Prentice v St George Bank Ltd

[2002] NSWSC 358

Reported Decision: (2002) 20 ACLC 923

New South Wales

Supreme Court

CITATION:	Prentice v St George Bank [2002] NSWSC 358
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 3796/01
HEARING DATE(S):	23 April 2002
JUDGMENT DATE:	26 April 2002
PARTIES :	Maxwell William Prentice (P1) Macquarie Construction Co Pty Ltd (in liq) (P2) St George Bank Ltd (D & XC) Peter Armstrong (XD)
JUDGMENT OF:	Austin J

COUNSEL :	Mr J T Johnson (P) Mr C R C Newlinds (D & XC) Mr J H Stephenson (XD)
SOLICITORS:	Sally Nash & Co (P) Gray & Perkins with Laurence & Laurence (D& XC) Regina Vickery, Solicitor (XD)
CATCHWORDS:	CORPORATIONS - winding up - unfair preference - meaning of 'transaction of the company' - whether sole director of insolvent company caused company's debt or his own debt to be paid
LEGISLATION CITED:	Corporations Act 2001 (Cth) ss 9, 588FA, 588FC, 588FE, 588FF
CASES CITED:	Re Emanuel (No 14) Pty Ltd (in liq) (1997) 24 ACSR 292
DECISION:	Originating process and cross-claim dismissed

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

FRIDAY 26 APRIL 2002

3796/01 MAXWELL WILLIAM PRENTICE & ANOR V ST GEORGE BANK LTD

JUDGMENT

1 HIS HONOUR: The resolution of this case depends principally upon the answer to a narrow question of fact. When Sandra Armstrong deposited a bank cheque into the overdraft account of Macquarie Construction Co Pty Ltd ("Macquarie"), was the payment made

· by direction of Macquarie, to reduce its overdraft to St George Bank Ltd ("St George"), or

· by direction of Peter Armstrong, to reduce his personal liability to St George?

Facts

2 Macquarie was a building and construction company whose sole director was Peter Armstrong. St George granted overdraft accommodation to Macquarie, and a home loan to Mr Armstrong. St George's advances to Mr Armstrong and Macquarie were secured by two mortgages over Mr Armstrong's house at Windsor, but there was no security over the assets of Macquarie. Therefore when Macquarie subsequently went into liquidation, St George was an unsecured creditor of the company.

3 On 26 August 1999, St George made a demand upon Macquarie for the balance of its overdraft facility in the sum of $154,363.93, together with legal fees. That amount was not paid, and by December 1999 St George had commenced to dishonour cheques drawn on the account of Macquarie. At some stage Mr Armstrong also fell into default in his home loan repayments to St George.

4 On 15 May 2000, this Court made an order for the winding up of Macquarie and appointed the plaintiff, Mr Prentice, as liquidator of the company. The "relation-back day” in respect of the administration of the winding up was 15 February 2000, the date upon which a creditor presented a winding up summons against Macquarie in proceedings No 1379 of 2000.

5 St George took proceedings for possession of Mr Armstrong's house at Windsor and on 17 February 2000 it obtained an order for possession. By late February 2000 it had become obvious to Mr Armstrong that St George would sell his home unless he could come to some accommodation with the bank. On about 20 February 2000 he called Mr Conrad of St George to discuss the situation, and on the following day he approached his sister, Sandra Armstrong. He asked her whether she could help him with his finances, because he was about to be evicted from his house. She said: "How much do you need?" He replied: "Can you arrange $100,000?" She said that she would see her bank and let him know.

6 Ms Armstrong sent a facsimile to her bank, the Commonwealth Bank of Australia, on 23 February 2000, which said in part:

"Due to extreme cash flow difficulties my brother, Peter Armstrong of 53 George Street, Windsor, is experiencing, who has received a Notice to Vacate his premises by Friday 25 February 2000 by 10:30 am, I have offered to give him $100,000 from my accounts."

7 The letter proceeded to specify a balanced fund account and an income account, and it asked the bank officer at the Commonwealth Bank to verify that a transfer of funds was being processed, in the event that Mr Conrad from St George made contact. Ms Armstrong gave evidence that the letter and facsimile were typed by her niece Kerry, who was an employee of Macquarie, but she did not say that the letter was typed by Kerry in her capacity as an employee rather than as her niece.

8 On 22 February 2000 Ms Armstrong signed a document which said:

"I Sandra Armstrong am giving Peter Armstrong of 53 George Street Windsor $100,000.
$20,000 from Commonwealth Income Fund.
$80,000 from Commonwealth Balanced Fund."

9 Ms Armstrong went to the Commonwealth Bank Windsor branch on 25 February 2000 to arrange for a bank cheque to be drawn upon the accounts that she had specified. She telephoned her brother Peter while waiting in the bank. She asked him: "Which account will I need to pay the money into?" Mr Armstrong contacted Mr Conrad at St George and asked him: "What account would you like the money put into, the overdraft account or the home loan account?" Mr Conrad replied: "Put it into the overdraft account, it's a simple way and it shows up on my computer straightaway". Mr Armstrong then telephoned his sister and said to her: "Put it into the overdraft account. That's what the bank wants."

10 In his affidavit Mr Armstrong gave the following evidence about his state of mind, which has not been challenged:

"At all times prior to 15 May 2000 I made all important business decisions on the part of the company. At no time did I understand or intend that the $100,000 that my sister, Sandra Armstrong, paid to the credit of the company's account would be available for the company's general purposes. Rather, it was always my understanding and intention that the money was to be paid to, or at the direction of the bank, so that the bank would not take possession of the property. I requested my sister to pay the money into the company's account with the bank because that is what the bank informed me it required."

11 Sandra Armstrong gave similar evidence, also unchallenged, about her state of mind. She said her understanding and intention was that the payment she made by depositing the bank cheque with St George was for the sole purpose of reducing her brother's liability to St George so he could keep his home. She understood that she was paying the money to the bank and that the bank for its own reason directed payment into the company's account. She said:

"If the bank had directed that that cheque be made payable to my brother or some other account I would have arranged for that to happen. At no stage did I intend or understand that I was lending or giving money to the company for its general use. I understood my brother would repay me the money because he was getting the benefit of keeping his home."

12 Ms Armstrong arranged for a bank cheque to be drawn by the Commonwealth Bank against her accounts in the sum of $100,000, in favour of Macquarie. She then went to the St George branch in Windsor and deposited the bank cheque into Macquarie's overdraft account. These steps were completed on 25 February 2000.

13 Mr Armstrong completed a Report as to Affairs in the liquidation of Macquarie on 29 May 2000, in which he listed himself as a creditor in the sum of $130,000, but he did not list his sister as a creditor.

14 On 7 June 2000, Mr Prentice as liquidator of Macquarie made a written demand upon St George for payment of the amount of $100,000 as an unfair preference.

15 On 30 April 2001, Ms Armstrong wrote to Mr Prentice saying that after seeking legal advice as to "the money I had lent to my brother to prevent his eviction from his home", she had been informed that she was a creditor of Macquarie and that she was entitled to participate in any distribution in the liquidation of that company. On 7 September 2001, she signed a proof of debt in the liquidation of Macquarie, for the sum of $100,000. Under the column in the document headed "Consideration" she wrote "lent my brother money to prevent his eviction from his home", and in the column headed "Remarks" she said "This proof of debt is subject to the liquidator's establishment that the payment made by me is a voidable preference."

16 Mr Armstrong became bankrupt and entered into a deed of arrangement under s 73 of the Bankruptcy Act 1966 (Cth). He gave evidence at the hearing that his sister had lodged a proof of debt in his bankruptcy in the sum of $100,000.

The proceedings

17 In the present proceedings, commenced by an originating process filed on 27 July 2001, Mr Prentice seeks a declaration that the payment of $100,000 on 25 February constituted an unfair preference, because it was an insolvent transaction void against him, and an order that St George pay him $100,000 together with interest from 7 June 2000 (the date of his demand on St George for payment). On 7 November 2001 St George filed a cross-claim against Peter Armstrong, seeking a declaration that the mortgages over his house secure any money required to be paid by St George to Mr Prentice in these proceedings, and also a declaration that St George is entitled to offset any money ordered to be paid by it to Mr Prentice in these proceedings against the proceeds of sale of Mr Armstrong's Windsor property.

18 If Mr Prentice succeeds in recovering $100,000 from St George, it is likely that St George will correspondingly succeed on its cross-claim against Mr Armstrong. In fact the Windsor property has been sold and there is a surplus of about $140,000, for which St George will account to Mr Armstrong. Consequently if Mr Prentice succeeds, St George will deduct $100,000 plus interest from the proceeds of sale, and the real loser will be Mr Armstrong (and perhaps his sister, to the extent that Mr Armstrong may plan to use the balance of the proceeds of sale of his property to reimburse her).

Unfair preferences under Part 5.7B

19 Section 588FF (1) of the Corporations Act empowers the Court to make orders of the kind sought by Mr Prentice in this case where it is satisfied that a transaction of the company is voidable because of s 588FE. By s 588FE (2) (b) (ii) a transaction is voidable if it is an insolvent transaction of the company, entered into after the relation-back day but before the day when the winding up began. If there is a "transaction of the company" in the present case, it was entered into within the time period specified by s 588FE (2) (b) (ii). By s 588FC a transaction is an insolvent transaction of the company if and only if (relevantly) it is an unfair preference given by the company when the company was insolvent. It is clear in the present case that Macquarie was insolvent during the period from 20 to 25 February 2000, when the events which may constitute a "transaction of the company" occurred. That being so, the only question in the present case is whether there has been a transaction of the company that is an unfair preference given by the company.

20 Section 588FA (1) is, so far as relevant, in the following terms:

"(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 …".

21 The evidence establishes that by virtue of the deposit of $100,000 made by Sandra Armstrong into Macquarie's overdraft account, St George has received, in respect of the unsecured debt constituted by the overdraft account between it and Macquarie, more than it would receive in respect of that debt if the deposit were reversed and St George were to prove for that amount in the winding up. The unchallenged evidence of Mr Prentice is that if St George pays the $100,000 to him, it is likely to receive a dividend of under $9000 in respect of the total debt claimed by it.

22 Consequently s 588FA (1) (b) is satisfied in this case. It has not been contended, perhaps surprisingly, that the transaction is an integral part of a continuing business relationship for the purposes of s 588FA (3). Therefore the only question is whether the payment of the $100,000 in the circumstances surrounding it constituted a transaction of Macquarie falling within s 588FA (1) (a). That requires the Court to identify the "transaction" in the present case and to determine whether Macquarie and St George were parties to that transaction.

"Transaction of a company"

23 The word "transaction" is defined in s 9 of the Corporations Act. To the extent that it is relevant, the definition is as follows:

" "transaction" , in Part 5.7B, in relation to a body corporate …, means a transaction to which the body is a party, for example (but without limitation):
(a) a conveyance, transfer or other disposition by the body of property of the body; and …
(d) a payment made by the body; and
(e) an obligation incurred by the body; and …
(g) a loan to the body …."

24 As the Full Federal Court remarked in Re Emanuel (No 14) Pty Ltd (in liq) (1997) 24 ACSR 292, at 294, this makes no attempt to define the word "transaction" itself. As well as giving examples of transactions, the definition confines the word "transaction" to a transaction to which the body is a party. It seems to me that, where the "body" in question is a "company", that limitation is no different from the limitation in ss 588FC and 588FE (2), which confines the scope of the insolvent transaction provisions to "a transaction of a company".

25 For present purposes the important issues are how to identify a "transaction", and how to determine when a transaction is one to which the company and the creditor are parties. I shall first consider each of the quoted subparagraphs of the definition of "transaction", and then the general concept of “transaction”.

(a) a conveyance, transfer or other disposition by the body of property of the body

26 The word "property" is defined in s 9, as follows:

" "property" means any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includes a thing in action."

27 Counsel for Mr Prentice presented his case under this part of the definition in two ways. First, he said that the bank cheque became the property of the company before it was disposed of by deposit and presentation. Secondly, he said that the bank cheque represented a thing in action belonging to the company, which was disposed of by the company through the process of deposit and presentation.

28 In my opinion the facts do not support a finding that the bank cheque was property of Macquarie for the purposes of the definitions in s 9. The evidence does not establish that Macquarie obtained any legal or equitable estate or interest in it. The bank cheque was created by the Commonwealth Bank in response to direct instructions given by its customer, Sandra Armstrong, and it was delivered to her. She procured the bank cheque and had it drawn in favour of Macquarie at the direction of Peter Armstrong, after she had agreed to give or lend the money to him. Even if his directions had been given to her in his capacity as a director of Macquarie, it could not be said that by virtue of giving those directions, or by virtue of any other circumstances relating to the creation and deposit of the bank cheque, Macquarie acquired any interest in the cheque. If Ms Armstrong had decided to pay the $100,000 by using some other procedure, and consequently to tear up the bank cheque or to reverse the transaction between her and the Commonwealth Bank represented by it, there would be no basis for contending that she had acted inconsistently with any legal or equitable interest of Macquarie in the bank cheque.

29 Counsel for St George submitted that, concealed in the proposition advanced on behalf of the plaintiff, there was an unstated assumption that Macquarie obtained control over the bank cheque before it was deposited with St George. The question posed by the definition of "property" is whether the company had a legal or equitable interest in the bank cheque. This may well refer to pedigreed title rather than possession, in the case of personal property. Assuming, however, that the definition encompasses possessory "title" in the case of personal property, it is far from clear that possession for this purpose has the extended meaning given by s 86 (according to which a thing that is under a person's control is in the person's possession). If, however, the extended definition applies so that the question of control of the bank cheque is of importance, my view is that on the evidence it cannot be said that Macquarie had any control over the bank cheque at any time. At most, Sandra Armstrong had undertaken a contractual obligation to deposit money into Macquarie's account by virtue of a loan contract. Consistently with that contract, she might have discharged her contractual obligation in some other fashion rather than by means of the cheque. Macquarie would have no control over the cheque such as to prevent her from doing so.

30 I turn to the submission based on the proposition that the deposit of the cheque gave rise to a thing in action. Once the bank cheque had been deposited into Macquarie's overdraft account with St George, Macquarie acquired an entitlement as against St George to have the face value of the cheque credited to its account upon due presentation and honouring of the cheque. That entitlement was a thing in action. Consequently the deposit of the cheque created "property of the body [ie Macquarie]" for the purposes of paragraph (a) of the definition of "transaction". But it cannot be said that there was any "conveyance, transfer or other disposition", by Macquarie or anybody else, of that property at any stage. Instead, the right created by the deposit came to an end when it was satisfied, when the bank cheque was duly honoured on presentation for payment and Macquarie's account was credited with the proceeds of the cheque.

31 My conclusion, therefore, is that the events of this case did not give rise to a "transaction" of Macquarie within paragraph (a) of the definition.

(d) a payment made by the body

32 Most of the argument at the hearing was directed towards this part of the definition. When the bank cheque was deposited into Macquarie's overdraft account, cleared and honoured on presentation, there was a "payment" of $100,000 to St George in reduction of Macquarie's debt. The question is whether the payment was made by Macquarie. Counsel for St George submitted that the payment was made by Sandra Armstrong at the direction of her brother, for the purpose of reducing his personal liability to St George, and therefore it was not a payment "by the body" within the definition. Counsel for Mr Prentice submitted that the payment was made by Sandra Armstrong at the direction of her brother in his capacity as the sole director of Macquarie, in reduction of the company's overdraft to St George, and therefore it was a payment "by the body".

33 As a matter of fact, Sandra Armstrong made the arrangement to provide $100,000 with her brother, rather than with Macquarie. The evidence is that he approached her, asking whether she could help him. The reason he gave was that he was about to be evicted from his house. This conveys a request for personal assistance. He did not ask her to help him keep his company going. In my opinion, therefore, there was no direct legal relationship between Ms Armstrong and Macquarie. Well after Macquarie had gone into liquidation, Ms Armstrong purported to lodge a proof of debt in the liquidation of the company. Her action in doing so does not, however, affect my conclusion on this point. Her evidence was that she was endeavouring to cover all bases, and the proof of debt itself was expressed to be subject to the liquidator establishing that the payment she had made was a voidable preference.

34 Just prior to making the deposit, Ms Armstrong described the transaction as a gift by her to her brother, both in her letter to the Commonwealth Bank dated 23 February 2000 and in the document she signed on 22 February 2000. Much later, in her letter of 30 April 2001, she referred to the money she had "lent" her brother, and she lodged a proof of debt in her brother's bankruptcy. I do not attach any significance to this later conduct, in light of her evidence that she wanted to cover all bases. However, her unchallenged affidavit evidence was that she understood that her brother would repay her the money. That is consistent with his evidence. On balance, it seems to me that the transaction between Sandra Armstrong and her brother was an informal loan, and that she spoke of "giving" the money to him because she realised that in his difficult financial circumstances, he might not ever be able to repay it.

35 Thus, when Ms Armstrong went to the Commonwealth Bank on 25 February 2000 to draw a bank cheque, there was a contractual relationship between her and her brother personally, namely the relationship of lender and borrower. When she telephoned her brother to ask which account to pay the money into, she was a contracting party seeking a direction by her counterparty as to the discharge of her contractual obligation. When Peter Armstrong directed her to draw the bank cheque in favour of Macquarie and pay it into the overdraft account, he was directing her to discharge her contractual liability to him by making a payment to a creditor (St George) of a third party (Macquarie), for the third party's benefit.

36 The critical question is whether, when Mr Armstrong contacted Mr Conrad of St George on 25 February 2000 to ask him which account to put the money into, he was acting in a purely personal capacity, or as the sole director of a corporate debtor. There is some significance in the way he framed the question. He invited Mr Conrad to specify either the overdraft account, a corporate account, or the home loan account, a personal account. This could be taken to imply that if Mr Conrad were to specify the overdraft account (as in fact he did), Mr Armstrong as the director of Macquarie would cause the company to authorise payment. However, in my opinion such a construction of the conversation between Mr Armstrong and Mr Conrad would be inaccurate.

37 From December 1999, St George had commenced to dishonour cheques drawn on Macquarie's account, but Mr Armstrong’s conduct in February 2000 was not for the purpose of resuscitating the account. The evidence makes it plain that he approached his sister and negotiated with Mr Conrad because there was a possession order against him requiring him to vacate his home by 10:30 am on 25 February 2000. His actions were focused on avoiding eviction. As both he and his sister said in evidence, the money was to be paid to or at the direction of St George so that St George would not take possession of his property.

38 Mr Armstrong might have caused the payment to be made in reduction of his home loan, if that arrangement had been satisfactory to St George. Had he done so, the payment would plainly have been in reduction of his personal liability as a home borrower. By making the payment, at the request of St George, into the company's overdraft account, he acted in a more ambiguous manner. It would be plausible to construe his conduct as the conduct of the director of Macquarie if he had been motivated by some corporate purpose in causing the payment to be made in that fashion, such as the purpose of restoring the overdraft account as an operating account. But he was motivated by his personal desire to avoid eviction, and his conversation with Mr Conrad on 25 February 2000 was conducted by him in his personal capacity. Therefore the subsequent payment is properly to be characterised as a payment that he caused to be made in reduction of his personal liability as guarantor of the company's debt - for it was that liability (along with his liability as a home borrower) that was the progenitor of his threatened eviction, rather than any liability of the company as such.

(e) an obligation incurred by the body
(g) a loan to the body

39 It is appropriate to consider these two paragraphs of the definition together, since they raise essentially the same issue. Counsel for Mr Prentice contended that the events of 25 February 2000 resulted in Macquarie incurring an obligation and obtaining a loan in one of two alternative ways. First, he said that Sandra Armstrong lent money to Macquarie by arrangement with her brother Peter. However, for reasons given above I have made a finding of fact that this did not occur.

40 Secondly, counsel said that if Ms Armstrong lent or gave the money to her brother rather than the company, then Mr Armstrong's instruction to his sister to deposit the money into Macquarie's overdraft account amounted either to a loan by him to the company or to an arrangement by which he as guarantor acquired a legal right of recoupment of that money from the company. This analysis is also inconsistent with my findings of fact. I have found that in dealing with Mr Conrad of St George on 25 February 2000, Mr Armstrong was acting in his personal capacity, and that the payment he caused to be made on that day was a payment in reduction of his personal liability as guarantor of Macquarie's debt, rather than a payment in direct discharge of Macquarie's debt.

The general concept of "transaction"

41 In Re Emanuel (No 14), A Co contracted with B that in settlement of all claims between them, B would make payments at A's direction to C, a creditor of A. When B paid C pursuant to these arrangements, and C accepted the payment in discharge of A's debt to it, the question arose whether A (the company) and C (the creditor) were parties to a "transaction" deemed to be an unfair preference (see 24 ACSR at 293). These schematic facts are, of course, distinguishable from the facts of the present case. Here, as in Re Emanuel, A directed B, pursuant to an arrangement between them, to pay C, A's creditor. However in the present case, A is not a company that has subsequently gone into liquidation. A is an individual, namely Mr Armstrong, because of my finding of fact that the payment was made by Ms Armstrong at the direction of Mr Armstrong personally in reduction of his liability to St George on the guarantee.

42 In Re Emanuel the Full Court identified three circumstances in which B's payment to C might be, or be part of, a transaction between A (the company) and C (the creditor). The first (at 299) is where the arrangements are such that it can be said that A has used B as its instrument for the purpose of making payment to C (for example, where the payment by B constitutes part of the consideration B furnishes to A and that consideration is in final settlement of the obligations inter se of A and B). That is clearly not the present case.

43 The second (at 99) is where there is a composite of dealings in not all of which A participates, but the "transaction" is properly regarded as the totality of the dealings, and to that transaction A is a party. In the present case there is a composite of dealings, comprising the dealing between Mr Armstrong and his sister by which he borrowed $100,000 from her, the dealing between Mr Armstrong and St George by which he arranged to reduce his indebtedness to St George by paying $100,000 into the overdraft account in order to forestall his eviction, and the dealing between Ms Armstrong and St George by which she deposited a bank cheque for $100,000 drawn in favour of Macquarie into Macquarie's overdraft account. However, Macquarie was not a party to any of those dealings, and therefore cannot be regarded as a party to the "transaction" comprising the composite of the dealings. It is merely the recipient of a benefit arising through performance of the transaction.

44 The third (at 99-100) is where A, by authorising B's payment to C in discharge of A's debt, is a party to the extinguishment of the debt even if it may not be a party to the payment to C. The extinguishment of a debt is not one of the examples given in the definition of "transaction" in s 9. However, according to the Full Court in Re Emanuel (No 14), the examples given in the definition of "transaction" in s 9 have the common characteristic that "the conduct or dealing engaged in by the debtor company has the consequence of effecting a change in the rights, liabilities or property of the company itself"(at 299). Consequently where a debtor company so acts as to extinguish its debt, the totality of the dealings initiated by the debtor so as to achieve the intended purpose of extinguishing the debt is a transaction of the debtor company for the purposes of s 588FA (1).

45 In my opinion these observations have no application to the present case. My findings of fact mean that the debtor company in the present case has at no stage acted to procure the extinguishment, pro tanto, of its debt. It is true that a result of the dealings that have occurred is the reduction of Macquarie's debt to St George by $100,000. But that result is a by-product of the transaction between Mr Armstrong and St George, which did not involve any conduct or dealing by Macquarie. The bank cheque was drawn in favour of Macquarie and deposited into Macquarie's account. That did not involve any action by Macquarie. In his dealings with St George Mr Armstrong acted in his personal capacity in order to avoid eviction, and he did not purport to authorise the payment on behalf of Macquarie. A consequence may be that Macquarie would have been able to repudiate the payment in its favour if it had acted promptly (see the literature cited by the Full Court in Re Emanuel (No 14) at 298), but that possibility has long since passed and does not in any case affect the analysis.

Conclusion

46 My conclusion is that the payment of $100,000 into Macquarie's overdraft account, and the arrangements preceding the payment, did not involve any transaction of the company for the purposes of ss 588FC and 588FE, nor any transaction to which Macquarie and St George were parties for the purposes of s 588FA (1) (a). Consequently there was no unfair preference and no voidable transaction for the purposes of those provisions.

47 By its amended defence St George contended that if, contrary to its submission, the payment of $100,000 was a voidable transaction within s 588FE, the Court should decline to make any orders pursuant to s 588FF. Counsel for St George submitted that s 588FF gives the Court a discretion introduced by the word "may", implying that the Court may choose not to make any order although a transaction is found to be a voidable transaction. Since I have found that there is no voidable transaction in the present case, it is unnecessary for me to consider whether I have such a discretion and if so, whether I should decline to exercise it.

48 The appropriate course is for me to dismiss the originating process, and also St George's cross claim against Mr Armstrong. I shall give the parties the opportunity to make brief submissions with respect to costs.

**********

Last Modified: 05/08/2002