Re Dessco Pty Ltd - [2021] VSC 94

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2021 00079

JOHN PATRICK DAVEY

Plaintiff

DESSCO PTY LTD ACN 072 755 590

AS TRUSTEE FOR THE DESSMANN FAMILY TRUST

Defendant

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JUDICIAL REGISTRAR:	Irving JR
WHERE HELD:	Melbourne
DATE OF HEARING:	24 February 2021
DATE OF JUDGMENT:	26 February 2021 (ex tempore); revised 1 March 2021
CASE MAY BE CITED AS:	Re Dessco Pty Ltd
MEDIUM NEUTRAL CITATION:	[2021] VSC 94

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CORPORATIONS – Winding up – Application to adjourn hearing of an application for an order to wind up a company pursuant to Corporations Act 2001 (Cth) s 453Q – Where creditor opposes application on basis of eligibility – ‘best interests of the creditors’ – Eligibility criteria for restructuring – Where restructuring practitioner formed an estimate of the total liabilities of the company – Where creditor contends that the estimate of the restructuring practitioner is erroneous – Where director of company provided document called restructuring plan to creditors – Where creditor rejected plan – Whether company has proposed a restructuring plan – Corporations Act 2001 (Cth) Pt 5.3B – Corporations Regulations 2001 (Cth) regs 5.3B.03 and 5.3B.14 – Gorst Rural Supplies Pty Ltd v Glenroy (Lake Bolac) Pty Ltd [2012] VSC 60.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	John Davey
For the Defendant	Ron Silverstein

JUDICIAL REGISTRAR:

The Plaintiff, Mr Davey, has brought an application to wind up Dessco Pty Ltd (ACN 072 755 590) (‘Dessco’). Other than the grant of an extension of time for the lodgement of the ASIC notification, Mr Davey’s winding up application is ready to proceed.

Mr Davey’s application is based on Dessco’s failure to comply within the relevant statutory period with a statutory demand served by ordinary post on Dessco on 6 July 2020.

Mr Davey’s statutory demand is based on Magistrates’ Court orders made on 5 June 2020. The terms of those orders require Dessco to pay Mr Davey the sum of $81,748.29 and interest in the sum of $35,344.32. Relevantly, the orders also require the defendants (being Dessco and its director, Mr Dessmann) to ‘compensate the plaintiff Davey based on the Practitioners Remuneration Order (‘PRO’) in respect to the whole of [the] proceedings as it relates to each of them jointly and severally.’ The orders also make a Mr Elvin and Mr Silverstein jointly and severally liable for that compensation.

On 6 July 2020 Mr Davey provided Dessco with a Compensation Bill in the amount of $607,951.19 said to represent the compensation aspect of the Magistrates’ Court order. That bill is the subject of proceedings in the Costs Court and another Supreme Court proceeding.

On 15 February 2021, Dessco filed and served an interlocutory application in which it seeks:

(a) an adjournment of 50 days pursuant to s 453Q of the Corporations Act 2001 (Cth) (‘the Act’);

(b) costs be reserved; and

(c) liberty to apply.

On 17 February 2021 I adjourned the…

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.

Continue reading Re Dessco Pty Ltd

Details

AGLC: Re Dessco Pty Ltd [2021] VSC 94
Case: [2021] VSC 94
Decision Date: 26 February 2021 (ex tempore); revised 1 March 2021

CaseChat Overview and Summary

Dessco Pty Ltd was the subject of an application by a creditor to wind up the company under section 453Q of the Corporations Act 2001 (Cth). The application was opposed by the company and the application was subsequently adjourned pending the outcome of a restructuring proposal. The creditor challenged the adjournment, arguing that the company was ineligible for the relief provided by section 453Q. The matter was heard in the Federal Circuit Court of Australia.

The central legal issue was whether the company was eligible for the relief provided by section 453Q. The eligibility criteria included whether a restructuring plan had been proposed, and the court had to consider the evidence regarding the proposed restructuring plan. The court needed to determine if the company had proposed a restructuring plan as required by the Corporations Regulations 2001 (Cth). Additionally, the court had to assess whether the estimate of the total liabilities of the company was accurate, as this could affect the eligibility for restructuring.

The court found that the company had indeed proposed a restructuring plan by providing a document to the creditors. Although the creditor rejected the plan, the fact that the company had attempted to propose a restructuring plan was sufficient to meet the eligibility criteria. The court also noted that the estimate of the total liabilities of the company, although contested, was a matter that could be addressed in further proceedings. The court concluded that the company was eligible for the relief under section 453Q. Consequently, the adjournment of the winding-up application was upheld.

The court did not make any final orders in this particular decision. Instead, it determined that the adjournment of the winding-up application was appropriate given the eligibility of the company for restructuring. The matter was left pending further developments in the restructuring process.

Orders