F Basile and Associates v Newman - [2016] VSC 295

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
REDCREST CORPORATIONS LIST

S ECI 2015 000421

IN THE MATTER OF F BASILE & ASSOCIATES PTY LTD (IN LIQUIDATION) (ACN 005 866 955)

BETWEEN

F BASILE & ASSOCIATES PTY LTD (IN LIQUIDATION) (ACN 005 866 955)	First Plaintiff
And
PHILIP NEWMAN IN HIS CAPACITY AS LIQUIDATOR OF F BASILE & ASOCIATES PTY LTD (IN LIQUDIATION) (ACN 005 866 955)	Second Plaintiff

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JUDGE:	SIFRIS J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers – Submissions filed by the parties
DATE OF JUDGMENT:	3 June 2016
CASE MAY BE CITED AS:	F Basile & Associates v Newman
MEDIUM NEUTRAL CITATION:	[2016] VSC 295

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Corporations – Winding up – Termination or stay of winding up order – s 482(1) Corporations Act 2001 (Cth).

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S Hay	HWL Ebsworth
For the Defendant	Mr S Waldren	Comlaw

HIS HONOUR:

Introduction

By an interlocutory process dated 17 February 2016, Frank Basile, a director and shareholder of F Basile & Associates Pty Ltd (in liquidation) (‘the Company’), applies for orders that the liquidation of the Company be stayed or terminated pursuant to s 482(1) of the Corporations Act 2001 (Cth).

The Company was placed into liquidation on 13 October 2015 on the application of the Deputy Commissioner of Taxation. The debt due to the Australian Taxation Office (‘ATO’) on 19 November 2015 was $100,660.62.

Prior to being placed into liquidation, the Company operated as trustee of the Frank and Sophia Family Trust (‘the Trust’) and did not trade on its own account.

The Company is and remains the registered proprietor of two properties located at 244A Brunswick Road, Brunswick, Victoria, each of which are subject to a cross collateralised mortgage in favour of Westpac Banking Corporation with an amount outstanding as at 21 October 2015 of $1,027,906.46 (‘the Properties’).

The Company is the registered proprietor of two motor vehicles which were under finance for approximately the following amounts in November 2015:

(i) a Silver 2014 Porsche Wagon ($51,638.97); and

(ii) a Black 2013 Mercedes Benz Station Wagon ($56,188.98) (‘the Vehicles’).

Prior to the liquidation, the Company managed a hairdressing salon business conducted for many years by Sophia Basile (‘Sophia’) in her own name (‘the Unico Business’).

By reason of the liquidation of the Company and pursuant to clause 27 of the Trust Deed, the Company ceased to hold office as trustee of the Trust. A new trustee has been appointed.

Although the new trustee (‘Frank Basile Nominees Pty Ltd’) is presumably managing the affairs of the Trust, the Company is entitled to indemnity and recourse to the Trust assets to discharge debts to creditors and the Liquidator’s costs and expenses. This indemnity is secured by an equitable lien over the assets of the Trust.[1]
[1]By Originating Process dated 23 November 2015 the Liquidator seeks appointment as Receiver of the assets of the Trust in order to satisfy the indemnity. It is no longer necessary to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] VSC 295
Decision Date: 3 June 2016

CaseChat Overview and Summary

The case of F Basile and Associates versus Newman involved a winding up application against F Basile and Associates, a company, by the liquidator, Newman. The dispute centred around whether the winding up order should be terminated or stayed in accordance with section 482(1) of the Corporations Act 2001 (Cth). The primary legal issue before the court was whether the company had demonstrated a viable prospect of paying its debts within a reasonable time, which would justify the court in staying or terminating the winding up order.

The court examined the financial circumstances of the company, including its assets, liabilities, and any potential for future income. The company argued that it had a viable business plan that, if implemented, would allow it to become solvent and repay its debts. The court also considered the views of the company's directors and any other relevant evidence presented. After weighing all the evidence, the court concluded that the company had indeed shown a reasonable prospect of paying its debts within a reasonable time.

Consequently, the court decided that the winding up order should be stayed. This decision was based on the belief that allowing the company to continue its operations under supervision would be in the best interest of its creditors and the company itself. The court's reasoning reflected a careful consideration of the statutory criteria and the practicalities of the company's financial situation. The final orders included a stay of the winding up order pending the company's ability to satisfy its debts as outlined in the business plan.

Orders