In the matter of News Emporium Pty Limited (in liq)
[2025] NSWSC 615
•12 June 2025
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New South Wales |
Case Name: | In the matter of News Emporium Pty Limited (in liq) |
Medium Neutral Citation: | [2025] NSWSC 615 |
Hearing Date(s): | 11, 12 June 2025 |
Date of Orders: | 12 June 2025 |
Decision Date: | 12 June 2025 |
Jurisdiction: | Equity - Corporations List |
Before: | Brereton J |
Decision: | See [13] |
Catchwords: | CORPORATIONS – winding up – application by contributory and sole director to set aside orders for winding up and appointment of liquidator – where winding up orders were made in the absence of applicant – where applicant was unaware of the statutory demand or winding up application – where liquidator consents to the termination of the winding up – where creditor neither consents nor opposes the termination of the winding up – where company is solvent and profitable - where creditors are protected – where liquidator’s remuneration is agreed |
Legislation Cited: | Corporations Act 2001 (Cth) |
Cases Cited: | In the matter of Day and Night Online Transport Pty Ltd (in liq) [2018] NSWSC 796 |
Texts Cited: | N.A. |
Category: | Consequential orders |
Parties: | Richard Worsley (applicant) |
Representation: | Counsel: |
File Number(s): | 2025/148609 |
Publication Restriction: | N.A. |
JUDGMENT EX TEMPORE – REVISED FROM TRANSCRIPT
This is an application by Mr Richard Worsley pursuant to the Uniform Civil Procedure Rules 2005 (NSW) r 36.16 for an order setting aside an order made on 21 May 2025 that News Emporium Pty Ltd (in liq) be wound up. Rule 36.16(2)(b) provides that the Court may set aside or vary a judgment or order after it has been entered if it has been given or made in the absence of the party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order.
The orders made by the Court on 21 May 2025 were made in the absence of News Emporium. The principles that apply in a case such as this are set out by Gleeson JA in In the matter of Day and Night Online Transport Pty Ltd (in liq) [2018] NSWSC 796 at [9]-[13] as follows:
[9] In George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 (George Ward Steel) at 465, Hodgson J expressed the following view:
In my view, if an order winding up a company is made in the absence of the defendant company, and an application is brought promptly by the company, with notice being given to the liquidator, to the plaintiff and to any creditor who appeared at the hearing; and if the evidence shows an explanation for the nonappearance at the hearing and indicates solvency of the company; and if there is consent to setting aside, or at least non-opposition; and if the liquidator indicates that nothing in his investigations to date shows a reason for the company to be stopped from trading, then the court will normally set aside the order.
[10] Subsequent authorities have expressed some qualifications with aspects of Hodgson J's statement in George Ward Steel. One qualification is that the reference by Hodgson J to there being some evidence which "indicates solvency" should not be understood as a requirement that there be "proof" of solvency in the sense that the company demonstrate it would be able to defeat the application for winding-up: see Deputy Commissioner of Taxation v Annesley Plant Hire Pty Ltd [2010] FCA 755 at [12] (Finkelstein J) and the authorities there referred to; Deputy Commissioner of Taxation, in the matter of SMAR Nominees Pty Ltd (in liq) v SMAR Nominees Pty Ltd (in liq) [2017] FCA 1384 at [12] (White J).
[11] Another qualification suggested by Finkelstein J in Deputy Commissioner of Taxation v Annesley Plant Hire Pty Ltd at [13] is that it may be going too far to say that success of the application will depend upon there being consent by, or at least non-opposition from, the liquidator. Finkelstein J gave two reasons why that cannot be so. One is that whether or not the application to set aside a winding-up order is opposed is beside the point; what is important is that justice is done to the parties. The other matter is that Hodgson J's approach, if followed, would have the effect of converting the liquidator into a protagonist and that is most undesirable given the liquidator's duty to act impartially when dealing with persons interested in the liquidation.
[12] Against this, Finkelstein J recognised that if the liquidator's investigation shows some reason why the winding-up should continue, for example if there has been misconduct on the part of the directors, he or she should inform the Judge because that would be a relevant matter to take into account: Deputy Commissioner of Taxation v Annesley Plant Hire Pty Ltd at [13].
[13] I agree with the remarks of Finkelstein J and have applied them in my approach to the present application.
See also the decision of In the matter of Nansut Pty Ltd (in liq) [2020] NSWSC 69 at [10]. I will apply those principles.
First, this application was brought promptly. It has been less than three weeks since the winding up order was made.
Second, notice has been given to the liquidator and to the creditor who appeared at the hearing for the winding up application. The liquidator consents to the orders propounded by Mr Worsley. The one creditor (Workers Compensation Nominal Insurer) neither consents to nor opposes the orders.
Third, there is evidence that shows an explanation for the non-appearance at the hearing. In short, the evidence is that Mr Worsley, who relevantly controls News Emporium, was unaware of: (1) the statutory demand; (2) the winding up application; and (3) the making of the winding up orders, until he was contacted by the liquidator's staff on 22 May 2025. That is because of a change of his residential address in circumstances connected with a marriage breakdown. That is, when News Emporium was properly served, the natural person who controls the company was unaware of the winding up application.
Fourth, there is evidence that indicates the solvency of the company. Recent accounting records and evidence from Mr Vido, who is the external accountant for the company, suggests a healthy net asset position and that the company is trading profitably.
Fifth, the liquidator, by his consent, indicates that his investigations have not revealed anything to show a reason for the company to be stopped from trading. The liquidator has not suggested any misconduct on the part of the director.
There was one matter that was drawn to my attention by counsel for Mr Worsley that is relevant as to whether I should make the order. It is apparent that the company has failed to lodge three recent BAS returns and that, once that default is rectified, the company will owe approximately $400,000 to the Australian Taxation Office. That is on top of the debt owed to the ATO of approximately $122,000 that is recorded in the company's accounting records. The $400,000 that will become payable is not recorded in the accounts of the company. However, the cash position of the company is such that there is comfortably a sufficient amount available to discharge that liability when it arises and there is evidence before the Court that the three outstanding BAS returns and associated income activity statements have been prepared and are ready to be lodged.
The orders proposed by Mr Worsley include a provision to protect the ATO, the creditor who appeared at the winding up application, as well as other creditors, so as to ensure they have been paid, or will be paid, and are not prejudiced by an order setting aside the orders winding up the company. In particular, the orders contemplate that, pursuant to s 90-15 of Schedule 2 of the Corporations Act 2001 (Cth), the liquidator would be justified in paying, and be directed to pay, to the creditor who appeared at the winding up application the amount of $36,028.92, to the ATO the amount of $521,234 and to the liquidator the amount of $18,617.82, on account of the liquidator's expenses.
There is evidence that the continuation of the winding up will threaten the viability of what is a profitable business. That is a consideration that supports the orders.
The proposed orders include an amount for the remuneration of the liquidator. In the matter of Re Hunter Valley Dental Surgery Pty Ltd [2017] NSWSC 1144, Black J observed as follows at [22]:
Although the Court will ordinarily require evidence to support the remuneration claimed in order to approve remuneration on an application to the Court, so as to satisfy itself that the remuneration claimed is reasonably claimed and is proportionate, a somewhat different position arises here. All of the Company’s creditors have been paid out in connection with the termination of the winding up, other than the one disputed debt to which I have referred. Those creditors that have been paid out, including the Commissioner of Taxation, have no present interest in the amount of the liquidator’s remuneration. Those who will have a continuing interest are Ms Morphett and Dr Harvey as a substantial creditor who has converted his claim to equity in the Company. They have consented to the remuneration claimed; they are those with the greatest economic interest in the Company, and have every reason to seek to protect their own interests in that respect. Where those with the economic interest in the assets from which the remuneration claimed will be paid consent to it, and it could have been approved at a meeting of creditors, albeit with delay and additional costs, then it seems to me the Court may readily approve the amount of remuneration in the amount that has been agreed.
Similar considerations arise here. The creditors are protected. The person with the greatest economic interest in limiting the liquidator's remuneration is Mr Worsley, and he consents to the amount proposed to be paid by way of remuneration. In the circumstances, no further evidence to support the remuneration is required. That would produce an unnecessary additional cost.
I make the following orders:
(1)Leave for the applicant to amend the interlocutory process filed on 26 May 2025, to seek relief in the form of an order pursuant to r 36.16(2)(b) of the UCPR, that orders 1 and 2 made on 21 May 2025, winding up the defendant and appointing a liquidator, be set aside.
(2)Dispense with the requirement to file and serve any amended interlocutory process.
(3)Pursuant to r 36.16(2)(b) of the UCPR, order that orders 1 and 2 made on 21 May 2025, be set aside.
(4)Pursuant to s 60-10(1)(c), 90-15 and 90-20 of the Insolvency Practice Schedule (Corporations) 2016 (Cth), the liquidator’s remuneration be fixed in the sum not exceeding $67,000 excluding GST and paid from funds held by the liquidator.
(5)Pursuant to s 90-15 of Schedule 2 to the Corporations Act 2001 (Cth) that the second respondent be justified in paying and be directed to pay:
(a)to the first respondent/plaintiff, the amount of $36,028.92;
(b)to the Australian Taxation Office, the amount of $521,234; and
(c)to the costs of the second respondent as liquidator, the amount not exceeding $18,617.82 excluding GST.
(6)No order as to costs on the interlocutory process.
(7)These orders be entered forthwith.
(8)That the hearing listed before the Corporations Registrar on 17 June 2025 be vacated.
(9)The Court notes and accepts the undertaking of Richard Sean Worsley, the applicant on the interlocutory process filed and director of the defendant, News Emporium Pty Limited (“the Company”), that he shall:
(a)within 14 days of the date of this Order, cause the Company to lodge any outstanding Business Activity Statements and Income Tax Returns with the Australian Taxation Office;
(b)within 7 days, update records maintained by the Australian Securities and Investment Commissions in respect to a change in the Company’s registered office and his residential address; and
(c)indemnify the second and third respondent in respect of any amount payable by the second and third respondent in respect of the trade on period 21 May 2025 to 12 June 2025, which has not been invoiced as at 11 June 2025.
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