Yang v Wong - Director-Related Transaction Appeal

Original Word Document (101.2 KB) Federal Court of Australia

Yang v Wong [2026] FCAFC 39

| Appeal from: | Yang v Wong, in the matter of Axis North Pty Ltd (Receiver and Manager Appointed) (in liq) (No 2) [2025] FCA 693 |
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| File number(s): | QUD 545 of 2025 |
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| Judgment of: | CHARLESWORTH, JACKMAN AND NEEDHAM JJ |
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| Date of judgment: | 8 April 2026 |
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| Catchwords: | CORPORATIONS – unreasonable director-related transaction – whether transactions taken as a whole constitute a payment to a close associate of a director under s 588FDA(1)(b)(ii) of the Corporations Act 2001 (Cth) – payment by company A to company B – subsequent repayment of loan from company B to respondent – where respondent is a relative of a director of company A – payment found to be relevantly “to” company B not respondent – whether gift constitutes payment considered – ground of appeal rejected

PRACTICE AND PROCEDURE – whether primary judge should have considered merits of matter raised at trial but not pleaded in statement of claim – whether matter not pleaded in statement of claim at first instance can be contended on appeal – where respondent does not consent to departure from pleaded case – ground of appeal rejected

PRACTICE AND PROCEDURE – where leave sought to raise ground for the first time on appeal – whether there would be prejudice to respondent – where respondent had no opportunity to establish defence at first instance – where decisions regarding evidence may have been different had matter been pleaded at first instance – held this would be prejudicial to respondent – leave not allowed – ground of appeal rejected |
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| Legislation: | Bankruptcy Act 1966 (Cth)

Corporations Act 2001 (Cth)

Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 (Cth) |
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| Cases cited: | Ashala Model Agency Pty Ltd (in liq) v Featherstone [2016] QSC 121; [2017] 2 Qd R 1

Aviation 3030 Pty Ltd (in liq) v Lao, in the matter of Aviation 3030 Pty Ltd (in liq) [2022] FCA 458

Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279

Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185; (2007) 164 FCR 83

CEG Direct Securities Pty Ltd v Cooper [2025] FCAFC 47; (2025) 309 FCR 66

Cussen v Sultan [2009] NSWSC 1114; (2009) 74 ACSR 496

Federal Commissioner of Taxation v Rozman [2010] FCA 324; (2010) 186 FCR 1

Roufeil v Tarrant Enterprises Pty Ltd [2023] FCAFC 142; (2023) 299 FCR 204

Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; (1997) 189 CLR 407

Vasudevan (as joint and several liquidator of Wulguru Retail Investments Pty Ltd) (in liq)) v Becon Constructions (Aust) Pty Ltd [2014] VSCA 14; (2014) 41 VR 445

Yang v Wong, in the matter of Axis North Pty Ltd (Receiver and Manager Appointed) (in liq) (No 2) [2025] FCA 693 |
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| Division: | General Division |
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| Registry: | Queensland |
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| National Practice Area: | Commercial and Corporations |
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| Sub-area: | Corporations and Corporate Insolvency |
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| Number of paragraphs: | 50 |
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| Date of hearing: | 27 March 2026 |
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| Counsel for the Appellant: | Mr L Copley and Mr M Goldsworthy |
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| Solicitor for the Appellant: | Bell Legal |
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| Counsel for the Respondent: | Mr S Couper, Mr D Marckwald and Ms L M Bullen |
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| Solicitor for the Respondent: | Colin Biggers & Paisley |
ORDERS

| | | QUD 545 of 2025 |
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| BETWEEN: | YINGNA YANG

Appellant | |
| AND: | LAI WAH WONG

Respondent | |

| order made by: | |
| DATE OF ORDER: | 8 April 2026 |
THE COURT ORDERS THAT:

1. The appeal be dismissed.

2. The appellant pay the respondent’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

CHARLESWORTH J:

1 This appeal should be dismissed for the reasons given by Jackman J.

| I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Charlesworth. |
Associate:

Dated:    8 April 2026

REASONS FOR JUDGMENT

JACKMAN J:

Introduction

2 This is an appeal from the decision of the primary judge in Yang v Wong, in the matter of Axis North Pty Ltd (Receiver and Manager Appointed) (in liq) (No 2) [2025] FCA 693 (the Primary Judgment or PJ). The primary judge dismissed an application concerning an alleged “unreasonable director-related transaction” under s 588FDA of the Corporations Act 2001 (Cth) (the Act).

Salient legislative provisions

3 Section 588FDA(1) of the Act provided as follows at the relevant time:

588FDA Unreasonable director-related transaction

(1) A transaction of a company is an unreasonable director-related transaction of the company if, and only if:

(a)     the transaction is:

(i)     a payment made by the company; or

(ii)     a conveyance, transfer or other disposition by the company of property of the company; or

(iii)    the issue of securities by the company; or

(iv)    the incurring by the company of an obligation to make such a payment, disposition or issue; and

(b)     the payment, disposition or issue is, or is to be, made to:

(i)     a director of the company; or

(ii)    a close associate of a director of the company; or

(iii)     a person on behalf of, or for the benefit of, a person mentioned in sub-paragraph (i) or (ii); and

(c)     it may be expected that a reasonable person in the company’s circumstances would not have entered into the transaction, having regard to:

(i)    the benefits (if any) to the company of entering into the transaction; and

(ii)    the detriment to the company of entering into the transaction; and

(iii)     the respective benefits to other parties to the transaction of entering into it; and

(iv)    any other relevant matter.

The obligation referred to in sub-paragraph (a)(iv) may be a contingent obligation.

4 Section 588FDA(1)(b) has since been amended (see Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 (Cth)), and reads in its current form:

(b)    the payment, disposition or issue is, or is to be, made to:

(i)    a director of the company; or

(ii)    a relative of a director of the company; or

(iii)     a relative of a spouse of a director of the company; or

(iv)    a person on behalf of, or for the benefit of, a person of a kind referred to in sub-paragraph (i), (ii) or (iii); and

The definition of a “close associate”, which was previously defined in s 9 of the Act as a “relative of a director” or “a relative of a spouse of a director”, has thus now been incorporated into para (b)(ii) and (iii) in s 588FDA(1).

5 A transaction is “voidable” where it is “an unreasonable director-related transaction of the company”, and was entered into, or an act was done for the purposes of giving effect to it, during the four years ending on the “relation-back day”: s 588FE(6A) of the Act. Where the Court is satisfied that a transaction of the company is voidable because of s 588FE, the Court may make one or more of a number of orders, including an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction (s 588FF(1)(a)), and an order requiring a person to pay to the company an amount that, in the Court’s opinion, fairly represents some or all of the benefits that the person has received because of the transaction (s 588FF(1)(c)). A court is not to make under s 588FF an order materially prejudicing a right or interest of a person other than a party to the transaction if it is proved that, in relation to each benefit that the person received because of the transaction: (i) the person received the benefit in good faith, and (ii) at the time when the person received the benefit (A) the person had no reasonable grounds for suspecting the company was or would become insolvent, and (B) a reasonable person in the person’s circumstances would have had no such grounds for so suspecting: s 588FG(1)(b).

6 Section 9 of the Corporations Act defines a “transaction” as follows:

transaction in Part 5.7B, in relation to a body corporate or Part 5.7 body, 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

(b)    a security interest granted by the body in its property (including a security interest in the body’s PPSA retention of title property); and

(c)    a guarantee given by the body; and

(d)    a payment by the body; and

(e)    an obligation incurred by the body; and

(f)    a release or waiver by the body; and

(g)    a loan to the body;

and includes such a transaction that has been completed or given effect to, or that has terminated.

The salient facts and the reasons of the primary judge

7 The primary judge began by saying that the applicant, Ms Yang, sought orders in relation to payments allegedly made by Axis North Pty Ltd (Receiver and Manager Appointed) (in liq) (Axis North), alleging that those payments were made to, or for the benefit of, the respondent, Ms Wong, and accordingly may be avoided under ss 588FDA and 588FE of the Corporations Act as an “unreasonable director-related transaction”: PJ [1]. The primary judge observed that such orders were usually sought by liquidators, but in the present case Ms Yang claimed that she had acquired the right to pursue them against Ms Wong from the liquidators of Axis North pursuant to a Deed of Assignment of Right to Sue entered into on 25 June 2023, and there was no dispute as to the existence or efficacy of that assignment: PJ [2].

8 The primary judge summarised Ms Yang’s assertions as being that: (a) she lent $3.5 million to Axis North; (b) Axis North used those funds to make payments to Wharf Road Surfers Paradise Pty Ltd (Wharf Road) as trustee for the Wharf Road Surfers Paradise unit trust; and (c) those monies, or a substantial portion of them, were ultimately transferred to Ms Wong: PJ [3]. Further, at all relevant times, Mr So, being the son of Ms Wong, was a director of Axis North and Wharf Road: PJ [3]. The primary judge said that it was apparent that, prior to Axis North’s receipt of funds from Ms Yang, Mr So and his business associate and co-director, Mr Clancy, intended to cause those funds to be transferred to Wharf Road, and for that entity then to use them to discharge its then-indebtedness to Ms Wong: PJ [3].

9 The primary judge said in the introduction to the Primary Judgment that the claim must fail: PJ [5]. The primary judge said that although it was true that the value of the funds lent by Ms Yang to Axis North was ultimately received by Ms Wong, that was only because Axis North lent the funds to Wharf Road, which then directly discharged its debt to Ms Wong by paying her $1.4 million, and further indirectly discharged the debt by paying an additional amount of $1.4 million to a third company: PJ [5]. The primary judge said that, despite the value represented by the funds lent to Axis North being substantially received by Ms Wong, Axis North did not make a “payment” to her for the purposes of s 588FDA(1)(a) of the Act, because the receipt of the value of the funds by Ms Wong did not create or alter any legal rights between herself and Ms Yang: PJ [5].

10 The primary judge referred to Axis North as being one of a plethora of entities which comprise the so-called “Golden Gate Property Group” (the Group), with Mr So and/or Mr Clancy as their director(s). One of the property developments pursued by Mr So and Mr Clancy concerned a property in Surfers Paradise which Wharf Road acquired on 8 July 2016: PJ [15].

11 By March 2018, Ms Wong had lent the Group about $4 million: PJ [19].

12 On 13 March 2018, Ms Yang entered into a loan agreement to lend $3.5 million to Axis North (the Loan Agreement). In accordance with the terms of the Loan Agreement, Ms Yang advanced $3.5 million to Axis North between 15 and 21 March 2018: PJ [25].

13 The primary judge referred to the evidence of Mr So that, not long before Axis North received the funds from Ms Yang, he held discussions with Mr Clancy where it was agreed that those funds would be used to repay the outstanding indebtedness of the Group to Ms Wong: PJ [26]. Between 15 and 22 March 2018, Axis North paid $3.5 million to Wharf Road: PJ [27]. The primary judge referred to that transaction as having been recorded as a loan, but that there was no loan documentation in relation to it: PJ [27].

14 On 19 March 2018, Wharf Road paid $1.4 million directly to Ms Wong: PJ [28]. On 20 March 2018, a further $1.4 million was paid away by Wharf Road: PJ [29]. The primary judge referred to an issue as to whether those monies were paid to Ms Wong (being the applicant’s contention) or whether they were instead paid to Ultimate Investment Portfolio Pty Ltd (Ultimate) (as the respondent contended). The primary judge said that on either of those competing contentions, the money was effectively paid to Ms Wong and found that Wharf Road paid away a sum of $2.8 million, which was ultimately received by Ms Wong, either directly or through Ultimate: PJ [29].

15 The primary judge said that there was no dispute that Mr So’s intention was to use the money received by Axis North for the purposes of repaying Ms Wong the indebtedness of the Group to her, and the payments amounting to $2.8 million achieved that purpose: PJ [30].

16 The primary judge referred to there having been differences as to the precise scope of what was in issue, in part due to certain generalities in the pleadings as well as some potential inconsistencies: PJ [33]. In relation to the statement of claim, the primary judge referred to allegations that between 15 March 2018 and 22 March 2018, Mr So (in his capacity as director of both Axis North and Wharf Road) authorised and directed the payment of (a) $3.5 million from Axis North to Wharf Road, and (b) $2.8 million from Wharf Road to Ms Wong: PJ [39]. The primary judge then referred to allegations that those payments comprised (a) a single or composite transaction to Ms Wong, and in turn (b) a payment made by Axis North: PJ [39]. The primary judge also referred to allegations of benefits to other parties arising from the transaction, and specifically the allegation that Ms Wong received a “significant benefit” because she obtained $2.8 million on interest free and security free terms and for no consideration: PJ [42].

17 Pausing there, it is worth setting out at this point the allegations made in the statement of claim at [9]–[14]:

The Payments

9.    Between 15 March 2018 and 22 March 2018, Mr So in his capacity as director of both Axis North and Wharf Road authorised and directed:

(a)    the payment and receipt of $200,000 from Axis North as trustee for the Axis North Unit Trust (“ AN Trust ”) to Wharf Road as trustee for the Wharf Road Surfers Paradise Unit Trust (“ WR Trust ”) on 15 March 2018;

(b)    the payment and receipt of $1,000,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 18 March 2018;

(c)    the payment and receipt of $400,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 19 March 2018;

(d)    the payment and receipt of $1,000,000 from Wharf Road ATF the WR Trust to the Respondent on 19 March 2018;

(e)    the payment and receipt of $400,000 from Wharf Road ATF the WR Trust to the Respondent on 19 March 2018;

(f)    the payment and receipt of $1,000,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 19 March 2018;

(g)    the payment and receipt of $500,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 20 March 2018;

(h)    the payment and receipt of $1,400,000 from Wharf Road ATF the WR Trust to the Respondent on 20 March 2018; and

(i)    the payment and receipt of $400,000 from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust on 22 March 2018.

(“ Payments ”)

10.    The Payments from Axis North ATF the AN Trust to Wharf Road ATF the WR Trust totalled $3,500,000 (“ Total Payment ”).

11.    Between 15 March 2018 and 20 March 2018, Mr So in his capacity as director of Axis North and Wharf Road authorised and directed the amount of $2,800,000 of the Total Payment to be paid to the Respondent. (“ Payment to the Respondent ”)

12.    The Payments and the Payment to the Respondent were:

(a)    a single transaction to the Respondent; or

(b)     alternatively, a composite transaction to the Respondent

by reason that in totality the Payments and the Payment to the Respondent were made up of a series of inter-related dealings between Axis North and the Respondent.

Voidable Transaction: Unreasonable Director-Related Transaction

13.    For the purposes of section 588FDA of the Act, the Payment to the Respondent are unreasonable director-related transactions of Axis North because the Payment to the Respondent:

(a)    was a payment made by Axis North;

(b)    were made to the Respondent, whom [sic] is a close associate of Mr So;

(c)    it may be expected that a reasonable person in Axis North’s circumstances would not have made the Payment to the Respondent because:

(i)    there was no benefit to Axis North by making the Payment to the Respondent;

(ii)    the Payment to the Respondent caused a detriment to Axis North because:

(A) no repayments of the $2,800,000 were made to Axis North by Wharf Road or the Respondent;

(B) Axis North made the Payment to the Respondent on interest free and security free terms, whereas, these funds could have been applied to generate a return for the benefit of Axis North by other, more commercial and secure means;

(C) Axis North exposed itself to a high degree of commercial risk given the Payment to the Respondent were advanced on interest free and security free terms; and

(D) Axis North had other liabilities to meet; and

Particulars

Axis North’s liabilities at the relevant time included a loan of $3,500,000 provided by the Applicant to Axis North pursuant to a loan agreement dated 9 March 2018.

Further particulars of Axis North’s liabilities at the relevant time will be provided following disclosure.

(E) Axis North received no consideration;

(iii)    there was a significant benefit to the Respondent because she obtained $2,800,000 on interest free and security free terms and for no consideration; and

(iv)    Axis North:

(A) was not in the business of lending money, especially not funds in the vicinity of $2,800,000, and was in fact in the business of buying and selling rare cars; and

(B) advanced $2,800,000 on terms not recorded anywhere.

14.    Pursuant to section 588FE(6A) of the Act, the Payment to the Respondent is voidable because:

(a)    for the reasons pleaded in paragraph 13 above, the Payment to the Respondent was unreasonable director-related transactions (sic) pursuant to section 588FDA of the Act; and

(b)    the Payment to the Respondent were (sic) entered into during the 4 years ending on the Relation Back Day.

18 As to whether the impugned payments were an “unreasonable director-related transaction”, the primary judge said that the conditions of s 588FDA(1) were without question cumulative, citing CEG Direct Securities Pty Ltd v Cooper [2025] FCAFC 47; (2025) 309 FCR 66 at [14] and [99]–102: PJ [52].

19 The first task was thus to identify the relevant “transaction” or “transactions”: PJ [52]. The primary judge said that the “transaction” pleaded was said to comprise the payment of $2.8 million from Axis North to Ms Wong, which was said to have been made via the transfer of $3.5 million to Wharf Road, such that the payment from Axis North to Wharf Road and then from Wharf Road to Ms Wong were the constituent elements of one transaction, referring to [9]–[12] of the statement of claim: PJ [53].

20 The primary judge referred to an attempt by Ms Yang to expand the alleged transaction to include certain wider dealings: PJ [54]. Those wider dealings included discussions and documents concerning Ms Yang investing with Axis North and the Group, the entry into the Loan Agreement and the issue of shares in one of the companies in the Group to Ms Yang. The primary judge referred to that liberalisation in the construction of Ms Yang’s case having been undertaken by reference to what was said to be a wide view in the case law in relation to what might constitute a “transaction” for the purposes of s 9 of the Act, relying on Ashala Model Agency Pty Ltd (in liq) v Featherstone [2016] QSC 121; [2017] 2 Qd R 1 at 120 and Capital Finance Australia Ltd v Tolcher [2007] FCAFC 185; (2007) 164 FCR 83 at 74: PJ [55]. However, the primary judge said that that approach, and the authorities to which reference was made, related to the operation of s 588FB of the Act, which provides the definition of an “uncommercial transaction” predicated upon substantially the same enquiry as that which is set out in s 588FDA(1)(c). In contrast to s 588FB, the primary judge said that s 588FDA makes specific provision for, among other things, the nature of the “transaction” that will fall within its scope, and provides emphatically that an action will be a “transaction” for the purposes of the section “if, and only if” it is one of the specific dealings identified in s 588FDA(1)(a) of the Act. The primary judge said that the explicit identification of payments, dispositions or issuance of securities by the company strongly indicates that an unreasonable director-related transaction is narrower than the infinitely variable transactions envisaged by the definition in s 9: PJ [56]. The primary judge said that the object of s 588FDA concerns specifically identifiable alienations of property by the entity rather than broad arrangements that include the company: PJ [56]. The primary judge referred to ss 6(1) and 7(1)(a) of the Act which make it clear that, for the purposes of s 588FDA, the internal definition of “transaction” is to apply to the exclusion of the more general definition in s 9: PJ [57]–[59]. To the extent that that conclusion was inconsistent with the observations made by Anastassiou J in Aviation 3030 Pty Ltd (in liq) v Lao, in the matter of Aviation 3030 Pty Ltd (in liq) [2022] FCA 458 at [299]–[301], [326] and [413], the primary judge disagreed with that analysis: PJ [59]. Accordingly, the primary judge concluded that the “transaction” in question must be that referred to in the statement of claim: PJ [60]. The primary judge described that as being the payment by Axis North of $3.5 million to Wharf Road and the onward payment of that, or at least the sum of $2.8 million, to Ms Wong: PJ [60].

21 The primary judge then turned to the question whether the transaction so identified was a “payment” that was made “by” Axis North “to” Ms Wong. The primary judge noted that it was incontrovertible that Ms Wong was “a relative of a director” of Axis North, thereby satisfying the condition in s 588FDA(1)(b): PJ [61].

22 The primary judge referred to the earlier finding that, prior to receiving the funds from Ms Yang, Mr So (and allegedly Mr Clancy) had agreed that the money received by Axis North would be used to reimburse or repay to Ms Wong some of the loans which she had made to the Group, the clear intention being that, following receipt of the funds from Ms Yang, they (or most of them) would be received by Ms Wong: PJ [62]. Once the funds had been received by Wharf Road, $1.4 million was paid to Ms Wong and a further $1.4 million was paid to Ultimate: PJ [62]. The central question was thus whether the receipt of money by Wharf Road, which was booked as a loan to it from Axis North, and the payment of funds to Ms Wong in discharge of an antecedent debt, constitute a payment by Axis North to Ms Wong for the purposes of s 588FDA of the Act: PJ [63].

23 The primary judge said that it may readily be accepted that the submission that only the direct transfer of money from A to B will constitute a “payment” for the purposes of s 588FDA(1)(a)–(b) of the Act affords the meaning of that term a far too narrow scope: PJ [64]. The primary judge referred to Roufeil v Tarrant Enterprises Pty Ltd [2023] FCAFC 142; (2023) 299 FCR 204 and Federal Commissioner of Taxation v Rozman [2010] FCA 324; (2010) 186 FCR 1, and said that based on those cases it might be argued that Axis North transferred value in the amount of $2.8 million to Ms Wong, and, as a result, there was a “payment” by Axis North to Ms Wong: PJ [65]–[68]. However, the primary judge held that the receipt of monetary value by one person which has been obtained indirectly from another cannot be described as a “payment” merely by reference to the flow of value alone, and in order for there to be a payment, the flow of value must alter the legal rights and obligations between the alleged payer and payee: PJ [69]. His Honour said that that alteration may be, for example, by the discharge of an indebtedness, either wholly or partially, or by the creation of new rights, such as the creation of a new debt: PJ [69]. However, where a transfer of money or value from A to C merely puts C into a position where it may discharge its own indebtedness to B, and does so by a further transfer of value without any reference to A, there has been no “payment” by A to B: PJ [70]. The primary judge said that such dealings neither create nor alter legal rights or obligations as between A and B, and a “payment” necessarily requires a transfer of value which has some consequential impact upon the legal rights between parties to it: PJ [70]. As an aside, the primary judge said that a gift of value is not a payment and, if Axis North merely transferred the $3.5 million received from Ms Yang to Ms Wong, the dealing would not amount to a “payment” under s 588FDA(1)(a)(i), although it might plausibly amount to a disposition of the company’s property (which was neither what was pleaded nor what occurred in this case): [71].

24 The primary judge concluded that in the present case there was no payment by Axis North to Ms Wong: PJ [72]. The primary judge accepted that there was a payment to Wharf Road of $3.5 million by Axis North which was recorded as a loan between those two entities, and accepted that in all likelihood a loan was created: PJ [72]. That being so, Axis North made a “payment” of the loan funds to Wharf Road: PJ [72]. Thereafter, Wharf Road made a payment to Ms Wong of $2.8 million which had the effect of reducing its indebtedness to Ms Wong by that amount: PJ [72]. However, the primary judge said that these dealings did not have any effect upon any legal relationship between Axis North and Ms Wong, either in relation to any antecedent legal rights or the creation of new legal rights, and as between Axis North and Ms Wong, their legal rights remained unaltered by reason of the dealings that transpired in late March 2018: PJ [72].

25 The primary judge referred to Ms Wong relying on the discussion by Dawson, Gummow and Gaudron JJ in Sheahan v Carrier Air Conditioning Pty Ltd [1997] HCA 37; (1997) 189 CLR 407 at 435 concerning the meaning of a “payment made by a debtor” for the purposes of s 122(1) of the Bankruptcy Act 1966 (Cth): PJ [73]. The primary judge said that the contrast in that case between the company’s funds and the receivers’ funds had no application in the present case, but observed that their Honours held (at 437) that the concept of a payment made by the debtor in s 122(1) is wider than a payment that is directly made by the debtor to another and could include the circumstance of a debtor directing a third party who holds funds at their direction or is otherwise obliged to the debtor, to account to the debtor, not by payment to the debtor but to a creditor of the debtor: PJ [75].

26 The primary judge concluded that Ms Yang had failed to establish that the alleged transaction constituted a “payment” made “by” Axis North “to” Ms Wong, and thus the necessary requirements of s 588FDA(1)(a) and (b) of the Act are not satisfied and the claim must fail: PJ [76]. The primary judge said that, although the value received by Ms Wong may very well have originated from the funds received by Axis North from Ms Yang, the only payment to her was “by” Wharf Road: PJ [76].

27 The primary judge then dealt with the question whether the alleged transaction was “unreasonable” in the circumstances, identifying the question as being whether a reasonable person in the position of Axis North would have made the payment of $3.5 million to Wharf Road in circumstances where it knew that Wharf Road intended to use the funds to reduce its indebtedness to Ms Wong by $2.8 million: PJ [82]. As that aspect of the primary judge’s reasoning is not in issue in this appeal, it is sufficient to refer to the conclusion of the primary judge that a reasonable person in the position of Axis North would not have made the payment to Wharf Road or to Ms Wong: PJ [106].

28 Finally, the primary judge dealt with the question of the “relation-back day” in relation to Axis North, being 14 March 2022 when Ms Yang filed an application in the Supreme Court of Queensland to wind up Axis North in insolvency: PJ [107]. As the impugned payments were made between 15 and 22 March 2018, the alleged transaction was entered into, or acts were done giving effect to it, within the four years prior to the “relationship-back day”: s 588FE(6A).

29 Accordingly, if the alleged transaction had comprised a payment by Axis North to Ms Wong for the purposes of s 588FDA(1)(a)–(b), it would have been an “unreasonable director-related transaction” and “voidable”: PJ [108]. In that circumstance, an order would have been made under s 588FF directing Ms Wong to repay the $2.8 million received from the transaction to Ms Yang (having been assigned the rights of Axis North’s liquidators, as well as the rights of Axis North, to sue Ms Wong in relation to that transaction): PJ [108].

Ground 1: Was a payment made by Axis North to Ms Wong?

30 This ground challenges the primary judge’s conclusions at PJ [72] and [76] that the payments to Ms Wong to the value of $2.8 million were not payments made by Axis North to Ms Wong within the meaning of s 588FDA(1)(a) and (b) of the Act.

31 Ms Yang places reliance on the Second Reading Speech by Mr Peter Costello as Treasurer in support of the amendments to the Act which introduced s 588FDA (being the Corporations Amendment (Repayment of Directors’ Bonuses) Bill, Parliamentary Debates, House of Representatives, 16 October 2002, at 7677–8), and in particular the following passages:

Subsection 588FDA(1) outlines the kinds of company transactions caught by the bill. It targets transactions that a reasonable person in the company’s circumstances would not have entered into.

…

The meaning of “transactions” is broadly described to prevent avoidance. It includes a payment made by the company, as well as conveyances, transfers and other dispositions of property. It also includes the issue of securities, including options. Further, incurring an obligation to enter into any of these transfers in the future would be a “transaction” for the purposes of the bill.

…

It will also apply to transactions entered into with third parties, where they are made on behalf of, or for the benefit of, either a director or close associate. This will prevent people avoiding the new provisions through restructuring or redirecting transactions.

32 In my view, the reference in that extract to the term “transactions” being broadly described to prevent avoidance requires some qualification when compared with the statutory language. As the primary judge correctly said, the kinds of transactions which fall within s 588FDA are narrower than the broad definition of “transaction” provided in s 9 of the Act. However, the Second Reading Speech was well justified in referring to the legislation applying to transactions “on behalf of, or for the benefit of, either a director or close associate” as preventing people avoiding the new provisions through restructuring or redirecting transactions. The language “for the benefit of” is at the heart of Ground 2 in the notice of appeal, and I do not regard it as pertinent to Ground 1 which focuses on the language of “payment” by the company to a director or close associate. Accordingly, I do not regard the purpose of preventing avoidance of s 588FDA as particularly germane to Ground 1.

33 Ms Yang next submits that the term “payment” is an ordinary English expression which, in the present context, embraces payments by direction, payments made via intermediaries and the transfer of value between bank accounts without the need for any creation of legal rights between the relevant actors. Ms Yang relies on Rozman at [20] for the proposition that as a matter of ordinary English, the verb “to pay” includes among its many meanings notions of satisfaction and discharge. Ms Yang points out that that reasoning was endorsed in Roufeil, which held that the transfer of value from one bank account to another is a “payment of money” between the account-holders. However, the reasoning in those cases is entirely consistent with the notion of a payment affecting legal rights between the relevant actors. Thus, in Rozman, Perram J spoke of an alteration of rights by way of satisfaction and discharge, such as where a customer purchases goods by credit card or cheque, even though those payment mechanisms involve at least one payment by direction with a third party. The reasoning in Roufeil concerned the transfer of funds directly from one bank account to another, that being found to constitute a payment of money between the two account-holders, where the bank was regarded as the agent for the recipient account-holder which was authorised to receive money on its customer’s behalf: see [35]–[36]. Neither case deals with the present circumstances where A pays money to B which then on-pays some of that money to C, and the question is whether there is a payment by A to C.

34 Ms Yang then submits that where a course of conduct, plan or series of steps is involved it may be appropriate to take a wide view of what constitutes the transaction, even though some or all of those steps may also be properly described individually as transactions, relying on Ashala v Featherstone at 120; Capital Finance v Tolcher at 74 and 120; and Cussen v Sultan [2009] NSWSC 1114; (2009) 74 ACSR 496 at 21. Stated at that level of generality, the submission does not undermine the reasoning of the primary judge, who recognised that an interpretation which resulted in only the direct transfer of money from A to B constituting a “payment” for the purposes of s 588FDA would afford the meaning of that term a far too narrow scope: PJ [64]. However, in my view the primary judge correctly held that the receipt of monetary value by one person which has been obtained indirectly from another cannot be described as a “payment” merely by reference to the flow of value alone, as the flow of value must alter the legal rights and obligations between the alleged payer and payee: PJ [69]. The point is borne out by the primary judge’s example of A directing C, who is indebted to A, to pay an amount to B, to whom A is indebted, and also the example where B was not indebted to A but the transfer of value via C was intended to create an indebtedness from B to A. In both cases, there has been a “payment” by A to B of the amount in question. The primary judge was correct to distinguish those circumstances from a transfer of money or value from A to C which merely puts C in a position where it may discharge its own indebtedness to B, and does so by a further transfer of value without any reference to A, in which case there has been no “payment” by A to B: PJ [70].

35 I note at this point that I disagree in a relatively minor way with the primary judge’s reasoning to the effect that a gift of value is not a payment, although his Honour said that it might plausibly amount to a disposition of the company’s property: PJ [71]. In my view, a gift of value does create and alter legal rights and obligations as between the two parties, in that the subject-matter of the gift is no longer the property of the party who makes it but has become the property of the recipient of the gift, who is now entitled to assert that ownership against the giver and others. However, this particular issue is not of any significance for the present case.

36 Further, as the primary judge said at PJ [56], the authorities relied on by Ms Yang (and referred to in the previous paragraph) relate to the operation of s 588FB of the Act, in which the term “transaction” bears the wider meaning provided by s 9 of the Act, rather than the specific provision in s 588FDA as to the kinds of transactions within the latter’s scope. The general definition in s 9 of the Act does not stipulate to whom the payment must be made, unlike the specific provision in s 588FDA(1)(b). Ms Yang submits that the primary judge erred in distinguishing the way in which the word “transaction” operates in s 588FB as compared to s 588FDA, but the submission must be rejected. The submission ignores the deliberate decision by the legislature not to adopt the broad language of s 9 and s 588FB in the drafting of s 588FDA, and instead to use the emphatic words, “if, and only if” in s 588FDA(1) before referring to the specific categories of transactions identified in s 588FDA(1)(a) and (b).

37 Ms Yang also relies on the reasoning of Nettle JA in V a sudevan (as joint and several liquidator of Wulguru Retail Investments Pty Ltd) (in liq)) v Becon Constructions (Aust) Pty Ltd [2014] VSCA 14; (2014) 41 VR 445 at [19], which was cited with approval by the Full Court in CEG v Cooper at [104]–[125], to the effect that the anti-avoidance purpose of s 588FDA favours a wide construction of the term “benefit” as including both direct and indirect benefits, and rejecting a narrow view that the term “benefit” requires that the disposition results in an equitable interest (or at least something in the nature of an equity) in the property in favour of the director or close associate. As I have indicated above, the use of the terms “on behalf of” and “for the benefit of” in s 588FDA do have the purpose of seeking to prevent avoidance of the section which may have been available if the section had been confined to the concept of payments by the company to the person in question. However, I do not regard that purpose as affecting the ordinary meaning of the term “payment”, which the primary judge correctly regarded as requiring that legal relations between the payer and payee be created or affected.

38 In my view, the primary judge was correct to characterise the payments made by Axis North as having been made to Wharf Road, rather than to Ms Wong. Accordingly, I reject Ground 1.

Ground 2: Is Ms Yang entitled to contend that a payment was made for the benefit of Ms Wong, and (if so) is the contention correct?

39 By Ground 2, Ms Yang contends that the payments by Axis North to Wharf Road to the extent of $2.8 million were payments made by Axis North to Wharf Road “for the benefit of” Ms Wong within the meaning of s 588FDA(1)(a) and (b)(iv) of the Act.

40 Ms Yang submits correctly that this contention was advanced in para 43 of her closing written submissions. Ms Yang observes (again correctly) that the primary judge referred to this contention in PJ [1], in stating that Ms Yang said that the payments by Axis North “were made to, or for the benefit of” Ms Wong. As the contention was run by Ms Yang at first instance, she does not require leave to argue Ground 2 on appeal.

41 Ms Yang submits that the primary judge did not deal with the contention that the payments by Axis North were made for the benefit of Ms Wong. That criticism is unjustified. The primary judge referred to the statement of claim as alleging only payments by Axis North to Wharf Road which comprised a single or composite transaction to Ms Wong and a payment by Axis North: PJ [39]. Further, in a later passage, the primary judge referred to the only transaction pleaded as comprising the payment of $2.8 million from Axis North to Ms Wong via the transfer of $3.5 million to Wharf Road, such that the payments from Axis North to Wharf Road and then from Wharf Road to Ms Wong were the constituent elements of one transaction: PJ [53]. In sum, the statement of claim referred only to alleged payments to Ms Wong as being unreasonable director-related transactions of Axis North, and did not express a different case that payments by Axis North to Wharf Road for the benefit of Ms Wong were unreasonable director-related transactions. The failure to allege that payments were for the benefit of Ms Wong explains why the primary judge did not deal with it on its merits.

42 Neither the notice of appeal nor Ms Yang’s submissions make any challenge to the primary judge’s reasoning as to what the statement of claim alleged to be the unreasonable director-related transaction. Counsel for Ms Yang accepted before us that the matter raised by Ground 2 had not been pleaded. In any event, I regard the primary judge’s reasoning at PJ [39] and [53] as correctly summarising the effect of the statement of claim in relation to the impugned transaction. No application to amend the statement of claim was made at the trial or in the course of this appeal. I note for completeness that para 43 of Ms Yang’s closing written submissions claimed that para 7(c) of her reply pleaded a case for payments to Wharf Road being for the benefit of Ms Wong, but the reply says nothing to that effect.

43 Those matters concerning the scope of the statement of claim do not necessarily conclude the issue, because a case may be decided on a basis different from that disclosed by the pleadings in circumstances where the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities: Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286–7 (Mason CJ and Gaudron J) and 288 (Brennan J). However, in the present case, Ms Wong insisted that Ms Yang was not to be permitted to depart from her pleaded case. Senior Counsel for Ms Wong made that point expressly at the outset of the hearing (T3.7–15), and repeated it in his closing submissions with specific reference to the argument that the payments by Axis North to Wharf Road were for the benefit of Ms Wong (T135.12–136.2; closing written submissions of Ms Wong at [99]–[100]). On the hearing of the appeal, counsel for Ms Yang accepted that Ms Wong had not consented to any widening of the issues beyond the pleadings.

44 Accordingly, Ms Yang is not entitled to contend that the payments by Axis North to Wharf Road were made for the benefit of Ms Wong. Ground 2 must be rejected. I say nothing about the merits of the contention.

Ground 3: Is Ms Yang entitled to contend that the payment by Axis North to Wharf Road “is to be made to” Ms Wong and (if so) is the contention correct?

45 Ms Yang accepts that this ground is raised for the first time on appeal, and thus requires leave. Ms Yang also accepts that leave should not be granted where there would be prejudice or unfairness to Ms Wong. Ms Yang submits that leave should be granted as the relevant facts are established beyond all controversy (and submits that the arguments are dependent on Mr So’s evidence which was led on Ms Wong’s behalf), the new point is strictly a matter of law, and the essential material facts were pleaded.

46 I do not accept that the new point is purely a question of law or that all the essential material facts were pleaded. Ground 3 arguably concerns Ms Wong as “a person other than a party to the transaction”, such that Ms Wong would be entitled to raise the defence under s 588FG(1)(b) that she received a benefit in good faith and without reasonable grounds to suspect Axis North’s insolvency. Those matters did not arise on the pleadings and were not dealt with in Ms Wong’s evidence. Accordingly, granting Ms Yang leave to run this point on appeal would plainly prejudice Ms Wong by depriving her of the opportunity to establish this defence.

47 Further, the issue sought to be raised by Ground 3 depends also on the factual question as to Mr So’s intention as to what Wharf Road would do with the money which Axis North paid to it. It is true that Mr So’s affidavit evidence made that intention clear, but that affidavit was served in circumstances where the pleaded case was a narrow one concerning payments by Axis North allegedly to Ms Wong. Mr So’s affidavit was evidently perceived by Ms Wong to assist Ms Wong in proving the reasonableness of the impugned transaction. While it may also have been perceived by Ms Wong that the affidavit may have been detrimental to Ms Wong on any question as to whether a payment “is to be made” to her (and for that matter whether the payments were for her “benefit”), no such issues had been pleaded. For as long as those issues were not pleaded, the affidavit would likely have been seen as potentially helpful to Ms Wong’s case, but if those unpleaded matters were raised, that may well have provided a strong countervailing reason for not serving the affidavit at all. At the very least, the tactical decision as to whether Mr So should give evidence was likely to have been more difficult if those issues had been pleaded, and it appears to me to be reasonable to conjecture that the ultimate decision might have been different. I therefore regard it as prejudicial and unfair to Ms Wong for Ms Yang to seize on admissions contained in Mr So’s affidavit as the basis of a new and unpleaded case in circumstances where the affidavit might not have been served if the new contention had in fact been pleaded.

48 Accordingly, it would not be appropriate to grant leave to Ms Yang to raise this ground for the first time on appeal, and Ground 3 should be rejected. In doing so, I say nothing as to the proper construction of the words “or is to be made” or as to the merits of Ms Yang’s contention.

Conclusion

49 Accordingly, the appeal should be dismissed with costs.

| I certify that the preceding forty- eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman. |
Associate:

Dated: 8 April 2026

REASONS FOR JUDGMENT

NEEDHAM J:

50 I have had the benefit of reading Jackman J’s reasons in draft. I concur with his Honour’s reasons. The appeal should be dismissed and the appellant should pay the costs of the appeal.

| I certify that the preceding one (1) numbered paragraph is a true copy of the Reasons for Judgment of the Honourable Justice Needham. |
Associate:

Dated:    8 April 2026

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