Ample Source International Ltd v Bonython Metals Group Pty Ltd

Judgment 1By Interlocutory Process filed on 20 February 2012, but not pressed until early 2013, the Defendant in these proceedings, Mrs Najwa Najjar, initially sought an order under s 482 of the Corporations Act 2001 (Cth) that the winding up of the First Plaintiff, Lorie Najjar & Sons Pty Limited (in liq) ("Company") be terminated. (In order to avoid confusion among members of the Najjar family, I will refer, without any disrespect, to Mrs Najwa Najjar as "NN"). Alternatively, NN sought, and now presses, an order under s 482 of the Corporations Act that the winding up of the Company be stayed, pending determination of the costs properly payable to the Second Plaintiff, Mr Peter Paul Krejci, as liquidator of the Company ("Liquidator") on termination of the winding up. Mr Sahade, who appears for NN, contends that the stay is sought on the basis that the Company is solvent and that the termination of the winding up would be justified, subject to meeting the Liquidator's proper fees and expenses after they are quantified. 2A stay or termination of the winding up or its termination would prevent the continuance of proceedings that have been brought by the Liquidator against NN, while leaving open the possibility that other persons with claims against the Company or NN could bring such claims in their own right. The parties each led a substantial amount of evidence relating to the matters in issue in the proceedings. Mr Miller, who appears with Mr To for the Liquidator, submits that the conduct of the liquidation (or the Liquidator) is not in issue in this application. That is correct in one sense, in that NN has not contended that there was any improper conduct on the part of the Liquidator and disavowed that contention in opening. Having said that, it will be necessary to reach findings as to matters that have occurred in the course of the liquidation for the purposes of determining the application. 3NN initially invited the Court to make final findings of fact that go to disputed matters including whether there was, in fact, an oral agreement in June 2007 so as to prevent RN and SN relying on the assignment of a debt by ING to them. I will address this matter in paragraphs 88-107 below. In oral submissions, Mr Sahade qualified that position to contend that NN did not need to establish that no debts existed as a matter of fact but only that that was a reasonably open proposition and that any claims against the Company should be agitated in the ordinary way once the winding up was terminated. The Liquidator initially contended that findings only needed to be made about the likelihood that debts of the Company would be established or not, in considering the Company's solvency, but also changed his position in final submissions to contend that NN had to prove the disputed oral agreement in order to establish the Company's solvency. The question of solvency is a matter relevant to the exercise of the Court's discretion as to whether to stay or terminate the winding up. It seems to me that the Court could properly exercise its discretion to terminate the winding up if it was satisfied that it was likely that the Company was solvent, without reaching a finding as to that matter on a final basis. I propose to reach findings as to that matter to the extent that it is necessary to allow the proper exercise of the discretion whether to stay the winding up. These findings will reflect the detailed affidavit evidence led by the parties and full cross-examination of the relevant witnesses. Factual background 4The Company was incorporated on 26 June 1997. NN's late husband, Mr Lorie Najjar (to whom I will refer, again without disrespect, as "LN"), had control of the Company and NN did not have any involvement in its day-to-day running and LN made all of the business and financial decisions relating to the Company (NN 22.3.2011 [10]). LN and his father, Mr Robert Najjar (to whom I will refer, again without disrespect, as "RN"), were each involved in property development and construction through the Company and Grenstar Pty Limited ("Grenstar") respectively. The parties led substantial evidence as to the history of the dealings between LN, RN, the Company and Grenstar. LN for a time worked for RN and they appear to have consulted with each other in relation to property purchases. The Company and Grenstar borrowed monies as co-borrowers and used existing properties owned by them jointly or separately as security for the loans that were guaranteed by the principals of both companies and used by both companies. It is common ground that those arrangements were informal in character. 5LN acquired a property at 64 Leylands Parade, Belmore on 22 January 1996. That property was purchased for approximately $230,000 (Krejci 15.7.2011 [5]). The purchase price was comprised of amounts paid to the selling agent of $23,000 and the balance of $214,981.37 received from the St George Partnership, which were funded by Grenstar (Ex R1, p 568; Krejci 15.7.2011 [6], Ex R3 tabs 4,5). In about December 1997, the Company purchased properties in Campsie Street, Campsie for approximately $600,000 (Krejci 15.7.2011 [11], Ex R3 tabs 10-13) and steps were subsequently taken to develop strata units on them. 6On or about 31 March 1998, the Company entered into a loan agreement with National Australia Bank Limited ("NAB") for $3.7 million. The borrowing from NAB was supported by a registered mortgage debenture over the Company's assets and by a guarantee and indemnity from Grenstar, NN, LN, RN and RN's wife and LN's mother, Mrs Salam Najjar (to whom I will refer, again without disrespect, as "SN") supported by a registered mortgage over two properties owned by Grenstar. The Company also had a bank facility with NAB in the sum of $1,450,000 which was secured by mortgages granted, in part by Grenstar. 7On or about 15 May 1998, the Company purchased a property in Beresford Street, Strathfield, which was subject to a first registered mortgage to NAB (Krejci 15.7.2011 [14], Ex R3 tabs 15-17) and steps were subsequently taken to develop strata units on that property. 8The Company then acquired an option to acquire a property at 66 Leylands Parade, Belmore, adjacent to 64 Leylands Parade, exercised that option and nominated Grenstar as purchaser, and Grenstar acquired that property on 22 May 2000 (Krejci 15.7.2011 [8], Ex R3 tabs 6-7). On 11 July 2000, the titles to 64 and 66 Leylands Parade, Belmore, were consolidated and LN and Grenstar thereafter became registered proprietors as tenants-in-common of the consolidated property ("Leylands Parade property") (Krejci 15.7.2011 [9], Ex R3 tabs 8-9). 9On 7 July 2003, Grenstar and the Company entered into a loan agreement with AMP Bank Limited ("AMP Bank") for $4 million repayable over 25 years ("AMP loan"), comprising two facilities of $1.2 and $2.8 million respectively and secured by registered mortgages and by guarantees provided by RN, SN, LN and NN (Krejci 15.7.2011 [20]). The amount of $1,220,000 from this facility was used to pay out the Company's NAB bill facility and an amount of $200,000 was applied to the Company's purchase of properties at Haldon Street, Lakemba ("Haldon Street property") (Ex R1, pp 556-557). The total of those two amounts corresponds to the amount of $1,420,000 (approximately) for which the Liquidator subsequently allowed a proof of debt by Grenstar in the Company's winding up. The Liquidator contends that the balance of the proceeds of the loan were applied to another entity, Najjar Constructions Pty Limited in the amount of $200,000 and to Grenstar's purchase of a property at Beamish Street for $1.5 million and to Grenstar in the amount of $842,000. 10On 2 October 2003, the Company and Grenstar entered into a loan agreement with ING Bank (Australia) Limited ("ING") for $1.225 million payable over 5 years ("ING loan") (Krejci 15.7.2011 [29], Ex R3 tab 49) secured by a registered mortgage over a property owned by Grenstar and guarantees provided by RN, SN, LN and NN. The proceeds of the loan were also applied to the purchase of the Haldon Street property, together with an amount of $200,000 drawn down from one of the AMP facilities. 11LN died in a car accident on 3 December 2005. On 13 December 2005, RN was appointed as a director of the Company. A meeting took place between NN, RN and other family members shortly after LN's death and I will address the evidence of that meeting in paragraphs 47-60 below. 12In about December 2006, the Company sold the Haldon Street property for approximately $2 million, and the balance of proceeds from the sale of approximately $1,872,936 were deposited into the Company's NAB bank account about 11 December 2006 (NN 22.3.2011 [40]; Ex R1, p 557; Krejci 15.7.2011 [34], Ex R3 tab 55). At this time, RN (rather than NN) was the sole director of the Company. At about this time, Ms Najjar also first met with the Liquidator (who had not yet been appointed to the position), to whom she had been referred by solicitors, to seek advice "in relation to closing down the Company". On 26 March 2007, NN was granted letters of administration in relation to LN's estate. RN ceased to be the director of the Company on 11 April 2007 and NN became sole director of the Company and became the sole shareholder of the Company on the same date. 13A meeting took place in June or July 2007 between RN, NN and others. I will address the evidence as to that meeting in paragraphs 88-107 below. A contract for the sale of the Leylands Parade property of which LN and Grenstar were joint registered proprietors was thereafter entered into on 21 July 2007 for a total price of $3,700,000. 14NN transferred the sum of $1,639,000 to her bank account from the Company's account on or about 10 August 2007 and transferred a further sum of $1,826.69 to her bank account on or about 3 September 2007 (Krejci 15.7.2011 [38]-[39], Ex R3 tab 58). There is a lack of clarity as to whether she received those monies in her personal capacity or partly on trust for her children or both. These transfers were funded from the proceeds of sale of the Haldon Street property paid into the Company's account in December 2006, to which I referred above. 15On 3 October 2007, the sale of the Leylands Parade property was settled and the proceeds, together with the sale proceeds of another property at Brighton Avenue, Campsie owned by Grenstar were paid in part to AMP to discharge the AMP loan (Krejci 15.7.2011 [43], Ex R3 tabs 62-63). 16At a general meeting of the Company held on 7 March 2008, NN resolved that the Company should be wound up voluntarily under s 491 of the Corporations Act and the Liquidator was appointed. On the same day, NN completed a report as to affairs, with the assistance of the Liquidator's staff. 17On about 6 January 2009, ING issued a notice under s 92 of the Conveyancing Act 1919 (NSW) to Grenstar in respect of one of the properties over which it was secured, requiring repayment of $1,002,740 as at 16 December 2008 (Krejci 15.7.2011 [46]-[47], Ex R3 tab 65). RN and SN paid out the whole of the ING debt by taking out a personal loan for $700,000 and using the proceeds to pay out the facility (Ex A7) and paying out the balance from their own funds. RN and SN took an assignment of ING's rights in late March 2010 (Ex R1, p 418; the counterpart signed by ING is at Krejci 8.3.2013 Annexure C, Ex R4, pp 113-120). I will address the evidence as to that assignment in paragraphs 76-87 below. 18By a Statement of Claim filed on 13 August 2010, and an Amended Statement of Claim filed on 22 February 2013, the Liquidator contends that the payments made by the Company to NN in August and September 2007 are recoverable as unreasonable director-related transactions under s 588FDA of the Corporations Act and were otherwise in breach of NN's duties as a director of the Company. By her Amended Defence, NN contends that, in June 2007, she reached an oral agreement with RN that the Leylands Parade property would be sold to pay down the AMP loan and Grenstar would then assume the remaining obligations under the AMP loan and under the ING loan. By his Reply, the Liquidator contends that, if the alleged agreement occurred, it was made for no consideration or unenforceable. By an Amended Statement of Claim filed in February 2013, the Liquidator advances a further claim to recover shareholder loans to NN and LN recorded in the Company's financial statements. NN's evidence is that she had no involvement in the financial management of the Company at the relevant time and did not receive those loans. 19There were significant limits to NN's knowledge of the transactions in issue in the proceedings. As I have noted above, NN's evidence is that LN had control of the Company and made all business and financial decisions prior to his death. RN became the director of the Company after LN's death and NN's evidence is that her brother-in-law, Mr Giunta, took care of the day-to-day affairs of the Company and "all the paperwork" until December 2006 (NN 22.3.2011 [37]). NN accepted in cross-examination that she had no knowledge of the manner in which the Leylands Parade property had been purchased at the time that occurred (T55). NN also had no knowledge of how the funds borrowed from AMP were used when the borrowing occurred in 2003 (T59). NN's evidence was that she did not become aware of the borrowing from ING until after LN's death, when she attended a meeting with RN and others at which that subject was discussed (T59-60) (although she had previously signed a guarantee of that borrowing because LN when asked her to do so (T60)) and she left her husband's business activities up to him (T61). NN did not know at the relevant time that the ING loan was used by the Company to purchase the Haldon Street property (T63). It was apparent from NN's cross-examination that, to the extent she gave evidence of the relevant transactions in her affidavit dated 22 March 2011, that evidence reflected her and her solicitor's analysis of those transactions based on the documents to which she obtained access after LN's death. Principles applicable to a stay or termination of a winding up 20Section 482 of the Corporations Act relevantly provides: "482 Power to stay or terminate winding up (1) At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order. (1A) An application may be made by: (a) in any case - the liquidator, or a creditor or contributory, of the company ... (3) Where the Court has made an order terminating the winding up, the Court may give such directions as it thinks fit for the resumption of the management and control of the company by its officers, including directions for the convening of a general meeting of members of the company to elect directors of the company to take office upon the termination of the winding up." The court's power to stay or terminate a winding up extends to a voluntary winding up, by reason of s 511(1)(b) of the Act. 21The principles applicable to a stay or termination of a winding-up under s 482 of the Corporations Act are well established, although this application raises somewhat different issues to those that commonly arise in applications for termination of a winding up. The factors relevant to whether a winding up should be stayed or terminated were summarised by Master Lee QC of the Supreme Court of Queensland in Re Warbler Pty Ltd (1982) 6 ACLR 526 at 533 as follows: "1. The granting of a stay is a discretionary matter, and there is a clear onus on the applicant to make out a positive case for a stay: Re: Calgary and Edmonton Land Co Ltd (in liq) (1975) 1 WLR 355 at pp 358-359 per Megarry J. See also sec 243 of the Act [ie, Companies Act 1961]. 2. There must be service of notice of the application for a stay on all creditors and contributories, and proof of this; Re South Barrule Slate Quarry Co (1869) 8 Eq 688; Re Bank of Queensland Ltd (1870) 2 QSCR 113. 3. The nature and extent of the creditors must be shown, and whether or not all debts have been or will be discharged: Krextile Holdings Pty Ltd v Widdows (above) [[1974] VR 689]]; Re Data Homes Pty Ltd (above) [[1971] 1 NSWLR 338], Law of Company Liquidation (above) at p 395. 4. The attitude of creditors, contributories and the liquidator is a relevant consideration: sec 243(1), Calgary and Edmonton Land Co Ltd (above). 5. The current trading position and general solvency of the company should be demonstrated. Solvency is of significance when a stay of proceedings in the winding-up is sought: In Re a Private Company (1935] NZLR 120; Re Mascot Home Furnishers Pty Ltd (1970) VR 593 at p 598. 6. If there has been non-compliance by directors with their statutory duties as to the giving of information or furnishing a statement of affairs, a full explanation of the reasons and circumstances should be given: Re Telescriptor Syndicate Ltd (above) [[1903] 2 Ch 174]. 7. The general background and circumstances which led to the winding-up order should be explained: Krextile Holdings Pty Ltd v Widdows (above). 8.` The nature of the business carried on by the company should be demonstrated, and whether or not the conduct of the company was in any way contrary to "commercial morality" or the "public interest": Krextile Holdings Pty Ltd v Widdows (above)." Master Lee noted that it that this summary was not intended to be exhaustive and should not be regarded as a series of rigid principles, and that proposition was subsequently emphasised in Dubolo Pty Ltd (t/as Fender Signs) v Codrington Investment Corporation Pty Ltd (1998) 26 ACSR 723 at 725, Metledge v Bambakit Pty Ltd (in liq) [2005] NSWSC 160 at [5] and Von Riesefer v Mainfreight International Pty Ltd [2009] VSCA 179; (2009) 73 ACSR 427 at 438. 22In Mercy & Sons Pty Ltd v Wanari Pty Ltd (subject to deed of company arrangement) (in liq) (2000) 35 ACSR 70 at [47]-[51], Austin J observed that: "In considering an application to stay or terminate a court-ordered winding up under s 482, the court has regard to various categories of interests. First, the court considers the interests of creditors, taking into account whether they object to the proposed termination. But even if all the existing creditors agree, the court may take the view that the proposed termination puts at risk the interests of future creditors. For example, the court is likely to be concerned where the proposal preserves the existing debts but defers their payment, particularly if the deferment has no enforceable status: see the remarks of Street J at first instance in Re Data Homes Pty Ltd [1971] 1 NSWLR 338 at 341. Similarly, if the proposal is that the principal shareholder/creditor will pay out all the other creditors and seek recovery of his debt by instalments, the court is unlikely to permit the company to start trading again and thereby incur additional debts, since if the company fails again, recovery by the new creditors may be prejudiced by the existing debt. However, if the principal shareholder/creditor capitalises his debt, the court may well take a different view: Collins v G Collins & Sons Pty Ltd (1984) 9 ACLR 58. The cases concerning the interests of creditors do not, in my opinion, establish inflexible rules. Specifically, I do not believe that there is any absolute rule that a winding up cannot be terminated as long as one or more debts remains undischarged. Instead, the cases identify the range of concerns which the court is likely to have in exercising its discretion when an application is made, and therefore give guidance as to the matters upon which the court will need to be satisfied. Second, the court considers the interests of the liquidator, particularly with respect to costs. ... Third, the court considers the interests of contributories. Generally a stay or termination will not be granted unless each member of the company either consents or is otherwise bound not to object to it, or his or her rights are properly secured: Re Calgary and Edmonton Land Co Ltd (in liq) [1975] 1 All ER 1046. ... Finally, the court considers the public interest, including matters of commercial morality, taking the initial approach that insolvent companies should be wound up: Re Data Homes Pty Ltd [1972] 2 NSWLR 22." Austin J also noted (at [53]) that the factors relevant to the exercise of the discretion were not "absolute rules" but "identify the range of discretionary concerns which the Court will need to address". 23In Vero Workers Compensation (NSW) Ltd v Ferretti Pty Ltd [2006] NSWSC 292; (2006) 57 ACSR 103 at [17], Austin J identified relevant factors as including the interests of the Company's creditors, including future creditors; the interests of the liquidator, particularly with regard to costs; the interests of contributories and the interests of "the public", including the public interest in matters of commercial morality, and the public interest that insolvent companies should be wound up. I summarised the relevant principles to the termination of a winding up, so far as they applied in respect of a company that had been placed in voluntary winding up, in my judgment in Re F & A Henry (Gowrie) Pty Ltd (deregistered) (2012) NSWSC 1061 at [16] as follows: "Section 482 of the Corporations Act permits the Court to terminate a winding up by the Court. The Court's power to make an order terminating a winding up under that section is discretionary and a person who seeks such an order must establish that the order is appropriate. Relevant factors include the attitude and interests of creditors including future creditors whose interests might be prejudiced if the company were released from winding up; the interests of the liquidator, particularly with regard to costs; the interests of contributories, so that a stay or termination will not generally be granted unless each member of the company either consents to it or is bound not to object to it or his or her rights are properly secured; and the public interest, including matters of commercial morality, whether all the company's debts have been discharged; the company's current trading position and general solvency; and any explanation for any non-compliance with statutory duties and of the circumstances leading to the winding up: Re Warbler Pty Limited (1982) 6 ACLR 526; Mercy & Sons Pty Ltd v Wanari Pty Ltd [2000] NSWSC 756; (2000) 35 ACSR 70 at [47]ff; Anderson v Palmer [2002] NSWSC 192 at [6]; Vero Workers Compensation (NSW) Ltd v Ferretti Pty Ltd [2006] NSWSC 292; (2006) 57 ACSR 103 at [17]; Re Yelin Group Pty Ltd [2012] NSWSC 74 at [8]-[11]. The question of the interests of the company's future creditors, and of its solvency, is of particular importance in this context: Prendergast v Rolcross Pty Ltd (in liq) [2008] NSWSC 146; Re SNL Group Pty Ltd (in liq) [2010] NSWSC 797 at [24]; Apostolou v VA Corporation of Australia Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84 at [58]; Re Kitchen Dimensions Pty Ltd (in liq) [2012] VSC 280." 24The factors identified in the case law are of importance in exercising the statutory discretion conferred on the Court by s 482 of the Corporations Act. However, those factors should not be treated as though they were a statutory requirement, so as to confine the exercise of the Court's statutory discretion to cases of the kind in which they have been identified. The Court is required to determine, exercising a discretion judicially and having regard to the purposes of the Corporations Act, and particularly the regime for winding up established under Part 5.4 of the Act, whether a stay or termination of the winding up is justified and that statutory discretion is not confined by imposing limitations not found in the express wording of the statute or by a checklist of criteria developed by the case law or by an exercise of classification of the factors considered in or the results of other cases: compare Owners of the Ship "Shin Kobe Maru" v Empire Shipping Co Inc [1994] HCA 54; (1994) 181 CLR 404 at 421; Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; (2009) 238 CLR 304 at 361; Weinstock v Beck [2013] HCA 14; [2013] 93 ACSR 213 at [55] - [56] per Hayne, Crennan and Kiefel JJ. The Company's solvency 25NN submits that the only real issue in dispute in the proceedings is the Company's solvency. While there are other issues that need to be taken into account in the exercise of the Court's discretion, to which I will refer below, the Company's solvency is an important issue in the exercise of the Court's discretion. 26The Liquidator expresses the opinion that: "I am of the opinion that the Company was insolvent from at least 10 August 2007 and remained insolvent throughout the period up until the time of my appointment. Nothing, since the date of my appointment has changed my opinion in respect of the Company's solvency. I remain of the view that the Company was insolvent as at 17 February 2012 and remains insolvent. This is due to the following factors: (a) The current liabilities of the Company were greater than its current assets for the period 10 August 2007 to date. (b) The total liabilities of the Company were greater than its total realisable assets for the period 10 August 2007 to date." 27The Liquidator expresses the view that, as the Company has not traded since mid-2007, a balance sheet analysis is more appropriate for the purpose of considering its solvency than an analysis based on cash flow. He also expresses the view that there was a net asset deficiency of $2,283,876 as at the date of his appointment on 7 March 2008 and $2,508,876 as at 17 February 2012 and that that position remained current, not including the costs and expenses he had incurred in the administration of the Company's liquidation. His analysis of solvency as at 17 February 2012 depends on treating an amount of $1,225,000 as owing to RN and SN (referable to the debt previously owing to ING Bank) and an amount of $1,309,804 as owing to Grenstar (referable to the amount previously owing to AMP Bank and interest). I will address the position in respect of those claims below. That analysis does not have regard to a debt previously claimed by NN against the Company, which is treated as nil with a notation that the proof of debt was not admitted. (Inconsistently with that approach, the Liquidator submitted at the hearing that the Court should also treat that claim as having the result that the Company was not presently solvent.) 28The Liquidator also refers to other matters which may, in an appropriate case, indicate insolvency in his affidavit dated 26 February 2013, including whether a company has outstanding creditors of more than 60 days or outside the stated terms of trade; overdue Commonwealth and State taxes; late or non-payment of statutory employee entitlements; unsecured creditors demanding payment; payment to creditors of rounded lump sum amounts; a poor relationship with its bank or an inability to access alternative finance or capital. He acknowledges that none of those matters are present here to support a conclusion of insolvency in respect of the Company. That is unsurprising where the Company has not traded for several years and is not incurring debts on an ongoing basis. 29It is not necessary or appropriate that I should address the question of solvency at the time the Liquidator was appointed and the key question to be determined here is that of the Company's present solvency. The Liquidator identifies six proofs of debt that he has received, set out in paragraph 34 of his affidavit sworn 26 February 2013. NN relies on the fact that, when the hearing before me commenced, none of those proofs of debt had been formally determined by the Liquidator and none was the subject of a judgment or an unanswered statutory demand. That position changed somewhat when the Liquidator allowed proofs of debt in the course of the hearing in circumstances to which I will refer below. In my view, the determination of a Company's solvency for the purposes of an application to remove a liquidator under ss 482 and 511(1)(b) of the Corporations Act does not have regard only to debts that are the subject of judgments, statutory demands or adjudicated proofs of debt. However, the wider issue raised by NN's submission is whether the particular claims are of a nature that would impeach the Company's solvency, until determined both as to liability and quantum by a Court. I address that issue below. 30NN relies on expert evidence of Mr Andrew Johnson dated 17 February 2012 in order to establish the Company's solvency. I consider that Mr Johnson's evidence is of limited assistance, since he expresses his view on the basis of an instruction to exclude and give no consideration to claims by, inter alia, Grenstar, RN, SN and NN and instructions that NN had secured sufficient funding to enable all creditor claims of the Company, apart from those excluded, to be paid and had no intention or ability to recommence the Company's business should the winding up be terminated. It was not surprising that Mr Johnson concluded that the Company was able to pay its debts as and when they fall due once the claims by Grenstar, RN, SN and NN, which are all the material claims against the Company, were excluded. I do not understand the Liquidator to contend to the contrary. The real question in this case was rather whether those claims should be excluded in determining the Company's solvency. 31The Liquidator submits that NN's evidence as to the Company's solvency amounts to a mere assertion by a Company's controller as to its position and is of no real value to the Court. In Gematech Pty Ltd v Bardi Investments Pty Ltd [2008] NSWSC 196 at [26]-[27], Hammerschlag J pointed to the need for the "fullest and best" evidence of the company's solvency in an application of this kind. In Re Pine Forests of Australia (Canberra) Pty Ltd [2010] NSWSC 1127 at [3], Barrett J formulated a central question in an application under s 482 as: "... whether the company's financial health is such that it may safely be released from the form of external administration focussed mainly on the interests of creditors and returned to the mainstream of commercial life where it may, under the control of its directors, incur new debts that have to be paid as and when they fall due. A capacity to operate in a financially sound and responsible way and to service foreseen indebtedness is central to the inquiry." In Re SNL Group Pty Ltd (in liq) [2010] NSWSC 797 at [24], Bergin CJ in Eq similarly observed that: "it is clear that in determining whether to terminate the winding up of a company, it is usual that the most significant matter for consideration is the solvency of the Company. The other considerations, such as the extent of the creditors, the status of the debts and the nature of the company's business will be taken into account in determining whether the company has returned to, or will be returned to solvency." 32The case law has repeatedly emphasised that the Court will be reluctant to act on the unsubstantiated evidence of a Company's controller as to the state of its liabilities: Deputy Commissioner of Taxation v Sydney Concrete Steel Fixing Pty Ltd [1999] NSWSC 494; (1999) 17 ACLC 972; Deputy Commissioner of Taxation v Lencal Excavations Pty Ltd [2004] NSWSC 783; Metledge v Bambakit Pty Ltd above. However, in this case, it seems to me that the determination of solvency does not turn on assertions by NN as to the Company's financial position, but upon an objective assessment of the factual and legal basis of the debts claimed against the Company. Grenstar's claim in respect of the AMP loan 33As I noted above, Grenstar and the Company entered into the AMP loan in 2003 comprising two facilities of $1.2 and $2.8 million respectively and secured by registered mortgages and guarantees provided by RN, SN, LN and NN. The AMP loan was recorded as a liability in the Company's 2007 financial accounts (Ex R1 p 247). The treatment of the whole of that loan as a liability of the Company in those accounts does not appear to have regard to the fact that the Company was a joint borrower with Grenstar in respect of the loan. 34The basis of Grenstar's claim in respect of the repayment of the amount owing to AMP was first set out in a letter dated 21 February 2008 from Grenstar's accountant to the Company as follows: "We act as accountants for Grenstar Pty Limited and have been directed by our client to write to you regarding the loan owing to AMP by [Company] having been discharged from funds provided by our client. Our client therefore writes to notify you of your indebtedness to them on the payment of such loan and also payments of interest due on that loan to AMP." That letter did not identify the basis of the contention that a payment made by Grenstar to AMP gave rise to a debt owed by the Company to Grenstar, as distinct from, for example, a claim for equitable contribution or unjust enrichment. 35Grenstar then lodged a proof of debt in the winding up in June 2008 claiming the amount of $4,414,801.22 in respect of the AMP loan, as follows: "1. AMP Limited debt owed by [Company] repaid by Grenstar Pty Limited - see attached settlement sheet, contract of sale, loan agreement and financial accounts for [Company] The contract of sale of 64-66 Leylands Parade, Belmore is shown vendor Grenstar Pty Limited and Najwa Najjar (previously Lorie Najjar) It is Grenstar Pty Limited's position this property was totally owned by Grenstar Pty Limited and not jointly with Lorie Najjar holding on trust for Grenstar Pty Limited. Further all costs covering the purchase of land and development costs paid by Grenstar Pty Limited. At a meeting with solicitors attended by Grenstar Pty Limited, Najwa Najjar and others it was acknowledged by Najwa Najjar the estate of the late Lorie Najjar did not have an interest in this property but it was held on trust for Grenstar Pty Limited. 2. Interest payments to AMP Limited paid by Grenstar Pty Limited on behalf of [Company] - see attached Grenstar Pty Limited bank statements showing payments made to AMP Limited and summary sheet - $479,631.46 [insert previous reference to $4 million] 3. Interest payments to ING Limited paid by Grenstar Pty Limited on behalf of [Company] - see attached Grenstar Pty Limited bank statements showing payments made to ING Limited and summary sheet - $228,115.76 4 Less off-set opening loan balance by Grenstar Pty Limited and Grenstar Property Trust as shown in attached [Company] financial statements as at 30th June 2004 - $292,946.00 5. Balance owed Grenstar Pty Limited - $4,414,801.22." The legal basis of the claim made by Grenstar is also not apparent from this document. The basis of the claim that interest payments to AMP were paid by Grenstar "on behalf of" the Company is not identified. There is not, for example, identified any request by the Company that such amounts be paid. The documents attached to the proof of debt also do not advance the matter. 36The Liquidator set out his reasons for treating Grenstar's claim as a debt owed by the Company at some length in his affidavit dated 15 July 2011. In his further affidavit dated 26 February 2013, the Liquidator summarised his reasoning in respect of Grenstar's claim as that at least $1,420,000 was paid by Grenstar for the benefit of the Company, and Grenstar paid interest in respect of this amount. 37On 7 March 2013, the first day of the hearing before me, the solicitors for RN, SN and Grenstar, at 7.15pm, sent an email to the Liquidator's solicitors requesting that the Liquidator adjudicate on the proof of debt lodged by Grenstar in June 2008 in respect of the AMP loan in the amount of $4,414,801.22. Prior to 11am the next day, when the Liquidator sought to read an affidavit dealing with these matters, he adjudicated that proof of debt and admitted the amount of $1,309,844.15 in respect of the claim referable to the AMP loan on the basis that the Company had received a total amount of $1,420,039.49 from that loan and that the amount of interest claimed should be admitted on a proportionate basis. Mr Miller properly acknowledged that the Liquidator did not rely on the admission of that proof of debt as determining the question that the Court would be required to determine, whether that debt was owed by the Company so as to support a conclusion that the Company was insolvent. Had that concession not been made, NN would have been required to pursue a foreshadowed application to set aside the Liquidator's determination under s 1321 of the Corporations Act in this hearing. Although that application would have raised the same, or substantially the same matters as were in issue in this hearing, it may have required this hearing to be adjourned since the Liquidator foreshadowed that he would seek to lead further evidence in response to such an application. The first step in Grenstar's claim in respect of the AMP loan - whether Grenstar was the beneficial owner of the Leylands Parade property 38Grenstar's proof of debt and the Liquidator's submissions proceed on the basis that, because Grenstar advanced the purchase price for the property situated at 64 Leylands Parade to LN, LN held that property on trust for Grenstar. As I noted above, Grenstar subsequently acquired 66 Leylands Parade and the two properties were consolidated. The Liquidator contends that he has reached the view that Grenstar was the beneficial owner of 64 Leylands Parade and therefore the beneficial owner of the whole consolidated property and that: "The sale of the consolidated property to pay the AMP loan would constitute Grenstar a creditor of the Company." It is therefore necessary to address the first step in Grenstar's claim, whether Grenstar was the beneficial owner of 64 Leylands Parade, and therefore of the whole of the Leylands Parade property on consolidation, to which the parties devoted substantial efforts in evidence and submissions. 39The Liquidator relies on evidence of RN and an accountant, Mr Desmond Lee, as to conversations with LN in support of Grenstar's claim to the entire interest in the Leylands Parade property. There is a need for careful scrutiny of such evidence where LN is deceased and unable to give evidence in response: Vukic v Grbin & Ors; Estate of Zvonko Grbin [2006] NSWSC 41; Weeks v Hrubala [2008] NSWSC 162 at [20]; Saliba & Anor v Tarmo [2009] NSWSC 581; Varma v Varma [2010] NSWSC 786 at [418]-[425]. It is also important to have regard to the fallibility of human memory, which increases with the passage of time, particularly where disputes or litigation intervene: Watson v Foxman (1995) 49 NSWLR 315 at 318-319; Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd (No 2) [2008] FCA 810 at [41]; Varma v Varma above at [424]-[425]. 40RN's evidence in his affidavit sworn 14 July 2011 is that he had a conversation with LN in which he said words to the effect: [RN]: "Lorie, I have seen a potential development site at Leylands Parade. I can buy number 64 straight away and I will then approach the owner of number 66. I want to buy number 64 in your name so that when I approach the owner of number 66 through Grenstar they won't know that I already own number 64 and put up the price. [LN]: "That sounds good." 41In addition to the need for care in dealing with this evidence for the reasons noted in paragraph 39 above, there are substantial difficulties with RN's evidence in this and other respects. RN's evidence was given by an affidavit prepared and sworn without the assistance of an interpreter; however, it emerged at the beginning of his cross-examination that his comprehension of written English was not sufficiently strong to allow him to understand the evidence he had given in that affidavit without access to an interpreter. RN also acknowledged in cross-examination that he did not read his affidavit before swearing it. These matters significantly reduce the weight that can be given to RN's affidavit evidence. 42RN's explanation in his affidavit as to the approach agreed with LN for the purchase of 64 Leylands Parade is also inconsistent with the documentary evidence as to how that purchase took place. LN acquired 64 Leylands Parade but the Company rather than Grenstar took the initial steps to acquire 66 Leylands Parade, taking up an option dated 18 October 1999 to purchase that property (Ex A1, p 26) and subsequently nominating Grenstar to purchase that property (Ex A1, p 34). That evidence is inconsistent with RN's evidence that the property at 64 Leylands Parade was placed in LN's name so that the owner of 66 Leylands Parade would not know that the potential purchaser already owned the adjoining property and then "put up the price". It would obviously not have been difficult for the owner of 66 Leylands Parade to appreciate that LN (who had acquired 64 Leylands Parade) and a company bearing his name (which acquired the option to purchase 66 Leylands Parade) were connected. 43RN's affidavit evidence is also that he told his solicitor, Mr George Shad, that "I am going to put this property in the name of my son". Mr Shad's evidence was that he acted in respect of the purchase of the Leylands Parade property and that RN advised him that "I am putting this property in the name of my son, Lorie". Mr Shad accepted in cross-examination that there was no reference at that time to LN holding the property as trustee in respect of any entity and that his understanding was that RN was buying the property for his son (T90). Mr Shad's evidence is at least not inconsistent with a finding the LN acquired 64 Leylands Parade beneficially, rather than on any trust for RN or Grenstar. 44I do not consider that NN's evidence significantly assists in the resolution of this issue. Her evidence is that her husband had told her that 64 Leylands Parade was "owned by him", which would suggest beneficial ownership of the property rather than a bare legal title, but the basis of the understanding attributed to LN is unclear. NN also gave evidence, in her first affidavit, that so far as she was aware her husband borrowed money from NAB to purchase the Leylands Parade property. Her understanding of that matter is not consistent with the documentary evidence that indicates that Grenstar funded the purchase price for the property. NN also gave evidence of a conversation, on the day after the husband was killed in the car accident in December 2005, while she at her hospital where her son was undergoing an operation in relation to injuries suffered in the accident. Her evidence is that she was approached by her brother in law, Mr Giunta and a conversation occurred as follows: Giunta: "[RN] wants you to transfer [LN's] share in Leylands Parade into his company's name because the building is his." The conversation is equivocal, since it appears to contain both a recognition that LN had a "share" in Leylands Parade, which may refer to no more than his legal ownership of the property, and a claim that the building was RN's. 45The Liquidator also relies on the affidavit of Mr Desmond Lee, who was for some 20 years, and remains, the accountant for RN, Grenstar and RN's other companies, and was also the accountant for LN and the Company. Mr Lee's evidence is that on a number of occasions (as to which he gives no further detail) subsequent to the consolidation of the Leylands Parade property and up to the time of his death, LN made the observation that: "My father put my name down on the purchase of 64 Leylands Parade because he wanted to buy number 66 and develop the site. I don't have any interest in the property at all. It is totally owned by Grenstar." 46I repeat my observation in paragraph 39 above as to the need for care in dealing with evidence of admissions attributed to deceased persons. The weight of Mr Lee's evidence is also reduced by the fact that it does not contain any detail of the occasions on which the conversations took place or of the content of the conversations (including what Mr Lee had said in those conversations) other than the observation attributed to LN and does not identify the context in which the statements were made by LN or the basis of the statements attributed to LN in that conversation. In my view, an analysis of the dealings between LN and RN in respect of the Leylands Parade property, to the extent they are disclosed by the evidence, provides a much more reliable basis for my findings than the statements made several years ago that are attributed to LN in Mr Lee's evidence. The meeting after LN's death 47A meeting of several members of the Najjar family took place a fortnight after LN's death, at the offices of a solicitor who had previously acted for Grenstar, LN and the Company. The Liquidator relies on statements said to have been made by NN at that meeting to establish that LN had no interest, and therefore Grenstar had the entire interest, in the Leylands Parade property. 48NN did not specifically address this meeting in her first affidavit sworn 22 March 2011, although she referred to discussions concerning the transfer of properties owned by the Company and the residential property owned by LN and NN to RN. Her affidavit evidence was that, in the period after her husband's death, she was approached by RN to transfer properties owned by the Company, including two terraces in Balgownie and a factory in Lakemba, to RN and also to transfer the family home owned by LN and NN to RN, on the basis that he would give NN an apartment and a weekly payment and pay mortgages and childrens' school fees (NN 22.3.2011 [35]). In his affidavit dated 14 July 2011, RN took issue with NN's evidence as to the words attributed to him by NN in respect of the conversations following LN's death, but did not address NN's evidence that he had sought the transfer of the properties owned by the Company and the family home to him. NN was also cross-examined at some length as to what occurred at this meeting. 49The Liquidator relies on minutes of this meeting that were prepared by Mr Lee and are exhibited to his affidavit. Mr Lee's evidence is that he took minutes of that meeting that "truly state and record the substance of those discussions". The minutes record, relevantly, that: "5. It was also discussed the issue of the property at 64-66 Leylands Parade, Belmore which was shown ownership [sic] of Grenstar Pty Limited and Lorie Najjar. It was confirmed at the meeting by Najwa Najjar that she had no interest in that property and likewise to her understanding that Lorie Najjar had no interest in that property which was purchased by Grenstar Pty Limited. Najwa Najjar confirmed at the meeting that she would assist in any way in the transferring of the interest in Leylands Parade property to Grenstar Pty Limited and it was suggested by Gerard Gooden that the most appropriate way was in the form of a constructive trust document for which he could prepare. However, he was uncertain if there would be any stamp duty on the transfer of the property to Grenstar Pty Limited It was confirmed by Robert Najjar that he would pay the necessary stamp duty if it was incurred, however he suggested that the lawyers of GJ Gooden do their best that no stamp duty should be payable. It was confirmed at the meeting Robert Najjar would be able to show for stamp duty purposes that all the payments for the purchase of the property and construction were paid by Grenstar Pty Limited. 6. It was discussed at the meeting that the family house [owned by LN and NN] at Strathfield had still not been completed and it was agreed to have the house completed as in its current state it would not bring it's [sic] full value at sale. It was suggested by Najwa Najjar that on completing the property the house would be worth approximately $5 million which could then be sold to repay back the debts owing to the AMP owed by Lorie Najjar & Sons Pty Limited. From the balance plus [sic] it was agreed to try and sell Haldon Street, Lakemba property in Lorie Najjar & Sons Pty Limited would provide sufficient funds to purchase another property for Najwa Najjar & the children." 50NN did not directly take issue with the minutes of that meeting in her affidavit evidence, although it was clear from her affidavits that the substance of her evidence was inconsistent with the position attributed to her in those minutes. NN was cross-examined it at length as to her failure to contradict that minutes and she maintained that she told her solicitor that she did not agree with the contents of those minutes (T67). It was put to NN in cross-examination that she had not, for example, disputed the accuracy of Mr Lee's record of the meeting in her affidavit dated 31 August 2011; she responded that she recalled reading Mr Lee's affidavit, although she could not recall the date when she read the minutes. Her evidence was that she did not agree that she said that she had "no interest" in the Leylands Parade property at that meeting, although she accepted that property was probably mentioned at that meeting, because RN was then pressing her to transfer the property to his name (T71). NN was asked to explain why she had not raised her disagreement with those minutes until she was cross-examined as to that question; she responded that she had not done so because she had not previously been advised by her solicitor that she needed to address the question in her affidavit. I have had regard to this matter in assessing the weight to be given to the minutes of the meeting. However, I do not think that NN's not taking issue with those minutes in her affidavits can support any inference that she accepted the truth of the statements contained in them, when the structure of her case and her affidavit evidence as a whole made clear that her position was to the contrary. 51It was not put to Mr Lee in cross-examination that his file note of this meeting did not attempt accurately to record what occurred at the meeting or that his evidence that the minutes of that meeting "truly state and record the substance of those discussions" did not truthfully reflect his belief and understanding, and I declined to permit Mr Sahade to reopen his cross-examination to put that matter after that cross-examination had been completed. There are nonetheless a number of aspects of the minutes and the record of the meeting that have led me to conclude that I can give little weight to the recorded discussion. 52First, Mr Lee's evidence in cross-examination was that the minutes were prepared by his taking handwritten notes of the meeting (which were not in evidence) and a member of his secretarial staff typing up those notes the next day (T158). He did not suggest that there was a subsequent step by which, for example, he revised the minutes from their original form. It seems to me plain that Mr Lee is in error in that recollection, since the form of the minutes is not consistent with a contemporaneous note made during a meeting, and they are plainly a summary prepared at some time after the meeting, in which the author has interpreted what was meant by what was said at that meeting rather than recording was said in the manner of a contemporaneous file note. 53Second, the minute of the meeting does not identify what was said by whom, at least in any comprehensive way, where it uses the language "it was discussed" or "it was confirmed", although there are some occasions on which a suggestion or confirmation is attributed to particular persons. It is not possible to determine what was said so as to lead Mr Lee to believe relevant matters had been "confirmed" or "agreed" or to determine what was said before those matters were "confirmed" or "agreed". Mr Lee was unable to give more precise evidence of critical aspects of what was said at the meeting in cross-examination, and his oral evidence was unclear in some respects, for example: "Q. What were the words that Najwa Najjar said or words to the effect in which she confirmed at the meeting she had no interest in the property? A I think there was words were - I mean against the background raised there relating to that property there whereby saying that because - raised there had whether Lorie [Najjar] had an interest or not because Mr Robert Najjar saying that it wasn't - that property was totally Grenstar and that. And Najwa [Najjar] there said, there confirmed, as far as she was aware that Lorie [Najjar] didn't have an interest in the property." 54The question of what was said at the meeting was further obscured by Mr Lee's reliance, in cross-examination, on discussions in the presence of NN prior to the meeting (T169) to which no reference had been made in his affidavit. It is unclear, from Mr Lee's evidence in cross-examination, who was party to those earlier discussions, what was said in them or how they may interact with, qualify or contradict what was said at the meeting. 55Third, the discussion recorded in the minutes prepared by Mr Lee appears to have proceeded, at least in part, on factual premises that were possibly incorrect and not fully examined. So far as NN was involved in that meeting, this is not surprising where the meeting was held shortly after LN's death and where her son had been seriously injured in the motor vehicle accident in which LN had died and was either still in or had just been released from hospital. For example, the file note records a discussion which appears to have taken place on the footing that LN "had no assets" so his creditors need not be paid and they should be left to "pursue [LN's] estate which was insolvent as [sic] the most prudent way of proceeding relating to those creditors claims." Putting aside any question as to the commercial propriety of that course, the premise that LN had no assets depended on the nature of his interest in the Leyland Parade property and he also had an interest in the Company. While Mr Lee suggested in cross-examination that it was assumed that the shares in the Company had no value, the file note does not suggest that the correctness of such an assumption was discussed at the meeting and it is unclear who (other than possibly Mr Lee) made that assumption. 56Fourth, the confirmation attributed to NN in the minute of that meeting, that "to her understanding" LN had no interest in the Leylands Parade property and that that property "was purchased by Grenstar Pty Limited" is strikingly inconsistent with the fact, acknowledged in NN's affidavit and convincingly demonstrated in Mr Miller's cross-examination of NN, that she had little or no knowledge of her husband's business affairs prior to his death. Given her then state of knowledge, it appears that NN would not have been capable of giving any meaningful confirmation that "to her understanding" LN had no interest in the property, still less that it was purchased by Grenstar, as distinct from that she had no understanding of those matters. In my view, NN's then understanding of LN's and the Company's business was so limited that a concession of the kind attributed to her would provide no assistance in the proper analysis of the legal position arising from the relevant transactions. 57For these reasons, I consider that the statements attributed to NN in the minute of the meeting prepared by Mr Lee provide a significantly less reliable basis for determining whether LN held an interest, initially in 64 Leylands Parade and subsequently in the consolidated Leylands Parade property, in trust for Grenstar than an objective analysis of the dealings between the parties, to the extent they are disclosed by the evidence. For completeness, I should add that I raised a concern in the course of the hearing as to whether the statement in the minutes of the meeting that NN - shortly after her husband's death and while her son was still in or just out of hospital with serious injuries - volunteered a suggestion that the family home (as to which LN's interest would pass to her) should be sold to repay the debt owing by the Company to AMP was consistent with the general course of human experience. The Liquidator submits that it would be unsafe and speculative to proceed by reference to any view as to the likelihood of that statement having been made, where further work was then required to complete that house, NN had no income and further work was also required to complete other projects undertaken by the Company, and the sale of that house would, possibly, have been a means of securing a fund to provide for NN and her children. I accept that it is preferable for the Court to reach no findings as to this matter and I have not relied on it in forming the view that I have set out above. 58The persons present at this meeting included two solicitors from the relevant firm who did not give evidence. A question arises as to whether a Jones v Dunkel ((1959) 101 CLR 298) inference should be drawn that their evidence would not have assisted the Liquidator as to any relevant matter. The Liquidator contends that there was a reasonable basis for not calling one of those solicitors, Mr Gooden, who says that he does not recall the meeting and was in any event not inclined to assist. In Fabre v Arenales (1992) 27 NSWLR 437 at 449-450, Mahoney JA (with whom Priestley and Sheller JJA concurred) observed that the significance to be attributed to the fact that a witness did not give evidence depended upon whether it was to be inferred that the reason the witness was not called was because the party expected to call him feared to do so, and that such an inference would not be available or would be of little significance if the reason why the witness was not called had no relevant relationship with the fact in issue and was, for example, because the witness had a reason for refusing to assist and the party who might call him was aware of this. On balance, I consider that Mr Gooden's claim that he did not recall the meeting provides sufficient explanation for the Liquidator's not calling him and I should draw no inference from his absence. However, there is no explanation of the Liquidator's failure to lead evidence of the other solicitor who attended that meeting, who it appears was Mr Lee's son. I infer that the evidence of Mr Lee's son would not have assisted the Liquidator as to any relevant matter. 59I do not find that LN held 64 Leylands Parade or his interest in the consolidated Leylands Parade property on an express trust for Grenstar. It also does not follow from the fact that Grenstar advanced the amount of the purchase price of the Leylands Parade property to LN, that LN held that property on an implied or resulting trust for Grenstar, although that is one possible outcome. First, as Mr Sahade points out, there is room for the presumption of advancement, where the advance was made by a Company controlled by RN to his son. Second, even if that presumption were not available, the amount advanced by Grenstar for the purchase of 64 Leylands Parade seems to me more likely to constitute a loan by Grenstar to LN, apparently interest free. Mr Shad's evidence is consistent with a finding that no trust over the property was intended. 60My finding that it has not been established that LN held 64 Leylands Parade on trust for Grenstar undermines a critical step in Grenstar's claim, and the Liquidator's view, that the sale of that property to repay the debt owed by the Company and Grenstar to AMP gives rise to a claim (still less a debt) owed by the Company to Grenstar. The better view is that the result of that transaction is that Grenstar has a claim in debt against LN's estate for the amount of a loan it made to him to purchase 64 Leylands Parade, and, possibly, LN's estate has a claim against the Company and Grenstar to the extent that its property has been sold to discharge their liability to AMP. I will address the question of the impact of a further meeting between the parties in June 2007 on Grenstar's claim in relation to the AMP loan below. That matter provides a further basis for a conclusion that Grenstar's claim in respect of the AMP loan is not a debt that can be taken into account in assessing the Company's solvency. Whether Grenstar's claim in respect of the repayment of the AMP loan is a debt 61Mr Sahade also contended in opening that the claims of Grenstar, RN and SN were in the nature of unliquidated claims at best, although he linked that with a further proposition that a partnership between Grenstar and the Company (or, possibly, between LN, NN, RN and SN) needed to be wound up and accounts taken before Grenstar, RN and SN could make claims on partnership assets, an issue that I will address below. 62In my view, even if Grenstar had a claim in respect of the AMP loan or interest arising from it, it would not presently constitute a debt of the Company and should now be taken into account in assessing the Company's solvency, for several reasons. As between AMP and the Company, no debt exists because the AMP loan has been repaid by, in large part, the proceeds from the sale of the Leylands Parade property of which LN and Grenstar were registered proprietors. If the Company (or LN on his own or its behalf) had not made a proportionate contribution to repayment of the AMP loan by contributing LN's interest in the consolidated property arising from the Leylands Parade property, Grenstar may have a claim for equitable contribution in respect of the amount it has repaid to AMP, so far as it was a joint mortgagor of property, or a claim for unjust enrichment. However, such a claim is not a debt for reasons I will note below. 63The Liquidator contended that, so far as the AMP debt was repaid from the proceeds of sale of the Leylands Parade property: "As a person who discharged a common obligation, it is also uncontroversial that Grenstar has a right of contribution against the Company in such circumstances. The amounts used from the AMP loan to the Company's benefit are ascertainable, as are the repayments made by Grenstar in October 2007 ... The obligation of the Company to repay to Grenstar is therefore similarly ascertainable, that is to say, liquidated. After repayment of the AMP debt by Grenstar, the Company therefore owed a debt to Grenstar instead of AMP." I cannot accept this submission. First, the "right" of contribution to which the Liquidator refers is a claim for contribution which may or may not be successful. Second, the quantum of any contribution is not ascertainable, unless and until that claim is determined, because of the range of factors that would be relevant to the Court in determining such a claim. Third, the submission turns on the premise, that I have not accepted, that the Leylands Parade property was wholly owned by Grenstar so the repayment of that amount was a payment only by Grenstar. 64If there was a common obligation between the Company and Grenstar to repay the AMP loan - a matter which NN disputes, relying on an agreement she claims was reached in June 2007 to which I will refer below - and Grenstar had discharged the loan without such a contribution by the Company or LN, Grenstar could maintain a claim for contribution to the payment made by Grenstar in an amount to be determined (if the presumption of equality is displaced) or as to 50% of the monies repaid: Sekhon v Sekhon [2007] NSWSC 875 at [90]; Chidiac v Maatouk [2010] NSWSC 386. However, a claim for contribution on that basis could be displaced by a contrary common intention on the part of the Company and Grenstar as co-obligors, which may be express or implied: Coulls v Bagot's Executor & Trustee Co Ltd (1967) 119 CLR 460 at 480, 488; Muschinski v Dodds [1985] HCA 78 ; (1985) 160 CLR 583, at 597; Sekhon v Sekhon above at [93]-[95]. The application of the funds raised may also be relevant in this regard: Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116 at 130. 65A claim for unjust enrichment could possibly be made by Grenstar on the basis that, where the Company obtained the benefit of part of the loan advances, it would be unjustly enriched if it is not required to repay to Grenstar a part of the amount paid by Grenstar to AMP to extinguish the loan. However, such a claim would only succeed if a recognised "unjust" factor is established, and the bare fact of conferral of a benefit by Grenstar on the Company would not suffice to establish an entitlement to recovery in unjust enrichment: Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 at [150]-[151]; Lumbers v W Cook Builders Pty Ltd [2008] HCA 27 at [80]; (2008) 232 CLR 635. 66Any claim for contribution or unjust enrichment by Grenstar may well need to take account of the fact that was a significant amount of mixing funds of Grenstar and the Company; indeed, RN's evidence in cross-examination was that "[o]ther money coming from both companies went to one account and we have been using that money." (T126). That claim could also be defeated by proof of an arrangement between the parties that contemplated that Grenstar would be liable for repayment of the loan or, possibly, that who would in future be responsible for payment of the loan would be agreed at that point consistent with the informal way in which LN, RN, the Company and Grenstar generally conducted their affairs. The quantum of any amount recoverable by Grenstar against the Company is also uncertain, with possibilities being half the borrowed amount and interest; the amount proportionate to the benefit which the Company obtained from this particular borrowing, the basis on which the Liquidator proceeded in allowing the proof on 8 March 2013; an amount proportionate to the benefit which the Company obtained from borrowings over the wider course of dealings between the Company, Grenstar and their respective principals, which would require a wider review of the dealings between those parties which the parties have not undertaken in these proceedings; or nothing, if the claim is not established or if the defences which NN has identified succeed. 67It is not necessary to resolve these complexities, because, in my view, any liability of the Company to Grenstar in respect of the AMP loan is not presently a debt, is not presently due for payment and the Company is not presently insolvent by reason of any future inability to pay it, if that claim is ultimately brought by Grenstar and established. The test for solvency is set out in s 95A of the Corporations Act, which provides that a person (including a company) is solvent if, and only if, that person is able to pay all the person's debts as and when they become due and payable. Any future claim by Grenstar for equitable contribution or unjust enrichment would be a claim for an unascertained liability and would not deprive the Company of solvency for the purposes of s 95A of the Corporations Act: White Constructions (ACT) Pty Ltd (in liq) v White [2004] NSWSC 71; (2004) 49 ACSR 220 at [317]; Box Valley Pty Ltd v Kidd [2006] NSWCA 26; Re Centro Properties Ltd [2011] NSWSC 1171; (2011) 87 ACSR 131 at [45]-[46]; Re F & A Henry (Gowrie) Pty Ltd (deregistered) above at [19]. The Liquidator did not contend that Box Valley was wrongly decided or that I should not follow it. Notwithstanding the reservations expressed by White J in New Cap Reinsurance Corporation Ltd (in liq) v A E Grant [2008] NSWSC 1015; (2008) 68 ACSR 176, I am bound to follow that decision and I do so. 68The Liquidator advanced several responses to the issue arising from Box Valley v Kidd in additional submissions, after that issue was raised in the course of oral submissions. The Liquidator contended, first, that a fundamental element of a debt is that the amount of the obligation is liquidated and, in that case, it does not matter that the obligation may be contingent. That submission does not assist the Liquidator, since a claim for contribution or unjust enrichment in respect of the repayment of the AMP loan is not a liquidated claim. The Liquidator also points out that a claim against a guarantor in respect of a principal debtor's obligation to repay a sum of money may give rise to a contingent debt: Hawkins v Bank of China (1992) 26 NSWLR 562; (1992) ACSR 349. While that proposition is correct, it also does not assist the Liquidator, since the AMP loan has been repaid and there is no room for a claim under a guarantee of it and the Company was not a guarantor of the ING debt, to which I refer below. 69The Liquidator also contends that a debt may come into existence as a result of a series of acts and events, not all of which take place at the same time, and that "it could conceivably be said that a debt has been incurred by the Company even before the debt is actually in existence and could be sued for": Shephard v ANZ Banking Group Ltd (1996) 20 ACSR 81, affirmed (1996) 41 NSWLR 431. It also does not seem to me that that submission assists the Liquidator, since it requires that at some point a debt has come into existence and can be sued upon. It does not follow from that proposition that every unliquidated claim is a debt, because proceedings could in future be brought and it could in future crystallise into a judgment. 70I have also had regard to, and see considerable force in, the view expressed by Ward J in Yelin Group Pty Ltd [2012] NSWSC 74 at [46], at least in its context of an application to stay a winding up pending the outcome of other Court proceedings to determine a claim to be a creditor of the Company, that claims which are asserted in good faith may be taken into account in exercising the Court's discretion whether to stay or terminate a winding up. However, her Honour's observations were made in circumstances of existing litigation between the claimant and the relevant company that would determine the relevant matters. It does not seem to me that her Honour's reasoning should be extended to permit a liquidator to bring proceedings under, inter alia, Part 5.7B of the Corporations Act (which, as the heading to the Part reflects, is directed to recovery of property or compensation for the benefit of creditors of insolvent companies) where a company is not presently insolvent, where there is no more than a prospect that claims might in future be brought against a company which might, if successful, result in its future insolvency. 71For these reasons, the Company is not insolvent by reason of any claim that may in future be brought by Grenstar in respect of the AMP loan. RN's and SN's claim in respect of the ING loan 72As I noted above, in October 2003, the Company, with Grenstar, jointly borrowed $1.225m from ING and RN, SN, LN and NN gave a guarantee in favour of ING Bank in respect of the borrowing by Grenstar and the Company under a loan offer made on or about the date of the guarantee (Ex R1, p 407). RN's evidence was that an agreement was reached with LN that, when the Haldon Street property was sold, LN would pay out the ING loan (RN 14.7.2011, p 20). That evidence is inconsistent with the treatment of the ING loan as recoverable against the Company in respect of that loan, so far as it contemplates that LN rather than the Company would attend to the discharge of the loan. 73The Liquidator relies on a report as to affairs dated 7 March 2008 signed by NN that records ING as the sole creditor of the Company in the amount of "one million tbd". However, the words "tbd", short for "to be determined", are in the nature of a qualification to that statement. NN's evidence is that the Liquidator suggested that she should include the $1 million debt to ING in the report as to affairs on the basis that there still appeared to be securities registered in respect of the Company (NN 5.3.2013 [12]). It appears that NN was in error in attributing that advice to the Liquidator and advice to that effect was given by one of the Liquidator's staff. I consider that I should place little weight on the statement contained in the report as to affairs. NN plainly did not have the expertise to reach an assessment of ING's claim against the Company and I accept that assessment reflects the advice given to her by the Liquidator's staff. In any event, the question before me is not the position in relation to the ING debt at the time of the Liquidator's appointment, but the position now, where ING has been repaid and the only relevant claims can be that of RN and SN arising from the circumstances of that repayment or the assignment of rights by ING to them to which I refer below. 74The Liquidator's affidavit dated 26 February 2013 bases his reasoning in respect of this claim on the assignment of the ING loan and a guarantee and indemnity given to ING by NN and LN to RN and SN. Subsequent to that affidavit, an email sent on 7 March 2013 from the solicitors for RN, SN and Grenstar to the Liquidator's solicitors (to which I have referred above) advised that previous Proofs of Debt lodged by RN dated 6 January 2013 in the amount of $1,225,000, SN dated 6 January 2013 in the amount of $1,225,000 and Grenstar dated 7 January 2013 in the amount of $228,115.76 were withdrawn and requested the Liquidator to adjudicate on a proof of debt in the joint names of RN and SN lodged the previous day, 6 March 2013, in the amount of $1,225,000 in respect of the ING loan, described as follows: "Liability arising as guarantors (jointly and severally) of a loan to the Company from ING Bank dated 1 October 2003 in the amount of $1,225,000 from the default of the Company of the loan covenants by the members resolving that the Company should be wound up and further by way of deed of assignment dated on or about 15 May 2009 between ING Bank (Australia) Limited assigning the Bank's right, title and interest in the loan agreement dated 1 October 2003 and guarantee to Robert Najjar and Salam Najjar." On 8 March 2013, the Liquidator adjudicated that proof of debt in the amount of $1,225,000. The Liquidator admitted the claim for interest payments in respect of the ING loan in full. 75The proof of debt lodged on 6 March 2013 identifies two bases in respect of the claim that the Company owes a debt to RN and SN in respect of the ING loan. The first basis, with reference to a default arising from breach of the loan covenants by the resolution to place the Company in voluntary winding up, is not clearly articulated but may depend on a proposition that the guarantors including RN and SN were subjected to liability to repay the ING loan by reason of the Company's default and have a claim against the Company in consequence. If that is the intended claim, it is not a debt and does not give rise to insolvency for the purposes of s 95A of the Corporations Act, for the reasons I have noted above in respect of the AMP loan. I have again had regard to the view expressed by Ward J in Yelin Group Pty Ltd above at [46], but it does not seem to me that her Honour's reasoning should be extended to permit a liquidator to bring proceedings under, inter alia, Part 5.7B of the Corporations Act where a company is not presently insolvent. 76The second basis of the claim depends on the assignment of the rights under the ING loan to RN and SN. ING assigned its rights under the ING loan and associated guarantee and indemnity to RN and SN by an undated Deed of Assignment (Ex R1, p 418; the counterpart signed by ING is at Krejci 8.3.2013, Annexure C, Ex R4, pp 113-120) and, on 3 June 2010, RN and SN gave notice of the assignment to, inter alia, the Company and NN pursuant to section 12 of the Conveyancing Act 1919 (NSW) (Krejci 15.7.2011 [49], Ex R3, tab 66). The assignment of the guarantee to RN and SN does not seem to be relevant, since the Company is not a guarantor of the ING loan. 77The initial question that arises in respect of the assignment is what was the content of the rights assigned by ING to RN and SN. The Liquidator contends that repayment of the loan accounts to ING took place in March 2010 (I will return to the date on which that occurred below) and that, in return for that repayment, RN and SN took an assignment of all ING's interest in the relevant loan account. The Liquidator also contends that the fact that notice of the assignment was not given until June 2010 does not alter that conclusion since the absence of that notice may have affected RN's and SN's ability to sue without joining the assignor ING but, they contend, was otherwise no impediment to a debt having arisen. Where that assignment was undertaken for value, being the amount paid by RN and SN to ING to repay the loan, it would be effective in equity when the consideration was paid or executed, so that ING was then constituted a trustee of the amount then owed to it for the benefit of RN and SN. 78Clause 2.1 of the Deed of Assignment between ING, RN and SN in turn provides that: "In consideration of payment of the Agreed Sum on the Settlement Date by the Assignees to the Assignor, on the Settlement Date the Assignor: (a) at the Assignee's request assigns and transfers all of the Assignor's right, title and interest under and in connection with: (i) the Debt under the Loan Deed; and (ii)the Guarantee and the Assignees accept such assignment ..." 79The term "Agreed Sum" is defined as an amount equal to the Debt (as determined by ING and notified by ING to RN and SN on or about the Settlement Date). The term "Settlement Date" is defined as the date of the Deed of Assignment. The term "Debt" is defined as: "All outstanding indebtedness (whether present or future, actual or contingent) of the Debtor [in turn defined as Grenstar and the Company] to [ING] arising under or in connection with the Loan Deed including principal, amounts in the nature of principal, interest, amounts in the nature of interest, fees, costs, charges and expenses". The Loan Deed is defined as the Fixed Rate Loan Offer dated 1 October 2003 between the Debtor and ING, the associated Terms and Conditions Booklet and fee schedule. 80It is necessary to determine the extent of the rights acquired by RN and SN under the Deed of Assignment, which assigns ING's rights in the Debt as at the Settlement Date, being the date on which it is executed, and whether the assignment took place before or after the debt was substantially repaid. The question here is not whether the assignment was effective, but rather the content of the rights that were assigned and continue to subsist as against the Company, where ING has been repaid in full. The rights acquired by RN and SN and subsisting against the Company can be no greater than ING's rights at the time the assignment took effect, taking account of any repayment to ING that had occurred by that time in discharge of the ING loan: Hallam v Burns (Supreme Court of Queensland, Williams J, 11 December 1998). (I note, for completeness, that the Liquidator did not contend that the assignment took effect in equity before the Deed of Assignment was executed by all parties to it.) 81The evidence indicates that the extent of the rights assigned may differ significantly depending on the date of the assignment. One of the relevant accounts commenced with a balance on 10 October 2003 of $1,217,802 but shows a balance at 30 April 2009 of $316.63 and at 31 May 2009 of $318.16. On 24 March 2010, the balance of the other relevant account was paid down from $1,003,713.96 to nil. In the result, if the Deed of Assignment was executed prior to 24 March 2010, then the amount subject to the assignment would have been in the order of $1 million; if the Deed of Assignment was executed on that date, there is a question (not adequately addressed in either party's submissions) as to how the amount of the indebtedness is determined, when that amount changed substantially on that date; and, if the Deed of Assignment was executed after 24 March 2010, the amount of the debt due to ING subject to the assignment was in the order of $318. 82The issue as to the balance of the ING loan accounts at the date of the assignment arose in the Liquidator's cross examination on 30 April 2013 and I adjourned the proceedings in order to allow an opportunity for the Liquidator to lead further evidence of the matter. In order to ensure that the proceedings would proceed in a fair and orderly way on the next occasion, I made an order that the Liquidator serve any further evidence which he sought to lead in respect of the amount of the ING debt by 8 May 2013, with no further evidence to be led after that date without leave of the Court, and made a corresponding direction for NN's evidence in response. The Liquidator did not seek to lead evidence of that matter either in accordance with that direction or prior to the resumption of his cross-examination on 16 May 2013. Instead, Mr Miller sought to lead that evidence in re-examination of the Liquidator. I did not permit that course for reasons set out in my judgment on that day. In summary, that course seemed to me to be inconsistent with the direction I had previously made as to how such evidence should be led so as to secure, inter alia, that NN would have fair notice of the evidence and an opportunity to respond to it; second, did not seem to me properly to amount to re-examination; and, third, was likely to have the result that either the Liquidator's cross-examination would then have to be reopened or the matter would again have to be adjourned to allow NN a fair opportunity to investigate the new evidence to be led in re-examination by the Liquidator, without the notice that the Court's direction had been intended to provide. If the Liquidator sought to lead further evidence at to this matter, the proper way to do so was in accordance with the Court's direction rather than in re-examination. 83The date of the assignment is not evident from the Deed of Assignment, since each of the counterparts executed by ING and RN and SN is undated. Those who would have direct knowledge of that matter did not give evidence of it. No officer of ING gave evidence as to the date it executed its counterpart of the Deed of Assignment or whether that occurred before or after the ING debt was substantially repaid. It seems to me that the Liquidator could readily have called such evidence on subpoena where the debt balance at the time the assignment took place had plainly become a central issue and an adjournment had been allowed to provide the Liquidator an opportunity to lead further evidence as to that issue. There was no explanation for the Liquidator's failure to call that evidence and I draw a Jones v Dunkel inference that such evidence would not have assisted the Liquidator. RN also did not give evidence as to the date on which he executed his counterpart of the Deed of Assignment or whether that occurred before or after the ING debt was substantially repaid. In these circumstances, the Court should at least be less likely to draw inferences favourable to the Liquidator from other evidence in respect of the relevant matters: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418-419; Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; (2011) 243 CLR 361; (2011) 276 ALR 375 at 393-394. SN did not give evidence as to these matters and I draw a Jones v Dunkel inference that such evidence would also not have assisted the Liquidator. RN, SN and Grenstar, who were heard in the proceedings in accordance with rule 2.13 of the Supreme Court (Corporations) Rules, also did not seek to lead evidence as to this matter, although Mr Eardley (who appeared for RN, SN and Grenstar) had foreshadowed the possibility that they might do so (T182) and directions were made in anticipation of that possibility. 84The Liquidator accepted in cross-examination that he did not make inquiries with either RN or SN or ING as to the level of indebtedness to ING at the Settlement Date under the Deed of Assignment before allowing RN's and SN's proof of debt (T142). He later gave evidence in re-examination (without objection by NN) that the Deed of Assignment "occurred" on 24 March 2010 (T220). While no order was sought or made limiting this evidence to be evidence of the Liquidator's understanding, it seems to me that this is its proper character. There is no suggestion that the Liquidator had personal knowledge of that matter; there is no evidence as to what inquiries were made or by whom to allow him to form that understanding; and it is unclear whether his evidence refers to the date on which ING, RN or SN or both signed the Deed of Assignment. If the Liquidator's understanding is correct, then the level of the rights acquired may turn on whether the Deed of Assignment was executed before or after the debt was reduced to $318 on that date. That matter was not, as I noted above, addressed by evidence of any officer of ING or by RN and SN who could have addressed it. 85In summary, there was plainly a critical question as to whether the ING debt had been substantially repaid before the assignment of it took place; those witnesses who could have given evidence that the assignment took place before the repayment of the debt were either not called by the Liquidator to do so - even after he had been permitted an adjournment to allow further evidence to be led as to the issue - or, in the case of RN, did not do so. RN, SN and Grenstar also did not seek to lead such evidence. Although NN bears the onus of satisfying the Court that it is appropriate to stay or terminate the winding up, and of addressing the issue of the Company's solvency to the extent necessary to do so, it seems to me that the Liquidator bears at least an evidentiary onus of establishing the amount of any debt that he contends was still owed by the Company, notwithstanding that the ING debt had been repaid to ING, by reason of the assignment to RN and NN. I do not consider the Liquidator has discharged that onus, so as to make good his approach to this debt in his evidence as to the Company's solvency or his submissions. 86NN also contends that the assignment was not effective in law by reason of an asserted non-compliance with s 12 of the Conveyancing Act. In my view, the requirements of s 12 of the Conveyancing Act are satisfied in respect of the assignment of the ING loan. The counterpart of the Deed executed by ING complies with the requirement in s 12 of the Conveyancing Act that an assignment be executed in writing under the hand of the assignor. Contrary to NN's submission, s 12 of the Conveyancing Act does not require that notice in writing be given to the debt by the assignor, but only that that the assignment be in writing under the hand of the assignor and that such notice be given by someone: Bennell v Netlink Australia Pty Ltd [2002] NSWSC 822; (2002) 42 ACSR 680 at [41]; Treadwell v Hickey [2009] NSWSC 1395 at [81]. Notice of the assignment was given, albeit by the assignees, to the Company. I therefore do not accept NN's contention that the assignment did not become effective under s 12 of the Conveyancing Act. 87To the extent that RN and SN were to assert rights arising under the assignment of the ING loan against the Company, the Company may have rights of contribution against Grenstar, RN or SN of the kind to which I have referred above. That matter was not addressed by the Liquidator's analysis of solvency, which assumed that the amount of $1,225,000 is now due by the Company to RN and SN without taking into account any such right, or by the parties in submissions. The meeting in June or July 2007 88NN contends that the RN's and SN's taking an assignment of the rights arising under the ING loan was contrary to a settlement agreement or corresponding understanding alleged to have been reached between RN and SN on the one hand and NN on the other at a meeting in June or July 2007 between RN, SN, NN and others. NN also contends that she reached an oral agreement with RN at that meeting as to the dissolution of a partnership which she contends existed which provided for RN and his interests to settle all the Company's outstanding debts. 89By way of background to that meeting, NN's evidence was that, in the first half of 2007, RN repeatedly asked her to transfer LN's interest in the Leylands Parade property to RN. In his affidavit dated 14 July 2011, RN denied that proposition. His evidence was that he had asked NN to ensure that the ING loan was paid out on the sale of the Haldon Street property but she had indicated that he should deal with ING, that loan was "not [her] problem" and she had three children to raise. RN also denied asking NN to pay money from the Haldon Street property to AMP. NN in turn denied that evidence in her affidavit dated 31 August 2011, contending that she knew the ING facility was both RN's and her problem until the meeting in June or July 2007 to which I will now refer. 90NN gave a detailed account of the meeting in June or July 2007 in her first affidavit dated 22 March 2011. In broad terms, her evidence is that, at the meeting in June or July 2007, Mr Shad suggested the sale of the Leylands Parade property and the use of the sale proceeds to pay off a part of the AMP loan and that the remaining debt to AMP and the ING loan could refinanced against another property, the rent of which would repay the debt. NN's evidence (NN 22.3.2011 [46]) is that, before that meeting, she had a conversation with Mr Shad in words to the following effect: NN: "If you are going to agree with him and tell me to give him everything, I'm not going to go through with the meeting." Shad: "Najwa, I wouldn't accept that proposal". Mr Shad accepts that a conversation to that effect occurred (Shad.28.7.2011 [7]). NN also gives evidence (NN 22.3.2011 [47]) that, at the beginning of the meeting, Mr Shad explained that he was attending as a friend and not as a solicitor as he wanted to help the family to resolve the matter and words to the following effect was spoken: RN: "I can't believe that a widow would inherit millions." Shad: "Where are the millions, Robert? She has three kids." Mr Shad also accepts that a conversation to that effect occurred (Shad 28.7.2011 [8]). 91NN's evidence is that, after some discussion, Mr Shad wrote details of the AMP loan and ING loan, including the debts owing and the properties those debts were secured against, on a piece of paper, and a conversation to the following effect occurred: Shad: "What I would suggest is that we sell Leylands Parade in use the money to pay off part of the AMP debt. After settlement, the remaining debt to AMP can be re-mortgaged with the ING debt against Eighth Avenue and the rent from Eighth Avenue will repay the whole of that debt within four years. You [RN] have enough to live on with your wife and this will allow her [NN] to look after her kids. This is an unfortunate situation, if you don't sort this out now, all your money is going to go on lawyers and interest." Shad: "I know the manager at Arab Bank and I can help you with getting a loan through them." 92NN's evidence is that RN did not initially agree with the proposal and kept repeating words to the effect that NN would "end up with millions" and that he didn't want that and that, after further discussion about that, words to the following effect word spoken: RN: "Okay, I will agree to do it, but I won't use Arab Bank. I will contact Simon Arraj and get him to prepare the paperwork." NN gives evidence of further discussion concerning arrangements in respect of the sale arrangements in relation to the Leylands Parade property and arrangements were made for the sale of that property (NN 22.3.2011 [48]-[51]). 93NN also gave affidavit evidence, admitted only as evidence of her understanding that: "Pursuant to the agreement reached with my father-in-law [RN], the proceeds from the sale of the [Leylands Parade] Belmore property were to be used to repay the debt owing pursuant to the AMP facility and my father-in-law had agreed to take responsibility for and refinance the debt owing pursuant to the ING facility into Grenstar's name alone." NN also gave evidence, without objection, summarising the agreement that she contended had been reached in June or July 2007 in a further affidavit dated 16 February 2012 as follows: "In summary, the agreement was to the effect that my late husband would allow his and [the Company's] interests in the property at [Leylands Parade] Belmore to be used to satisfy or assist in satisfying the AMP facility (of which [RN] and his interests were also liable.) The ING facility would then be taken over by [RN] and his interests, thereby removing the [Company] as a debtor under that facility. In this way it was agreed that all liability between the parties would be resolved with no further claim made against each other." That position seems to me to go significantly further than the conversation of which NN gave evidence, which did not involve an express acceptance by RN of sole responsibility for the ING facility or specific reference to Grenstar but did involve a commitment to refinancing and to repayment by means other than payment by the Company. 94NN also gave evidence, in her affidavit dated 31 August 2011, of a subsequent conversation with Mr Arraj, a finance broker with whom, on her evidence, RN was dealing in relation to a refinancing of the ING debt following the meeting in June or July 2007, and gave evidence that she had informed Mr Arraj, at that time, of the agreement reached with RN that the Haldon Street property was to be sold and the proceeds from that sale were to be used to repay the AMP debt, and that RN had agreed "to take responsibility for and to refinance" the ING debt into Grenstar's name. Mr Arraj, who could have corroborated that evidence, was not called by NN. 95RN, in his affidavit evidence, denied that he agreed to anything discussed at the meeting, but did not otherwise elaborate on what was said at that meeting, on the basis that he contended, in paragraph 28 of his affidavit, that: "With respect to paragraphs 45 to 50 of the [NN] affidavit, I say that that meeting [in June or July 2007] was commenced with George Shad saying words to the effect of "This meeting is to be conducted on a without prejudice basis and no one can use these discussions in a Court of Law". Accordingly, on legal advice, I do not answer these paragraphs other than that, without any way waving privilege, denying that I ever agreed to anything discussed at the meeting." 96To return to a difficulty which I noted above, when RN's attention was drawn to this paragraph at the commencement of his cross-examination, it appeared to me that he was having considerable difficulty in reading it and I raised with Counsel whether an interpreter was required. The proceedings were then adjourned to allow an interpreter to be obtained. After an interpreter was obtained, I inquired of RN whether he was able to read paragraph 28 without it being translated for him, and he twice confirmed, through the interpreter, that he wished to have the paragraph interpreted for him. He then confirmed in cross-examination that no interpreter was present when he swore his affidavit and that he had not read that affidavit through. He responded to a further question asked by NN's counsel as follows: "Q And you don't feel capable of being able to read the [affidavit] and understand it? A [Interpreter]: Not much. Q You are not able to understand paragraph 28 without an interpreter? A. [Interpreter]: No." (T117-118). 97SN did not give evidence in respect of this meeting. NN's evidence was that SN did not take part in the conversation between RN, NN and Mr Shad although SN was sitting with them and listening to the conversation (T65). RN's evidence what was that SN was making coffee and was not involved in the meeting in June or July 2007. I can readily more readily accept NN's evidence of SN's role in the meeting where SN was not called and has not given evidence to the contrary. 98Mr Shad, a solicitor who had acted for members of the Najjar family and the associated companies for a considerable period, also gives evidence of this meeting. Mr Shad's affidavit evidence was that he suggested the sale of the Leylands Parade property to pay off the AMP loan; that there was further discussion as which he cannot recall the detail (and gives no evidence as to the substance) resulting it NN saying "Okay, I will agree to sell Leylands Parade." Mr Shad's affidavit evidence was also that RN "very much wanted that course of action" (Shad 28.7.2011 [9]); that evidence was inconsistent with RN's evidence in cross-examination denying that matter to which I will refer in paragraph 101 below. Mr Shad's affidavit evidence was also that he had no recollection of any discussion about a debt owing to ING in his presence at the meeting and also that: "I say that at no point during the meeting did I make any proposal about payment of the ING debt nor to the best of my recollection did [RN] say any words in connection with the ING debt to the effect "I would agree to do it" or words or conduct signifying assent to any course of conduct in relation to or to do with ING. I recall that the discussion only related to the AMP loan which was of concern to [RN]" (Shad 28.7.2011 [10]). 99Mr Shad was cross-examined as to this meeting and his evidence was, in substance, that the meeting was directed to the Leylands Parade property, as to which RN was liable in respect of the AMP loan. He was cross-examined as to his knowledge of the ING loan and his evidence was that he knew that there are other loans but could not recall any of them (T92). He accepted that, after the discussion about the AMP loan, there was also discussion about "a number of debts" (T93). Mr Shad's evidence was that he left the meeting in order to return to his office at a time when he felt "sure they had agreement on the sale of Leylands Parade and the payment of the mortgage to the AMP" (T93). 100There were inconsistencies between NN's evidence and Mr Shad's evidence, so far as Mr Shad said that some matters did not occur and did not recall other matters, but he accepted that he was present for only part of the meeting. Mr Shad's evidence was that he did not recollect a discussion about the ING loan in his presence at the meeting and that he had no knowledge of the details of the ING transaction. However, he accepted that there was discussion of other debts after the discussion about the AMP loan. On the other hand, NN maintained her evidence that that the ING loan was discussed and that Mr Shad had written the word "ING" on a piece of paper as he made notes to suggest and explain his proposal (NN 31.8.2011, p 3). 101There were also inconsistencies between RN's evidence and Mr Shad's evidence concerning the meeting; in particular, Mr Shad was emphatic that RN was pressing to sell Leylands Parade in order to repay the AMP loan, whereas RN's evidence was that NN had initiated that sale and "told me the best thing is to sell the Leylands property and to benefit from the sale" (T129). RN's evidence in re-examination was that RN had said that NN had to pay the ING debt because it was taken out to buy the Haldon Street property (T133); that evidence was in turn inconsistent with any inference that the ING loan was not discussed that might otherwise be drawn from Mr Shad's lack of recollection of such a discussion. 102I do not accept RN's evidence in respect of the meeting, given the wider difficulties with his affidavit evidence to which I have referred above and that his evidence is a bare denial that does not seek to give evidence of what occurred at the meeting. RN's denial that he agreed to "anything discussed at the meeting" is inconsistent with both Mr Shad's evidence and NN's evidence, where both NN's and Mr Shad's evidence and the subsequent conduct make clear that agreement was reached at least in respect of the sale of the Leylands Parade property and the repayment of the AMP loan at the meeting. RN's evidence is further undermined by RN's inability to understand his own affidavit, which was prepared without access to an interpreter, and by his failure to read that affidavit before it was sworn. SN was not called to give evidence as to events at the meeting, and I draw a Jones v Dunkel inference that her evidence would not have assisted the Liquidator's case, in circumstances that she plainly had an interest in giving such evidence if it would do so, where she with RN was funding the Liquidator's claim. 103For the purposes of this application, I generally accept NN's evidence of the relevant conversation. That evidence, which is not contradicted by Mr Shad's evidence, seems to me to establish that agreement was at least reached, either in the discussion at that meeting or by that discussion combined with subsequent conduct in respect of the sale of the Leylands Parade property, that the proceeds from the sale of the Leylands Parade property would be used to pay off part of the AMP loan and any remaining debt would be remortgaged against other property. The necessary implication of refinancing of the loan against other property was that it would not be repaid by the Company or NN. This is, as I noted above, a further basis on which the Court should find that Grenstar's claim in respect of the AMP loan cannot be treated as a debt in determining the Company's solvency. 104I accept that the ING loan was also discussed at this meeting, although I am not satisfied that the evidence presently establishes an agreement that RN or Grenstar would assume liability for that loan. That proposition is presently supported only by NN's evidence of what she understood from that meeting, rather than by any evidence of a conversation giving rise to such an agreement. I would therefore not have found that matters agreed at this meeting prevented RN's and SN's claim in respect of the ING loan being taken into account in respect of the Company's solvency, had I otherwise considered that it was a debt that was capable of depriving the Company of solvency: 105To the extent that an agreement or understanding was formed at this meeting, it seems to me that NN's agreement to sell the Leylands Parade property, of which LN's estate was a registered proprietor, would be adequate consideration for it. It seems to me that the seriousness of the steps subsequently taken in respect of the sale of the Leylands Parade property would also likely be sufficient to support a finding of an intent to enter legal relations in the relevant context. That understanding, and the steps taken by NN in respect of the sale of the Leylands Parade property on the basis of that understanding, may also be sufficient to give rise to an estoppel which would prevent at least RN and SN (and arguably Grenstar) from acting inconsistently with that understanding, although NN, at least primarily, put this aspect of the application on the basis of contract. 106The Liquidator also contends that NN's conduct in lodging a proof of debt in June 2009 (Ex R1, p 357) claiming to be a creditor of the Company is inconsistent with the agreement she asserts was made with Grenstar and RN at the meeting in June 2007 and demonstrates that any agreement reached at that meeting did not bar Grenstar from claiming against the Company. I do not understand there to be any inconsistency between NN's claim that RN and SN had reached an agreement at that meeting which was binding on them and Grenstar in respect of the AMP loan and the making of a claim by LN (or NN as his executor) in respect of the AMP loan, where there is no suggestion that LN was bound by such an agreement. 107The Liquidator also raised, in written submissions but not in oral submissions, a submission that any agreement formed at that meeting was not enforceable because it affected interests in lands or the mortgage to AMP, by reason of s 23C of the Conveyancing Act 1919. It is not immediately apparent to me that an agreement that one party rather than another would repay a debt amounts to the creation or disposal of an interest in land or any other transaction of the kind referred to in s 23C of the Conveyancing Act and the Liquidator did not explain in submissions how that was the case or refer to any authority in support of that proposition. I do not consider that submission was sufficiently developed by the Liquidator's submissions to allow me to accept it. Had that submission been developed by the Liquidator, it would have been necessary to address whether NN's conduct in respect of the sale of the Leylands Parade property would in any event have amounted to part performance sufficient to exclude a defence based on that section. Other matters raised by NN in response in respect of the AMP loan and the ING loan 108NN contends that Grenstar cannot make a claim on the "partnership" assets unless and until there has been a proper winding up of the partnership. NN also contends that the ING debt was a "partnership interest" and it was a breach of the duties owed to "the partnership" for RN and SN to take that assignment for their own benefit as opposed to the benefit of the partnership, and that RN and SN could not bring such a claim unless and until there had been a proper winding up of the partnership. In her affidavit dated 16 February 2012, NN formulated that contention in evidence, admitted as a submission only, that if the agreement she contended was reached in June or July 2007 was not enforced by the Court, then: "I contend that [RN] and his interests cannot claim any debt against the Company unless and until there has been a proper winding up of the Business, namely the Business between the [Company], [LN] and [RN] and his interests and that a proper accounting has been done." 109This contention assumes that NN can establish that there in fact existed such a partnership. There are difficulties with this contention, including the fact that it has only recently been advanced, that NN has herself taken no steps to affect a winding up and that my attention has not been drawn to any document reflecting the existence of the alleged partnership. There is, as I noted above, evidence of a degree of cooperation between RN and LN and their respective corporate vehicles, Grenstar and the Company, in respect of their business ventures and, as I have noted above, of the joint purchase of properties and of joint borrowings. However, it was not established that their arrangements had characteristics which are usually necessary to establish a partnership and, in particular, a sharing of profits as distinct from each entity profiting from the developments in which it was involved: Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at 327, United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; (1985) 157 CLR 1 at 681. Mr Shad's evidence as to this issue was in general terms and plainly qualified by his lack of detailed knowledge of the dealings between the respective parties. There is no evidence, for example, of the lodgement of partnership tax returns. Mr Lee, as accountant to the Company, Grenstar, LN and RN in the relevant period, denied that there was such a partnership (Lee 25.4.2013 [17]-[19]) and that denial was not challenged in cross-examination. I am not persuaded that this matter is such that the debts for which the Liquidator contends should be disregarded in assessing the Company's insolvency, had they otherwise been established. NN's claim against the Company 110NN submitted a proof of debt in the Company's liquidation, consistent with the position for which she contends, namely that her husband beneficially owned 64 Leylands Parade, and the application of the sale proceeds of that property to pay the AMP loan arguably gave rise to a claim by LN's estate against the Company (Ex R1, p 357). The Liquidator's position in respect of this claim is confusing, where he has rejected that proof of debt but, inconsistently, contends in this application that the debt should be treated as owed by the Company for the purposes of determining its solvency. I do not consider that claim is a debt that may properly be taken into account in assessing the Company's solvency. It is, like Grenstar's claim in respect of the AMP Loan, a claim in the nature of equitable contribution or unjust enrichment and, for the reasons noted above, not a debt that would deprive the Company of solvency for the purposes of s 95A of the Corporations Act. 111NN also contends that proof of debt is "immaterial to these proceedings because as part of her application to this Court the defendant forgives that debt". There is, however, no evidence of any binding document executed by NN by which she has taken that step. Had I otherwise been satisfied that NN's claim was a debt, I would not have disregarded it in assessing the Company's solvency for that reason: Metledge v Bambakit Pty Ltd (in liq; above; Re Yelin Group Pty Ltd [2012] NSWSC 74 at [16]. Other debts 112The Liquidator's analysis of solvency as at 17 February 2012 also treats the Company as owing a debt of $17,410.56 to AMP Bank, although containing a note that AMP Bank has not lodged a proof of debt. The Liquidator refers to a letter dated 13 November 2008 from solicitors acting for AMP advising that an amount of $17,410 is outstanding to AMP for a loan issued to Grenstar and the Company. There is no evidence that he has taken any further steps to investigate the validity of that claim, and I would not treat that debt as established for the purposes of determining the Company's solvency. The Liquidator's analysis of solvency as at 17 February 2012 also refers to a debt of $7,423.33 owed to Mr Lee's firm, Baker & Company. A proof of debt lodged by Baker & Company dated 9 September 2009 attaches invoices rendered for professional services in the period from September 2005 to April 2007. There is no reason to doubt that the Company is indebted to Baker & Company for those services. The Liquidator's evidence does not establish that the Company's assets would be insufficient to meet these liabilities, if they are the only liabilities that are ultimately established. 113The Liquidator's evidence is that he has been informed by a representative of the Australian Taxation Office that it currently has no claim in the liquidation of the Company, but he notes that the Company has not lodged income tax returns for the years ended 30 June 2008 or activity statements for the quarters ended September 2007, December 2007 and March 2008. His evidence is that the Australian Taxation Office may be a creditor once those documents have been lodged. No doubt, that is a possibility, just as it is a possibility that the Australian Taxation Office may not be a creditor or may be a debtor to the Company once those documents have been lodged or that those documents are ultimately not required to be lodged. I would not treat that matter as depriving the Company of solvency that might otherwise be established. Whether there is any public interest reason not to terminate the winding up 114The case law recognises that questions of commercial morality may give rise to reason not to terminate a winding up where there is serious impropriety in the conduct of a company's affairs or significant risk to future creditors. In Gematech Pty Ltd v Bardi Investments Pty Ltd above at [26]-[27], Hammerschlag J noted that the Court will have regard, in such an application, not only to creditors' interests but also to the public interest, including whether granting the order would be detrimental to commercial morality. His Honour also referred (at [29]-[30]) to the observation in Re Telescriptor Syndicate Ltd [1903] 2 Ch 174 that the company's trading operations should have been "fair and above board" and that there was not an "ugly side to the picture" and also noted that "the concepts of commercial morality and public interest are not narrow". In Prendergast v Rolcross Pty Ltd (in liq) [2008] NSWSC 146 at [25], White J directed attention to the question: "... whether it appears that it would be, or may be, contrary to the public interest if the company were permitted to resume operations." His Honour also noted that, where shares in a company are closely held the public interest means primarily the interests of existing and future creditors. 115In Apostolou v VA Corporation of Australia Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84 at [14], [58], Finkelstein J noted that there may be exceptional cases where a stay of a company's winding up would not be granted when the company was solvent, but noted that such an order would usually be made if all the creditors are paid out, the liquidator's costs and expenses are covered and the members agree; see also the careful review of the case law in Re Kitchen Dimensions Pty Ltd (in liq) [2012] VSC 280 at [22]ff. In Re R.A.N.S. Pty Ltd (in liq) [2012] VSC 480 at [18], Sifris J noted that issues as to the previous conduct of the company's affairs were likely to arise primarily in respect of the assessment of its future conduct, observing that: "... the critical focus of the application is on the future of the company and in particular the risk of danger to future creditors. Previous issues of non-compliance and breach by a company and its directors are relevant to the intended future operation of the company, particularly where the breach or non-compliance is sufficiently serious or persistent to the extent that the court can have no confidence that the restored company will continue to operate as a good 'corporate citizen' according to law." His Honour there held that a winding up should be terminated where the Company would be solvent after specified steps had been taken, notwithstanding some concerns as to a director's previous conduct. 116At least as at June 2012, the Liquidator did not appear to consider that there was any public interest reason not to terminate the winding up, since he then responded to an indication by NN in her affidavit evidence and in Court that she was prepared to pay his fees and expenses (which were then substantially less than they are now) by offering to consent to an order that the winding up be terminated on terms, inter alia, that NN pay a specified amount and there be mutual releases between NN on the one hand and the Liquidator, the Company, Grenstar and members of the Najjar family on the other (Ex A3, pp 29-31). The Liquidator noted in cross-examination (T192) that: "This letter was written in the context where at this point in time Grenstar and the [Najjar] family were prepared to settle these proceedings, at that point in time which must mean they were prepared to - at some point to perhaps not persist with those claims." He appeared to resile, to some extent, from the position taken in this letter in cross-examination, suggesting that he would have needed further advice from the solicitors then acting both for him and RN and his interests as to whether the Company's "debts were indeed discharged before there would have been any settlement", even if the offer set out in the letter had made had been accepted by NN. He was further cross-examined as to this letter as follows (T191-192): "Q. There was not any moral objections or reasons as to why the company should not have been brought out of the liquidation at this point that came to your mind? A. As long as I was satisfied that the company was solvent, all the debts could be discharged and my fees were paid and costs and then I had no objection." At least the conduct of NN which is the subject of the claims under s 588FDA of the Corporations Act in the present proceedings was known to the Liquidator at the time this offer was made, although I recognise that some of the other matters on which the Liquidator now relies to resist a stay of the winding-up on public interest grounds arise, at least in part, from subsequent dealings between NN, the Liquidator and their respective legal representatives. 117The Liquidator also contends that NN's conduct in withdrawing monies from the Company was improper. However, that issue depends upon whether, in a final hearing, NN is successful in establishing the agreement with RN and SN for which she contends, which would have the result that the Company had minimal debt, and also needs to be approached in the context that NN had taken advice from the Liquidator's staff in respect of that course. NN gives evidence in her affidavit dated 22 March 2011 that the Liquidator advised that, if she decided to liquidate the Company, she should "pull the money out of the Company and then we can sort it out later". The Liquidator accepts, in his affidavit dated 15 July 2011, that he gave advice to NN that: "Assuming the Company is solvent and all claims against the Company have been discharged then the common practice is for shareholders to draw down any surplus funds as loans pending a member's voluntary liquidation when the loans will be accounted for as an in specie distribution." 118The Liquidator points out that an aspect of commercial morality is the director's conduct in respect of the responsibilities arising from winding up: Metledge at [35]. The Liquidator expresses concern that NN may not have been frank with him. The Liquidator notes that, in response to a request in February 2009 for information about funds transferred from the Company to her, he was advised that those monies had been put into trusts for the benefits of NN's children and invested with Checkpoint (Ex R1, p 801A-801B). That position was qualified by NN's Counsel's in submissions to the Court on 21 February 2013 (Krejci affidavit 27.2.2013, Annexure A, p 8) and the Liquidator complains that there has been no attempt to explain the change in position. I do not consider that I can find that those matters involve any impropriety, where the initial advice was provided by NN's former solicitors; the more recent correction to the Court was given by NN's Counsel; and there has been no investigation of the basis on which either those solicitors or Counsel put those positions. 119The Liquidator also relies on the fact that undertakings were given by NN through her solicitor on 20 April 2009 and 18 August 2009 not to disburse monies she "presently holds" (Krejci affidavit 26.2.2013 [68]-[70]). The Liquidator contends that it was implicit in that communication that she held the funds. The Liquidator also relies on a subsequent statement by NN's solicitor, on 20 February 2013 that NN was happy to give that undertaking because she did not then have any money "in her hands" since she had set up trusts and transferred the money prior to giving that undertaking (Walker 20.2.2013 [4]). I accept that the giving of an undertaking, knowing that it would not be effective, could fairly be characterised as sharp practice, and it is a matter to be taken into account in determining whether the winding up should be stayed or terminated. The Liquidator also refers to a "possible breach" of NN's undertakings, so far as she accepted in cross examination that she had spent funds returned to her from Checkpoint in 2011 (T81). An allegation of a breach of undertakings to the Court is a serious matter and, where the Liquidator did no more than raise a "possibility" of such a breach, I should not make any finding in that regard. 120The Liquidator also complains that NN has failed to comply with a requirement to furnish the Liquidator with information about the Company's property, made under s 530A of the Corporations Act by letter dated 13 February 2013 (Walker 15.2.2013, Ex LK1, pp 44-46). The only request initially made in that letter which was specifically made under that section was that NN advise her residential address and her solicitor did so. Once the liquidator later sought to rely on that section in respect of the other information sought in follow up letters, it may well be that NN and her advisers should have provided the information sought, or at least that information that was reasonably sought for the purposes of s 530A(3) of the Act. 121It may be that these matters are properly the subject of criticism of NN or her advisers. However, I do not consider that these matters provide sufficient reason to consider that the public interest or the interests of future creditors would be at risk if the winding up was stayed or terminated, particularly where the Liquidator accepts that there is no real likelihood that the Company would recommence trading and has approached the assessment of solvency on that basis. The creditors' position 122By letter dated 6 March 2013, the solicitors acting for RN, SN and Grenstar wrote to the Liquidator's solicitors indicating their clients' opposition to a stay or termination of the winding up and observing that, inter alia: "... The ending of the liquidation is futile. On the premise that the liquidation is terminated then our Clients would be in a position where, without the necessity for leave pursuant to s 471B of the Corporations Act 2001, they would then need to bring their own claims against the Company and the Defendant. If successful, the likely result would be that ultimately a liquidator would be appointed to the Company. Applying the just, quick and cheap formula found in s 56 of the Civil Procedure Act 2005 the ending of the liquidation would result in unnecessary delay and costs to our Clients and to the creditors generally." 123As RN's, SN's and Grenstar's solicitors point out, the effect of a termination of the winding up would leave them free to bring proceedings against the Company so as to establish their claims against it. (They have, of course, always been free to bring proceedings against NN notwithstanding the liquidation.) In those proceedings, RN, SN and Grenstar would need to establish the basis for a claim for equitable contribution, unjust enrichment or their entitlement to rely on the assignment of the ING debt or any other basis on which they claim to be entitled to judgment against the Company. If they were successful, a debt would be established and the Company may well then be placed in liquidation. If they are not successful, that result would not follow. 124In each case, the creditors' claims would be determined on their merits, rather than the present proceedings being pursued by the Liquidator relying in part on causes of action under Part 5.7B of the Corporations Act (which, as the heading to the Part reflects and as I noted above, is directed to recovery of property or compensation for the benefit of creditors of insolvent companies) where the Company is not presently insolvent for the reasons noted above. I do not regard that outcome as either "futile" or in any way inconsistent with s 56 of the Civil Procedure Act. The Liquidator's position 125The Liquidator's affidavit dated 27 February 2013 indicates that he has, in the course of the administration and as at 27 February 2013 recovered assets of approximately $45,000, not including the substantial recoveries sought in these proceedings. That affidavit summarises the costs and expenses of the liquidation to date, including what are described in his written submissions as "substantial costs and expenses incurred in these proceedings, of approx $938,000". He has incurred costs and expenses made up of his time costs of $175,225; fees and disbursements in respect of de Mestre & Co of $6,545; fees and disbursements in respect of his former solicitors, Henry Davis York, of $343,918; and fees and disbursements in respect of his current solicitors, Colin Biggers & Paisley, since late 2012 of $407,412, including work in progress and disbursements of $70,000. 126The amount of legal costs and disbursements incurred is substantial in absolute terms, and even more substantial in comparison with the amount claimed in the proceedings during the period in which it was incurred. At the same time, it must be noted that Mr Sahade, who appears for NN, made clear in his opening that her application to stay or terminate the winding up was not brought on the basis that fees have been paid which ought not to have been paid or incurred which ought not to have been incurred (T7) and that NN did not put that the Liquidator was proceeding in a manner that would justify the court seeking to stay his acting in the winding up (T7-T8). NN at one point raised the possibility of departing from that position, did not ultimately depart from it, in the course of the hearing. Whether the costs incurred by the Liquidator were reasonably incurred would need to be determined if the winding up is to be terminated and the parties cannot reach agreement as to the amount of the Liquidator's costs which would need to be paid on termination of the winding up. 127The Liquidators contended, in written submissions at the conclusion of the hearing, that the Court must consider the question of payment of the Liquidator's costs at this stage, in the context of an application for a stay of the winding up, and not only at the point of termination of the winding up. That submission has the difficulty that the question of the costs properly incurred by the Liquidator (which may or may not be the same as the level of costs actually incurred by him) has not been comprehensively addressed in evidence by either party or in submissions. NN submits that the Liquidator has only recently served information as to his fees and expenses; that she has not had the opportunity to properly assess these, to determine which fees have been paid by third party funders and to what extent those funders are still liable to pay any outstanding fees and expenses; and submits that it is her intention to pay or cause to pay the proper fees and expenses and then move the Court to terminate the winding up. NN contends that a stay of the winding up should be ordered until that time to prevent the Liquidator from incurring "further unnecessary fees and expenses (including substantial costs in the Liquidator's claim against [NN] under section 588FF and other matters". 128There is also a dispute between the parties as to whether the amount of expenses recoverable by the Liquidator would include costs paid by interests associated with RN, in their capacity as funders of the proceedings, that the Liquidator is not required to reimburse to them. NN contends that the proper expenses and fees of the liquidation would not include those costs, where the funders have taken the risk of the success or otherwise of the proceedings. The Liquidator submits that a position that NN is only required to pay the Liquidator's fees to the extent that they have not been met by RN and his interests, as litigation funders, has the result that the majority of the burden of expenses and fees (namely the costs of the proceedings) would be shifted to other creditors - or, more accurately, the litigation funders associated with RN. The Liquidator submits that that result is "inequitable and would cause the Court to question whether a termination or stay would be appropriate in those circumstances". 129It is not apparent to me why there would be any inequity or unfairness in RN and his interests, in their capacity as litigation funders, bearing the costs of proceedings which they have contracted to bear under the terms of the relevant funding agreements or being left to bear the risk that, for whatever reason, the proceedings do not result in a successful conclusion which they have assumed by entry into the funding agreements. I should add that RN and his interests, as litigation funders, appear to have taken the benefit of those agreements by exercising a degree of influence over the conduct of the proceedings in their capacity as funders, by at least determining the solicitors who were to be retained by the Liquidators in the proceedings (Initial Funding Agreement, Ex A3, p56; Second Funding Agreement dated 13 February 2013, Ex A8). (I should again interpolate that no allegation of impropriety was put by NN against the Liquidator in this respect.) Neither the Liquidator nor RN, SN and Grenstar submitted that NN's delay in progressing this application (to which I had referred in paragraph 1 above) led to any relevant prejudice. The absence of such a submission may be explicable by the fact that they have been on notice of this application since February 2012, and it has been addressed between the parties and raised before the Court in the intervening period. I do not regard these matters as supporting a refusal to stay or terminate the winding up, where, as I noted above, that would leave the Liquidator free to pursue claims under, inter alia, Part 5.7B of the Corporations Act although the Company is not presently insolvent for the reasons noted above. 130NN has paid into Court the sum of $187,900 which can be used to meet the Liquidator's fees and expenses. It is not presently apparent whether the proper costs and expenses of the winding up would exceed that amount. It appears that NN has borrowed that amount and may be required to repay it, but that is a matter between NN and her lenders and not a matter which affects the availability of those funds, while they remain in Court, to meet those costs and expenses. It appears that NN would also need to borrow any other amount required to pay expenses and costs, but whether she would be able to do so is unknown until the amount of those additional expenses and costs is known. 131I have also had regard to the fact that any stay of the winding up could continue for in a lengthy period, given the potential difficulties in determining the fees and expenses properly payable to the Liquidator. Mr Sahade has not drawn my attention to any case in which a stay has been granted in similar circumstances. For example, in Re Simeon Enterprises Pty Ltd (in liq) [2012] NSWSC 538, Hammerschlag J stayed a winding up pending the response of the Australian Securities & Investments Commission to an application to terminate the winding up; that stay would plainly operate for only a relatively short period. In other cases, windings up have been stayed pending an appeal from a winding up order: for example, Ample Source International Ltd v Bonython Metals Group Pty Ltd (No 7) [2012] FCA 137. I have had regard to the fact that the risk that a stay would continue for too long a period may be mitigated by making such an order for a fixed time period and bringing the matter back before the Court for directions if required. 132Mr Eardley raised an alternative course that may have some attraction, namely that a stay would subsist pending proceedings brought by RN, SN or Grenstar for contribution in equity or for unjust enrichment, so that they have the opportunity to establish their claims in the usual way. Mr Eardley recognised that such proceedings are likely to require leave under s 471B of the Corporations Act, while the Company is presently in liquidation. (The reference to s 471B in this submission should be to s 500(2) of the Corporations Act since the Company is in voluntary liquidation rather than being would up by the Court). The difficulty of determining the issues by means of the proof of debt process (which these proceedings amply demonstrate) and the likelihood or inevitability of an appeal under s 1321 of the Corporations Act from any determination of the Liquidator would strongly support the grant of such leave, subject to RN, SN and Grenstar satisfying the Court that there is a serious question to be tried in respect of their claims. Whether a stay should continue until this has occurred, rather than the Court proceeding to a termination of a winding up, should be determined if and when a further application for termination of the winding up is brought by NN. Conclusion 133I have expressed the view above that the Court is required to determine, exercising its discretion under ss 482 and 511(1)(b) of the Corporations Act judicially and having regard to the purposes of the Corporations Act, and particularly the regime for winding up established under Part 5.4 of the Act, whether the winding up should be stayed, and that discretion is not confined by implied limitations not found in the sections or by a checklist of criteria developed by the case law or any exercise of classification of the factors considered in or the results of other cases. 134I have ultimately formed the view that the winding up should be stayed, in what seem to me to be exceptional circumstances. I reach that result because the claims against the Company on which the Liquidator relies do not, in my view, support a finding that the Company is presently insolvent. The claim by Grenstar in respect of the AMP loan and the claim by RN and SN for contribution or unjust enrichment in respect of the ING loan are unliquidated claims that, on the authority of Box Valley v Kidd, do not support a finding of insolvency. The assignment of the ING debt to RN and SN does not, for the reasons noted above, support a finding that the Company is presently insolvent. Any claim by NN is also an unliquidated claim that does not support a finding of insolvency; and the Liquidator's reliance on that claim has the additional difficulty that he has rejected a proof of debt for that claim while inconsistently asserting in these proceedings that it should be treated as a debt in assessing the Company's solvency. I have, as I noted above, had regard to the view expressed by Ward J in Yelin Group Pty Ltd above at [46], but it does not seem to me that her Honour's reasoning should be extended to permit a liquidator to bring proceedings under, inter alia, Part 5.7B of the Corporations Act where a company is not presently insolvent. 135This result will leave it open to Grenstar, RN and SN to bring such proceedings against the Company as they may be advised, subject to leave of the Court under s 500(2) of the Corporations Act while the winding up is stayed, and without such leave if the winding is ultimately terminated. The proceedings generally should be stayed while the winding up is stayed. 136The conclusion that I have reached above means that it is not necessary to invite submissions from the parties as to several issues that arose in the course of evidence and submissions, which might otherwise have raised issues as the future conduct of the winding up. The issues include the Liquidator's retainer of the same solicitors as RN, SN and Grenstar ("common solicitors") in respect of proceedings over an extended period (compare Smarter Way (Aust) Pty Ltd v D'Aloia [2000] VSC 408; (2000) 35 ACSR 595), the manner in which proofs of debt were dealt with, including the fact that no inquiry was made to determine the amount of the ING debt assigned to RN and SN before their proof of debt based on that assignment was allowed; the level of costs incurred in the proceedings; and the question who should bear the costs wasted when the common solicitors ceased to act when a conflict arose between their duties to the Liquidator and their duties to RN and his interests as to whether the Liquidator should enforce his rights under the earlier funding agreement. I again emphasise that NN did not contend that there was any improper conduct on the part of the Liquidator and I express no view as to the merits in respect of any of these matters. I was also informed, in the course of the hearing, that NN has appealed from a decision of the Liquidator to allow the proofs of debt by Grenstar, RN and SN. That appeal may now be moot as a result of the findings that I have reached. If it were to proceed, the issues in it may well have been substantially narrowed by the findings that I have reached above. 137It is, of course, also possible that the parties, now better informed as to the complexities of the relevant claims and the strengths and weakness of their respective evidence, might take this opportunity to consider whether they would be better advised to seek to resolve their differences rather than expending substantial further costs in the pursuit of further litigation, in addition to the substantial costs have been spent to date. Orders and costs 138I direct the parties to bring in agreed short minutes as to the orders that should be made to give effect to this judgment within 28 days or, if there is no agreement between them, the orders for which they respectively contend and submissions as to the differences between them, which should indicate whether an oral hearing is requested.

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: 21 June 2013