In the matter of Shire Lind Developments (NSW) Pty Ltd (in liq) [2024] NSWSC 1454 - NSWSC 2024 case summary — Zoe

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In the matter of Shire Lind Developments (NSW) Pty Ltd (in liq) [2024] NSWSC 1454

[2024] NSWSC 1454

Supreme Court of NSW|2024-10-25|Before: Nixon J, Kerry J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2024-10-25

Before

Nixon J, Kerry J

Catchwords

[2023] NSWCA 88 Australian Securities and Investments Commission v Edwards (2005) 220 ALR 148
[2009] FCA 1415 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449
[2001] NSWSC 621 Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 Tourprint International Pty Ltd (in liq) v Bott (1999) 32 ACSR 201
[1999] NSWSC 581 Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72 Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354

Source

Original judgment source is linked above.

Catchwords

[2023] NSWCA 88 Australian Securities and Investments Commission v Edwards (2005) 220 ALR 148[2009] FCA 1415 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449[2001] NSWSC 621 Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 Tourprint International Pty Ltd (in liq) v Bott (1999) 32 ACSR 201[1999] NSWSC 581 Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72 Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354

Judgment (65 paragraphs)

[1]

y Ltd (in liq) [2016] NSWSC 1724 Southern Cross Interiors Pty Ltd (in liq) v Deputy Commission of Taxation (2001) 52 NSWLR 213; [2001] NSWSC 621 Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 Tourprint International Pty Ltd (in liq) v Bott (1999) 32 ACSR 201; [1999] NSWSC 581 Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72 Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354; [1943] HCA 4 Woodgate as liquidator of Marketing Results Pty Ltd v Network Associates International BV [2007] NSWSC 1260 Woodgate v Davis (2002) 55 NSWLR 222; [2002] NSWSC 616 Texts Cited: M Murray and J Harris, Keay's Insolvency, Personal and Corporate Law and Practice 10th edition (2018, Thomson Reuters) Category: Principal judgment Parties: Jason Lloyd Porter in his capacity as liquidator of Shire Lind Developments (NSW) Pty Ltd (in liquidation) (First Plaintiff) Shire Lind Developments (NSW) Pty Ltd (in liquidation) (Second Plaintiff) Peter Geoffrey Gribble (First Defendant) Quantum Management Pty Ltd (Second Defendant) Quantum Development Management Pty Ltd (Third Defendant) Representation: Counsel: D Woods w J Abednego (Plaintiffs) A Cameron (Defendants)

[3]

JUDGMENT

This proceeding concerns an insolvent trading claim, which is brought by the First Plaintiff, Mr Jason Porter, in his capacity as liquidator (Liquidator) of the Second Plaintiff, Shire Lind Developments (NSW) Pty Ltd (the Company).
The First Defendant, Mr Peter Gribble, is the sole director of the Company. Mr Gribble is also the sole director of the Second Defendant, Quantum Management Pty Ltd, and the Third Defendant, Quantum Development Management Pty Ltd. Each of the Company, Quantum Management, and Quantum Development is a company within the "Quantum Group".
The Company is a special purpose vehicle, which was established in relation to a development of apartments on land situated at 134-146 Linden Street, Sutherland, New South Wales (the Land). This is referred to as the "Linden Development".
All of the shares in the Company were owned by Shire Lind Investments Pty Ltd (in liquidation) (SLI), which was a special purpose vehicle established for the purpose of acquiring and holding the Land. All of the shares in SLI were owned by Quantum Management. Mr Gribble was also sole director of SLI.
SLI engaged the Company to manage the Linden Development, and the Company engaged a builder to construct the development.
The Company did not have any employees. It entered into an agreement with Quantum Development to provide services for the Linden Development. The fees payable by the Company to Quantum Development were approximately equal to the fees payable by SLI to the Company.
By Originating Process filed 16 March 2023, the Plaintiffs make the following claims: 1. insolvent trading claims against Mr Gribble and Quantum Management, seeking compensation pursuant to, respectively, s 588M and s 588W of the Corporations Act 2001 (Cth) (the Act); and 2. an unfair preference claim against Quantum Development, pursuant to s 588FF of the Act.
It was common ground that the Company was insolvent before it went into administration. However, there was a substantial dispute regarding the date on which the Company became insolvent which was critical to the quantum of the Plaintiffs' claims. Before turning to consider that issue, I address below the relevant factual background.

[4]

Witnesses

There were two lay witnesses, namely, the Liquidator and Mr Gribble.
The Defendants did not challenge the Liquidator's credit. His evidence was primarily document-based, although he did express some opinions on the adequacy of the Company's books and records (which are addressed below).
The Plaintiffs challenged Mr Gribble's credit. They did not advance a submission that his evidence was dishonest, but instead contended that, given various discrepancies between his evidence and the contemporaneous documents, I should rely primarily on the documents in determining the relevant course of events.
I deal with some of these discrepancies below. As a general observation, Mr Gribble indicated on a number of occasions that he had a limited recollection of documents which were in evidence. For example, he had difficulties recalling signing documents, or reviewing documents which he had signed, or whether documents had been sent to him (unless this was established by other objective evidence). That is not surprising, given that the events which were the focus of the proceeding occurred more than six years ago, and given that Mr Gribble has been involved in around twenty property developments in the past two decades.
One example of the limits of Mr Gribble's recollection is provided by his evidence in respect of the financial statements of the Company. In cross-examination, he was taken to the accounts for the financial year ending 30 June 2018, which bore his signature and the date 8 October 2018, and was asked when he signed them. Mr Gribble responded: "I don't recall the actual date I signed it but that was the date the report looks like it was generated and possibly that was the date, I signed it on the same day".
However, in an examination in the Federal Court of Australia in August 2021, Mr Gribble said that the accounts in question were "prepared within a day; were not forwarded to ASIC; were not given to the shareholders and they were purposely done to give a copy to the liquidator as per his request under the forms he requested and they were done in haste", adding "I signed them all within half an hour". The Liquidator was appointed in April 2020, such that this evidence was to the effect that the FY2018 report was prepared some time after that date (and well after the date that it bears).
After being confronted in the current proceeding with those prior statements, Mr Gribble indicated that the financial statements "were produced by [the Quantum Group finance team] and I signed them. That's all I recall. And that is my signature on it. Whether I signed it on that date or that's a date they produce the reports, I can't recall".
It therefore appears that, by the time that Mr Gribble gave evidence in this proceeding in October 2024, he had forgotten the course of events leading to the creation of these financial statements some time after April 2020, which he had recalled at his examination in August 2021.
Mr Gribble's affidavit evidence largely consisted of a chronological account of events by reference to the contents of exhibited documents. Where Mr Gribble has given evidence of matters which are not recorded in documents, such as evidence of conversations or evidence of his state of mind at particular points in time, I have assessed such evidence in light of the contemporaneous documents and the inherent probabilities.

[6]

Engagement of Colliers

In May 2017, the Company engaged Colliers International (NSW) Pty Ltd as agent to sell apartments in the Linden Development, pursuant to a written agreement which was signed by Mr Gribble on behalf of the Company (the Agency Agreement). Twelve of the sixty-two apartments in the Linden Development were "Quantum Properties", which were to be sold by the Quantum Group. The remaining fifty apartments were "Non-Quantum Properties", which were to be marketed and sold "off-the-plan" by Colliers.
Clause 4.6 of the Agency Agreement provided that Colliers must satisfy the "Sales Milestones" set out in Schedule 2, namely: 1. by 17 June 2017, Colliers was to sell twenty-three of the Non-Quantum Properties (45%); and 2. by 17 December 2017, Colliers was to sell fifty of the Non-Quantum Properties (100%).
In cross-examination, Mr Gribble agreed that the speed with which contracts could be exchanged for pre-sales was important for the Company's ability to obtain finance for the construction of the Linden Development. That was because construction finance "typically has some pre-sales hurdles". Mr Gribble agreed that the terms of construction finance offered in the market generally were to the effect that the pre-sales number depended on the number of contracts that had been unconditionally exchanged.
In June and July 2017, several finance brokers were engaged to source funding for the Linden Development.
Mr Gribble received weekly reports from Colliers, setting out matters such as the number of units available for sale in the Linden Development, the number of contracts issued, the number of sales advices issued, and the number of contracts exchanged (including the number exchanged unconditionally).
On 16 July 2017, one month after the date by which the first of the Sales Milestones was meant to have been achieved (namely, the sale of 45% of the Non-Quantum Properties), Colliers reported that contracts had not been exchanged on any of the units. In cross-examination, Mr Gribble explained that there had been a delay in Colliers gaining access to a display suite, which had affected Colliers' ability to meet the Sales Milestones.
On 26 October 2017, Mr Gribble received a Project Control Group Report in relation to the Linden Development, which was prepared by Quantum Development as "Project Manager". It stated that a tender for the building contract had been issued on the date of the report (26 October 2017). It also set out a development program which stated that the "current forecast date" for the completion of pre-sales of apartments and for the obtaining of construction finance was 15 December 2017. The report recorded that, as at 26 October 2017, contracts had been exchanged on only seven of the units in the Linden Development.

[7]

Letter of Intent

On 22 November 2017, Lords Property Group Pty Ltd provided a tender proposal for the Linden Development. In a covering email, the director of Lords, Mr Jad Maroun, stated that Lords was able "to offer a negotiated tender price based upon receiving a Letter of Intent by COB today if possible".
On 23 November 2017, Mr Gribble signed a letter of intent on behalf of the Company, which was accepted by Lords on the following day (the Letter of Intent). The Letter of Intent confirmed that the Company and Lords were "continuing to negotiate the terms of a design and construct contract" for the Linden Development, and that there remained "matters which are not agreed". In that context, the letter set out the "basis on which the parties' negotiations will proceed", including that: "2. The Contract and the date of the Contract are subject to and conditional upon the following Conditions Precedent: i. [the Company] obtaining finance approval from the Financier on terms acceptable to [the Company]; ii. the Financier approving the engagement with [Lords]; iii. [Lords] entering into the Tripartite Deed with [the Company] and the Financier; and iv. the issue of a commencement notice confirming the conditions in subparagraphs (i), (ii) and (iii) of this subclause have been satisfied. 3. Stage 1 of the project is capped at $3,040,816.01 ex GST (CAP). This is anticipated to be drawn down as per Lords Property Group Pty Ltd supplied progress schedule titled 'Linden - Stage 1 & 2 Cost Break-up 171123' 4. No agreement will be in place until the lump sum Contract is executed, following the parties' negotiation and agreement on the contract terms and conditions. The parties will use reasonable endeavours to negotiate and agree these;"
By the Letter of Intent, the Company and Lords agreed to continue negotiating the terms of a construction agreement for the Linden Development, while acknowledging that there would be no such agreement in place unless and until a contract was subsequently executed.
The Letter of Intent did not define, or otherwise identity, the "Financier" referred to in paragraph 2 of that letter. At this time, the Company had not received any offer of construction finance for the Linden Development.
As set out above, paragraph 3 of the Letter of Intent referred to "Stage 1" of the Linden Development, by reference to a schedule entitled "Linden - Stage 1 & 2 Cost Break-up 171123". The relevant schedule set out a proposed "Stage 1" of the construction (which included design, piling, capping, beam, shotcrete, anchoring, excavation and reinforcement to all footings) and "Stage 2" (which was from "underside of slab on ground to completion"). The payments falling within Stage 1 totalled $3,040,816.01 and within Stage 2 totalled $15,185,943.99, for a total cost excluding GST of $18,226,760.00.
During late November and December 2017, Lords commenced design work for the Linden Development.
As noted at paragraph [29] above, as at 26 October 2017, it was forecast that the pre-sales of the units in the Linden Development would be completed by 15 December 2017. This forecast was not met. On 17 December 2017, Colliers issued a weekly report stating that contracts had been exchanged for only nine of the units in the Linden Development (with a contract for one further unit having been exchanged conditionally).

[9]

Quantum Loan

On 15 December 2017, the Company (as borrower) and Quantum Group Holdings Pty Ltd (as guarantor) entered into a loan agreement with The Trust Company (Australia) Limited as custodian for Quantum Funds Management Ltd as responsible entity for the Quantum Mortgage Trust (QM Trust) (the Quantum Loan).
By clause 3.1 of the Quantum Loan, QM Trust agreed to lend the "Loan Amount" to the borrower. The Loan Amount was defined as "the amount that is not less than $1.5m and not more than $9.0m but which is otherwise determined by the amount which is no greater than 70% of the Gross Realisable Value of the [Linden Development] on its completion or 80% of the Land Value + the Additional Guarantee Amount".
Clause 6.1 provided that the Loan Amount would be used for the completion of the purchase of the Land as required, and that the balance would be used to complete the construction of the Linden Development.
Clause 5.1 provided that the Company would pay QM Trust interest at a rate of 12% per annum (unless the interest is not paid on the due date, in which case the rate would be 16% per annum).
Clause 4.1 of the Quantum Loan provided that the Company must repay the Loan Amount to QM Trust on the later of (a) two years after the first drawdown of any part of that amount; and (b) six months after notice of practical completion is given under the building contract.
Clause 7.1 provided that the money advanced and the interest payable under the Quantum Loan would be secured by a mortgage over the Land; by a registered security interest against the present and future acquired property of the Company and SLI; and by the guarantee given under the loan deed by Quantum Group Holdings.
Mr Gribble agreed in cross-examination that, although the Loan Amount was expressed to be in a range of $1.5m to $9.0m, the amount which was available to be advanced depended on the number of "SL class units" which were sold by the QM Trust to investors.
A Product Disclosure Statement for the SL class units was issued by QM Trust on 8 December 2017 (Quantum PDS). Part 2 of the Quantum PDS stated that QM Trust would use the funds raised by the issue of SL class units to provide a loan to the Company for the purpose of the Linden Development. It further stated that: "A minimum of $1.5 million up to a maximum of $9 million 'SL' Class of Units will be issued by [QM Trust] to investors". This matched the range of the loan amount specified in the Quantum Loan. However, importantly, the Quantum PDS stated as follows: "Loan amount: The maximum loan amount is $9 million and the minimum amount is $1.5 million. The value of the Loan will depend on the value of funds raised from investors pursuant to the issue of SL Class of Units and is within the absolute discretion of the Trust Manager."
The Quantum PDS stated that the "Purpose" of the loan was as follows: "The Trust Manager will use the funds raised under the SL Class of Units to provide a loan (Loan) to the [Company]. The [Company] will use the Loan to: (i) pay part of the purchase price of the Land; and (ii) to the extent funds provided under the Loan remain after purchasing the Land, they will be used towards the development and other costs required to complete the [Linden Development]."
The Quantum PDS stated that: "A bank or funder is being [sought] to finance the Land as the senior lender (Senior Lender), which will hold a first ranking mortgage with respect to the Land (including improvements). Before [the Company] is able to enter into the Loan agreement for construction finance, it must have satisfied all conditions precedents of the senior construction finance."
The Quantum PDS further stated that: "The Senior Lender will provide a loan of approximately $7.5 million to [the Company] which is to be used to fund the purchase of the Land (Land Loan). The [Company] will grant the Senior Lender a first ranking mortgage over the Land. In order to complete the Project, [the Company] will need to raise additional funds of approximately $13 million, to raise these funds, [the Company] anticipates it will need to enter into additional loan agreement, to refinance the Land Loan, and may need to grant further security interests in relation to the Land (Construction Finance)."
It is plain from the reference to "additional funds of approximately $13m" that the Quantum PDS envisaged that total finance of more than $20m would need to be obtained for the Linden Development. (This is confirmed by statements later in the Quantum PDS, which are set out below, regarding the number of pre-sales required in order to secure the finance required.)
Accordingly, even if the maximum amount of the SL class units were issued ($9m), with the result that the maximum amount of the Quantum Loan was advanced ($9m), those funds would be insufficient to fund these construction costs. In that regard, the Quantum PDS stated that the purpose of the Quantum Loan was "to partially fund the Project".
Part 2 of the Quantum PDS described the Linden Development as having two stages, as follows (emphasis added): "The development of the Project involves two stages: (i) stage one involves: (a) the purchase of the Land; (b) obtaining sufficient pre-sales of apartments made 'off the plan' to obtain the financing required to commence construction; (c) obtaining a Construction Finance, term sheet/s; and (d) entering into a fixed price construction contract; and (ii) stage two involves the drawdown of the Secured Loan and eventually the Construction Finance to finance the development of the Project; the completion of the construction contract; the sale of each of the 62 apartments constructed; the repayment of the Land Loan and Construction Finance including any interest owed in relation thereto; the payment of all other fees and expenses associated with the Project; and the making of distributions of income and capital to the holders of the SL Class of Units in accordance with the trust deed establishing the Trust."
As this passage indicates, it was planned that sufficient pre-sales of apartments would have to be completed in order to obtain construction finance, before a construction contract was entered and the construction of the Linden Development would commence.
The Quantum PDS stated that the "marketing of the 62 apartments for sale has commenced", and provided the following further information regarding the level of pre-sales required in order to achieve construction finance (emphasis added): "The estimated number of pre-sales required to secure the additional funding needed to finance the construction of the Project (i.e. the Construction Finance) is equivalent to a value of at least 100% of senior debt cover. [SLI] and [the Company] expect that it will need to make approximately 29 pre-sales of apartments equal to a gross sales value of approximately $22,700,000 (including GST) in order to obtain the Construction Finance"
The above passage indicates that the required level of senior debt for the Linden Development was some $22.7m. As at the date of the issue of the Quantum PDS, the pre-sales necessary to obtain this level of finance was nowhere near being achieved. The Quantum PDS reported that contracts had been exchanged on only eight units, with a total value of $5.635m.

[11]

Provisions regarding commencement of works

Clause 2.7 of the General Conditions provided as follows: "(a) The parties acknowledge no Works are to commence or be performed except as provided by this clause. (b) Upon execution of the Contract [Lords] is to commence early design development of the Works. (c) Except as provided by subclause (b), [Lords] must not perform any WUC nor incur any liability in respect of the WUC until and unless a commencement notice is issued pursuant to this clause. (d) [The Company] may in its absolute discretion at any time issue [Lords] with a notice ('commencement notice') directing [Lords] to commence performing all of the WUC (including the WUC comprised within subclause (b)). (e) Without limitation, [the Company] may have regard to any factor in considering whether to issue the commencement notice and the timing for issuing such notice, including but in no way limited to: (i) [The Company] obtaining finance for the [Linden Development] on terms acceptable to [the Company] in its sole and absolute discretion; (ii) the status of the WUC comprised within subclause (b); (iii) the status of the Development Application Approval and conditions contained within the Development Application Approval; and (iv) [Lords] having executed the tripartite deed. (f) [Lords] must do all things necessary to assist [the Company] in obtaining finance for the [Linden Development] including to execute any tripartite deed the Financier requires. (g) If [the Company] has not issued the commencement notice by the date three months after the date the Contract is executed, [the Company] may (in its sole and absolute discretion) at ay time after that date: (i) suspend the performance of all or any of the WUC until [the Company issued the commencement notice; and (ii) terminate the Contract by issuing a written notice to [Lords], in which case the terms of clause 40 will apple as if the Contract has been frustrated on the date of the termination. (h) Prior to the date the commencement notice is issued [Lords] must not: (i) perform any Work or WUC or incur any costs, except for the Works provided by subclause (b), until [Lords] receives a commencement notice; and (ii) incur any liability for any Work or WUC other than as required by subclause (b). (i) The parties agree and acknowledge that any entitlement for the WUC comprised within subclause (b) forms part of the contract sum. (j) The rights provided by this clause 2.7 are in addition to, and do not prejudice, any other right provided by this Contract. (k) The parties acknowledge that this clause 2.7 is inserted for the sole benefit of [the Company], which may at any time give written notice to [Lords] waiving any condition within this clause. (l) Except as provided by clause 2.7(g)(ii) [Lords] shall have no Claim in respect of this clause or the commencement notice (including in respect of the date the commencement notice is issued)."
The effect of this provision was, in broad terms, to give the Company the sole and absolute discretion as to whether and when the works would commence on the project (other than the early design development works). The evident purpose was to ensure that the Company was able to be satisfied that it had sufficient finance in place for the works before any substantial costs were incurred.
The "tripartite deed" was defined as meaning "the deed or deeds required to be executed by [the Company], [Lords] and the Financier as a prerequisite to entering into this Contract, or which may be required by the Financier from time to time, including the deed at Annexure Part M" . The "Financier" was defined as meaning Westpac Banking Corporation.
Clause 53 of the General Conditions was headed "Tripartite Deed" and provided, relevantly, as follows: "[Lords] agrees to enter into a Tripartite Deed with [the Company] and the Financier on or before the issue of the commencement notice and as a condition precedent to payment. …"

[13]

Provisions regarding consequences of breach

Clause 39.7 of the General Conditions defined a substantial breach of the Construction Contract as being "a failure by the [Company] to make payment which is payable to [Lords] pursuant to the Contract", and provided that if the Company commits a substantial breach, Lords may give the Company a written Show Cause Notice, requiring the Company to show cause why Lords should not exercise a right referred to in clause 39.9.
Clause 39.9 of the General Conditions provided that: 1. if the Company fails to show reasonable cause by the stated date and time, Lords may, by written notice to the Company, "suspend the whole or any part of" the works; and 2. if the Company fails within 28 days of the date of any such suspension: 1. to remedy the breach; or 2. if the breach is not capable of being remedied, to make other arrangements to the reasonable satisfaction of Lords, then Lords may, by written notice to the Company, terminate the Construction Contract.
Clause 39.9 further provided that: "Damages suffered by [Lords] by reason of the suspension shall be assessed by the Superintendent, who shall certify them as moneys due and payable to [Lords]."
In addition, clause 33.4 of the General Conditions provided that, other than where Lords was required to bear the cost of a suspension (that is, other than where the suspension is due to an act or omission of Lords or its associates, agents or employees): "if the suspension causes [Lords] to incur more cost than otherwise would have been incurred, [Lords] is entitled to make a claim for additional costs actually incurred by [Lords] on that day by reason of the suspension, subject to the limitation that the total amount of compensation payable for each day of suspension under this subclause 33.4 and under subclause 34.9 will not exceed the amount stated in Item 31 [being an amount of $5,100 per day]."
Clause 34.9 of the General Conditions provided as follows: "For every day the subject of an EOT [Extension of Time] for a compensable cause and for which [Lords] gives the Superintendent a claim for delay damages pursuant to subclause 41.1, [Lords] shall (unless otherwise expressly provided in the Contract) be entitled to be paid the cost actually incurred by the [Lords] on that day by reason of the delay, subject to the limitation that the total amount of compensation payable under this subclause 34.9 and under subclause 33.4 for any one day will not exceed the amount stated in Item 31. [Lords] agrees that the compensation provided for in this subclause 34.9 and in subclause 33.4 is the only amount which it may recover from [the Company] for any exclusion, suspension, delay or disruption, including any delay or disruption arising from a breach of the Contract by [the Company]."

[14]

Agreements between the Company and SLI

On 1 February 2018, the Company entered into two agreements with SLI, the first entitled a "Development Manager Agreement" and the second entitled a "Project Manager Agreement". These agreements were executed by Mr Gribble on behalf of each of the Company and SLI.
Clause 5.5 of the Development Manager Agreement relevantly provided as follows: "(a) [SLI] must procure that the: (i) Land is available for demolition, site and building works, reconfiguration and titling as required for the execution of the Project; and (ii) [the Company] pays all Project Costs incurred in carrying out the Works. (b) [The Company] must cause the Works to be carried out: (i) in accordance with the Project DA (ii) in accordance with all Approvals, all statutory or governmental requirements, the law (including any occupational health and safety laws) and good building practices; (iii) in accordance with the Building Code of Australia and otherwise be fit for purpose and using good quality materials; (iv) at all times subject to budgets approved by [SLI]; and (v) otherwise in accordance with this Agreement."
Clause 5.3 of the Project Manager Agreement was in relevantly identical terms.
The main distinction between the two agreements appears to be that the Development Manager Agreement was intended to cover the period up to the commencement of construction, while the Project Manager Agreement was to cover the period from commencement to completion of construction. For example, the Development Manager Agreement contained provisions relating to the obtaining of approvals for the works, and regarding any appeal to Land and Environment Court (which did not have any counterpart in the Project Manager Agreement).
Clause 3.4 of the Development Manager Agreement provided as follows: "From the date of the exchange of the land option or 30/06/2016, which ever earlier until Completion, [SLI] must pay to [the Company] a fee being equal to $13,888.88 plus GST per month in consideration for [the Company] entering into this Agreement and carrying out the Project in accordance with the terms of this Agreement, up to a maximum amount of $250,000 (plus GST). This amount is to be paid on the first day of each month, in advance and forms part of the Project Costs."
The date of the exchange of the land option was around 7 June 2016. By reason of the cap on fees in clause 3.4, there were a total of eighteen monthly amounts payable under that clause, with the result that the last of those monthly amounts was payable in December 2017.
From around that point in time, the amounts due under the Project Manager Agreement were payable. Clause 3.4 of the Project Manager Agreement provided as follows: "From the date of first works starting on the land or the site, until Completion, [SLI] must pay to [the Company] a fee being equal to $15,000 (plus GST) per month in consideration for [the Company] entering into this Agreement and carrying out the Project in accordance with the terms of this Agreement, up to a maximum amount of $180,000 (plus GST). This amount is to be paid on the first day of each month, in advance and forms part of the Project Costs."
Clause 4.2 of the Development Manager Agreement provided as follows: "(a) [SLI] acknowledges and agrees that [the Company] may cause another entity associated with or nominated by [the Company] to be appointed as development / Project Manager pursuant to a Project Manager Agreement to assist [the Company] to carry out the Project, subject to obtaining the prior approval of [SLI]. (b) The terms of that appointment will be set out in a Project Manager Agreement on such terms and conditions agreed by [SLI] (acting reasonably)." Clause 4.2 of the Project Manager Agreement was in relatively identical terms.
The Company did not have any employees. In order to perform its obligations under the Development Manager Agreement and the Project Manager Agreement, it engaged Quantum Development to provide those services to SLI.

[15]

Commencement of construction

On 15 December 2017, a construction certificate was issued for the demolition of the existing structures on the Land. On 8 February 2018, a further construction certificate was issued for bulk excavation and shoring.
As at February 2018, the sales of units in the Linden Development remained well below the targets specified in the Agency Agreement and in the Quantum PDS. A report from Colliers for the week ending 4 February 2018 stated that a total of ten contracts had been exchanged (with a further three contracts exchanged conditionally).
As at February 2018, the Company had not received an indicative term sheet for any construction finance facility.
Despite those matters, on 14 February 2018, the Company issued a "Commencement Notice" to Lords in respect of the Linden Development. This notice was copied to Mr Gribble and stated relevantly as follows: "Pursuant to the general Conditions of Contract clause no. 2.7, This letter will serve to instruct the builder to commence performing all the WUC (including the WUC comprised within sub clause b)."
Mr Gribble gave evidence in his affidavit that, on or about 14 February 2018, he was informed by Mr Najar that: "(a) [Mr Najar] issued a letter of commencement on 14 February 2018; (b) construction would proceed in two stages; (c) the budget for Stage 1 works was expected to be $3,040,000; (d) the budget for Stage 2 works was expected to be $15,180,000; (e) Stage 1 would end on 29 May 2018; (f) pursuant to the letter of commencement, Lords was to complete Stage 1 works only and a further letter or notice would be issued when Stage 2 works could commence; (g) Stage 1 works would be paid by funds raised by QMT; (h) Stage 2 was always subject to final construction finance."
In circumstances where Mr Najar was not called as a witness in this proceeding, this evidence was admitted subject to an agreed ruling under s 136 of the Evidence Act 1995 (NSW) that it be limited to evidence of what was said to Mr Gribble, and not as the truth of the matters stated.
There is no contemporaneous document which records the matters which Mr Najar is said to have told Mr Gribble.
The Commencement Notice, which was issued by Mr Najar and was copied to Mr Gribble, did not refer to Stage 1 or Stage 2. It did not state that Lords was to commence only Stage 1 of the works, or that a separate notice would be issued in respect of Stage 2.
The Construction Contract which was signed by Mr Gribble did not divide the works into Stage 1 and Stage 2, and did not provide for separate commencement notices to be issued for separate stages.
The Commencement Notice did not contain any statement that any part of the works was "subject to final construction finance". Clause 2.7 of the Construction Contract provided that the issue of a commencement notice was in the absolute discretion of the Company, and that the Company could, in deciding whether and when to issue a commencement notice, take into account whether it had obtaining finance for the Project on terms which it regarded as acceptable, and whether Lords had executed a tripartite deed with the Financier. However, this clause was for the sole benefit of the Company, and could be waived by the Company: subclause 2.7(k). As matters eventuated, the Company elected to issue the Commencement Notice before it had obtained construction finance, or had even obtained an indicative term sheet for such finance, and before it had reached the level of sales in the Linden Development which (according to the Quantum PDS) were required in order to obtain construction finance.
Mr Gribble was aware of those matters. In particular, he was aware of the terms of the Commencement Notice (which was copied to him) and of the Construction Contract (which he signed); he was aware of the statements made in the Quantum PDS regarding the level of pre-sales required in order to obtain construction finance; and he was aware, as at 14 February 2018, of the level of pre-sales that had been achieved and the lack of any offer of construction finance.
Significantly, in the correspondence which ensued with Lords over the coming months regarding payments due under the Construction Contract, Mr Gribble did not, on any occasion, state to Lords that any amounts claimed by Lords above the sum of $3.04m were not payable because they comprised a "Stage 2" of works which Lords was not authorised to undertake without the issue of a further notice under the contract.
In those circumstances, I find that it is unlikely that Mr Najar said, or that Mr Gribble believed as at 14 February 2018, that the Commencement Notice was issued only in respect of "Stage 1" of the Linden Development; or that a separate commencement notice was going to be issued in respect of "Stage 2"; or that the issue of the Stage 2 commencement notice and the commencement of the Stage 2 works was subject to finance being obtained.

[16]

Progress Claim No 1

On 28 February 2018, Lords sent the Company its first progress claim in relation to the Linden Development (Progress Claim No 1). In the covering email, Mr Maroun stated that: "As per our agreement and as a sign of good faith based on our working relationship, Lords Group commenced works as per the letter of intent on the 27th of November 2018 and agreed not to submit a Progress claim until works onsite commenced and the first months' work was completed. We have been paying for and cash flowing all design works/ Lords Group overheads and construction works up until this point. Therefore please find attached Progress Claim No.01 which is for design and construction works from the commencement of the project in November up until end of month February."
Lords plainly did not regard the Letter of Intent as a binding agreement to perform works, since it described the works done following the signing of the Letter of Intent and prior to the issue of the Commencement Notice, as having been performed "as a sign of good faith based on our working relationship". As noted above, the Commencement Notice issued on 14 February 2018 had included authorisation for Lords to perform the works specified in clause 2.7(b) of the General Conditions, being the "early design development of the Works" (being work which Lords had already performed). Following the issue of the Commencement Notice, Lords raised Progress Claim No 1 for the cost of those early design works.
Following the issue of Progress Claim No 1, the parties exchanged emails, in which Lords confirmed that it had submitted the documentation required by clause 37.2A of the General Conditions (which had to be supplied before the Company was obliged to make any payment to Lords).
Progress Claim No 1 was for an amount of $1,023,156.07. Mr Najar, as Superintendent, issued a payment schedule in respect of Progress Claim No 1 in the amount of $694,752.49. Pursuant to the terms of the Construction Contract, the Company was obliged to pay the amount set out in the Superintendent's payment schedule by 21 March 2018. Lords issued a tax invoice for this amount.
On 21 March 2018, being the due date for payment, Mr Maroun sent an email to Mr Najar, asking: "Can you please also confirm when we can expect Linden St payment of Tax Invoice No. 1". This was the commencement of a pattern which would continue throughout the dealings between the Company and Lords, whereby Lords was consistently enquiring after, and pressing for, payment by the due date.
Later that day, Kim Jin, who was a Financial Controller at the Quantum Group, responded to Mr Maroun stating: "For our new project on Linden, we will talk to peter for further instruction". Mr Gribble confirmed in cross-examination that he was the only "Peter" at the Quantum Group. It is apparent that, from the first request for payment by Lords, instructions were sought from Mr Gribble. Further, as set out below, he was subsequently copied into much of the correspondence between Lords and the Quantum Group regarding late payments.
It appears that no response to Mr Maroun's request was forthcoming, from Mr Gribble or otherwise. On 23 March 2018, Mr Maroun sent a further email in the same email chain, again seeking confirmation as to when Lords would receive payment for their first invoice.
On 3 April 2018, the Company made a part payment of $400,000 to Lords in respect of Progress Claim No 1. Later that day, Mr Gribble sent an email to Mr Maroun in the same email chain, stating as follows: "Sorry Jad made part payment we're still waiting for $300000 from the ATO we are chasing them daily now and then can pay the balance of your claim". Mr Maroun replied to Mr Gribble shortly afterwards, again pressing for payment of the outstanding balance, stating as follows: "We can probably hold for a few more days but we will need the balance paid by COB Friday please so that we can also pay our contractors, mainly earthworks contractor who is close to finished. I am working with Hazim [Mr Najar] to try and keep claims generally as tight as possible from our end but this is on the basis that they get paid on the due date or close to the due date otherwise it starts to put too much pressure on us from a cash flow point of view if they are right and we are also waiting, which I'm sure you could appreciate."
On 9 April 2018, the Company paid the balance of the amount due in respect of Progress Claim No 1 (being $294,752.49).

[18]

As this cash flow forecast showed, Lords expected that by the end of June 2018, it would have issued over $4.851m in progress claims. There was no reference in this cash flow forecast to Stage 1 and Stage 2, and no indication that any part of the works would not be performed unless a further commencement notice was issued or unless construction finance was obtained. As at March 2018 (when this cash flow forecast was prepared), Lords was plainly intending to perform substantial works on the Linden Development every month for the coming 18 months, in an average amount of around $1m per month.
Mr Najar did not, in response to this email dated 23 March 2018 (or at any other time), state that no works should be performed by Lords beyond "Stage 1" or beyond an amount of $3.04m, unless a further commencement notice was issued or unless construction finance was obtained.
As at the end of March 2018, the amount of funds being raised by the sale of SL class units, which was thereby available to be advanced to the Company pursuant to the Quantum Loan, was not keeping pace with the cost of the works being performed.
Part 1 of the Quantum PDS stated that, upon receipt of application moneys by QM Trust, the moneys would be held in trust for the applicant in a bank account established by the QM Trust in the name of the SL class units. The Quantum PDS further stated that: "No contributions will be released from this account for any purpose, other than to refund cancelled applications, until the minimum subscription has been received".
Part 2 of the Quantum PDS stated that: "Should the minimum of $1.5 million not be raised in SL Class of Units within 4 months of the issue of this Part Two PDS, [QM Trust] will return Investors funds plus interest earn based upon the interest rate from the designated bank account less any bank fees".
As foreshadowed in the Quantum PDS, in December 2017 the QM Trust opened a bank account with Westpac in the name of the SL class units. The first deposit into that account was on 23 January 2018. In January 2018, there were two deposits into the account totalling $229,253.87. In February 2018, there were no deposits into the account. In March 2018, there was one deposit of $50,000.
It follows that, by the end of the March 2018 (being around the time that the Company received the cash flow forecast from Lords set out above), QM Trust had raised a total of $279,253.87 in the three months since the issue of the Quantum PDS, which appears to have been raised from only three investors.
Despite the statements in the Quantum PDS that no amount would be withdrawn from the SL class unit bank account "for any purpose, other than to refund cancelled applications, until the minimum subscription [of $1.5m] has been received", an amount equal or approximately equal to the amount of each deposit into the bank account was, within a day or two of that deposit, withdrawn from that account.
Those moneys were transferred to a bank account in the name of SLI, which in turn transferred them into a bank account in the name of the Company.
According to a schedule which was prepared by QM Trust in support of a proof of debt lodged in the liquidation of the Company in respect of the amount owing by the Company under the Quantum Loan, the cumulative total of the amount transferred to the Company by QM Trust was $279,000 as at the end of March 2018; $1,079,000 as at the end of April 2018; $2,089,000 as at the end of May 2018; and $2,689,000 as at the end of June 2018.
Those amounts were well short of the amounts which were certified as due to Lords in respect of the progress claims for those corresponding months. As set out below, the total amount certified as due to Lords in respect of Progress Claims No 1 to No 5, covering the period from February to June 2018, exceeded $5m.

[19]

"Loan Agreement" between SLI and the Company

The fact that the moneys raised from the sale of SL class units were transferred from QM Trust to SLI, and then from SLI to the Company may explain why a document was prepared which was described as a "Loan Agreement" between SLI as Lender and the Company as Borrower. This agreement, which was dated 13 March 2018, was executed by Mr Gribble on behalf of each of the parties.
Clause 2.1 of this document provided that SLI agreed to lend the "Loan Amount" to the Company. The "Loan Amount" was defined as "the total amount shown on the schedule attached to this agreement, and which is $1,200,000 or thereabouts as at the date of this agreement but in any case, that is not more than $8,000,000". This was similar to, but lower than, the range of the Quantum Loan ($1,500,000 to $9,000,000).
Clause 5.1 provided that the Loan Amount would be used to complete the works.
Clause 8.1(e) gave, in effect, SLI a discretion as to whether or not to advance any amount to the Company. It provided that SLI was not required to make any advance of the Loan Amount "if [SLI] becomes aware of any information, or any event occurs (including, an event of default under this agreement and/or any Security) which in the reasonable opinion of [SLI], would render the advancing of the Loan Amount materially prejudicial to [SLI's] interests".
Each of QM Trust and SLI lodged a proof of debt in the liquidation of the Company, in precisely the same amount ($4,889,037), which in each case was said to be a loan to the Company.
The QM Trust proof of debt attached minutes of a meeting of QM Trust, which were dated 27 March 2020 and signed by Mr Gribble, recording that: "[QM Trust] has lent monies to [the Company], via SLI which has a loan account with [the Company]."
Mr Gribble acknowledged in cross-examination that the separate proofs lodged by QM Trust and SLI related to the same loan, being the amount which QM Trust had advanced to the Company, and that the two proofs were a "double up".
The Plaintiffs submitted that the loan agreement between SLI and the Company was a "sham", and noted that it was not referred to in the evidence of Mr Gribble.
It is unnecessary to determine whether or not this document was a sham. It is sufficient for present purposes to note that, having regard to the evidence set out above regarding the proofs of debt, it appears that no amount was advanced to the Company by SLI which was separate from or additional to the amount which was advanced to the Company by QM Trust. Accordingly, the "Loan Agreement" between SLI and the Company did not represent a facility to which the Company could have access in the event that it was not possible to raise Construction Finance in respect of the Linden Development.

[23]

Progress Claim No 2

On 30 March 2018, Lords issued a second progress claim in the amount of $547,479.77 (including GST) (Progress Claim No 2). Mr Najar, as Superintendent, issued a payment schedule certifying that the amount claimed by Lords was payable.
Pursuant to the terms of the Construction Contract, the Company was obliged to pay the amount set out in the Superintendent's payment schedule by 18 April 2018.
On 11 April 2018, Lords issued a tax invoice for this amount. In his covering email to Mr Najar, Mr Maroun requested that payment "be made on the due date".
On Friday 27 April 2018 at 5.51pm, Mr Maroun sent an email to Mr Gribble stating that Lords was still waiting for payment of this tax invoice of $547,479.77 for the Linden Development, and requested that Mr Gribble confirm that this payment could be made on Monday (being the following business day).
On Monday 30 April 2018, Mr Maroun sent an email to Mr Najar, again requesting payment of the tax invoice in relation to Progress Claim No 2.
On Friday 4 May 2018, Mr Gribble responded to Mr Maroun's messages, stating that he "was hoping to transfer $200k today … then balance Mo-Tue … the funds are in transit … so wont be today but will clear the a/c we hope on M-W next week". Shortly afterwards, Mr Maroun sent an email in response to Mr Gribble, stating: "I really am pushing it at the moment to assist for Linden by not claiming as much as I should be but I cannot afford to have payments delayed too long."
Mr Gribble's reference to "funds in transit" was likely a reference to the moneys which had been raised by the sale of SL class units, and which were subsequently transferred by QM Trust to the Company via SLI. For example, the statements for the SL class units bank account show that an amount of $100,000 was deposited into the account on Friday, 4 May 2018, and the same amount was transferred out of the account on Monday, 7 May 2018.
Two payments of $100,000 each were made to Lords by the Company on 7 and 9 May 2018.
The full amount of those payments ($200,000) was not credited by Lords to Progress Claim No 2 in its reconciliation. The Defendants submitted that this indicated that the amounts paid by the Company to Lords had been understated, with the result that the Plaintiffs' claim in respect of the outstanding value of the debts incurred to Lords during the period of alleged insolvent trading was overstated.
However, there was evidence which appeared to explain the reason why the full amount of these two payments was not credited by Lords to Progress Claim No 2. In relation to the first of these payments, the following narrative is given on the Company's bank statement "Pymt Lords Prop Inv104/Inv105(Bal)". It therefore appears that this payment to Lords was in respect to two distinct invoices, numbered 104 and 105 (with the payment in respect of the latter being a payment for the outstanding balance). Invoice 104 was the invoice issued by Lords in relation to Progress Claim No 2. Invoice 105 was not an invoice which was issued by Lords in respect of the Linder Development. Instead, it appears to have been an invoice in respect of another development which Lords was constructing for the Quantum Group, namely, the Adelong Development. On the morning of 10 May 2018, the day after the second of the payments totalling $200,000 was received, Mr Maroun sent an email to Mr Gribble confirming that "Full payment" had been "received" for an outstanding invoice in respect of the Adelong Development and that, in addition, an amount of $144,715.79 had been received in respect of Progress Claim No 2 for the Linden Development.
Having regard to the evidence set out above, I am satisfied that the Company received full credit from Lords for the payments totalling $200,000 which were made from the Company's bank account on 7 and 9 May 2018, with part of that sum being attributed to payment of the outstanding balance of an invoice issued by Lords in respect of the Adelong Development, and the remainder being attributed to Progress Claim No 2 in respect of the Linden Development. It follows that there has not been, in this respect, any understatement of the amounts received by Lords.
On 10 May 2018, at the same time as acknowledging receipt of the payments in respect of the invoices for the Adelong and Linden Developments, Mr Maroun informed Mr Gribble that a balance of $402,763.98 including GST remained outstanding in respect of Progress Claim No 2 for the Linden Development, and chased up payment of this amount, asking: "Can you please confirm if balance can be paid today?"
The outstanding balance in respect of Progress Claim No 2 was not paid in full until 30 May 2018. This payment was made by a series of payments as follows: $100,000 on 18 May 2018; $150,000 on 23 May 2018; $100,000 on 25 May 2018; and the balance on 30 May 2018.
It is likely that the timing of these payments was determined by the receipt of moneys by QM Trust in respect of SL Class Units, and the transfer of those moneys to the Company via SLI. In particular, in the period from 18 May 2018 to 31 May 2018, the only dates on which moneys were transferred by the QM Trust to SLI matched the only dates on which moneys were paid by the Company to Lords (namely, 18, 23, 25 and 30 May 2018).
Throughout this period, Lords continued to push the Company - and, in particular, Mr Gribble - for payment of the outstanding balance of Progress Claim No 2. For example: 1. on 17 May 2018, Mr Maroun asked Mr Gribble to provide an update on payment for the balance of this claim; 2. on Sunday, 20 May 2018, Mr Gribble responded by saying that he was interstate on Monday (the following day), but that "balance is due I hope on Tuesday [22 May] as waiting on funds transfer from OS [overseas]", and by thanking Mr Maroun for his patience; 3. on Monday, 21 May 2018, Mr Maroun asked Mr Gribble to "confirm the funds being received tomorrow [22 May] will close out" the outstanding balance of Progress Claim No 2; and 4. on Friday, 25 May 2018, Mr Maroun sent an email to Mr Gribble and others, asking when Lords could expect to receive the outstanding balance of $152,763.98 for Progress Claim No 2, "as I need certainty on these payments as soon as possible". Mr Taylor of the Quantum Group responded later that evening, copied to Mr Gribble, that the Company had "transferred $100k tonight and will work through the remaining amounts next week".
The Defendants submitted that there was a further discrepancy regarding the final payment made in respect of Progress Claim No 2, which again meant that the total amount received by Lords had been understated. On 30 May 2018, an amount of $52,763.98 was paid from the Company's bank account to Lords, with the narrative "Lords Prop 104 last install" (that is, final instalment in respect of Invoice 104 for Progress Claim No 2). However, Lords credited, in their reconciliation, an amount of only $46,814.36 to Progress Claim No 2.
As set out above, on 25 May 2018, Mr Maroun stated that an amount of $152,763.98 including GST was outstanding in respect of Progress Claim No 2. Later that day, as foreshadowed by Mr Taylor, a further amount of $100,000 was paid to Lords and credited to Progress Claim No 2. However, on 30 May 2018, Mr Maroun stated that the balance remaining in respect of this claim was now $46,814.36 including GST. Mr Taylor responded by sending Mr Maroun confirmation of a payment of $52,763.98 in respect of Progress Claim No 2. (This matched the amount that was said to be owing several days earlier, less the payment of $100,000 that was subsequently made, but was higher than the amount stated by Mr Maroun as owing earlier that day.) In forwarding this payment notification, Mr Taylor commented as follows: "Small discrepancy with the $52k amount as looks like we may have overpaid a claim for Adelong that has been offset against the Linden St outstanding balance on your end. Our accounts term can work through the detail later".
It therefore appears that the discrepancy between the amount paid from the Company's bank account in respect of the outstanding balance of Progress Claim No 2 ($52,763.98) and the amount credited by Lords to that claim ($46,814.36) was due to an adjustment, worked out by the accounting teams of Lords and the Company, as between amounts credited to, respectively, the Adelong and Linden Developments. In those circumstances, it has not been established that there is any understatement in the amount credited by Lords to the progress claims for the Linden Development.

[24]

Progress Claim No 3 and Correspondence with Lords in May 2018

Meanwhile, on 30 April 2018, Lords had issued its third progress claim in respect of the Linden Development in an amount of $894,343.91 (Progress Claim No 3).
On 14 May 2018, Mr Najar, as Superintendent, issued a payment schedule in respect of Progress Claim No 3. The payment schedule certified that the quantity surveyor, Mitchell Brandtman, had verified the completed works which were valued at $894,343.91 including GST; that the Quantum Group had reviewed the quantity surveyor's report and approved this verification; and therefore that the full amount of Progress Claim No 3 was approved and should be processed to be paid to Lords by the due date of 21 May 2018.
Lords issued Invoice No 108 in respect of Progress Claim No 3 in the amount of $894,343.91 including GST.
Mr Maroun commenced chasing Mr Gribble for confirmation regarding payment of Progress Claim No 3 before it was due. On 17 May 2018, he sent an email to Mr Gribble asking him to "confirm when we can anticipate" receiving payment of the amount of $894,393.91 for this claim.
On 21 May 2018, which was the date when payment of Progress Claim No 3 was due, Mr Maroun sent an email to Mr Gribble asking him to confirm that funds would be received on the following date to "close out" the amount of this claim.
On 25 May 2018, Mr Maroun sent an email to Mr Gribble and others, stating that Lords required "certainty" on the payment of Progress Claim No 3 "as soon as possible", adding: "I have significantly large expenses going out the door to keep the projects running efficiently and the delays are putting stress on our operations."
This email was sent in a context where, on 11 May 2018, a construction certificate was issued in respect of the Linden Development for "Construction of structure", and the cash flow forecast which had been prepared by Lords and provided to the Company in April 2018 anticipated substantial costs in the near future of $1m in June, $1.45m in July and $1.4m in August (see paragraph [106] above).
On 30 May 2018, Mr Maroun sent a further email to Mr Gribble regarding Progress Claim No 3. Mr Maroun noted that Mr Taylor had been unable to provide him with "a date for Linden invoice of $894,343.91", and asked Mr Gribble to "advise when we can expect to receive this payment", requesting a response "as soon as possible".
On the following day, 31 May 2018, Mr Maroun sent another email to Mr Gribble regarding this claim (emphasis added): "Can you please confirm when we can expect to receive payment of the attached Tax Invoice for the amount of $894,343.91 which is overdue. We have submitted a progress claim today for the May period which is also attached for your reference as well. With ground floor slab being poured on Tuesday, we will be progressing into the construction of the 2 x buildings with slab pours anticipated every 8 days. With almost 3 x slabs being poured per month the monthly progress claims will be large. Can you please call me to discuss urgently if there are any issues with the progression of payments. I trust you understand my concern."

[26]

Progress Claim No 4 and Correspondence with Lords in June 2018

As at 30 May 2018, Lords had not yet received any payment in respect of Progress Claim No 3 (for April). The outstanding balance of Progress Claim No 2 (for March) had been paid on that day.
On 30 May 2018, Lords issued a fourth progress claim in the amount of $2,450,838.39 including GST (Progress Claim No 4).
On 8 June 2018, Mr Najar, as Superintendent, issued a payment schedule in respect of Progress Claim No 4. This payment schedule certified that the quantity surveyor, Mitchell Brandtman, had verified the completed works in May 2018 and valued them at $2,038,510.46 including GST; that the Quantum Group had reviewed the quantity surveyor's report and had approved this verification; and therefore that the amount of $2,038,510.46 should be processed to be paid to Lords by the due date of 15 June 2018.
On 11 June 2018, Lords issued invoice No 110 to the Company in respect of Progress Claim No 4, with a specified due date of 15 June 2018. (There was an unexplained, but trivial, difference between the amount specified in the payment schedule issued by the Superintendent, $2,038,510.46, and the amount of this invoice, $2,038,511.20.)
On 12 June 2018, Mr Taylor sent an email to Mr Maroun, informing him that the Company had transferred $50,000 to Lords, and would "be in a position to send some more tomorrow once the funds have come through from the trust account". A payment summary which was attached to the email indicated that this payment was described as for Invoice No 108, this being the invoice in the amount of $894,343.91 which had been issued in respect of Progress Claim No 3 (for April). Payment for Progress Claim No 3 had been due on 21 May 2018. This payment of $50,000, more than three weeks after the due date, was the first payment made in respect of that invoice. It was made on the same day as an amount of $100,000 was transferred by QM Trust to SLI from the SL class unit bank account.
It is apparent from the text of Mr Taylor's email that he had not met Mr Maroun face-to-face prior to 12 June 2018, stating as follows: "Great to meet you today and put a face to the name and voice on the phone". As outlined above, Mr Maroun had been dealing predominantly with Mr Gribble in respect of the outstanding invoices.
On 13 June 2018, Mr Maroun sent an email to Mr Gribble, setting out the "plan for payments" which they had "discussed". This plan was as follows: "APRIL TAX INVOICE 108 - CURRENT OVERDUE - $744,343.91 Inc GST ● By COB Wednesday 13/06 - $50,000 + $50,000 ● By COB Friday 15/06 - $294,000 ● 7-10 days from 12/06 - $350,000 ○ Best case scenario by 20th ○ Worst case scenario by 23rd MAY TAX INVOICE 110 - $2,038,511.20 Inc GST: ● By 29th June or earlier if possible - $1,000,000 (Crucial Payment and cannot be delayed - Noting extent of works in month of May to ensure payments can be made to suppliers/contractors) ● By 30th July or earlier if possible - Balance"
After setting out this payment plan, Mr Maroun stated as follows (emphasis added): "As discussed, we are proceeding with works onsite in good faith and placing a lot of trust with Quantum on the above commitments being achieved, as we are essentially expending further to progress. If the above is unable to be achieved it will put us in a position where we will unfortunately have to cease works onsite and in this case we will have to be discuss the delay costs we will incur."
The Company could not meet the payment plan stipulated by Lords. This plan required the payment of an amount of $100,000 on 13 June 2018, and a payment of a further amount of $294,000 on 15 June 2018. The Company did not pay those amounts, or any amount, to Lords in the period 13 to 15 June 2018.
On 15 June 2018, Mr Gribble sent an email to Mr Maroun in which he "confirm[ed] fund flows as follows", namely, that payments would be made on 18 June 2018 ($50,000); on 20 June 2018 ($200,000); and on 22 June 2018 ($400,000). The total amount proposed to be paid on those dates ($650,000) was less than the outstanding amount due in respect of Progress Claim No 3 for April ($744,343.91).
This was, in effect, a different payment plan, which was at odds with the payment plan which Lords had required. In any case, it was not met.
On 19 June 2018, Mr Maroun sent an email to Mr Gribble and Mr Taylor, asking for an update on the payments which had been set out in Mr Gribble's email, and noting that the payment of $50,000 which had been promised for 18 June 2018 had not been received. Later that day, Mr Taylor sent an email to Mr Maroun (copied to Mr Gribble) stating that the amount of $50,000 was being transferred "today", and that he would provide an update on the other amounts referred to by Mr Gribble "but at this stage they are still scheduled to arrive per the dates below"; and Mr Najar sent an email to Mr Maroun (also copied to Mr Gribble) stating that the Company was now trying to push "harder to get the pending payments as promised by Peter at least 1M before the end of this month".
At the end of his email, Mr Najar added: "Hopefully by mid of next month we will have the finance approval in place". This confirms that, as at 19 June 2018, the Company did not have any finance in place, and it remained a "hope" that finance would be in place by the middle of July.

[27]

Suspension of works by Lords

As at 25 June 2018, the Company had not made any of the payments specified in Mr Maroun's payment plan of 13 June 2018 (which had required a total amount of $744,343.91, being the outstanding balance in respect of Progress Claim No 3, to be paid in full by 23 June 2018, on a "Worst case scenario"). Nor had the Company made the payments specified in Mr Gribble's email of 15 June 2018 (which had promised a total of $650,000 to be paid by 22 June 2018).
On 25 June 2018, Lords issued a "Show Cause Notice" to the Company pursuant to the terms of the Construction Contract. This Notice stated that the "contract has been breached as a result of failure of certified payments to be made in accordance with the contract". The certified payments which had not been made were those in respect of Progress Claim No 3, which had been certified in an amount of $894,343.91, and Progress Claim No 4, which had been certified in an amount of $2,038,511.20. The Show Cause Notice stated that an amount of $744,343.91 remained outstanding in respect of Progress Claim No 3, and the full amount remained outstanding in respect of Progress Claim No 4, being a total outstanding amount of $2,782,855.11.
On the same day, Mr Maroun sent an email to Mr Gribble, notifying him that all onsite works would cease as at close of business on 26 June 2018. This email stated as follows: "I have been trying numerous times to get an update on the below payments, but have been unsuccessful. I confirm since our meeting on the 12th we received $50,000 on the 19th. Unfortunately the payments are not coming in as we discussed and as a result we are progressing too far backwards from a cash flow point of view and placing the company at too large risk. As we have been pouring a slab every 7-8 days and the plan was to continue in this manner, our costs will continue to accumulate significantly and with the payments not coming in as planned and no commitment on funding in place (as far as we are aware), I am sure you can appreciate we are already in a compromised position where we may not be able to meet commitments to our suppliers and contractors. For this reason we regretfully will be proceeding as follows: ● We poured Level 2 slab to first building this week and already installed A frames to Level 3 slab. We will not be proceeding any further on this building as of COB today ● We have already installed steel to Level 2 slab on the next building and cannot risk the steel rusting, so we will pour the concrete to this slab which is another costly exercise as we want to safe guard the integrity of the steel in this slab. We will then not be proceeding any further on this building. ● All works will cease onsite as of COB Tuesday 26th June 2018"
Mr Maroun set out in his email to Mr Gribble the terms on which Lords would be prepared to recommence works onsite, namely: "● $774,795.11 is paid and cleared into our account to close out Invoice No.3 of Linden and No.12 of Adelong ● We need to receive and/or sight correspondence that formal agreements and committed terms are in place that will cover the full balance of contract value and that our June invoice yet to be submitted will be paid for by the funder in the month of July. Please note a main concern is the funding agreement and when this will be effective to pay invoices as we are about to submit our June invoice which will be due mid-month and we cannot have this push into August. We cannot continue to work and expend costs which will be due in July and not have any commitment that funding is in place whilst we still have $2.8m outstanding currently. ● Clarification on satisfactory time frame for payment of the outstanding $2,038,511.20 for the Linden St May Invoice and whether it will be paid by Quantum and/or by Funder as our initial agreement was that $1,000,000 of this amount would be paid by end of this month."
Finally, Mr Maroun warned that there would be delay costs incurred as a result of ceasing work: "If we have to cease works onsite, please note we will have to be compensated for loss of programme during the down time and for resources which are project committed which we will be continuing to pay for through the down time ie. Project team/crane hire/amenities hire/insurances etc."
In a follow up email sent to Mr Gribble and Mr Najar shortly afterwards, Mr Maroun repeated that the issue of funding was "critical" (emphasis added): "What is critical at the moment is understanding whether funding is in place and when it will be effective. Any stopping of works, is only to ensure that Lords Group can make all outstanding payments due to contractors/suppliers for the works we are completing now and in July period from the $2.8m worth of work complete and which we haven't been paid for. Without commitment on this, we are only increasing this amount to be due and increasing exposure. We do not want to stop work, it is the last thing we want, but at the same time I am in the dark at the moment with the funding and when it will be in place."
On 28 June 2018, Mr Gribble and Mr Maroun had a telephone conversation, with Mr Gribble "providing an update on where he is at with finance/payments". There appears also to have been agreement about the conditions on which Lords would resume work on the Linden Development. On that day, Mr Maroun sent an email to Mr Najar, informing him of his meeting with Mr Gribble, and stating that "we would be happy to mobilise again back onto site as per the following which we agreed": "● April Invoice of $744,343.91 is paid and cleared into account ● We receive signed funding agreement terms confirming full contract coverage and that funding will be effective in July for all claims outstanding and future claims ● Satisfactory agreement on continuing down payments of $300,000 per week until the funding is in place at which point we will require balance paid"
None of these conditions was met. The Company did not enter into any funding agreement; it paid two amounts to Lords of $200,000 on 29 June 2018 and 2 July 2018, but then no further payments until the end of August 2018; and the outstanding balance of the "April invoice" (Progress Claim No 3) was not paid in full until late November 2018.

[29]

Banner Indicative Term Sheet

On 3 July 2018, Mr Najar wrote to Mr Maroun, referring to the Show Cause Notice, and informing him that "the draft of agreement with the financier is being finalised and will be forward[ed] with in two business days". Mr Najar also stated that the balance of the Progress Claim No 3 (for April) would be paid within seven business days, and that "$300,000 will be paid every week to finish off the balance" of Progress Claim No 4 (for May). Neither of those promises was subsequently met.
Lords was not satisfied with a draft finance agreement. On 9 July 2018, Lords indicated to the Company that, as well as the payments which were promised by Mr Najar (and which were not made), it required: "The final signed terms of funding agreement is issued to Lords Group, confirming full contract value coverage and written verification funding will be in place within the month [of] July." (emphasis in original)
There was a Facility Indicative Term Sheet dated 11 July 2018, which was executed by Banner Capital Manager Limited as Lender, by the Company as Borrower, and by Mr Gribble as Guarantor (the Banner Indicative Term Sheet). This document stated that it contained "Indicative Terms of a proposed facility ('Proposal'), subject to entry into of definitive documentation satisfactory to all parties". No such documentation was subsequently entered.
The Banner Indicative Term Sheet set out twenty-eight conditions precedent, and provided that all of these conditions must be completed to the satisfaction of Banner. There was no evidence to establish how many of these conditions precedent were met or were capable of being met.
The first two of those conditions precedent were as follows: "1. The first drawdown under this facility must occur by 31 July 2018; 2. The [Company] is to have achieved Acceptable Sale Contracts with a Gross Value of 80% of the facility limit. Facility limit will be adjusted upwards a maximum of 90% LCR and funds progressively released as further sales are made. Residual LVR is also not to exceed 45%;"
Neither of those conditions precedent was met.
As regards the first condition, there was no agreement, let alone any drawdown, by 31 July 2018.
As regards the second condition: 1. the term "Acceptable Sales Contracts" was defined as referring to "unconditional" and "executed contracts of sale", which complied with nine specified requirements; and 2. the Facility Limit was $37,549,146, and was in two tranches, as follows: "Tranche 1 A$33,078,319 (up to 80% LTC [Loan to Cost]) Tranche 2 A$4,085,894 (up to 90% LTC)"
Mr Gribble said, in cross-examination, that the second condition precedent would have been met if the Company had achieved sales with a gross value of 80% of Tranche 1. Assuming that was so, it was necessary for there to be pre-sales of units to a value of $26,462,655, and it would have been necessary for all such pre-sales to be executed and unconditional contracts, which met each of the nine requirements for "Acceptable Sales Contracts".
As at 15 July 2018, contracts had been exchanged for twenty-seven units in the Linden Development, with a total value of $20,595,750. It is not known whether each of these contracts, or how many of them, met the nine requirements for Acceptable Sales Contracts set out in the Banner Indicative Term Sheet.
Even if all of these contracts had met the specified requirements for "Acceptable Sales Contracts", the level of pre-sales remained some $6m short of the amount required as a condition precedent for a drawdown of Tranche 1 (assuming Mr Gribble's interpretation of the Banner Indicative Term Sheet was correct). Based on the average sale price to date ($20,595,750 / 27 = $762,805), there needed to be contracts exchanged, unconditionally, for a further eight units before any such trigger could be met (meaning it was necessary to have contracts exchanged on a total of thirty-five units). Further, as set out above, under the first condition precedent, this trigger had to be met, and the first drawdown had to occur, by 31 July 2018.
However, pre-sales of units had effectively come to a halt with the cessation of works on site. Mr Gribble acknowledged in cross-examination that pre-sales had "stagnated" because "Lords had left the site in July and it was creating difficulties in generating sales".
According to the weekly status reports issued by Colliers, between 15 July 2018 and the termination of the Construction Contract on 25 January 2019, contracts were exchanged for only one unit in the Linden Development (bringing the total pre-sales to twenty-eight units).
On 13 July 2018, Lords issued a Notice of Delay to the Company, which referred to the Company's failure to pay the outstanding balance of Progress Claims No 3 (for April) and No 4 (for May), and required that: "All outstanding monies must be paid to enable Lords Group to mobilise back onsite."
On 17 July 2018, Mr Najar responded to this notice, raising various matters regarding the notices that had been issued by Lords, and adding the following statement: "Another point worth mentioning is that the executed building contract is subject to finance approval, which is being worked and is shaping up and very soon, all the pending dues will be cleared."
This appears to have been the first time that the Company asserted to Lords that the obligations under the Construction Contract were "subject to finance approval". There was no reference in this notice to "Stage 1" or "Stage 2", nor was there any statement that "Stage 2" was not to be commenced before the issue of some further notice, which had not been given.
The suggestion by Mr Najar that obligations under the Construction Contract were "subject to finance approval" was swiftly rebuffed by Lords on the same day, with Mr Maroun responding as follows: "We also confirm that the letter of intent was subject to finance approval, but once the head contract is executed, the letter of intent becomes redundant. The head contract is not conditioned subject to finance approval."
There was no subsequent communication from Mr Gribble, Mr Najar or anyone else at the Quantum Group, in the period up to the termination of the Construction Contract, disputing this interpretation, or contending the Letter of Intent had any ongoing force, or asserting that the obligations in the Construction Contract were "subject to finance".
Instead, as outlined below, Mr Najar subsequently certified amounts as due and payable by the Company in respect of further progress claims which were issued by Lords. Such conduct was inconsistent with any belief on the part of Mr Najar or the Company that payments to Lords for any amounts under the Construction Contract were "subject to finance".

[30]

Progress Claim No 6

On 31 July 2018, Lords issued its sixth progress claim, in the amount of $872,098.04 including GST (Progress Claim No 6).
On 10 August 2018, Mr Najar, as Superintendent, issued a payment schedule in respect of Progress Claim No 6. This payment schedule certified that the quantity surveyor, Mitchell Brandtman, had verified the completed works in July 2018 and valued them at $842,858.42; that the Quantum Group had reviewed the quantity surveyor's report and had approved this verification; and therefore that the amount of $842,858.42 should be processed to be paid to Lords by the due date of 15 August 2018.
The Company has not paid any amount to Lords in respect of Progress Claim No 6.
On 13 August 2018, Mr Maroun sent an email to Mr Gribble, noting that the outstanding amount in respect of Progress Claims No 3 to No 6 was more than $4.059m, and stating as follows: "I need more certainty as to when you are anticipating the drawdown so I know what to communicate to contractors/suppliers who have material onsite i.e. Scaffolding/formwork/tower crane/site amenities etc. as I am starting to look like a liar and contractors will not tolerate me for much longer asking them to wait for their own material which they need."
It is apparent from this email that, although Lords had stopped work, it continued to incur costs in respect of the Linden Development, and that this was because Lords was maintaining material on site during this period, in which it was being informed by the Company that finance would be forthcoming. On 16 August 2018, Mr Maroun sent a follow up email to Mr Gribble, requesting an update on finance, and stating that: "Progressive payments is the only way I can avoid or hold contractors from removing items until the drawdown is in place".
On 24 August 2018, Mr Gribble wrote to Solcap, on behalf of the Company, seeking "a $2,000,000 additional cash advance from our existing facility in respect of [the Linden Development]". Emails exchanged between Mr Gribble and the Company's finance broker, Mr Watson, indicate that this additional advance, under the Solcap Loan, was made "against a higher land valuation, due to the works complete". That is, the works performed by Lords had increased the value of the Land, and Solcap was advancing the additional $2m against this increased equity.
On 27 August 2018, an amount of $1,955,984 was drawn down under the increase to the Solcap Loan, and was paid to Lords. This, in effect, exhausted the amount that was able to be borrowed on the security of the Land. Following this payment, an amount of more than $2.063m remained payable by the Company to Lords.
This additional advance from Solcap was for a term of three month from the date of drawdown, such that it was repayable by 27 November 2018.

[33]

Company's inability to satisfy conditions in order to obtain finance

By early November 2018, Mr Gribble was frustrated with Banner, writing to Mr Maroun that "Banner has been extremely slow in interaction with us, so we have decided to proceed with another lender (as a backup, we are still dealing with Banner, so please keep this qui[et])". The other lender was Martin Place Capital.
An indicative term sheet was issued by Martin Place Capital. However, there was no evidence that matters progressed beyond this document.
This indicative term sheet included the following requirement in respect of pre-sales: "The Borrower must provide evidence of unconditional pre-sales prior to first drawdown in form and substance acceptable to the Lender and for an aggregate value of $24,975.000 inclusive of any GST. Acceptable pre-sale certification letters from the Borrower/ Mortgagor's lawyers addressed to the Lender will be required. All pre-sales must be qualifying pre-sales in accordance with the requirements of the Lender."
On 14 November 2018, Mr Gribble exchanged emails with a representative of Banner. In this exchange, Mr Gribble made the following request (emphasis in original): "Aim is to settle 26th November - please confirm that this is the date all lawyers etc are aiming for as we work thru settlement proce[s]s?" The Banner representative responded as follows: "Appreciate that you are aiming to settle on the 26th, however as noted previously, we will not be in a position to confirm settlement date until such time as all CP's [conditions precedent] have been met and documentation has been executed." One of those conditions precedent was a required level of pre-sales.
In his response, Mr Gribble noted that the pre-sales target was $24.975m. (This was the same as the target in the indicative term sheet issued by Martin Place Capital, as set out above.) Mr Gribble told the Banner representative that the Company had "just crossed over the pre-sales hurdle", and had now achieved $25,205,000 of pre-sales.
This was incorrect. According to a weekly report issued by Colliers in respect of the Linden Development, as at 9 December 2018, contracts had been unconditionally exchanged on only 28 units, with an aggregate value of around $21.435m. Mr Gribble appears to have been including, in his calculation of pre-sales, units in respect of which steps had been taken by prospective purchasers, but no contracts had been exchanged. Each of the Banner Indicative Term Sheet and the indicative term sheet issued by Martin Place Capital only had regard to contracts which had been unconditionally exchanged in determining whether the condition precedent for pre-sales had been met.
It follows that the Company did not meet the conditions precedent under the indicative term sheets issued by either Banner or Martin Place Capital. No facility documentation was executed with either financier.

[35]

Events following termination

On 31 January 2019, Lords issued the Company a final progress claim for costs incurred up to termination of the Construction Contract, in the amount of $2,122,025.10 including GST. The Company issued a payment schedule in response to this progress claim on 13 February 2019, by which the Company claimed that an amount of $1,482,737.20 including GST was payable by Lords to the Company as a result of "Non Compliant Works", which were identified in a quantity surveyor's report.
On 11 February 2019, SLI gave a notice to the Company, terminating the Project Manager Agreement and the Development Manager Agreement.
On 12 February 2019, Mr Gribble caused a new company to be registered, Linden Developments (NSW) Pty Limited, in order to take over the role of development manager for the Linden Development. SLI was the sole shareholder of this company, and Mr Gribble was its sole director.
This new entity subsequently obtained construction finance from Alceon Finance Pty Ltd. The Alceon facility was drawn down and was used to repay the amount owing under the Solcap Loan (which was secured by a mortgage over the Land), and subsequently to fund the completion of the Linden Development by a new builder, Devakon Pty Ltd.
In August 2019, Lords commenced a proceeding in this Court to recover unpaid amounts under the Construction Contract. The amounts claimed were the outstanding amounts due in respect of Progress Claims No 5 to No 8.
On 11 December 2019, judgment was entered against the Company to pay Lords the sum of $1,511,244.06 and Lords' costs of the proceedings (the Judgment Debt). In his reasons for judgment, Ball J relevantly held as follows (Lords Property Group Pty Ltd v Shire Lind Developments (NSW) Pty Ltd [2019] NSWSC 1818 at [8]-[10]): "Under s 16 of the [Building and Construction Industry Security of Payment Act 1999 (NSW)], where a claimant has served a payment claim and the respondent has provided a payment schedule in respect of that claim, the claimant may recover the unpaid portion of the scheduled amount from the respondent as a debt due to the claimant in any Court of competent jurisdiction. Section 16(4)(b) of the Act makes it clear that the respondent is not entitled in those proceedings to bring any cross-claim or to raise any defence in relation to matters arising under the relevant construction contract. The only defence that the defendant has raised in its technology and construction list response to the plaintiff's claim based on s 16 is an allegation in each case that the payment claim did not comply with cl 37.1 of the construction contract. That clause relevantly provides that the plaintiff may serve a progress claim if and only if the contractor has satisfied the conditions precedent set out in cl 37.2A of the contract. That clause clearly cannot provide a defence to the right conferred by s 13 of the Act to make a progress claim. As I have said, the defendant concedes that each of the progress claims in this case were payment claims within the meaning of s 13 of the Act. Therefore, the rights conferred by the Act are triggered. Moreover, as I have said, s 16(4)(b)(ii) makes it clear that the defendant cannot in a claim under s 16 raise any defence arising under the construction contract. It follows that the defendant has no defence to the plaintiff's claim. I am satisfied on the evidence before me that the defendant has not made full payment in respect of progress claim number 5 and progress claim numbers 6, 7 and 8. As I have said, the plaintiff is entitled to interest on the progress claims that have [not] been paid."
On 7 January 2020, Lords served a creditor's statutory demand on the Company for the amount of the Judgment Debt.
On 11 February 2020, the Company commenced a proceeding in this Court against Lords claiming damages of $1,739,830.42 for various defects and non-compliances in the works at the Linden Development.
On 4 March 2020, Lords filed an application in this Court to wind up the Company. On 19 March 2020, the Company went into voluntary administration; and on 21 April 2020, the Company was wound up in insolvency by orders of this Court.
On 16 March 2023, the Plaintiffs commenced these proceedings.

[37]

Relevant Principles

The relevant principles for determining solvency were not in dispute.
Section 95A of the Act provides as follows: Meaning of solvent and insolvent (1) A person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. (2) A person who is not solvent is insolvent.
The definition in s 95A(2) adopts a "cash flow test" of insolvency, which turns upon the income sources available to the company and the expenditure obligations which it has to meet, rather than a balance sheet test which focuses upon the value of the company's assets and liabilities as reflected in the company's books. However, a balance sheet test can provide context for the application of the cash flow test: Re Custom Bus Australia Pty Ltd (in liq) [2021] NSWSC 1036 at [33] (Black J) and the cases there cited.
Whether a company is able to pay its debts as and when they fall due and payable is a question of fact to be determined objectively and without hindsight in all the circumstances, including the nature of the company's assets and business, and the Court will have regard to commercial realities in that regard: Re Custom Bus Australia at [34] and the cases there cited.
In assessing a company's capacity to pay its debts, the Court should have regard to all of the assets of the company as at the relevant time in order to determine the extent to which those assets were liquid or realisable within a timeframe that would allow each of the debts to be paid as and when they became due. Apart from an assessment of the company's own assets, regard can also properly be had to funds which the company can borrow, on a secured or unsecured basis, or otherwise obtain from lenders or shareholders and which were, as a matter of commercial reality, available to the company to enable its debts to be paid. The case law recognises that, in determining a company's solvency, the Court may have regard to the likelihood that it will have funds available to it from sources with which it has no formalised agreement or understanding, including loans from its directors or from third parties, at least if they are not repayable in the short term, and the company's ability to borrow funds can also be taken into account: Re Custom Bus Australia at [35] and the cases there cited.
In order for financial support from a related financial entity to be relevant, there is a need for cogent evidence establishing a degree of commitment from the related entity to the continuance of the financial support for the company whose solvency is in contention: Treloar Constructions Pty Ltd v McMillan [2017] NSWCA 72 at [142] (per Beazley P, Gleeson JA and Emmett AJA), citing the observations of Morrison JA in Chan v First Strategic Development Corporation Ltd (in liq) [2015] QCA 28 at [44] (which are quoted in Treloar at [83]).
In Re Custom Bus Australia at [36], Black J noted that although each case is to be decided on its own facts, insolvent companies tend to share common symptoms of financial stress, which include those identified in Australian Securities and Investments Commission (ASIC) v Plymin (No 1) [2003] VSC 123 at [386] (Mandie J), namely: "1. Continuing losses. 2. Liquidity ratios below 1. 3. Overdue Commonwealth and State taxes. 4. Poor relationship with present Bank, including inability to borrow further funds. 5. No access to alternative finance. 6. Inability to raise further equity capital. 7. Suppliers placing [company] on COD, or otherwise demanding special payments before resuming supply. 8. Creditors unpaid outside trading terms. 9. Issuing of post-dated cheques. 10. Dishonoured cheques. 11. Special arrangements with selected creditors. 12. Solicitors' letters, summons[es], judgments or warrants issued against the company. 13. Payments to creditors of rounded sums which are not reconcilable to specific invoices. 14. Inability to produce timely and accurate financial information to display the company's trading performance and financial position, and make reliable forecasts."
In Quick v Stoland Pty Ltd [1998] FCA 1200, Emmett J observed that: "In order to determine whether the Company was solvent at a given time, it would be relevant to consider the following matters: ● All of the Company's debts as at that time in order to determine when those debts were due and payable. ● All of the assets of the Company as at that time in order to determine the extent to which those assets were liquid or were realisable within a timeframe that would allow each of the debts to be paid as and when it became payable. ● The Company's business as at that time in order to determine its expected net cash flow from the business by deducting from projected future sales the cash expenses which would be necessary to generate those sales. ● Arrangements between the Company and prospective lenders, such as its bankers and shareholders, in order to determine whether any shortfall in liquid and realisable assets and cash flow could be made up by borrowings which would be repayable at a time later than the debts."
The test in s 95A "is directed to a present inability to pay all debts as and when they become due and payable, including debts that will become payable in the immediate future": Anchorage Capital Master Offshore Ltd v Sparkes (2023) 111 NSWLR 304; [2023] NSWCA 88 at [235] (Ward P, Brereton JA, Griffiths AJA) (emphasis in original). The "correct question is whether, at the date of alleged insolvency, it can be said that the company is already in a state of inability to pay those debts when they fall due": ibid at [245].
While the question of solvency is to be determined by reference to the circumstances as they were known or ought to have been known at the date at which the question of solvency is assessed, and not in hindsight, the Court can have regard to what subsequently happened, to the extent that actual events shed light on what was likely at the time when the question of solvency falls to be assessed: Anchorage Capital at [256].
Part of the exercise required by s 95A of the Act in assessing solvency is a consideration of the terms of each relevant debt and whether it is due and payable at the relevant time the subject of consideration. Part of that consideration includes ascertaining and reviewing the contractual terms relevant to any obligation that arises under contract, and a consideration of the relevant statutory terms where an obligation arises under statute: Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5 at [515] per curiam (Besanko, Markovic and Banks-Smith JJ).
It is proper to have regard to the commercial reality that, in normal circumstances, creditors will not always insist on payment strictly in accordance with their terms of trade. However, this does not, in itself, warrant a conclusion that the debts are not payable at the times contractually stipulated and have become debts payable only upon demand: Southern Cross Interiors Pty Ltd (in liq) v Deputy Commission of Taxation (2001) 52 NSWLR 213; [2001] NSWSC 621 at [54] (Palmer J).
In Anchorage Capital at [261], the Court of Appeal accepted the following principles: 1. that a debt is taken to be owing at the time stipulated in the contract, absent evidence proving that there has been an express or implied agreement between the company and the creditor for an extension of time, or that some estoppel applies, or that there is an imminent compromise between the creditor and the debtor; 2. that while the possibility of an alteration to the amount or due date of a debt is relevant, a mere theoretical possibility of a compromise would not preclude a finding of insolvency; and 3. that the party asserting that a company's contract debts are not payable at the times contractually stipulated bears the burden of making good that assertion by satisfactory evidence.

[38]

Mr Cavanagh's report

Mr Cavanagh expressed the opinion that the Company did not become insolvent until 11 December 2019, when the Judgment Debt was entered, as prior to that time there was no "debt" due.
Mr Cavanagh further expressed the view that, if he was wrong in concluding that there was no debt due to Lords until that point in time, any debt to Lords in respect of the Progress Claims did not become due and payable until the Construction Contract was terminated because, prior to that time, Lords had extended the payment terms in respect of its invoices.
The Plaintiffs submitted that Mr Cavanagh's opinion regarding the date of insolvency was of no probative value and was therefore irrelevant and inadmissible, or alternatively should not be given any weight, primarily because his methodology did not address the statutory test and his opinions depended on an erroneous assumption that there was no debt to Lords prior to the Judgment Debt.
When Mr Cavanagh was called on the final morning of the hearing, I indicated that I would deal with these objections in my reasons for judgment, following Mr Cavanagh's cross-examination.
For the reasons set out below, I consider that the Plaintiff's criticisms of Mr Cavanagh's report have been established.
In his report, Mr Cavanagh described his "Methodology for determining timing of insolvency" as follows: "In order to determine the timing of when the Company became insolvent, I have undertaken the following steps: a) Identification of relevant or potential creditor claims which the Company was ultimately unable to pay; b) Assessment of whether those creditors' claims were actual debts prior to the appointment of the Administrator and, if so, when they may have first become due and payable; c) Consideration of the Company's ability to borrow money on the strength of available assets to pay debts as and when they became due and payable; d) Consideration of the Company's ability to obtain concessional funding or financial support to pay debts as and when they became due and payable; and e) Consideration of the effect of creditor concessions"
In considering whether a company is insolvent at a particular point in time, it is necessary to have regard to all of the company's debts as at that time in order to determine when those debts are due and payable, and whether the company is able to pay all of those debts as and when they become due and payable. This is a question of fact to be determined objectively and without hindsight in all the circumstances pertaining at the relevant time.
Mr Cavanagh did not undertake any such enquiry. Instead, he commenced by focussing only on those "relevant or potential creditor claims" which the company "was ultimately unable to pay"; and then assessed whether those particular claims were "actual debts" prior to the appointment of an administrator and, if so, when they "may have first become due and payable".
This flaw in Mr Cavanagh's methodology was compounded by his error in determining whether the debt to Lords became due and payable.
Mr Cavanagh concluded that there was no debt to Lords prior to the entry of the Judgment Debt on the following basis: "The claim by Lords Group was merely an 'unliquidated claim' until then, as there was a genuine dispute over the amount owed between the parties which needed to be resolved by the Court."
In expressing this opinion, Mr Cavanagh did not have regard to clause 37.2A(b) of the General Conditions of the Construction Contract, which provided that the Company was required to pay Lords "the amount certified by the Superintendent in a progress certificate under subclause 37.2 within 15 business days after the date a payment claim meeting the requirements of the Contract is validly received by the Superintendent".
Nor did Mr Cavanagh have regard to the terms of s 16 of the Building and Construction Industry Security of Payment Act 1999 (NSW) which provides that, where a claimant has served a payment claim and the respondent has provided a payment schedule in respect of that claim, the claimant may recover the unpaid portion of the scheduled amount from the respondent as a debt due to the claimant in any Court of competent jurisdiction. In the proceeding in this Court which led to the Judgment Debt, the Company admitted that each of the Progress Claims was a payment claim within the meaning of this provision: Lords Property Group v Shire Lind Developments (NSW) at [8]-[10].
In respect of each of Progress Claims No 1 to No 8, the Company owed a debt to Lords, in the amount certified in the payment schedule corresponding to each such Progress Claim, which was due and payable within 15 business days after the receipt of each such Progress Claim.
In reaching the view that the Company did not have any debt to Lords in advance of the Judgment Debt, Mr Cavanagh appears not to have applied the definition of the term "debt" which he himself adopted in his report, and which was taken from Keay's Insolvency, Personal and Corporate Law and Practice 10th edition (2018, Thomson Reuters), as follows: "a debt may be defined as a liquidated sum of money which is due from the debtor to the creditor. The term 'liquidated sum' refers to a debt of a precise amount. This may be contrasted with an unliquidated claim which requires the court to determine the amount of the debt payable."
Mr Cavanagh concluded that there was no "debt" to Lords in respect of any of Progress Claims No 1 to No 8 on the basis that, in February 2019, the Company raised an offsetting claim for defects. He concluded that, because there "was a genuine dispute between Lords Group and the Company over amounts both parties claimed were owed to them", there was no "debt" to Lords in respect of the Progress Claims until the Judgment Debt was entered: "Until that point, the amount was merely an unliquidated claim and should not be taken into consideration when assessing the solvency of the Company prior to 11 December 2019".
On the definition of a "debt" set out above, which was adopted by Mr Cavanagh, there was a debt in respect of each of Progress Claims No 1 to No 8, since there was, on the issue of the payment schedule corresponding to each of those claims, a liquidated sum due from the Company to Lords. Pursuant to clause 37.2 of the Construction Contract, the Superintendent was entitled when determining the amount which was due from the Company to Lords in respect of a particular Progress Claim, to take into account, inter alia, "the cost to rectify work which is defective or does not comply with the requirements of the Contract". To the extent this was done, such defects were taken into account in determining the precise (liquidated) sum that was due to Lords in respect of that Progress Claim. To the extent that this was not done, the fact that, many months later and following the termination of the Construction Contract, the Company raised an unliquidated claim for damages against Lords in respect of alleged defects in the Linden Development does not turn the previously incurred debts in respect of Progress Claims No 1 to No 8 into unliquidated claims for damages.
The impact of these errors upon Mr Cavanagh's opinion was profound. Mr Cavanagh expressed the view that the debts which were unpaid as at the date the Company went into administration, the amounts of those debts, and the dates on which each of those debts became payable, were as follows: Date Claimant Debt Balance 30 August 2017 PR Print Pty Limited $1,970.10 $1,970.10 23 May 2018 Circular Creative Pty Ltd $1,604.50 $3,574.50 30 September 2018 BT Projects Marketing $3,667.00 $7,241.50 11 December 2019 Lords Property Group $1,511,244.06 $1,518,485.56 22 February 2020 RUK Australia $880.00 $1,519,365.56

[39]

On the basis of the above table, Mr Cavanagh opined that the timing of the insolvency of the Company was wholly dependent upon when the Lords debt became due and payable, because the "remaining debts are immaterial in value". It necessarily followed that, in his view, the Company only became insolvent at the time of the Judgment Debt (on 11 December 2019). Consequently, Mr Cavanagh concluded that the Company incurred a single debt, in a trivial amount of $880, in the period when it was insolvent.
For the reasons given above, this conclusion depended on a flawed methodology, coupled with an erroneous assumption about when the Lords debt became due and payable.
Mr Cavanagh stated that, if he was wrong in concluding that there was no debt to Lords until the Judgment Debt, nonetheless he considered that there was no amount due and payable to Lords in respect of the Progress Claims until the date of termination of the Construction Contract "due to the implied extension of payment terms by Lords Group". The key passage in his reasoning was as follows: "From 27 April 2018 until the end of 2019, Lords Group regularly sent emails to the Company requesting payment for outstanding invoices. I have reviewed a number of these emails and, given the nature of the commercial relationship, I consider the requests for payment to be prudent cash flow management, rather than an indication that Lords Group would cease to extend payment terms to the Company and that outstanding amounts would become due and payable. Following receipt of emails requesting payment, the Company would regularly arrange a transfer of funds to Lords Group. I consider that the Company adequately managed payments to Lords Group to the extent that both parties were satisfied with the timeliness of payment. Whilst it was in the interest of Lords Group to increase the frequency and value of payments received, it was similarly in the interest of the Company to defer payment for as long as was mutually acceptable, rather than draw down on related party or arms-length loans. The commercial relationship with respect to payment of invoices appears to have been mutually acceptable until 25 January 2019, when Lords Group terminated the Building Contract."
The passage set out above does not involve any application of specialised knowledge, but is instead a series of inferences as to the views of Lords and the Company throughout the relevant period, based on statements made in their email correspondence.
Having regard to the course of correspondence summarised at paragraphs [97]-[238] above, I do not draw that any such inferences. In particular, the correspondence does not establish that Lords was willing to extend payment terms, or that Lords regarded the outstanding amounts as not being due and payable. Instead, Lords consistently required payment by the due date specified in the payment schedule; Lords chased up late payments on or shortly after the due date; and Lords demanded that amounts which were not paid by the due date be paid forthwith. Further, the evidence does not establish that the Company "adequately managed payments to Lords Group", or that Lords were "satisfied with the timeliness of payment". Nor does the evidence establish that the relationship between the Company and Lords with respect to payment of invoices was "mutually acceptable" at all times up until termination of the Construction Contract on 25 January 2019. Lords consistently expressed dissatisfaction with the late payment of invoices and, after suspending works in June 2018, consistently made clear that it would not resume unless and until it was paid in full and received confirmation that there was finance in place to pay all remaining amounts due under the Construction Contract.
For those reasons, I reject the Defendants' submission that the Company was not insolvent until 11 December 2019, or alternatively was not insolvent until 25 January 2019.

[40]

Presumed Insolvency?

Section 588E of the Act relevantly provides as follows: (4) Subject to subsections (5) to (7), if it is proved that the company (a) has failed to keep financial records in relation to a period as required by subsection 286(1); or (b) has failed to retain financial records in relation to a period for the 7 years required by subsection 286(2); the company is to be presumed to have been insolvent throughout the period. … (5) Paragraphs (4)(a) and (4A)(a) do not apply in relation to a contravention of subsection 286(1) that is only minor or technical. …
Section 286(1) of the Act relevantly provides that: (1) A company … must keep written financial records that: (a) correctly record and explain its transactions and financial position and performance; and (b) would enable true and fair financial statements to be prepared and audited. …
Section 9 of the Act defines "financial records" as including: (a) invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and (b) documents of prime entry; and (c) working papers and other documents needed to explain: (i) the methods by which financial statements are made up; and (ii) adjustments to be made in preparing financial statements.
Both parties relied on the following observations by Rees J in In the matter of ZH International Pty Ltd (in liq) [2022] NSWSC 2 at [152]: "the obligation to keep financial records under section 286 is twofold: first, to keep records which record the company's transactions and financial performance sufficient to enable financial statements to be prepared; and, secondly, to retain those records for seven years. The records which must be retained are not simply the financial statements that were prepared from the financial records, but the underlying financial records from which the financial statements were prepared. The purpose of these provisions was explained by Siopis J in Trinick v Forgione (2015) 239 FCR 285; [2015] FCA 642 at [209]: '… to assist a liquidator in bringing recovery actions (including recovery actions against former directors for insolvent trading) when it is necessary to prove insolvency and the company's financial records are not available.'"
In support of their submission that the Company failed to comply with its obligation to maintain financial records in accordance with s 286 of the Act, and therefore is deemed insolvent throughout the relevant period pursuant to s 588E(4) of the Act, the Plaintiffs relied on opinions expressed by the Liquidator that the documents provided by the Company to the Liquidator - "being bank account statements, reconciliation and loan documents, some creditor records, some deeds, financial statements, loan documents, tax records and various correspondence" - "do not allow true and fair records of the Company to be created without intricate working knowledge of the operation". The Liquidator further deposed that the documents which, in his experience, are "generated and required by a company so as to correctly record and explain the transactions and financial position of the company, including a company undertaking property development" include "[e]lectronic management accounts, company tax returns, invoices, receipts and contracts". The Liquidator was not provided with any electronic management accounts or accounting data files for the Company. Nor was he provided with company tax returns, business activity statements, invoices "or other documents relating to the transactions detailed in the Company bank statements or the amounts stated in financial report extracts that Mr Gribble had provided".
The opinions set out above were expressed in the Liquidator's affidavit of 15 March 2023. Subsequently, the Plaintiffs retained Mr Bailey, who is an insolvency practitioner, to prepare an expert report for use in this proceeding. His report was served in December 2023. The questions on which Mr Bailey was asked to express an opinion included "What written financial records ought the Company have kept and retained, having regard to its obligations with section 286 of the [Act]?" and "Did the Company uphold its obligations to keep and retain written financial records in accordance with section 286 of the Act?"
Mr Bailey expressed the view that, although "certain essential books and records have either not been maintained or provided to me", the Company "evidently had the capacity to generate special purpose financial statements when directed to do so", and on that basis he concluded that "I think it more likely than not that the Company did adequately comply with its statutory obligation pursuant to section 286 of the Act".
There was no challenge to Mr Bailey's expertise or to his opinions on these matters.
I do not consider that there is any sufficient basis for the Court to prefer the opinions expressed by the Liquidator over the opinions of the independent expert called by the Liquidator. In closing address, Counsel for the Liquidator confirmed that she did not contend that I should reject Mr Bailey's opinion on this issue.
Having regard to Mr Bailey's opinion that it was more likely than not that the Company did comply with its obligations pursuant to s 286 of the Act, the Plaintiffs' contention regarding presumed insolvency has not been established.

[42]

Mr Bailey's analysis of those indicia was not challenged in cross-examination or submissions.
Mr Bailey also conducted a month-to-month cash flow analysis, in which he compared the month-end cash balances of the Company against its equivalent month-end debt owing to Lords (as the largest creditor of the Company), as follows: Date (EOM) Westpac Bank Balance ($) Builder RBA Debt ($) Surplus/ Deficit ($) 28/02/2018 129,984 694,752 (564,768) 31/03/2018 1,774 1,242,232 (1,240,458) 30/04/2018 928 1,441,824 (1,440,896) 31/05/2018 71,057 2,832,854 (2,761,797) 30/06/2018 253 3,416,768 (3,416,515) 31/07/2018 418 4,059,626 (4,059,208) 31/08/2018 211 2,193,966 (2,193,754) 30/09/2018 629 2,324,289 (2,323,660) 31/10/2018 5.567 2,324,289 (2,318,722) 30/11/2018 167 1,324,985 (1,324,817) 31/12/2018 29 1,324,985 (1,324,955) 31/01/2019 454 1,324,985 (1,324,530) 28/02/2019 20 1,324,985 (1,324,965) 31/03/2019 11 1,324,985 (1,324,974) 30/04/2019 26 1,324,985 (1,324,959) 31/05/2019 23 1,324,985 (1,324,961) 30/06/2019 235 1,324,985 (1,324,749) 31/07/2019 225 1,324,985 (1,324,759) 31/08/2019 57 1,324,985 (1,324,928) 30/09/2019 57 1,324,985 (1,524,928) 31/10/2019 47 1,324,985 (1,324,938) 30/11/2019 47 1,324,985 (1,324,938) 31/12/2019 37 1,324,985 (1,324,948) 31/01/2020 27 1,324,985 (1,324,958) 29/02/2020 17 1,324,985 (1,324,968)

[43]

As Mr Bailey observed, this analysis establishes that the Company was at no time, since the receipt of Progress Claim No 1, in a position to satisfy the debt of its largest creditor (Lords) and was wholly reliant upon drawing down loan facilities with Solcap and QM Trust / SLI to cause these debts to be repaid.
As regards the Solcap Loan, this was fully drawn down when the Land was purchased in December 2017, and therefore the facility was unavailable to meet any Progress Claim issued by Lords from February 2018 onwards. I acknowledge that, in August 2018, a further $2m was advanced under the Solcap Loan. This additional advance was made based on the increased value of the Land, as a result of the works performed by Lords. It was wholly used to make a payment to Lords, in partial reduction of the Company's debt (which remained in excess of $2.06m after that payment was made). Further, this additional advance was repayable within three months from the date of drawdown. As Barrett J observed in Australian Securities and Investments Commission (ASIC) v Edwards (2005) 220 ALR 148; [2005] NSWSC 831 at [99], "availability of loan funds for a very short term or payable on demand, as a source from which debts overdue may be paid, does not enhance solvency: it merely substitutes one form of immediate (or near immediate) obligation for another". Those observations were accepted and applied by this Court on the appeal from his Honour's decision, Edwards v Australian Securities and Investments Commission (2009) 264 ALR 723; [2009] NSWCA 424 at [163] per Macfarlan JA (Spigelman CJ and Campbell JA agreeing).
Each of SLI and the QM Trust was a related entity of the Company. In Chan v First Strategic Development Corporation at [44], Morrison JA (with whom Gotterson and Boddice JJA agreed) observed that: "where the financial support is being provided by a director or related entity, and in circumstances where there is no formalised agreement or understanding, what is required is cogent evidence which enables the court to conclude that there is such a degree of commitment on the part of the provider of the financial support to continue it, such that it can be said that at any point of time it was likely to be continued, with the result that, at any of those times, the company was able to pay its debts as and when they fell due."
As regards the SLI Loan, clause 8.1(e) gave, in effect, SLI a discretion whether or not to advance any amount to the Company in the event that SLI formed the view that the advancing of any further funds to the Company would be materially prejudicial to SLI's interests (see paragraph [122] above). In those circumstances, there was not such a degree of commitment on the part of SLI to continue to provide the support that it could be said that at any point in time it was likely to be continued. In any case, I do not consider that the SLI Loan has any significance, separate from the Quantum Loan, for the reasons given at paragraphs [117]-[125] above.
As regards the Quantum Loan, the funds available under that loan were tied, as Mr Gribble acknowledged, to the sales of SL class units. In the period up to the end of June 2018, a total amount of $2.689m was raised from the sale of SL class units and was advanced by QM Trust to the Company via SLI. In comparison, the amount due to Lords in respect of Progress Claims No 1 to No 4, the last of which was due and payable by 15 June 2018, was in excess of $4.175m. In the period from July to September 2018, a further $954,500 was advanced under the Quantum Loan, but a further $1.939m became due and payable to Lords in respect of Progress Claims No 5 to No 8.
As these figures demonstrate, the amount being raised by the sale of SL class units, and therefore the amount available to be advanced under the Quantum Loan, was insufficient to keep pace with, and to cover, the amount which had become payable, and continued to become payable, to Lords under the Construction Contract.
Mr Bailey prepared the following summary of the invoices issued by Lords and of the payments made in respect of those invoices by or on behalf of the Company. Invoice Number Progress Claim Invoice ($) Claim issued Due date Payment date Payments on invoice Balance Owing Notes 102 1 694,752.49 28/02/2018 21/03/2018 13/04/2018 400,000.00 - Invoice paid 2 weeks Iate 9/04/2018 294,752.49 104 2 547,479.77 30/03/2018 18/04/2018 7/05/2018 50,665.41 - Invoice partially paid 2 weeks late, and fully settled approx. 6 weeks from due date 9/05/2018 100,000.00 18/05/2018 100,000.00 23/05/2018 150,000.00 25/05/2018 100,000.00 30/05/2018 46.81436 108 3 894,343.91 30/04/2018 21/05/2018 5/06/2018 100,000.00 - Payment arrangement entered into between parties, total sum settled over 3 months after invoice due date 12/06/2018 50,000.00 29/06/2018 200,000.00 2/07/2018 200,000.00 27/08/2018 344,34331 110 4 2,038,511.20 30/05/2018 15/06/2018 27/08/2018 1,651,640.09 - Solido assisted in partial payment of invoice on 27/08/2018. Balance settled over 5 months after invoice due date. 15/11/2018 266,623.19 20/11/2018 120,247.92 114 5 833,913.24 30/06/2018 23/07/2018 15/11/2018 152,433.79 221,479.45 Invoice partially settled approximately 4 months after invoice due date. Balance unpaid. 20/11/2018 340,000.00 21/11/2018 120,000.00 1704-06 6 842,858.42 31/07/2018 15/08/2018 N/A N/A 842,858.42 Invoice unpaid 1704-07 7 130,232.70 31/08/2018 20/09/2018 N/A N/A 130,232.70 Invoice unpaid 1704-08 8 130,232.70 30/09/2018 18/10/2018 N/A N/A 130,232.70 Invoice unpaid TOTAL 6,112,324.43 4,787,521.16 1,324,803.27

[44]

As Mr Bailey observed, the above table "demonstrates a gradual but clear deterioration of agreed terms of trade between the Company and [Lords]". The first two invoices were settled, respectively, around two weeks and six weeks after their due dates. The next two invoices were settled, respectively, around three months and five months after their due dates. The final four invoices remain unpaid.
Further, although the table demonstrates that, as Mr Bailey observed, the Company was able to contribute lump sum payments to Lords "on a sporadic basis" (either from the one-off additional amount advanced under the Solcap Loan or from the amounts advanced from time to time under the Quantum Loan, depending on the sale of SL class units), the Company was not in a position to pay any of the invoices issued by Lords as and when they fell due.
Mr Bailey expressed the opinion that the debt to Lords became "unmanageable" when the Company became liable to pay some $2.038m in respect of Progress Claim No 4. As Mr Bailey observed, although the debt was later substantially reduced, the Company was never able, from that point in time, to bring the debt into line with Lords' terms of trade.
Mr Bailey identified that the first threat by Lords of direct consequences for the Company's continued failure to pay outstanding invoices occurred on 13 June 2018, when Lords threatened to cease work on site (see paragraphs [176]-[178] above). Mr Bailey described the significance of this email, in the light of prior correspondence, as follows: "In my opinion, the email correspondence of 13 June 2018 is compelling because it demonstrated the immediate concern of the Builder regarding the ability of the Company to pay the outstanding invoices within a reasonable timeframe, and that its correspondence had escalated from following up the payment of invoices to threatening adverse action against the Company. It is also highly relevant that as a consequence of this correspondence, the Company appears to have admitted its inability to pay its debts as and when they fell due and entered into a special payment arrangement with the Builder, the terms of which the Company was ultimately unable to comply with. This conclusion relevantly considers both the formally documented payment terms in respect of which the Company was in breach from at least 30 May 2018 and probably earlier, as well as the inferred payment terms as seem to have operated as normal practices for payment between the two entities which had clearly been exceeded by 13 June 2018."
Based on the summary of the parties' correspondence set out at paragraphs [97]-[194], I agree with this view. The email of 13 June 2018 marked a significant change in the correspondence, in that Lords moved from insisting on the payment of invoices on time, and chasing up late payments, to informing the Company that there would be drastic consequences if the Company failed to pay the outstanding invoices by specific dates, namely, the cessation of works on site. The Company's failure to make the payments required by Lords led to the issue of the Show Cause Notice less than two weeks later.
Mr Bailey concluded that the Company was "very likely insolvent as at 30 May 2018", when Progress Claim No 4 was issued, "based on a technical review of its financial statements, a cash flow analysis and its running balance debt with [Lords]".
Mr Bailey further concluded that that the Company was "definitively insolvent by 13 June 2018", when Lords "began to aggressively pursue payment of its outstanding invoices", "by raising the threat of cessation of works" and "by requiring formal repayment arrangement terms to be agreed by the Company".
Having regard to the matters advanced by Mr Bailey in support of his conclusions, which are summarised above, I accept Mr Bailey's opinions regarding the date of insolvency. It is unnecessary to resolve whether the Company was insolvent by 30 May 2018 or by 13 June 2018, since there were no debts incurred in that period which are the subject of the insolvent trading claim, and no payments made in that period which are the subject of an unfair preference claim.
Mr Bailey further expressed the opinion that the Company remained insolvent until it entered into external administration, on the basis that there was "no evidence that the Company had reasonable prospects of obtaining sufficient liquid capital to return to a position of solvency within any reasonable time frame". Having regard to the findings set out in paragraphs [195]-[238] above, I also accept this opinion. The Company could not return to a position of solvency unless it obtained construction finance to cover not only the amounts owing to Lords, but also the monthly progress payments which would fall due to Lords if work on site resumed. The Company was not able to meet the conditions precedent for obtaining finance under the Banner Indicative Term Sheet in any reasonable time frame, in particular, because the cessation of works on site meant that the sale of units in the Linden Development had stalled.

[45]

Earlier date for insolvency?

The Plaintiffs contended for an earlier date for insolvency, based on the contents of the Linden Report, which was generated on 16 April 2018. This report only came to light after Mr Bailey's report was produced.
In particular, the Plaintiffs referred to the list of "Unpaid Invoices" of the Company in the Linden Report, which indicated that there were multiple creditors owed amounts extending over the past two years.
The Plaintiffs contended that this material established that the Company was insolvent by 20 April 2018 (being the date of the first of the payments to Quantum Development which was alleged to be an unfair preference payment).
There are two main difficulties with this submission.
First, there are some uncertainties regarding the source and accuracy of the data in the Linden Report. For example, as Mr Bailey acknowledged, it was not clear whether the dates specified for individual invoices were the dates shown on the invoices, the dates when the debts were entered in the Company's system, or the dates when they were due and payable. Further, one of the largest of the "unpaid invoices" recorded in the Linden Report was an invoice for $694,752.49 issued by Lords in respect of Progress Claim No 1. This represented almost 33% of the total amount of the "unpaid invoices" ($2.137m) listed in that report. In fact, this invoice had been paid in full prior to the date of the Linden Report.
Secondly, Mr Bailey did not produce any supplementary report after the Linden Report came to light. He was asked in examination in chief whether the contents of the Linden Report affected any of the opinions in his report, and gave the following evidence (emphasis added): "Q. …. What effect, if any, does this have on the opinions that you expressed in your December 2023 report? A. I think it would broadly endorse the opinion of the date of the company's insolvency, if anything. It is further evidence than what we had at the time we issued or prepared our report that there was a history or pattern of non‑payment of creditors within standard terms, at least at the date of this report. It certainly wasn't up to date with all of its other debts for example besides the debts owed to Lords, that seems to be the crux of the report."
Significantly, Mr Bailey regarded the contents of the report as confirming his views on the date of insolvency. He did not express any opinion, based on the contents of the Linden Report, that the Company was insolvent at any earlier point in time than 30 May 2018 or 13 June 2018. As outlined above, the crux of Mr Bailey's conclusions is that the Company's inability to pay its debts to Lords led to its insolvency. As at the date of the Linden Report, the only debt to Lords which had fallen due and payable was the debt in respect of Progress Claim No 1 (which had been paid in full, albeit two weeks late).
Accordingly, I am not satisfied that the Linden Report provides a sufficient basis to conclude that the Company became insolvent by 20 April 2018.

[48]

Debts incurred after 13 June 2018

The term "debt" is not defined in the Act. Its meaning is well understood as a matter of ordinary language, namely, "a liability or obligation to pay or render something; that which one person is bound to pay to or perform for another": Treloar at [44]-[45]. This statutory conception of debt is "to be applied in a practical and commonsense fashion, consistent with the context and with the statutory purposes": ibid at [46], referring to Hawkins v Bank of China (1992) 26 NSWLR 562 at 572 per Gleeson CJ.
The "incurring" of a debt refers to "the act, omission or other circumstance which causes the company to owe the debt": ASIC v Edwards at [81] (Barrett J).
A liquidated debt exists "whenever the amount to which the plaintiff is entitled ... can be ascertained by calculation or fixed by any scale of charges, or other positive data": Treloar at [48], referring to Spain v Union Steamship Co of New Zealand Ltd (1923) 32 CLR 138 at 142 per Knox CJ and Starke J.
The Company incurred debts after 13 June 2018, and therefore incurred debts at a time when it was insolvent.
In particular, in this period the Company incurred a debt to Lords in respect of each of Progress Claims No 5 to No 8, which were issued at, respectively, the end of June, July, August and September 2018. In each case, the Company incurred, pursuant to the terms of the Construction Contract, a debt in respect of the amount certified in the corresponding payment schedule.
The amounts incurred in respect of each Progress Claim and the dates on which those amounts were due and payable were as follows: 1. Progress Claim No 5, issued 30 June 2018 - an amount of $833,913.24, due and payable on 23 July 2018; 2. Progress Claim No 6, issued 31 July 2018 - an amount of $842,858.42, due and payable on 15 August 2018; 3. Progress Claim No 7, issued 21 August 2018 - an amount of $130,323.70, due and payable on 20 September 2018; and 4. Progress Claim No 8, issued 30 September 2018 - an amount of $130,323.70, due and payable on 18 October 2018.
It was common ground that, in the period following 13 June 2018, the Company also incurred debts in respect of invoices issued by the following entities: 1. on 31 August 2018, a debt to BT Project Marketing Pty Ltd (BTPM) in the amount of $3,667.73, in respect of an invoice issued for marketing expenses; 2. on 12 December 2018, a debt to Stornoway Capital Partners Pty Ltd in the amount of $22,000, in respect of an invoice issued for a service fee; and 3. on 23 January 2020, a debt to RUK Australia in the amount of $880, in respect of an invoice for project management fees.
In addition, the Plaintiffs claimed that the Company incurred debts in respect of Delay Damages Claim No 1 and No 2. The Defendants contended that these were not debts, but claims for unliquidated damages. I deal with this issue when addressing the question of loss and damage below.

[49]

Reasonable grounds for suspecting insolvency

In Quin (in his capacity as liquidator of Roderick Group Pty Ltd (in liq)) v Vlahos (2021) 64 VR 319; [2021] VSCA 205, the Victorian Court of Appeal (Kyrou, Kennedy and Walker JJA) made the following observations regarding the operation of s 588G(1)(c), which concerns whether there are reasonable grounds for suspecting that the company is insolvent at the time when a debt is incurred (at [216], footnotes omitted, emphasis original): "(a) First, the requirement under sub-s (1)(c) is an objective one. The provision calls for an inquiry into the objectively formed state of mind of 'a director of reasonable competence and diligence, seeking properly to perform his or her duties as imposed by law ... and capable of reaching a reasonably informed opinion as to [the company's] financial capacity'. The provision is not concerned with the particular director whose conduct is under scrutiny. (b) Secondly, the focus of the sub-section is on a specific state of mind, namely, 'suspicion'. This can be contrasted with earlier formulations of analogous provisions, such as that found in s 556 of the Companies (NSW) Code 1981, which required there to be reasonable grounds for expecting a company's insolvency. A suspicion is 'less developed and less well formulated than [an] expectation'. A suspicion that something exists is 'more than a mere idle wondering whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to "a slight opinion, but without sufficient evidence"'. (c) Thirdly, where there is material before the court that is capable of proving actual insolvency, and where the material was available to the director at the time the debt was incurred, a court will generally find that a reasonable person in the position of the director would have concluded that the company was unable to pay its debts as they fell due. However, the court must always ultimately make its own findings, based on all of the facts and circumstances that existed at the time, and without the benefit of hindsight."
I am satisfied that, as at 13 June 2018, there were reasonable grounds for suspecting that the Company was insolvent. In particular: 1. following the issue of a payment schedule in respect of Progress Claim No 4, the Company had a debt to Lords of around $2.8m; 2. the Company was aware that further costs were continuing to be incurred by Lords and would be the subject of future Progress Claims; 3. Lords were threatening to take action and cease work on site if its outstanding debt was not paid in accordance with a stipulated payment program; 4. the Company did not have any assets of its own to meet its debt to Lords; 5. the Company had entered into the Quantum Loan, but any advances under that facility were wholly dependent on the sale of SL class units, and there was no reasonable basis, given the sales to date and the advances to date, to conclude that the sale of further SL class units would occur within a period and in a volume sufficient to pay the outstanding debts to Lords, within the time required by Lords, or future invoices as and when they fell due; 6. SLI had agreed to procure that the Company pay amounts owing to Lords, but SLI did not have any assets other than the Land, which was already mortgaged (with the full amount of the Solcap facility having been drawn down in order to purchase the Land); and 7. the Company did not, as at June 2018, have any offer of construction finance, and its ability to obtain such finance depended on its ability to achieve pre-sales targets (which had not been met).
I am also satisfied that, at all times following 13 June 2018, there were reasonable grounds for suspecting that the Company was insolvent. In this period, further progress claims were issued by Lords, and certified by the Superintendent. With the cessation of works on site, pre-sales came to a halt, well short of the level required in order to obtain construction finance. This remained the case through until the termination of the Construction Contract. Any further amounts raised from the sale of SL class units following June 2018, or advanced under the increase to the Solcap facility, were insufficient to meet the existing debts to Lords, with the Company being unable to pay any of Progress Claims No 5 to No 8 as and when they fell due.

[50]

Knowledge of Mr Gribble

A director contravenes s 588G(2) of the Act by failing to prevent a company from incurring a debt, in the circumstances specified in s 588G(1), if the director is aware at the relevant time that there are reasonable grounds for suspecting that the company is insolvent, or would become insolvent by incurring the relevant debt, or if a reasonable person in a like position in a company in the company's circumstances would be so aware.
Mr Gribble had actual knowledge of each of the matters set out in paragraph [340] above.
As regards subparagraphs (1)-(3), Mr Gribble was aware that monthly progress claims were being issued by Lords, pursuant to the terms of the Construction Contract; he received regular emails from Mr Maroun informing him of the amounts owing to Lords in respect of each such progress claim, the dates when they were due, and the outstanding balance; and he received emails from, and had discussions with, Mr Maroun in June 2018 regarding the action that Lords intended to take if the outstanding invoices were not paid (see paragraphs [176]-[189] above).
As regards subparagraph (4), Mr Gribble was aware that the only assets of the Company were cash at bank and capitalised development costs. The cash at bank was minimal, and the capitalised development costs did not represent an asset which could be realised in order to pay current liabilities. .
As regards subparagraph (5), one of the tasks for which Mr Gribble was personally responsible was raising money for the Linden Development, including via the sale of SL class units. The emails which Mr Gribble sent to Lords regarding when payments would be made, and in what amounts, indicate that he was monitoring, and aware of, the level of sales of SL class units and therefore the amount available to be advanced under the Quantum Loan (see, for example, paragraphs [144]-[145] above).
As regards subparagraph (6), Mr Gribble agreed in cross-examination that he was aware that the Solcap Loan had been fully drawn down as at 15 December 2017 and applied to the purchase of the Land.
As regards subparagraph (7), Mr Gribble was aware that no offer of construction finance for the Linden Development had been received as at June 2018, and that it was uncertain when (or if) the Company would have such finance in place. For example, he referred in his affidavit to an email from Mr Najar to Mr Maroun on 19 June 2018, which was copied to Mr Gribble and which stated that "hopefully by mid of next month we will have finance in place" (emphasis added). Mr Gribble was also aware of the terms of the Quantum PDS, which had set out the level of pre-sales required in order to obtain construction finance. In addition, he was responsible for overseeing the sale of units by Colliers and was aware of the level of pre-sales.
As regards the position following 13 June 2018, Mr Gribble was aware of each of the further Progress Claims issued by Lords in this period and the amounts owing by the Company in respect of each; was aware that the additional moneys advanced by Solcap or QM Trust in this period were insufficient to meet the amounts owing to Lords; was aware of the conditions precedent regarding pre-sales stipulated in the indicative term sheets for construction finance; and was aware that pre-sales effectively "stagnated" when work stopped on site (see paragraph [206] above).
Mr Gribble gave evidence that it was his understanding, based on a conversation with Mr Najar, that the works were to be performed in two stages, with Stage 1 having a budget of $3.04m, and Stage 2 having a budget of $15.18m; that Stage 1 would end on 29 May 2018; that Stage 2 was "subject to final construction finance"; and that work on Stage 2 would commence only when a further letter or notice was issued by the Company to Lords.
I have found that the relevant conversation did not occur (see paragraphs [89]-[96] above). I have also found that Mr Gribble did not in fact have any such understanding in the period April to June 2018, noting the complete lack of any contemporaneous statement to this effect in his various communications with Mr Maroun about the Linden Development.
If (contrary to my findings) Mr Gribble did have this understanding based on a discussion with Mr Najar, it was not reasonably based. It was at odds with the plain terms of the Construction Contract, which Mr Gribble signed. When taken to the terms of cl 2.7 of the General Conditions, Mr Gribble stated: "I find reading a building contract extremely complex and I don't understand them". I do not consider that evidence to be credible, in circumstances where Mr Gribble has been involved in around twenty property developments.
Significantly, the Defendants did not advance any submission, orally or in writing, that any understanding on Mr Gribble's part that "Stage 2" works could not commence without finance being in place and without some further notice being given to Lord given was reasonably based, or that a reasonable director in Mr Gribble's position would have held such a view.
Having regard to those matters, I am satisfied that Mr Gribble had actual knowledge of matters which constitute reasonable grounds for suspecting insolvency. Further, I am satisfied that a reasonable person who was a sole director of a company in the Company's circumstances, and who had knowledge of those matters, would have been aware that there were reasonable grounds for suspecting insolvency.
It follows that Mr Gribble contravened s 588G(2) of the Act.

[52]

Section 588H Defence

Section 588H of the Act relevantly provides as follows: Application (1) This section has effect for the purposes of: (a) proceedings for a contravention of subsection 588G(2) relating to the incurring of a debt at a time (the key time ); and … (c) proceedings under section 588M relating to the incurring of the debt or the disposition of the property. Expectations and belief about company's solvency (2) It is a defence if it is proved that, at the key time, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent despite all its debts incurred, and dispositions of its property made, at that time. (3) Without limiting the generality of subsection (2), it is a defence if it is proved that, at the key time, the person: (a) had reasonable grounds to believe, and did believe: (i) that a competent and reliable person (the other person ) was responsible for providing to the first - mentioned person adequate information about whether the company was solvent; and (ii) that the other person was fulfilling that responsibility; and (b) expected, on the basis of information provided to the first - mentioned person by the other person, that the company was solvent at that time and would remain solvent despite all its debts incurred, and dispositions of its property made, at that time.
The principles applicable to this provision were summarised by the Court of Appeal in Treloar at [163]-[168]. There are two elements which must be established in order to make out a defence under s 588H(2). The first element is that Mr Gribble had reasonable grounds to expect that, at the relevant times, the Company was solvent, and would remain solvent. The second concerns Mr Gribble's actual expectation as to those matters.
The first element was explained by Austin J in Tourprint International Pty Ltd (in liq) v Bott (1999) 32 ACSR 201; [1999] NSWSC 581 at [67] as follows: "'Expectation', as required by s 588H(2), means a higher degree of certainty than 'mere hope or possibility' or 'suspecting'. The defence requires an actual expectation that the company was and would continue to be solvent, and that the grounds for so expecting are reasonable. A director cannot rely on a complete ignorance of or neglect of duty and cannot hide behind ignorance of the company's affairs which is of their own making or, if not entirely of their own making, has been contributed to by their own failure to make further necessary inquiries." (citations omitted)
This approach was adopted by Palmer J in Hall v Poolman [2007] NSWSC 1330 at [262] and by Goldberg J in McLellan, in the matter of the Stake Man Pty Ltd v Carroll (2009) 76 ACSR 67; [2009] FCA 1415 at [170].
As regards the second element, it is necessary not only to consider whether the evidence establishes that Mr Gribble had an actual expectation that the Company was, and would remain, solvent, but also whether Mr Gribble had reasonable grounds for that expectation. As noted in Treloar at [168], the courts have been critical of reliance on the possibility or hope of future successful trading as the basis for such an expectation. In Hall v Poolman at [265], Palmer J observed that: "In order for the defence to succeed, there must be an expectation, held on reasonable grounds, that recourse to assets will enable debts to be paid, not at some indefinite time in the future, but so as to keep the companies solvent according to the definition in CA s.95A, namely, as the debts fall due for payment. It is not appropriate to base an expectation of solvency: '… upon the prospect that [the company] might trade profitably in the future thereby restoring its financial position. … The question is whether the company at the relevant time is able to pay its debts as they become due not whether it might be able to do so in the future if given time to trade profitably …': Sheahan v Hertz Australia Pty Ltd (1995) 16 ACSR 765, at 769; Powell v Fryer (above) at [75]."
The only basis on which a defence pursuant to s 588H was advanced in written submissions was as follows: "The Defendants … plead a defence under s 588H of the Act in respect of Mr Gribble's reliance on the CFO and financial controller of the Quantum Group, Stephen Taylor …"
In his affidavit, Mr Gribble gave the following evidence of his reliance on Mr Taylor: "I relied heavily upon Stephen as CFO to inform me that both [SLI] and the Company had the financial capacity to meet all debts when and if they fell due. At page 868 are copies of the Linden Project funding table, cash flow model and report to directors all created by Stephen. In early 2018, Stephen created cashflow, project budgets and work with me and the brokers to finalise the construction loan for the Linden Project. At page 871 is a copy of a work paper prepared by Stephen on the funding proposal with Stornoway and used in different version to potential funders."
In cross-examination, Mr Gribble acknowledged that the first of the documents referred to in the above passage was not in fact "created by Stephen", but was instead created by Lords; and that the second of the documents was created for the purpose of discussions with potential financiers and was a document showing the amount of funding required (rather than a document showing the amount of funding that the Company currently had).
In closing address, Counsel for the Defendants developed the s 588H defence as follows: "COUNSEL FOR DEFENDANTS: Really what we say about that is that Mr Gribble relied on Mr Taylor or the CFO. His CV is in evidence with his experience, but, in essence, he was the one responsible for the accounts. He had access to the accounts. Mr Gribble gave evidence that he did not, and so to the extent that there were specific payments being made back and forth between companies and third parties, that was in Mr Taylor's purview and Mr Gribble relied on him for that. He's the only person we rely on in respect of the 588H defence. HIS HONOUR: Are you able to say what Mr Taylor knew that Mr Gribble did not know? [COUNSEL FOR DEFENDANTS]: Yes, relevantly, it's the accounts. That is, what was outstanding to each creditor at each point in time. The actual numbers. Mr Gribble was involved in the raising of capital to put into the bank accounts, but the transfers that were going out to anybody that was owed money, including Lords, and the figures that were owed to them were within Mr Taylor's purview and that of his team, and not Mr Gribble."
As set out above, my finding that the Company was insolvent by 13 June 2018 and at all times thereafter, and that there were reasonable grounds for suspecting insolvency, largely turns on the Company's inability to meet its indebtedness to Lords. Whatever responsibility Mr Taylor may have had for dealing with other creditors, the evidence clearly establishes that (to adopt the language of the submission set out above) Mr Gribble was in regular communication with Lords regarding "specific payments being made" by the Company to Lords, "what was outstanding to [Lords] at each point in time", "the transfers that were going out to …. Lords", "the figures that were owed to them", "the actual numbers". Mr Maroun was sending emails directly to Mr Gribble, and was receiving emails from Mr Gribble, about these matters throughout the relevant period. I therefore do not accept the submission that these matters "were within Mr Taylor's purview and that of his team, and not Mr Gribble".
Similarly, Mr Gribble did not rely on Mr Taylor to provide him with information about the terms of the Construction Contract, the Quantum Loan or the Solcap Loan (each of which was signed by Mr Gribble on behalf of the Company, before Mr Taylor joined the Company), or to provide him with information about the sales of SL class units or the status of the attempts to obtain construction finance or any indicative term sheet provided by a financier or the level of pre-sales of units in the Linden Development.
For those reasons, the s 588H defence has not been established.

[53]

Section 1318 Defence

Section 1318(1) of the Act provides as follows: If, in any civil proceeding against a person to whom this section applies for negligence, default, breach of trust or breach of duty in a capacity as such a person, it appears to the court before which the proceedings are taken that the person is or may be liable in respect of the negligence, default or breach but that the person has acted honestly and that, having regard to all the circumstances of the case, including those connected with the person's appointment, the person ought fairly to be excused for the negligence, default or breach, the court may relieve the person either wholly or partly from liability on such terms as the court thinks fit.
Counsel for the Defendants did not, in opening or closing address, specifically advance any submissions in support of the s 1318 defence.
In Woodgate v Davis (2002) 55 NSWLR 222; [2002] NSWSC 616 at [36], Barrett J observed that: "Section 588G and related provisions serve an important social purpose. They are intended to engender in directors of companies experiencing financial stress a proper sense of attentiveness and responsible conduct directed towards the avoidance of any increase in the company's debt burden. The provisions are based on a concern for the welfare of creditors exposed to the operation of the principle of limited liability at a time when the prospect of that principle resulting in loss to creditors has become real."
Mr Gribble was responsible for the issue of the Quantum PDS which stated that the Company needed to obtain construction finance in order to fund the costs of the Linden Development, and needed to achieve pre-sales of a gross value equivalent to a value of at least 100% of senior debt cover (or some $22.7m) in order to obtain such finance. Mr Gribble signed the Construction Contract, as sole director of the Company. He was aware that a Commencement Notice was provided to Lords at a time when the Company did not have in place the finance necessary to meet its obligations under that contract, and had not achieved pre-sales of the level required in order to obtain such finance. He was aware of the debts which had been incurred to Lords as at the end of May 2018, and the Company's lack of any means as at that time to pay those debts. On 31 May 2018, Mr Maroun sent Mr Gribble an email which referred to the issue of Progress Claim No 4 on the previous day, and which stated: "With ground floor slab being poured on Tuesday, we will be progressing into the construction of the 2 x buildings with slab pours anticipated every 8 days. With almost 3 x slabs being poured per month the monthly progress claims will be large. Can you please call me to discuss urgently if there are any issues with the progression of payments. I trust you understand my concern."
Mr Gribble did not, in response to this message, urgently contact Mr Maroun to inform him that the Company did not have finance in place to fund the works referred to in this email. Instead, he allowed Lords to continue to incur very substantial costs after the end of May 2018, which were the subject of subsequent progress claims that remain unpaid.
Having regard to all the circumstances of this case and, in particular, the matters set out above, I am not satisfied that Mr Gribble ought fairly be excused for his breach of s 588G of the Act.

[54]

Insolvent Trading Claim against Quantum Management

Section 588V(1) of the Act provides as follows: When holding company liable (1) A corporation contravenes this section if: (a) the corporation is the holding company of a company at the time when the company incurs a debt; and (b) the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and (c) at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and (d) one or both of the following subparagraphs applies: (i) the corporation, or one or more of its directors, is or are aware at that time that there are such grounds for so suspecting; (ii) having regard to the nature and extent of the corporation's control over the company's affairs and to any other relevant circumstances, it is reasonable to expect that: (A) a holding company in the corporation's circumstances would be so aware; or (B) one or more of such a holding company's directors would be so aware; and (e) that time is at or after the commencement of this Act.
Quantum Management owned 100% of the shares in SLI, which in turn owned 100% of the shares in the Company. It follows that the Company was a "subsidiary" of Quantum Management within the meaning of s 46 of the Act, and therefore that Quantum Management was, at all relevant times, the "holding company" of the Company, within the meaning of s 9 of the Act.
Mr Gribble was the sole director of Quantum Management. Quantum Management and Mr Gribble established the Company as a special purpose vehicle for the purpose of the Linden Development. The Company had no employees of its own, and relied on employees being supplied by the Quantum Group in order to perform its functions. In short, Quantum Management controlled the Company and was aware of all matters known to Mr Gribble about the Company's operations.
For the reasons set out above, I have determined that the Company incurred debts following 13 June 2018; that it was insolvent at the time that it incurred those debts; and that there were reasonable grounds for suspecting that it was insolvent at that time.
I am satisfied that, having regard to the nature and extent of Quantum Management's control over the Company's affairs, and the circumstances of the Company set out at paragraph [340] above (those being matters known to Mr Gribble, and therefore to Quantum Management), it is reasonable to expect that a holding company in Quantum Management's circumstances, or one of more of the directors of such a holding company's directors, would have been aware, at the time those debts were incurred, that there were reasonable grounds for suspecting that the Company was insolvent.
Accordingly, it has been established that Quantum Management contravened s 588V(1) of the Act.

[55]

Compensation under ss 588M and 588W

Section 588M of the Act relevantly provides as follows: Recovery of compensation for loss resulting from insolvent trading (1) This section applies where: (a) a person (in this section called the director) has contravened subsection 588G(2) or (3) in relation to the incurring of a debt by a company; and (b) the person (in this section called the creditor) to whom the debt is owed has suffered loss or damage in relation to the debt because of the company's insolvency; and (c) the debt was wholly or partly unsecured when the loss or damage was suffered; and (d) the company is being wound up; … This section applies whether or not the director has been convicted of an offence relating to the contravention or a civil penalty order has been made against the director for the contravention. (2) The company's liquidator may recover from the director, as a debt due to the company, an amount equal to the amount of the loss or damage.
Section 588W(1) of the Act provides as follows: Recovery of compensation for loss resulting from insolvent trading (1) Where: (a) a corporation has contravened section 588V in relation to the incurring of a debt by a company; and (b) the person to whom the debt is owed has suffered loss or damage in relation to the debt because of the company's insolvency; and (c) the debt was wholly or partly unsecured when the loss or damage was suffered; and (d) the company is being wound up; the company's liquidator may recover from the corporation, as a debt due to the company, an amount equal to the amount of the loss or damage.
Since I have determined that Mr Gribble contravened s 588G(2) of the Act and Quantum Management contravened s 588V(1) of the Act, the requirements of each of s 588M(1)(a) and s 588W(1)(a) are satisfied. Further, because the Company is in liquidation, and each of the debts which is the subject of the insolvent trading claim was unsecured, the requirements of each of s 588M(1)(c)-(d) and s 588W(1)(c)-(d) are satisfied.
In order to determine the Plaintiffs' claim for compensation, it is necessary to determine the following matters: 1. what debts were incurred by the Company while it was insolvent; 2. whether the person to whom each such debt was owed has suffered loss or damage in relation to that debt because of the Company's insolvency; and 3. what is the amount of such loss or damage.

[60]

Delay Damages Claims No 1 and No 2

The Plaintiffs argued that, in addition to these debts to Lords totalling $1,511,244.06, the Company incurred further debts to Lords in respect of Delay Damages Claim No 1 ($953,700) and Delay Damages Claim No 2 ($173,910). The Defendants disputed that these claims by Lords for damages constituted debts incurred by the Company on the date that those claims were issued.
Mr Bailey expressed the opinion in his expert report that any claim for insolvent trading would reasonably consist of: "(i) Genuine trade creditor debts demonstrated as being incurred after the date upon which the Company became insolvent; and (ii) Liquidated damages (including but not limited to interest and other costs of proceedings) brought against the Company by a creditor, which have been acknowledged in a judgment of a court; and (iii) Any other damages where the relevant creditor has demonstrated that it is contractually entitled to certain damages, their amount is calculated in line with agreed terms within said contract, and has provided supporting documentation to verify the accuracy of the calculation."
Mr Bailey further expressed the view that any claim for insolvent trading must reasonably exclude "[u]nliquidated damages brought against the Company by a creditor that have not reasonably been assessed or scrutinised by a court".
The debts incurred by the Company to Lords in respect of Progress Claims No 5 to 8 fall within subparagraph (i) above. The debt incurred to the Company to Lords in respect of pre-judgment interest on the unpaid balance of those Progress Claims falls within subparagraph (ii) above.
Delay Damages Claims No 1 and No 2 do not fall within either of those subparagraphs. The Plaintiffs contended that they fell within subparagraph (iii) above.
Mr Bailey's opinion in respect of Delay Damages Claims No 1 and No 2 was as follows: "I acknowledge that the contract between the Builder and the Company has a relevant clause pertaining to the Builder's entitlement to delay damages, and have accordingly sighted two (2) delay damages claim notice documents in which the methodology for calculating these damages is evidenced. I can therefore infer that these claims are reasonable with regard to contractual entitlement of the Builder. However, I acknowledge that this component of the Builder's claim does not directly relate to a debt raised by the Company in the continuing course of business and must be separated from other debts that are not damages for the purpose of this exercise."
Mr Bailey described the Delay Damages Claims as "damages incurred as a consequence of the insolvency of the Company, as opposed to additional debts positively incurred by the Company after the date on which its insolvency was apparent, or ought to have been apparent, to the Director".
In cross-examination, Mr Bailey was taken to this part of his report and confirmed that he had treated the Delay Damages Claims separately from the Progress Claims. He gave the following evidence: "Q. That's because that isn't an additional debt incurred by the company during the period of insolvency; is that correct? A. That's correct. It's a consequence rather than direct debt."
Mr Bailey also confirmed that, in order for the Delay Damages Claims to fall within subparagraph (iii) above, there would need to be supporting documentation for those claims. He also agreed that, if costs caused by delay had already been claimed in respect of earlier Progress Claims, then it would be necessary to remove any such costs to avoid "double charging".
The Delay Damages Claims were expressed to be advanced pursuant to clause 39.9, or alternatively clause 34.9, of the General Conditions of the Construction Contract. Neither of those clauses gave rise to an entitlement to claim a liquidated sum.
Clause 39.9 gave Lords the right to claim "damages suffered" by reason of a suspension of works, with such damages to "be assessed by the Superintendent, who shall certify them as moneys due and payable to [Lords]". Clause 34.9 provided that, for every day which was the subject of an extension of time for a "compensable cause" and for which Lords gave the Superintendent a claim for delay damages pursuant to subclause 41.1, Lords was "entitled to be paid the cost actually incurred by [Lords] on that day by reason of the delay, subject to the limitation that the total amount of compensation payable under this subclause 34.9 and under subclause 33.4 for any one day will not exceed the amount stated in Item 31 [being $5,100 per calendar day]". Clause 34.9 further stated as follows : "[Lords] agrees that the compensation provided for in this subclause 34.9 and in subclause 33.4 is the only amount which it may recover from [the Company] for any exclusion, suspension, delay or disruption, including any delay or disruption arising from a breach of the Contract by [the Company]."
Accordingly, in order to show any contractual entitlement to payment under clause 39.9 or clause 34.9, it was necessary for Lords to establish, respectively, that it had suffered damage as a result of a suspension of works, or that it had incurred costs as a result of a delay.
In each of the Delay Damages Claims, Lords stated that it had "sustained" the "following costs and damages" during the period covered by the claim (which, as between the two claims, covered July 2018 to January 2019): 1. hire costs for a tower crane, site amenities, formwork, scaffolding, temporary fencing and crane radios, as well as daily costs for electricity bill and construction work zone; 2. costs of Contract Works & Public Liability Insurance and Professional Indemnity Insurance; 3. costs of the Lords Project Team, consisting of five individuals whose rates ranged from $375 to $1,000 per day; and 4. Lords Group overhead costs relating to the project accounts team, an estimator and a director (each allocated on the basis of 50% of their time), with the resultant rates being from $325 to $550 per day.
The Construction Contract did not specify rates for any of these items, including for the members of Lords' team.
Lords did not provide, with either of the Delay Damages Claims, any rental agreements or invoices to establish the daily hire costs, or any documents to establish the daily cost of the insurance policies. Moreover, it did not provide any documents to substantiate the costs of the Lords project team or to establish that these persons were unable to be redeployed to other projects in the period from July 2018 to January 2019.
In addition, Delay Damages Claim No 1 was expressed to be incomplete, in that Lords claimed that it had suffered other damage, and incurred other costs, which could not be quantified as at the date of that Claim. It stated as follows: "This delay damages claim does not include the following items which at this stage, cannot be ascertained until re-mobilisation on site. It is anticipated that those damages will crystallise once works recommence after the current suspension ends. For completeness, those damages include: • Damages associated with any further EOT notices • Remediation costs associated with dilapidated construction details as a result of the suspended period of works (ie. Rusted reinforcement starter bars etc.) • Damages costs from Lords Group sub-contractors."
Finally, it appears that there is a significant degree of overlap between Delay Damages Claim No 1 and Progress Claims No 6 to No 8.
The period covered by Delay Damages Claim No 1 is a period of 157 days up to 24 December 2018. It therefore covers all of August and September 2018, and a significant portion of July 2018, presumably from around the time that work ceased on site. Costs incurred by Lords in July, August and September 2018 were the subject of, respectively, Progress Claims No 6, No 7 and No 8. In particular, each of Progress Claims No 7 and No 8 was for precisely the same amount, and each was a claim in respect of Preliminaries and Overheads.
Having regard to the matters set out above, I am not satisfied that it has been demonstrated that Lords was contractually entitled to the amount of damages sought in Delay Damages Claims No 1 and No 2, or that Lords provided supporting documentation to verify the accuracy of the calculation. Instead, I consider that the claims for delay damages were claims for unliquidated damages which were brought by Lords against the Company and which have not reasonably been assessed or scrutinised by a court. In accordance with the views of Mr Bailey which I have set out above, it follows that the claim for insolvent trading must reasonably exclude such damages.

[61]

The amount of the loss or damage suffered by Lords in relation to the debts

The final issue for determination is what is the amount of loss or damage suffered by Lords in relation to the debts which were incurred while the Company was insolvent.
Both parties relied on the following observations by Barrett J in Edenden v Bignell [2007] NSWSC 1122 at [30]: "[Section 588M] does not allow recovery of the amount of the creditor's debt as such. Rather, it is a provision allowing recovery of compensation measured by reference to loss or damage suffered by the creditor in relation to the debt because of the debtor's insolvency. In some cases - perhaps most cases - this will be the equivalent of the amount of the debt: see, for example, Powell v Fryer (2001) 37 ACSR 589. In others - for example where a proof of debt is admitted and a substantial payment is made to all creditors rateably - the relevant loss or damage may be less than the amount of the debt. There may perhaps be circumstances in which the amount of the loss or damage exceeds the amount of the debt. The separateness of the debt, on the one hand, and the loss and damage, on the other, is emphasised by the statement in s.588M(3) that an amount equal to the loss or damage may be recovered 'as a debt due to the creditor'."
The Plaintiffs submitted, in reliance on this passage, that the amount of the compensation should be the unpaid amount of the relevant debts owing to Lords, totalling $1,511,244.06. The "quantum of loss or damage to which the creditor is entitled under s 588M is usually the amount of the debt owed by the insolvent company to the creditor": Treloar at [53]. As noted above, the Defendants accepted that this approach should be applied in respect of the creditors other than Lords. The Plaintiffs noted that the evidence confirmed that no dividend had been paid, and that there were no funds available to pay a dividend to creditors of the Company.
The Defendants submitted that the above passage from Edenden recognises that there may be exceptions to the usual approach of calculating compensation by reference to the face value of the unpaid debts. In particular, the Defendants referred to the following remarks made by Brereton J in Re Salfa Pty Ltd (in liq) [2014] NSWSC 1493 at [24], immediately after quoting (at [23]) the passage from Edenden set out above: "Thus, s 588M makes recoverable the loss or damage suffered by the creditor in relation to the debt because of the insolvency, not the original amount of the debt. Although the amount of the debt will be the starting point and will often - but not always - be the amount of the loss, the cases do not state that the loss or damage will invariably be equivalent to the debt. Indeed, this could not be so where the creditor would in any event receive a dividend in the winding up. While Powell v Fryer rightly rejects the notion that most of the inquiries suggested in that case would be necessary, it seems to me that assessment of the loss or damage must necessarily bring to account any dividend paid or likely to be paid to the creditor."
The Defendants submitted that, just as it is necessary to take account of any dividend in a winding up, calculation of the loss or damage suffered by Lords in relation to the debts in question "must, as a matter of principle, take into account credits for payments made to Lords (to the extent that they have not been recovered as preferences, which they have not) following the date of insolvency so as to reduce the quantum of 'loss or damage' that can be claimed by the liquidator".
In that regard, the Defendants contended that "the 'debt' owed to Lords was 'substantially reduced' after the date of insolvency".
This submission was advanced on the basis of Mr Cavanagh's report.
Mr Cavanagh's primary position on loss and damage was that the quantum of such loss was $880, by reason that the date of insolvency was 11 December 2019 and only one unpaid debt was incurred after that date (being the debt of $880 to RUK). For reasons given above, I have rejected Mr Cavanagh's conclusion on the date of insolvency.
Mr Cavanagh further expressed the view that, if he was wrong on the date of insolvency and the Company was (as Mr Bailey opined, and as I have found) definitively insolvent by 13 June 2018 and remained insolvent thereafter, then no loss or damage was suffered as a result of the insolvent trading. The basis for this opinion was that, as at 13 June 2018, the Company owed $2,782,855.11 to Lords, and as at the date the Company entered administration, the net asset deficiency was around $1.519m, "meaning that the Company did not incur a loss from continuing to trade after 13 June 2018".
There are two main flaws in this approach.
First, the issue is not whether the Company incurred a loss from continuing to trade while insolvent. Instead, the issue is whether "the person … to whom the debt is owed has suffered loss or damage in relation to the debt because of the company's insolvency": s 588M(1)(b).
Secondly, Mr Cavanagh considered the total indebtedness of the Company to Lords, and whether the level of that total indebtedness decreased between 13 June 2018 and the date that the Company entered into administration.
In adopting this approach, Mr Cavanagh focussed on the requirement in s 588M to identify loss or damage "because of the company's insolvency" and asked whether the overall level of indebtedness to the creditor decreased between the date that the company became insolvent and the date that it went into administration. He explained in his evidence in chief that "when you're quantifying a loss that … happened because of an event, and in this case it's the alleged insolvent trading", then his "methodology for calculating that loss" was to ask "What position are you in now after that supposed event, and what position would you have been in if that event or thing didn't happen?"
However, s 588M does not ask whether the position of the creditor overall has worsened or improved "because of the insolvency", but whether the creditor has suffered loss or damage "in relation to the debt [which was incurred while the company was insolvent] because of the company's insolvency" (s 588M(1)(b), s 588W(1)(b)). The amount of compensation to which the liquidator is entitled is the amount of such loss or damage (s 588M(2), 588W(1)).
The debts to Lords which were incurred when the Company was insolvent were those in respect of Progress Claims No 5 to No 8, as well as the interest subsequently awarded on those debts which was included in the Judgment Debt. It is therefore necessary to determine whether Lords suffered loss or damage in relation to those debts because of the Company's insolvency, and the amount of such loss or damage.
In Perrine v Carrello [2017] WASCA 151 at [40]-[41], the Western Australian Court of Appeal explained that this question will usually be answered along the following lines, "as at trial, the creditor of the insolvent company will get nothing; if the company were not insolvent, the creditor would be paid the amount of the debt; consequently, the loss is the amount of the debt", adding (citations omitted): "That is why the cases state that, in ascertaining the creditor's loss or damage, the amount of the debt is the starting point and will often, if not normally, reflect the quantum of the loss. If the creditor has received or is receiving a dividend in the winding up, the loss suffered by the creditor is reduced accordingly."
This passage was quoted with approval in Quin v Vlahos at [267].
For those reasons, Mr Cavanagh's report does not address the correct statutory test regarding compensation for an insolvent trading claim.
I accept that, in assessing the loss or damage suffered by the creditor "in relation to the debt because of the company's insolvency", it is necessary to take into account any payments made by the company to the creditor in respect of the debt during the period that the company was insolvent. However, all such payments made by the Company to Lords after 13 June 2018 have been taken into account in determining the outstanding balance due to Lords in respect of Progress Claims No 5 to No 8.
The ordinary rule with respect to appropriation of payments is that the debtor has a right when making a payment to appropriate the money to any of the debts owing to the creditor and, if the creditor takes the money, the creditor is bound to recognise this appropriation; and if the debtor does not make any such appropriation, the creditor is then entitled to make an appropriation: Visbord v Federal Commissioner of Taxation (1943) 68 CLR 354 at 371; 371 per Latham CJ; [1943] HCA 4. When making payments to Lords, the Company did not appropriate the payments to any particular debt. Instead, Lords informed the Company of the particular debts to which particular payments were appropriated, and the resultant outstanding balance of each particular debt.
Lords generally chose to appropriate the payments received from the Company to the payment of the oldest outstanding debt, until that debt was paid in full. By this approach, the amounts due by the Company to Lords in respect of Progress Claims No 1 to 4 were paid in full, and the amount due by the Company to Lords in respect of Progress Claim No 5 was reduced from $833,913.24 to $221,479.45 (with the full amount due in respect of Progress Claims No 6 to 8 remaining outstanding).
It follows that all amounts received by Lords in payment of the debts owing by the Company in respect of Progress Claims No 5 to 8 have been taken into account in determining the outstanding balance of those debts.

[63]

Unfair Preference Claim

The unfair preference claim can be dealt with briefly.
There were four payments in issue, each of which was a payment made to Quantum Development. The date and amount of each payment were as follows: 1. 20 April 2018, a payment of $264,726; 2. 8 May 2018, a payment of $28,457; 3. 18 September 2018, a payment of $16,500; and 4. 20 September 2018, a payment of $66,000.
It was common ground that Quantum Development was a related entity of the Company. It was also common ground that the relation-back day in respect of the Company is 19 March 2020, and that the relevant relation-back period runs from 19 March 2016 to 19 March 2020.
Each of the four payments in issue was made to Quantum Development between April and September 2018. It follows that each was a payment made to a related entity during the relation-back period.
Section 588FA(1) of the Act provides as follows: Meaning of unfair preference (1) A transaction is an unfair preference given by a company to a creditor of the company if, and only if: (a) the company and the creditor are parties to the transaction (even if someone else is also a party); and (b) the transaction results in the creditor receiving from the company, in respect of an unsecured debt that the company owes to the creditor, more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company; even if the transaction is entered into, is given effect to, or is required to be given effect to, because of an order of an Australian court or a direction by an agency.
Quantum Development was a creditor of the Company, and the payments in issue were made in respect of amounts due to Quantum Development (see paragraphs [134]-[137] above). Each of the payments resulted in Quantum Development receiving from the Company in respect of its unsecured debt, more than Quantum Development would have received from the Company in respect of the debt if the transaction were set aside and Quantum Development were to prove for that debt in the winding up of the Company. When the Company went into administration, Quantum Development was not a creditor of the Company. In contrast, as noted above, no dividend has been paid to unsecured creditors and there are no funds to pay any such dividend.
It follows that the payments were unfair preferences within the meaning of section 588FA.
The Plaintiffs contended that each of these payments was an insolvent transaction within the meaning of section 588FC, which provides as follows: Meaning of insolvent transaction A transaction of a company is an insolvent transaction of the company if, and only if, it is an unfair preference given by the company, or an uncommercial transaction of the company, and: (a) any of the following happens at a time when the company is insolvent: (i) the transaction is entered into; or (ii) an act is done, or an omission is made, for the purpose of giving effect to the transaction; or (b) the company becomes insolvent because of, or because of matters including: (i) entering into the transaction; or (ii) a person doing an act, or making an omission, for the purpose of giving effect to the transaction.
The first two payments to Quantum Development were made on 20 April 2018 and 8 May 2018, and the third and fourth payments were made on 18 and 20 September 2018.
For reasons given above, I have accepted Mr Bailey's opinion that the Company was likely insolvent by 30 May 2018, was definitely insolvent by 13 June 2018, and remained insolvent at all times thereafter until it entered into administration.
It follows that the Plaintiffs have not established that the first two payments to Quantum Development were made, or that an act was done for the purpose of giving effect to the payments, at a time when the Company was insolvent. Nor have they established that the Company became insolvent as a result of those payments being made.
However, the Plaintiffs have established that the third and fourth payments to Quantum Development were made at a time when the Company was insolvent. It follows that each of those payments was an insolvent transaction.
It also follows that each of the third and fourth payments, being an insolvent transaction with a related party during the relation-back period, was a voidable transaction: s 588FE(4).
Accordingly, the Liquidator is entitled to an order pursuant to s 588F(1) of the Act that Quantum Development pay to the Company an amount equal to the money that the Company paid pursuant to those transactions, being an amount of $82,500.

[64]

Conclusion and Orders

For the reasons given above, I have determined that the insolvent trading claims against Mr Gribble and Quantum Management have been established, and that the amount of compensation which the Liquidator is entitled to recover against each of them pursuant to, respectively, s 588M and s 588W is $1,532,291.06.
The Plaintiffs also sought pre-judgment interest under s 100 of the Civil Procedure Act 2005 (NSW). The making of a demand is not a pre-requisite to a cause of action for insolvent trading and, as a matter of convenience, the award of interest is usually taken to run from the date of the appointment of the liquidator: Powell v Fryer [2001] SASC 59 at [115] per Olsson J (Duggan and Williams JJ agreeing); Smith v Bone (No 2) (2015) 233 FCR 568; [2015] FCA 389 at [14]-[17] (Gleeson J). Accordingly, the Plaintiffs are entitled to interest on this sum from 21 April 2020 to the date of judgment.
I have also determined that the payments made to Quantum Development in September 2018 were voidable transactions, and that the Liquidator is entitled to an order under s 588FF(1) that Quantum Development pay the Company the amount of $82,500.
The Plaintiffs also sought an order for pre-judgment interest on this sum under s 100 of the Civil Procedure Act from the date that the demand for payment was made by the Liquidator (being 10 February 2023) to the date of judgment. I am satisfied that an award of pre-judgment interest for this period is appropriate in respect of the unfair preference claim: Woodgate as liquidator of Marketing Results Pty Ltd v Network Associates International BV [2007] NSWSC 1260 at [33] (Barrett J); Capital Finance Australia Ltd v Tolcher (2007) 164 FCR 83; [2007] FCAFC 185 at [150] per Gordon J (Heerey J agreeing).
Finally, as the Plaintiffs have been successful in their claims against each of the Defendants, the Plaintiffs are entitled to an order for their costs.
I will direct the parties to bring in short minutes of order to give effect to these reasons, including dealing with interest and costs. If there is any dispute about the form of those orders, including as to calculation of interest, or if any party seeks a different costs order, or a costs order other than on the ordinary basis, the parties will have an opportunity to be heard on these matters.
Accordingly, I make the following orders. 1. The parties are to bring in short minutes of order, by 5pm on 3 December 2024, to give effect to these reasons for judgment, including orders that deal with interest and costs, insofar as those matters can be agreed; and 2. If orders to give effect to these reasons for judgment cannot be agreed, the parties are to exchange, by 5pm on 3 December 2024, the form of orders which each party proposes and submissions (limited to 5 pages) on those orders, indicating whether, and if so why, an oral hearing is requested to deal with the matters in dispute.

In the matter of Shire Lind Developments (NSW) Pty Ltd (in liq) [2024] NSWSC 1454

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