Mutton v Living Australia Pty Ltd - [2019] FCA 1051

FEDERAL COURT OF AUSTRALIA
Mutton v Living Australia Pty Ltd [2019] FCA 1051

File number: SAD 28 of 2019

Judge: WHITE J

Date of judgment: 21 June 2019

Catchwords: BANKRUPTCY AND INSOLVENCY – application pursuant to s 35A(6) of the Federal Court of Australia Act 1976 (Cth) for an order staying the operation of a winding up order and appointment of a liquidator to allow an application for review to be heard and determined – Plaintiffs claim that they are solvent and they will suffer prejudice if the winding up continues – judgment debt on which the statutory demand of the creditor was based has been set aside – Plaintiffs proffered an undertaking not to dispose of any assets or incur any liabilities other than in the ordinary course of business – order staying the operation of the winding up order and the appointment of the liquidator granted.

Legislation:
Corporations Act 2001 (Cth) ss 459A, 465C, 482

Federal Court of Australia Act 1976 (Cth) s 35A

Magistrates Courts Civil Rules

Cases cited:
HVAC Construction (Qld) Pty Ltd v Energy Equipment Engineering Pty Ltd [2002] FCA 1638; (2002) 44 ACSR 169

Jarena Pty Ltd v Sholl Nicholson Pty Ltd (1996) 19 ACSR 425

Living Australia Pty Ltd v Rans Consulting Group Pty Ltd [2019] SASC 86

Re Kwiatek (1989) 21 FCR 374

Remuneration Database Pty Ltd v Pauline Goodyer Real Estate Pty Ltd [2007] NSWSC 59

Date of hearing: 21 June 2019

Registry: South Australia

Division: General Division

National Practice Area: Commercial and Corporations

Sub-area: Corporations and Corporate Insolvency

Category: Catchwords

Number of paragraphs: 30

Counsel for the Plaintiffs: Mr G Stevens

Solicitor for the Plaintiffs: Wadlow Solicitors

Counsel for the Defendant: Mr M Burnett QC

Solicitor for the Defendant: Griffins Lawyers

Counsel for the Intervener: Ms D Di Girolamo

Solicitor for the Intervener: Wallmans Lawyers

ORDERS

SAD 28 of 2019

BETWEEN:
GREGORY RALPH MUTTON

First Plaintiff

WENDY ANNE MUTTON

Second Plaintiff

AND:
LIVING AUSTRALIA PTY LTD (ACN 601 559 380)

Defendant

RANS CONSULTING GROUP PTY LTD (ACN 613 674 749)

Intervener

JUDGE:

WHITE J

DATE OF ORDER:

21 JUNE 2019

THE COURT ORDERS THAT:
1.The operation of Orders 4 and 5 made by the Registrar on 12 June 2019 are, pursuant to s 35A(6) of the Federal Court of Australia Act 1976 (Cth), stayed until the hearing and determination of the Amended Application for Review filed by Living Australia Pty Ltd on 13 June 2019.
2.The question of costs of the application for the stay is reserved.
3.The matter is adjourned to 4:30 pm today for a Case Management Hearing with respect to the conduct of the review.
4.There be liberty to the parties to apply.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EX TEMPORE REASONS FOR JUDGMENT
WHITE J:

On 12 June 2019, a Registrar made an order, pursuant to s 459A of the Corporations Act 2001 (Cth) that the defendant to these proceedings, Living Australia Pty Ltd…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2019] FCA 1051
Decision Date: 21 June 2019

CaseChat Overview and Summary

Mutton v Living Australia Pty Ltd involved a dispute where the plaintiffs sought to stay the operation of a winding up order and the appointment of a liquidator. The plaintiffs argued that they were solvent and would suffer prejudice if the winding up continued. The case was heard in the Federal Court of Australia. The primary focus was on whether the court should grant an order to stay the winding up to allow for an application for review to be heard and determined.

The court had to determine whether the plaintiffs could demonstrate that they were solvent and would suffer prejudice if the winding up order was not stayed. This involved assessing the plaintiffs' financial position and the potential harm they would face if the winding up continued. Additionally, the court had to consider whether the plaintiffs had provided a sufficient undertaking to mitigate any potential harm to the creditors.

The Federal Court found that the plaintiffs had demonstrated their solvency and the potential prejudice they would suffer if the winding up continued. The judgment debt on which the statutory demand was based had already been set aside. The plaintiffs also provided an undertaking not to dispose of any assets or incur liabilities other than in the ordinary course of business. The court accepted these assurances and granted the order to stay the operation of the winding up order and the appointment of the liquidator. This allowed the plaintiffs to pursue their application for review without the immediate threat of liquidation.

The court's final orders included staying the operation of the winding up order and the appointment of a liquidator, pending the outcome of the plaintiffs' application for review. This decision provided the plaintiffs with the opportunity to address their financial situation and seek a resolution without the immediate pressures of liquidation.

Orders