Nicolai v Indochina Medical Co Pty Ltd, in the matter of Indochina Medical Co Pty Ltd (No 2)

In the matter of Nicolai v Indochina Medical Co Pty Ltd, the plaintiff sought an order for the winding up of the defendant under section 459P of the Corporations Act 2001 (Cth) due to the defendant's failure to comply with a statutory demand for the amount of USD1,972,451.89. The defendant, while acknowledging the debt, asserted its solvency despite the presumption of insolvency arising from its non-compliance with the statutory demand under section 459C(2)(a) of the Corporations Act. The case was first heard on 9 July 2012, where the plaintiff applied for relief from an implied undertaking to not use certain affidavits and documents filed, to use them in obtaining freezing orders in the Supreme Court of New South Wales. This relief was granted, and the reasons for the grant were detailed in the previous judgment Nicolai v Indochina Medical Co Pty Ltd, in the matter of Indochina Medical Co Pty Ltd [2012] FCA 729. The court was now required to determine the costs of the proceeding.

The legal issues before the court included the interpretation of the Corporations Act provisions regarding statutory demands and winding up, the applicability of the presumption of insolvency, and the appropriateness of costs orders in light of the relief granted. The court had to balance the plaintiff's right to seek recovery of the debt against the defendant's assertion of solvency and its refusal to provide an undertaking regarding the preservation of assets. The court's reasoning was based on the evidence provided in the affidavits and the submissions of both parties. The court found that the defendant's refusal to provide an undertaking regarding the preservation of assets, despite the plaintiff's reasonable concerns, was unreasonable. Consequently, the court ordered that the defendant pay the plaintiff's costs of the proceeding.