Flow of value alone won’t cut it – Full Court demands altered legal rights to trigger s 588FDA
On April 8, 2026, the Full Federal Court dismissed an appeal challenging a finding that funds routed through a corporate group did not amount to a payment to a director's relative under s 588FDA of the Corporations Act 2001 (Cth).
In Yang v Wong [2026] FCAFC 39, Charlesworth, Jackman, and Needham JJ unanimously dismissed Ms. Yingna Yang's appeal from the primary judge's decision in Yang v Wong, in the matter of Axis North Pty Ltd (Receiver and Manager Appointed) (in liq) (No 2) [2025] FCA 693.
Ms. Yang had acquired the right to sue the respondent, Ms Lai Wah Wong, under a Deed of Assignment of Right to Sue from the liquidators of Axis North Pty Ltd. She alleged that Axis North made payments amounting to an unreasonable director-related transaction in favour of Ms Wong, who is the mother of Axis North director Mr. So.
Between 15 and 22 March 2018, Axis North paid $3.5 million to Wharf Road Surfers Paradise Pty Ltd, recorded as a loan. Wharf Road then paid $1.4 million to Ms. Wong on 19 March 2018 and a further $1.4 million on 20 March 2018. The parties disputed whether the second sum went directly to Ms. Wong or to Ultimate Investment Portfolio Pty Ltd, but the primary judge found that the $2.8 million was ultimately received by Ms. Wong, either directly or through Ultimate, and that the payments reduced Wharf Road's antecedent indebtedness to her. The primary judge also accepted that Mr. So intended to route the funds in this way before Axis North received them from Ms. Yang.
The primary judge held that, despite the value reaching Ms. Wong, Axis North did not make a "payment" to her for the purposes of s 588FDA(1)(a). Justice Jackman agreed. The flow of value, he held, must alter the legal rights and obligations between the alleged payer and payee – for example, by discharging an indebtedness or creating new rights – to constitute a payment. Where a transfer of value from A to C merely puts C in a position to discharge its own debt to B without reference to A, no payment runs from A to B.
Justice Jackman accepted that the term "payment" embraces payments by direction and via intermediaries, citing Roufeil v Tarrant Enterprises Pty Ltd and Federal Commissioner of Taxation v Rozman. However, he rejected the submission that the wide view of "transaction" under s 9 of the Act applies to s 588FDA, pointing to the legislature's emphatic "if, and only if" language and the narrower categories of dealings the section identifies.
The court also rejected Ms. Yang's second ground, which argued that the payments to Wharf Road were made "for the benefit of" Ms. Wong under s 588FDA(1)(b)(iv). Counsel for Ms. Yang conceded the point did not appear in the statement of claim, and Ms. Wong refused to consent to any departure from the pleaded case.
On the third ground – raised for the first time on appeal – Justice Jackman refused leave. He held that granting leave would prejudice Ms. Wong by depriving her of the opportunity to establish a good-faith defence under s 588FG(1)(b), and noted that tactical decisions about Mr. So's affidavit evidence might have differed had the new contention been pleaded.
The court ordered Ms. Yang to pay the respondent's costs.
