John Sheahan and Le Poidevin Industries Pty Ltd (in Liquidation) v Northern Australia Land and Agency Co Ltd, Dean Kiverton Le Poidevin and Gloria Dawn Le Poidevin No. 4242 Judgment No. SCGRG 92/195 Number of..
[1993] SASC 4242
•29 October 1993
COURT IN THE SUPREME COURT OF SOUTH AUSTRALIA PERRY J
CWDS
Corporations - liquidation of company - disposition of property of company after commencement of winding up - plaintiff company, in liquidation, was the owner of the fee simple in two parcels of land - purported transfers to a related company, dated over a year before, were lodged for stamping and registration shortly after the deemed date of commencement of the liquidation - held that even if there was an underlying transaction creating an equitable interest as purchaser (as to which there was no evidence), lodgment of the transfers for registration would, if not void under s.468 of the Companies Code, create a legal interest and were, therefore, "dispositions" within the meaning of the section, and hence were, unless the Court ordered otherwise, void - counter claim seeking validation of the transactions dismissed on the ground that no acceptable evidence was adduced by the defendant to prove that the lodgment of the transfers for registration was pursuant to a bona fide transaction of sale or for value - order that the registration of the transfers be cancel led. Corporations Laws.468. Telecom Australia v Sheahan (as liquidator of Magill Construction Holdings Pty Ltd (In Liquidation) (1991) 4 ACSR 425, considered.
HRNG ADELAIDE, 3-5, 31 May, 1 June 1993 #DATE 29:10:1993
Counsel for plaintiffs: Mr J. Cudmore with
Mr G. Dart
Solicitors for plaintiffs: Ward and Partners
Counsel for defendants Northern Australia and Gloria LePoidevin: Mr D.K. LePoidevin
Solicitors for defendants: LePoidevin and Co
Defendant Dean LePoidevin: In person
ORDER
Orders made.
JUDGE1 PERRY J The first-named plaintiff, John Sheahan, sues in his capacity as liquidator of the second-named plaintiff, LePoidevin Industries Ltd (In Liquidation) ("LePoidevin Industries"), having been appointed to that position by a winding up order pronounced in this Court on 13 November 1991. At least until the purported transfer to which I will refer in due course, LePoidevin Industries was the registered proprietor of an estate in fee simple of two pieces of land, one being situated at near Owen ("the Owen land"), the other being situated at Angle Vale ("the Angle Vale land"). 2. By separate Memoranda of Transfer, both lodged for registration with the Registrar-General in October 1991, LePoidevin Industries purported to transfer both parcels of land to the first defendant, Northern Australia Land and Agency Co Pty Ltd ("Northern Australia Land"). 3. The second defendant, Dean Kiverton LePoidevin ("Mr LePoidevin"), and the third defendant, Gloria Dawn LePoidevin ("Mrs LePoidevin"), who is his mother, at all relevant times have held various offices in both LePoidevin Industries and Northern Australia Land. In particular, they are, and were, both a director and secretary of LePoidevin Industries, and they both hold the same offices in Northern Australia Land. In addition, they are shareholders of the latter company. 4. In the proceedings, the plaintiffs seek declarations that what I have described as the purported transfers of both parcels of land are void pursuant to s.468(1) of the Corporations Law. Other relief is claimed, including damages pursuant to s.232(7) of the Corporations Law, and damages for fraud and breach of fiduciary duty. 5. At an early stage of the trial, I directed that the trial proceed with respect to the issues arising out of the claim under s.468 of the Corporations Law, and that the hearing of the other issues proceed after judgment had been given on the s.468 claims. The defendants made no submissions against the making of that order. 6. Mr LePoidevin is a practitioner of this Court. He is the solicitor on the record for all three defendants. At the start of the case he announced his appearance as counsel for all three defendants. At an early stage I drew his attention to the fact that it was undesirable for counsel to appear in a matter in which he or she held a personal interest. Later, when it seemed that it was possible that he might wish to give evidence, I pointed out that he could not appear as counsel and as a witness. 7. After hearing argument as to those matters, I delivered an ex tempore ruling (Judgment No 3815, 4 February 1993) in which I ruled that I could no longer hear him as counsel for the defendants. I then adjourned the hearing to enable steps to be taken to secure proper representation of the defendants. 8. Following the adjournment, on the resumption of the hearing, Mr LePoidevin alleged that for financial reasons it had not been possible to secure other representation for the defendants. He intimated that he did not propose to give evidence, and in those circumstances sought leave to appear in his own right as a defendant, and as counsel for the defendant Northern Australia Land and Mrs LePoidevin. With some hesitation, I permitted him to continue to appear on that basis. 9. In the events which happened, neither Mr LePoidevin nor anyone else was called to give evidence on behalf of the defendants. The plaintiff did not call oral evidence in support of its case, but was given leave to call evidence in rebuttal after the defendants had opened and tendered some documents. In particular, the rebuttal evidence was permitted with respect to certain books of account of LePoidevin Industries tendered by the defendants, including the cash journal and accounting ledger of the company. The rebuttal evidence was that of a Mr Reibeling, a forensic scientist, who gave evidence of his analysis of certain pages of the accounting records, and in particular the alteration of various figures within the accounts, and a Mr Auricht, an accountant in the firm of which the liquidator of LePoidevin Industries practices, as to the circumstances in which certain records of the company were called for and supplied to the liquidator by Mr LePoidevin. 10. I accept the evidence of both Mr Reibeling and Mr Auricht. In particular, I accept the validity of the opinions expressed by Mr Reibeling. 11. The defendant filed a document described as "Consolidation of Defence and Amended Defence and Counterclaim". That part of it which appears to have been intended to be a defence reads as follows:
"1(a) The Plaintiffs are not entitled to an Order to set
aside the sale of land contained in Certificate of Title
Register Book Volume 4255 Folio 748 and Volume 3367 Folio 50 by
LE POIDEVIN INDUSTRIES PTY LTD to NORTHERN AUSTRALIA LAND and
AGENCY CO PTY LTD on the 25th August, 1990. The land was sold
by contract dated the 25th August, 1990 for full market value
and paid for by offset against mortgage loans by NORTHERN
AUSTRALIA LAND and AGENCY CO PTY LTD to LE POIDEVIN INDUSTRIES
PTY LTD which comprised of two mortgages originally for the
following amounts:- 1. $153,076.68 advanced on the 7th July,
1989 with interest at 22 per cent p.a. compounded annually, 2.
$12,972.30 advanced on the 13th March, 1990 with interest at 22
per cent p.a. compounded annually. The interest payments at
the time were approximately 6 months in arrears and as the land
could not be sold to repay the whole of the principal and
interest owing the land was sold to NORTHERN AUSTRALIA LAND and
AGENCY CO PTY LTD in reduction of the loan.
1(b) The transfers were not lodged at the Lands Titles Office
until the 9th October, 1991 because NORTHERN AUSTRALIA LAND and
AGENCY CO PTY LTD wanted to make use of the existing mortgage
loans on the properties from the ANZ Bank and General Credits Ltd.
All payments on these mortgages from the 25th August, 1990
were made by NORTHERN AUSTRALIA LAND and AGENCY CO PTY LTD.
1(c) When the mortgages to the ANZ Bank and General Credits
Ltd were paid out by NORTHERN AUSTRALIA LAND and AGENCY CO PTY
LTD in September, 1991 Caveats were lodged on the 11th
September, 1991 on each of the titles to protect the interest of
NORTHERN AUSTRALIA LAND and AGENCY CO PTY LTD and the Company
held the 2 titles as purchaser.
1(d) The Transfers were lodged at the Stamp Duties Office in
September, 1991 and took 3 weeks for stamp duty to be assessed.
The transfers were then lodged at the Lands Titles Office on the
9th October, 1991.
1(e) At the time of the sale of the 2 properties to NORTHERN
AUSTRALIA LAND and AGENCY CO PTY LTD the interest payments at 22
per cent p.a. were approximately 6 months in arrears. If the
Court set aside the sales of the 2 properties NORTHERN AUSTRALIA
LAND and AGENCY CO PTY LTD would remain as Mortgagee in
possession. There would therefore be no point in the Court
making an Order to set aside the sales as this would serve no
purpose. The total amount due under the mortgage loans would
now be approximately $220,000.00. As the 2 properties could not
be sold for this amount they would eventually be transferred
back to NORTHERN AUSTRALIA LAND and AGENCY CO PTY LTD in
reduction of the loan.
2. The sale of the 2 properties to NORTHERN AUSTRALIA LAND
and AGENCY CO PTY LT on the 25th August, 1990 with immediate
possession were not void or voidable under the Corporations Law.
If the Court does not consider there is any defect of title the
Court is asked to rectify the defect.
3. The Defendants DEAN KIVERTON LE POIDEVIN and GLORIA DAWN
LE POIDEVIN are not personally liable for any amount in this
dispute and the Plaintiff's claims against them should be
dismissed. All transactions have been carried out in compliance
with all Company law, commercial practice and the books of
account show a true record of all transactions.
4. None of the Defendants acted dishonestly, made improper
use of their positions, committed any fraud, breached any
fiduciary duty or failed to exercise reasonable care and
diligence and the Statement of Claim does not give any
particulars of any fraud, loss or damage suffered by the
Plaintiffs as a result of the Defendant's actions." 12. It will be immediately apparent that the so-called defence did not comply with the rules as to pleading. It is more in the nature of a written argument. Virtually everything alleged in the Statement of Claim is not the subject of a specific admission or denial, as required by Rule 46.12(1), with the result that almost the whole of the Statement of Claim must, therefore, be taken to be admitted. The plaintiffs, however, in their reply join issue with the defence, with the result that many of the assertions of fact in the defence, absent evidence proving them, are simply not made out. As will be seen, I am simply not prepared to accept what little evidence was adduced by the defendants as amounting to satisfactory proof of any of the factual matters alleged in the defence, such as the suggestion that the respective parcels of land were sold by contract dated 25 August 1990, and "paid for by offset against" mortgage loans of the kind referred to in the defence. 13. The relevant parts of s.468 of the Corporations Law are as follows:
"468.(1) Any disposition of property of the company, other
than an exempt disposition, and any transfer of shares or
alteration in the status of the members of the company made
after the commencement of the winding up by the Court is, unless
the Court otherwise orders, void.
(2) .....
(3) Notwithstanding subsection (1), the Court may, where an
application for winding up has been filed but a winding up order
has not been made, by order: (a) validate the making, after the
filing of the application, of a disposition of property of the
company; or (b) permit the business of the company or a portion
of the business of the company to be carried on, and such acts
as are incidental to the carrying on of the business or portion
of the business to be done, during the period before a winding
up order (if any) is made: on such terms as it thinks fit.
(4) ......." 14. As I have said, I have at this stage limited the trial to a consideration of the issues arising with respect to the application of s.468. 15. There are two basic issues arising out of the section. They are whether, in the first place, the relevant dispositions, namely, the lodgment for registration of the two Memoranda of Transfer are dispositions within the meaning of s.468(1), and are therefore void unless the Court otherwise orders. The second issue is as to whether or not the Court should "otherwise order" within the meaning of those words in ss.(1). 16. Subsection (3) is not of application to the case, as that only applies where application is made to the Court for an order validating a disposition of property of the company after the application for winding up has been filed, but before any winding up order has been made. 17. So far as the plaintiffs' case is concerned, its case is made out if it proves that a disposition of the character referred to in ss.(1) has been made. Once that is proved, the onus is on the defendants to prove that the circumstances are such that the Court should "otherwise order": see Telecom Australia v Sheahan (as liquidator of Magill Construction Holdings Pty Ltd (In Liquidation)) (1991) 4 ACSR 425. Although the relevant words in ss.(1) are "otherwise orders", and in ss.(3) "validate", for convenience, I will hereafter refer to an order that the Court "otherwise orders" under ss.(1) as an order validating the relevant disposition. 18. Mr Cudmore, who appeared for the plaintiffs, submitted that the onus on the plaintiffs was discharged by the documents which they tendered. I agree. 19. Those documents include the two executed transfers. There are some strange features of those documents, which I will enlarge on when I come to consider the defendants' counter claim. They both purport to be dated 25 August 1990. In both instances the execution by LePoidevin Industries, and the acceptance of the transfer by Northern Australia Land, is in the usual form of execution clause appropriate to the affixation of a company seal, except that in the case of both transfers the execution clauses exhibit the affixation of two seals on behalf of each company, with an additional third seal in the case of the execution by LePoidevin Industries of the transfer of the Angle Vale land. In the cases where there are two seals, one seal is in the form which would be appropriate to the execution of a document by a company under seal prior to the coming into effect of the Corporations Law on 1 January 1991, and the other seal is in the form appropriate to a seal used after that date, which, of course, carries a reference to the registration number (see s.362(4) of the Corporations Law). 20. In the case of the three seals, one is in the old form, and the other two are in the form which it is appropriate to use after 1 January 1991. 21. Both transfers were impressed as duly stamped on 8 October 1991, in each instance the impression indicating that as well as the payment of ad valorem duty, a penalty was imposed, no doubt having regard to the lapse of time between the date appearing on the face of the instruments and their presentation for stamping. 22. The transfers indicate that in the case of the Owen land, the consideration for the transfer was expressed to be $54,000, and in the case of the Angle Vale land, $69,000. In the space on the transfer forms provided for the insertion of a reference to "encumbrances", appears in each case the word "nil". The Certificates of Title indicate that on 11 September 1991 caveats were lodged by Northern Australia Land over each title. The caveats in each case claim "an estate or interest as purchaser under and by virtue of a certain agreement dated the 25th day of August, 1990, made between the caveator and the caveatee". 23. In each instance the caveats were withdrawn upon the lodgment on 9 October 1991 of the two transfers. In the case of both transactions, discharges of mortgage were also registered. They were produced at the same time as the transfers, and registered ahead of the transfers. In the case of the Angle Vale land, the mortgage which was discharged was a mortgage to General Credits Ltd (subsequently AGC), and in the case of the Owen land, the discharge was of a mortgage to Australian and New Zealand Banking Group Ltd. 24. In the case of neither title is there any record of any transaction subsequent to the registration of the transfers to Northern Australia Land on 9 October 1991, except for caveats lodged by the plaintiffs on 15 November 1991. 25. The plaintiffs tendered a copy of the order pursuant to which LePoidevin Industries was ordered to be wound up. That order was made on 13 November 1991, upon an application by summons dated 30 September 1991. When s.468(1) speaks of "the commencement of the winding up by the Court', by virtue of the application of s.465(2), the winding up is deemed to have commenced "at the time of the filing of the application for the winding up". The date of filing of the summons in this case was the same as the date which it bears, namely, 30 September 1991. It follows that for the purposes of s.468(1), any disposition of property of the company made after that date is void "unless the Court otherwise orders". 26. Under s.67 of the Real Property Act, the two transfers became effective so as to pass title in the land upon registration, but not before. An underlying transaction, expressed perhaps in some other document, would be effective to create an equitable interest, which no doubt would amount to a disposition within the meaning of s.468. An attempt during the course of the defendants' case by Mr LePoidevin to tender two contract notes alleged to have been dated 25.8.90, relating respectively to the sale by LePoidevin Industries to Northern Australia Land of the two parcels of land, failed, amongst other reasons for want of proof of execution. It follows that there is no evidence before the Court of any underlying transaction. 27. Execution of the transfers themselves is capable of creating an equitable interest prior to registration, if they evidence a contract which would be enforced by a decree of specific performance. It appears, however, that both of the transfers must have been executed in escrow, having regard to the fact that they indicate "nil" encumbrances. It is unlikely, therefore, that they were intended to take effect until registration of the discharges of the mortgages to which I have referred, which immediately preceded registration of the transfers. Looked at in that way, there is an absence of evidence from which a disposition in the nature of the creation of an equitable interest in either piece of land prior to registration of the transfers might properly be inferred. If the conclusions which I have expressed so far are wrong, and if it is right to infer that there was an equitable interest created in favour of Northern Australia Land at some date, which was either 25 August 1990 or some later date before the presentation of the transfers for registration, this would not detract from the conclusion that there was a disposition of property on the date of lodgment for registration, that is, on 9 October 1991. This result follows from the fact that it is only on that date that the legal estate could pass. However, in my opinion, the legal estate did not pass on that date, as the transaction was caught by s.468(1) of the Corporations Law, and was, therefore, unless validated by this Court, void. 28. It follows that the plaintiff is entitled to the relief sought by way of a declaration under s.468 unless the defendants succeed in their plea by way of a counterclaim for an order validating the transactions. 29. The terms of the counterclaim are as unusual and as unsatisfactory as the terms of the defence. The counter claim reads:
"1. and in the alternative NORTHERN AUSTRALIA LAND and
AGENCY CO PTY LTD seeks an Order of the Court pursuant to
Section 468 of the Corporations Act, 1989 (Commonwealth)
validating the 2 Transfers of land detailed as follows:- (1)
Transfer No. 7184188 of all of the land contained in
Certificate of Title Register Book Volume 4255 Folio 748 from LE
POIDEVIN INDUSTRIES PTY LTD to NORTHERN AUSTRALIA LAND and
AGENCY CO PTY LTD signed on the 25th August, 1990 and lodged at
the Lands Titles Office on the 9th October, 1991. (2) Transfer
No. 718185 of all of the land contained in Certificate of Title
Register Book Volume 3367 folio 50 from LE POIDEVIN INDUSTRIES
PTY LTD to NORTHERN AUSTRALIA LAND and AGENCY CO PTY LTD signed
on the 25th August, 1990 and lodged at the Lands Titles Office
on the 9th october, 1991.
AND THE DEFENDANTS SEEK ORDERS AS FOLLOWS:-
1. That the Plaintiff's claims be dismissed.
2. In the alternative, an Order of the Court pursuant to
Section 468 of the Corporations Act, 1989 (Commonwealth)
validating the 2 Transfers of land as detailed in the
counter-claim.
3. An Order for costs against John Sheahan personally.
4. That the Caveats lodged by the Plaintiffs on the titles owned
by NORTHERN AUSTRALIA LAND and AGENCY CO PTY LTD being Certificate of
Title Register Books Volume 4255 Folio 748 and Volume 3367 Folio 50 on
the 15th November, 1991 be removed.
DATED the 24th day of February, 1992 and AMENDMENTS dated the
20th day of May, 1992.
DEAN KIVERTON LE POIDEVIN Defendant and Solicitor for the
Defendants" 30. As I have previously indicated, insofar as the counter claim seeks an order validating the two transfers, this is strictly an inappropriate use of language, in that this is not a case to which ss.468(3) applies. The real question is whether the Court should "otherwise order" under s.468(1). I will, however, continue to use the word "validate" in the context of s.468(1), which is the only context in which the counter claim can be considered. The counter claim is distinguished by the absence of any particulars indicating the basis upon which it is suggested that it would be proper to validate the transaction. It appears, however, from the argument advanced by Mr LePoidevin that the defendants contend that the registration of the transfers should be validated because lodgment of the transfers for registration was nothing more than the perfection of a transaction in the nature of a sale of the two parcels of land which was, in turn, evidenced by contracts signed on 25 August 1990. Furthermore, he contended that entries recorded in a bundle of sheets extracted from the general ledger of LePoidevin Industries (D8 and D20), and other records which find expression in the general journal of the plaintiff company (D15), prove the underlying transaction as having taken place in August 1990. 31. The defendant's case is that the transaction was an arm's length transaction for good consideration, and having been entered into well before the commencement of the winding up, the Court should validate the steps necessary to allow its implementation, notwithstanding that those steps were not taken until after the commencement of the winding up. 32. The difficulty with the case put by the defendants is that there is simply no evidence which satisfies me of the essential factual basis upon which the case is put forward. 33. I could accept the proposition that if a truly arm's length transaction for good consideration takes place before the commencement of the winding up, it might well be proper in such a case for the Court to exercise its power to validate a further or final step in the transaction, that step otherwise constituting a disposition of property within s.468(1). 34. In such a case, presumably, the creditors would have the benefit of whatever consideration was paid, and furthermore, such an approach is consistent with the general principle that a liquidator takes subject to equities attaching to the property of a company. 35. Here, however, the evidence relied upon by the defendants to support such an approach is both fragmentary and unconvincing. As I have indicated, the so-called contract notes were not admitted in evidence. Furthermore, no party to the alleged transactions was called to give evidence of the nature of the transactions, and of the payment of the consideration for the transfers. No evidence has been given to explain the appearance of the transfers, nor to explain why it is that they were not presented for stamping and registration until the expiration of such a long period of time. No company minutes have been tendered. 36. Mr Reibeling gave evidence that a number of entries in the company's ledger and journal had been altered, in most instances by using liquid paper correction fluid, and by the writing over of another figure or number. By use of an instrument which he described as a video-spectral comparator, he was able to see through the white-out and identify the underlying, original entry. The amounts of a number of journal entries have been changed significantly, and as well, entries indicating a corresponding journal entry designated by a capital J followed by a number, have been changed so as to indicate different entries or pages in the journal. 37. His evidence was neither shaken in cross-examination, nor was it the subject of any explanatory oral evidence given by the defendants, or any of them. 38. It seems likely that the journal and ledger were kept by Mr LePoidevin. For reasons which I will come to, I am unable to accept that fact as a basis upon which the records might be regarded as reliable. 39. I accept the contentions advanced by Mr Cudmore with respect to the significance of certain discrepancies in the journal and the ledger, and in particular the fact that, according to the books, on 1 July 1989 the company resolved to pay Mr LePoidevin a dividend of $135,000 as a result of the increase in valuations of the two pieces of land, which was credited to a capital reserve account. It appears from the books, in regard to which certain evidence was given by Mr LePoidevin at an examination under s.597 of the Code, that this was credited to him as a loan, and not paid, and "transferred" two days later by him to Northern Australia Land. There is a total absence of any explanation as to why that transaction took place, or the circumstances. 40. Furthermore, in the journal, the sheet which is numbered on one side J97 and on the other J98, is a sheet of paper of different colour from the sheets on either side of it, and it does not carry, as do most of the other sheets in the ledger, a stamp heading "LePoidevin Industries Pty Ltd". 41. That sheet carries entries said to be relevant to the present transactions. I have a strong suspicion that the sheet was inserted irregularly at a time other than the dates which appear on it. 42. The answers of Mr LePoidevin to the examination to which I have referred, which took place before a Master of this Court shortly before the commencement of the proceedings before me, in the first place, fail to satisfy me, even on the balance of probabilities, that any transactions took place in 1990, as asserted by the defendants, and also operate to destroy any confidence I otherwise might have entertained as to his involvement with the books of the company. 43. The whole of Mr LePoidevin's examination indicates consistent evasion, and attempts either to conceal or confuse both the position of the companies, and the circumstances of the transactions in question. 44. I quote some examples of questions and answers appearing in that examination:
(Page 8) Q. Have you at all times since the incorporation
of the company been responsible for the maintenance of the
records of the company?
A. As much as any director is. .........
Q. Is your mother Gloria Dawn LePoidevin?
A. Yes, that's her name.
Q. Does she take an active part in the management of, first,
the company?
A. As much as any director does.
Q. Is she involved in an active way in the management of
Northern Australia Land and Agency Co Pty Ltd?
A. Is that relevant to these proceedings? You see, the
company was LePoidevin Industries, and now you're asking
questions about a different company. Surely that company is not
relevant to these proceedings?" 45. At a later point he was questioned about certain evidence suggesting that a Mr Potter held three shares in LePoidevin Industries, as trustee for Mr LePoidevin. He was asked about a document which might evidence the trust. In the course of the questioning appears the following passage:
Q. Well, would you be able to make a search for it and
produce it up to the liquidator?
A. Well, I could, but I don't see that the document belongs
to the liquidator anyway. I would object to giving it to the
liquidator. As far as I'm concerned, it's between shareholders.
It's nothing to do with the liquidator of the company." 46. With respect to another transaction evidenced by a contract between the company and a third party, he was asked:
(Page 16) "Q. Did the company proceed to fulfil the,
obligations of that contract?
A. What do you mean by that?
Q. Did the company purchase that unit?
A. It's shown in the books of the company as a company asset,
if that's what you mean.
Q. Will you answer the question. Did the company purchase
that unit?
A. There was a contract signed, yes.
Q. Did it complete the contract?
A. What do you mean by complete the contract?
Q. You are a legal practitioner, aren't you, Mr LePoidevin?
A. Yes. I think I've already answered that question. The
answer is yes."
(Page 19) "Q. Please tell His Honour, pursuant to your
obligations under s.597 of the Corporations Law, what you knew
the business of LePoidevin Industries Pty Ltd to be in 1976?
A. My answer is, everything in the objects clause of the
memorandum." 47. The plaintiff tendered in evidence two stamp duty opinion forms, which accompanied the lodgment of the transfers in question at the Stamp Duties Office, which was apparently effected on 20 September 1991. 48. 11 September 1991, as I have indicated, was the date of the lodgment of the caveats by Northern Australia Land and Agency Co Pty Ltd. Both those dates ante-date the date of the order of the Court that LePoidevin Industries be wound up. 49. Counsel agreed that I was at liberty to refer to the file in this Court of the liquidation proceedings to ascertain the general circumstances of the liquidation (file 2265/91). The affidavit in support of the winding up summons (document 2) refers to the fact that following the entry of a judgment for $10,459.59 in favour of the petitioning creditor, the Mid-North Animal and Plant Control Board on 4 June 1991, a notice of demand dated 5 August 1991 was served on LePoidevin Industries "by sending the same by pre-paid post to the registered office" of LePoidevin Industries on the same date. The petitioning creditor relied upon the failure to pay the amount following service of that demand as evidence of its insolvency. For present purposes, however, the significance is that the date of service of the notice of demand was shortly before what appears to be the first of the steps taken by Northern Australia Land Co to perfect the alleged transaction pursuant to which it took both parcels of land, namely, the lodgment of the caveats, and the lodgment of the transfers for stamping. Those steps must, therefore, be considered in the light of the fact that by then the company was under notice that a creditor was preparing the ground for the liquidation of the company. 50. I am quite unable to accept the proposition inherent in the case of the defendants that it was purely coincidental that just at that time North Australia Land took steps to complete the transaction. 51. The onus is on the defendants to prove on the balance of probabilities the facts necessary to support its plea for an order validating the transactions in question. I am totally unconvinced of the genuineness of the purported transactions, or that any money or moneys worth passed between the companies involved, and I remain unsatisfied that there is any proper basis upon which it would be right to make the orders, or any of them, sought in the counter claim. 52. The counter claim is dismissed, and there will be judgment for the plaintiffs on the issues ordered to be tried at this stage, namely, the issues arising out of s.468 of the Corporations Law. 53. In particular, I declare that the purported disposition of the Owen and Angle Vale lands by lodgment of the Memoranda of Transfer to which I have referred, is void pursuant to s.468(1) of the Corporations Law. 54. I further order pursuant to s.191(7) of the Real Property Act that the time for removal of the caveats lodged by the plaintiff John Sheahan, be extended until further order. 55. There will be an order pursuant to s.64 of the Real Property Act 1886 directing the Registrar-General to cancel the entry in Register Book Volume 4255 Folio 748, and Register Book Volume 3367 Folio 50 recording the registration on the said titles of the transfers effected by Memoranda of Transfer numbered 7184188 and 7184185. 56. I will provide an opportunity for counsel to speak to the minutes of the final order. 57. Before parting with the matter, I should say that I am well aware that the effect of the order is to give to the liquidator the opportunity to apply, for the benefit of the creditors in the winding up, the two properties in question, free of the two registered mortgages to which I have referred. 58. It seems likely that if the two void transfers had not been attempted, the liquidator would have been obliged to recognise the equity of redemption in favour of the two registered mortgagees before realising the properties for the benefit of the creditors. 59. At one stage I had thought that in those circumstances, it might be proper to order that if the liquidator saw fit to realise the properties, the amount outstanding on the two mortgages as at the date of commencement of the liquidation be paid into Court or otherwise put aside for a time to enable a claim to be put forward by any person who might be able to establish an equitable or other interest to the extent of the monies paid to discharge the mortgages. 60. However, on reflection, the source of the moneys used to pay off the mortgages must be regarded as LePoidevin Industries, in which event, there is no reason why the creditors of the company should not now get the benefit of the payments. 61. I will hear counsel as to any direction which might be sought for the trial of the remaining issues in the case, and as to costs.
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