In the matter of SPG Projects Pty Ltd (in liq)

[2020] NSWSC 34

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of SPG Projects Pty Ltd (in liq) [2020] NSWSC 34
Hearing dates:	3 February 2020
Date of orders:	05 February 2020
Decision date:	05 February 2020
Jurisdiction:	Equity - Corporations List
Before:	Gleeson J
Decision:	(1)   Originating process filed 18 October 2019 be dismissed.  (2)   There is no order as to costs, to the intent that each party bear its own costs.
Catchwords:	CORPORATIONS – where company subject to creditors’ voluntary winding up – where creditor seeks court ordered winding up – where little practical difference between the forms of administration – whether benefit to the administration if court ordered winding up under s 459A of the Corporations Act 2001 (Cth)
Legislation Cited:	Corporations Act 2001 (Cth), ss 91, 233, 439C(c), 446A, 459A, 459B, 461, 467B, 468, 500(2), 513B, 513C, 588FJ, Pt 5.3A
Cases Cited:	Citrix Systems Inc v Tele Systems Learning Pty Ltd (in Liq) (1998) 28 ACSR 529 Deputy Commissioner of Taxation v Tull Reinforcing Pty Ltd [2006] FCA 810 In the matter of Kimberley Diamond Company Pty Ltd (in liq) [2017] NSWSC 538 Re Evcorp Grains Pty Ltd (No 2) [2014] NSWSC 155 Re Patterson Group Pty Ltd (in liq) [2014] NSWSC 1927
Category:	Principal judgment
Parties:	Sky 5 Pty Ltd (Plaintiff) SPG Projects Pty Ltd (in liq) (Defendant) Winterlong Project Services Pty Ltd (Supporting creditor)
Representation:	Solicitors: Case Legal (Plaintiff) Gilbert & Tobin Lawyers (Defendant) L Price (director, Winterlong Project Services Pty Ltd)   Counsel: E Hyde (Plaintiff)
File Number(s):	2019/326414

Judgment

1. GLEESON J: SPG Projects Pty Ltd (in liq) (SPG Projects) is presently subject to a creditors’ voluntary winding up following a period of voluntary administration. Ms Gayle Dickerson and Mr Ryan Eagle were appointed the administrators of the company under Pt 5.3A of the Corporations Act 2001 (Cth) by the directors on 14 December 2019. Subsequently at a meeting of creditors convened on 30 January 2020, the creditors resolved that the company be wound up and that Mr Nick Combis and Ms Louisa Sijabat be appointed liquidators of the company: Corporations Act, s 439C(c). A winding up in these circumstances is deemed to be a creditors’ voluntary winding up: s 446A(2). The combined effect of Corporations Act, ss 513B and 513C is that the winding up is taken to have begun or commenced on the day on which the administration began, here, 14 December 2019.

2. Given that immediately before the creditors’ resolution the company was under administration, and an application under s 459A that the company be wound up was filed before the beginning of the administration, and that application had not been dismissed or withdrawn before the administration commenced, the “relation-back day” in relation to the company is the day on which application for an order under s 459A was filed: Corporations Act, s 91, Item 7. That application was commenced by originating process filed on 18 October 2019.

3. Notwithstanding the existing creditors’ voluntary winding up, the plaintiff, Sky5 Pty Ltd (Sky5), pressed its application to wind up the company in insolvency pursuant to s 459A of the Corporations Act.

4. The company did not appear on the hearing when the matter was called outside the Court. The liquidators of the company indicated that they would not be attending the hearing and did not oppose an order that the company be wound up in insolvency by the Court.

5. Sky5’s application to wind up the company relies upon the presumption of insolvency arising from the company’s failure to comply with the statutory demand dated 20 September 2019 in an amount of $302,169.25: Corporations Act, s 459C(2)(a). There is no challenge to the presumption of insolvency.

6. It is well accepted that the Court may make a winding up order under s 459A even if the company is already being wound up voluntarily. So much is recognised by s 467B which provides that the Court may make an order under ss 233, 459A, 459B or 461, even if the company is already being wound up voluntarily. However, s 467B is not a source of power to order winding up; it is facultative and confirms that such an order can be made despite the fact that the company is already being wound up voluntarily: Citrix Systems Inc v Tele Systems Learning Pty Ltd (in Liq) (1998) 28 ACSR 529 at 535 (Moore J) in relation to s 467B of the then Corporations Law.

7. An order under s 459A should only be made in an appropriate case; it is relevant that the company is already subject to a winding up, and since there is little practical difference between a creditor’s voluntary winding up and the form of winding up imposed by the Court, a further winding up by the Court may not be appropriate: Re Evcorp Grains Pty Ltd (No 2) [2014] NSWSC 155 at [16]-[19] (Brereton J).

8. Counsel for Sky5 acknowledged that a court-ordered winding up would have no effect on the relation-back day in relation to the company under s 91, Item 7 of the Corporations Act. It was not suggested that an order under s 459A would potentially enable the liquidators to rely on s 588FJ to have a security set aside for the benefit of unsecured creditors if an order was made for the voluntary winding up to be converted to a court winding up: cf In the matter of Kimberley Diamond Company Pty Ltd (in liq) [2017] NSWSC 538. Nor was it suggested that converting the deemed creditors voluntary winding up into a court-ordered winding up would enable the liquidators to pursue a claim against a third party based on s 468 of the Corporations Act: cf Re Patterson Group Pty Ltd (in liq) [2014] NSWSC 1927.

9. Counsel for Sky5 frankly conceded that the only matters he could point to were that a court-ordered winding up would put beyond doubt any dispute as to the circumstances of the second meeting of creditors of the company on 30 January 2020 which resolved to wind up the company, and there was no objection by the liquidators to the order sought.

10. As to the first reason, there was no evidence of any matters suggestive of doubt as to the validity of the creditors’ resolution on 30 January 2020. In the circumstances, it is unnecessary to determine whether any such doubt would have been a sufficient reason for the Court to wind up the company in insolvency.

11. As to the second reason, the absence of objection by the liquidators is not determinative. In Deputy Commissioner of Taxation v Tull Reinforcing Pty Ltd [2006] FCA 810, Besanko J said at [19] that the fact that there is no objection to the proposed order cannot be a good reason for seeking the order.

12. I am not persuaded on the evidence that a case has been made out for the existing creditors’ voluntary winding up to be converted to a court-ordered winding up. There is no apparent benefit to the administration in a court-ordered winding up. Accordingly, the originating process should be dismissed.

13. As to costs, Sky 5 sought its costs of the originating process up to the date of the second creditors’ meeting on 30 January 2020. An initial question is whether leave is required pursuant to s 500(2) of the Corporations Act for Sky5 to pursue an application for costs, given that SPG Projects is now in liquidation. That section provides that after the passing of the resolution for voluntary winding up, no action or other civil proceeding is to be proceeded with or commenced against the company except by leave of the Court and subject to such terms as the Court imposes.

14. Sky5 acknowledged that it was not able to point to any authority which would permit the Court to make a costs order against SPG Projects in the absence of a grant of leave to proceed under s 500(2) of the Corporations Act. No application was made for leave to proceed. In the circumstances, the appropriate order is that there be no order as to costs of the originating process.

Orders

15. The Court makes the following orders:

1. Originating process filed 18 October 2019 be dismissed.

2. There is no order as to costs, to the intent that each party bear its own costs.

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Decision last updated: 05 February 2020