12 Ignoring the item of $69,100.00 as insignificant for present purposes, it can thus be said that DLALC was deprived of some 76% of the relevant moneys from 15 July 2004 and 100% from 7 July 2005. Interest should therefore be added to the equitable compensation sum on the footing that 76% of that sum attracts interest from 15 July 2004 to 6 July 2005 and 100% attracts interest from 7 July 2005 to the date of payment, with the interest being calculated by reference to the Commonwealth Bank rate referred to in [10] above, as actually offered and available at relevant times.
Vesting of property held by DPL on trust for DLALC
13 I turn now to a separate issue. I observed at paragraph [6] of the reasons of 16 November 2006 that it had been conceded by DPL that DLALC was entitled to have transferred to it the whole of the funds and assets of DPL, it being acknowledged that, in view of the conclusions expressed in the reasons of 3 October 2006, that whole is held by DPL upon trust for DLALC. There was not, at that time, any claim for an order for transfer or a vesting order. Such a claim is now made. Specifically, DLALC seeks an order as follows:
"Order that the land comprised in folio identifier 301/555497 and all other property and assets of the first defendant Darkinjung Pty Limited do hereby vest in Darkinjung Local Aboriginal Land Council."
14 Having regard to the findings stated in the judgment of 3 October 2006, DPL does not quarrel with the basic proposition that DLALC should assume full and direct ownership of the whole of DPL's property. DPL does, however, contend that there should be excluded and left with DPL for the time being a sum estimated to be sufficient to meet such entitlements as DPL may have for costs of the proceedings (and proceedings 5634/05), whether pursuant to rule 42.25 of the Uniform Civil Procedure Rules 2005 or otherwise, with the balance of the excluded sum passing to DLALC after determination of such entitlements and relevant quantification. The response of DLALC is that no such exception or reservation is warranted since any monetary entitlement of DPL as trustee may be set-off against the equitable compensation DPL is to pay.
15 I am of the opinion that there are several reasons why a vesting order should not be made, at least at this point and in the comprehensive form sought. First, I have an unease about an order which refers to a specific parcel of land then deals indiscriminately and without description or elaboration with "all other property and assets of" DPL. Because a vesting order operates in the same conceptual way as a conveyance or transfer, it should in like manner specify with particularity the items of property with which it deals.
16 Second, it is recognised in the case law that a vesting order is an extraordinary remedy not intended to displace ordinary conveyancing and transfer mechanisms. In Chang v Registrar of Titles (1976) 137 CLR 177, it was accepted that a purchaser who had paid the purchase moneys in full and was entitled to specific performance (so that the vendor was a constructive trustee) might obtain a vesting order - but only, as Mason J observed at p.185, where the vendor "refuses or declines to execute a transfer or is disabled from so doing". In this case, it has not been shown that DPL will be recalcitrant in the matter of transfer to give effect to the trust in favour of DLALC that will be recognised by the declarations and orders of the court and flows from the substantive conclusions in this case. Until that is shown, it is premature to consider a vesting order.
17 The third point goes to the matter raised by DPL concerning preservation of the trustee's indemnity. Particularly where a winding up application is pending and seems most likely to produce an administration in insolvency, I am not satisfied that it is sufficient to look at that matter simply in terms of set-off. A trustee's right to be indemnified out of trust assets is given effect to by means of an equitable interest in the whole of the assets of the trust. Until the right to be indemnified is exercised, the trustee has a right to possession superior to the rights of the beneficiaries (Re Suco Gold Pty Ltd (1983) 33 SASR 99 at p.109 per King CJ) and a "preferred beneficial interest in the trust fund" (a description applied by Sheller JA in Chief Commissioner of Stamp Duties v Buckle (1995) 38 NSWLR 574 at p.586 and expressly approved by the High Court in Chief Commissioner of Stamp Duties v Buckle (1998) 192 CLR 226 at p.247). Until satisfaction of the trustee's right of indemnity, it is not possible to say what the trust fund is: CPT Custodian Pty Ltd v Commissioner of State Revenue (2005) 79 ALJR 1724 at [51].
18 If the court were to make a vesting order in the terms sought by DLALC, the "preferred beneficial interest" of DPL in the property concerned would be denied. The "preferred beneficial interest" might be of particular significance in an insolvent administration of DPL, particularly if the right of DLALC in respect of unpaid equitable compensation was no more than a debt provable along with all others. It may be that a vesting order could be framed in a way that excepted or reserved the interest of the trustee (see, for example, Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (1990) 3 ACSR 183 at p.186), but the efficacy of such a course in respect of the Real Property Act land could present problems, having regard to s.86 of that Act.
19 The three considerations I have mentioned indicate that this part of DLALC's claims will most efficiently be dealt with at this stage by an order requiring DPL to transfer all its funds and assets to DLALC, with the exception of a specified sum of money, on the footing that that sum, or so much of it as remains after satisfaction of any lien, will also be transferred once DPL's claims for relevant costs and to entitlement to indemnity and lien have been determined.
20 DLALC says that, if any such regime is adopted, the sum withheld should be paid into court to abide the outcome of the determination. Given that DPL can assert no right to the moneys in question (except in satisfaction of the determination just mentioned), DPL will not be prejudiced by that course. As to the amount that might be withheld, DPL has placed material before the court indicating that a sum of $430,000 may be considered appropriate. DLALC takes issue with certain matters referred to in that connection but they are really of relevance to the future question of determination and quantification of such entitlement as DPL may have. In adopting a figure of $430,000, the court is, of course, not in any way suggesting an entitlement of DPL to that or any other sum.
21 In summary, therefore, there will be an order requiring DPL to transfer the whole of its funds and assets to DLALC, with the exception of money to the extent of $430,000; and there will be an order that that sum of $430,000 be paid into court by DPL on terms that, following determination of DPL's claim to be indemnified out of trust assets for costs and expenses, so much of the moneys in court as are not required to satisfy DPL's entitlement shall be paid to DLALC.
DLALC's renewed winding up application
22 In the reasons of 16 November 2006, I held that DLALC had not established an entitlement to relief under ss.232 and 233 of the Corporations Act 2001 (Cth). An order modifying DPL's constitution was accordingly refused, as was the alternative order sought by DLALC, being an order that DPL be wound up.
23 Pursuant to leave granted, DLALC has amended its originating process to include a claim for a winding up order in respect of DPL on a new and different ground, namely, the ground in s.461(1)(a) of the Corporations Act:
"the company has by special resolution resolved that it be wound up by the Court."
24 In support of this claim, there has been tendered a document signed by Mr Hillig, as administrator of DLALC, and stating that a resolution that DPL be wound up by the court was passed as a special resolution on 4 December 2006. Having regard to the effect of s.222 of the ALR Act as regards Mr Hillig's ability to act for and bind DLALC (see paragraphs [2] to [4] of the judgment of 3 October 2006), the circumstance that DLALC is the sole member of DPL and the effect of s.249B of the Corporations Act (see Gosford Christian School Ltd v Totonjian [2006] NSWSC 725), I am satisfied that the event contemplated by s.461(1)(a) occurred in relation to DPL on 4 December 2006. There has accordingly been shown to exist the circumstance referred to in s.461(1)(a).
25 By causing to be passed a resolution in terms of s.461(1)(a), DLALC, through Mr Hillig, has dealt with what was described at paragraph [223] of the 3 October 2006 judgment as a factor that I continued to regard as highly relevant to the part of DLALC's case seeking relief on the ground of oppression or analogous conduct under ss.232 and 233 of the Corporations Act. In the judgment of 16 November 2006, I held that DLALC had failed to establish an entitlement to relief based on ss.232 and 233 and pointed to DLALC's ability to initiate voluntary winding up. DLALC has now seen fit to assert its own ability to create grounds for the winding up of DPL by the court.
26 Writing in 1960, the editors of the 17th edition of "Palmer's Company Precedents" described resolutions under the then English equivalent of s.461(1)(a) as "extremely rare". Members capable of passing a special resolution may thereby initiate voluntary winding up without any need to invoke the jurisdiction of the court: see s.491. The learned editors said that they knew of only one case in England in the previous 25 years in which the court had been asked to make a winding up order on the basis of a special resolution of members that the company be wound up by the court. That unreported case involved very special circumstances. In a footnote beginning "See also", the editors did, however, refer to three cases from other countries. The footnote was repeated without elaboration almost forty years later at looseleaf p.15061 (August 1997) of "Palmer's Company Law".
27 Only one of the three cases dealt with an equivalent of s.461(1)(a). The first, Hawke's Bay Fruit Canning Co Ltd v Boardman (1920) 15 MCR 2, a decision of a Magistrate's Court in New Zealand, concerned the validity of a resolution for voluntary winding up. The second case, Re Buzolich Patent Damp-Resisting and Anti-Fouling Paint Company Ltd (1884) 10 VLR(E) 276, involved an application for winding up on the just and equitable ground. The third case, Byrom Motors (Pvt) Ltd v Dolphin House (Pvt) Ltd 1958 (3) SA 532, did involve an application for winding up on the ground that there had been passed a special resolution that the company be wound up by the court. There was secondary reliance on the just and equitable ground. The High Court of Southern Rhodesia (Quènet J) held that the first ground was sufficient, noting that the petition had been duly advertised and that the one objector who had emerged put forward an objection "personal to itself". The objector was the company's landlord and it appeared that winding up of the tenant by order of the court would entail consequences for the landlord less advantageous than voluntary winding up, which could have been initiated likewise by special resolution.
28 In the Byrom Motors case, the judge commented on the availability of the alternatives of an application to the court based on the equivalent of s.461(1)(a) and voluntary winding up, both achievable by special resolution. He said (at p.536):
"The statute gives a company the right to move the Court for a winding-up order. It is possible that the applicant believed that a voluntary winding-up might have attendant disadvantages and that, for that reason, it took the course it did. I am not prepared to withhold an order because of the possibility that the respondent might have been in a better position had the applicant following a different method of liquidating itself."
29 Also instructive is the decision of the Ontario Court of Appeal in Re United Fuel Investments Ltd (1961) 31 DLR (2nd) 331 (an appeal to the Supreme Court of Canada, on grounds not presently relevant, was dismissed: Fallis and Deacon v United Fuel Investments Ltd [1963] SCR 397). The relevant Canadian statute contained a provision corresponding in general terms with s.461(1)(a). The holders of some 99% of the company's voting shares, duly assembled at a meeting, voted in favour of a resolution that the company be wound up by the court. A winding up order was refused on the basis that the meeting in question was not a meeting of the particular kind contemplated by the statutory provision (a "special" meeting).
30 On appeal, an additional question canvassed was whether the court had a discretion to refuse a winding up order even though the members had, in the required statutory form, expressed a wish that the company be wound up by the court. The Ontario Court of Appeal (Roach, Gibson and Schroeder JJA) was prepared to think that some discretion exists but was of the view that it is a controlled and narrow discretion. The court said (at p.349):
"I am in accord with the submission of appellant's counsel that if there is a discretion in the Court to refuse an order for winding-up within the terms of s.10(b), since, under the provisions of the Companies Act and the terms of the letters patent and supplementary letters patent the right to decide that the company should be wound up has been conferred upon the holders of the majority of the common shares issued and outstanding, their decision should not be overridden unless it can be shown that their intended action is fraudulent or is tainted with mala fides or something approaching it. … It is a legal discretion founded upon stated conditions which call for judicial action as distinguished from a mere individual or personal view or desire, or from the wider discretion exercisable under the terms of s.10(e). The shareholders are in effect a domestic tribunal upon which has been conferred the power to decide questions as to the administration of the affairs of the company, and the Court will not substitute its opinion for the decision of such a tribunal unless very strong grounds are shown for doing so."
(In the Canadian legislation, s.10(b) was the equivalent of Australia's s.461(1)(a), and s.10(e) was the provision referring to the just and equitable ground.)
31 An Australian case in which the shareholders' decision that the company should be wound up by the court was "overridden" (to adopt the word used by the Ontario court) is Re Fernlake Pty Ltd (1994) 13 ACSR 600. The shareholders who caused to be passed a special resolution under s.461(1)(a) had in fact sold some of their shares to another person before the resolution was passed. They initiated action towards winding up without the knowledge and consent of that person. W C Lee J said (at p.607):
"Having concluded there were no technical irregularities surrounding the passing of the resolution, does it necessarily follow that it should be acted upon by the court in the exercise of its undoubted discretion whether or not to order the winding up under s 461? In my opinion it does not. As I have mentioned, that section being in permissive rather than mandatory terms, confers a residual discretion on the court. The evidence is that both registered shareholders who were entitled to vote and did in fact vote in respect of the resolution had contracted to sell one or more of their shares to the respondent. Both were cognisant of that fact and both appear to have acted in disregard of the respondent's right to determine how the votes in respect of those shares should be cast. The meeting was called without any indication to him. It would be clearly inequitable for this court to give effect to a resolution passed wholly in breach of the trusts by which each shareholder was bound in circumstances where both shareholders were fully aware of all the relevant circumstances surrounding those breaches. I would decline to do so in this case. In effect, each shareholder was knowingly involved in the other's breach of trust."
32 While an application based on s.461(1)(a) is concerned predominantly with the wishes and interests of members, the position of creditors is not irrelevant. Any special or adverse implications of the winding up for creditors is something to which the court must be alive: Leca Investments (Pty) Ltd v Shiers 1978 (4) SA 703; Ex parte Three Sisters (Pty) Ltd 1986 (1) SA 592.
33 There are two recent decisions of this court to which I should refer for the sake of completeness. In CIC Insurance Ltd v Hannan & Co Pty Ltd (2001) 38 ACSR 245, a sole shareholder seeking a winding up order relied on the s.461(1)(a) ground, the just and equitable ground and the insolvency ground. All three grounds were found to be established and an order appointing a provisional liquidator was made, that being the only relief sought at that point. A particular aspect of the factual circumstances was that the company had no directors and no prospects of obtaining any. While the possibility of the sole shareholder's procuring a voluntary winding up was not canvassed, the absence of all internal machinery would have militated against the due taking of the steps to convene the creditors meeting that the state of insolvency would have made a necessary element of the procedure for voluntary winding up.
34 The other recent decision of this court is Official Trustee in Bankruptcy v Buffier (2005) 54 ACSR 767. In that case, a sole member sought winding up on the just and equitable ground. The availability of voluntary winding up by action of that member was not mentioned in the judgment, but there was reference to the sole member's ability to create the s.461(1)(a) ground. Campbell J said (at p.779):
"In the present case, there is in effect a power vacuum at board level, because of Mr Services' invalid appointment, and the official trustee, as sole shareholder, both does not want to rectify that problem, and is in any event, by reason of the lack of anyone willing to take on the task, unable to do so.