In the matter of Lorang Contractors Pty Ltd
[2015] NSWSC 1435
•15 May 2015
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Lorang Contractors Pty Ltd [2015] NSWSC 1435 Hearing dates: 15 May 2015 Date of orders: 15 May 2015 Decision date: 15 May 2015 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Originating process dismissed.
Catchwords: CORPORATIONS – winding up – winding up in insolvency – where time for compliance with statutory demand expired after date at which originating process seeking winding up order filed – whether presumption of insolvency available where demand had expired at date of hearing but not at date of filing of originating process – held, presumption not available. Legislation Cited: (Cth) Corporations Act 2001, s 459C(2), s 459Q Cases Cited: Woodgate v Garard Pty Limited [2010] NSWSC 508; (2010) 239 FLR 339 Category: Principal judgment Parties: Jacdav Pty Ltd ACN 137 742 575 (first plaintiff)
DSJW Pty Ltd ACN 129 779 764 (second plaintiff)
Lorang Contractors Pty Ltd ACN 112 068 710 (defendant)Representation: Counsel:
Solicitors:
D C Eardley (plaintiffs)
Legal Minds (plaintiffs)
File Number(s): 2015/46462
Judgment (ex tempore)
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HIS HONOUR: Before the Court is an undefended application for an order that the defendant Lorang Contractors Pty Limited be wound up in insolvency and a liquidator appointed. The matter has been referred to me by the Registrar because an issue arises in connection with the ability and entitlement of the plaintiff to rely on a statutory demand which was served and which expired after the originating process claiming a winding up order had been filed.
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In this case, the plaintiffs, there being two of them, each served statutory demands on the defendant on or about 8 August 2014, which were not complied with and expired, unsatisfied, thereby founding a presumption of insolvency under (Cth) Corporations Act 2001, s 459C(2)(a). However, no originating process seeking a winding up order was filed within three months after those demands expired, which would have been about 29 August 2014. Originating processes were ultimately filed on 13 February 2015, and attached and relied on the demands that had been issued and served in August 2014. But as a period of well over three months since 29 August 2014 had elapsed by that time, it could not be said that the company had failed to comply with the statutory demand “during or after the three months ending on the day when the application was made”, as at the date when the application was made by filing it in the court.
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In order to address that problem, the plaintiffs served further statutory demands on the defendant on 2 April 2015, which were deemed to be served by post on or about 6 April 2015. The defendant has not complied with those second statutory demands. The plaintiff submits that that non-compliance founds a presumption of insolvency that is available at the date of hearing, though it was not available at the date when the originating process was filed.
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At first sight, some support for that contention is derived from two sources. The first is that ordinarily the question of insolvency is a matter to be determined on the evidence at the date of hearing, as distinct from as at the date on which the application was made. The second is that s 459C(2) provides that the Court must presume that the company is insolvent if "during or after the three months ending on the day when the application was made", any of the various grounds for the presumption referred to in subparagraphs (a) through (f) are established. The fact that reference is made to “after the three months ending on the day when the application was filed” seems to contemplate that the presumption may arise after the application is filed.
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However, s 459Q mandates that, in an application for a company to be wound up in insolvency that relies on a failure to comply with the statutory demand, the application must set out particulars of service of the demand and the failure to comply with it and attach to it a copy of the demand. That section bespeaks a requirement that the demand and failure have occurred before the application is made.
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Were the matter to come before me untrammelled by authority, I might have inclined to the view that the requirements of s 459Q were directory or procedural rather than mandatory and substantive. But, in Woodgate v Garard Pty Limited [2010] NSWSC 508; (2010) 239 FLR 339, Palmer J reviewed the sections and carefully and thoroughly considered earlier authorities, concluding (at [85]) that s 459C(2) must be construed consistently with s 459Q, so that the presumption of insolvency afforded by s 459C(2)(a), which is the relevant one here, arises only where failure to comply with the statutory demand has occurred during the three months before the winding up application is filed – although the presumptions afforded by s 459C(2)(b) through (f) can arise where the insolvency event occurs either during the three months before the winding up application is filed, or after the filing date and before the hearing date.
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His Honour said (at [86]) that had he found that the statutory demand was served at a time such that time for compliance would not have expired by the time of the filing of the winding up application but afterwards, the application would have been dismissed on the basis that it had not been proved that the company had failed to comply with the statutory demand within the three months ending on the day when the application was made, so that the presumption of insolvency was unavailable and there was no other evidence of insolvency.
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It seems to me that, consistent with his Honour's decision, which is reported, which is reasoned by reference to earlier authorities, which has stood for five years and which is not obviously wrong, I should not – particularly on an undefended application in the absence of a contradictor – depart from it.
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As the presumption of insolvency is unavailable in the present proceedings and as there is no other evidence of insolvency, notwithstanding that all other matters required to found a winding up application are established, this application must be dismissed.
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The Court orders that the originating process be dismissed.
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Decision last updated: 29 September 2015