 2") at [91], Barrett J noted that, in the ordinary course, insolvent companies should be wound up and that the scope for the application of principles of abuse of process in such a case must be limited, but indicated that such principles could not be entirely discarded in that context. I would take the same approach. 132 After referring to the principles applicable to whether a proceeding constitutes an abuse of process, his Honour continued as follows at [58]: In Australian Beverage Distributor Pty Ltd v Evans & Tate Premium Wines Pty Ltd [2007] NSWCA 57; (2007) 61 ACSR 441, Beazley JA (with whom Hodgson and Santow JJA agreed) observed that the Court may dismiss proceedings or grant injunctions in respect of an abuse of process. In TS Recoveries Pty Ltd v Sea-Slip Marinas (Aust) Pty Ltd [2007] NSWSC 1074; (2007) 25 ACLC 1371, Barrett J noted that a claim that the pursuit of a winding up application was an abuse of process involved wider issues than an attack upon a creditor's statutory demand and was not excluded by s 459S of the Corporations Act and identified relevant matters to such an attack, observing (at [17], [19]) that: Abuse of process is concerned predominantly with propriety of purpose. That issue must be judged according to the legitimate objectives of the particular process. A challenge under s 459J(1)(b) on the grounds of abuse of process would pay attention to the objectives properly pursued by service of a statutory demand, whereas an abuse of process allegation in relation to the pressing of winding up proceedings would pay attention to the objectives for which winding up proceedings are properly pursued. … A winding up application is designed to serve a different purpose, at least where it is pursued in the present circumstances where a presumption of insolvency has arisen, and the defendant company, while conceding insolvency, consciously and deliberately chooses to defend. In those circumstances, proper pursuit of winding up proceedings entails the purpose of securing the imposition of a scheme of insolvent administration aimed at ending the company's activities, seeing assets marshalled and the claims of creditors ascertained and culminating in payment to creditors of whatever is available from the insolvent estate. The logical and expected outcome will be the imposition of that regime (for the benefit of all creditors), not payment of the plaintiff's debt. 133 Splash Bay pointed to a number of matters based upon which, it submitted, the Court would infer that the proceeding has been substantially pursued for collateral and improper purposes. 134 First, Splash Bay submitted that the evidence relied on by Mr Plunkett, which included a recitation of grievances that were otherwise irrelevant to the application to wind up, demonstrated that 640's motives lie in retribution for the perceived wrongs of Messrs Richards and Buckeridge against Mr Plunkett. As I have already observed, both parties led a deal of evidence which was irrelevant to the matters in issue, particularly given what appeared to be a late abandonment by Splash Bay of the ground of duress as a basis to oppose the winding up application. However, that fact does not demonstrate an improper purpose on the part of 640 in bringing and pursuing the application to wind up Splash Bay. It may ultimately go to the issue of the quantum of recovery of 640's costs. 135 Next, Splash Bay submitted that: Mr Plunkett's cross examination, in which he made several concessions about his motives for bringing the application, demonstrated that he is seeking retribution and avenues to pursue litigation against persons other than Splash Bay; and the cross examination of Guy Richards, Mr Richards, Ms Goodacre and Mr Buckeridge were substantially directed to establishing that Mr Plunkett, or his company, had legitimate causes of action or complaints against 640 and Charles Richards. 136 Mr Plunkett's evidence in cross examination does not rise to the level of demonstrating that his motive for bringing the winding up application is for an improper purpose, namely to seek retribution or to find avenues to better pursue litigation. One outcome of a winding up application is that a liquidator will investigate the affairs of a company and form a view about whether there are any causes of action available to recover assets for the benefit of creditors. Mr Plunkett's evidence discloses that he is aware of that role of a liquidator and that he may be able to take advantage of that outcome of the winding up. But it goes no further. It does not amount to evidence of bringing the proceeding for some other advantage. For the same reason, nor does the fact that the cross examination of various people in Splash Bay's camp may have gone to establishing that Mr Plunkett had legitimate causes of action or complaints against 640 and Charles Richards establish that the proceeding is an abuse of process. 137 Thirdly, Splash Bay referred to a series of text messages between Mr Plunkett and Guy Richards, which were admitted into evidence, as evidence that Mr Plunkett sought to use the proceeding as a "tool for attacking Guy Richards". It is not necessary for me to set out the text messages in question. Suffice to say they use strong and extreme language. They demonstrate a level of frustration and anger on the part of Mr Plunkett but, again, in my opinion, they do not support a conclusion that the proceeding has been brought for a collateral or improper purpose. 138 Finally, Splash Bay submitted that the substantial disputes over the debt claimed by 640 demonstrate that 640 is taking advantage of the insolvency procedure to avoid a trial on the merits. I reject that submission, particularly in circumstances where Splash Bay took no steps, as it was entitled to do, to file an application pursuant to s 459G of the Corporations Act to set aside the 640 Demand. That was the time at which Splash Bay could raise any alleged substantial disputes and, if successful in its application, those disputes would be resolved in a different forum. It did not do that. It does not now sit comfortably in the mouth of Splash Bay to contend that the application to wind it up is an abuse of process because it alleges there are substantial disputes about the debt the subject of the 640 Demand. 139 640's application to wind up Splash Bay is not an abuse of process and I would not exercise my discretion to stay or dismiss the proceeding on that basis. This is particularly so where there is no evidence displacing the presumption of insolvency that arises in relation to Splash Bay. Should Splash Bay be wound up? 140 It was open to Splash Bay, in opposition to this application, to establish its solvency and to thus displace the presumption that arose pursuant to s 459C of the Corporations Act. It does not require leave to do so. It has not led any such evidence. The available evidence in fact supports a contrary conclusion. 141 Splash Bay has failed to establish any of its grounds of opposition such that I would be persuaded to dismiss or stay the application to wind it up, the presumption of insolvency that arises in relation to it has not been rebutted and, subject to one matter, upon my consideration of the evidence, the formal requirements for a winding up have been satisfied. 142 The one matter that arises is the failure by the deponent of the affidavit in support of the Rosch Demand to include a statement that "there is no genuine dispute about the existence or amount of the [debt]" as required by s 459E(3) and r 5.2 and Form 7 of the Federal Court (Corporations) Rules 2000 (Cth). The failure to include such a statement would be "some other reason" why the demand should be set aside for the s 459J(1)(b) of the Corporations Act: see Kisimul Holdings Pty Ltd v Clear Position Pty Ltd [2014] NSWCA 262 at [32]-[37]. However, Splash Bay did not apply pursuant to s 459G of the Corporations Act to have the Rosch Demand set aside on that or any other basis. Nor was this issue raised as a ground of opposition before me, noting that leave to do so would have been required pursuant to s 459S. I also note that, while omitting the statement that there is no genuine dispute about the debt, the deponent of the affidavit verifying the Rosch Demand has otherwise deposed to the fact that the amount demanded is due and payable. 143 In all circumstances of this case, I would not stay or dismiss the application to wind up because of this defect in the affidavit. As Black J observed at [72] in Gladstone Mortgagee No 1 when considering the same issue, to do so after a presumption of insolvency had arisen which had not been rebutted would be inconsistent with the purpose of the legislative regime "so far as it would allow a company that is presumed to be insolvent a continued ability to incur debts which, on that unrebutted presumption, it could not pay as they fell due". 144 Accordingly I will make the following orders: (1) the defendant be wound up; (2) William Paul Cotter and William Roland Robson be appointed as joint and several liquidators of the defendant; and (3) the plaintiff's costs (including reserved costs, if any) be taxed and reimbursed out of the property of the defendant in accordance with s 466(2) of the Corporations Act 2001 (Cth). I certify that the preceding one hundred and forty-four (144) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Markovic. Associate: Dated: 14 February 2017