New South Wales Supreme Court CITATION : Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371 HEARING DATE(S) : 07/12/06 JUDGMENT DATE : 12 December 2006 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Barrett J DECISION : Declarations and orders to be made as set out in paragraph [39] CATCHWORDS : EQUITY - equitable compensation - requirement that fiduciary account for gains - whether gains should be reduced by losses - EQUITY - equitable compensation - basis on which interest should be included in equitable compensation - EQUITY - vesting order - whether vesting order should be made in favour of beneficiary - where order sought refers to specified parcel of land and "all other property and assets of" trustee - where no refusal of trustee to transfer - where extent of trustee's right to resort to trust fund for indemnity not yet quantified - CORPORATIONS - winding up - by the court - where company resolves by special resolution that it be wound up by the court - whether court has discretion - relevance of availability of voluntary winding up by special resolution - whether any reason not to exercise discretion Aboriginal Land Rights Act 1983, ss.52(1)(g)(ii), 152(4), 222 Aboriginal Land Rights Regulation 2002, cl 94 LEGISLATION CITED : Corporations Act 2001 (Cth), ss.232, 233, 249B, 461(1)(a), 462(2)(c), 467(3)(b), 491 Real Property Act 1900, s.86 Supreme Court (Corporations) Rules 1999, rule 5.11(3) Uniform Civil Procedure Rules 2005, rules 41.5, 42.25 Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45 Bartlett v Barclays Bank Trust Co Ltd [1980] Ch 515 Byrom Motors (Pvt) Ltd v Dolphin House (Pvt) Ltd 1958 (3) SA 532 Cameron v Murdoch (No 2) [1984] WAR 278 Chang v Registrar of Titles (1976) 137 CLR 177 Chief Commissioner of Stamp Duties v Buckle (1995) 38 NSWLR 574 Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226 CIC Insurance Ltd v Hannan & Co Pty Ltd (2001) 38 ACSR 245 CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 Ex parte Three Sisters (Pty) Ltd 1986 (1) SA 592 Fallis and Deacon v United Fuel Investments Ltd [1963] SCR 397 CASES CITED : Re Fernlake Pty Ltd (1994) 13 ACSR 600 Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (1990) 3 ACSR 183 Gosford Christian School Ltd v Totonjian [2006] NSWSC 725 Hagan v Waterhouse (1991) 34 NSWLR 308 Hawke's Bay Fruit Canning Co Ltd v Boardman (1920) 15 MCR 2 Leca Investments (Pty) Ltd v Shiers 1978 (4) SA 703 Lewis v Nortex Pty Ltd [2006] NSWSC 480 Official Trustee in Bankruptcy v Buffier (2005) 54 ACSR 767 Re Buzolich Patent Damp-Resisting and Anti-Fouling Paint Company Ltd (1884) 10 VLR(E) 276 Re Suco Gold Pty Ltd (1983) 33 SASR 99 Re United Fuel Investments Ltd (1961) 31 DLR (2nd) 331 Scott v Scott (1963) 109 CLR 649 Peter Hillig in his capacity as Administrator of Darkinjung Local Aboriginal Land Council - Plaintiff Darkinjung Pty Limited - First Defendant Jeffrey John Bradford - Second Defendant PARTIES : David Pross - Third Defendant Greg Flanders – Fourth Defendant George Alexander Watts – Fifth Defendant Michael Stuart Jones – Sixth Defendant FILE NUMBER(S) : SC 2842/06 COUNSEL : Mr D.A. Smallbone - Plaintiff Mr D.A.C. Robertson - Defendants SOLICITORS : Patrick Woods & Company – Plaintiff Norton White Melbourne – Defendants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST BARRETT J TUESDAY, 12 DECEMBER 2006 2842/06 PETER HILLIG AS ADMINISTRATOR OF DARKINJUNG LOCAL ABORIGINAL LAND COUNCIL v DARKINJUNG PTY LIMITED & 5 ORS JUDGMENT 1 These reasons deal with remaining matters relevant to the form of the orders to be made in proceedings 2842/06 consequent upon my judgments of 3 October 2006 ([2006] NSWSC 1008) and 16 November 2006 ([2006] NSWSC 1217). They also deal with a renewed claim by DLALC for a winding up order in respect of DPL. Abbreviations and definitions used in the reasons of 3 October 2006 apply here also. Equitable compensation - assessment 2 The first question for decision concerns the method of assessing the equitable compensation briefly described at paragraphs [46] to [48] in the reasons of 16 November 2006. 3 Given that whatever funds and assets DPL actually has will be held on trust for DLALC by virtue of Order 3 set out at paragraph [4] of those reasons, DLALC will in that way receive the benefit of all enhancements to particular assets that may have resulted from the application of its funds. Equitable compensation must therefore be concerned with the losses or detriments. Those losses or detriments will have arisen in one of two ways: by application of moneys to produce some asset now worth less than the applied sum; or by application of moneys in a way not now reflected in DPL's asset base. Equitable compensation must make good these two classes of deficiency. 4 This result may be achieved by a system which, in the first instance, ascertains the present value of each asset of DPL. If that value exceeds the amount outlaid to obtain the asset, no more need be done: the gain for which DPL as a fiduciary must account will accrue to DLALC by reason of the circumstance that the asset is held by DPL on trust for DLALC. But if the value of an asset is less than the amount outlaid to obtain it, the deficiency will be an element of the equitable compensation. For these purposes, an asset by asset approach is necessary so that absorption of gains by losses does not work to the detriment of DLALC. In this respect, I do not accept the submission of DPL, based on Bartlett v Barclays Bank Trust Co Ltd [1980] Ch 515 and Cameron v Murdoch (No 2) [1984] WAR 278, that a single course of conduct or common policy warrants setting off losses against profits. DPL's investment decisions in respect of the sums not marked by asterisk at paragraph [18] of the reasons of 3 October 2006 were discrete and independent decisions. 5 At the same time, however, the assessment of equitable compensation should proceed in a way that does not needlessly dissect asset groups or categories. Thus, if an office building contains office furniture, fittings and equipment accounted for as a composite whole, that whole should be treated as a separate and single asset. I note that the parties have, in this respect, agreed that the investment portfolio managed by Macquarie Bank should be treated as a composite whole rather than being broken down into the separate and individual investments. There should be a discretion in the assessment process for other groups or categories to be dealt with in the same combined way. 6 The compensation sum will be calculated in a manner that first pays attention to the present value of each asset (with "asset" understood in the way thus described). If the value is greater than or equal to the amount outlaid to obtain the asset, credit will be given in the calculation for the amount outlaid. If the value is less than the amount outlaid to obtain the asset, credit will be given in the calculation for the value only. The aggregate of all the amounts for which credit is thus given will then be subtracted from the sum of $25,757,095.01, being the total received by DPL from DLALC. The result of that subtraction will represent the total loss to DLALC, without allowance for gains on assets which have produced a gain. That loss figure will be the appropriate measure of equitable compensation, subject to the addition of an appropriate interest factor. In this way, effect will be given to the principle that a fiduciary must both account for gains and make good losses resulting from misapplication of trust moneys: Scott v Scott (1963) 109 CLR 649. Equitable compensation - interest 7 The next issue concerns the rate at which interest should be allowed on the amount of equitable compensation. Both parties rely on the decision of Kearney J in Hagan v Waterhouse (1991) 34 NSWLR 308 – DPL for the proposition that interest should be allowed at the rate applicable to legacies and DLALC for the proposition that the relevant rate is the "mercantile" rate referred to by his Honour. 8 The choice between these two approaches will sometimes involve assessment of the quality of the relevant conduct: see, for example, Alemite Lubrequip Pty Ltd v Adams (1997) 41 NSWLR 45 and the references there to the distinction between "acting honestly and in good faith" and being guilty of "gross negligence". But, as Hamilton J has recently pointed out in Lewis v Nortex Pty Ltd [2006] NSWSC 480 at [13], the real determinant of the compensation that should be awarded by way of interest in a case of this kind is what the trust estate would have earned if the relevant funds had been available. In that case, his Honour paid attention to the fact that the trust was a trading trust and awarded interest at the "mercantile" rate which he considered to be adequately reflected by the rate prescribed by the rules of court. 9 If, in the present case, the moneys in fact transferred to DPL had remained with DLALC as they should have, the return on them would have been governed by s.152(4) of the ALR Act which requires investment in accordance with the ALR Regulation. Clause 94 of the regulation specifies a number of authorised investments, all of which involve government or government-backed securities or deposits with banks and similar deposit-taking institutions – in other words, modes of investment that I believe I am entitled to know pay interest at what are, in market terms, low rates. It is returns at a rate of that kind of which DLALC has been deprived. 10 In view of the clear indications in clause 94 of the ALR Regulation of the returns of which DLALC has been deprived, interest included as part of the equitable compensation should be at an appropriate rate attracted by term deposits with the Commonwealth Bank of Australia. The calculation of interest should be approached on the general footing that relevant moneys would have been invested, at each material point in time, in a 12 month term deposit with that bank, with each investment and its accrued interest being rolled over into a new term deposit at the end of the 12 months period. 11 There is then the question of timing, for the purposes of the interest calculation. Once the amount of the equitable compensation (disregarding the interest component) has been ascertained, the interest component to be added should be calculated on that amount by reference to the periods for which DLALC was deprived of the wrongfully transferred moneys. The amounts transferred and the dates of transfer are shown in the items marked by asterisk at paragraph [18] of the reasons of 3 October 2006, namely: 15 July 2004 $ 19,582,713 . 36 27 October 2004 69,100 . 00 7 July 2005 (two amounts) $ 6,105,282 . 65 $ 25,757,095.01 12 Ignoring the item of $69,100.00 as insignificant for present purposes, it can thus be said that DLALC was deprived of some 76% of the relevant moneys from 15 July 2004 and 100% from 7 July 2005. Interest should therefore be added to the equitable compensation sum on the footing that 76% of that sum attracts interest from 15 July 2004 to 6 July 2005 and 100% attracts interest from 7 July 2005 to the date of payment, with the interest being calculated by reference to the Commonwealth Bank rate referred to in [10] above, as actually offered and available at relevant times. Vesting of property held by DPL on trust for DLALC 13 I turn now to a separate issue. I observed at paragraph [6] of the reasons of 16 November 2006 that it had been conceded by DPL that DLALC was entitled to have transferred to it the whole of the funds and assets of DPL, it being acknowledged that, in view of the conclusions expressed in the reasons of 3 October 2006, that whole is held by DPL upon trust for DLALC. There was not, at that time, any claim for an order for transfer or a vesting order. Such a claim is now made. Specifically, DLALC seeks an order as follows: "Order that the land comprised in folio identifier 301/555497 and all other property and assets of the first defendant Darkinjung Pty Limited do hereby vest in Darkinjung Local Aboriginal Land Council." 14 Having regard to the findings stated in the judgment of 3 October 2006, DPL does not quarrel with the basic proposition that DLALC should assume full and direct ownership of the whole of DPL's property. DPL does, however, contend that there should be excluded and left with DPL for the time being a sum estimated to be sufficient to meet such entitlements as DPL may have for costs of the proceedings (and proceedings 5634/05), whether pursuant to rule 42.25 of the Uniform Civil Procedure Rules 2005 or otherwise, with the balance of the excluded sum passing to DLALC after determination of such entitlements and relevant quantification. The response of DLALC is that no such exception or reservation is warranted since any monetary entitlement of DPL as trustee may be set-off against the equitable compensation DPL is to pay. 15 I am of the opinion that there are several reasons why a vesting order should not be made, at least at this point and in the comprehensive form sought. First, I have an unease about an order which refers to a specific parcel of land then deals indiscriminately and without description or elaboration with "all other property and assets of" DPL. Because a vesting order operates in the same conceptual way as a conveyance or transfer, it should in like manner specify with particularity the items of property with which it deals. 16 Second, it is recognised in the case law that a vesting order is an extraordinary remedy not intended to displace ordinary conveyancing and transfer mechanisms. In Chang v Registrar of Titles (1976) 137 CLR 177, it was accepted that a purchaser who had paid the purchase moneys in full and was entitled to specific performance (so that the vendor was a constructive trustee) might obtain a vesting order – but only, as Mason J observed at p.185, where the vendor "refuses or declines to execute a transfer or is disabled from so doing". In this case, it has not been shown that DPL will be recalcitrant in the matter of transfer to give effect to the trust in favour of DLALC that will be recognised by the declarations and orders of the court and flows from the substantive conclusions in this case. Until that is shown, it is premature to consider a vesting order. 17 The third point goes to the matter raised by DPL concerning preservation of the trustee's indemnity. Particularly where a winding up application is pending and seems most likely to produce an administration in insolvency, I am not satisfied that it is sufficient to look at that matter simply in terms of set-off. A trustee's right to be indemnified out of trust assets is given effect to by means of an equitable interest in the whole of the assets of the trust. Until the right to be indemnified is exercised, the trustee has a right to possession superior to the rights of the beneficiaries (Re Suco Gold Pty Ltd (1983) 33 SASR 99 at p.109 per King CJ) and a "preferred beneficial interest in the trust fund" (a description applied by Sheller JA in Chief Commissioner of Stamp Duties v Buckle (1995) 38 NSWLR 574 at p.586 and expressly approved by the High Court in Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226 at p.247). Until satisfaction of the trustee's right of indemnity, it is not possible to say what the trust fund is: CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 at [51]. 18 If the court were to make a vesting order in the terms sought by DLALC, the "preferred beneficial interest" of DPL in the property concerned would be denied. The "preferred beneficial interest" might be of particular significance in an insolvent administration of DPL, particularly if the right of DLALC in respect of unpaid equitable compensation was no more than a debt provable along with all others. It may be that a vesting order could be framed in a way that excepted or reserved the interest of the trustee (see, for example, Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (1990) 3 ACSR 183 at p.186), but the efficacy of such a course in respect of the Real Property Act land could present problems, having regard to s.86 of that Act. 19 The three considerations I have mentioned indicate that this part of DLALC's claims will most efficiently be dealt with at this stage by an order requiring DPL to transfer all its funds and assets to DLALC, with the exception of a specified sum of money, on the footing that that sum, or so much of it as remains after satisfaction of any lien, will also be transferred once DPL's claims for relevant costs and to entitlement to indemnity and lien have been determined. 20 DLALC says that, if any such regime is adopted, the sum withheld should be paid into court to abide the outcome of the determination. Given that DPL can assert no right to the moneys in question (except in satisfaction of the determination just mentioned), DPL will not be prejudiced by that course. As to the amount that might be withheld, DPL has placed material before the court indicating that a sum of $430,000 may be considered appropriate. DLALC takes issue with certain matters referred to in that connection but they are really of relevance to the future question of determination and quantification of such entitlement as DPL may have. In adopting a figure of $430,000, the court is, of course, not in any way suggesting an entitlement of DPL to that or any other sum. 21 In summary, therefore, there will be an order requiring DPL to transfer the whole of its funds and assets to DLALC, with the exception of money to the extent of $430,000; and there will be an order that that sum of $430,000 be paid into court by DPL on terms that, following determination of DPL's claim to be indemnified out of trust assets for costs and expenses, so much of the moneys in court as are not required to satisfy DPL's entitlement shall be paid to DLALC. DLALC's renewed winding up application 22 In the reasons of 16 November 2006, I held that DLALC had not established an entitlement to relief under ss.232 and 233 of the Corporations Act 2001 (Cth). An order modifying DPL's constitution was accordingly refused, as was the alternative order sought by DLALC, being an order that DPL be wound up. 23 Pursuant to leave granted, DLALC has amended its originating process to include a claim for a winding up order in respect of DPL on a new and different ground, namely, the ground in s.461(1)(a) of the Corporations Act: "the company has by special resolution resolved that it be wound up by the Court." 24 In support of this claim, there has been tendered a document signed by Mr Hillig, as administrator of DLALC, and stating that a resolution that DPL be wound up by the court was passed as a special resolution on 4 December 2006. Having regard to the effect of s.222 of the ALR Act as regards Mr Hillig's ability to act for and bind DLALC (see paragraphs [2] to [4] of the judgment of 3 October 2006), the circumstance that DLALC is the sole member of DPL and the effect of s.249B of the Corporations Act (see Gosford Christian School Ltd v Totonjian [2006] NSWSC 725), I am satisfied that the event contemplated by s.461(1)(a) occurred in relation to DPL on 4 December 2006. There has accordingly been shown to exist the circumstance referred to in s.461(1)(a). 25 By causing to be passed a resolution in terms of s.461(1)(a), DLALC, through Mr Hillig, has dealt with what was described at paragraph [223] of the 3 October 2006 judgment as a factor that I continued to regard as highly relevant to the part of DLALC's case seeking relief on the ground of oppression or analogous conduct under ss.232 and 233 of the Corporations Act. In the judgment of 16 November 2006, I held that DLALC had failed to establish an entitlement to relief based on ss.232 and 233 and pointed to DLALC's ability to initiate voluntary winding up. DLALC has now seen fit to assert its own ability to create grounds for the winding up of DPL by the court. 26 Writing in 1960, the editors of the 17th edition of "Palmer's Company Precedents" described resolutions under the then English equivalent of s.461(1)(a) as "extremely rare". Members capable of passing a special resolution may thereby initiate voluntary winding up without any need to invoke the jurisdiction of the court: see s.491. The learned editors said that they knew of only one case in England in the previous 25 years in which the court had been asked to make a winding up order on the basis of a special resolution of members that the company be wound up by the court. That unreported case involved very special circumstances. In a footnote beginning "See also", the editors did, however, refer to three cases from other countries. The footnote was repeated without elaboration almost forty years later at looseleaf p.15061 (August 1997) of "Palmer's Company Law". 27 Only one of the three cases dealt with an equivalent of s.461(1)(a). The first, Hawke's Bay Fruit Canning Co Ltd v Boardman (1920) 15 MCR 2, a decision of a Magistrate's Court in New Zealand, concerned the validity of a resolution for voluntary winding up. The second case, Re Buzolich Patent Damp-Resisting and Anti-Fouling Paint Company Ltd (1884) 10 VLR(E) 276, involved an application for winding up on the just and equitable ground. The third case, Byrom Motors (Pvt) Ltd v Dolphin House (Pvt) Ltd 1958 (3) SA 532, did involve an application for winding up on the ground that there had been passed a special resolution that the company be wound up by the court. There was secondary reliance on the just and equitable ground. The High Court of Southern Rhodesia (Quènet J) held that the first ground was sufficient, noting that the petition had been duly advertised and that the one objector who had emerged put forward an objection "personal to itself". The objector was the company's landlord and it appeared that winding up of the tenant by order of the court would entail consequences for the landlord less advantageous than voluntary winding up, which could have been initiated likewise by special resolution. 28 In the Byrom Motors case, the judge commented on the availability of the alternatives of an application to the court based on the equivalent of s.461(1)(a) and voluntary winding up, both achievable by special resolution. He said (at p.536): "The statute gives a company the right to move the Court for a winding-up order. It is possible that the applicant believed that a voluntary winding-up might have attendant disadvantages and that, for that reason, it took the course it did. I am not prepared to withhold an order because of the possibility that the respondent might have been in a better position had the applicant following a different method of liquidating itself." 29 Also instructive is the decision of the Ontario Court of Appeal in Re United Fuel Investments Ltd (1961) 31 DLR (2nd) 331 (an appeal to the Supreme Court of Canada, on grounds not presently relevant, was dismissed: Fallis and Deacon v United Fuel Investments Ltd [1963] SCR 397). The relevant Canadian statute contained a provision corresponding in general terms with s.461(1)(a). The holders of some 99% of the company's voting shares, duly assembled at a meeting, voted in favour of a resolution that the company be wound up by the court. A winding up order was refused on the basis that the meeting in question was not a meeting of the particular kind contemplated by the statutory provision (a "special" meeting). 30 On appeal, an additional question canvassed was whether the court had a discretion to refuse a winding up order even though the members had, in the required statutory form, expressed a wish that the company be wound up by the court. The Ontario Court of Appeal (Roach, Gibson and Schroeder JJA) was prepared to think that some discretion exists but was of the view that it is a controlled and narrow discretion. The court said (at p.349): "I am in accord with the submission of appellant's counsel that if there is a discretion in the Court to refuse an order for winding-up within the terms of s.10(b), since, under the provisions of the Companies Act and the terms of the letters patent and supplementary letters patent the right to decide that the company should be wound up has been conferred upon the holders of the majority of the common shares issued and outstanding, their decision should not be overridden unless it can be shown that their intended action is fraudulent or is tainted with mala fides or something approaching it. … It is a legal discretion founded upon stated conditions which call for judicial action as distinguished from a mere individual or personal view or desire, or from the wider discretion exercisable under the terms of s.10(e). The shareholders are in effect a domestic tribunal upon which has been conferred the power to decide questions as to the administration of the affairs of the company, and the Court will not substitute its opinion for the decision of such a tribunal unless very strong grounds are shown for doing so." (In the Canadian legislation, s.10(b) was the equivalent of Australia's s.461(1)(a), and s.10(e) was the provision referring to the just and equitable ground.) 31 An Australian case in which the shareholders' decision that the company should be wound up by the court was "overridden" (to adopt the word used by the Ontario court) is Re Fernlake Pty Ltd (1994) 13 ACSR 600. The shareholders who caused to be passed a special resolution under s.461(1)(a) had in fact sold some of their shares to another person before the resolution was passed. They initiated action towards winding up without the knowledge and consent of that person. W C Lee J said (at p.607): "Having concluded there were no technical irregularities surrounding the passing of the resolution, does it necessarily follow that it should be acted upon by the court in the exercise of its undoubted discretion whether or not to order the winding up under s 461? In my opinion it does not. As I have mentioned, that section being in permissive rather than mandatory terms, confers a residual discretion on the court. The evidence is that both registered shareholders who were entitled to vote and did in fact vote in respect of the resolution had contracted to sell one or more of their shares to the respondent. Both were cognisant of that fact and both appear to have acted in disregard of the respondent's right to determine how the votes in respect of those shares should be cast. The meeting was called without any indication to him. It would be clearly inequitable for this court to give effect to a resolution passed wholly in breach of the trusts by which each shareholder was bound in circumstances where both shareholders were fully aware of all the relevant circumstances surrounding those breaches. I would decline to do so in this case. In effect, each shareholder was knowingly involved in the other's breach of trust." 32 While an application based on s.461(1)(a) is concerned predominantly with the wishes and interests of members, the position of creditors is not irrelevant. Any special or adverse implications of the winding up for creditors is something to which the court must be alive: Leca Investments (Pty) Ltd v Shiers 1978 (4) SA 703; Ex parte Three Sisters (Pty) Ltd 1986 (1) SA 592. 33 There are two recent decisions of this court to which I should refer for the sake of completeness. In CIC Insurance Ltd v Hannan & Co Pty Ltd (2001) 38 ACSR 245, a sole shareholder seeking a winding up order relied on the s.461(1)(a) ground, the just and equitable ground and the insolvency ground. All three grounds were found to be established and an order appointing a provisional liquidator was made, that being the only relief sought at that point. A particular aspect of the factual circumstances was that the company had no directors and no prospects of obtaining any. While the possibility of the sole shareholder's procuring a voluntary winding up was not canvassed, the absence of all internal machinery would have militated against the due taking of the steps to convene the creditors meeting that the state of insolvency would have made a necessary element of the procedure for voluntary winding up. 34 The other recent decision of this court is Official Trustee in Bankruptcy v Buffier (2005) 54 ACSR 767. In that case, a sole member sought winding up on the just and equitable ground. The availability of voluntary winding up by action of that member was not mentioned in the judgment, but there was reference to the sole member's ability to create the s.461(1)(a) ground. Campbell J said (at p.779): "In the present case, there is in effect a power vacuum at board level, because of Mr Services' invalid appointment, and the official trustee, as sole shareholder, both does not want to rectify that problem, and is in any event, by reason of the lack of anyone willing to take on the task, unable to do so. Section 249B(1) of the Corporations Act provides: 'A company that has only one member may pass a resolution by the member recording it and signing the record.' It is (as Mr Angyal SC, for the second defendant, accepts) clearly within the power of the official trustee under that provision to pass a special resolution that the company be wound up by the court, which would then provide the jurisdictional basis for an order under s 461(1)(a) of the Corporations Act to wind the company up. Mr Angyal SC submits that, when that course is open, the making of a winding-up order on the just and equitable ground is inappropriate. I do not agree. The governance of this company is so irregular it should not be permitted to continue any longer." 35 Although judicial discussion of s.461(1)(a) and equivalent provisions has been limited, it seems to me that three principles should be regarded as relevant to a case in which winding up is sought on the ground that the company has by special resolution resolved that it be wound up by the court. First, the body of shareholders has a statutory right to decide that their company should be wound up by the court, being a right exercisable by whatever procedures are sufficient, in the particular circumstances, to cause a special resolution to be passed. Second, the court has discretion whether or not to make a winding up order (being the discretion created by the word "may" at the start of s.461(1)) but the discretion should not be exercised against the making of the order unless the shareholders' decision, or some aspect of the surrounding circumstances, involves something unconscionable or inequitable (or some special consideration adversely affecting creditors indicates that there should be no winding up). Third, the availability to the shareholders of the alternative of initiating voluntary winding up by special resolution does not represent any reason for declining to make a winding up order. This last point is really no more than an aspect of statutory interpretation: if there had been some intention that the voluntary winding up mechanism should have primacy, s.461(1)(a) would not form part of the Act. 36 I am of the view that, in this case, the sole member (that is, DLALC, acting through Mr Hillig) is entitled to rely on the s.461(1)(a) ground despite the existence of its power to initiate voluntary winding up. Mr Hillig's reasons for preferring winding up by the court to voluntary winding up do not appear to me to be something into which I need inquire. The sole shareholder desires winding up by the court. That shareholder's standing to apply for a winding up order is clear: s.462(2)(c). A ground for winding up has been established. There is no suggestion of any unconscionable or inequitable element of the sole shareholder's decision or in the wider context. Indeed, with the whole of DPL's funds and assets held by it upon trust for DLALC, there has been, in a real sense, a removal of DPL's substratum of such a kind that, having regard to that wider context, winding up should be considered just and equitable. 37 I have mentioned the possible relevance of the interests of creditors where winding up is sought on the s.461(1)(a) ground. There is nothing in the circumstances of this case indicating that attention needs to be given to the interests of DPL's creditors or that winding up might be inconsistent with those interests. Because the whole of DPL's funds and assets will be held on trust for DLALC, DPL may be expected to be insolvent so that the interests of creditors, as well as the public interest, will be served by winding up. 38 A winding up order and an order appointing a liquidator of DPL will be made. There has been incomplete compliance with procedural pre-requisites. In the circumstances, that cannot be productive of prejudice and there will be a dispensing order under s.467(3)(b). This dispensation will not, however, extend to the requirements under rule 5.11(3) of the Supreme Court (Corporations) Rules relating to publication of notice of the making of the winding up order and the appointment of the liquidator. Disposition 39 The declarations and orders proposed to be made to dispose of all the matters dealt with in the reasons of 3 October 2006, the reasons of 16 November 2006 and these reasons are as follows: 1. Declare that the purposes identified in s.52(1)(g)(ii) of the Aboriginal Land Rights Act and the purpose identified in clause 3.1(h) of the Darkinjung Local Aboriginal Land Council Trust deed dated 9 March 2004 are not charitable and are not purposes for which the trustee of the Darkinjung Local Aboriginal Land Council Trust is able to receive, hold and apply capital or income of the Darkinjung Local Aboriginal Land Council Trust property. 2. Declare that the following payments made by Darkinjung Local Aboriginal Land Council to Darkinjung Pty Limited: (a) on 15 July 2004, the sum of $19,582,713.36; (b) on 27 October 2004, the sum of $69,100.00; (c) on 7 July 2005, the sum of $5,453,374.25; and (d) on 7 July 2005, the sum of $651,907.40, were beyond the power of Darkinjung Local Aboriginal Land Council and that those funds were received by Darkinjung Pty Limited and were and are held by it upon trust for Darkinjung Local Aboriginal Land Council. 3. Declare that the whole of the funds and assets of Darkinjung Pty Limited are held by it upon trust for Darkinjung Local Aboriginal Land Council. 4. Declare that Darkinjung Pty Limited is not entitled to indemnity from the assets of the Darkinjung Local Aboriginal Land Council Trust for the amount of any liability of Darkinjung Pty Limited under a deed of indemnity dated 19 May 2006 between Darkinjung Pty Limited and Mr Warner and Mr Sanderson, the persons supposedly appointed voluntary administrators of Darkinjung Housing Pty Limited, Darkinjung Funeral Fund Pty Limited and Darkinjung Projects Pty Limited. 5. Declare that Darkinjung Pty Limited is liable to pay to Darkinjung Local Aboriginal Land Council as equitable compensation the sum obtained by (a) determining, in respect of each asset (other than money) held by Darkinjung Pty Limited upon trust for Darkinjung Local Aboriginal Land Council pursuant to Declaration 3, the "relevant value amount" of the asset; (b) in the case of each such asset (other than money) the "relevant value amount" of which equals or exceeds the amount outlaid by Darkinjung Pty Limited to obtain the asset, treating the amount so outlaid as the "credit allowance" for the asset; (c) in the case of each such asset (other than money) the "relevant value amount" of which is less than the amount outlaid by Darkinjung Pty Limited to obtain the asset, treating the "relevant value amount" as the "credit allowance" for the asset; (d) determining the aggregate of the "credit allowances" for all the assets (other than money) held by Darkinjung Pty Limited upon trust for Darkinjung Local Aboriginal Land Council pursuant to Declaration 3; (e) adding to that aggregate the total of all money held by Darkinjung Pty Limited upon trust for Darkinjung Local Aboriginal Land Council pursuant to Declaration 3; (f) subtracting the result obtained under paragraph (e) from $25,757,095.01; and (g) subtracting from the result of the subtraction under paragraph (f) the amounts which have been repaid by Darkinjung Pty Limited or by Darkinjung Projects Pty Limited into any bank account of Darkinjung Local Aboriginal Land Council and for these purposes (i) "money" includes a sum on deposit with a bank or other recognised financial institution; and (ii) "relevant value amount" means, in relation to an asset other than money, the smaller of (A) the amount outlaid by Darkinjung Pty Limited to acquire the asset (being, in the case of an asset which is a debt or trust fund resulting from a loan or advance, the amount lent or advanced); and (B) the present value of the asset, such present value being: a. in the case of an asset which is a debt, the amount judged actually recoverable, having regard to the circumstances of the debtor; b. in the case of any asset (other than a debt) which is not an investment authorised by section 152 of the Aboriginal Land Rights Act 1983, the sum realisable by immediate sale, of the investment net of the probable expenses of sale (including as expenses of sale the amount of any cost, charge, fee or damages payable under any contract or arrangement under which the investment is held or managed as a result of the early termination of such contract or arrangement); and c. in any other case, the fair value of the asset; (iii) the investment portfolio of Darkinjung Pty Limited which is managed by Macquarie Bank shall be deemed one asset; and (iv) any group or class of associated assets of Darkinjung Pty Limited which the Associate Justice who determines equitable compensation considers may conveniently and rationally be treated as one asset shall be deemed one asset. 6. Order that Darkinjung Pty Limited do forthwith assign, transfer and convey to Darkinjung Local Aboriginal Land Council and cause to be vested in Darkinjung Local Aboriginal Land Council the whole of the funds and assets of Darkinjung Pty Limited (including, but not limited to, the land in folio identifier 301/555497) save and except for a sum of $430,000 and that Darkinjung Pty Limited pay that sum of $430,000 into court. 7. Order that the moneys paid into court pursuant to order 6 (a) be invested in accordance with rule 41.5 of the Uniform Civil Procedure Rules 2005; and (b) remain in court to abide the determination of the amount, if any, which is fairly to be allowed to Darkinjung Pty Limited for its expenses of acting as trustee of the trust referred to in Declaration 3, in respect of the prosecution of proceedings number 5634 of 2005 and in respect of its conduct of the defence of these proceedings; and (c) upon completion and certification of that determination, (i) be paid out to Darkinjung Pty Limited to the extent of the sum to which Darkinjung Pty Limited is entitled as a result of the determination; and (ii) be paid out to Darkinjung Local Aboriginal Land Council as to the remainder, together with interest actually earned. 8. Order that further consideration be reserved of the costs of these proceedings and of amount, if any, which is fairly to be allowed to Darkinjung Pty Limited for its expenses of acting as trustee of the trust referred to in Declaration 3, in respect of the prosecution of proceedings number 5634 of 2005 and in respect of the conduct of the defence of these proceedings. 9. Order that subject to Order 8, it be referred to an Associate Justice to inquire and determine (a) the amount of the equitable compensation which Darkinjung Pty Limited is to pay to Darkinjung Local Aboriginal Land Council in accordance with Declaration 5; (b) a sum representing interest in respect of the amount of equitable compensation so determined, being the sum that would have been interest if (i) 76% of the amount of equitable compensation had been invested for the period 15 July 2004 to 6 July 2005 at the best rate of interest offered by Commonwealth Bank of Australia on 15 July 2004 for a deposit of equivalent amount for a term of 12 months; and (ii) 100% of the amount of equitable compensation plus the amount of interest calculated under paragraph (a) had been invested for the period 7 July 2005 to 6 July 2006 at the best rate of interest offered by Commonwealth Bank of Australia on 7 July 2005 for a deposit of equivalent amount for a term of 12 months; (iii) 100% of the amount of equitable compensation plus the amounts of interest calculated under paragraphs (a) and (b) had been invested for the period from 7 July 2006 to the date of payment at the best rate of interest offered by Commonwealth Bank of Australia on 7 July 2006 for a deposit of equivalent amount for a term of 12 months; and (c) the costs of the inquiry and the Associate Justice conducting the inquiry shall certify the amounts so determined and the amounts so certified shall be paid by Darkinjung Pty Limited to Darkinjung Local Aboriginal Land Council. 10. Order that the claims of the plaintiff for relief pursuant to ss.232 and 233 of the Corporations Act 2001 (Cth) be dismissed. 11. Order that, to the extent that any of the notices or steps required by the Corporations Act 2001 (Cth) or the rules of court in respect of the application in these proceedings for an order for the winding up of Darkinjung Pty Limited on the ground specified in s.461(1)(a) of that Act have not been given or taken, the requirement therefor is dispensed with. 12. Order that Darkinjung Pty Limited be wound up by the court on the ground specified in s.461(1)(a) of the Corporations Act 2001 (Cth). 13. Order that Richard James Porter of Moore Stephens PMN, Chartered Accountants, 460 Church Street, Parramatta, an official liquidator, be appointed liquidator of Darkinjung Pty Limited. 14. Order that the documents produced to the court by Christopher Ernest Jurd on 26 and 27 July 2006 be released into the custody of the plaintiff, by his solicitor. 15. Grant liberty to apply on 7 days notice in these proceedings in respect of any matter concerning the effectuation and implementation of these orders. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.