In the matter of Lilibuck Pty Ltd

[2016] NSWSC 1950

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Lilibuck Pty Ltd [2016] NSWSC 1950
Hearing dates:	1 February 2016
Date of orders:	01 February 2016
Decision date:	01 February 2016
Jurisdiction:	Equity - Corporations List
Before:	Brereton J
Decision:	Order that company be wound up and liquidator appointed.
Catchwords:	CORPORATIONS – winding up – winding up in insolvency – scant evidence of insolvency; CORPORATIONS – winding up – winding up on just and equitable ground – where company has no director acting – where only shareholder has no director acting and unlikely that any director will be appointed to act; PROCEDURE – miscellaneous procedural matters – standing – where plaintiff creditor is bankrupt – held, debt vests in trustee in bankruptcy so right to bring action vests in trustee in bankruptcy of creditor; PROCEDURE – miscellaneous procedural matters – standing – inherent power of the court to wind up company of its own motion under (NSW) Supreme Court Act 1970, s 23 where there is no practicable alternative – where company and contributory director-less; PROCEDURE – miscellaneous procedural matters – where no notice given of winding up application – where company and contributory director-less.
Legislation Cited:	(CTH) Corporations Act 2001, s 459A, s 459P and s 461 (CTH) Bankruptcy Act 1966, s 58 and s 116 (NSW) Supreme Court Act 1970, s 23
Cases Cited:	Botar-Tatham Pty Ltd, Re (2001) 52 NSWLR 680; [2001] NSWSC 613 CIC Insurance Ltd (Provisional Liquidator Apptd) v Hannan & Co Pty Ltd (2001) 30 ACSR 2005; [2001] NSWSC 437 Edwards v Attorney General & Anor (2004) 60 NSWLR 667; (2004) 50 ACSR 122; [2004] NSWCA 272 Official Trustee in Bankruptcy v Buffier (2005) 54 ACSR 767; [2005] NSWSC 839 Phelan v Ambridge Corporation Pty Ltd (2005) 55 ACSR 136; [2005] NSWSC 875
Category:	Principal judgment
Parties:	Peter Ashton (plaintiff) Lilibuck Pty Ltd (defendant)
Representation:	Counsel: M Rosenblatt (solicitor) (plaintiff)   Solicitors: Marc Ryckmans (plaintiff)
File Number(s):	2015/349565

Judgment (ex tempore)

1. HIS HONOUR: By originating process filed on 27 November 2015, the plaintiff Peter Aston, a former director of the defendant Lilibuck Pty Ltd, sought orders pursuant to (CTH) Corporations Act 2001, s 459A, s 459P and s 461 that the company be wound up. The originating process was amended by an amended process apparently filed on the same date, omitting the reference to the Corporations Act, s 461. However, as it seems to me that the just and equitable ground is one ground that is available, I propose to have regard to it also.

2. The plaintiff was formerly the sole director of the company, but became disqualified and ceased to be a director on 30 September 2015 when he filed a debtor's petition and became a bankrupt. The company has one shareholder, Ant & Ballast Pty Ltd, a search of which dated 26 November 2015 reveals that the plaintiff was also the sole director and secretary of that company until 30 September 2015 when he ceased those roles, presumably for the same reason, namely that he became a bankrupt.

3. The evidence establishes that the company has no director acting, that its only shareholder has no director acting, and it seems unlikely that any director will be appointed to act. Those circumstances have been held sufficient to support an order for the winding up of a company on the just and equitable ground. [1]

   1. See CIC Insurance Ltd (Provisional Liquidator Apptd) v Hannan & Co Pty Ltd (2001) 30 ACSR 2005; [2001] NSWSC 437; Official Trustee in Bankruptcy v Buffier (2005) 54 ACSR 767; [2005] NSWSC 839; Phelan v Ambridge Corporation Pty Ltd (2005) 55 ACSR 136; [2005] NSWSC 875.

4. It may well be that, as the plaintiff contends, the company is insolvent. However, the evidence of insolvency is scant, and amounts to little more than a bare assertion to that effect. It would certainly not support a finding of insolvency in a contested matter in the absence of a presumption of insolvency. Nonetheless, there is some evidence elicited orally from the plaintiff that there have been demands for payments of debts. He attaches to his affidavit, unsupported by any invoices or documentary evidence, what is said to be a Creditor Invoice List amounting to $767,000. The plaintiff says that though the company is the registered proprietor of two parcels of land, they have no value – a proposition which seems somewhat surprising.

5. Nonetheless, prima facie, I am satisfied that it is just and equitable that the company be wound up, given that there is no director acting and none likely to be appointed.

6. The application, however, is still beset by a number of difficulties. The first is that of standing. The plaintiff, Mr Aston, claims standing as a creditor, but he is a bankrupt, and the true creditor is therefore his trustee in bankruptcy, not himself. Apparently, the debt – which he claims was incurred after the date of his bankruptcy – was authorised by another “manager” of the company for the undertaking of further management work, and is presumably in the nature of remuneration. Just what authority this other manager had to retain him on that basis is not apparent. Moreover, although I recognise the possibility of an argument that the debt is in the nature of income and not property, so that it might be exempt from the provisions relating to after-acquired property, prima facie a debt due to the bankrupt is property of the bankrupt and, if acquired post-bankruptcy, vests in the trustee in bankruptcy as after-acquired property, pursuant to (CTH) Bankruptcy Act 1966, s 58 and s 116. The right to bring any action with respect to such property also vests in the trustee in bankruptcy. Accordingly, there is very grave doubt as to Mr Aston's standing to bring these proceedings.

7. I am also greatly troubled by the circumstance that no notice has been given to any relevant parties to the application, save a letter to ASIC apparently serving the process on ASIC. The prescribed notice has not been lodged with ASIC, the requisite advertisement has not been published on the ASIC Insolvency Notices web site, and the proceedings have not been served on the company or on any person with an interest in the company, most evidently the shareholder. Against that, as I have said, the shareholder is a director-less company, and its shareholder in turn is a company of which Mr Aston's wife is apparently the director. Mr Aston gave evidence that she was aware of and supported the application.

8. Notwithstanding these unsatisfactory aspects of the application, the evidence indicates that this is a company that should be wound up, and it seems improbable that any interested person would be adversely affected by such an order. I say that with some considerable diffidence because in many cases, if one looks at only one side of the evidence and does not afford the other an opportunity to be heard, the outcome will appear clear and that of course is not how litigation ought to proceed. It would have been much better had there been cogent evidence of publication of the proceedings and identification of who has the ultimate beneficial interest in the company and notice to that person had been given. However, if it eventuates that any interested person has not been notified and opposes the winding up, he or she would be entitled to apply to set aside the winding up order or to terminate the winding up.

9. So far as the problem of standing is concerned, there is authority that where there is no practicable alternative, at least in New South Wales under (NSW) Supreme Court Act 1970, s 23, the court has inherent power to wind up a company of its own motion. [2] Accordingly if Mr Aston is not a creditor for the purposes of s 462(2)(b), the company being director-less and its shareholder being director-less cannot make an application, nor can the sole contributory, and in those circumstances I am satisfied there is no practicable alternative.

   2. Botar-Tatham Pty Ltd, Re (2001) 52 NSWLR 680 at 683 (Young CJ in Equity); Edwards v Attorney General & Anor (2004) 60 NSWLR 667; (2004) 50 ACSR 122; [2004] NSWCA 272 at [63].

10. For those reasons, the court orders that:

1. The defendant be wound up.

2. Benjamin Carson of Level 5, 2 Barrack St Sydney, an official liquidator, be appointed liquidator of the defendant.

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Endnotes

Decision last updated: 13 July 2017