Pavlakis v Equmen Pty Limited - [2014] FCA 929

FEDERAL COURT OF AUSTRALIA
Pavlakis v Equmen Pty Limited [2014] FCA 929

Citation: Pavlakis v Equmen Pty Limited [2014] FCA 929

Parties: ANTHONY PAVLAKIS v EQUMEN PTY LIMITED ACN 129 797 315

File number(s): NSD 857 of 2014

Judge(s): YATES J

Date of judgment: 20 August 2014

Catchwords: CORPORATIONS - application for winding up of company on just and equitable ground under s 461(1)(k) of the Corporations Act (2001) (Cth) – appointment of provisional liquidator

Legislation: Corporations Act2001 (Cth) ss 461, 462
Federal Court (Corporations) Rules2000

Date of hearing: 20 August 2014

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 17

Counsel for the Plaintiff: Mr S Golledge

Solicitor for the Plaintiff: Benjamin Nicholson Law

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 857 of 2014

BETWEEN:
ANTHONY PAVLAKIS
Plaintiff

AND:
EQUMEN PTY LIMITED ACN 129 797 315
Defendant

JUDGE:

YATES J

DATE OF ORDER:

20 AUGUST 2014

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.On the undertaking of the solicitor for the plaintiff to pay the relevant filing fee in the Registry, leave be granted to the plaintiff to file in court the originating process dated 20 August 2014 together with the affidavits of Anthony Pavlakis sworn 20 August 2014, David Levi sworn 19 August 2014 and Anna Kerdijk Nicholson sworn 20 August 2014.
2.The originating process be made returnable instanter.
3.Service on the defendant be dispensed with.
4.On the plaintiff, by his counsel, giving the usual undertaking as to damages, David Levi, an official liquidator, be appointed liquidator of Equmen Pty Limited provisionally, pursuant to s 472(2) of the Corporations Act 2001 (Cth).
5.The proceeding be listed for the hearing of final relief at 10.15 am on 3 September 2014.
6.The costs of today’s appearance be reserved.
7.These orders may be entered forthwith.

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

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 857 of 2014

BETWEEN:
ANTHONY PAVLAKIS
Plaintiff

AND:
EQUMEN PTY LIMITED ACN 129 797 315
Defendant

JUDGE:

YATES J

DATE:

20 AUGUST 2014

PLACE:

SYDNEY

REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)

This application comes before the Court on an urgent basis. The plaintiff seeks an order for the winding up of the defendant on the just and equitable ground: see s 461(1)(k) of the Corporations Act2001 (Cth) (the Act). The plaintiff is a creditor of the defendant: see s 462(2)(b) of the Act. He is the Chief Executive Officer of the defendant whose wages have not been paid since 11 July 2014.
The background facts can be stated briefly. The defendant conducts the business of selling proprietary pressure-support underwear. It conducts its business internationally through a website. The business is currently in its start-up phase and has not reached commercial maturity.
The defendant has lost approximately $3 million thus far. The evidence before me indicates that it is unable to pay its…

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: [2014] FCA 929
Decision Date

CaseChat Overview and Summary

Pavlakis v Equmen Pty Limited is a case in which the plaintiff, Anthony Pavlakis, sought the winding up of the defendant, Equmen Pty Limited, on the grounds that it was just and equitable to do so under section 461(1)(k) of the Corporations Act 2001 (Cth). The Federal Court of Australia, presided over by Yates J, heard the case on an urgent basis, given that Pavlakis, the Chief Executive Officer of Equmen, had not been paid his wages since 11 July 2014, and the company was unable to pay its debts as they fell due. The court had to determine whether the appointment of a provisional liquidator was appropriate under the circumstances, and if so, whether the application for winding up should proceed in the usual manner.

The legal issues before the court were whether the corporation was unable to pay its debts as they fell due and whether the appointment of a provisional liquidator was justified. The court considered the evidence that Equmen had lost approximately $3 million thus far, had stocks frozen in warehouses due to non-payment of invoices, and was unable to service its customers. Additionally, the company had no acting directors, as the sole director had passed away, and the plaintiff was unwilling to take on the role of director. The court also considered the potential for conflicts of interest if the administrator of the major shareholder, Gavin Jones Communications, was appointed as the liquidator of Equmen.

In determining the appropriate course of action, the court noted that while the evidence showed a clear case for placing Equmen in the hands of an independent person to manage its business and affairs, it was not persuaded that the company should be wound up immediately. Instead, the court concluded that it was appropriate to appoint a provisional liquidator, in this case, David Joseph Levi, to manage the company's affairs. The court was satisfied that Levi was prepared to act as liquidator, had no knowledge of any conflicts of interest that would impede his ability to perform his duties, and would seek the court's direction if such conflicts arose in the future. Therefore, the court appointed Levi as the provisional liquidator of Equmen and allowed the application for winding up to proceed in the usual manner.

The court's final orders included granting leave to Pavlakis to file the originating process, appointing David Joseph Levi as the provisional liquidator of Equmen, and listing the proceeding for the hearing of final relief. The court also reserved the costs of the appearance and dispensed with service on the defendant.

Orders