In the matter of Saab Investment Group Pty Limited
[2016] NSWSC 1769
•31 October 2016
Supreme Court
New South Wales
Medium Neutral Citation: In the matter of Saab Investment Group Pty Limited [2016] NSWSC 1769 Hearing dates: Monday, 31 October 2016 Date of orders: 31 October 2016 Decision date: 31 October 2016 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Proceedings adjourned to 28 November 2016. Any further affidavit evidence be served on respondent/plaintiff and liquidator by 14 November 2016, together with copy of interlocutory process and affidavit evidence already been served by Mr Saab. Applicant pay respondent’s costs of today.
Catchwords: CORPORATIONS – winding up – termination of winding up – winding up order made ex parte – whether company no longer insolvent – no acceptable evidence of solvency – no admissible evidence that petitioning credit has been paid – no evidence of cooperation with liquidator Legislation Cited: (CTH) Corporations Act 2001, s 482 Category: Procedural and other rulings Parties: Saab Investment Group Pty Ltd (applicant/defendant)
Deputy Commissioner of Taxation (respondent/plaintiff)Representation: Counsel:
Solicitors:
C Bavin (respondent/plaintiff)
C Garton (liquidator)
Mr Saab (applicant/defendant)(in person)
JHK Legal (respondent/plaintiff)
File Number(s): 2015/ 245084
Judgment (ex tempore)
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HIS HONOUR: On 6 October 2015, the Court made an order that the company Saab Investment Group Pty Limited be wound up in insolvency and appointed Christopher Palmer as liquidator of the company. By interlocutory process filed on 23 September 2016, the applicant John Saab seeks an order that "the winding up order to be set aside". Although, at first sight, that appears to be an application to set aside an order made, in the absence of the defendant, I have treated it as also raising an application for termination of the winding-up under (CTH) Corporations Act 2001, s 482.
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Mr Saab has produced evidence which explains why he did not appear on the occasion when the winding-up order was made and satisfactorily explains his absence on that occasion. However, in order to secure the setting aside of a winding-up order made ex parte, it is necessary to show more than a mere explanation for not being present. At the least, it is necessary to show that there was an arguable defence to the winding-up proceedings, which, in the context of this case, means either an arguable defence that the petitioning creditor, the Australian Tax Office, was not a creditor, or an arguable defence that the company was not insolvent.
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On an application for termination of a winding-up under Corporations Act, s. 482, it is necessary to show, first, that the situation which required that the company be wound up no longer obtains, and secondly, that the company can safely be returned to the management of the directors. The situation which required the winding up of the company in this case was, relevantly, alleged insolvency, and thus it would be necessary to show that the company was not or is no longer insolvent. Because a year has passed – or more – since the winding-up order was made until this application was instituted, the Court would in any event be inclined to proceed under s 482 rather than as an application to set aside an ex parte order.
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In those circumstances, the critical matters of which the Court would require to be satisfied are, first, that the company is solvent – that is to say, able to pay its debts as and when they fall due – which would normally require at the least the sworn evidence of an accountant familiar with the company's affairs, setting out a balance sheet and profit and loss statement, and showing that its assets exceed its liabilities in current terms, and that it had the resources to meet its debts as and when they fell due. There is no acceptable evidence of solvency before the Court.
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Secondly, that the petitioning creditor has been paid; otherwise, it is entitled to maintain the winding-up order it obtained. The only evidence before the Court, so far as I can tell, is that the petitioning creditor is still owed $52,000. Mr Saab asserts that the company is owed more than that by the ATO, but there is no admissible evidence of that assertion whatsoever.
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Thirdly, one would normally expect to see evidence of co-operation with the liquidator. The liquidator's report at this stage indicates anything but that, as no sworn or signed report as to affairs has been provided, and other information which the liquidator requests has not been provided.
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If this application is to have any prospects of success, the evidence will need to address the following matters: first, cogent evidence of solvency, including a detailed balance sheet and profit and loss statement verified by an accountant; secondly, proof of payment of the petitioning creditor, the Australian Taxation Office; and, thirdly, proof that the liquidator's requirements have been met and satisfied. In order to bring about that situation, Mr Saab would be well advised to consult with and co-operate with the liquidator to determine what is required and, as I have previously indicated, to obtain legal advice in respect of an application which is technical and often difficult.
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On the application of the applicant Mr Saab, the Court orders that:
The proceedings be adjourned to 28 November 2016 at 9.45am in the Corporations Judge Motions List.
Any further affidavit evidence to be relied on in support of the application be served on the respondent/ plaintiff and on the liquidator by 14 November 2016, together with a copy of the interlocutory process and the affidavit evidence that has already been served in the proceedings by Mr Saab.
The applicant pay the respondent's costs of today.
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Decision last updated: 09 December 2016
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