Re Cube Footwear Pty Ltd

Case [2012] QSC 398

SUPREME COURT OF QUEENSLAND

CITATION:

Re: Cube Footwear Pty Ltd [2012] QSC 398

PARTIES:

KARINO EMANOUEL
(applicant)
v
CUBE FOOTWEAR PTY LTD ACN 127 584 089

(respondent)

FILE NO:

BS6791/12

DIVISION:

Trial

PROCEEDING:

Application

DELIVERED ON:

14 December 2012

DELIVERED AT:

Brisbane

HEARING DATES:

17 & 25 October 2012

JUDGE:

Jackson J

ORDERS:

1.   The application is dismissed.

2.   The applicant pay the respondent’s cost of the proceeding to be assessed.

CATCHWORDS:

CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – WHAT CONSTITUTES INSOLVENCY – PROOF OF SOLVENCY – where the applicant applies to wind up the company on the ground of insolvency – where the respondent is at hearing date able to pay debts as and when they are falling due and is trading profitably yet its total (current and non-current) liabilities significantly exceed its total assets – where the respondent has two debts to related party creditors which it would be unable to pay if due – where the creditors have agreed to defer the time for payment of the debts when they become payable if necessary – extent debts payable at a future date should be taken into account in assessing solvency under s 95A of the Corporations Act 2001 (Cth) – whether the company by the support of its creditors can discharge the onus of proving that it is solvent

Bankruptcy Act 1924 (Cth), s 95
Corporations Act 2001 (Cth), s95A, s 459A, s 459C, s 459D, s 459E, s 459F, s 459G, s 459P, s 459S, s 460, s 461, s462

Companies Act 1863 (Qld), s 79, s 78

Companies Act of 1931 (Qld), s 173

Companies Act of 1961 (Qld), s 364

Companies (Queensland) Code, s 364

Companies Act Amendment Act of 1913 (Qld), s5

Insolvency Act of 1874 (Qld), ss 107-109

Service and Execution Process Act 1992 (Cth)

Life Assurance Companies Act of 1871 (UK), s 21

Companies (Consolidation) Act 1908 (UK), s 130

Australian Securities and Investments Commission v Plymin (No 1) (2003) 46 ACSR 126, referred
Bank of Australasia v Hall (1907) 4 CLR 1514, cited
Bell Group Ltd (in liq) v Westpac Banking Corporation (No 9) (2008) 39 WAR 1, cited
Edwards v Attorney-General (NSW) [2004] NSWCA 272, considered
Emmanuel Management Pty Ltd v Foster's Brewing Group Ltd [2003] QSC 205, referred
Georgiou Building Pty ltd v Perrinepod Pty Ltd [2012] WASC 72, considered
Insurance Commissioner v Associated Dominions Assurance Society Pty Ltd (1953) 89 CLR 78, referred
Leslie v Howship (1997) 15 ACLC 459, considered
Lewis (as liquidator) Doran Constructions Pty Ltd v Doran (2005) 54 ASCR 410, considered
Melbase Corporation Pty Ltd v Segenhoe Ltd (1995) 17 ACSR 187, referred
Mulherin v Bank of Western Australia Ltd [2006] QCA 175, considered
New Cap Re Insurance Ltd (in liq) v Grant (2008) 221 FLR 164, cited
Pereira v Farace 413 F.3d 330, 2005, referred
Quick v Stoland Pty Ltd 29 ACSR 130, considered

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AGLC
Re: Cube Footwear Pty Ltd [2012] QSC 398
Case
[2012] QSC 398
Decision Date

CaseChat Overview and Summary

The case of Re Cube Footwear Pty Ltd involved the applicant's application to wind up the respondent company on the basis of insolvency. The matter was heard in the Supreme Court of Queensland. The applicant alleged that the company was insolvent, while the respondent argued that it was solvent and capable of paying its debts as they fell due. The respondent also pointed out that it was trading profitably at the time of the hearing.

The court was tasked with determining the appropriate criteria for assessing a company's solvency under section 95A of the Corporations Act 2001 (Cth), particularly when considering debts payable in the future. The court had to decide whether the company could rely on the support of its creditors to discharge the onus of proving its solvency. The respondent had two debts to related party creditors that it would be unable to pay if they fell due, but the creditors had agreed to defer the payment if necessary.

The court found that the respondent, despite having liabilities exceeding its assets, was solvent because it had the ability to pay its debts as they fell due and was trading profitably. The court also considered that the debts to related party creditors could be deferred if necessary, and thus did not need to be taken into account in the assessment of solvency. The court held that the respondent had discharged the onus of proving its solvency by the support of its creditors, and therefore dismissed the application.

The court ordered that the application be dismissed and that the applicant pay the respondent's costs of the proceeding, to be assessed.

Orders

Orders of the court

1. The application is dismissed.

2. The applicant pay the respondent’s cost of the proceeding to be assessed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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