Deputy Commissioner of Taxation v Bedroff Pty Ltd ACN 079 158 955

Assets Cash at Bank and on Hand 5.1 Nil Nil Trade Debtors 5.2 Nil Nil Plant, Office Furniture and Equipment 5.3 Nil Nil Vehicles 5.4 Nil Nil Real Property 5.5 Unknown Nil Other Assets - GCCC Security Bond 5.6 80,000 61,538 Contingent Assets 5.7 575,000 Nil Total Assets Unknown 61,538

Priority Creditors Priority Unsecured Creditors 5.8 7,000 7,000 Total Priority Creditors 7,000 7,000

Funds Available for Ordinary Unsecured Creditors Unknown Nil

Secured Creditors (Estimate 5.9 Unknown Unknown

Ordinary Unsecured Creditors (estimate) Ordinary Unsecured Creditors 5.10 4,031,314 Unknown Total Unsecured Liabilities 4,031,314 Unknown

Total Estimated Deficiency (subject to costs) Unknown Unknown

My comments on the above position follow: 5.1 Cash at Bank and on Hand Upon my appointment, demands were issued to all major banks requesting the balance of all bank accounts held in the name of the company. My inquiries revealed that there were no bank accounts in the name of the company. 5.10 Ordinary Unsecured Creditors Set out below is a list of the known unsecured creditors of the company together with details of the Proof of Debt forms received to date: Creditor Company Records Proofs $ of Debt $ Ashtons Advisory 20,512.00 Delaneys Lawyers 30,000.00 Deputy Commissioner of Taxation 420,000.00 Equity Transport 822.20 James Tonge TBC 2,654,314.00 James Conomos Lawyers 433.39 Mark Tonge TBC 300,000.00 National Australia Bank 30,000.00 Origin Energy Retail Limited 2,753.80 Ray White 6,307.00 Telstra Insolvency Centre of Excellence 193.70 Westpac Banking Corporation 7,292.81 WMS Chartered Accountants 10,000.00 11,000.00 Total TBC 2,964,314.00

... 10.1 Voidable Transactions and Preferential Payments … My investigations into financial transactions involving the company are continuing. These transactions will be examined in more detail should creditors resolve to place the company into liquidation at the forthcoming meeting of creditors. As Liquidator, if creditors resolve to place the company into liquidation, I will investigate potential preferential payments further and funds permitting, pursue appropriate recovery action if any claims capable of commercial recovery are identified. Investigations have not identified any preference payments. Given the company did not operate a bank account for some time and made no payments to creditors, no potentially preferential payments were identified. 11. PROPOSAL FOR A DEED OF COMPANY ARRANGEMENT The director (Mark Tonge) has submitted a proposal for a DOCA. The key features of the proposed DOCA are as follows: s That Nick Combis and Peter Dinoris, the current Administrators, will be the Deed Administrators; s The Deed Administrators will not be involved in any trading operations; s The DOCA is intended to hand control of the company back to the director upon its conclusion; s The trustee of the Barr Trust, FUFM Pty Ltd, will agree to pay any surplus funds from the sale of Lots 11, 12 and 13 at Coomera to the Deed Administrators; s The director will provide complete assistance in recovering any potential claim against MKM Group Pty Ltd for non-compliance with a contract previously entered into; s The director will provide all necessary assistance in recovering the security bond of $80,000 from the Gold Coast City Council; s The mortgage over a property at 46/2 Dawes Road, Belrose Country Club will be recovered with the assistance of the director in the amount of $75,000; s James Tonge will provide 100,000 Contrabart Dollars for the benefit of creditors of the company; s Damages for insolvent trading and the recovery of voidable transactions and preferential payments will not be available under the DOCA; s James Tonge and all his related entities will subordinate their claim as creditors for dividend purposes, that is, they will not be entitled to participate in any dividend declared and paid; and s There will be appropriate default and termination clauses contained within the DOCA. 12. DIVIDEND ESTIMATE Based on the information presently available to me, it appears that insufficient funds will be realised to enable the declaration and distribution of a dividend to ordinary unsecured creditors should the company be placed into liquidation. However, should creditors accept the proposed DOCA, a dividend will become payable to ordinary unsecured creditors depending on the realisation of the assets. Set out below is a comparison of the potential dividends under the proposed DOCA and liquidation based on my investigations and best estimates: Available Funds Notes DOCA Liquidation $ $ Real Property Lots 11, 12, 13 Coomera 12.1 Unknown Nil Contingent Claim against MKM Group 12.2 Unknown Unknown GCCC Security Bond 12.3 80,000 61,538 46/2 Belrose Country Club 12.4 70,000 Unknown Contrabart Dollars 12.5 30,000 n/a Insolvent Trading 12.6 n/a Nil Voidable Transactions 12.7 n/a Nil Total Funds available Unknown 61,538

Less Administrator's Fees 12.8 22,000 22,000 Deed Administrator's Fees 12.9 22,000 n/a Liquidator's Fees 12.10 n/a 44,000 Legal Fees 5,000 5,000 Outlays (estimate) 1,000 1,000 Total Estimated Fees 50,000 72,000

Available Funds Unknown Nil

Priority Creditors Employee Entitlements 12.11 Nil 7,000 Funds for Unsecured Creditors Nil

Related Party Claims 12.12 Nil 3,256,814 Secured Creditors Shortfall 12.13 700,000 Unknown Unsecured Creditors 12.14 528,315 528,315 Total Unsecured Creditors (est) 1,228,315 3,785,129

Dividend to unsecured creditors Unknown Nil

Timing n/a

The following notes are made in relation to the above: 12.1 Real Property Lots 11, 12 13 Coomera The surplus available from this property (assuming there is a surplus) would ordinarily be payable to FUFM Pty Ltd as Trustee of the Barr Trust. However, the Director of FUFM Pty Ltd, namely Mr Mark Tonge has agreed that any surplus will be contributed to the creditors of Bedroff Pty Ltd in accordance with his DOCA proposal. It is unclear what surplus funds will be available at this point in the administration. 12.2 Contingent Claim against MKM Group Pty Ltd This debt relates to a contract into by MKM Group Pty Ltd which subsequently did not proceed. While the information in regard to amounts is commercially sensitive, the director believes a significant amount is recoverable by the Company in regard to the termination of the contract. I am yet to form a view on the recoverability of same. The director advises that he will provide all necessary assistance to attempt to recover this debt. It is unknown what value this contingent asset would have in a Liquidation scenario. 12.3 Gold Coast City Council ("GCCC") Security Bond As previously advised, an amount of $80,000 is held by way of security deposit by the GCCC over Lots 1-13 of the Marine Precinct at Coomera. Given 10 of the 13 Lots have now been sold, I believe the Company is entitled to these funds. The bond is secured by way of bank guarantee with Westpac Banking Corporation. I have written to the GCCC requesting release of 10/13 of the $80,000 and the Director advises that he will provide any assistance required in regard to this claim. 12.4 46/2 Dawes Road, Belrose Country Club While this asset was not included in the Directors RATA, our investigations reveal that the Company had paid the mortgage of a Retirement Home in the Belrose Country Club for the mother of an employee. I am advised the deal was that while the employee was still working for the Company, the mortgage would not be called up. However, given the employee is no longer with the Company and the appointment of Administrators, it is the view of the Director that the mortgage should be repaid. I am advised this amount was secured by way of a Deed of Trust and I currently await provision of this document to consider what action can be taken. In a DOCA scenario, the Director would provide all assistance required to ensure that mortgage is repaid. 12.5 Contrabart Dollars Mr James Tonge has advised that he will contribute 100,000 Contrabart Dollars should the DOCA be accepted by creditors. I am advised that the dollars can be used to purchase property, building material and other related products. It would be my intention to either purchase an asset and sell it at public auction or attempt to sell the Contrabart Dollars for a cash amount. After discussing this asset with the Director I have estimated a cash recovery of $30,000 after costs. This amount may be more or less depending on the assets available for purchase. Any such recoveries would be dependent on the assets purchased and the saleability of same. 12.6 Insolvent Trading ... In summary, no funds are expected to be realised in liquidation. No damages for insolvent trading will become available under the proposed DOCA. 12.7 Voidable Transactions ... In summary, a small amount of funds is expect to be realised from preference payments should a liquidation occur. Voidable transactions not available under the proposed DOCA. Please note that the recovery of the preference payments will be subject to costs. 12.8 Administrator's Fees I estimate that my professional fees as Administrator of the company will be approximately $22,000.00 (to the date of the second meeting). The issue of professional fees is addressed in further detail at section 15 of this report. 12.9 Deed Administrators Fees If creditors resolve at the second meeting of creditors to accept the company's proposal for a DOCA, I estimate the professional fees of the Deed Administrator will not exceed $22,000.00. Please note that if the costs of the Deed Administrator are less than this amount, only the lesser amount will be drawn in respect to the Deed Administrators' fees. 12.10 Liquidator's Fees If the company is placed into liquidation, I estimate that the professional fees of the Liquidator will be approximately $33,000.00. The figure is a reflection of the likely necessary investigations and examinations which may need to be undertaken. 12.11 Employee Entitlements Irrespective of the alternative chosen by creditors, the priorities set out in the Corporations Act 2001 remain and the quantum of entitlements will be equal under either alternative. I note that the company did not have any employees and therefore no employee entitlements are outstanding. 12.12 Related Party Claims Pursuant to the DOCA, the related entities will give up their right to participate in any dividend which maybe declared to ordinary unsecured creditors. I am in receipt of one related party claim from Mr James Tonge in the amount of $2,654,314. I have not adjudicated on this claim at this point in the Administration but intend to do so prior to the second creditors meeting on 2 December 2009. I have also received a claim from Mr Mark Tonge in the amount of $300,000 for unpaid wages. As above, I have not adjudicated on this claim at this point. 12.13 Secured Creditors Shortfall Secured Creditors who suffer a shortfall in the sale of the assets will be entitled to claim as unsecured creditors for their estimated shortfall. To date I have identified the following shortfall: Property 155 Baileys Mountain Road, Upper Coomera - shortfall of $700,000. 12.14 Unsecured Creditors (est) I have estimated the value of ordinary unsecured creditors based on the available information from company records and proofs of debt submitted. The amounts listed are based on the RATA figures provided to me and do not include related party debts. Please note that should the Company be placed into Liquidation, the related parties would be entitled to prove for their debts assuming their validity. I note that this would include the balance of the employee entitlements as an unsecured debt in accordance with the provisions of the Corporations Act 2001. Please note that I have not received a Formal Proof of Debt from the Australian Taxation Office. 13 At least as revealed in the draft, the administrators' disposition is to make a recommendation for the purposes of s 439A of the Corporations Act that it would be in the creditor's best interests to accept the proposal for a deed of company arrangement. 14 The draft deed of company arrangement includes, materially, cl 11 which provides: 11. DIRECTORS' PROPOSAL 11.1 Sale Agreement (a) The Director has currently been engaged in negotiations to sell on behalf of the Company in its capacity as trustee for the Barr Trust the properties situated at 2 Hansen Court and 21 Ford Road, Coomera having Real Property Descriptions Lots 11, 12 and 13 on SP176347, County Ward Parish Coomera having Title References 50595837, 50595838 and 50595839 ("the Coomera Properties) with a number of prospective purchasers. (b) It is expected that the sale price of any such Contracts of Sale will provide, if not all necessary funds to pay all creditors, a substantial sum over and above what is due and payable to all six (6) secured creditors. (c) The Administrators are authorised to execute on behalf of the Company any documents required to sell the Coomera Properties or any other property of the Company as well as to complete the transfers and transactions contemplated in the contracts, including any lease or rental assignments, subject to the terms and conditions of the relevant sale and purchase agreement. (d) Pursuant to a Deed of Removal and Appointment of Trustee dated 19 July, 2009 the Company was removed as trustee of the Barr Trust and FUFM Pty Ltd ACN 131 905 274 was appointed the new trustee of the Barr Trust. FUFM Pty Ltd as trustee of the Barr Trust hereby agrees to pay all surplus funds from the sale of the Coomera Properties, after payment of all secured creditors, to the Administrators for the benefit of the creditors of the Company. (e) It should be noted, that the Registered Owner of the Coomera Properties as noted in the Queensland Land Registry is the Company and that notwithstanding there is no notation on the Title to the Properties that the Company holds such Properties in the capacity as trustee, it does. (f) The transfer of the Coomera Properties to FUFM Pty Ltd as trustee for the Barr Trust has not occurred due to the difficulties obtaining the relevant documents contemplated in clause 11.1(c) in relation to the sale of the Coomera Properties. 11.2 Director and related entities (a) The Director and Related Entities will not prove for any priority claims under this Deed associated for entitlements associated with: (i) unpaid salary; (ii) unpaid annual leave; (iii) redundancy; (iv) compensation for loss of office; and (v) unpaid expense claims. (b) The Director and Related Entities will not prove for any dividend as Unsecured Creditors. 11.3 Directors' contribution (a) The Director will: (i) pay to the Administrator the Contribution; (ii) the Contribution will be paid upon the creditors of the Company resolving to accept the terms of this Deed with such contribution to be: (A) 100,000 Contrabart dollars; and (B) the sum of $4,400.00 in Australian currency. 11.4 Directors' cooperation (a) In addition to all requirements as detailed in the Corporations Act 2001 and its regulations, the Director will provide complete assistance and cooperation in relation to all aspects of the company and in particular the following: (i) the Company's potential claim against MKM Group Pty Ltd in relation to a claim for breach of contract relating to a joint venture agreement with the Company with an approximate claim value of $500,000.00; (ii) the recovery of the security bond held by the Gold Coast City Council in the sum of $80,000.00; (iii) the recovery of the debt of approximately $75,000.00 owed to the Company by a former employee, which is secured by a mortgage over a property at 46 Belrose Country Club, New South Wales. 11.5 Release of director (a) This Deed releases and discharges the Director from an Admitted Claim where the Admitted Creditor receives the Admitted Creditors' distribution under clause 9.3 and Admitted Creditors must accept their distribution under clause 9.3 in full and final satisfaction of all of their Claims. (b) Upon termination of this Deed, the Director is forever released and discharged by each Creditor of all debts or claims Creditors may have or claim to have against the Director as at the day when the Administration began and each of them will, if called upon to do so, execute and deliver to the company such forms of release of any such claim as the Administrators require. 15 Of the "available funds" identified at para 12 of the administrators' draft report, it appears that the real property (Lots 11, 12 and 13 at Coomera), the cause of action against the MKM Group, the Gold Coast City Council security bond and the debt in respect of funds advanced for the acquisition a residential unit in the Belrose Country Club each form part of the trust fund of the Barr Trust. The offer by the present trustee, FUFM, to realise these assets and make the net proceeds available pursuant to the deed of company arrangement in substance offers nothing different to that which a liquidator of the company could claim from the trust fund on behalf of that company in the exercise of the right of reimbursement to which I have referred. Though it is evident from the draft report that the administrators are aware that the company acted as trustee of the Barr Trust, it is a significant omission from that draft report that this feature of the law of equity is not highlighted to the company's creditors in the examination of the relative merits of the deed and liquidation. 16 The related party claim which is to be subordinated is at least substantially that of Mr James Malcolm Tonge. In an affidavit read on 24 November 2009, Mr James Tonge describes himself as "unsecured creditor of [Bedroff] with debts owing to me from [Bedroff] in the sum of $2,344,314". That claim is evidenced by a letter from Mr D G Hayes, chartered accountant of WMS Chartered Accountants dated 20 November 2009 exhibited to his affidavit. The letter materially recites: I confirm that Bedroff Pty Ltd in its capacity as trustee for the Barr Trust is currently indebted to Mr James Tonge in the amount of $2,344,314. This amount represents Mr Tonge's unpaid beneficiary entitlements. I note that this liability arose on 1 July 2006 and remains unpaid as of today. The sum referred to in this letter differs in amount from the related party claim from Mr James Tonge in the amount of $2,654,314 referred to in the draft of the administrators' report. Though it is evident from his affidavit that he had read this draft report, Mr James Tonge did not seek to explain the difference in the figures in his affidavit. Nor was it otherwise explained. 17 It would seem that Mr Hayes is either unaware of the change in July in the occupancy of the office of trustee or unaware of its impact. It is unnecessary to decide which. Mr James Tonge's claim for "unpaid beneficiary entitlements" is a claim to be paid from the trust fund of the Barr Trust. It is the responsibility of the trustee for the time being of the Barr Trust to meet that claim insofar as the trust fund is in surplus and subject to any priority claim on that fund. The trustee of the Barr Trust is no longer the company but rather FUFM. Further, even assuming that there remains any surplus after the claims of secured creditors are met, unless and until the company's entitlement to reimbursement, referred to above, is satisfied, it is impossible even to state what the trust fund of the Barr Trust comprises: see also in addition to Buckle's case, CPT Custodian Pty Ltd v Commissioner of State Revenue (Victoria) (2005) 224 CLR 98 at 121, [51]. Again, the absence of any discrimination in the administrators' draft report as between the claims of those such as the Deputy Commissioner who were and remain creditors of the company and those such as Mr James Tonge who, as beneficiaries, have a claim against the trust fund (such as it may be) of the Barr Trust is a significant omission. 18 That employee entitlements are being foregone in the proposed deed of company arrangement is an offer the value of which is moot. As explicitly identified, they amount to no more than $7,000. Further, even this amount and the further statement in para 12.12 of the draft report that the administrators had "received a claim from Mr Mark Tonge in the amount of $300,000 for unpaid wages" is at odds with the statement in para 12.11 of the draft report where the administrators note that, "the company did not have any employees and therefore no employee entitlements are outstanding". Further, under the terms of s 556(1A) of the Corporations Act, the amount of outstanding entitlements to Mr Mark Tonge in respect of the period when he was a director of the company which would enjoy any priority in the event of a winding up is subject to a cap of $2,000. 19 It was for those who would wish to engender the satisfaction that it was in the interests of creditors for the administration to continue so as thereby to occasion an adjournment to resolve or explain such seeming inconsistencies. It has been known since 30 October 2009 that it would be necessary to engender such satisfaction on 24 November 2009. 20 Also of concern in this regard is that it is evident from the draft administrators' report that the company's financial accounts were last prepared to 30 June 2006. Apparently, the administrators were informed that the accounts as at 30 June 2009 "will be prepared". The fact that the case was to come back to court on 24 November 2009 does not seem to have lent any urgency to this task. 21 According to the information in the draft report, the company made a trading profit in the 2006 financial year of $1,036,414. Further, at that time it had net assets of $3,079,098. Seemingly, that profit and those net assets were incurred or held by it in its then capacity as trustee of the Barr Trust. The present extent of information as to the dramatic change since then in the company's fortunes is that the administrators have been advised that "a number of the assets and liabilities have been paid out since [the 2006 accounts] were prepared' and that "the values will have altered due to property prices". Beyond this, the present circumstance of the company is said in the draft report to be the result of the following contributing factors: (a) "a general downturn in property prices"; (b) "litigation involving the company"; and (c) "the global economy downturn". 22 For the purposes of the Deputy Commissioner's application that the company be wound up in insolvency, the company is, by virtue of its non-compliance with the statutory demand, presumed to be insolvent: s 459C of the Corporations Act. The position revealed in the draft administrators report is that the company is truly insolvent and is so by what on even an optimistic view is a large margin. 23 FUFM is not presently a party to the proposed deed of company arrangement. However, even it were, its offer to provide the net proceeds of the realisation of the assets mentioned is nothing more than an offer to provide that which in equity it is obliged in any event to provide by way of reimbursement to the company. 24 Another benefit said to be a feature of the proposed deed of company arrangement is the full cooperation of Mr Mark Tonge with the deed's administrators in the realisation of the assets identified. Mr Mark Tonge is though, in the event of a liquidation, obliged as a director to do whatever the liquidator reasonably requires of him to help in the winding up: see s 530A(3) of the Corporations Act. Failure to provide such assistance to a liquidator is an offence: s 530A(6) of the Corporations Act. It would not be appropriate for the purpose of deciding whether it is in the interests of creditors for the administration to continue to assume in favour of that course that Mr Mark Tonge would, in the event of a liquidation, commit an offence against the Corporations Act by providing to the liquidator something worse than that which he proposes to provide to the deed's administrators by way of assistance. 25 On analysis, what remains is the offer by Mr James Tonge to contribute under the deed "100,000 Contrabart Dollars", should the deed be accepted. These have an estimated cash recovery value of $30,000 after allowing for realisation costs. This sum, however, would mostly be absorbed in administrators' fees in the event that the Deed of Company Arrangement were to be accepted. The same comment may be made in respect of the sum of $4,400 which is all Mr Mark Tonge seems to be disposed personally to contribute under the terms of that deed. 26 The Deputy Commissioner's submissions highlighted the company's right of reimbursement in equity set out above. He pointed to a series of cases which exemplify particular applications of that right as described in Buckle's case, supra. It is unnecessary to detail these case examples. In terms of the enforcement of this right of reimbursement, he contrasted the absence of FUFM as a party to the proposed deed of company arrangement with the position in the event of a liquidation whereby the liquidator could enforce such a right on behalf of the company. Also highlighted on behalf of the Deputy Commissioner was the subjection of any claim which Mr James Tonge might have on the trust fund of the Barr Trust to the priority which the company would enjoy by way of reimbursement in respect of expenses incurred by it in the course of the administration of that trust. He submitted, and I agree, that when the effect of this priority was recognised, the offer made by Mr James Tonge was of no real value to creditors. Indeed, I would go further and question whether it is correct to regard Mr James Tonge as a creditor of the company at all, given the description of the nature of the debt in the accountant's letter he exhibits to his affidavit. 27 The Deputy Commissioner also noted the absence of any affirmative evidence as to the nature and extent of the trust fund of the Barr Trust. It may, of course, be that the assets which were held in terms of that trust comprise only those forming part of what are described in the draft administrators' report as "available funds". Perhaps the company's accounts as at 30 June 2009 might more aptly be described as the accounts of the Barr Trust for that year if it were the case that the company did not trade in its own right. Again though, the persuasive onus lies not on the Deputy Commissioner. Mr Mark Tonge is the director of both FUFM and the company. His affidavit offers no enlightenment as to the full extent of the assets said to form part of the trust fund. 28 The Deputy Commissioner also pointed to the absence of any particular evidence as to the nature and extent of voidable payments which a liquidator might recover for the benefit of creditors. He also drew attention to the releases found in cl 11.5 of the proposed deed of company arrangement and submitted that, having regard to City of Swan v Lehman Brothers Australia Limited (subject to a Deed of Company Arrangement) (2009) 260 ALR 199 (City of Swan v Lehman Brothers Australia Limited), such a term "may be contrary to the rights of creditors and render the term void". 29 As against this, attention was directed to the recommendation, albeit voiced only in a draft report, of the administrators that it is in the interests of the company's creditors to accept the proposal for a deed of company arrangement. Yet the presence, in the draft report, of what I have described as significant omissions in terms of an analysis of the ramifications of the company's having acted as the trustee of the Barr Trust detracts from giving weight to that recommendation. Indeed, without such an analysis, the draft report is apt to mislead as to the benefits of the proposed deed. The want of any appearance by or on behalf of the administrators meant that I did not have the benefit of submissions from them as to such ramifications or those omissions. In fairness to the administrators, it must be said that the report is but a draft. I do not in truth have any evidence as to the recommendation that the administrators are finally disposed to make or their reasons for such a recommendation. 30 There is no presumption, arising from the presence of Pt 5.3A in the Corporations Act, in favour of allowing the administration to continue so as to allow a vote to be taken at the meeting proposed to be held on 2 December 2009. Rather, what is offered by that Part of the Corporations Act is an alternative to liquidation but an alternative which is regulated by the provisions of that Part. Of course the object of Pt 5.3A of the Corporations Act as expressed in s 435A must be borne in mind, but the question for immediate resolution remains that posed by another of the Part's provisions, s 440A(2). 31 In Australian Securities and Investments Commission v Storm Financial Limited (Receivers and Managers Appointed) (Administrators Appointed) (2009) 71 ACSR 81 at [20]-[27], I canvassed authorities touching upon the question of the judicial satisfaction to which s 440A(2) of the Corporations Act refers. I shall not repeat afresh what is there stated. The subsection requires that there be some persuasive case that it is in the interests of creditors for a company to continue under administration. On analysis, for reasons given above, the material now to hand reveals no such case. Rather, it reveals a situation where creditors may come to vote at the meeting on the false premise that there is a substantial benefit being conferred in relation to the deed by Mr James Tonge's offer of subordination and more generally on the basis of an absence of consideration of the ramifications of the company's having acted as the trustee of the Barr Trust. 32 I note that the administrators observe in the draft report that: "it is inappropriate for the administration to end and the control of the company returned to its director. The company has ceased trading and has significantly more liabilities than assets". So far as the objects of Pt 5.3A of the Corporations Act are relevant, that observation eliminates as a factor telling in favour of its being in the interests of creditors for the administration to continue that this course will "maximise the chances of the company, or as much as possible of its business, continuing in existence" (s 435A(a)). 33 These matters are in themselves enough to dissuade me from satisfaction that it is in the interests of creditors for the company to continue under administration. There is another consideration that underscores that view. 34 Having regard to cl 11.5 of the draft deed, it is in Mr Mark Tonge's interests for the deed to be approved at a meeting of creditors. If lawful, that clause will confer upon him the benefit of wide releases if the deed were approved. 35 In City of Swan v Lehman Brothers Australia, supra, it was the opinion of each of the judges comprising the Full Court that Pt 5.3A of the Corporations Act could not be employed by creditors so as to prevent the exercise by some of their number of such legal rights as they had against persons other than the company the subject of the deed of company arrangement: (see at [4], [92] and [151]). Clause 11.5 seeks to achieve this so far as Mr Mark Tonge is concerned. That clause seems to me to be an essential feature of the proposed deed. Though City of Swan v Lehman Brothers Australia Limited is presently the subject of as yet unheard applications for special leave to appeal to the High Court, I am for the moment bound to follow the views expressed in the Full Court. For this additional reason, I am not satisfied that it is in the interests of creditors for the company to continue under administration. 36 It does not axiomatically follow that the winding up application must proceed. However, there was nothing put forward that might enliven a residual discretion to adjourn the hearing of the winding up application. To the contrary, it is in the public interest that an insolvent corporation be wound up. 37 I note that Mr Gregory Michael Maloney, an official liquidator, has consented to be the liquidator of the company in the event that a winding up order is made. There was no submission made to me that I should instead appoint the present administrators. There are doubtless some advantages to be gained from the work which they have already undertaken but I do not assume that they will deprive Mr Maloney of that benefit. There may equally be some advantages in a fresh mind being brought to bear on the subject of recoveries for the benefit of creditors. I see no reason not to appoint Mr Maloney as requested by the Deputy Commissioner. 38 It is no reflection on the submissions, which were helpful, made on behalf of the Deputy Commissioner by an officer (Ms Cameron) who had been authorised under the Taxation Administration Act 1953 (Cth) to appear to state that this right of appearance carries with it no entitlement to professional costs. That is in contrast to the position as to professional costs which would prevail in the event that the Deputy Commissioner chose to be represented by a lawyer in the employ of the Australian Government Solicitor or some other person enjoying a right of practice in this Court pursuant to the Judiciary Act 1903 (Cth). That the Commonwealth is thereby deprived of the benefit, such as it may be, of an order in respect of professional costs is a matter for the value judgement of the Commissioner in his general administration of taxation legislation and perhaps also a policy issue for the Attorney as First Law Officer. The Deputy Commissioner is entitled to an order in respect of filing fees and outlays. 39 For these reasons, I make the following orders: 1. Bedroff Pty Ltd ACN 079 158 955 be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth). 2. Gregory Michael Maloney, an official liquidator, be appointed liquidator of the company. 3. The Plaintiff's costs, be fixed in the sum of $1,137.31 and reimbursed in accordance in with s 466(2) of the Corporations Act 2001 (Cth). I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.

Solicitor for the Plaintiff: The Applicant appeared via an officer authorised on their behalf pursuant to the Taxation Administration Act 1953 (Cth)

Solicitor for the Defendant: Mr A Delaney of Delaneys Lawyers