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GIO General Ltd v Sabko Pty Ltd

GIO General Ltd v Sabko Pty Ltd

Case [2007] NSWSC 251 21 March 2007

Winding Up & Liquidation

Breach of Contract

Unjust Enrichment

Insolvency Law

Corporate Law & Governance

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Reported Decision:
(2007) 25 ACLC 935
70 NSWLR 743

New South Wales

Supreme Court

CITATION: GIO General v Sabko [2007] NSWSC 251

HEARING DATE(S): 19 March 2007

JUDGMENT DATE :
21 March 2007

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Winding up order made on just and equitable ground

CATCHWORDS: CORPORATIONS - winding up by the court - winding up of reinstated company in insolvency or on the just and equitable ground - plaintiff's standing as creditor - whether, by virtue of s 601AH(5), plaintiff is a creditor with respect to a "debt" said to be incurred during company's deregistration - whether sufficient evidence of insolvency - whether sufficient evidence of failure of substratum

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 459A, 459P, 461, 462, 467, 601AB, 601AD, 601AH
Workers Compensation Regulation 2003 (NSW), para 49 and Form 3

CASES CITED: CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd [2006] NSWSC 690
Diamond Hill International Pty Ltd v Xu (2001) 19 ACLC 1139
White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441

PARTIES: GIO General Limited (Agent for the NSW WorkCover Scheme) (P)
Sabko Pty Ltd (D)

FILE NUMBER(S): SC 1101/07

COUNSEL: J O'Connor (P)

SOLICITORS: Mason Black Lawyers

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

AUSTIN J

WEDNESDAY 21 MARCH 2007

1101/07 GIO GENERAL LTD (AGENT FOR WORKCOVER SCHEME) V SABKO PTY LTD

JUDGMENT

1 HIS HONOUR: By an originating process filed on 15 January 2007, the plaintiff sought an order under s 601AH(2) directing ASIC to reinstate the registration of Sabko Pty Ltd ("the company"), and orders for the winding up of the company and the appointment of a liquidator, forthwith upon its reinstatement. Registrar Flaskas made a reinstatement order on 16 March 2007. The plaintiff came before me as Corporations List Judge on Monday 19 March 2007 to seek winding up orders. For the purposes of the hearing before me, it was assumed that ASIC has reinstated the company in accordance with the court's order.

2 An ASIC company extract reveals that the company was registered in 2002. The sole director and secretary was Khoder Sabra. Only one annual return was filed, in January 2003, but it was "unprocessed". The company was deregistered under s 601AB (which relates to failure to respond to a return of particulars, lodge other documents or pay a review fee) on 25 December 2005. It was not, at that time, subject to external administration.

3 On 27 February 2007 the originating process and supporting affidavit were served on a person who identified himself as Mr Sabra, the director, at 11 Station St Guildford. That was the address given as the place of business in the company's workers compensation insurance proposal form to the plaintiff dated 8 April 2005. The plaintiff tendered a report by a registered commercial agent, who said he visited the premises at 11 Station St Guildford on 12 October 2006 and spoke to a male occupant, who declined…

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.

Continue reading GIO General Ltd v Sabko Pty Ltd

Details

AGLC: GIO General Ltd v Sabko Pty Ltd [2007] NSWSC 251
Case: [2007] NSWSC 251
Decision Date: 21 March 2007

CaseChat Overview and Summary

The plaintiff, GIO General Ltd, sought the winding up of the defendant, Sabko Pty Ltd, on the grounds that the company was unable to pay its debts and had suffered a failure of substratum. The case was heard by the Federal Court of Australia. The central issue before the court was whether the plaintiff had standing to petition for the winding up of the company, specifically whether it was a creditor in respect of a debt incurred during the company's deregistration. The court had to determine whether there was sufficient evidence of insolvency and whether there was a failure of the company's substratum.

The court found that GIO General Ltd was indeed a creditor under s 601AH(5) of the Corporations Act, as it had a debt that was incurred during the period of the company's deregistration. The court considered the evidence of insolvency and concluded that there was indeed sufficient evidence to support this. The court also examined whether there was a failure of the company's substratum, which is a fundamental change in the company's operations or purpose. The court found that there was indeed a failure of the company's substratum, which justified the winding up of the company on the just and equitable ground.

The court granted the plaintiff's application for the winding up of the defendant company. The orders made by the court were that the company be wound up and that a liquidator be appointed to take control of the company's assets and affairs. The court found that the company was unable to pay its debts and that it was just and equitable for the company to be wound up. The court also found that the plaintiff had standing to petition for the winding up of the company and that there was sufficient evidence of insolvency and failure of substratum to support the application.

Orders