Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Treadtel International Pty Ltd v Cocco [2016] NSWCA 360 Hearing dates: 28 November 2016 Decision date: 16 December 2016 Before: Gleeson JA at [1] Leeming JA at [8] Barrett AJA at [9] Decision: (1) Grant leave to appeal. (2) Direct that a notice of appeal in the form of the draft notice of appeal in the white folder be filed within seven days. (3) Appeal allowed. (4) Set aside Order 1 made in the Equity Division on 8 September 2016 and order in lieu that the plaintiff have leave to file an amended statement of claim in the form annexed to the orders of 8 September 2016 and marked "A" but with the following omitted therefrom: (a) Paras 1, 1A, 8, 9, 10 and 11 of the relief claimed; and (b) Paras 98E and 98 to 108 inclusive of the pleading and particulars. (5) Order, in addition to the orders for costs made in the Equity Division on 8 September 2016, as follows: "That the plaintiff pay the costs of the first defendant of and incidental to the plaintiff's interlocutory process filed on 9 October 2015 (including any amendment thereto) up to and including 8 September 2016." (6) That the respondent pay the appellants' costs of the summons seeking leave to appeal and of the appeal. Catchwords: CORPORATIONS - winding up - application on grounds other than insolvency - standing – classes of person who can apply for a winding up order – s 462(2)(b) Corporations Act 2001 (Cth) – creditors including contingent or prospective creditors - where plaintiff denies any enforceable agreement with company but alternatively claims unliquidated damages against the company for breach of denied agreement - where basis for such claim disputed – whether plaintiff should be permitted to seek winding up order in same proceedings in which damages claim is made CORPORATIONS - winding up - application on grounds other than insolvency – s 462(2)(c) Corporations Act – standing as a contributory – where plaintiff not registered holder of shares – claim for rectification of register to record plaintiff as holder of share – whether plaintiff should be permitted to seek winding up order in same proceedings as claim for rectification of register CORPORATIONS - oppression and unfair prejudice – application for relief on basis of oppression – s 234 Corporations Act – standing as a member – where plaintiff asserts beneficial ownership of share in company – claim for rectification of register to record plaintiff as member – whether plaintiff should be permitted to seek relief in case of oppression in same proceedings as claim for rectification of register Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56(1), 57, 58, 64(2) Companies Act 1961 (NSW), s 221 Companies Act 1961 (Vic), s 220 Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (Cth) Conveyancing Act 1919 (NSW), s 12 Corporations Act 2001 (Cth), ss 9, 175, 231, 232, 233, 234, 235, 461, 462, 464, 514, 528, 529, 553,1072E Supreme Court Act 1970 (NSW), s 23 Cases Cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39 Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 Alati v Wei Sheung [2000] NSWSC 601; (2000) 34 ACSR 489 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27 Bilkus v King [2003] EWHC 2516 (Ch) Bital Holdings Ltd v Middleditch (1992) 6 NZCLC 67,842 Cadiz Waterworks Co v Barnett (1874) LR 19 Eq 182 Cercle Restaurant Castiglione Co v Lavery (1881) 18 Ch D 555 Chahwan v Euphoric Pty Ltd [2009] NSWSC 805; (2009) 73 ACSR 252 Cheung Kwan v Xu Shengheng [2013] HKFI 1659 Commissioner of Taxation v Simionato Holdings Pty Ltd [1997] FCA 125; (1997) 15 ACLC 477 Commonwealth of Australia v ABC2 Group Pty Ltd [2009] NSWSC 1442 Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455; [1969] HCA 47 Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1 El Sayed v El Hawach (2015) 88 NSWLR 214; [2015] NSWCA 26 Emanuele v Australian Securities Commission (1997) 188 CLR 114; [1997] HCA 20 Enviroco Ltd v Farstad Supply A/S [2011] UKSC 16; [2011] 1 WLR 921 Eskdale South Cattle Company Pty Ltd v Deputy Commissioner of Taxation [2013] FCA 1125 General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 Gerlach v Beyond Ltd (NSWSC unreported, McLelland J, 13 July 1992, BC9201750) Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 Hayim v Citibank NA [1987] AC 730 Hazard Systems Pty Ltd v Car-Tech Services Pty Ltd (In liq) [2013] NSWCA 314 House v The King (1936) 55 CLR 499; [1936] HCA 40 In re Sussex Brick Company [1904] 1 Ch 598 In the matter of Vangory Pty Ltd [2015] NSWSC 1809 In the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318 Julian Suresh Candiah v Axis IP Sdn Bhd [2013] 1 LNS 982 Lancaster v Evors (1841) 4 Beav 158; 49 ER 299 Lanepoint Enterprises Pty Ltd v Australian Securities and Investments Commission [2010] FCAFC 49; (2010) 78 ACSR 499 Leaney v Olmstead Pty Ltd (1994) 51 FCR 240 L'Estrange v L'Estrange (1850) 13 Beav 281; 51 ER 108 Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 97,374 Lunn v Cardiff Coal Co [2002] NSWSC 1247; (2002) 171 FLR 430 Lunn v Cardiff Coal Co (No 2) [2003] NSWSC 25 Macks v Valamios Produce Pty Ltd (No 2) [2003] NSWSC 1044; (2003) 47 ACSR 686 Mandarin International Developments Pty Ltd v Growthcorp (Aust) Pty Ltd (1998) 143 FLR 408 Mann v Goldstein [1968] 1 WLR 1091 Melluish v Underwood Development Pty Ltd [2004] NSWSC 429 Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236; (2011) 29 ACLC 11-018 National Mutual Life Nominees Ltd v National Capital Development Commission (1975) 37 FLR 404 Niord v Adelaide Petroleum NL (1990) 54 SASR 87 (1966) 65 FCR 449 Norman v Federal Commissioner of Taxation (1963) 109 CLR 9; [1963] HCA 21 Oates v Consolidated Capital Services Ltd (2009) 76 NSWLR 69; [2009] NSWCA 183 Owen Sim Liang Khui v Piasau Jaya Sdn Bhd [1996] 1 MLJ 113 Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204 Ramage v Waclaw (1988) 12 NSWLR 84 Randa Lee Investments Pty Ltd v Ballan [2015] VSC 178 Re A Company [1894] 2 Ch 349 Re Botar-Tatham Pty Ltd (2001) 52 NSWLR 680; [2001] NSWSC 613 Re Brightview Ltd [2004] EWHC 1056 (Ch); [2004] BCC 542 Re European Society Arbitration Acts (1878) 8 Ch D 679 Re Exclusive Master Book-Binding and Manufacturing Pty Ltd (1977) 17 SASR 522 Re Gasbourne Pty Ltd [1984] VR 801 Re Gattopardo Ltd [1969] 1 WLR 619 Re Harvest Lane Motor Bodies Ltd [1969] 1 Ch 457 Re Independent Quarries Pty Ltd (1993) 12 ACSR 188 Re JN2 Ltd [1977] 3 All ER 1104 Re Kalblue Pty Ltd (1994) 12 ACLC 1057 Re Meyer Douglas Pty Ltd [1965] VR 638 Re Ocean City Ltd [1993] FCA 86;(1993) 10 ACSR 483 Re Patent Steam Engine Company (1878) 8 Ch D 464 Re PMC Investments Pty Ltd (1991) 9 ACLC 1559 Re QBS Pty Ltd [1967] Qd R 218 Re Westerton [1919] 2 Ch 104 Roberts v Gill & Co [2011] 1 AC 240; [2010] UKSC 22 Rodda v Lifestyle Loans Vic Pty Ltd [2015] VSC 628; (2015) 303 FLR 227 Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311 Sharpe v San Paulo Railway Company (1873) LR 8 Ch App 597 Smyth v Investec Bank Ltd (2016) (4) SA 363 (GP); [2015] ZAGPPHC 1144 South Launceston Football Club Inc v Tasmanian Football League Ltd (1995) 4 Tas R 342 Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 Spokes v Grosvenor Hotel Co Ltd [1897] 2 QB 124 Stainton v The Carron Company (1854) 18 Beav 146; 52 ER 58 TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 Thomas v Mackay Investments Pty Ltd (1996) 22 ACSR 294 Tilley Air Conditioning Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 757 Titlow v Intercapital Group (Australia) Pty Ltd (1966) 65 FCR 449 Treadwell v Hickey [2009] NSWSC 1395 Warner v Shulamite Pty Ltd [2012] FCA 863 Weddell v J A Pearce & Major [1988] Ch 26 Western Interstate Pty Ltd v Deputy Commissioner of Taxation (1995) 13 WAR 479 Wickstead v Browne (1992) 30 NSWLR 1 Texts Cited: Board of Trade, Report of the Company Law Committee Cmd 1749, June 1962 W J Koeck & I M Ramsay, "The importance of distinguishing between different categories of creditors for the purposes of company law" (1994) 12 Company and Securities Law Journal 105 B T Lee, "Claiming a pound of flesh as a contingent or prospective creditor under the Companies Act" (1993) Singapore Journal of Legal Studies 144 W E Paterson, H H Ednie and H A J Ford, Australian Company Law (3rd ed, 1989) Category: Principal judgment Parties: Treadtel International Pty Ltd (First Applicant) Richard Crosher (Second Applicant) Pierro Cocco (Respondent) Representation: Counsel: Mr J E Thomson (Applicants) Mr D Sulan/Mr G Gee (Respondent) Solicitors: Michael C Smith (Applicants) Rolland Ross Lawyers (Respondent) File Number(s): 2016/214973 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2016] NSWSC 791 Date of Decision: 20 June 2016 Before: Robb J File Number(s): 2014/205607 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. GLEESON JA: I agree with Barrett AJA. Without in any way detracting from his Honour's comprehensive reasons, I would add the following comments in relation to one matter. 2. One of the bases on which the respondent, Mr Cocco, sought to justify the contested amendments to his pleading which introduced the winding up claim and the oppression claim in relation to Treadtel International Pty Ltd (Treadtel) was that they were appropriate for avoiding multiplicity of proceedings: s 64(2) of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act). That contention should be rejected. 3. The power to grant leave to amend pleadings is to be exercised, subject to s 58 of the Civil Procedure Act, in accordance with the dictates of justice and requires regard to be had to the overriding purpose of the rules – to facilitate the just, quick and cheap resolution of the real issues in the proceedings (s 56) – as well as the efficient and timely disposal of the proceedings (s 57). Three observations can be made in the present case. 4. First, the dictates of justice did not favour a grant of leave to add the amendments to the existing proceedings. To permit that course involved ignoring the statutory requirements that the classes of persons who may apply for a winding up order in relation to a company or relief in the case of oppression are those listed respectively in ss 462 and 234 of the Corporations Act 2001 (Cth). For the reasons given by Barrett AJA, Mr Cocco is not presently either a member (or contributory), or (on his alternative case) a creditor of Treadtel. 5. Secondly, the real issues in the proceedings did not include Mr Cocco's new claims for relief the subject of the contested amendments. The new claims were contingent on Mr Cocco first succeeding in establishing his claim (a) to be a member of Treadtel – by having the register of Treadtel rectified to reflect his holding of the "trust share" presently held by Mr Crosher or, alternatively (and only in the case of the winding up claim), (b) to be a creditor, or at least a contingent or prospective creditor, of Treadtel – based on an untried and unascertained claim for unliquidated damages for breach of the so-called "Milan agreement", the making and existence of which Mr Cocco denied. 6. Thirdly, allowing the introduction of the contested amendments was inconsistent with the efficient and timely disposition of the proceedings as then constituted. Prior to those amendments, the issues raised by the proceedings were relatively straightforward. Mr Cocco had sought an order that the share register of Treadtel be rectified so as to record him as the holder of the trust share (then held by Mr Crosher). Mr Crosher disputed that claim for relief on the basis that Mr Cocco had allegedly relinquished his equitable interest in the trust share by virtue of the making of the Milan agreement. In response, Mr Cocco denied the making and existence of the Milan agreement and, in the alternative, if (which he denied) there was an enforceable agreement reached for the transfer of Mr Cocco's equitable interest in the trust share to Mr Crosher, Mr Cocco was entitled to damages against Treadtel for breach of other alleged terms of the Milan agreement. 7. What Mr Cocco sought to achieve by the contested amendments was to have determined in the same proceedings the very matters upon which his standing to apply for a winding up order and for relief in the case of oppression depended. But acceptance of this "cut-through" approach would necessarily introduce additional costly and time-consuming contentions relating to alleged oppression and winding up on an asserted just and equitable basis that should not be permitted to go forward in the same proceedings as those in which Mr Cocco sought to establish that he was a member, or alternatively, a creditor of Treadtel. 8. LEEMING JA: I agree with Barrett AJA's reasons and the orders he proposes. I also agree with the comments made by Gleeson JA. 9. BARRETT AJA: This matter raises questions about locus standi to sue for certain statutory relief under the Corporations Act 2001 (Cth) and whether the issue of standing should be determined before the claims for statutory relief are heard. The questions arise because defendants seek to challenge a grant of leave for a plaintiff to amend his statement of claim. 10. In Equity Division proceedings that have yet to come to trial, Mr Cocco sues two defendants, Treadtel International Pty Ltd ("Treadtel") and Mr Crosher. Treadtel is engaged in a business of wholesaling motor tyres and like items. Its activities extend beyond Australia. 11. For reasons published on 20 June 2016, [1] Robb J granted leave for Mr Cocco to amend his statement of claim. Treadtel and Mr Crosher maintain that his Honour should not have done so. Subject to leave to appeal being granted, they ask this Court to set aside the primary judge's orders and to allow only significantly curtailed amendment of Mr Cocco's claim. Argument on the grounds of appeal was heard concurrently with argument on the application for leave to appeal. The proceedings 1. The issued share capital of Treadtel consists of two ordinary shares. Mr Crosher is registered as the holder of both shares. By an originating process filed as long ago as July 2014, Mr Cocco sought an order under s 175 of the Corporations Act that the share register of Treadtel be rectified so as to record that, from 9 July 2014, one of the shares has been held by Mr Cocco. The share in question was originally held by Mr Crosher's former wife, Marisa Crosher, and is referred to in pleadings and submissions as the "trust share". It is convenient to adopt that terminology. 2. It was ordered in October 2014 that the matter proceed on pleadings. On 3 November 2014, Mr Cocco filed a statement of claim. He there maintained his claim for an order under s 175 of the Corporations Act and added ancillary claims regarding the trust share, including a claim for a declaration that Mr Crosher held the trust share on trust for Mr Cocco; an order that Mr Crosher transfer the trust share to Mr Cocco; an order that Treadtel and Mr Crosher record Mr Cocco as the holder of the trust share in the register of members; and an order that Mr Crosher account to Mr Cocco for any dividends or other distributions paid in respect of the trust share held on trust for Mr Cocco for the period Mr Crosher was the registered holder of that share. 3. The case pleaded in the 3 November 2014 statement of claim was to the effect that, on formation of Treadtel in about January 2000, one share was issued to Mr Crosher and one was issued to Marisa Crosher; Mr Crosher became the sole director of Treadtel in April 2006; some time before 10 August 2001, Marisa Crosher agreed to hold her share on trust for the benefit of Mr Cocco as evidenced by an undated trust deed between Marisa Crosher and Mr Cocco; the trust deed declared an absolute trust and that Marisa Crosher would execute a transfer to Mr Cocco (or as directed by him) on his request; the register of Treadtel recorded Marisa Crosher as the holder of the one share but not the beneficial owner of it; pursuant to consent orders of the Family Court of Australia, the trust share was transferred by Marisa Crosher to Mr Crosher who then became the registered holder of it; Mr Cocco did not consent to that transfer; upon transfer to Mr Crosher, the trust share came to be held by him on trust for Mr Cocco subject to the trust deed and he was required to transfer it to Mr Cocco as and when directed; it was "a requirement of law" that, following registration of the transfer from Marisa Crosher to Mr Crosher, the share register record that he did not hold the trust share beneficially; from about 30 May 2007 the share register has erroneously recorded that with effect from 30 May 2007 Mr Crosher was the beneficial owner of the trust share; and on or after 22 May 2014, Mr Cocco requested Mr Crosher to cause the register to be rectified to reflect Mr Cocco's beneficial ownership of the trust share. 4. By defences dated 2 and 12 December 2014, Mr Crosher and Treadtel admitted that Marisa Crosher declared by the trust deed that she held the trust share on trust for Mr Cocco. They also admitted the Family Court orders and their effect as contended, as well as transfer of the trust share by Marisa Crosher to Mr Crosher. However, both defendants denied any entitlement of Mr Cocco after 12 February 2012 to call for or direct a transfer of the trust share. They alleged that Mr Cocco had, by an oral agreement made on that day in Milan, Italy, agreed to relinquish in favour of Mr Crosher his interest in Treadtel (including his beneficial interest in the trust share). They also alleged agreement by Mr Cocco that he would claim no interest in respect of the businesses operated by Treadtel and its subsidiaries. Terms of that so-called "Milan agreement" were then pleaded. These included the transfer to Mr Cocco of an interest in a Czech company and certain other European assets. 5. As the primary judge observed, [2] the effect of the pleadings to that point was that Mr Cocco's case in respect of entitlement to the trust share was confessed, subject to a plea in avoidance that Mr Cocco had entered into the Milan agreement and, by so doing, relinquished his beneficial interest in the trust share to Mr Crosher, with the result that he was no longer entitled to require transfer of the share to himself. 6. By replies dated 22 December 2014, Mr Cocco admitted that he and Mr Crosher had met in Milan on 12 February 2012, but denied the agreement pleaded by Mr Crosher and Treadtel. Mr Cocco pleaded in the alternative that, if there was an agreement with respect to the trust share, it was an agreement that he would transfer his beneficial interest to Mr Crosher upon payment of €375,000 (which had not been paid) and that Treadtel itself would reimburse Mr Cocco for the costs to be incurred in winding up the business established by TD Srl, an Italian subsidiary of Treadtel. 7. By a cross-claim dated 23 February 2015, Treadtel alleged that it had transferred assets to Mr Cocco (as envisaged by the Milan agreement) and that he had not given the agreed consideration for them. On that basis, Treadtel sought judgment for money sums and ancillary relief. 8. At that point, therefore, the parties' dispute concerned not only the trust share and entitlements to it, but also rights to elements of the businesses established by Mr Cocco and Mr Crosher through Treadtel and its subsidiaries in various parts of the world and the making and effect of the Milan agreement. It was in that context that Mr Cocco put forward the amended statement of claim that came before the primary judge. By that draft pleading, Mr Cocco sought three groups of orders, as follows: First group: 1. a declaration that he had done all things necessary to be recorded in Treadtel's register as a member of Treadtel; 2. an order nunc pro tunc rectifying Treadtel's register of members; 3. an order that Mr Crosher do all things necessary to transfer the trust share to Mr Cocco; 4. an order that Treadtel and Mr Crosher do all things necessary to record Mr Cocco as holder of the trust share; 5. in the alternative, a declaration that Mr Crosher holds the trust share on trust for Mr Cocco; 6. an order pursuant to s 175 of the Corporations Act that Treadtel's register be corrected so as to record that Mr Crosher, while holding the trust share, did not hold beneficially; 7. an order that Mr Crosher account to Mr Cocco for all dividends and other distributions in respect of the trust share. Second group: 1. a declaration that certain buy-out terms are void and unenforceable; 2. a declaration that, contrary to s 232 of the Corporations Act, the affairs of Treadtel are being conducted contrary to the interests of the members as a whole or in a manner that is oppressive to, unfairly prejudicial to, or unfairly discriminatory against Mr Cocco or, alternatively, Mr Crosher in his capacity as trustee of the one share for Mr Cocco; 3. an order that, if Mr Cocco so elects (in a particular way after the making of final orders), Mr Crosher purchase "the plaintiff's share" at fair value; 4. an order that, if Mr Cocco makes such election, fair value be determined by inquiry; and 5. if Mr Cocco does not so elect, an order that Treadtel be wound up pursuant to s 233(a) or, alternatively, s 461(e), (f), (g) or (k). Third group (in the alternative to (h) to (l)): 1. as against Treadtel, damages (and interest); and 2. as against Mr Crosher, damages, the sum of €375,000 and interest. 1. Claims in the first group ((a) to (g) above) are those originally advanced in relation to Mr Cocco's alleged entitlement to the trust share (see [14] above). Claims in the second group ((i) to (k) above) are claims for statutory relief premised squarely on Mr Cocco's continuing status in relation to Treadtel. The claims in the third group ((m) and (n) above) are based on the Milan agreement (which, on Mr Cocco's principal case, never became binding so as to be the source of legal rights and obligations) and the proposition that, as is alleged against him, Mr Cocco thereby agreed to relinquish his interest in Treadtel in return for a particular consideration. 2. The position taken by Mr Cocco through the amended statement of claim thus involves two propositions in the alternative. The first is that he is entitled to the trust share (and should be recorded as the holder of it) and is accordingly entitled to certain statutory relief available to a stakeholder in Treadtel. The second claim (quite inconsistent with the first) is that, having agreed to relinquish his stake in Treadtel (and the trust share), he is entitled to receive an agreed consideration from Mr Crosher and also has a claim in damages against Treadtel. The decision of the primary judge 1. Eligible claimants for relief under Pt 2F.1 are identified in s 234. Eligible claimants for relief under Pt 5.4A are identified in s 462(1). In each case, standing depends on the existence of a particular relationship between the applicant and the company concerned. In the present context, standing for the purposes of Pt 2F.1 depends on Mr Cocco's being a "member" of Treadtel (s 234(a)) while his standing for the purposes of Pt 5.4A depends upon his being either a "contributory" of Treadtel (as referred to in s 462(2)(c)) or a "creditor (including a contingent or prospective creditor)" of Treadtel (as referred to in s 462(2)(b)). 2. By the amended statement of claim considered by the primary judge, Mr Cocco asserted three alternative grounds on which he considered himself entitled to make application under Pt 2F.1 and Pt 5.4A. A fourth ground related to Pt 5.4A alone. Mr Cocco acknowledged that he was not within the statutory definition of "member" because his name was not entered in the register. The three grounds on which he nevertheless claimed standing under Pt 2F.1 (and, in terms of the s 9 definition of "contributory", under Pt 5.4A) were as follows: First ground: That he has done everything he can do to become recorded as member in the register but Mr Crosher, who controls the register and is opposed in interest to Mr Cocco, has refused to comply with Mr Cocco's request for the making of the necessary entry and, by reason of these matters, Mr Cocco "is a member for the purposes of section 231 of the Corporations Act". Second ground: That he is the beneficiary of a trust under which Mr Crosher holds the trust share, Mr Crosher as trustee will not take steps as a member of Treadtel to protect Mt Cocco's beneficial interest in the one share and Mr Cocco as beneficiary accordingly has rights to bring proceedings that Mr Crosher could and should bring but will not. Third ground: That Mr Crosher acted in breach of trust by failing to transfer the one share to Mr Cocco, an order for rectification of the register by recording Mr Cocco in place of Mr Crosher in respect of the share should be made nunc pro tunc and, on the basis that equity regards as done that which ought to be done, Mr Cocco is a member of Treadtel. 1. In relation to the Pt 5.4A claim only, the fourth ground alleged by Mr Cocco was that, on one or more of the first to third grounds, he is within the definition of "contributory" and, in the alternative, has standing as a "contingent or prospective creditor" of Treadtel. 2. The primary judge decided that the second of the four grounds was "sufficiently arguable in the circumstances" to justify the court permitting Mr Cocco to make the allegation of "member" status for the purposes of Pt 2F.1. [3] Having reached that point, his Honour held that Mr Cocco should also be allowed to plead the first and second grounds in relation to Pt 2F.1 on the principle discussed in Wickstead v Browne (1992) 30 NSWLR 1. [4] As to standing under Pt 5.4A to seek winding up, the primary judge held that his conclusion on the second ground was sufficient to indicate arguable status as a contributory and that the asserted fourth ground was sufficiently arguable to cause Mr Cocco to be regarded as a contingent or prospective creditor of Treadtel. [5] 3. In the result, therefore, the primary judge granted leave to file an amended statement of claim which pleaded both a case to be recognised as having standing to claim relief under both Pt 2F.1 and Pt 5.4A and a substantive case for the grant of both forms of statutory relief. Grounds of appeal 1. Treadtel and Mr Crosher wish to obtain from this Court an order setting aside the grant of leave to amend made by the primary judge and substituting a grant of leave limited to the claims other than those which seek relief under Pt 2F.1 and Pt 5.4A of the Corporations Act (as well as the associated claims that go to standing to seek such relief). On the view they advance, the only claims that should be allowed to progress to trial in the current proceedings are those concerning Mr Cocco's entitlement to the trust share (and whether he should be recognised as the holder of it) and the alternative claims for damages and other monetary relief on the basis of Mr Crosher's failure to pay a consideration referable to Mr Cocco's relinquishing of the trust share. They emphasise that it is only if the claims concerning entitlement to the trust share are determined favourably to Mr Cocco that he will be shown to have standing to initiate claims for substantive relief under Pt 2F.1 and Pt 5.4A; and if he fails to make good his entitlement to the share, his want of standing to seek such substantive relief will mean that litigation of significant areas of controversy is unavailable to him and will be avoided. 2. The grounds of appeal advanced in the draft notice of appeal are based on two propositions. The first is that a plaintiff who, according to the legislation, must have a particular status in order to bring a substantive claim under Pt 2F.1 or Pt 5.4A cannot, in a single proceeding, litigate concurrently the substantive claim and the question whether he or she possesses the standing required to pursue that claim. The second proposition (which becomes relevant only if the first is not accepted) is that, in this particular case, Treadtel and Mr Crosher, as defendants, will be exposed to unwarranted prejudice if compelled to defend the substantive claims brought under Pt 5F.1 and Pt 5.4A by a plaintiff who may ultimately be shown to lack standing to bring those claims. Approach to the present application 1. The question whether Mr Cocco should be allowed to amend by filing the amended statement of claim was a discretionary question of practice and procedure. Because the decision was discretionary, appellate intervention is permissible only on grounds identified in House v The King (1936) 55 CLR 499; [1936] HCA 40 at 504–5, namely, that the decision is affected by extraneous or irrelevant matters, or the judge has mistaken the facts, acted on a wrong principle or failed to take into account a material consideration, or the decision is unreasonable or plainly unjust. The fact that a matter of practice and procedure is involved means that, if leave to appeal is granted, this Court will be required to exercise the "added restraint" that that circumstance attracts (Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39 at 176) and will be "extremely reluctant to interfere" (In the Will of F B Gilbert (dec) (1946) 46 SR (NSW) 318). 2. In assessing the decision of the primary judge, this Court must also bear in mind that his Honour's task, upon an application for leave to amend, was not to arrive at any concluded view as to the ultimate merits of the pleaded allegations. The central inquiry is that indicated by Dey v Victorian Railways Commissioners (1949) 78 CLR 62; [1949] HCA 1 at 91, General Steel Industries Inc v Commissioner for Railways (1964) 112 CLR 125; [1964] HCA 69 at 130 and, more recently, Agar v Hyde (2000) 201 CLR 552; [2000] HCA 41 where Gaudron, McHugh, Gummow and Hayne JJ said at [57]: "Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way." [6] [Citations omitted.] 1. The question for the primary judge was therefore whether the relevant claims are so obviously untenable or groundless that there exists "a high degree of certainty" that they will fail if allowed to proceed to trial; and whether this is one of the "clearest of cases" in which the court may accordingly intervene to prevent the claims being litigated. The question for this Court is whether the primary judge, in answering that question in the negative as to the whole of the amended statement of claim, fell into error requiring correction in accordance with the principles of appellate intervention to which I have referred. 2. An anterior question is whether leave to appeal is warranted. As to that, I am content to say that, although care must be taken in deciding whether to entertain interlocutory appeals, [7] the central issues presented by this case are of importance not only to the orderly progress of the particular litigation but also to the due administration of the corporations legislation. For that reason, they merit the attention of this Court and leave to appeal should be granted. Standing under Pt 2F.1 – legislation 1. Pt 2F.1 headed "Oppressive conduct of affairs" consists of four sections, ss 232, 233, 234 and 235. Mr Cocco wishes to obtain orders under s 233 which, so far as relevant, provides: "(1) The Court can make any order under this section that it considers appropriate in relation to the company, including an order: (a) that the company be wound up; (b) that the company's existing constitution be modified or repealed; (c) regulating the conduct of the company's affairs in the future; (d) for the purchase of any shares by any member or person to whom a share in the company has been transmitted by will or by operation of law; (e) for the purchase of shares with an appropriate reduction of the company's share capital; (f) for the company to institute, prosecute, defend or discontinue specified proceedings; (g) authorising a member, or a person to whom a share in the company has been transmitted by will or by operation of law, to institute, prosecute, defend or discontinue specified proceedings in the name and on behalf of the company; (h) appointing a receiver or a receiver and manager of any or all of the company's property; (i) restraining a person from engaging in specified conduct or from doing a specified act; (j) requiring a person to do a specified act. Order that the company be wound up (2) If an order that a company be wound up is made under this section, the provisions of this Act relating to the winding up of companies apply: (a) as if the order were made under section 461; and (b) with such changes as are necessary." 1. The court's power to make such an order is conferred by s 232: "The Court may make an order under section 233 if: (a) the conduct of a company's affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity. For the purposes of this Part, a person to whom a share in the company has been transmitted by will or by operation of law is taken to be a member of the company." 1. The matter of standing to apply for such an order is dealt with by s 234: "An application for an order under section 233 in relation to a company may be made by: (a) a member of the company, even if the application relates to an act or omission that is against: (i) the member in a capacity other than as a member; or (ii) another member in their capacity as a member; or (b) a person who has been removed from the register of members because of a selective reduction; or (c) a person who has ceased to be a member of the company if the application relates to the circumstances in which they ceased to be a member; or (d) a person to whom a share in the company has been transmitted by will or by operation of law; or (e) a person whom ASIC thinks appropriate having regard to investigations it is conducting or has conducted into: (i) the company's affairs; or (ii) matters connected with the company's affairs." 1. The meaning of "member" – a word used in all three sections – emerges from s 231: "A person is a member of a company if they: (a) are a member of the company on its registration; or (b) agree to become a member of the company after its registration and their name is entered on the register of members; or (c) become a member of the company under section 167 (membership arising from conversion of a company from one limited by guarantee to one limited by shares)." Standing under Pt 5.4A – legislation 1. Pt 5.4A, headed "Winding up by the Court on other grounds", consists of three sections, ss 461, 462 and 464 (the Act contains no s 463). Section 461, so far as relevant to this case, provides as follows: "(1) The Court may order the winding up of a company if: (a) . . . ; or (c) . . . ; or (d) . . . ; or (e) directors have acted in affairs of the company in their own interests rather than in the interests of the members as a whole, or in any other manner whatsoever that appears to be unfair or unjust to other members; or (f) affairs of the company are being conducted in a manner that is oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or in a manner that is contrary to the interests of the members as a whole; or (g) an act or omission, or a proposed act or omission, by or on behalf of the company, or a resolution, or a proposed resolution, of a class of members of the company, was or would be oppressive or unfairly prejudicial to, or unfairly discriminatory against, a member or members or was or would be contrary to the interests of the members as a whole; or (h) . . . ; or (k) the Court is of opinion that it is just and equitable that the company be wound up." 1. The matter of standing is dealt with by s 462, [8] the relevant parts of which are: "(1) A reference in this section to an order to wind up a company is a reference to an order to wind up the company on a ground provided for by section 461. (2) Subject to this section, any one or more of the following may apply for an order to wind up a company: (a) . . . ; or (b) a creditor (including a contingent or prospective creditor) of the company; or (c) a contributory; or (d) . . . ; or (e) . . . ; or (f) . . . ; or (h) . . . . (2A) . . . . (4) The Court must not hear an application by a person being, or persons including, a contingent or prospective creditor of a company for an order to wind up the company unless and until: (a) such security for costs has been given as the Court thinks reasonable; and (b) a prima facie case for winding up the company has been established to the Court's satisfaction. (5) Except as permitted by this section, a person is not entitled to apply for an order to wind up a company." 1. The term "contributory", as it applies to a company limited by shares such as Treadtel, is defined by paragraph (a) of the definition in s 9: [9] "'contributory' means: (a) in relation to a company (other than a no liability company): (i) a person liable as a member or past member to contribute to the property of the company if it is wound up; and (ii) for a company with share capital--a holder of fully paid shares in the company; and (iii) before the final determination of the persons who are contributories because of subparagraphs (i) and (ii)--a person alleged to be such a contributory." Standing under Pt 5.4A – alleged creditor status 1. It is convenient to deal first with the question whether, for the purposes of s 462(2)(b), Mr Cocco is, on the allegations in the amended statement of claim, within the description "a creditor (including a contingent or prospective creditor) of the company". 2. In asserting standing as a creditor, Mr Cocco relies on the Milan agreement. He alleges in the amended statement of claim that, in the course of the 8 February 2012 meeting at which that agreement was concluded (if it was concluded at all), he and Mr Crosher "agreed a framework to result in the buy-out of Cocco's interest in Treadtel or Cocco's share in Treadtel". One element of the "buy-out terms" so agreed, it is said, is that Treadtel would pay Mr Cocco €6,000 per month in respect of Mr Cocco's funding of the closing down of TD Srl, Mr Cocco having agreed to fund closing down costs of approximately €306,000. That element involving payment by Treadtel of €6,000 per month is one of several pleaded in sub-paras (a) to (e) of para 60 of the amended statement of claim. Then follows sub-para (f): "the matters in (a) to (e) were to be documented in a series of legally enforceable contracts." 1. Mr Cocco goes on to plead that the terms have not been performed by Mr Crosher and Treadtel and, in particular: "Crosher has not made some or all of the monthly instalment payments required to fund the winding up of TD Srl, nor has Crosher made those payments on behalf of Treadtel." And further: "at no time have the proposed buy-out terms been documented in a legally enforceable contract." 1. Mr Cocco's claim in respect of alleged breaches by Treadtel (framed in terms that "Treadtel has failed to repay Cocco for the costs of closing down TD Srl") is: "Treadtel pay damages and interest pursuant to s 100 of the Civil Procedure Act, calculated since 8 February 2012." 1. There is a separate claim against Mr Crosher for damages, a money sum (€375,000) and interest. The sum of €375,000 is said to be the agreed consideration for the transfer of Mr Cocco's interest in Treadtel. 2. The primary judge dealt with Mr Cocco's claim to seek winding up as a contingent or prospective creditor of Treadtell as follows: [10] "I am also satisfied that Mr Cocco should be permitted to plead the fourth ground of standing, which relates to his claim to be a contingent or prospective creditor for the purposes of s 462 of the Corporations Act. Against the possibility that Mr Crosher succeeds in establishing what I have called the Milan agreement, Mr Cocco wishes to plead that he is entitled to be paid debts in performance of that agreement, which remain outstanding. He therefore has an arguable case that he is a contingent or prospective creditor of Treadtel. Now is not the occasion to investigate the merits of that claim, or any difficulties for Mr Cocco's case that may flow out of the inconsistent alternative positions that he wishes to plead." 1. There is, in that part of the judgment, no reference to the way in which Mr Cocco's pleaded claim against Treadtel (as distinct from Mr Crosher) is framed. It is true that Mr Cocco "wishes to plead that he is entitled to be paid debts in performance of that agreement, which remain outstanding". But his debt claims are articulated only against Mr Crosher. The claim against Treadtel is specifically pleaded as a claim for damages. 2. It is axiomatic that a claim for damages differs in nature and in substance from a claim for debt. Mr Cocco does not consider himself to be a person to whom Treadtel presently owes money. Rather, he says that Treadtel has breached a contractual obligation owed to him (despite, it seems, the absence of the "series of legally enforceable contracts" referred to in his pleading) and thereby rendered itself liable to an action for damages for breach of contract. The contract apparently alleged cannot be equated with one under which a right to claim money will arise progressively or upon some future event, [11] so that it can be said that there exists an obligation making Mr Cocco a contingent or prospective creditor. 3. It may readily be accepted that a claim for damages for breach of contract is provable in a winding up. Section 553(1) makes admissible to proof "all debts payable by, and all claims against, the company (present or future, certain or contingent, ascertained or sounding only in damages), being debts or claims the circumstances giving rise to which occurred before the relevant date". These categories extend far beyond the concepts suggested by the expression "contingent or prospective creditor". [12] When it comes to standing to seek winding up, however, the case law has tended to exhibit a measure of uncertainty whether someone with no more than an untested claim for unliquidated damages qualifies. 4. There is, in my view, a great deal to be said for the position adopted by Santow J in Roy Morgan Research Centre Pty Ltd v Wilson Market Research Pty Ltd (1996) 39 NSWLR 311, as interpreted by Young J in Alati v Wei Sheung [2000] NSWSC 601; (2000) 34 ACSR 489 at [17]. Santow J said (at 323): "I find no basis for including under 'contingent or prospective creditor' a person with an untried claim for unliquidated damages." [13] 1. Young J saw the rationale for this conclusion as that explained by Santow J himself in Mandarin International Developments Pty Ltd v Growthcorp (Aust) Pty Ltd (1998) 143 FLR 408 at 422, that is, that if a debt is genuinely disputed and the dispute is yet to be dealt with on its merits, one cannot say that the person with the disputed debt is a creditor, and therefore that person cannot be a contingent creditor. [14] 2. An alternative view (preferred by Mansfield J in Commissioner of Taxation v Simionato Holdings Pty Ltd [1997] FCA 125; (1997) 15 ACLC 477 and by Logan J in Eskdale South Cattle Company Pty Ltd v Deputy Commissioner of Taxation [2013] FCA 1125 [15] ) is that, as long as there is a claim made arising from facts, events or circumstances, including but not limited to contractual arrangements which existed prior to the winding up proceeding, that claim may qualify the claimant as a contingent or prospective creditor. 3. It is instructive to consider the decision of Mansfield J where, it may be noted, the issue was not whether a person with an undetermined damages claim had standing to seek winding up but, rather, whether what his Honour called "the possible liability" of the company to such a person should be taken into account when determining whether solvency had been proved. After referring to the decision of the High Court in Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455; [1969] HCA 47, Mansfield J considered several cases in which courts had considered the general question whether an entity which has an arguable claim for damages against the company may properly be regarded as a contingent or prospective creditor. 4. The first such case is Re Gasbourne Pty Ltd [1984] VR 801. The issue there was whether an entity with a claim for unliquidated damages only should be recognised as qualified to appear to oppose the making of a winding up order on an application initiated by another party. The question was answered in the affirmative. That says nothing, in any direct way, about the standing of such a person to apply for a winding up order. 5. Mansfield J next referred to Re PMC Investments Pty Ltd (1991) 9 ACLC 1559 where winding up of a defaulting purchaser of land was sought by a vendor who claimed creditor status by reference to the difference between the agreed purchase price and the diminished value of the land, after allowing for the forfeited deposit. Williams J held that the vendor had standing as a contingent or prospective creditor to seek winding up. Significantly, however, he added: "There is, of course, generally a principle that a disputed debt cannot be made the subject of a statutory demand so as to provide proof of the company's inability to pay its debts in the event of failure to comply therewith. There is, in addition to that, a broad general principle that a winding-up order will not, as a matter of discretion, be made on a debt which is bona fide disputed provided that the dispute is based on some substantial ground. Those principles are well discussed in Macpherson commencing at p 63. Given the argument which has taken place to date, it is sufficient for me to rule that the applicant has locus standi to seek the order for the winding up of the company. In those circumstances, it seems to me to be fair to give the company an opportunity of placing material before the Court which may call into play the principles in relation to disputed debts to which I have recently referred." 1. Williams J thus recognised what was, in a sense, provisional standing – standing subject to the possibility that the initial favourable impression might be displaced. 2. The question in the third case mentioned by Mansfield J, Thomas v Mackay Investments Pty Ltd (1996) 22 ACSR 294, was again as to standing to seek a winding up order. The applicant was a person with whom the company had made a contract to share future profits from certain investments. At the time of the hearing, the investments were said to be worthless but the applicant relied on the possibility of future increase in value to argue creditor status. The court held that there was insufficient evidence to demonstrate any such possibility and that, in any event, the quantification of any profit would depend on the proper construction of the contract, with the result that there was no proper evidentiary basis upon which to find that the applicant was a contingent creditor with standing under s 462. 3. The view to be taken of a contingent or prospective creditor will, in my opinion, differ according to the purpose for which the creditor's position is under consideration. Recognition as someone qualified to be heard on another applicant's winding up petition or as someone whose claim should be taken into account in judging solvency is one thing. Recognition as someone who may initiate winding up proceedings is another. It is a well-established rule of practice that a person who claims to be a creditor but whose debt is disputed on genuine grounds will not be permitted to initiate or pursue a winding up application. The report of the decision of Jessel MR in Cercle Restaurant Castiglione Co v Lavery (1881) 18 Ch D 555 contains, as a footnote, that judge's judgment in Niger Merchants Co v Capper (1877) 18 Ch D 557n where reference was made to an earlier decision of Malins V-C in Cadiz Waterworks Co v Barnett (1874) LR 19 Eq 182 in which the pursuit of winding up proceedings was enjoined "on the ground that it is the object of the Court to restrain the assertion of doubtful rights in a manner productive of irreparable damage". As Ungoed-Thomas J said of the winding up jurisdiction in his influential judgment in Mann v Goldstein [1968] 1 WLR 1091 at 1098-9: "I would prefer to rest the jurisdiction directly on the comparatively simple propositions that a creditor's petition can only be presented by a creditor, that the winding-up jurisdiction is not for the purpose of deciding a disputed debt (that is, disputed on substantial and not insubstantial grounds), since, until a creditor is established as a creditor he is not entitled to present the petition and has no locus standi in the Companies Court; and that, therefore, to invoke the winding up jurisdiction when the debt is disputed (that is, on substantial grounds) or after it has become clear that it is so disputed is an abuse of process of the court." 1. The rationale of the several decisions I have mentioned concerning contingent and prospective creditors is, it seems to me, that such a creditor will not be permitted to apply for winding up unless there is an existing obligation of the company (as required by the decision in Community Development Pty Ltd v Engwirda Construction Co), which obligation can be viewed with a high degree of assurance as a source of financial liability. Thus, in a case such as Re PMC Investments Pty Ltd, a defaulting purchaser under a conveyancing transaction may be seen to be subject to a relevant obligation where the standard contractual position is uncontroversial and the value of the property is shown to be such that the default has occasioned loss to the vendor, even though no proceedings for damages have crystallised that liability. But the position is otherwise where, as in Thomas v Mackay Investments Pty Ltd, the existence of the obligation, as well as the quantification of any damage, is dependent on the resolution of disputed or otherwise unclear legal rights and duties by means of proceedings for damages brought against the company. 2. The present case is, to my mind, one of disputed or otherwise unclear legal rights and duties when it comes to the question whether Treadtel is, by reason of an action for unliquidated damages maintainable by Mr Cocco, subject to an obligation that makes Mr Cocco a contingent or prospective creditor (it is not, and cannot be, argued that he is a present creditor). The obligation of Treadtel upon which Mr Cocco relies as the foundation of his standing to seek winding up is, on his own case, a contractual obligation derived from the Milan agreement. Yet Mr Cocco himself disputes the making and existence of the Milan agreement and the contractual force of the buy-out terms alleged against him. In asserting his standing to seek remedies available to a shareholder, he relies on the absence of any contractual commitment to relinquish the trust share to Mr Crosher and denies the contractual force that his opponents ascribe to the Milan agreement. In mounting his winding up case, however, Mr Cocco advances the proposition that the Milan agreement is the source of a right for him to sue Treadtel for damages. 3. On the face of his own pleading, Mr Cocco causes his status as a creditor to be questioned. That, coupled with the circumstance that proof of the Milan agreement will involve the trial of obviously controversial issues, is sufficient to warrant a conclusion that Mr Cocco's asserted status as a contingent or prospective creditor is based on disputed or otherwise unclear legal rights and duties destructive of any argument that he should, at this stage, be permitted to petition for winding up of Treadtel. 4. In the particular circumstances, the primary judge acted on a wrong principle when he held that, for the purposes of the claim under Pt 5.4A advanced in the amended statement of claim, Mr Cocco had an arguable case to bring winding up proceedings on the basis of status as a contingent or prospective creditor of Treadtel. Standing under Pt 5.4A – s 462(4) 1. A separate obstacle arises at the threshold under s 462(4) which states that the court "must not hear an application" for winding up by a contingent or prospective creditor (or plaintiffs including such a person) "unless and until" such security for costs has been given as the court thinks reasonable (s 462(4)(a)) [16] and a prima facie case for winding up "has been established to the Court's satisfaction" (s 462(4)(b)). [17] 2. Section 462(4) imposes on the court an obligation to desist from hearing a winding up proceeding until the two conditions have been satisfied. The plaintiff affected by the section is therefore not at liberty to move for a winding up order unless any application for security for costs made by the defendant company has been heard and determined (and any security ordered has been furnished) and the plaintiff has sought and obtained the court's decision that a prima facie case for winding up has been shown. The court, as a matter of case management, will no doubt make directions to ensure that the first aspect does not become an instrument of delay in the hands of the company. As to the second, it will seek to ensure that the plaintiff's motion comes on promptly for hearing. And, if circumstances so require, it will stay proceedings on the winding up application itself until the preliminary matters have been disposed of. 3. Neither of the s 462(4) matters has a direct impact on the content of a plaintiff's pleaded case for winding up. But the section does emphasise matters that, on the material before this Court, have played no part in the Equity Division proceedings to date and may be relevant to any re-exercise of discretion by this Court. Standing under Pt 5.4A - alleged contributory status 1. The primary judge decided that Mr Cocco should be permitted to plead standing under Pt 5.4A not only as a contingent or future creditor on the basis discussed above but also on the footing that he is a contributory. The particular aspect of the s 9 definition of "contributory" upon which his Honour focused was para (a)(ii) which refers to "a holder of fully paid shares in the company". [18] The judge considered that the second ground on which Mr Cocco alleged status as a "member" for the purposes of Pt 2F.1 was sufficiently arguable to allow that claim to go to trial and that that conclusion applied also the allied question of alleged status as "a holder of fully paid shares in the company" as referred to in the definition of "contributory". [19] 2. The rationale underlying the second ground was explained by the primary judge at [71]. It proceeds by several steps: Mr Crosher is a bare trustee of the trust share for Mr Cocco; as Mr Crosher is recorded on the share register of Treadtel as being a member, he has standing to bring proceedings as a member or the holder of shares; but Mr Crosher cannot be expected to pursue a claim for the relief Mr Cocco wishes to seek because he has a conflict of interest and is practically disabled from commencing the proceedings because he would effectively be suing himself. 3. In dealing with the second ground, his Honour said: [20] "It appears to me that the second ground falls within what may be described as the exception to the general rule contemplated (and I use that word advisedly) in the three authorities that I have discussed above. It is an open question whether or not a party should be treated as a member of a company where that party is entitled to be recorded as the holder of shares in the register of members of the company, and the party cannot achieve registration because the register is under the control of a rival party, particularly where the refusal of registration may be a breach of duty to the first party – in the present case, a breach of trust." 1. The three authorities to which his Honour here referred are Niord v Adelaide Petroleum NL (1990) 54 SASR 87, Re Independent Quarries Pty Ltd (1993) 12 ACSR 188 and Titlow v Intercapital Group (Australia) Pty Ltd (1966) 65 FCR 449. In the first and third of these cases, the view was taken that, for the purposes of forerunners of Pt 2F.1, a person was a "member" only if their name appeared in the register of members. In the second case, a person whose name was not on the register but who held a share certificate sealed by the company was said to be a "member". [21] 2. It was emphasised in submissions to this Court that none of the three cases concerned circumstances analogous to those alleged by Mr Cocco in his second ground, that is, where a share is allegedly held upon a bare trust by a person who controls the content of the register, refuses to acknowledge the beneficiary's right to be registered and, because he is effectively the object of proceedings that the beneficiary wishes to institute, cannot realistically be expected to commence those proceedings for the beneficiary's benefit. Those circumstances, it was said, are sufficient to invoke the equitable principle that a beneficiary may take in his or her own name the proceedings that the trustee could take but will not. [22] 3. The discussion in this part of his Honour's judgment centred on the question whether equity allows a beneficiary, in appropriate circumstances, to sue upon a cause of action made available to the trustee by statute. That question was answered in the affirmative. 4. A question also requiring attention goes to the nature of the equitable assistance the beneficiary requires in order to be able to mount the statutory claim. Dealing with a common law debt claim, James LJ said in Sharpe v San Paulo Railway Company (1873) LR 8 Ch App 597 at 609-10: "[A] person interested in an estate or a trust fund could not sue a debtor to that trust fund, or sue for that trust fund, merely on the allegation that the trustee would not sue; but that if there was any difficulty of that kind, if the trustee would not take the proper steps to enforce the claim, the remedy of the cestui que trust was to file his bill against the trustee for the execution of the trust, or for the realization of the trust fund, and then to obtain the proper order for using the trustee's name, or for obtaining a receiver to use the trustee's name, who would, on behalf of the whole estate, institute the proper action, or the proper suit in this Court." 1. The reason there must be "the proper order for using the trustee's name" is that, as was recognised in Hayim v Citibank NA [1987] AC 730 at 748, the beneficiary's direct cause of action arises only if the court is satisfied that there are "special circumstances" indicating some proper reason for proceedings to be taken. 2. There is some difference of opinion in the decided cases whether a beneficiary wishing to proceed in this way requires an anterior grant of "leave", [23] or whether the necessary screening process can and should be undertaken in the substantive proceeding. In Chahwan v Euphoric Pty Ltd [2009] NSWSC 805; (2009) 73 ACSR 252 at [34], Brereton J was of the view that no advance ruling is required. In Randa Lee Investments Pty Ltd v Ballan [2015] VSC 178 at [12], Sifris J was of the opposite opinion. The decision of this Court in El Sayed v El Hawach (2015) 88 NSWLR 214; [2015] NSWCA 26 at [56]-[57] favoured the latter view in the particular circumstances of that case and referred to the potential need for evidence to sustain the necessary finding of "special circumstances" relevant to the welfare of the trust estate. 3. I suspect that there is no hard and fast rule and that much depends on context. The need for a safeguard by way of screening by the court as a prelude to a derivative suit by a beneficiary upon a cause of action maintainable by the trustee is understandable where certain conditions prevail – for example, where there are several beneficiaries one of whom purports to act for the estate as a whole; where there is a question about the benefit that the estate will derive from pursuit of the proceedings; [24] or where it is necessary to discover whether the trustee's decision not to proceed has some sound basis. [25] In straightforward cases, there will be no need for such a safeguard. 4. As Windeyer J explained in Norman v Federal Commissioner of Taxation (1963) 109 CLR 9; [1963] HCA 21 at 27, the position before the enactment of provisions such as s 12 of the Conveyancing Act 1919 (NSW) was that an assignee of a legal debt could not in his own name bring an action against the debtor to recover the debt. The original creditor had to be the plaintiff on the record in the common law action because he remained at law the owner of the chose in action. That rule has been relaxed to some extent as equity and common law have come to be administered together. A person to whom a legal chose in action is assigned in equity and whose equitable title is not contested by the assignor may now sue in his or her own name to recover the debt and will be entitled to a judgment at law, provided that the assignor has been joined as a defendant before judgment is given. [26] The proviso is important. The need for the assignor (who is, at law, the proper plaintiff) to be joined as a defendant is to ensure that he or she is bound by the judgment and cannot sue the debtor again. [27] 5. An undisputed equitable assignee who proceeds in this way is not required to obtain any advance clearance from the court. Use of the name of the assignor (an element essential at common law) is seen by equity as "so much a formality" that, if the assignor does not consent to be a co-plaintiff, he can be added as a defendant; and if the party sued does not take the technical point of want of party, the court may ignore it: National Mutual Life Nominees Ltd v National Capital Development Commission (1975) 37 FLR 404 at 412 per Blackburn CJ. [28] 6. In Roberts v Gill & Co [2011] 1 AC 240; [2010] UKSC 22 at [102], Lord Walker of Gestingthorpe JSC observed that a bare trustee who holds property as nominee for the benefit of another occupies a position closely analogous with that of the assignor under an undisputed equitable assignment. The analogy arises because there is a sole trustee, a sole beneficiary, no conceivable third party interest and no need for concern about prudent administration of a trust estate. 7. If Mr Crosher in truth holds the trust share upon a bare trust for Mr Cocco, equity regards Mr Cocco as entitled to sue in his own name upon a cause of action maintainable by Mr Crosher by reason of his shareholding. Mr Cocco could thus, for example, sue the company for a dividend declared but unpaid on the share, provided that he joined Mr Crosher as a defendant. But such an action would not be one brought or maintained by the shareholder. Proceedings initiated by Mr Cocco by virtue of his equitable entitlement would be proceedings brought by Mr Cocco. Only if Mr Cocco resorted to the alternative process of compelling Mr Crosher to sue in Mr Crosher's name for the benefit of Mr Cocco would the proceedings be proceedings brought by the shareholder. In former times, a person in the position that Mr Cocco considers himself to occupy could procure such proceedings by filing a bill in equity and obtaining an injunction in personam to allow the use of the name of the necessary plaintiff. [29] While, for reasons stated, such equitable intervention is unnecessary where the objective of the beneficiary is merely to obtain a judgment binding on the debtor, it is an indispensable step where there is a statutory need for the trustee to be (and to be seen to be) the moving party. 8. On the pleadings as they stand, Mr Crosher does not accept that he holds the trust share on a bare trust for Mr Cocco. He denies any entitlement of Mr Cocco to call for or direct a transfer of the trust share after 12 February 2012. It is that dispute that would fall to be determined in any proceedings brought by Mr Cocco in equity to compel Mr Crosher to lend his name as plaintiff to the substantive proceedings that Mr Cocco wishes to commence. 9. The existence of this dispute on the face of the pleadings is critical. Reference has already been made to the principle that a person who claims to be a creditor but whose debt is disputed on genuine grounds will not be permitted to initiate or pursue a winding up application. The same reasoning applies to a contributory's application for winding up. There were formerly provisions making a contributory's standing dependent on the shares in respect of which he or she was a contributory having been held for at least six months. [30] In Re Gattopardo Ltd [1969] 1 WLR 619, the petitioner had been registered as the holder of shares for less than six months but consent orders made more than six months earlier in proceedings between the petitioner and the former holder of her shares had declared that she was entitled to be registered as the holder. A transfer was executed and registered less than six months before the petition was presented. It was held that standing as a contributory dated only from the registration and could not be regarded as having arisen when the consent orders became binding on the petitioner and her predecessor in title. 10. Different considerations applied in Re Patent Steam Engine Company (1878) 8 Ch D 464 where the company itself had been a party to proceedings in which it was ordered to allot shares forthwith to certain persons and to register them as shareholders accordingly. Although the names of those persons had not been on the register for the required period when they petitioned for winding up, the court made the winding up order on the footing that lack of formal standing was a product of the company's default in prompt compliance with the earlier order. 11. The Patent Steam Engine Company decision was recognised as anomalous in Re Gattopardo Ltd (above) at 622 and subsequently in Re Exclusive Master Book-Binding and Manufacturing Pty Ltd (1977) 17 SASR 522. In the latter case (at 525), Bray CJ saw doubt as having been cast on Patent Steam Engine Company by observations of Russell LJ in Re Gattopardo Ltd. Bray CJ also referred with approval to the decision in Re A Company [1894] 2 Ch 349 at 351 where the principle that equity regards as done that which ought to have been done was unsuccessfully invoked by a petitioner claiming to be entitled to an allotment of shares. [31] Vaughan Williams J held that the petitioner lacked standing as a contributory and enjoined continuation of the winding up proceedings, saying (at 351): "There is an express statutory provision as to the qualification of a contributory to present a winding-up petition, and that cannot be modified by saying that he ought to be in a position in which he is not. The provisions of s 40 [the applicable section] are not complied with, and I see no reason why the company should not set up that defence." 1. That observation sums up the difficulty faced by Mr Cocco. His claim is, in effect, that he has done all that he can possibly do to become a member of Treadtel and that equity ought to compel Mr Crosher and Treadtel itself to take the steps necessary on their part to complete his status. [32] That may well be an arguable position for Mr Cocco to take as against those parties (or, at least, against Mr Crosher) regarding rights to the trust share and registration of Mr Cocco as the holder of it. But it is not an arguable position that it is open to him to take in initiating winding up proceedings as a contributory by reason of his asserted entitlement to the trust share as beneficiary. [33] Such proceedings are not the occasion for testing the standing of the applicant. A long line of cases makes it clear that the court should not entertain a petition presented by an applicant whose standing is disputed on cogent grounds. The primary judge acted on a wrong principle when he held that, for the purposes of the claim under Pt 5.4A pleaded in the amended statement of claim, it was sufficient for Mr Cocco to put forward an arguable case of standing as a contributory of Treadtel. Standing under Pt 5.4A - conclusions 1. Under s 462(2) of the Corporations Act, an application for a winding up order may be made by a person within one of the categories there specified. Application by a person not within any of those categories is not permitted and the court may not order winding up on such an application. [34] That is made plain by s 462(5). 2. Mr Cocco cannot maintain a winding up application in his own name as a contributory of Treadtel unless and until his dispute with Mr Crosher about the trust share leads to a result that sees him recorded in the register of members as the holder of that share. Nor can he maintain an application as a contingent or prospective creditor while his principal case is that the Milan agreement is not the source of legally recognisable rights and obligations. Apposite, therefore, are observations in two decided cases to which I now turn. The first is Re JN2 Ltd [1977] 3 All ER 1104. Observations of Brightman J in that case at 1108 -1109 warrant quotation in full: "It is, of course, common practice to dismiss a creditor's petition if the debt is bona fide disputed by the company. This seems to me a wholly proper attitude to be adopted by the Court. The presentation of a winding up petition has an immediate effect on the ability of a company to deal with its assets, although capable of mitigation by an appropriate order under s 227. Frequently in the case of a trading company the presentation of a petition will damage the financial standing of the company. It therefore seems to me obviously correct that the Court should not allow a creditor's petition to remain on the file longer than is necessary once the status of the petitioner is in doubt. In my judgment this reasoning applies with even greater force to a petition by a person whose status as a contributory is in dispute. In the case of a disputed creditor's petition, the petitioner has at least an unsatisfied claim against the assets of the company. A person asserting that he is a contributory has not, in so asserting, any claim against the company's assets. It makes no difference whatever to the quantum of the company's assets whether the contributory succeeds or fails in his claim to be a shareholder. It therefore seems to me to be all the more important that he should not be permitted to present a petition and thereby interfere with dispositions by the company of its assets and risk damaging the financial standing of the company, so long as his right to be a shareholder of the company is in dispute. Basically, that dispute is not between the company and a person claiming against the company, but between a shareholder and a person claiming to be a shareholder. Let that dispute be settled first before the company is brought on to the scene by the presentation of a petition. By being brought on to the scene I mean of course as a substantial party. By dismissing the petition the Court is not driving a litigant from the judgment seat, or doing any injustice to him. The court will be merely requiring him to establish his right to present a petition before he is permitted to take a step which has such an immediate and potentially damaging effect on the company." 1. The second case is Gerlach v Beyond Ltd (NSWSC unreported, McLelland J, 13 July 1992, BC9201750). That case arose under provisions of the Corporations Law identical with the Corporations Act provisions now under consideration. A non-member claiming standing in winding up proceedings advanced arguments similar to those relied on by Mr Cocco. McLelland J rejected those arguments, saying: "The classes of persons who may apply for an order to wind up the company are those listed in s462(2) of the Corporations Law. There is no allegation in the statement of claim in either its present or its proposed amended form that indicates that either of the plaintiffs falls into any of those classes in respect of the first defendant or the fifth defendant and it has not been suggested that they do. The plaintiffs seek to rely on the general law principle that in special circumstances a beneficiary under a trust may sue to enforce a right vested in the trustee as against a third party, joining the trustee, the other beneficiaries and the third party as defendants, where the trustee will not act (see generally Ramage v Waclaw 12 NSWLR 84). So far as winding up proceedings are concerned the operation of this principle must necessarily yield to the clear words of s462(5) of the Corporations Law: 'Except as permitted by this section, a person is not entitled to apply for an order to wind up a company." 1. McLelland J also said: "Although the mere inclusion in a statement of claim of a claim to relief of an unsustainable kind would not necessarily justify the striking out of that claim, a claim for an order for the winding up of a company is in a special category, having regard to the adverse legal and practical effect on a company and on those dealing with it of a pending claim for its winding up, and an improper claim to relief of that kind should be struck out." 1. In the present case, Pt 5.4A is not engaged by the allegations in Mr Cocco's amended statement of claim. On the case there articulated, Mr Cocco does not have and cannot attain standing as a creditor under s 462(2)(b) and will have no standing as a contributory under s 462(2)(c) unless and until he becomes registered as the holder of the trust share. [35] He must establish his title to sue; and he must do so before proceeding with the substantive claim for winding up he wishes to bring under Pt 5.4A. 2. As counsel for Treadtel and Mr Crosher correctly observed, the mere initiation of winding up proceedings has serious consequences for the defendant company and its constituency. Kirby J observed in Emanuele v Australian Securities Commission (1997) 188 CLR 114; [1997] HCA 20 (at 143, 145-6) that every species of winding up application has potential to damage the company's reputation and to undermine its capacity to trade, with serious consequences for the company. The fact that an application has been made necessarily becomes the subject of lodgement with ASIC through which the information that proceedings are pending becomes generally available. The court must take notice of that reality in matters such as the present. It is a reality that tells positively against any course of action exposing a company to relevant risks except where the course of action is clearly mandated by the legislation. 3. In the present case, the dispute is essentially a dispute between Mr Cocco and Mr Crosher. Treadtel, a company with existing business activities, sits between them. The court should not assist an attempt by either protagonist to put Treadtel into liquidation against the will of the other unless and until he has shown himself to be a person qualified to seek that relief. Mr Cocco's failure to plead in his amended statement of claim matters establishing present and immediate standing under s 462(1)(b) or s 462(1)(c) means that the primary judge's decision to allow amendments dependent on such standing was unreasonable and plainly unjust. Standing under Pt 2F.1 – alleged member status 1. The question central to Mr Cocco's standing under Pt 2F.1 is whether he is a "member" of Treadtel. His difficulty is that he is not within any of the categories specified in s 231 (see [36] above). In particular, his name is not entered in the register of members, as referred to in para (b) of the s 231 definition. 2. Treadtel and Mr Crosher challenge the primary judge's decision that Mr Cocco is arguably a "member" in consequence of his claimed entitlement as the beneficiary of a bare trust in respect of the trust share. That decision was made in a statutory context in which the catalogue of eligible applicants includes persons with certain kinds of rights to shares short of registered holding. Section 234(d) affords standing to "a person to whom a share in the company has been transmitted by will or by operation of law". The inclusion of that category of eligible applicant is traceable to a recommendation of the Jenkins Committee in its report of 1962. [36] The Committee said: [37] "The position of legal personal representatives and others (e.g, trustees in bankruptcy) to whom shares are transmitted by process of law, but who are not registered members, would be improved by an express provision in s 210 entitling them to present a petition under that section, so as to place beyond doubt their rights in this respect, which appear as the law now stands to be open to question." 1. Australia's adoption of a like reform suggests that similar reasoning was at work. [38] That being so, the legislative intention may be taken to have been to assimilate the position of a person entitled to shares by transmission by will or operation of law to the position of a registered holder that and, by implication, not to extend like status to someone having (or claiming) some other kind of beneficial interest or ownership right in respect of a share. 2. The concept of "transmission" referred to in s 234(d) is to be gathered from s 1072E of the Act. In the case of a deceased or bankrupt person registered as the holder of shares, that section permits registration instead of the trustee, executor or administrator of the deceased estate or the trustee in bankruptcy as the holder. It cannot be argued (nor was it argued) that Mr Cocco was in any relevant sense entitled by transmission so as to be within s 234(d). 3. In some other jurisdictions where standing under provisions akin to those in Pt 2F.1 is afforded to a "member" [39] and entry in the register of members is the determining factor, attempts have been made to rely on an enlarged concept of "member". Such an attempt met with a measure of apparent success in Owen Sim Liang Khui v Piasau Jaya Sdn Bhd [1996] 1 MLJ 113, a case under the Malaysian legislation. The Federal Court of Malaysia held that an applicant must show that his name appears on the company's register of members at the date of the presentation of the petition. But the court emphasised that this was a general as opposed to a universal rule, as there might be cases where an application of the rule will work unfairness. Gopal Sri Ram JCA said (at 135): "It may therefore be quite safely stated that if facts emerge from which it may be determined that it is unjust or inequitable to permit a respondent to a petition under s 181 to assert or to contend that a petitioner has no locus standi to move the court, then, he will be estopped from so asserting. Stated in another fashion, a respondent who is guilty of unconscionable or inequitable conduct will not be permitted to raise or rely upon the requirement of membership in order to defeat a petitioner's standing as this would amount to his using statute as an engine of fraud. It does not matter how the proposition is formulated so long it has the effect adverted to." 1. As explained in the subsequent Malaysian case of Julian Suresh Candiah v Axis IP Sdn Bhd [2013] 1 LNS 982 at [105], however, Owen Sim Liang Khui v Piasau Jaya Sdn Bhd did not, in truth, sanction any expansion of the class of permitted applicants or lay down any general proposition regarding the meaning of "member" [40] in the particular statutory context. Rather, it was a case in which uncontroversial principles of estoppel were applied, on the particular facts, to prevent reliance by other parties on the applicant's lack of statutory status. [41] The court merely prevented a litigant raising a defence upon which equitable considerations made it unconscionable for that litigant to rely. 2. In the present case, the arguments advanced in support of Mr Cocco's status as a contributory under s 462(2)(c) are repeated in relation to status as a "member" for the purposes of Pt 2F.1. For the same reasons, those arguments cannot succeed. Mr Cocco's claim to be able to sue as beneficiary of a bare trust in respect of the trust share [42] does not avail him in his search for "member" status for Pt 2F.1 purposes any more than it avails him in his search for "contributory" status for the purposes of Pt 5.4A. The three decided cases to which the primary judge paid particular attention (see [68] above) all concerned Pt 2F.1 or predecessor provisions. Those cases tell decisively against any attempt by Mr Cocco to obtain access to that statutory regime through some extended meaning of "member". [43] 3. It is, to my mind, particularly pertinent to the circumstances of this case to quote the following passage in the judgment of Lord Collins of Mapesbury JSC in Enviroco Ltd v Farstad Supply A/S [2011] UKSC 16; [2011] 1 WLR 921 at [37]-[38]: "The starting point is that the definition of 'member' in what is now section 112 of the 2006 Act (section 22 of the 1985 Act for the purposes of this appeal) reflects a fundamental principle of United Kingdom company law, namely that, except where express provision is made to the contrary, the person on the register of the members is the member to the exclusion of any other person, unless and until the register is rectified: In re Sussex Brick Company [1904] 1 Ch 598 (retrospective rectification of register did not invalidate notices). Ever since the Companies Clauses Consolidation Act 1845 and the Companies Act 1862 membership has been determined by entry on the register of members. The companies legislation proceeds on that basis and would be unworkable if that were not so. Among the many provisions relating to members are these: (1) a member will be bound by alterations in the company's articles, subject to specified exceptions (section 25, 2006 Act); (2) there are elaborate provisions relating to the register of members (sections 113 et seq), including a duty to keep an index of members (section 115) and rights to inspect and require copies (sections 116-121), and documents in hard copy form must be sent to a member at his address as shown in the register of members (Schedule 5, Part 2); (3) a subsidiary cannot be a member of its holding company (section 136); (4) elaborate provision is made for voting by members, by proxies appointed by members, and by joint holders (sections 281 et seq); (5) the company must send its annual accounts and report to every member (section 423); (6) unlawful distributions may be recovered from a member who knows or has reasonable grounds for believing that it is unlawfully made (section 847(2))." 1. The scheme of the legislation there described is indistinguishable from that of our own Corporations Act. Someone wishing to claim a right as a "member" must first obtain entry of their name in the register, if necessary by preliminary proceedings. [44] 2. Relevant, in that connection, are observations of Sifris J in the recent case of Rodda v Lifestyle Loans Vic Pty Ltd [2015] VSC 628; (2015) 303 FLR 227. The circumstances there were similar to those now before this Court. The plaintiff in Pt 2F.1 proceedings had never been on the company's register of members but claimed that he should have been and that he had a real prospect of making good that claim. On that basis, he said, his substantive claims under Pt 2F.1 should be allowed to proceed to trial, his locus standi being one of the matters to be litigated. Sifris J rejected that submission. His Honour's reasons were as follows (at [17]-[19]): "Rodda does not fall within the definition of member, and accordingly, the oppression provisions are not engaged. It is not desirable that a proceeding of this kind continue as presently framed with the hope that the threshold issue will, as part of the proceeding, be established. This is not only inefficient and undesirable, but is a jurisdictional issue that prevents the matter from proceeding. There is a dispute as to whether Rodda is a member of Lifestyle Loans, and this dispute needs to be resolved before the oppression proceeding continues. It is not desirable to use the very oppression proceeding, which presupposes uncontested membership, to establish the threshold requirement of membership. This is an antecedent issue that requires prior determination. I have considered dealing with the issue relating to contested membership as a preliminary issue within this proceeding. Upon reflection, however, I do not think this is a desirable course. Such a case requires pleadings and appropriate discovery and is best dealt with as a commercial matter, whether in this Court or the County Court. Lifestyle Loans should not endure a proceeding under the oppression provisions, and which may result in its winding up, in circumstances where the plaintiff does not have a right to bring the proceeding." 1. The primary judge acted on a wrong principle when he held that, for the purposes of the claim under Pt 2F.1 pleaded in the amended statement of claim, it was sufficient for Mr Cocco to put forward the particular case of standing as a "member" of Treadtel. Given Mr Cocco's failure to plead matters establishing present and immediate standing as a "member" under s 233, the primary judge's decision to allow amendments dependent on such standing was unreasonable and plainly unjust. Conclusion 1. There may be occasions on which it is appropriate for the court to determine, upon the hearing of substantive proceedings, a question going to disputed standing of a plaintiff. That has been said to be so where, for example, the dispute is one that it is "very easy to decide": Re QBS Pty Ltd [1967] Qd R 218 per Gibbs J; see also Re Ocean City Ltd [1993] FCA 86; (1993) 10 ACSR 483, Lanepoint Enterprises Pty Ltd v Australian Securities and Investments Commission [2010] FCAFC 49; (2010) 78 ACSR 499 at [52]-[59]. A case in which an issue of disputed standing surfaces at the final hearing is, however, to be distinguished from one such as the present in which a question about the course the litigation should take is raised for decision by the court and involves potentially difficult questions of standing depending for their resolution on matters of evidence and, potentially, issues of credibility (on the material currently available, it seems that four persons were present at the meeting in Milan on 12 February 2012). Even allowing for the principle of just, quick and cheap resolution of the real issues in proceedings that, in accordance with s 56(1) of the Civil Procedure Act 2005 (NSW), must be applied in every matter of procedure and case management, the decision in this case to allow Mr Cocco to proceed towards a final hearing under both Pt 2F.1 and Pt 5.4A despite obviously disputed and equivocal standing is one that cannot stand. No question of re-exercise of discretion by this Court arises. 2. Orders should be made as follows: 1. Grant leave to appeal. 2. Direct that a notice of appeal in the form of the draft notice of appeal in the white folder be filed within seven days. 3. Appeal allowed. 4. Set aside Order 1 made in the Equity Division on 8 September 2016 and order in lieu that the plaintiff have leave to file an amended statement of claim in the form annexed to the orders of 8 September 2016 and marked "A" but with the following omitted therefrom: 1. Paras 1, 1A, 8, 9, 10 and 11 of the relief claimed; and 2. Paras 98E and 98 to 108 inclusive of the pleading and particulars. 1. Order, in addition to the orders for costs made in the Equity Division on 8 September 2016, as follows: "That the plaintiff pay the costs of the first defendant of and incidental to the plaintiff's interlocutory process filed on 9 October 2015 (including any amendment thereto) up to and including 8 September 2016." 1. That the respondent pay the appellants' costs of the summons seeking leave to appeal and of the appeal. ********* Endnotes 1. In the matter of Treadtel International Pty Ltd (No 2) [2016] NSWSC 791 ("Primary judgment"). 2. Primary judgment at [20]. 3. Primary judgment at [114]. 4. Primary judgment at [115]. 5. Primary judgment at [116]. 6. That formulation has since been re-affirmed: see Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256; [2006] HCA 27 at [46]; Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 at [24]. It was said in Batistatos that the General Steel formulation should not be given "canonical force". 7. Gerlach v Clifton Bricks Pty Ltd (2002) 209 CLR 478; [2002] HCA 22 at [49]. 8. Standing may also arise from s 420(2)(u): Commonwealth of Australia v ABC2 Group Pty Ltd [2009] NSWSC 1442 at [38]. 9. Holding on the register is contemplated by the words "a holder of fully paid shares" in para (a)(ii). There is a question whether the legal personal representative or trustee in bankruptcy of a deceased or bankrupt registered holder stands in the holder's shoes for the purpose of making a winding up application. Cases indicating a positive answer rely on provisions of earlier legislation similar to the current ss 528 and 529: see, for example, Re Meyer Douglas Pty Ltd [1965] VR 638, where the relevant provision was s 220 of the Companies Act 1961 (Vic). However, provisions within the current Div 6 of Pt 5.6 (in which ss 528 and 529 are located) apply, by force of s 514(1), only "where a company is wound up". This suggests that the extension of contributory status to legal personal representatives and trustees in bankruptcy is relevant to matters such as liability to contribute and rights to participate in distributions but irrelevant to questions of standing to apply for a winding up order. For that reason, the decisions in Melluish v Underwood Development Pty Ltd [2004] NSWSC 429 at [15] and Warner v Shulamite Pty Ltd [2012] FCA 863 at [14] on the question of standing under the current legislation may be doubted. 10. Primary judgment at [116]. 11. As in the case of a building contract: Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455; [1969] HCA 47. 12. In "The importance of distinguishing between different categories of creditors for the purposes of company law" (1994) 12 Company and Securities Law Journal 105, W J Koeck and I M Ramsay emphasise the observation of Kitto J in Community Development Pty Ltd v Engwirda Construction Co (1969) 120 CLR 455; [1969] HCA 47 at 459 that, to justify a finding of contingent creditor status, "there must be an existing obligation, and that out of that obligation a liability on the part of the company to pay a sum of money will arise in a future event, whether it be an event that must happen or only an event that may happen". The learned authors point out that the concept of prospective creditor also requires that there be an existing obligation. 13. In Tilley Air Conditioning Pty Ltd v Austruc Constructions Ltd [2009] NSWSC 757, Brereton J said at [15] that "the prevailing view appears to be that a person with an untried claim for unliquidated damages is not even a contingent or prospective creditor" but acknowledged that contrary views have been expressed. 14. In his article "Claiming a pound of flesh as a contingent or prospective creditor under the Companies Act" (1993) Singapore Journal of Legal Studies 144, Beng Tat Lee argues convincingly that, despite the decisions of Megarry J in Re Harvest Lane Motor Bodies Ltd [1969] 1 Ch 457 and Nicholson J in Re Gasbourne Pty Ltd [1984] VR 801, a person who is merely a plaintiff in an action for unliquidated damages should not be regarded as any species of "creditor", whether contingent, prospective or otherwise for the purposes of standing to seek winding up. 15. Logan J, after referring to the views of Santow J and Mansfield J said (at [30]): "Some commentators suggest that a balance of more recent authority lies with Santow J's approach. That particular approach was one, as the passage quoted from Simionato Holdings reveals, exposed to Mansfield J. In the end, as the passage from his Honour's reasons for judgment quoted reveals, it did not prove persuasive to his Honour. Nor does it to me." 16. It has been held that s 462(4)(a) does not mandate security for costs and merely directs that the application is not to be heard unless and until the plaintiff has given such security, if any, as the court thinks reasonable: Macks v Valamios Produce Pty Ltd (No 2) [2003] NSWSC 1044; (2003) 47 ACSR 686 at [5]. 17. It was said by Brereton J in In the matter of Vangory Pty Ltd [2015] NSWSC 1809 at [34] that a plaintiff with standing as a contingent or prospective creditor is "required first to persuade the Court that there was a prima facie case for the winding up of the company". In the particular case, as his Honour noted, the court was not asked at any early stage to decline to hear the winding up application and the issue arose only after a full hearing. 18. Mr Cocco did not seek to rely on any other aspect of the s 9 definition of "contributory". 19. See [25] above. 20. Primary judgment at [114]. 21. This decision is explicable on the basis that the company, having certified member status under its common seal, was estopped from denying the certificate holder's allegation that he was a member. Reservations about the correctness of the decision were expressed by Zeeman J in South Launceston Football Club Inc v Tasmanian Football League Ltd (1995) 4 Tas R 342 at 345. In addition, it was said by Hely J in Natural Extracts Pty Ltd v Stotter [1998] FCA 1636 that "the fact that a person is in a position to take or compel the taking of steps which when taken may result in the person becoming a member, has never been treated by the courts as investing the person with the status of a member in advance of the taking of those steps, except in the very particular circumstances which existed in Re Independent Quarries Pty Ltd". 22. The cases referred to and discussed by the primary judge in that connection are Ramage v Waclaw (1988) 12 NSWLR 84, TAL Life Ltd v Shuetrim (2016) 91 NSWLR 439; [2016] NSWCA 68 and Mercedes Holdings Pty Ltd v Waters (No 3) [2011] FCA 236; (2011) 29 ACLC 11-018. 23. By this, I do not mean leave to proceed in any formal procedural sense. The reference is, rather, to determination of locus standi as a preliminary issue: see Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204; Oates v Consolidated Capital Services Ltd (2009) 76 NSWLR 69; [2009] NSWCA 183. 24. See for example Stainton v The Carron Company (1854) 18 Beav 146; 52 ER 58. 25. See for example Lancaster v Evors (1841) 4 Beav 158; 49 ER 299. 26. I had occasion to consider this principle and its ramifications in Treadwell v Hickey [2009] NSWSC 1395 at [80]-[100] and do not pause to repeat the analysis. See also Hazard Systems Pty Ltd v Car-Tech Services Pty Ltd (In liq) [2013] NSWCA 314 at [15]-[16]. 27. See Weddell v J A Pearce & Major [1988] Ch 26 at 40 and, in the analogous case of a derivative suit by a member of a company, Spokes v Grosvenor Hotel Co Ltd [1897] 2 QB 124 at 128. 28. In Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 97,374, this Court referred to the requirement of joinder of the assignor as "a rule of procedure which may be dispensed with". 29. Re Westerton [1919] 2 Ch 104 at 111. In Norman v Federal Commissioner of Taxation (1963) 109 CLR 9; [1963] HCA 21 at 27, Windeyer J explained the matter in this way: "[C]ourts of equity would come to the assistance of the assignee if the assignor refused to do whatever was necessary to enable the assignee to get the benefit of the assignment. Thus a recalcitrant assignor would be required, on having an indemnity for his costs, to permit his name to be used in an action to recover the debt; or an assignor would be restrained from receiving the debt for himself, as for example in L'Estrange v. L'Estrange [(1850) 13 Beav 281 (51 ER 108)]. Because the assistance of equity was available, it was generally not needed". 30. See, for example, Companies Act 1961 (NSW), s 221 (2)(a)(ii). 31. The petitioner averred: "Your Petitioner holds 800 shares in the capital of the company, which said shares are fully paid; and although your Petitioner was not the original allottee of such shares, he was entitled de jure to have had the same originally allotted to him, and claims to be considered as an original allottee". The petitioner's holding resulted from a recent transfer and his attempt to satisfy the six months requirement paid attention to what he considered to have been an unsatisfied right to allotment and registration at an earlier point. 32. It is, however, necessary to add this qualification. While a signed instrument of transfer of the trust share in favour of Mr Cocco is said to exist, the transferor who has signed is Marisa Crosher. She is not now the registered holder of the share. It is registered in the name of Mr Crosher. It follows that Mr Cocco cannot argue that he has done, as against the company itself, all things necessary to obtain registration as a member. He has not presented a transfer signed by the holder of the share in question. 33. In Re European Society Arbitration Acts (1878) 8 Ch D 679 at 708, James, Baggallay and Thesiger LJJ said of "a person who has taken shares in the name of a trustee" that he "is, as between him and his own trustee, the person liable to contribute, but that does not make him a contributory as between him and the company". 34. It was said by Young J in Re Kalblue Pty Ltd (1994) 12 ACLC 1057 that the court's inherent power recognised by s 23 of the Supreme Court Act 1970 (NSW) enabled it to make a winding up order under the Corporations Law of New South Wales in respect of a company within the meaning of that enactment even though no application for winding up had been made by a person within the specified categories of eligible applicant. That opinion was disapproved in Western Interstate Pty Ltd v Deputy Commissioner of Taxation (1995) 13 WAR 479 at 481 but later repeated by Justice Young in Re Botar-Tatham Pty Ltd (2001) 52 NSWLR 680; [2001] NSWSC 613 at [22] and doubted by me in Lunn v Cardiff Coal Co [2002] NSWSC 1247; (2002) 171 FLR 430 at [30]. In Lunn v Cardiff Coal Co (No 2) [2003] NSWSC 25, I went further, saying (at [11]): "The court possesses no jurisdiction to set in train processes resulting in the extinction of a body corporate created by statute except to the extent that statute so allows". To accept that an effective application for winding up may be made by a person not recognised by the statute as a competent applicant is to overlook or disregard the clear words of s 462(5). 35. Alternatively, as discussed, he may seek, as a prelude to commencing winding up proceedings, an order compelling Mr Crosher to make his name available so that those proceedings are pursued in the name of Mr Crosher. 36. Board of Trade, Report of the Company Law Committee Cmd 1749, June 1962. 37. Paras 209, 212(f). 38. It is said in Australian Company Law (3rd ed, 1989) by W E Paterson, H H Ednie and H A J Ford at 320/1 that the words in question were added to the 1961 version of what is now Part 2F.1 to overcome the decision in Re Meyer Douglas Pty Ltd [1965] VR 638. That case was concerned with the standing of a shareholder's executor under both the winding up and the "oppression" provisions of the Companies Act 1961 (Vic). The executor was held to stand in the contributory's shoes for the purposes of seeking winding up but was not within the "member" concept for the purposes of s 186 of the Companies Act (which was the forerunner of Pt 2F.12). Extension of the class of eligible applicants for relief of the Pt 5F.1 kind to transmittees of shares by will or operation of law was effected by the Companies and Securities Legislation (Miscellaneous Amendments) Act 1983 (Cth). That Act caused the oppression provisions to assume essentially their current form. The explanatory memorandum accompanying the Bill for that Act referred to an intention to adopt a number of reforms recommended by the Jenkins Committee but made no specific reference to the particular matter of transmittees. 39. Or "shareholder". 40. Or "shareholder". 41. The "principle established by Owen Sim's case" was said by Pathmanathan J at [106] to be that "if an estoppel is evident on a given set of facts which precludes a prospective respondent from challenging the locus standi of the aggrieved party, then the threshold issue would not be allowed to stand in the way of the merits of the case relating to oppression". 42. That was the "second ground" that found favour with the primary judge. It was the only ground on which his Honour reached a positive decision on standing in favour of Mr Cocco. 43. As do the decision of Branson J in Leaney v Olmstead Pty Ltd (1994) 51 FCR 240 and a number of cases on similar provisions in other countries, for example, Bital Holdings Ltd v Middleditch (1992) 6 NZCLC 67,842, Re Brightview Ltd [2004] EWHC 1056 (Ch); [2004] BCC 542, Cheung Kwan v Xu Shengheng [2013] HKFI 1659 and Smyth v Investec Bank Ltd (2016) (4) SA 363 (GP); [2015] ZAGPPHC 1144. 44. See for example Bilkus v King [2003] EWHC 2516 (Ch) at [4]. Amendments 16 December 2016 - Representation - typographical error. 19 December 2016 - Footnote 43 - typographical error. 21 December 2016 - Heading after para 61 - reformatted without para number. 02 January 2017 - Heading before para 65 amended - "5.4A" replaces "2F.1". 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. Decision last updated: 02 January 2017