Re LJAC Energy Pty Ltd (in liq) - [2013] NSWSC 1231

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of LJAC Energy Pty Ltd (In Liquidation) [2013] NSWSC 1231
Hearing dates: 22, 23 August 2013
Decision date: 23 August 2013
Jurisdiction: Equity Division
Before: Lindsay J
Decision:
Order, on terms, that the winding up of the defendant company be terminated

Catchwords: CORPORATIONS - Winding up - Termination of winding up order - Factors to be considered - Public interest - Solvency - Interests of present and future creditors - Order for termination made on terms - Corporations Act 2001 (Cth), s 482
Legislation Cited: Corporations Act 2001 Cth, s 482; 95A(1), 95A(2)
Supreme Court (Corporations) Rules 1999 NSW, Rule 2.8
Cases Cited: O'Sullivan v Farrer (1989) 168 CLR 210 at 216, citing Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 493 at 505
In the matter of 311 Hume Highway Liverpool Fund Pty Ltd (In Liquidation) [2013] NSWSC 465 (1 May 2013), esp paras 4-8
Texts Cited: -
Category: Principal judgment
Parties: Lila Hou Yuk Chan (Plaintiff)
LJAC Energy Pty Ltd (In Liquidation) (Defendant)
Representation: AG Martin (Plaintiff)
Cam Ly & Co Solicitors (Plaintiff)
Champion Legal Solicitors (Defendant)

File Number(s): 2013/00232172

Judgment

By Originating Process filed on 31 July 2013 Lila Hou Yuk Chan (the plaintiff) applies for an order that the winding up of LJAC Energy Pty Ltd (in liquidation) ("the company") be terminated under s 482 of the Corporations Act 2001 Cth.

So far as material, s 482 is in the following terms:

"SECT 482

Power to stay or terminate winding up

(1) At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order.

(1A) An application may be made by:

(a) in any case - the liquidator, or a creditor or contributory, of the company: ...

(b) ...

(c) ...

(2) On such an application, the Court may, before making an order, direct the liquidator to give a report with respect to a relevant fact or matter.

(2A) ..."

The plaintiff has standing to apply for a termination order, by virtue of s 482(1A)(a), because she is a creditor/contributory of the company. The term "contributory" is defined by s 9, relevantly, to include a shareholder. The plaintiff holds all the shares (1,000 in toto) in the company. She is also the sole director of the company.

The company was incorporated on 8 August 2008. The plaintiff has been a shareholder and director of the company since that time. She is, and has been since its incorporation, the principal - the alter ego - of the company.

The business of the company mirrors the character of its principal asset: land and improvements in Goulburn, New South Wales, from which the company derives rental income and which the plaintiff, through the company as her corporate vehicle, has been developing.

The company has substantial assets;…

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: [2013] NSWSC 1231
Decision Date: 23 August 2013

CaseChat Overview and Summary

In the case of Re LJAC Energy Pty Ltd (in liq), the liquidator sought an order for the winding up of the company to be terminated. The dispute involved the consideration of various factors, including the public interest and the solvency of the company, as well as the interests of present and future creditors. The court was tasked with determining whether the winding up order should be terminated and, if so, whether any terms should be imposed.

The legal issues before the court included the statutory criteria outlined in section 482 of the Corporations Act 2001 (Cth), which sets out the factors the court must consider when deciding whether to terminate a winding up. The court was required to weigh the public interest in the cessation of the winding up against the potential prejudice to creditors and other stakeholders. Additionally, the court had to assess the solvency of the company and whether it was in the best interests of creditors for the winding up to continue or be terminated.

In delivering its judgment, the court carefully considered the evidence presented regarding the company's financial position and the implications of continuing the winding up for its creditors. The court determined that it was in the public interest to terminate the winding up, taking into account the company's solvency and the interests of both present and future creditors. The court concluded that an order for termination should be made on specified terms, ensuring that the rights of creditors were protected and that the winding up could be resumed if necessary. The court emphasised the importance of balancing the interests of all parties involved and the need for a fair and equitable outcome.

The court made an order for the termination of the winding up of the company on the terms set out in the judgment. These terms included provisions for the preservation of the company's assets and the continuation of certain legal proceedings. The court's decision was based on a comprehensive analysis of the relevant statutory criteria and the specific circumstances of the case, ensuring that the interests of all stakeholders were properly considered.

Orders