EFG Australia Ltd & Anor v Murphy

[1995] HCATrans 180

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Brisbane  No B14 of 1995

B e t w e e n -

E.F.G. AUSTRALIA LIMITED and E.F.G. LEASING LIMITED

Applicants

and

ROBERT EUGENE MURPHY

Respondent

Application for special leave to appeal

DAWSON J
TOOHEY J
McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT BRISBANE ON THURSDAY, 22 JUNE 1995, AT 10.04 AM

Copyright in the High Court of Australia

MR P.A. KEANE, QC, Solicitor-General for the State of Queensland:   Your Honours, I appear with MR L.D. BOWDEN for the applicant.  (instructed by Clayton Utz)

MR J.A. GRIFFIN, QC:   May it please the Court, I appear with my learned friends, MR M.R. BLAND and MR S.R. ELEFTHERIOU for the respondent.  (instructed by Bickfords)

DAWSON J:   Mr Keane.

MR KEANE:   Your Honours, could we hand up a bundle of cases to which reference may be made.  The case raises questions as to the operation of section 121 of the Bankruptcy Act.  That section avoids, as against the trustee in bankruptcy, dispositions made with intent to defraud creditors not being dispositions received by the disponee in good faith for value and consideration.  Your Honours, the issues raised are of importance in relation to the insolvency of individuals and will continue to be so unless and until the amendment of the Bankruptcy Act in accordance with the provisions of a bankruptcy bill which has been, I understand, passed in the House of Representatives.  When and if that bill comes into force in its present form quite different statutory concepts to the notion of disposition with intent to defraud will be employed.

But the issues are of importance in relation to individual insolvency until then and in respect of transactions involving corporate insolvents where those transactions were effected before July 1993 when the amendments effected by the Corporations Law Amendment Act 1992 came into force.  Your Honours, we accept that it is rather difficult to put a figure on just the extent to which these matters matter, as a matter of commerce, but it is possible, perhaps, that bearing in mind the lack of corporate success in Australia during the latter years of the 1980s and early 1990s, that the $10 million involved in this case is perhaps not unusual.

Your Honours, as to the points that are raised, your Honours will appreciate from the parties’ summaries of argument that there is controversy between them as to the basis of the decision of the majority of the Court of Appeal in relation to the attempt to defraud issue.  There are passages in the majority judgment which suggest that their Honours accepted the proposition that a disposition made in the genuine hope of meeting debts could nevertheless be made with intent to defraud because, in the event of a liquidation, the disponee would be apt to be preferred as a creditor to the detriment of other creditors.  Those passages, if we might just refer your Honours to them briefly, are at the record pages 57 lines 35 to 45, particularly what their Honours say at lines 44 and 45 in relation to the decision below; page 58 lines 15 to 25 and at page 67 lines 30 to 50, bearing in mind what their Honours have said in relation to the case advanced by the present respondent who was the appellant mentioned at lines 5 to 20 at the top of page 67.

The distinction between such a case and a case of actual fraud is one between a disposition which is apt to defeat creditors as a matter of objective fact and a disposition intended to defraud them.  That distinction is pointed up by Mr Justice Pincus who dissented at page 87 of the record, we would ask your Honours to look at that, lines 15 to 35 and lines 35 to 50.

TOOHEY J:   I suppose the argument here, to a large extent, is that if you water down the attempt to defraud creditors concept you are tending to eliminate any difference between that and preference ‑ ‑ ‑

MR KEANE:   Your Honour, that is so, and that indeed was clearly the basis on which the learned primary judge decided the case against us on that point, although overall he decided in our favour.  His Honour took the view that one ought to read “intent to defraud” in section 121 as meaning apt to do so.  Apt, indeed, to confer a preference by preferring a member of the group of companies to another creditor or to do so by preferring an outside creditor so as to give a member of the group an advantage in respect of the guarantee that had been given.  Mr Justice Pincus made what, in our submission, are some compelling observations as to the unlikelihood that that would be a correct reading which would really give 121 no extra operation or no different operation from 122.

Your Honours, the majority also held that a case of actual dishonesty was made out.  Now, there is controversy between us and our learned friends as to whether that was an alternative view.  But that they did hold that ‑ ‑ ‑

DAWSON J:   What do you mean it was an alternative view.  Alternative to that there was not dishonesty ‑ ‑ ‑

MR KEANE:   No, alternate to the view that it was sufficient to engage 121, that there was a disposition that was apt to defeat creditors, although not moved by that intent.

DAWSON J:   I see.

MR KEANE:   Now, it is a little difficult, we accept, with respect, to see quite whether it was an alternative holding or not.  That they did hold that it was a case of actual dishonesty is apparent at page 70 lines 29 to 35.  It would appear that their Honours were going on to deal with this as at least a further point, in our submission, and that is rather suggested by what is at page 68 line 5 where their Honours actually say, “Further”.  Having referred to the basis on which the case was decided below, they then go on to say, “Further” and conclude with a finding of actual dishonesty.  But whether or not one should interpret the majority judgment as involving alternate holdings, it is clear that the respondent’s case is and always was that the disposition that was made with intent to defraud, because it involved improving the position of the parent of the disponor by creating a benefit to it, which is said in paragraph 13 of our learned friend’s summary to have been surreptitious but which, on the evidence, was in no way clam precario, nothing surreptitious about it at all, but a benefit conferred on a member of the group of companies of which the disponor was a member in circumstances where that was apt to prefer it to other creditors.

DAWSON J:   Was there a finding below that there was no dishonesty involved?

MR KEANE:   Your Honour, there was.  There was a finding below that the parties responsible for the disposition intended - or were genuinely hopeful, I think, are the words his Honour used - were genuinely hopeful that all debts would be paid.

TOOHEY J:   There was a finding of dishonesty, was there not, in regard to KFL?

MR KEANE:   No, your Honour, with respect.  What there was was a finding of intent to defraud, taking intent to defraud to mean a disposition apt to defeat, and his Honour made the point and accepted the evidence of the witnesses who gave evidence for WEP, the disponor, that they did not believe that the claims being advanced by that creditor, KFL, were genuine.  And his Honour accepted that evidence.

TOOHEY J:   Is that the significance that should be attached to your statement on page 31, Mr Keane, about line 10 and the lines following?

MR KEANE:   That was his Honour’s finding about that, but his Honour did accept the evidence of the witnesses for the disponor at page 23 lines 35 to 36.  Your Honours will see, right at the end of that long paragraph, where his Honour was satisfied - your Honours, I should have said Mr Blood and Mr Pendal were officers of the disponor who gave evidence - and his Honour obviously accepted their belief that KFL’s claim was not maintainable.  There were differences of view and there was a suggestion that that view was really a try-on by KFL claiming large amounts of money under a management agreement in connection with the attempt by KFL to lever a buy-out  of its shares and their evidence was that they did not accept those claims were genuine and his Honour accepted that.

But his Honour accepted that it was nevertheless a transaction with intent to defraud that creditor, no other creditors.  Not to defraud any other creditors at all, but them, because the transaction was apt to defeat their claim, and even though not dishonestly.

TOOHEY J:   Where do we pick up that the statement on page 31, to which I have just referred you, must be read in the context of the particular test which his Honour adopted?

MR KEANE:   We will take your Honour to that.  Your Honours will find it at page 17, commencing just above line 25, where his Honour says:

I do not think that the word “fraud” in s.121 connotes deceit or dishonesty.  I accept as correct the passage stated in Lewis’ Australian Bankruptcy Law (4th ed, 1955) at pp.45-46, which is cited in Garuda Indonesia Ltd v Grellman at p.523:-

where it is said that the phrase has a wider meaning than one normally associates with the notion of a fraudulent intent.  His Honour goes on, over the page, to develop the submission that was made for the applicant - that is the present respondent - as to the nature of the intent involved in this case, that is to say that there would be this transaction, the effect of which would be to advantage a member of the group and disadvantage other creditors.  But not in the context of a finding other than that what was done was apt to prefer them.

Your Honours, can we just say something about the passage that is referred to on the preceding page.  That is a passage that was in Lewis’ Australian Bankruptcy Law, 4th edition, in relation to the old Act, and dealt with acts of bankruptcy, not with a provision in the nature of section 121.  That passage in Lewis which is referred to in Garuda v Grellman actually came out of the subsequent editions, the 1970 edition of Lewis which dealt with the 1966 Act.

DAWSON J:   Otherwise there is authority, and you point this out, the fact that fraud involves actual dishonesty.

MR KEANE:   Yes, your Honour, and as to that ‑ ‑ ‑

McHUGH J:   There are two decisions of this Court, are there not?

MR KEANE:   Yes, there are: Williams v Lloyd and Hardie v Hanson.  And, in a similar context, the first case on the bundle we have handed your Honours in the Court of Appeal in England in Lloyds Bank v Marcan.  If your Honours go to the fourth page in your Honours will see the passage in the judgment of Lord Justice Cairns below the letter B and concluding below the letter C. 

DAWSON J:   Why is it the “ordinary modern sense” of the word that it does not involve dishonesty?

MR KEANE:   It may be there are some statutory contexts which free it up from the strictness ‑ ‑ ‑

DAWSON J:   It is the other way around, but still ‑ ‑ ‑

MR KEANE:   And, your Honours, that is, in our submission, consistent with the view taken in this Court in Hardie v Hanson and Williams v Lloyd.

McHUGH J:   It is probably a reference back to the Statute of Elizabeth.

MR KEANE:   Yes, it is, the intent to defeat or delay, which was the language of the Statute of Elizabeth.  Your Honours, the other thing we would say about this is in relation to the point, I think, Justice Toohey reverted to earlier, that the juxtaposition of section 121 with 122, which makes specific provision in relation to preferences, makes it unlikely that 121 had preferences in view and was intended to act in some way where intent to defraud was watered down.

Further, your Honours, could we refer to the untoward consequences for commerce adverted to by Mr Justice Pincus, where a business in trouble acts in all good faith, perhaps forlornly, perhaps unreasonably, but in all good faith and unsuccessfully in the event to prop itself up or to prop up one of its members, by giving further security to a source of finance.  Your Honours, in our respectful submission, those are the considerations that suggest that the view taken by Mr Justice Ryan and, we think, taken by the majority in the Court of Appeal on this point, are in error.

As to the question whether this case is a suitable vehicle for special leave, because of the, we would say, further conclusion of the majority of the Full Court that the case was one of actual dishonesty, we  would make these submissions:  firstly, we are concerned with a case where, at the instigation of a creditor, the debtor makes a disposition in the hope, as we say perhaps forlorn, of propping up the group so that it might survive, and in the context of the finding by the judge who saw the witnesses, that he believed they genuinely hoped to be able to pay all the debts by keeping the house of cards, as it ultimately turned out to be, afloat. 

If leave were granted, we would contend that the conclusion, the further conclusion, was wrong.  But more importantly for present purposes, the suggestion that this finding makes the case an inappropriate vehicle for the grant of leave, in our submission, is misconceived.  We would urge that this further finding itself affords a basis for the grant of leave in terms of the due administration of justice in the particular case because this conclusion was contrary to findings based on credibility of witnesses, seen by the learned trial judge - and in that regard, your Honours, can we refer to the observations of Mr Justice Pincus, page 80 of the record, commencing at line 35 and concluding on page 81 line 10.

Your Honours, might we say, with respect, that it is odd, having regard to the passage in the judgment of the majority at page 70 of the record, commencing at line 20 and concluding at line 25, because, with the greatest respect, their Honours must necessarily have been differing from views as to credibility formed by the learned trial judge.  Your Honours will recall we have referred your Honours to the specific finding at page 23 of the record, lines 35 to 36.  If there was no intent to defraud KFL, there could not have been an intent to defraud any other creditors.  We refer your Honours, in relation to that, to page 29 of the record, lines 35 to 40.

McHUGH J:   What about the factual finding on the same page, that even if dishonesty is the test, that it was made out in this particular case?

MR KEANE:   That is the holding we are addressing, which we say is an alternative one.  The other side, I think, say it is the finding of the majority.  To that we say that it is contrary to what their Honours said in the teeth of the primary judge’s findings on credibility, he having heard the witnesses and, indeed, it is a finding that was contrary to the case that was advanced.

Can we refer your Honours to paragraph 19 of our written summary, and in particular to paragraphs (b) and (c), because they have not been gainsaid.  They have not been gainsaid by the other side.  Your Honours, that those points are well made is reflected, in our respectful submission, in the judgment of the majority at page 67, lines 5 to 20 where, in relation to the debate about fraudulent intent and the necessary element of dishonesty, their Honours in the majority conclude as to what the attitude of the appellant, the present respondent, was in relation to those matters.  The appellant had little to say on these matters, apparently being content to rely

on the primary judge’s opinion that an intent to defraud for the purposes of section 121 of the Bankruptcy Act does not connote deceit or dishonesty.

DAWSON J:   Your time has expired, Mr Keane.

MR KEANE:   I beg your Honour’s pardon.  Your Honour, there is just one further short point.  We can make it in a sentence.

DAWSON J:   One sentence.

MR KEANE:   As to the suggestion in paragraph 14 of our learned friend’s outline that not all the witnesses on our side were called - that is to say those who were authors of documents - there was no Jones v Dunkel point, there never was, it is not mentioned in any of the judgments because there was never a suggestion this inference should be drawn.

DAWSON J:   That is three sentences.

MR KEANE:   I beg your Honour’s pardon.

DAWSON J:   Yes, Mr Griffin.

MR GRIFFIN:   If the Court pleases.  Our primary submission is that if special leave were granted the appeal will not necessarily resolve the question of what is the correct test to apply for the purposes of section 121 of the Bankruptcy Act and, indeed, it would very probably not resolve that question. 

An examination of the majority judgment shows that World Expo Park had acted with intent to defraud creditors, no matter what test of intention to defraud creditors applies; that is, whether it is actual dishonesty or whether, on the other hand, it will suffice if  disponor engages in a transaction, the necessary consequence of which is to defeat or delay creditors.  The relevant finding is the finding at page 70, lines 28 to 37, to which reference has been made.

The same can be said about the majority decision that Elders did not act in good faith ‑ ‑ ‑

TOOHEY J:   Just before you leave that, Mr Griffin, what are you inviting us to conclude from that passage on page 70?

MR GRIFFIN:   That there was a finding of dishonesty no matter what test of dishonesty is applied.

TOOHEY J:   There is a statement about dishonesty.  I suppose on one view it might amount to a finding but, I mean, how far is it supported by reasons which lead to that conclusion?

MR GRIFFIN:   It is fully supported, and it is based on the contemporaneous documentation, and this is where our friend has erred in his submission to your Honours.  The liquidator’s case was based on documentation.  The case of Elders was based on calling some viva voce evidence.  But the decision of the majority is based on the contemporaneous documents.  If I could take your Honours to some examples, there is the Elders memorandum ‑ ‑ ‑

TOOHEY J:   Just before you do - and I am sorry to interrupt you - just so I can understand this passage on page 70, if the notion of something being apt to give a preference to a creditor is not enough to constitute dishonesty, what is it that you say in this case did constitute dishonesty?

MR GRIFFIN:   The fact that the creditor joined with the guarantor, which was the parent company, to enter into a transaction which gave a benefit to two parties, namely Elders, who was getting the mortgage debenture, and the guarantor, namely Pennant Holding.  The other thing that is dishonest is that all the negotiations occurred between Elders and Pennant.  No negotiations occurred with World Expo Park at all.  It was a case of two companies pulling the strings, as it were, in relation to this company, World Expo Park, which had no assets apart from the $8 million which was about to come to it from the government.

TOOHEY J:   You are really saying that this transaction was entered into with intent not merely to give a preference but with intent to defraud all other creditors?

MR GRIFFIN:   Yes.  And that is what the majority found.  It is based, as I said, on a number of documents that were put before the court, for example, the one at page 56, lines 16 to 20, which is a document of Elders, and it is speculating on - that document was contemporaneous with the execution of the security and it is talking about whether they should call a default on the part of Pennant and it speaks about:

the additional security which we completed today which could be clawed back as preferential security in the event of a liquidation.

Now, another example - and these are only examples - but at page 46 there was a memorandum from Elders dated 6 July 1989, which is 11 months prior to the execution of the relevant mortgage debenture and it refers, if your Honours look at line 32:

In addition, the risks in respect of the World Expo Park debt were stated to be:

“ - Losses resulting in insufficient cash flow to meet rentals and liquidation.
- State payments diverted to other creditors.”

Now, the only State payments were the amounts that were to come from the government in respect of the amount due to World Expo Park for the sale of the land.

They are examples, examples only - there are a large number of these documents in evidence, both Elders’ documents and correspondence between Elders and Pennant, which formed the basis for this view of the matter that the majority took.  In no relevant respect, therefore, does the majority judgment turn on the question of the correct test to be applied, either in relation to intent to defraud creditors or good faith. 

An appeal would be confined to an examination of the question whether the majority was justified in broadening the decision of the primary judge on intent to defraud creditors, because he did make a finding of intent to defraud creditors, although admittedly on the less stringent test and only in relation to KFL, but an appeal would be confined to the question whether the majority was justified in broadening that finding and whether the majority was justified in reversing, in effect, the primary judge’s finding on the issue of good faith.  Now, of course, we would contend that seeing that the majority decision was based on the contemporaneous documentation, it was a case in which the appeal court was in as good a position as the primary judge to determine what the appropriate inferences were.  So the net result is that - and an examination of the majority judgment demonstrates this - the case does not really raise the question of what the appropriate tests are.

Now, those tests are to be abandoned, as our friends have indicated, under the Bankruptcy Legislation Amendment Bill ‑ ‑ ‑

DAWSON J:   Have you got copies of that?

MR GRIFFIN:   Yes, we will hand those to your Honours.

TOOHEY J:   While you are doing that, what has happened in the Corporations Law?

MR GRIFFIN:   They have already been abandoned there, except ‑ ‑ ‑

DAWSON J:   By amendment to the ‑ ‑ ‑

MR GRIFFIN:   By amendment by the Corporation Law Reform Act 1992.  As our friends have said, they still apply, of course, in relation to transactions before a particular date.  But your Honours see that so far as the bankruptcy legislation is concerned, it passed the House of Representatives yesterday, the second and third reading stages, and as we understand it, there is no opposition to the amendments.

Section 121 does not mention the word “fraud” or “intent to defraud”.  It establishes a purposive test in relation to the transfer and it is a condition precedent to the operation of the section that:

the transferor’s main purpose in making the transfer was:
to prevent the transferred property from becoming divisible among the transferor’s creditors; or
to hinder or delay the process of making property available for division among the transferor’s creditors.

Under section 121(2), as your Honours see:

The transferor’s main purpose in making the transfer is taken to be the purpose described in paragraph (1)(b) if it can reasonably be inferred from all the circumstances that, at the time of the transfer, the transferor was, or was about to become, technically insolvent.

Then certain types of transactions are exempted from the operation of the section.  The new section does use the term “in good faith”, but not in relation to the transferee in the original transaction.  It protects successors in title “who acquired property from the transferee in good faith and for at least the market value of the property”.

So the major alteration there is the substitution of the requirement that the transferrer act with intent to defraud creditors by this purposive test.  The new provision also focuses on the state of solvency of the transferor in that if it can reasonably be inferred from all the circumstances “that at the time of the transfer, the transferor was, or was about to become, technically insolvent” the main purpose set forth in the section will be inferred.  There is no reference to the term “valuable consideration”, so that is not involved any more and it is no longer relevant that the transferee in the original transaction acted in good faith. 

Dealing with the company liquidation position, your Honours, the Corporate Law Reform Act 1992 took effect on 23 June 1993. Section 565 of the former Corporations Law, which had the effect, as your Honours know, of applying sections 120, 121 and 122 of the Bankruptcy Act to company liquidations, was in Part 5.6 of the Corporations Law and it no longer applies.  Under the amending provisions, a distinction is drawn between what is called the old winding-up law and the law introduced by the new provisions and the old winding-up law continues to apply in effect to transactions that occurred before 23 June 1993.  But in relation to matters since that time, the provision is to the effect that the transaction may be voidable in certain circumstances and, fundamentally, a transaction is voidable if it is both an insolvent transaction and an uncommercial transaction as defined.  Your Honours see there the definition of “uncommercial transaction” which is a transaction which:

a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to:
(a) the benefits (if any) to the company.....; and
(b) the detriment to the company of entering into the transaction; and
(c) the respective benefits to other parties.....; and
(d) any other relevant matter.

The tests for whether a transaction is uncommercial rely on the words “if.....it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction”.  So they are entirely different tests.

The term “in good faith” does continue to crop up in relevant provisions of the Corporations Law but again not in respect of the transaction that involved the corporation said to be insolvent.  Again, it comes up in relation to successors in title.

Your Honours, on this question of due administration of justice that our friend has raised, the liquidator here impugned the transaction and claimed that WEP thereby intended to defraud its creditors within the meaning of that term in section 121 and that Elders had not acted in good faith or given valuable consideration.  Now, one can put the valuable consideration question aside for present purposes.  But, as I have said, for both of those contentions the liquidator relied on the contemporaneous documents and it was the essence of the liquidator’s case that it was the specific intent of both Elders and Pennant, the parent company of WEP, to

ensure that at all costs this money that was to come from the government was applied in reduction of the lease debt. 

In order to show that Elders had not acted in good faith the liquidator relied on the various matters that the majority has relied on in the case for its conclusions, namely that Elders was aware that WEP was disposed to execute the mortgage because the transaction advantaged its parent holdings; that all of the arrangements made concerning the mortgage were made between Elders and Pennant; that the whole purpose of the transaction was, as the majority held, to advantage these two companies, Elders and Pennant.  Now, it is true that in relation to the test to be applied to WEP’s conduct the liquidator contended for the less stringent test of intent to defraud creditors, which found favour with the Full Court of the Federal Court in the Garuda Case. 

On behalf of Elders it was contended that the more stringent test of actual dishonesty was the appropriate test.  But the liquidator, of course, would have been quite content with the finding that Mr Justice Ryan made in relation to the first limb of the section provided, of course, that it had been accompanied by a finding that Elders had not acted in good faith.  It was to that proposition that those various matters to which I have referred were directed.  All of those matters were put before Mr Justice Ryan in order to show, primarily, that Elders had not acted in good faith.  In other words, the issue of dishonesty was raised by the liquidator primarily in the context of good faith.  Of course, that is the only thing that is relevant, so far as Elders was concerned, because Elders was the disponee not the disponor.

For those reasons, there is nothing in the administration of justice point.  All these matters were fully ventilated before Mr Justice Ryan, then again before the Court of Appeal, and for the reasons that the majority advanced they considered that the inferences drawn by Mr Justice Ryan from the documentation were incorrect and that the proper inference was that there was an intent to defraud creditors, no matter what test was applied, and that there was a lack of good faith on Elders’ part, no matter what test was applied.

Those are our submissions, if the Court pleases.

DAWSON J:   Thank you, Mr Griffin.  Mr Keane.

MR KEANE:   Your Honours, in relation to the suggestion that contemporary documentation demonstrated dishonesty on the part of the disponor, the documentation you have been taken to is documentation of the disponee.  There is no documentation relied upon to suggest that it evidences an intent to produce a result whereby creditors were defeated.  The pressure for this transaction came from the disponee.  The disponor’s witnesses gave evidence, and their evidence that they did not intend to defeat creditors was accepted.

TOOHEY J:   But do you not face this difficulty, Mr Keane, that while I see the force of the argument that the correct test may not have been applied, you do have findings by the Court of Appeal which are against you, whichever test is applied.  So if in the end the matter becomes one of the correctness or otherwise of the view reached or expressed by the Court of Appeal in regard to dishonesty, then you are virtually inviting this Court to become another court of review of that particular matter.  And that, of itself, does not tend to attract a grant of special leave to appeal.

MR KEANE:   Your Honour, we have appreciated that point.  We have addressed submissions to the Court on the basis that, far from being an obstacle it is, indeed, a basis for a grant of special leave, because the finding of dishonesty on the part of the disponor is not based on any contemporary documents of the disponor and is contrary to findings made on matters of credit about their intents and belief made by his Honour the primary judge and in circumstances where the majority, in reaching that finding, say that they are not differing from him in respect of findings of primary matters of fact and credibility.  It is plainly wrong.  And in circumstances where - and this is to reach, I hope, your Honour’s point - that error has occurred without the responsibility of any of the parties in the Court of Appeal, the error has crept in there, and it is only this Court that can right the situation.

So that, far from accepting that it is an obstacle to the grant of special leave, in our respectful submission it is itself a reason why the terms of administration of justice in this case, bearing in mind that once that finding of actual dishonesty in the majority, quite contrary to the findings below, and on no sound basis in terms of contemporary documentation emanating from the disponor, is put to one side, then the case is one where, in our respectful submission, there is a strong case that the relevant test, actual dishonesty, has not been satisfied and a strong case that the disponee acted in good faith and acted for valuable consideration in circumstances where, as a party with contractual rights, it was prepared to forego or vary those rights to allow the debtor to carry out a sale of assets in an orderly manner as requested by it.

The only other thing we want to say, your Honours, is to suggest that it is a circumstance of dishonesty where the transaction was dealt with by the parent company in the group rather than the subsidiary is to confuse

dishonesty with breaches perhaps of Walker v Wimborne-type duties by directors to particular companies, rather than to the group.

Those are our submissions in reply, your Honours.

DAWSON J:   Thank you, Mr Keane.

Whilst this case raises a question which might, in other circumstances, warrant the grant of special leave, the factual issues make it an unsuitable vehicle in which to consider that question.  Moreover, amendments to the Corporations Law and proposed amendments to the relevant provisions of the Bankruptcy Act mean that the answer to the question is unlikely to have a continuing application.  For those reasons, special leave to appeal is refused.

MR GRIFFIN:   I would ask for costs, if the Court pleases.

MR KEANE:   Nothing to say, your Honour.

DAWSON J:   It is refused with costs.

AT 10.47 AM THE MATTER WAS CONCLUDED