Bunt v Nati

REASONS FOR JUDGMENT 1 This proceeding arises out of arrangements entered into between the applicant, Mr Gregory Bunt, on the one hand, and the first respondent, Mr Robert Nati, and the second respondent, Mr Jason Dai, on the other, in relation to the affairs of the third respondent, Rowa Australia Pty Limited (Rowa), which has since been deregistered. At relevant times, Mr Nati and Mr Dai each held one of the two issued shares in Rowa and they were the only directors. 2 Mr Bunt and Mr Nati became friends when Mr Bunt was working for an insurance company and Mr Nati provided electronic equipment and other services for the insurance company. Subsequently, Mr Bunt was engaged in business with a Mr Ian Douglas. Together they formed a company called TransPacific Insurance Company (TransPacific). In the meantime, the friendship between Mr Bunt and Mr Nati continued. In late 2003, Mr Bunt and Mr Nati had a discussion about the possibility of TransPacific assisting with funding difficulties that Rowa was experiencing. Mr Nati wrote to Mr Douglas and Mr Bunt, inviting TransPacific to consider a commercial facility for Rowa. The letter indicated that Rowa required approximately $1.5 million for a period of 18 months to fund the expansion of its business. 3 Nothing came of that inquiry and, in a subsequent discussion, Mr Bunt told Mr Nati that he was having difficulties in working with Mr Douglas and would be looking for new opportunities for the future. He said that he would like, if possible, to be able to assist with the funding that Rowa was looking for. He said that he would be looking for equity in Rowa, a directorship and employment. Mr Bunt was aware that Messrs Nati and Dai were equal shareholders in Rowa and indicated to Mr Nati that he expected a package commensurate to what Messrs Nati and Dai were receiving from Rowa. Mr Nati said that he would arrange to provide some accounts of Rowa to Mr Bunt. 4 Further discussions were held in the first half of 2004. For the most part, the conversations and discussions between Mr Bunt and Mr Nati took place at the Willoughby Hotel. Mr Bunt informed Mr Nati that he was having difficulties with Mr Douglas and would certainly be looking at obtaining a different position for himself. He said that he had been giving consideration to becoming involved with Rowa, as had been discussed previously. He said he would be looking to purchase shares from Messrs Nati and Dai and that he would be looking to become a director of Rowa and become involved in the day-to-day activities. The precise detail of those discussions is not entirely clear and there is some disagreement as to the precise words that were used, but the general tenor is as I have indicated. 5 On 11 July 2004, Mr Bunt wrote to Messrs Nati and Dai. The letter was sent by email and in the letter Mr Bunt confirmed his desire to join Rowa, both in the capacity of an equity holder and as a member of the management team. The letter observed that there was a fairly large difference between their respective funding as the funds of Messrs Nati and Dai would be treated as loans to the company, while Mr Bunt's funds would be split with a proportion as the purchase of equity and, depending on the "buy in price", a proportion as loan. The letter said that making Mr Bunt's position more complicated was the fact that he was borrowing against his house, so that there would be interest charges and they would have to work out how those should be offset against the value of the cash injection to Rowa. The letter went on to say that the three of them would be able to work well together and that Mr Bunt believed that there should be a reasonable level of equity between them. He said he would not suggest that he should come in as an equal partner, but that somewhere in the range of 20 to 30 per cent would be sensible. He said he would expect to be a director of Rowa with any equity percentage. However, he said that he was not sure how that equity percentage would be valued, due to the business of Rowa being very young and the projections relying on one client for the first year, being Strathfield Car Radio. 6 In his letter, Mr Bunt referred to the accounts of Rowa for the period 1 July 2003 to 16 June 2004 that had been provided at that stage. The letter observed that those accounts demonstrated there were no real assets of Rowa, nor any real shareholder equity without the proposed arrangement with Strathfield Car Radio. The letter said that the bottom line was that they were going to have to agree on a price for Mr Bunt's equity and that Messrs Nati and Dai would have to decide what they would consider fair and he would have to decide if he agreed. The letter referred to the question of starting work and said that it was probably best to begin at two days per week and then increase, as Rowa developed, which would make it fair to Rowa. 7 There was no written response to Mr Bunt's letter of 11 July 2004. However, on 19 July 2004, Mr Bunt received an offer of an equity loan of some $800,000 at an interest rate of 7.07 per cent from an organisation described as Premier Capital. Following that letter, the first significant meeting that gives rise to the dispute that is presently before the Court took place on 22 July 2004. 8 The meeting on 22 July 2004 took place at the Willoughby Hotel. Mr Bunt told Mr Nati that he had moved forward with possible financing for Rowa by borrowing against his house. Mr Bunt told Mr Nati that he was happy to proceed with a transfer of shares from Mr Nati and Mr Dai to him. He said he would be looking for a position with Rowa and would also require to be a director. 9 Mr Bunt told Mr Nati that the only way he could proceed with the proposal was for the interest repayments on his loan to be met. He said he would be happy to look at some 15 to 20 per cent of Rowa and Mr Nati said that he was happy to proceed along those lines. He also said that he had spoken to Mr Dai, who was happy to proceed as well. Mr Nati did not, in effect, dispute the substance of what was said at the meeting. In the course of the meeting, Mr Nati made some handwritten notes, which tend to corroborate the version of the discussion that was given by Mr Bunt. The notes suggested that each 5 per cent of Rowa had a value of $250,000. 10 Mr Bunt had previously been a party to a shareholders' agreement in relation to another company. He made a redacted copy of that agreement and sent it to Mr Nati shortly after their discussion on 22 July 2004. The shareholders' agreement contemplated that there would be three directors of the company in question. Otherwise there is no particular significance to be attached to the draft agreement. 11 Against that background, Mr Bunt wrote to Messrs Nati and Dai on 2 August 2004, saying that he had progressed with the finance arrangements and that it should now be completed over the next few days. The letter referred to the fact that, when they had met on 22 July 2004, Mr Nati had put his thoughts on the value of Rowa at $250,000 for each five per cent. Mr Bunt said he thought that was a bit high, but to get things on the road, he was happy to move forward with the proposal on that basis. Mr Bunt said that he would be in a position to put up $750,000, which, on the basis suggested, would get him 15 per cent of Rowa. He said he would need to have the interest for those funds met by Rowa, that he was happy to have the interest considered as dividend, if that was satisfactory from Mr Nati's and Mr Dai's point of view. The letter said that there needed to be a simple contract prepared for the transfer of the shares, together with the issue of the share certificate. 12 Mr Bunt also referred to the fact that, in his letter of 11 July 2004 and in his discussions with Mr Nati, he had referred to the value that he would bring to Rowa with his experience and also his support and preparedness to put his house on the line to assist. He also referred to the fact that he had provided Mr Nati with a sample shareholders' agreement that should be finalised as soon as possible, since it would ensure that they were fully aware of the agreed operating arrangements. He said that the more comprehensive that document was, the fewer problems they would have should there be any differences in the future. In the letter, Mr Bunt said the final issue was employment and that he was happy to start off part time at two days per week and increase that as required. He said that he assumed that the three of them would be on comparable salaries and benefits and he would appreciate that being confirmed and documented. 13 There was no written response to the letter of 2 August 2004 and certainly no indication that there was any disagreement with its contents. The letter therefore tends to corroborate the version of the discussions to which Mr Bunt deposed. 14 Shortly after 2 August 2004, Mr Nati sent to Mr Bunt a draft share transfer agreement. The parties named in the draft agreement were Messrs Nati, Dai and Bunt and Rowa. The draft recited that Messrs Nati and Dai owned shares in Rowa and wished to sell shares to Mr Bunt and that he agreed to buy shares in Rowa. The pivotal provision of the draft agreement said that Mr Nati and Mr Dai agreed to sell to Mr Bunt, or his nominee, and Mr Bunt agreed to purchase, 20 per cent of the shares in Rowa registered in the name of Messrs Nati and Dai for a purchase price of $750,000. The draft provided that Rowa would meet any interest that was due and payable for the purchase price and any other loan funds from Mr Bunt and that the interest paid would be considered as a dividend to Mr Bunt. Curiously, the draft also provided that it was agreed that neither party would refuse to sign "the Shareholders Agreement", although the document referred to was not identified as such. 15 There is some dispute about when the question of directorship was mentioned. Mr Bunt attended the Hong Kong Electronics Fair from 14 to 17 April 2005. He was given an identification card that described him as a director of Rowa. He said that that was not his doing and that somebody else had arranged for him to be described as a director. That tends to corroborate Mr Bunt's evidence that there was an acceptance of the proposal that he become a director of Rowa. Eventually, after some hesitation, Mr Nati accepted that, by the end of 2004, there was agreement that Mr Bunt should become a director. Nevertheless, no steps were ever taken to make him a director. 16 In early August, after sending the letter of 2 August 2004, Mr Bunt and Mr Nati met at the Willoughby Hotel once again. Mr Nati confirmed that he and Mr Dai were happy to proceed to transfer their shares to Mr Bunt and appoint him as a director and to sort out employment, commencing on two days a week initially. Mr Nati said that there was a problem with starting that employment as Rowa's offices were at that time insufficient or not big enough and he would not be able to confirm when Mr Bunt would actually start employment. Mr Nati said there would be a share transfer. At the end of the meeting, Mr Nati and Mr Bunt shook hands and agreed that a deal was in place. 17 Some days afterwards, Mr Nati asked Mr Bunt to make some payments. Mr Bunt was about to depart on what he described as a "Variety Club bash". Mr Bunt said to Mr Nati, "Where would you like me to transfer the funds to you and Jason?". Mr Nati replied, "Can you just transfer them straight into Rowa". On 11 August, a payment of the sum of $645,148 was made from Mr Bunt's account into a bank account of Rowa. On 12 August 2004, the sum of $70,000 was paid by Mr Bunt to Rowa and, on 6 September 2004, a further sum of $50,000 was paid by Mr Bunt to Rowa. On 19 November 2004, Rowa repaid to Mr Bunt the sum of $15,148. Thus, there was a net payment of $750,000 by Mr Bunt to Rowa. 18 Mr Bunt said that he paid the money as Mr Nati directed in order to consummate the arrangements that he had negotiated and agreed on. He said that his part of the deal was to pay the money and he was prepared to consummate the agreement with Mr Nati because he had known Mr Nati for many years and he regarded him as a friend. He relied on that friendship and Mr Nati's integrity in concluding that everything was in order. Mr Bunt said that it was important for his decision-making in 2004 that there be a share transfer, because otherwise he had not actually received anything other than donating $750,000 to Rowa. He said he would not have been prepared to do that without shares being provided to him. 19 That evidence may be significant, as will become apparent, in the sense that there may be a question as to whether it was ever contemplated by Mr Bunt at that stage that, rather than there being a transfer of shares from Mr Nati and Mr Dai, there might be an allotment of new shares by Rowa. I shall return to that question later. 20 After that exchange, not a great deal seems to have occurred in terms of consummating any arrangements between the parties. Mr Bunt says that towards the end of 2004, the question of capital gains tax was mentioned in relation to the transfer of shares in Rowa. Mr Bunt said that, after he returned from the Variety Club bash, he asked Mr Nati what was happening with the share transfers. He said that Mr Nati responded that there was a problem with capital gains tax in relation to the transfer. 21 Mr Nati accepted that there may have been such a discussion, but said that it was in early 2005. He denied that capital gains tax was mentioned in August 2004. He accepted that there was some discussion, but probably in early 2005, about having to pay a hefty amount of capital gains tax in relation to any sale of shares. It is unlikely that capital gains tax was mentioned either at the end of 2004 or any time before June 2005, for reasons that I shall now mention. 22 On 7 June 2005, Mr Bunt sent an email to Mr Nati referring to earlier emails sent while they were overseas, presumably at the Hong Kong Electronics Fair. Mr Nati responded later in the morning of 7 June 2005, saying that he had arranged a meeting with Rowa's accountant for the following Friday, 10 June 2005, at 11 am. Mr Nati said that the accountant could not make it sooner. Mr Bunt inquired where the meeting would be held. He also asked for the accountant or Mr Nati to send him a set of accounts, both as at 30 June 2004 and the current year. It is not clear whether such accounts were sent. It is clear enough, however, that there was a meeting on 10 June 2005 that was attended by Mr Bunt, Mr Nati, and Mr Dai, as well as Ms Irene Low, an accountant who did accounting work for Rowa, as an independent practitioner. That is to say, Rowa was Ms Low's client. Mr Bunt, curiously, has no recollection of the meeting. That is surprising, having regard to the interest he showed in it in his exchange of emails. In any event, he is not in a position to deny what was said. 23 To the extent that there is any doubt about what was said at the meeting, I would accept the evidence of Ms Low as a true account of what happened at the meeting. Mr Nati puts greater emphasis on the result of the meeting than Ms Low did. While Ms Low made some brief jottings in the course of the meeting, they do not throw much light on the substance of the discussion. Ms Low remembered the meeting taking place, and that it was attended by Messrs Bunt, Nati and Dai. 24 Mr Dai gave evidence as to his recollection of the meeting. I should interpose, at this stage, that Mr Dai's English is not perfect. He speaks Mandarin, and apparently some Cantonese. He said that he does not read English and cannot write English. While the evidence was going to be given through an interpreter, I indicated that the evidence would be worthless unless Mr Dai was able to give his recollection of what was said in English. While Mr Dai and Ms Low had some exchanges in Mandarin or Cantonese, the meeting was conducted in English. 25 Ms Low's recollection is that Mr Dai said something to the effect that Mr Bunt was interested in investing in Rowa. She said that 20 per cent was mentioned as the shareholding in Rowa that was to be acquired by Mr Bunt. She said that there was discussion of the amount that Mr Bunt was going to invest in Rowa, and what form the investment could take. She said there was discussion about the alternatives that could achieve his having 20 per cent of Rowa. She said that neither Mr Nati nor Mr Dai said that they could not transfer their shares to Mr Bunt. She looked into the file, and her reaction was that, in transferring 10 per cent each, that would be a transfer from their personal shareholding, and would involve personal dealings between shareholders. She said that the issue of capital gains tax was then raised. She said she commented that, if there was going to be a share transfer, there would be capital gains tax, and also stamp duty, involved. It is more likely than not, although it is probably not critical to determine, that capital gains tax was first raised by Ms Low in the course of the meeting. Somebody asked whether the capital gains tax and stamp duty would be a substantial amount. Ms Low does not recall mentioning a specific amount, but she told them that it would be substantial, and it would depend upon their personal tax circumstances. 26 During the meeting, one of the others present said that the money was already in Rowa, in that it had already been deposited into one of Rowa's bank accounts by Mr Bunt. Ms Low asked whether the intention was to take the money out as part of the share transfer consideration. The response was that the money would remain in Rowa's account as working capital. Ms Low then suggested that, if there was a transfer of shares, then the shareholders would have to relend the money to Rowa. One of them then asked whether there was any other alternative. She said if there was going to be an investment in Rowa, issuing shares would be one of the alternatives that should be considered, if Messrs Nati and Dai were not going to take the money personally. Ms Low could not remember exactly what was said, but the issue was discussed. She had to explain to them what the effect on the books of Rowa would be if there was to be a personal transfer of shares and then the money was re-lent to Rowa, and how it would appear in the books of Rowa if there was going to be an issue of shares to Mr Bunt. She said that, if there was an issue of shares, the amount would appear as part of the share capital. 27 Ms Low said that there was a discussion to the effect that the money was going to be used by Rowa and they were not going to be redrawing it. She recalled a comment that the latter option, being an issue of shares, would be the best for Rowa. She does not recall Mr Bunt saying very much during the meeting. She recalls his saying that he was interested in owning 20 per cent of the shares but that was all. 28 Mr Nati's version of the meeting is slightly different. He said the meeting began by his saying they were there to discuss what was the best way of going forward to issue shares to Mr Bunt for ownership of Rowa. He said he asked what was the best way to do it so that it would not have any effect on Mr Bunt especially. He said that Ms Low outlined a few plans. One was that 20 per cent be issued from Rowa, since the funds were, in effect, placed into Rowa. She said another option was for Mr Dai and Mr Nati to split their shares, and issue 10 per cent each, giving 20 per cent to Mr Bunt. She said that that would have implications for capital gains tax. Mr Nati said that they were obviously not in a position to pay any more tax than they have to, and suggested they look at all options. He said that as long as it did not affect Mr Bunt's position, they should look at the best way. 29 Mr Nati said that at the end of the meeting, Mr Bunt said that it did not really matter how he got his shares, so long as he had a 20 per cent holding of Rowa, he would be satisfied. I consider it is probably more likely than not that Mr Bunt said words to that effect. It is by no means clear from Mr Bunt's evidence that he had a clear understanding of the distinction between a share transfer and an allotment. From one point of view, it would have been more favourable to Mr Bunt for the shares to be allotted to him, and the whole of the $750,000 be put into Rowa as share capital, rather than the $750,000 being paid to Messrs Nati and Dai as consideration, on the basis that they would then lend that money to Rowa. From Mr Bunt's point of view, it would have been preferable for his investment in Rowa to be by way of subscription for shares, so that the investment be made directly to Rowa as share capital. If he paid the amount to the other share holders, on the basis that they would lend the money to Rowa for working capital, they would have been in a preferred position over him. That would put them in a better position in terms of the funds, in that they would be creditors for the sum of $750,000, whereas Mr Bunt would remain merely as a contributory. 30 Mr Bunt certainly did not advance any reasons as to why he might have preferred the payment to be made to the shareholders rather than directly to Rowa. In those circumstances, it is probably more likely than not that Mr Bunt indicated that he would not mind whether he received his 20 per cent by means of transfer from the other shareholders or by means of direct allotment by Rowa. There is no reason to conclude that he would have insisted on the transfer in circumstances where that would result in the imposition of capital gains tax that would otherwise have been avoided. The distinction has taken on some further significance in the light of Mr Bunt's contention that the arrangements were never consummated. 31 It is now appropriate to indicate the nature of the allegations and counter-allegations that have been made in the proceeding. The proceeding was commenced in October 2008. Initially, Rowa was joined as the third respondent. However, on 11 December 2011, Rowa was deregistered, pursuant to action taken by the Australian Securities and Investments Commission (the Commission), apparently under s 601AB(3) of the Corporations Act 2001 (Cth) (Corporations Act). The proceeding has continued against Messrs Nati and Dai, and no claim has been prosecuted further against Rowa. 32 Two broad claims are now pressed by Mr Bunt against Messrs Nati and Dai. One is that Mr Nati and Mr Dai engaged in misleading and deceptive conduct in connection with the arrangements that were entered into in August 2004, in contravention of the Trade Practices Act 1976 (Cth) (Trade Practices Act), as it was then called. The alternative claim is that there has been a total failure of consideration in relation to the contract that was entered into, such that Mr Bunt is entitled to a refund of the sum of $750,000. It is common ground, on the pleadings, that an agreement was entered into in August 2004 and that Mr Nati acted as agent for Mr Dai in that regard. There is a dispute, however, as to the precise terms of the agreement that was made, and whether it was varied by reason of the discussions that took place on 10 June 2005. 33 I shall first describe the allegations made by Mr Bunt in relation to the arrangements. He alleges in his amended statement of claim that, during the period June 2004 to August 2004, Mr Nati, on his own behalf and on behalf of Mr Dai, represented to Mr Bunt that, in return for payment of the sum of $750,000: (a) Each of Messrs Nati and Dai would sell to Mr Bunt 10 per cent of the shares registered in their names and beneficially owned by them in the issued capital of Rowa, thus giving Mr Bunt a total of 20 per cent of the issued shares in Rowa; (b) Mr Bunt would be made a director of Rowa; (c) Mr Bunt would be employed by Rowa, initially for two days a week but building up to full-time as quickly as possible; and (d) Rowa would meet any interest that was due and payable on the $750,000, and that any payments would be regarded as a franked dividend paid to Mr Bunt by Rowa. Mr Bunt also asserted that, by making those representations, there was an implied statement of fact that each of Mr Nati and Dai owned, during the period June 2004 to August 2004, a sufficient number of shares in Rowa for each of them to be able to sell 10 per cent of those shares to Mr Bunt. He says that those representations were made in trade and commerce and that, in reliance upon them, he paid the sum of $750,000 to Rowa, as instructed by Messrs Nati and Dai. 34 Mr Bunt then asserts that, except in relation to the representation about the payment of interest, at the time of making the representations neither Mr Nati nor Mr Dai had any reasonable grounds for making them. He relies on the fact that there were only two issued shares in Rowa, which, he says, made a sale of 20 per cent of the issued shares impossible without further shares being issued. Further, if further shares were issued, Messrs Nati and Dai would incur a considerable capital gains tax liability and they did not intend selling their shares if it meant that they would incur a significant capital gains tax liability. And, finally, he says, they did not intend to make Mr Bunt a director of Rowa. Mr Nati and Mr Dai deny that they made representations as alleged, and deny that any such representation was misleading or deceptive. 35 I am not persuaded that there was any misleading or deceptive conduct on the part of Mr Nati and Mr Dai in relation to the discussions that led to whatever contractual arrangements came into place in August 2004. In fact, there were only two issued shares in the capital of Rowa at the time of those discussions. However, the discussions were not sufficiently precise to justify a finding that an express representation was made, or that one was made impliedly, that there were sufficient shares already issued to enable a transfer of 20 per cent of the share capital to be effected without either a subdivision of shares or an allotment of further shares. 36 Assuming there were a representation that each of them would sell to Mr Bunt 10 per cent of the shares registered in their names, it was of no consequence, one way or the other, whether the shares were actually issued at that time, or whether they would be issued prior to settlement. It is of some significance that, in the draft share sale agreement to which I referred, 9 August 2004 was specified as the date for completion. However, it is not clear precisely when the draft share sale agreement was brought into existence. It does indicate that the author of that document contemplated there might be some time between the signing of the contract and the completion of the contract. That interval would have enabled the share capital to be adjusted to permit a transfer of shares to Mr Bunt. 37 I am not persuaded that it was the intention of Mr Dai and Mr Nati not to appoint Mr Bunt as a director. While that did not occur, I would not conclude from the evidence that I have seen that it was never their intention that Mr Bunt be appointed as a director of the company. Nor would I conclude from the material before me that there was never any intention that Rowa would employ Mr Bunt. The discussion that took place at the time was that it might be some short period, at least, before space was available so that Mr Bunt could commence performing any duties as an employee of Rowa. 38 I am not satisfied that it was in the mind of any of the parties in August 2004 that there might be capital gains tax payable in respect of the sum of $750,000. I consider it is more likely than not that it was first brought to the parties' attention by Ms Low. I am not persuaded that the possibility of capital gains tax being incurred is such as to conclude that anything that was said in the course of the discussions was misleading or deceptive. I do not consider, therefore, that there was any contravention of either the Trade Practices Act or the Fair Trading Act 1987 (NSW) in relation to the discussions that took place in June, July and August 2004. 39 That brings me to the alternative way in which Mr Bunt seeks relief. He alleges in his amended statement of claim that, in early August 2004, he, as purchaser, and Messrs Nati and Dai, as sellers, entered into an agreement pursuant to which, in consideration of his paying a purchase price of $750,000, each of Messrs Nati and Dai would sell to him shares equivalent to 10 per cent of the shares registered in their names and beneficially owned by them in the issued capital of Rowa, thus giving him a total of 20 per cent of the issued shares in Rowa. 40 He alleges that, at the same time, he entered into a collateral agreement with Rowa whereby, in consideration of his entering into the share purchase agreement with Messrs Nati and Dai, Rowa would make him a director, employ him and meet any interest that was due and payable on money borrowed to pay the purchase price, and that any payments would be regarded as a dividend paid to him by Rowa. As I have said, Mr Bunt no longer presses his claim against Rowa in respect of the alleged collateral agreement. 41 The amended statement of claim then alleges that Messrs Nati and Dai have refused or neglected, in breach of the terms of the share purchase agreement, to sell 10 per cent of the shares registered in their respective names, in consequence whereof the consideration for the payment of the purchase price by Mr Bunt has wholly failed. Therefore, he alleges that the sum of $750,000 is money had and received to the use of Messrs Dai and Nati, and they are obliged to repay the sum to Mr Bunt. The pleading is somewhat confused but, as I understand the intention, it is that the sum of $750,000 was paid as consideration for the transfer of 20 per cent of the issued share capital of Rowa, and that there has been a total failure of that consideration, in that there has been no transfer of any shares in the capital of Rowa to Mr Bunt. 42 It is common ground that there has been no transfer of shares. However, while Messrs Nati and Dai deny that there was an agreement in the terms alleged by Mr Bunt, they accept that there was an agreement. They say that, on or about 2 August 2004, Mr Bunt wrote to them proposing that, in return for a payment of the sum of $750,000 to Rowa, he would receive 20 per cent of Rowa, and that Messrs Nati and Dai and Rowa agreed to that proposal. They also admit that, in early August 2004, Mr Nati agreed with Mr Bunt's proposal that, in return for his paying $750,000, he would be employed by Rowa, initially for one or two days a week, and possibly more, if needed, as Rowa grew. 43 The assertion of the agreement relating to a payment of $750,000 in consideration for receipt of 20 per cent of Rowa is repeated several times in the defence. The defence then says that, on or about 11 or 12 August 2004, Mr Bunt transferred the sum of $750,000 to Rowa's bank account and that, subsequently, they had a meeting at Ms Low's office in early 2005, where they discussed various options of how to implement the agreement alleged by them, and that at that meeting they agreed on how to implement the agreement. It is now clear that the meeting at Ms Low's office was held on 10 June 2005. 44 The defence alleges that one option discussed at the meeting was that each of Mr Nati and Mr Dai would transfer 10 per cent of their shareholdings to Mr Bunt so that he would hold 20 per cent of Rowa's share capital and the others would hold 40 per cent each, that option involving a share split. The defence alleges that the other option discussed at the meeting was to issue additional shares that would give Mr Bunt a 20 per cent interest in Rowa and each of Mr Nati and Mr Dai 40 per cent. The defence alleges that, during the meeting, Mr Bunt agreed and stated that, as long as he ended up receiving a 20 per cent interest in Rowa, he would be content with the adoption of either of the two options discussed. 45 The only real difference between the agreements asserted by the opposing sides is that, whereas Mr Bunt contends that there was simply an agreement for the transfer of shares and nothing else, Messrs Nati and Dai say that Mr Bunt subsequently accepted that, so long as he received a 20 per cent interest in Rowa for his payment of $750,000, he would be content. As I have said, I do not understand why Mr Bunt would not have agreed to such an arrangement. Nevertheless, he maintains his position that the only transaction that was ever agreed to was one whereby he would receive a transfer of shares from Mr Nati and Mr Dai. If there was no transfer, clearly there has been a total failure of consideration, there being no transfer by the time the proceeding commenced. I shall shortly say something about correspondence in that regard between the parties that continued from 2006 onwards. 46 The critical question in relation to the defence advanced on behalf of Mr Nati and Mr Dai is that they say that there was a variation of the agreement or an acceptance by Mr Bunt that an allotment of shares would be sufficient to satisfy the obligations under the agreement entered into in August 2004. In their defence, they say that Mr Bunt did, in fact, receive a 20 per cent interest in Rowa pursuant to the agreement that was made, as varied on 10 June 2005. They point to records lodged with the Commission on behalf of Rowa as evidence of that assertion. Mr Bunt says that, even if there had been an allotment of shares, that would not have been sufficient to satisfy any obligation under the agreement made in August 2004 and that there was still a total failure of consideration. 47 I am by no means convinced that that is the case. Had there been an allotment of shares or other re-organisation of the share capital of Rowa at some time before the commencement of this proceeding, there may well have been a good basis for the conclusion that there was not a total failure of consideration. It may well be that an allotment of shares was not a precise compliance with the obligations under the agreement but, if an allotment had been made and accepted by Mr Bunt, I would be disposed to conclude that there was not a total failure of consideration. 48 In order to deal with that matter, it is necessary to say something about the documents lodged with the Commission. One thing is clear, in that regard: somebody has been prepared to prepare minutes that tell a lie. There are in evidence copies of documents purporting to be minutes of meetings of directors of Rowa held on 29 March 2004 and on 11 August 2004 relating to the share capital of Rowa. It is quite clear that no such meetings occurred and that the minutes purporting to record such a meeting were prepared at some time during 2008, in circumstances about which there has been no evidence. 49 It appears that, on 24 November 2006, a discussion took place between Mr Bunt, on the one hand, and Mr Nati and possibly Mr Dai on the other. No evidence was given of that meeting. However, on 30 November 2006, Mr Bunt sent an email to Mr Nati and Mr Dai attaching a letter dated 30 November 2006 referring to a meeting held on 24 November 2006. The letter refers to discussions with Mr Nati in early 2004 in relation to Rowa and the funding that was required to obtain the contract with Strathfield Car Radio. Mr Bunt's letter referred to the proposal that he be employed initially for two days a week and then increasing as Rowa grew. The letter also referred to discussions about Mr Bunt's investing in Rowa and to the set of management accounts provided by Mr Nati to Mr Bunt. The letter then referred to Mr Bunt's letter of 11 July 2004 and to the meeting on 22 July 2004 and went on to say that, based on the discussions that he had had, he had proceeded with the sourcing of funds. He said that he again confirmed his position in his letter of 2 August 2004, which he said was confirmed by Mr Nati, along with the decision of Mr Nati and Mr Dai "to issue 20 per cent of the company to me for the $750,000". 50 Mr Bunt's letter then referred to the fact that he transferred funds on or about 15 August 2004 and that, notwithstanding his numerous inquiries over the last two years, the share transfer had not occurred and he had not commenced the two days a week employment. He referred to problems that Rowa was having with customers, but said that those issues had no impact on completing the transaction agreed to in August 2004. He said he was no longer prepared to have "an unsecured loan" with Rowa and that, if that loan was to be converted to the 20 per cent shareholding that was agreed, then all of the issues of employment and company structure and management would need to be addressed and put in place. 51 There was no immediate response to that letter. However, on 19 January 2007, Mr Bunt sent an email to Messrs Nati and Dai referring to a conversation on 18 January 2007. Again, there is no evidence of that conversation. The email said that Mr Bunt confirmed his advice that it was time for them to go their separate ways due to the various commitments not being met that he had mentioned at the meeting the previous day. He asked that his funds in the amount of $750,000 be repaid as soon as possible and that, until such time as those funds were repaid, he required that he receive a market-oriented interest rate. He said that he regretted that they had come to that "fork in the road" but could see no alternative but to sever the business relationship with Rowa. 52 That communication is a fairly unequivocal rescission of the arrangements, which would entitle Mr Bunt to a refund of any amount paid on account of the purchase price for shares or subscription moneys for the allotment of shares if that were the arrangement between the parties. Once again, however, nothing appears to have happened, until 27 February 2007, when Mr Nati sent an email to Mr Bunt attaching a letter dated 19 February 2007. The letter of 19 February 2007 began by cavilling with a number of observations in Mr Bunt's letter of 30 November 2006, but then went on to say that those details were not important, and that what was important was that Mr Bunt had bought shares in Rowa for a price that was agreed on. 53 Mr Nati said that Mr Bunt was to get 15 per cent for $750,000, but that, instead, he gave Mr Bunt 20 per cent. He said that that was based on many new clients that Mr Bunt was to introduce to Rowa, which did not eventuate. The letter went on to say that both Mr Bunt and Mr Nati knew that the reason the shares were not transferred to Mr Bunt was because Mr Dai and Mr Nati would have faced a heavy capital gains tax bill, but that there was never any doubt that the shares "are yours". Mr Nati referred to a number of meetings with the accountants to try to solve the problem, at which Mr Bunt was present. He said, therefore, that he did not know why Mr Bunt was referring to having an unsecured loan with Rowa. He said that, if Mr Bunt insisted on taking a transfer of shares, he would arrange that for him immediately. 54 Mr Nati then referred to the monthly amount that Mr Bunt had received, which, he said, was really a dividend in advance to help him meet his interest payments. It is common ground that, from 7 October 2004 to 2 April 2007, Mr Bunt received regular monthly payments from Rowa. For the most part, the payments were $5000 per month, although occasionally there was a payment of $10,000. Over that period, a sum of $186,164.47 was paid by Rowa to Mr Bunt. 55 Mr Nati's letter then went on to say that he would have no objection to Mr Bunt's proper participation in Rowa, as they had originally thought, but that he was concerned that they may no longer be thinking the same way. Mr Nati said that he was worried that, although Mr Bunt had been quite involved, he had not really managed to increase Rowa's business. Mr Nati said that Mr Dai and he would like to buy back Mr Bunt's shares, but that, at the moment, they could not afford that. He said that Mr Bunt would normally offer his shares to them if he wanted to sell, but Mr Nati would be quite happy to allow Mr Bunt to sell them to a suitable outsider. Notwithstanding the terms of the letter, there had in fact been no step taken to cause Mr Bunt to become the holder of any shares in the capital of Rowa, either by transfer or allotment. 56 Later in the day on 27 February 2007, Mr Bunt responded to Mr Nati's email, saying that he was under the impression that Mr Nati was going to send some options for moving forward. He said that, at that point, he had no intention in getting into a debate about how they had arrived at where they were and that he was looking for ways to resolve the situation amicably. He said he would appreciate something a little more substantial from Mr Nati and Mr Dai on how the situation would be resolved. He referred to a meeting on the following Wednesday. However, there is no evidence of such a meeting. That is one of the many gaps in the evidence in the proceeding. 57 Solicitors then became involved in the dispute. On 14 June 2007, Mr Ziman of Messrs Ziman and Ziman, the solicitors for Messrs Nati and Dai, wrote to Mr Price of Price & Company, the solicitors for Mr Bunt. The letter of 14 June 2007 began by referring to a letter from Mr Price of 6 June 2007. That letter is not in evidence. Mr Ziman's letter said that he was instructed to record that the allegation of a loan to Rowa was incorrect and that the arrangement was that Mr Bunt was to acquire shares in Rowa for a price of $750,000, something that was evidenced in correspondence. The letter referred particularly to Mr Bunt's letter of 2 August 2004. 58 Mr Ziman's letter then referred to a meeting of 3 April 2007. That appears to be the proposed meeting referred to in Mr Bunt's email of 27 February 2007. As I have said, there is no evidence about that meeting. Mr Ziman said that he was instructed that no agreement had been reached and that the parties had agreed to disagree. He then went on to say that the shares in question were not transferred to Mr Bunt because of tax considerations and that the shares: …are available to be transferred to your client and we are instructed to offer, as we hereby do, the transfer of the shares into your client's name immediately. 59 Mr Ziman's letter said that, as far as the ongoing payments to Mr Bunt were concerned, Mr Ziman's instructions were that those payments had been made as a gesture of goodwill and in lieu of any dividend that Mr Bunt might have been entitled to arising from his shareholding. Mr Ziman said that Mr Bunt was aware that Rowa was not obliged to pay those ongoing amounts, but did so in order to assist Mr Bunt with the liability he incurred in order to purchase the shares. The letter said that Messrs Nati and Dai had made suggestions to Mr Bunt as to the sale by Mr Bunt of the shares to an acceptable third party, as Messrs Nati and Dai were not in a position to repurchase shares from Mr Bunt at that stage. The letter ended by saying that, if it became apparent that Mr Bunt was intent on litigation to obtain repayment to him of a loan that was denied, Messrs Nati and Dai would have no option but to discontinue paying the monthly amounts that had so far been paid. 60 It is quite clear from the terms of that letter that Mr Ziman had received quite detailed instructions from Messrs Nati and Dai. There is no suggestion in the letter that there was any arrangement for an allotment of shares. There is certainly no suggestion that there had been an allotment of shares at that stage. The only indication was that there had been a transfer. Nobody now suggests that there was in fact any such transfer. 61 On 30 October 2007, Mr Price wrote to Mr Ziman. The letter is headed "Without Prejudice", but the parties accept that it is not privileged. Mr Price said that he was instructed to request that Mr Nati and Mr Dai each transfer forthwith to Mr Bunt the shareholding that was agreed to and which Mr Bunt acquired by way of payment of the sum of $750,000 in August 2004. Mr Price asked Mr Ziman to obtain his client's earliest instructions and confirm that shares representing a total of 20 per cent of the equity in Rowa would be transferred from Mr Dai and Mr Nati, noting the acquisition date as being August 2004. He asked that Mr Bunt be appointed as a director of Rowa forthwith. The letter finished by seeking confirmation that Messrs Nati and Dai would attend to the matter, which was originally supposed to have been attended to back in 2004. 62 Mr Ziman's response of 6 November 2007 referred to a recent telephone conversation and confirmed that his clients were willing to transfer the shares to Mr Bunt. Mr Ziman noted that Mr Price would prepare the share-transfer forms together with such other documents that required a signature and let Mr Ziman have them. He said that, as far as the directorship was concerned, his instructions were that there was no agreement that Mr Bunt would become a director. Mr Nati, in the course of cross-examination, acknowledged that that statement was false. Mr Ziman went on to say that his clients were quite willing to consider appointing Mr Bunt as a director in the event that he could contribute something to the business. The letter pointed out that the question of a directorship was, in his clients' view, unimportant, given that the majority of the shareholders could simply vote Mr Bunt off the board of directors at any time. 63 Curiously, the next relevant event was that two signed share-transfer forms were sent without any covering letter to Mr Bunt. He received them on 22 December 2007. The transfer forms are in the same form, except for the name of the transferor. In one case, the transferor is Mr Dai. In the other case, the transferor is Mr Nati. Each of the transfers says that, in consideration of the sum of $375,000, paid by Mr Bunt to the transferor, the transferor transfers 10 shares in Rowa. Mr Nati acknowledged that he signed the transfer and that he did not believe it was untrue at the time when he signed it, the significance being that it acknowledges receipt of the sum of $375,000 by Mr Nati. 64 There were further communications between Messrs Ziman and Price in February 2008. On 7 February 2008, Mr Price wrote to Mr Ziman, referring to those conversations, saying that Mr Ziman had said that he was expecting to obtain instructions within the next 24 hours, but that Mr Price had heard nothing from him. Mr Price said that, in the circumstances, it was clear that Mr Bunt was entitled either "to be issued with proper share certificates and material" evidencing Mr Bunt's shareholding of 20 per cent in Rowa as at August 2004 for the sum of $750,000, or repayment of the loan forthwith. Mr Price asked Mr Ziman to indicate, by close of business that day, what his instructions were. 65 There was apparently no response on the day. However, on 11 February 2008, Mr Ziman wrote to Mr Price, saying that he had managed to discuss the matter with Mr Nati, who had informed Mr Ziman that both he and their bookkeeper had been trying to contact Mr Bunt with a view to establishing the date upon which the transfer of the shares would be effective. The letter noted that there had been a discussion during the recent telephone conversation of the manner in which Mr Bunt's 20 per cent shareholding should be transferred to him. The letter referred to the fact that Mr Bunt had apparently received documents from Messrs Nati and Dai for the purpose of that transfer, but that Mr Ziman had not seen those documents. 66 Mr Ziman said that his understanding of the matter was that his clients had intended altering the share structure and not issuing additional shares. He said that, if shares had previously been issued at $1 each, his understanding was that the structure was to be altered to reflect those shares as having a value of one cent each, thereby creating a situation where a percentage of existing shares might be transferred to Mr Bunt. He said that he understood that those matters were well in hand and that his clients failed to understand Mr Bunt's concern. He said that, in particular, his clients had said in the past, and said again, that there is no loan and that his clients, therefore, failed to understand any reference to repayments of Mr Bunt's loan. Again, it is perhaps significant that, in that letter, as late as February 2008, there was no suggestion of an allotment of shares, but that, whatever was going to happen, it would involve a transfer of shares, albeit after a capital reorganisation. 67 Mr Price responded on the same day, asserting that Mr Bunt had had no contact with Mr Nati since he demanded repayment of his funds in mid-2007 and has no record of any message or attempt to contact him by Mr Nati. Mr Price said that it had always been known and documented that the transfer date was August 2004. In that regard, Mr Price noted that he had indicated that date on more than one occasion to Mr Ziman. Mr Price then said that each of Mr Nati and Mr Dai had purported to transfer 10 shares in Rowa to Mr Bunt, which the letter of 11 February 2008 from Mr Ziman suggested was at a value of one cent per share. Mr Price said that that was erroneous, as it would only convey a total of 10 per cent of the company, not 20 per cent. He said, as previously discussed with Mr Ziman, the 10 shares would have to be two cents each and not one cent. The letter said that, in any event, no such share split had occurred and Mr Price failed to see the basis upon which a retrospective share split could occur. 68 Mr Price then said that the issue was simple: either Mr Bunt "is issued" with the much-promised shares or he is not, and if he is not "issued" the shares forthwith, then he should be repaid $750,000. The letter said that Mr Bunt simply required his 20 per cent equity in Rowa, being a valid 20 per cent of the equity and not a manufactured nonexistent equity, by way of fully executed share-transfer forms and share scrips provided to Mr Price, together with the relevant documents lodged for registration with the Commission. He said that he wanted that no later than 5 pm on Wednesday, 13 February 2008, failing which Mr Bunt would seek to proceed in court for relief without further notice. In a letter of 15 February 2008, Mr Ziman acknowledged that letter of 11 February 2008, and said that he had forwarded it to his clients for instructions. 69 Curiously, two further documents appear to have been brought into existence at about that time, in circumstances about which there has been no evidence. The first was a draft share sale agreement sent to Ms Low on 17 March 2008. The second was a draft shareholders agreement sent to Ms Low on 18 March 2008. 70 The share sale agreement followed fairly closely, but with formatting changes, the draft share sale agreement that Mr Nati had given to Mr Bunt in August 2004. Significantly, the pivotal provision was the same, namely, that Messrs Nati and Dai agreed to sell and Mr Bunt agreed to purchase 20 per cent of their shares in Rowa. The draft said 20 per cent of Mr Nati's shares and 20 per cent of Mr Dai's shares, suggesting that the author had mixed things up. Again, the purchase price for the transfer of shares was $375,000 payable to each of Messrs Nati and Dai. Curiously, the date of completion was still to be 9 August 2004. The terms of the draft shareholders' agreement are not significant other than the recital that Messrs Nati and Dai each held 40 shares and Mr Bunt held 20 shares in Rowa. 71 The next relevant communication, so far as the evidence is concerned, was a letter of 31 March 2008 from Mr Price to Mr Ziman, indicating that, notwithstanding the comments of Mr Ziman in his letter of 15 February 2008, there had been no response to Mr Price's letter of 11 February 2008. Mr Price referred to the fact that two share transfer forms purporting to transfer a total of 20 shares on undated transfer forms had previously been provided directly to Mr Bunt. The letter said that, as previously advised, those share transfer forms were invalid. Mr Price said that Mr Bunt wished to proceed against Messrs Nati and Dai, seeking orders that they be required to do what they continually promised but failed to do. 72 Mr Price wrote again on 8 April 2008, saying that it was inexplicable as to why Messrs Nati and Dai were conducting themselves in such a manner when they agreed that Mr Bunt was entitled to his shares and that the process of providing the shares was straight forward. The letter said that Mr Bunt required "the issue of the shares" forthwith, and said that he hoped that it would not be necessary for proceedings to be brought. 73 Mr Ziman replied by facsimile later on the same day, saying that he had received further instructions, which were to the effect that his clients had now consulted a different person who was assisting with the issue of the shares. The letter said that, previously, the bookkeeper had tried to attend to the matter but the accountant was now attending to it. The letter also said that there had been discussion of Mr Bunt's requirements that the shares be "backdated". Mr Ziman said that that had caused some concern, so that it was not accurate to say that the process of providing the shares was straightforward. The letter said that it was Mr Price who had originally raised the question of the issue of a portion of existing shares and that Mr Ziman's client had been obliged to take advice as to the correct way in which the agreement between the parties was to be given effect. 74 Mr Price replied on 11 April 2008, saying that it was not a matter for the accountants, in any event, as it related to legal documentation effecting a transfer of legal title to shares. Mr Price referred to an email received by Mr Bunt from Mr Dai on 8 April 2008 requesting the return to Mr Dai of the originals of the two share transfer forms originally sent in December 2007. Mr Price said that Mr Bunt was attending to the return of those documents, albeit that the request appeared inexplicable. Mr Price said that he was instructed that, unless Mr Bunt was in receipt of the correct form of transfers duly executed, properly dated and in registrable form by no later than 5 pm on 16 April, then Mr Bunt would be commencing a proceeding in the Supreme Court on 17 April 2008. 75 That is the last evidence of communication between the parties prior to the commencement of the proceeding. However, several documents in relation to Rowa were subsequently lodged with the Commission. Messrs Nati and Dai rely on the documents as constituting evidence of performance of their agreement with Mr Bunt. 76 On 23 April 2008, a form giving notice of change to company details and notification of a share issue was lodged. The document was dated 23 April 2008 and purported to notify of the issue, on 29 September 2003, of 98 new shares in the capital of Rowa. The document stated that 49 of those had been issued to Mr Nati and 49 had been issued to Mr Dai. On 5 May 2008, a further document was lodged with the Commission, being a form notifying a request for correction of the document that I have just described. The document is dated 5 May 2008. The second document said that the date of the change should be 29 March 2004, in lieu of 29 September 2003. 77 On 15 May 2008, two further documents were lodged. One was a form purporting to constitute supplementary pages to the earlier document, confirming that the date of change in the share capital should be 29 March 2004. Curiously, there was annexed to the document a copy of minutes, recording that a meeting of the directors of Rowa, attended by Messrs Nati and Dai, had been held on 29 March 2004, and that it was agreed to issue 98 ordinary shares, 49 to Mr Dai and 49 to Mr Nati. There was, in fact, no such meeting ever held on that day, as Mr Nati confirmed in the course of cross-examination. Clearly, the document was manufactured by someone with a view to holding out to the world that something had happened on 29 March 2004 that had not happened. It is not clear who was responsible for the creation of the fraudulent document. 78 The other document lodged on 15 May 2008 was a form notifying change to company details in respect of Rowa. It is signed by Mr Dai and it bears the date 9 May 2008. It purports to notify an issue of 25 ordinary shares in the capital of Rowa for $30,000 each on 11 August 2004 to Mr Bunt. It purports to report a change showing Mr Bunt as the holder of 25 shares having paid a consideration of $750,000 and that the issued capital as at 11 August 2004 was 125 shares. 79 While there is no minute attached to that form, a further document purporting to be minutes of a meeting of the directors of Rowa held on 11 August 2004 was in evidence. That document purports to record a resolution to accept Mr Bunt's application to invest in Rowa, in the amount of $750,000, and an agreement to issue 25 shares to Mr Bunt at a premium of $749,975, noting that that percentage of shareholding by Mr Bunt would equal 20 percent of the net worth of Rowa, thus giving Mr Bunt 20 per cent of the voting power. Mr Nati, who signed the document with Mr Dai, acknowledged that no such meeting was held and it is clear that that document was not brought into existence until some time during 2008. 80 It does no credit to those who were responsible for the preparation of the documents I have described that they prepared them, in whatever circumstances they were prepared. There has, however, been no evidence about that. I can only conclude that they were brought into existence for the purpose of putting forward to the world a pretence that something had happened in 2004 that did not happen. 81 There is also in evidence a current and historical company extract in respect of Rowa provided by the Commission. That extract records that Rowa was deregistered on 11 December 2011 and that strike-off action had been in progress from 3 October 2011 to 10 December 2011. I would draw the inference from the extract that there had been a failure by Rowa to comply with the requirements of the Corporations Act to lodge documents with the Commission and that, after notice had been given in accordance with s 601AB(3) of the Corporations Act, there had been a failure to rectify any default. 82 Messrs Nati and Dai point to the contents of the extract, as well as the other documents lodged with the Commission to which I have referred, as showing that, prior to deregistration, members of Rowa included Mr Nati in respect of 50 shares, Mr Dai in respect of 50 shares, and Mr Bunt in respect of 25 shares. The extract records that the former share capital of the company was $125, and that the amount paid up was $750,100. 83 The documents are the only possible evidence of the existence of any allotment of shares that might possibly have involved a satisfaction of any obligation on the part of Messrs Nati and Dai to Mr Bunt under the agreement that they say was made in August 2004. It certainly does not satisfy the terms of the agreement that Mr Bunt alleges. 84 Section 1274B(2) of the Corporations Act provides that, in a proceeding in a court, a writing that purports to have been prepared by the Commission is admissible as prima facie evidence of the matters stated in so much of the writing as sets out what purports to be information obtained by the Commission, by using a data processor, from the national database. In other words, the writing is proof of such a matter, in the absence of evidence to the contrary. 85 It appears to be common ground that the material coming from the Commission, to which I have referred, sets out what purports to be information obtained by the Commission, by using a data processor, from the national database. Accordingly, the statements concerning shareholdings and issuing of shares in Rowa are prima facie evidence of the facts of those matters and prove those matters, in the absence of evidence to the contrary. In my view, there is ample evidence to the contrary to prove that there was no issue or allotment of shares to Mr Bunt during 2008, and certainly not during 2004. 86 The documents purport to record events that occurred in 2004. The evidence is quite clear that nothing happened in 2004 by way of allotment of shares. Mr Nati confirmed that there never was a meeting of directors during 2004. Mr Nati accepted in cross-examination that, at least until 2007, there were only two issued shares of Rowa, one owned by him, and one owned by Mr Dai. He agreed that minutes of meetings purportedly held in 2004 did not exist in 2004, and that no meetings were held in 2004. He said that directors' meetings of Rowa were not held every year. He could not recall whether there had been meetings held in 2004 and 2005. He thought there might have been meetings in 2006, and he thought there might have been meetings in 2007 and 2008. 87 Mr Nati acknowledged that he was aware that orders had been made by the Court for discovery of documents that included minutes of meetings of Rowa. He accepted that he looked for such minutes and produced everything that was in the files of Rowa. No such minutes were discovered. A call was made for any minutes of meetings of directors of Rowa either in 2004 or 2008. Nothing was produced. 88 I consider there is ample evidence to conclude that, notwithstanding the documents that were lodged with the Commission, no formal or even informal steps were taken to effect any change in the share structure of Rowa. People who operate through companies must understand that, if they wish to do so, they must comply with the law. I am satisfied that no juridical act occurred that involved any change in the share capital of Rowa before it was deregistered. It follows that, at the time of its deregistration, if there were a register of members, and I would draw the inference that there never has been a register of members, it would have shown that the only shareholders were Mr Nati and Mr Dai, and that each held one share. 89 It follows, in my view, that while Mr Bunt paid $750,000 as consideration for the acquisition of 20 per cent of the share capital of Rowa, whether by way of transfer or by allotment, that consideration has failed totally. It was not suggested on behalf of Mr Nati or Mr Dai that Mr Bunt had received any benefit under any agreement with them. The payments made by Mr Bunt in August 2004 were clearly made to Messrs Nati and Dai, by being paid to Rowa at their direction. Whether or not Mr Bunt accepted that the obligations under the agreement he made with Messrs Nati and Dai could be satisfied by the allotment of shares by Rowa, no transfer or allotment of any kind was ever effected. While the payments totalling $186,164.47 made by Rowa to Mr Bunt may be relevant in relation to the question of interest on any judgment to be entered in favour of Mr Bunt, it was not suggested that those payments in some way represented part of the consideration passing from Mr Nati and Mr Dai under their agreement with Mr Bunt. 90 On that basis, Mr Bunt is entitled to recover the sum of $750,000 paid by him to Rowa at the direction of Messrs Nati and Dai as consideration for the transfer of shares in Rowa. It is clear that, at the time when the payments were made, there had been no suggestion made of any allotment of shares. The payments must be treated as payments to Messrs Nati and Dai, which they directed to be paid to Rowa. How it was treated in the books of Rowa is unknown. The proper treatment would have been for the sum of $750,000 to be treated as an advance by Messrs Dai and Nati to Rowa. Be that as it may, it follows that there should be judgment for Mr Bunt against each of Mr Nati and Mr Dai in the sum of $375,000. 91 Following the delivery of my reasons for concluding that Mr Bunt is entitled to judgment in the sum of $375,000 against each of Messrs Nati and Dai, Mr Bunt asked for interest on those sums under s 51A of the Federal Court of Australia Act 1976 (Cth). Section 51A(1) relevantly provides that, in any proceeding for the recovery of any money, the Court must, on application, unless good cause is shown to the contrary: either order that there be included, in the sum for which judgment is given, interest at such rate as the Court thinks fit on the whole or any part of the money for the whole or any part of the period between the date when the cause of action arose and the date as of which judgment is entered; or, without proceeding to calculate interest in accordance with that provision, order that there be included in the sum for which judgment is given a lump sum in lieu of any such interest. Messrs Nati and Dai do not oppose an order for prejudgment interest, but contend that any such award ought to take account of the payments that have already been made to Mr Bunt in the sum of $186,164.47. 92 Section 51A givens no guidance as to what amounts to good cause. However, it is clear enough that interest under s 51A is awarded to compensate a successful party for the cost of borrowing money to enter into a transaction or for the opportunity costs of not being able to use money employed in a transaction in order to produce a return in other ways (Kestrel Holdings Pty Limited v APF Properties Pty Limited (2009) 260 ALR 418 at 456 [174]). If an applicant has been guilty of delay of the kind that makes it unjust for the applicant to have interest on judgment during the period of delay, that might be a factor, although delay simpliciter would not be sufficient because, in the meantime, the respondent has continued to have the use of the applicant's money. If the applicant has otherwise been compensated or indemnified in respect of damage, such that the applicant has not been kept out of his or her money, that might be a circumstance where the Court would conclude that good cause has been shown. In addition, if the judgment sum includes damages for loss of use of the money, the applicant should not be compensated twice for being out of the use of his or her money (see Management 3 Group Pty Limited v Lenny's Commercial Kitchens Pty Limited (2012) 289 ALR 275 at [32]-[35]). 93 Mr Bunt paid the sum of $750,000 to Rowa at the direction of Messrs Nati and Dai. His loss is that money, together with any liability to a lender for interest in respect of money that was borrowed. To the extent that that borrowing was repaid from the proceeds of the sale by Mr Bunt of his house, on which the borrowing was secured, his loss extended to the return that he might have derived from the additional $750,000 proceeds that were required to repay the borrowing. 94 Mr Bunt resists any allowance being given for the sum of $186,164.47, on the basis that the payments in question were received from Rowa, and not from Mr Nati or Mr Dai. He says that it would be unfair for them to claim credit for the payments made by Rowa without accepting responsibility for interest that was not paid by Rowa after the regular payments ceased in April 2007. He contends that the monies received by Rowa should be credited against any liability that Rowa has to him and that there is no contractual right on the part of Messrs Nati and Dai to claim a benefit passing under a separate and discrete contract between Mr Bunt and Rowa. He says that there is no reason why they should retain the benefit of having had his funds for a lengthy period without paying interest on it for the full amount. 95 That contention appears to me to be misconceived. The purpose of requiring Messrs Nati and Dai to pay interest under s 51A is to compensate Mr Bunt for being out of pocket in respect of the total sum of $750,000. If the sum of $186,164.47 were to be deducted from the interest that would otherwise be ordered under s 51A, the result would be that Mr Bunt will have been reimbursed for being out of pocket for the whole of the period from the time of the cause of action arising until the time of judgment. I do not consider that it would be unfair for Mr Nati and Mr Dai to be given credit against any liability for interest under s 51A for the sums paid to Mr Bunt by Rowa. 96 At one stage in the course of the evidence, Mr Dai said that Mr Bunt had been remunerated $5,000 per month for the work that he did for Rowa. Mr Bunt rejects that contention. It is clear that the payments were not made by way of remuneration to Mr Bunt for work done, but as interest in accordance with the arrangements made in August 2004. That is not a basis for refusing to allow Messrs Nati and Dai credit for the amount paid by Rowa to Mr Bunt by way of reimbursement to him of the interest paid on the borrowing that he made in order to make the payment of $750,000. 97 Judgment should be entered against each of Mr Nati and Mr Dai in the sum of $375,000 plus interest at the relevant rate under s 51A, less one half of the sum of $186,164.47. I propose to make orders accordingly. I certify that the preceding ninety-seven (97) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.