CGU Workers' Compensation (NSW) Ltd v Harry Wever Pty Ltd

[2006] NSWSC 1246

CITATION:	CGU Workers' Compensation (NSW) Ltd v Harry Wever Pty Ltd [2006] NSWSC 1246
HEARING DATE(S):	06/11/06
JUDGMENT DATE :	6 November 2006
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	White J
EX TEMPORE JUDGMENT DATE:	11/06/2006
DECISION:	1. Make orders in accordance with paragraphs 1 and 2 of the interlocutory process filed on 28 August 2006; 2. order that there be no order as to costs of the application.
CATCHWORDS:	CORPORATIONS – Winding up – Winding up in insolvency – Statutory demand – Application to set aside statutory demand – Court ordered defendant be wound up on earlier application of plaintiff – Order made in absence of appearance by defendant – Defendant contended that debt claimed by plaintiff was not owed due to earlier cancellation of workers’ compensation policy which gave rise to alleged debt – Plaintiff decided to executively reverse debt on basis of which it served statutory demand on defendant – Whether Court should set aside winding up order pursuant to r 36.16(2)(b) Uniform Civil Procedure Rules 2005 (NSW) – Whether defendant solvent – Where any debts owed by defendant discharged by forgiveness or novation – Application to set aside statutory demand granted.
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005 (NSW)
CASES CITED:	Double Bay Newspapers Pty Ltd & Others v The Fitness Lounge Pty Ltd (2006) 57 ACSR 131
PARTIES:	CGU Workers' Compensation (NSW) Ltd v Harry Wever Pty Ltd
FILE NUMBER(S):	SC 1934/06
COUNSEL:	Plaintiff: Ms Zevgolis Defendant: N/A
SOLICITORS:	Plaintiff: PH Legal Defendant: N/A

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

WHITE J

Monday, 6 November 2006

1934/06 CGU Workers’ Compensation (NSW) Ltd v Harry Wever Pty Ltd

JUDGMENT

1 HIS HONOUR: On 28 August 2006, the Court made an order for the winding-up of the defendant company on the application of the plaintiff, CGU Workers’ Compensation (NSW) Ltd. The order was made in the absence of appearance by the defendant company. The director of the defendant, Mr Wever, contended that the debt claimed by the plaintiff, on the basis of which the winding-up order was obtained, was not owed. He contended that the notice of cancellation of the workers’ compensation policy which gave rise to the alleged debt had been sent to the plaintiff on about 30 November 2004.

2 The plaintiff's evidence is that it had no record of receiving the original cancellation request. Nonetheless in June 2006, it decided to cancel the policy and backdate the cancellation to 2 November 2004. This executively reversed the debt on the basis of which it served the statutory demand and claimed status as a creditor of the defendant.

3 The application to set aside the winding-up order is made pursuant to r 36.16(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW). This rule provides that the Court may set aside a judgment or order after it has been entered if the judgment or order was given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing, or of the application for the judgment or order.

4 There is evidence of service of the originating process. The winding-up order was regularly obtained. Nonetheless, there is jurisdiction to set it aside pursuant to r 36.16(2). On such an application, it is incumbent upon the defendant company to establish its solvency (Double Bay Newspapers Pty Ltd & Others v The Fitness Lounge Pty Ltd (2006) 57 ACSR 131 at [16]).

5 The present application has been stood over on a number of occasions in order for such evidence to be adduced. The liquidator, Mr Andrew, consents to the application. It appears that his fees have been paid by Mr Wever. Mr Andrews deposed in an affidavit of 22 August 2006 that the company had no assets, and the only creditors known to him at that time had been paid. However, the financial statements of the company as at 30 June 2006 disclose the existence of a trade creditor in the sum of $9,401, and an unsecured liability to the director, Mr Wever, for some $116,718. They also disclose a small amount of liquid assets.

6 The evidence shows that the trade creditor, Minford Australia Pty Ltd, has, to use Mr Wever's words, "assigned the personal loan" to him. There is in evidence a letter from Minford Australia Pty Ltd which does appear to amount to an agreement to discharge the debt owed by the defendant company in consideration of Mr Wever assuming liability for that debt.

7 It appears that on or about 27 October 2006, 120,000 shares were issued to Mr Wever. Precisely how this was done does not appear. No order is sought pursuant to s 471A of the Corporations Act 2001 (Cth) for the Court to give its approval to an exercise by the shareholders or directors of the company of a power to issue the shares. It may be, although Mr Andrew does not depose to this, that the shares were issued with the written consent of the liquidator, and thus were authorised under s 471A(1A)(c).

8 It appears from the most recent financial statements that the loan to Mr Wever has been discharged, apparently in consideration of the issue of shares. In any event, Mr Wever has executed a deed forgiving the company from debts that he may have against the company as at 30 September 2006. Thus, it appears that all of the debts owed by the company have been discharged either by forgiveness or by novation.

9 Accordingly, I am satisfied of the company's solvency. The Australian Securities and Investments Commission has been given notice of the application, and neither consents to, nor opposes, the application.

10 For these reasons, on the application of the plaintiff, I make orders in accordance with paragraphs 1 and 2 of the interlocutory process filed on 28 August 2006. I order that there be no order as to costs of the application.

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