Prestige Powdercoaters (WA) Pty Ltd v Profounder Factory Direct Pty Ltd [No 2] - [2025] WASC 96

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   PRESTIGE POWDERCOATERS (WA) PTY LTD -v- PROFOUNDER FACTORY DIRECT PTY LTD [No 2] [2025] WASC 96
CORAM:   LUNDBERG J
HEARD:   24 MARCH 2025
DELIVERED          :   24 MARCH 2025
FILE NO/S:   COR 103 of 2024
BETWEEN:   PRESTIGE POWDERCOATERS (WA) PTY LTD
Plaintiff
AND
PROFOUNDER FACTORY DIRECT PTY LTD
Defendant

Catchwords:

Corporations - Winding up and insolvency - Application by substituted creditor to wind up defendant company pursuant to s 459P and s 459Q of the Corporations Act 2001 (Cth) - Whether hearing should proceed given engagement between defendant and its solicitors has been terminated - Orders made to wind up defendant company - Turns on own facts

Legislation:

Corporations Act 2001 (Cth), s 459A, s 459C(2)(a), s 459P, s 459Q, s 459R, s 459S, s 465B(4), s465C, s 466(2)
Rules of the Supreme Court 1971 (WA), O 1 r 4A, O 1 r 4B
Supreme Court (Corporations) (WA) Rules 2004, r 5.4, r 5.5, r 5.6, r 5.11

Result:

Orders made for winding up of the defendant company

Category: B

Representation:

Counsel:

Plaintiff	:	R K Collins
Defendant	:	A F Roberts and A P Donnelly (sole director, with leave)

Solicitors:

Plaintiff	:	Hilton Bradley Lawyers
Defendant	:	Solomon Brothers

Case(s) referred to in decision(s):

640 The Esplanade Pty Ltd v Splash Bay Pty Ltd (No 2) [2017] FCA 89
Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs appointed) [2011] HCA 18; (2011) 244 CLR 1
Bibby Financial Services Australia Pty Ltd v Wolf Industries Australia Pty Ltd [2004] NSWSC 134; (2004) 49 ACSR 45
David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265
Hadley v BetHQ Pty Limited [2016] FCA 1263
Krysiak v Housing Authority [2020] WASCA 119
Profounder Electrical Pty Ltd v Profounder Factory Direct Pty Ltd [2025] WASC 51
Prow Pty Ltd v Commissioner of Police [2012] WASC 363
Re OCNR (Australia) Pty Ltd; Convergence Team Pty Ltd v OCNR (Australia) Pty Ltd [2014] QSC 102

Table of Contents

A. Introduction

B. Procedural history

C. Legal representation of the defendant

D. Disposition

Position as a substituted plaintiff

Compliance with s 465C

Defendant's application pursuant to s 459S

Whether an order should be made to wind up the defendant?

E. Conclusion and orders

LUNDBERG J:

A. Introduction

At the hearing this morning, counsel for Prestige Powdercoaters Pty Ltd moved for final orders that Profounder Factory Direct Pty Ltd (the defendant) be wound up in insolvency. Counsel moved for those orders based on the amended originating process dated 28 February 2025.
Prestige is a creditor of the defendant, having served a creditor's statutory demand on the defendant on 3 May 2024, in the sum of $38,975.46. Prestige was substituted as the plaintiff pursuant to orders made by the Court on 20 February 2025. I refer to the reasons delivered on 20 February 2025 which explain the basis on which the substitution order was made.[1]
[1] Profounder Electrical Pty Ltd v Profounder Factory Direct Pty Ltd [2025] WASC 51.
Prestige was substituted in place of Profounder Electrical Pty Ltd, the original plaintiff, which had initiated the proceedings on 27 June 2024, seeking orders to wind up the defendant pursuant to s 459P and s 459Q of the Corporations Act 2001 (Cth).[2]
[2] All references to statutory provisions in these reasons are to the Corporations Act 2001 (Cth), unless otherwise stated.
Profounder Electrical had sought those orders following the defendant's failure to comply with a statutory demand served on 4 April 2024. That statutory demand was for the sum of $8,424.35, said to represent a debt for the provision of goods and services.[3]
[3] Affidavit of Fedel Conti sworn 20 June 2024 [2].
At the conclusion of the hearing, I was satisfied the winding up order sought by Prestige should be made. My reasons for making the order now follow.

B. Procedural history

Following the substitution of Prestige as the plaintiff creditor to these proceedings, directions were made on 20 February 2025 to programme the matter to a hearing on 24 March 2025.
In accordance with the directions which were made, Prestige filed four affidavits in support of the application and also relied upon an affidavit filed by the original plaintiff for the purposes of the hearing today. The affidavits filed and relied upon by the plaintiff were as follows:
(a) the affidavit of Shuchi Bhandari affirmed on 28 February 2025;
(b)the affidavit of Stephen Murray Gangemi affirmed on 28 February 2025;
(c)the affidavits of Jeoffrey Belen Bibon sworn on 28 February 2025 and on 6 March 2025; and
(d)the affidavit of Fedel Conti sworn on 20 June 2024, which was filed by the original plaintiff.
The orders made on 20 February 2025 also provided the defendant with an opportunity to file affidavit evidence in response to the application, to be filed by 11 March 2025. The defendant did not file any affidavit evidence.
The orders required the plaintiff to file its submissions by 14 March 2025, and required the defendant to file its submissions by 21 March 2025. The plaintiff did not file submissions as required. The plaintiff only filed submissions on 21 March 2025 after being prompted by the Court in relation to the non-compliance. Given the plaintiff's delay, the defendant was unable to file responsive submissions (although in the ordinary course, the Court would expect solicitors to confer about slippages in the timetable and attempt to agree a revised timetable).
The failure by the plaintiff to file submissions as ordered, which emerged only following prompting by the Court, was highly undesirable and ought not to have occurred. It should not be for the Court to follow up solicitors to ensure compliance with a Court-ordered timetable. I had made the Court's expectations very clear to the parties at the hearing on 20 February 2025, following my frustration at the difficulties encountered at that hearing and my disappointment that the matter needed to be adjourned, as the following transcript extract demonstrates:[4]
[4] ts 42 – 46.
LUNDBERG J: So I regret to say, Mr Collins, the direction I'm moving to at the moment is that this proceeding will need to be adjourned. And I can't emphasise enough how disappointed I am that that needs to be done, but I am not going to make final orders winding up any company, much less this one, unless I have absolute certainty as to the evidentiary platform that is before the court and that all of the requisite requirements have been met. So my view this morning is that I'm not going to make final orders. I'm going to accede to what is effectively Mr Roberts' proposal that the matter be adjourned to a further hearing. I don't want that to drift too far into the future. It seems to me I should make some other points; and Mr Collins, I want you to take these on board….
…
And if solvency is an issue, then no doubt there will need to be some submissions made as to the state of satisfaction the court needs to get to in order to overcome the presumption.
…
LUNDBERG J: … Mr Roberts, in terms of responding to that, is another week sufficient, bearing in mind that it doesn't appear as though you will be – you don't need to wait to prepare your material until the 28th, Mr Roberts; you can start that now. So would another seven days on that be adequate?
ROBERTS, MR: That is correct that we don't have to wait, your Honour, but given that the material will need to go to solvency and it will probably need to involve some third parties such as external accountants, I would seek the indulgence of a further 14 days to put on that evidence.
LUNDBERG J: All right. Well, look, I think your client has had more than adequate time in conducting this matter. What I will do is I will give you until 11 March to put on that material. Your client has been on plenty of notice about this matter and I can't imagine that it, or those who have been thinking about this issue, haven't thought at some level about the types of evidence that needs to be put on.
So I'm going to order that you do that by 11 March, which is a Tuesday. And what I'm going to say in response to that is, then, that I want Mr Collins to put his submissions on by 14 March. And I will then give you, Mr Roberts, until 21 March to file your submissions, which is a week.
And again, I want to emphasise to all here today that what I expect in those submissions is for all issues of opposition or in support to be squarely identified, so that in the lead up to the hearing each party understands the other side's position and there is no doubt about what the debate is when we come back for the hearing. That leaves us with a hearing date, and on that basis, we would be able to return in the week of 24 March…
The foregoing observations on the transcript are also relevant to the defendant's application for an adjournment to adduce further evidence, which I will address below.

C. Legal representation of the defendant

On or about 14 August 2024, the defendant engaged solicitors to represent it in these proceedings.[5] Those solicitors filed various documents in the proceedings over the past 6 or 7 months, including affidavit evidence and submissions. Those solicitors also represented the defendant at the most recent hearing, held on 20 February 2025.
[5] Affidavit of Andrew Paul Donnelly sworn on 30 August 2024 [5.1]; and notice of appearance for the defendant dated 16 August 2024.
On 21 March 2025, the last working day before the hearing this morning, the Court contacted the parties (by email sent at 11.02am) to query the non-compliances with the directions made on 20 February 2025. In response to that enquiry, an email was received at 11.49am on 21 March 2025 from the defendant's solicitors, in the following terms:
Our engagement with Profounder Factory Direct Pty Ltd (“PFD”) has ended. Accordingly, we do not intend to file any submissions on behalf of PFD.
We had been informed by our instructors that steps were being taken to engage new solicitors; but it appears that has not been done. If this persists, an application will be made under Order 8 rule 7 of the Rules of the Supreme Court 1971.
As we are presently solicitors of record, we will attend the hearing that is listed for 24 March 2025; but we will not be in a position to make any submissions on behalf of PFD.
The late notification by the defendant's solicitors as to the end of its engagement with the defendant, which emerged only following prompting by the Court, was also highly undesirable.
At the hearing this morning, a solicitor from the law firm on the record for the defendant appeared. After hearing from that solicitor, I gave him leave to withdraw from the bar table. The sole director of the defendant, Andrew Paul Donnelly, also appeared this morning and sought leave to appear for the defendant company. Over the opposition of the plaintiff's counsel, I granted Mr Donnelly that leave.
The Court has power to grant leave to a director to appear for a company, but the discretion to permit this course is to be exercised sparingly.[6] I granted Mr Donnelly leave given the apparent cessation of the relationship between the defendant company and its solicitors, given the hearing was listed some weeks ago for a final hearing today, and noting that he is the sole director of the company.
[6] Krysiak v Housing Authority [2020] WASCA 119 [83] (Murphy and Mitchell JJA); and Prow Pty Ltd v Commissioner of Police [2012] WASC 363 [20] - [23] (Hall J).
It emerged from the submissions made by Mr Donnelly on behalf of the defendant company that there were various documents he wished to rely upon in opposition to the winding up application, which had not been put before the Court on affidavit, and of which the plaintiff had no notice. I engaged with Mr Donnelly as to whether he was seeking an adjournment to file additional evidence, which he confirmed he was. I declined to grant that adjournment, and formed the view that it was appropriate to proceed today, given the following matters, some of which overlap.
First, I was satisfied that Mr Donnelly had had notice of today's hearing and of the programming directions made on 20 February 2025.
Second, knowing that this important hearing was listed today, Mr Donnelly and the defendant had ample opportunity to brief alternative solicitors following the termination of the engagement of the current solicitors. The defendant ought to have taken active steps to engage alternative solicitors. The sole director of the defendant company is a businessman who the Court can infer would readily understand the nature of the listed hearing and the importance of engaging solicitors to represent the company's interests, as well as to file affidavit evidence in a timely way as ordered by the Court. That was not done.
I emphasised at some length at the hearing on 20 February 2025 the importance of filing evidence on salient issues for the purposes of the hearing listed for today. I have referred above to the transcript which records some of these comments. My following observations, also made on 20 February 2025, are relevant in this regard as well:[7]
LUNDBERG J: … this is a serious matter. The application on its face seeks orders that would lead to the winding up of your client. Your client has been at peril of this winding up since 27 June last year. Your client took steps to instruct your firm to file an affidavit from Mr Donnelly, which was filed last year.
There has been ample time to put on other material in order to make good the solvency point. I think what you're telling me is your client wants the opportunity to put on further affidavit evidence to address the solvency point and overcome the presumption. Perhaps I therefore need to know with real clarity that you have instructions to put on that affidavit material and as to when you would propose to put it on.
ROBERTS, MR: Okay, your Honour. As to the instructions, I cannot say to the court that I presently have instructions to put on any affidavit material, but I apprehend that if a short adjournment is granted, we would be receiving such instructions. On that basis, all I would say is that we would seek a short adjournment. The most appropriate course would be that there's a short adjournment of today's hearing, number one, to allow the substituted plaintiff to comply with rule 5.10; and two, for our client to have an opportunity to put on any affidavit evidence to establish solvency, and that the hearing be brought back at the earliest available date.
[7] ts 40 – 41.
Third, these proceedings have been on foot for many months, indeed since June 2024, and the standard time period in s 459R has been extended on two occasions. As matters stand, therefore, the originating process seeking winding up orders was filed more than 8 months ago, which is a lengthy period in the context of winding up applications and given the policy which underlies pt 5.4 of the legislation to have a speedy resolution of applications such as this.[8]
[8] David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265, 270 (Gummow J); and Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs appointed) [2011] HCA 18; (2011) 244 CLR 1 [27] - [28] (Gummow, Heydon, Crennan, Kiefel and Bell JJ).
Fourth, the available evidence indicates that the defendant company had been served with multiple statutory demands and, in respect of each such demand, there has been no application to set aside any of them.
Fifth, I was informed during the hearing that the defendant had been the subject of previous winding up proceedings, being COR 34 of 2024. That proceeding was brought by Profounder Alliance Robes Pty Ltd, a creditor which had issued a statutory demand against the defendant. Those proceedings were ultimately dismissed by the Master, apparently by consent. This Court's record[9] shows that the law firm on the record in that earlier proceeding for the defendant was the law firm on the record in the current proceeding. It was therefore apparent that the defendant company had engaged solicitors to represent its interests in responding to legal challenges as far back as April 2024.
[9] COR 34 of 2024, Folio 10 (notice of appearance dated 22 April 2024).
Sixth, I accepted there would be some prejudice to the plaintiff in granting an adjournment, resulting in further delays of the proceeding and further legal costs being incurred.
Seventh, I was not satisfied the explanation for the adjournment was satisfactory, bearing in mind the law firm on the record had been engaged by the defendant company commencing in April 2024, and that law firm had filed various documents on behalf of the company including affidavit evidence. A solicitor of that law firm had also deposed on affidavit, on information and belief from Mr Donnelly, that further insolvency evidence would be filed in due course.[10]
[10] Affidavit of Louis Lut-Yiu Lee sworn 16 August 2024 [5].
The suggestion by Mr Donnelly that that law firm had not filed important affidavit evidence in support of the company's position, which Mr Donnelly had made available to them, is not one I was prepared to accept when considering all the circumstances. Mr Donnelly would have been well aware that he had not sworn a further affidavit and had ample time to address that deficiency with those lawyers and make arrangements for an affidavit to be filed. Even if I accept Mr Donnelly's suggestion, which I do not, merely because the defendant company had engaged a law firm to represent its interests does not abrogate the need for the client company (and its director) to monitor the proceedings and take active steps to prompt its lawyers to file documents.
Eighth, I was conscious that a decision to proceed with the hearing on the limited evidence filed in August 2024 might occasion the defendant company prejudice, but that was a consideration to bear in mind and weigh against the other facts identified above and below.
Ninth, as a more general proposition, I was conscious of the need to give appropriate weight to the goal and objects in O 1 r 4A and r 4B of the Rules of the Supreme Court 1971 (WA) in assessing the adjournment request and the failure to file affidavit evidence in accordance with the timetable. In my view, the need to avoid delays is a particularly acute consideration in the context of winding up applications such as this one, a point which I have already emphasised in these reasons.
In these circumstances, I considered it appropriate to proceed to determine the application and, conversely, I considered that it would not be in the interests of justice for the hearing to be delayed further. The efficient disposition of this proceeding should not be further delayed merely by reason of the termination of the engagement of the defendant's solicitors and the director's assertion that there existed further material which could be put before the Court, where there was no dispute that the material could have been adduced by way of affidavit evidence at an earlier point in time. Critically, in my view, none of the material identified by Mr Donnelly was described as being fresh or as having been recently unearthed by him.
Naturally enough, evidence as to solvency of a company would be well known to the sole director of that company and ought to have been readily capable of being adduced.

D. Disposition

I turn now to the disposition of the winding up application.

Position as a substituted plaintiff

Having been substituted as the plaintiff creditor in the proceeding, Prestige was entitled to proceed with the application as if it had been the original applicant: s 465B(4). The effect of this is that Prestige was permitted to rely on the presumption of insolvency in s 459C(2)(a), which arises by reason of the defendant company's failure to comply with the original plaintiff's statutory demand.

As the defendant did not apply to set aside the statutory demand issued by Prestige, the position of Prestige in those circumstances was explained by Austin J as follows:[11]
The position of an applicant for substitution who relies on a statutory demand that has not been satisfied or set aside is indistinguishable from the position of the original applicant who relies on such a statutory demand. The latter's standing as a creditor cannot be challenged, and the former is a person who might have applied for the company to be wound up on exactly the same basis as the latter (compare the wording of subsection (1)). Further, substitution will permit the applicant to proceed as if it had been the original applicant (see the wording of subsection (4)), and therefore place it in a position to rely on the statutory demand without any challenge to its standing as a creditor, subject only to s 459S. (emphasis added)

Compliance with s 465C

[11] Bibby Financial Services Australia Pty Ltd v Wolf Industries Australia Pty Ltd [2004] NSWSC 134; (2004) 49 ACSR 45 [25] (Austin J).

Pursuant to s 465C, on the hearing of an application under s 459P, a person may not, without the leave of the Court, oppose the application unless, within the period prescribed by the rules of court, the person has filed, and served on the applicant, notice of the grounds on which the person opposes the application and a verifying affidavit.
The defendant company did not file any specific application or notice setting out its grounds of opposition in response to the substituted plaintiff's application, nor any affidavit verifying the grounds of opposition.
In fairness to the defendant, I observed at the hearing that it had filed an interlocutory process some months ago seeking orders pursuant to s 459S that it be granted leave to oppose the winding up application. I will turn now to address that application on the basis the defendant maintains reliance on that application and that it reflects the grounds for its intended opposition under s 465C.

Defendant's application pursuant to s 459S

The defendant filed an interlocutory process on 30 August 2024 seeking orders pursuant to s 459S that it have leave to oppose the winding up application on a ground that the defendant could have relied upon for the purposes of an application to set aside the original plaintiff's statutory demand. The defendant's interlocutory application was supported by the affidavit of Mr Donnelly sworn on 30 August 2024.
The defendant's application under s 459S had not previously been determined by the Court, and had been held in abeyance given the precedence which was given to the two applications for creditors to be substituted, which were filed on 8 October 2024 and 17 January 2025.
The interlocutory application, and the supporting affidavit, were directed to the claim advanced by the original plaintiff, Profounder Electrical, not the judgment debt relied upon by the substituted creditor, nor the statutory demand issued by the substituted creditor. Of course, it would be inconsistent with my reasons delivered on 20 February 2025 and with established authority to permit the defendant to now challenge the substituted plaintiff's standing as a creditor.[12]
[12] 640 The Esplanade Pty Ltd v Splash Bay Pty Ltd (No 2) [2017] FCA 89 [93] – [101] (Markovic J), subject to any proper application under s 459S.
In his affidavit, Mr Donnelly deposed to the following matters.
First, he explained that the defendant did not apply to the Court to set aside the statutory demand, being the demand issued by the original plaintiff, prior to the winding up application being commenced, because he was not familiar with the rules that govern applications to set aside statutory demands and he only engaged solicitors on 14 August 2024.
Mr Donnelly deposed that he thought his commitment, insofar as the 21 day period was concerned, was only to send a response to the plaintiff highlighting the genuine dispute or offsetting claim. It is apparent from his affidavit that Mr Donnelly emailed the solicitors for the original plaintiff on 24 April 2024 outlining his grounds for opposition, having been served with the statutory demand on 4 April 2024.
Second, as to the substance of his opposition, Mr Donnelly asserted in his email (and also in the body of his affidavit) that the invoices upon which the statutory demand was based were false, that the defendant company had been sold on 30 June 2021, he denied the asserted transactions between the entities, he pointed to a lack of supporting evidence or documentation, and he disputed the amount claimed. Mr Donnelly also reserved the right to pursue counterclaims, although provided little detail of the nature of those claims.
The email from Mr Donnelly concluded by requesting that the original plaintiff immediately withdraw the 'defective and malicious statutory demand'.
Within the body of the affidavit, Mr Donnelly deposed that the defendant had ceased operating on 1 July 2021 following the sale of its business, and noted that the invoices relied upon by the original plaintiff were all dated after this date. Mr Donnelly deposed that, since the sale of the business there had been no ongoing relationship between the defendant and the original plaintiff, and that the defendant had not sought provision of, nor received, any goods or services from the plaintiff following the sale.
Finally, Mr Donnelly deposed that the grounds in the affidavit were 'relevant to proving the defendant is solvent because the defendant has not been trading and, excluding the amount claimed in the Statutory Demand, it has no assets or liabilities'.
The solicitor for the original plaintiff responded to Mr Donnelly by email on 30 April 2024 stating that his client intended to rely upon the demand.
As I have noted above, no other substantive evidence had been filed by the defendant in support of the application under s 459S. In particular, no evidence has been filed in response to the substituted creditor's judgment debt obtained in May 2023 (of which $38,975.46 is outstanding), nor in response to the statutory demand served by that creditor on 3 May 2024, nor in response to the Commissioner of State Revenue's statutory demand for payment of $6,206.34, which was for unpaid payroll tax for the period from 1 July 2020 to 30 June 2021.
Pursuant to s 459S(2), the Court is not to grant leave under sub-section (1), to allow a company to rely on a ground it could have relied on had it made an application to set aside the statutory demand, unless that ground is material to proving that the company is solvent.
This limitation is important in the present context. I say that because Mr Donnelly swore in his affidavit on 30 August 2024 that, other than the alleged debt claimed by the original plaintiff, the defendant had no assets or liabilities. The complete paragraph and its heading are as follows:
Grounds are material to proving that the defendant is solvent
11.The grounds above are relevant to proving the defendant is solvency because the defendant has not been trading and, excluding the amount claimed in the Statutory Demand [being the statutory demand issued by the original plaintiff], it has no assets or liabilities.
This statement is incorrect, insofar as it asserts the company had no liabilities.
At the time the affidavit was sworn, the defendant was, at the very least, subject to the liability owed to the Commissioner of State Revenue and the liability owed to Prestige. Assuming, favourably to the defendant, that the former liability was subsequently discharged, the defendant remained subject to the judgment debt owed to Prestige Powdercoaters, less the small amount which has been paid down. I understood from Mr Donnelly that there had been no application to set aside the default judgment obtained by Prestige in the Magistrates Court.
Mr Donnelly sought to explain away as an error the reference in the affidavit to the defendant having 'no assets', informing the Court from the bar table that this was a reference to 'no trading assets', given the underlying business had been sold. Mr Donnelly explained that the business sold by the defendant led to a significant influx of funds to the defendant from the purchaser, which appears to be a related entity to the defendant. Mr Donnelly drew my attention to the sale price for the business, of $1.095m, which is identified in the REIWA agreement attached to his affidavit (as Attachment APD-2).
I do not accept that the affidavit demonstrates, by reference to the attached business sale agreement, that the defendant company received or holds the sale funds just mentioned. Thus, there is a difference between the error which is apparent concerning the statement the company had no liabilities and the statement the company had no assets, the former being evidently incorrect based on the admissible evidence adduced on this application. As to the asset position of the company, importantly, the affidavit merely attached the agreement and provided no further evidence as to:
(a)the completion of the business sale agreement;
(b)the payment in fact of the sum in question; or
(c)the whereabouts of those funds following the completion of the sale.
Put simply, there is no direct evidence before the Court as to whether the defendant company received those funds and, if it did receive the funds, whether it held them or transferred the funds to another entity.
Further, I do not accept that the statements in par 11 of the affidavit as to the company's asset position can be explained away as an error. The following brief points may be made in this regard:
(a)The statement in the affidavit that the defendant company had no assets is relatively clear. If the defendant company held such a large sum of cash as part of its asset pool, the Court can reasonably expect that Mr Donnelly would have made this abundantly clear in his affidavit. Further, the outline of submissions filed by the defendant's solicitors on 6 September 2024 does not give any indication that the affidavit contains an error.[13]
[13] Defendant's submissions dated 5 September 2024 but filed on 6 September 2024 (Folio 20), [13].
(b)The affidavit was sworn in a context in which solvency issues were of fundamental importance to the application which had been filed by the defendant company. It is not lightly to be inferred or concluded that the deponent made an error of this magnitude in such an important affidavit.
(c)The affidavit was sworn in the context of the hearing which took place before the Master on 20 August 2024, by which orders were made to permit the application and the affidavit to be filed. I refer to the transcript of proceedings before the Master on 20 August 2024, as to the interchanges with counsel for the defendant at pages 6 to 11 and as to the Master's reasons for making those orders at pages 14 to 17.
(d)The affidavit was also made by Mr Donnelly in the context of the affidavit which had been sworn by the solicitors for the defendant, on 16 August 2024, which foreshadowed the further evidence which would be filed. One of the solicitors for the defendant company swore that:[14]
5.I am informed by the defendant's sole director, Andrew Donnelly, and I do believe, that the defendant opposes the application on the basis of the following:
5.1the defendant is solvent. Further evidence, inclusive of expert evidence, demonstrating the solvency of the defendant will be provided to the Court once it has been obtained by the defendant;
5.2the plaintiff is utilising the Application for the purposes of recovering a disputed debt; and
5.3the debt claimed by the plaintiff in the statutory demand on which the Application is based is disputed. The defendant intends to seek leave pursuant to s. 459S of the Corporations Act 2001 to rely upon grounds that could have been relied upon for the purposes of an application by the defendant to set aside the statutory demand.
6.Based on recent experience with obtaining evidence of a company's solvency, including expert evidence as to solvency from an insolvency practitioner, I anticipate that it will take in the order of three months to prepare evidence addressing the defendant's solvency.
[14] Affidavit of Louis Lut-Yiu Lee sworn 16 August 2024 [5] and [6].
Ultimately, I was not satisfied that any ground asserted by Mr Donnelly on behalf of the defendant could be material to proving the solvency of the defendant, bearing in mind my conclusion that the defendant was subject to the judgment debt owed to Prestige (which has not been the subject of any set aside application) and my conclusion, based on Mr Donnelly's affidavit, that the company had no assets.
The onus is, of course, on an applicant for leave under s 459S to place material before the Court on the question of its solvency and that onus must be discharged in the context of the overall financial position of the defendant company, given the presumption of insolvency established by s 459C(2)(a).[15]
[15] Re OCNR (Australia) Pty Ltd; Convergence Team Pty Ltd v OCNR (Australia) Pty Ltd [2014] QSC 102 [16]-[17] (Mullins J); and Hadley v BetHQ Pty Limited [2016] FCA 1263 [45] (Farrell J).
Accordingly, to the extent to which the defendant maintained its reliance on the application under s 459S, I considered it appropriate to dismiss that application.

Whether an order should be made to wind up the defendant?

The substituted plaintiff is required to demonstrate compliance with the requirements of s 459P and s 459Q, as well as the requirements of the Supreme Court (Corporations) (WA) Rules 2004.[16]
[16] See rules 5.4, 5.5 and 5.6 of the Supreme Court (Corporations) (WA) Rules 2004.
I was satisfied the substituted plaintiff has properly demonstrated compliance with these requirements. In particular, on the basis of the affidavits filed by the substituted plaintiff, I was satisfied the following matters have been demonstrated:
(a)that the original plaintiff served a statutory demand on the defendant on 4 April 2024, for the sum of $8,424.35, which the defendant failed to comply with and did not apply to set aside;
(b)that Prestige served a statutory demand on the defendant on 3 May 2024, requiring payment of $38,975.46, which the defendant failed to comply with and did not apply to set aside;
(c)that the basis of the underlying indebtedness to Prestige was a judgment obtained by that company against the defendant in the Magistrates Court on 19 May 2023 in the amount of $40,217.46, of which only $1,242 has been paid to date;
(d)that Prestige advertised the notice of application for winding up orders on the ASIC Insolvency and Deregistration Notice website on 28 February 2025;
(e)that the solicitors for Prestige served the supporting documents on the solicitors for the defendant on 4 March 2025; and
(f)the consent of a registered liquidator has been provided to the Court.
Importantly, having regard to the presumption of insolvency in s 459C(2)(a), and the absence of any countervailing evidence in this regard (as explained above), I was satisfied that the defendant company is insolvent.
Accordingly, I was satisfied the orders sought by the plaintiff should be made.

E. Conclusion and orders

At the conclusion of the hearing this morning, I ordered that:
1.Mr Andrew Paul Donnelly be given leave to appear at the hearing on 24 March 2025, in his capacity as sole director of Profounder Factory Direct Pty Ltd.
2. The application made on behalf of Profounder Factory Direct Pty Ltd by Mr Donnelly for an adjournment to adduce further evidence is refused.
3.The interlocutory application filed by Profounder Factory Direct Pty Ltd pursuant to s 459S of the Corporations Act 2001 (Cth) be dismissed.
4.Profounder Factory Direct Pty Ltd be wound up pursuant to s 459A of the Corporations Act 2001 (Cth) and the provisions of that Act.
5.Stephen John Michell of PCI Partner Pty Ltd be appointed liquidator of Profounder Factory Direct Pty Ltd for the purpose of winding up.
6.The plaintiff's costs of the proceedings (including any reserved costs) be assessed and reimbursed out of the property of the defendant in the winding up, pursuant to s 466(2) of the Corporations Act 2001 (Cth).
Finally, I note the plaintiff will need to ensure it complies with rule 5.11 of the Supreme Court (Corporations) (WA) Rules 2004.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
IR
Associate to the Hon Justice Lundberg
24 MARCH 2025