In the matter of Eurool Traditional Owners Aboriginal Corporation

[2018] NSWSC 1485

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Eurool Traditional Owners Aboriginal Corporation [2018] NSWSC 1485
Hearing dates:	19 April 2018
Decision date:	19 April 2018
Jurisdiction:	Equity - Corporations List
Before:	Black J
Decision:	Order made winding up the Defendant in insolvency. The Plaintiff’s costs of and incidental to the winding up application, as agreed or as assessed, be costs in the winding up.
Catchwords:	CORPORATIONS – winding up – application based on failure to meet creditor’s statutory demand – whether company should be wound up
Legislation Cited:	- Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) ss 120.1 526.1, 526.5, 526.15, 526.35 - Corporations Act 2001 (Cth) s 459E - Evidence Act 1995 (NSW) s 160
Category:	Procedural and other rulings
Parties:	Menzies Pumps & Irrigation Pty Ltd (Plaintiff) Eurool Traditional Owners Aboriginal Corporation (Defendant)
Representation:	Counsel: R. Notley (Plaintiff)   Solicitors: Wilsons Solicitors (Plaintiff)
File Number(s):	2018/78491

Judgment – ex tempore (revised 23 april 2018)

Nature of the application and evidence

1. By Originating Process filed on 10 March 2018, the Plaintiff, Menzies Pumps & Irrigation Pty Ltd ("MPI"), applies to wind up Eurool Traditional Owners Aboriginal Corporation (“Corporation”) under s 526.15 of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (“ATSI Act”). That application is in the nature of a winding up on the ground of insolvency, in reliance on an unsatisfied creditor's statutory demand for the payment of debt dated 1 February 2018, which in turn identifies the debt claimed as a judgment debt arising from a judgment in the Local Court of New South Wales in the amount of $68,449.69. A sealed copy of that judgment is in evidence. I should briefly refer to the evidence on which MPI relies, before turning to the statutory scheme to which Mr Notley, who appears for MPI, draws attention.

2. An affidavit of Mr Geoffrey Menzies, dated 8 March 2018, indicates that he is the sole director of MPI and confirms that, as at 28 February 2018, the Corporation was indebted to MPI in the amount claimed which was then due and payable, and also confirms that at the time of the making of the affidavit, immediately before the winding up application was filed, the amount claimed remained due and payable by the Corporation to MPI. MPI also relies on a corporation extract annexed to Mr Menzies' affidavit which indicates that MPI is a small corporation, although it has a main place of business and a registered office address described by reference to a street address and post office box in Collarenebri in New South Wales. That corporation extract also identifies a contact person, as required for a small corporation, who is named and whose residential address is given at the same address, but by reference to what is apparently a street address rather than the post office box address. I will return to further evidence which deals with that matter below.

3. An affidavit of Mr Wilson, MPI’s solicitor, dated 8 March 2018 confirms service of the creditor’s statutory demand by post, and the annexed letter was addressed to the street address and post office box which is recorded as the Corporation’s main place of business and registered office, and the street address part of which is recorded as the address of the contact officer of the Corporation. An affidavit of Mr Wilson dated 23 March 2018 confirms service of the Originating Process seeking to wind up the Corporation, again by ordinary prepaid mail, and again addressed to the house address and post office box recorded as the Corporation’s main place of business and registered office and also, in respect of the house address, the address of the contact person for the Corporation. An affidavit of service of Mr Wilson dated 5 April 2018 refers to notification of the application to the office of the Registrar of Indigenous Corporations and to service of a liquidator’s consent to act and notice of application for the winding up order on the Corporation, in the same manner as service of previous documents had been effected by post.

4. A further affidavit of Mr Wilson dated 9 April 2018 addresses the fact that the address of the Corporation’s registered office and the main place of business includes, as I noted above, both a house address and a post office box address. Mr Wilson explains that matter, by reference to his knowledge, as a practitioner in Dubbo, New South Wales, that Collarenebri is a small town in north western New South Wales, which does not have a postal delivery service, but that mail is instead there delivered to the Collarenebri Post Office and residents collect their mail from the post office. It follows that, in practical terms, a reference to a house address and a reference to a post box address have corresponding effect, because mail would not be delivered to a house address but is instead made available for collection from the relevant post office box. Mr Wilson also refers to failed attempts made to deliver correspondence and documents to an email address for the Corporation. By a further affidavit dated 12 April 2018, Mr Wilson addresses further aspects of service and addresses questions of the cost of the proceedings. A consent of liquidator is in evidence.

Submissions and determination

5. Mr Notley sets out the relevant provisions of ATSI Act and notes that s 526.1 of the ATSI Act provides for a winding up on the grounds set out in s 526.5 of the ATSI Act, including on the basis that a corporation is insolvent. Mr Notley draws attention to s 526.15 of the ATSI Act which provides that a creditor may apply to the Court for an order that an ATSI corporation be wound up. The evidence establishes that MPI is a creditor of the Corporation, by reason of the judgment debt in its favour. Certain provisions of the Corporations Act 2001 (Cth) are then applied to the winding up of an ATSI corporation by s 526.35 of the ATSI Act, and those include, relevantly, the provisions providing for service of a creditor’s statutory demand under s 459E of the Corporations Act, so as to give rise to a presumption of insolvency.

6. Mr Notley in turn refers to s 120.1 of the ATSI Act, which provides that a document may be served on, relevantly, a small ATSI corporation, by sending it by post to the address of the contact person. The ATSI Act also specifically provides for service of a document on a large ATSI corporation by posting it to the registered office of that corporation, although such a provision is not included in respect of a small ATSI corporation. Mr Notley also points to the presumption of receipt on the fourth working day after posting, arising under s 160 of the Evidence Act 1995 (NSW). These matters are of significance in this application, because the Corporation has not appeared in response to the application.

7. I am satisfied that service has been effected, at least by posting the relevant documents to the contact person of the Corporation. Mr Notley has fairly drawn attention to the fact that the relevant correspondence used the address including both the home address and the post office box address, in circumstances that that was the registered office address of the Corporation and the main place of business of the Corporation, but the description of the contact person’s address had only included reference to the home address. It seems to me that that is, in the particular circumstances, a distinction without a difference where, first, service upon the registered office address and main place of business is likely to have drawn the application to the Corporation’s attention and, second, the evidence establishes that there is no practical difference, so far as delivery of mail in Collarenebri is concerned, between the home address and the post office box address, since mail is, in any event, delivered to the post office box rather than delivered to the home address. I am satisfied that service has been effected on the Corporation for these reasons.

8. The evidence otherwise establishes that a creditor’s statutory demand, founded on a judgment debt, was served and not complied with. The provisions of the Corporations Act giving rise to a presumption of insolvency for failure to comply with a creditor’s statutory demand are applied under the ATSI Act and, in those circumstances, the effect of service of the creditor’s statutory demand, and non-compliance with it, is to give rise to a presumption of insolvency which supports a winding up order.

Costs

9. An order for costs was sought, in a fixed amount, comprising Counsel’s and solicitor’s costs in the order of $10,724 plus GST, and disbursements of over $3,000, a significant of part of which comprised the Court’s filing fee. It appears, from Mr Wilson’s affidavit dated 12 April 2018, that those costs include costs of reporting to MPI which may or may not be recoverable on an assessment. The Courts have often made fixed sum cost orders in winding up applications, and there is ordinarily a strong basis to do so, where the cost of an assessment may well be wasted in circumstances that a company is insolvent at the time that a winding up order is made.

10. However, it would be necessary to discount the amounts claimed, where a lump sum cost order is made, from those which would ordinarily be charged for its solicitor/client costs, and Mr Wilson’s affidavit does not provide any basis for not doing so. Second, such an order is ordinarily made in respect of modest costs in respect of uncontested winding up applications. The costs involved in this matter are significant, although that should not be understood to suggest that they are excessive, given the complexities of the application and the fact that additional work would have been required because of the issues arising in the application and the need for more than one appearance, where the Corporation did not appear.

11. It therefore seems to me that an order should be made for costs as agreed or as assessed to be recoverable in the winding up. That will not prevent MPI agreeing the amount of costs with the liquidator, where, for example, those costs can be determined on a basis which does provide a discount reflecting the likely result of an assessment.

Orders

12. I make the following orders:

1.    Order that Eurool Traditional Owners Aboriginal Corporation be wound up in insolvency.

2.    Mr Andrew Barnden of Rodgers Reidy be appointed as liquidator of Eurool Traditional Owners Aboriginal Corporation.

3.    The Plaintiff’s costs of and incidental to the winding up application, as agreed or as assessed, be costs in the winding up.

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Decision last updated: 18 October 2018