Re MSB Capital Holdings Pty Ltd - [2020] VSC 775

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

CORPORATIONS LIST

S ECI 2020 03480

IN THE MATTER of MSB CAPITAL HOLDINGS PTY LTD (ACN 630 039 646)

BETWEEN:

HENCLO INVESTMENTS PTY LTD (ACN 100 550 650)	Plaintiff
v
MSB CAPITAL HOLDINGS PTY LTD (ACN 630 039 646)	Defendant

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JUDICIAL REGISTRAR:	Matthews JR
WHERE HELD:	Melbourne
DATE OF HEARING:	11 November 2020
DATE OF JUDGMENT:	25 November 2020
CASE MAY BE CITED AS:	Re MSB Capital Holdings Pty Ltd
MEDIUM NEUTRAL CITATION:	[2020] VSC 775

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CORPORATIONS – Application to wind up in insolvency – Plaintiff not relying on an unmet statutory demand – Proof of actual insolvency required – Proceeding not defended – Corporations Act 2001 (Cth), ss 459A, 459P – Cornhill Insurance plc v Improvement Services Ltd [1986] 1WLR 114 – Re Taylor’s Industrial Flooring Ltd (1990) 8 ACLC 3081 – In the matter of Plutus Payroll Pty Limited & others [2017] NSWSC 1360 – FP Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd (1993) 12 ACSR 136 – Actual insolvency not established – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D J Williams QC	Piper Alderman
No appearance by or on behalf of the Defendant

JUDICIAL REGISTRAR:

Introduction

By originating process filed 1 September 2020, the plaintiff seeks orders pursuant to ss 459A and 459P of the Corporations Act 2001 (Cth) (‘Act’) that the defendant be wound up in insolvency.[1] The application was heard on 11 November 2020 and the decision was reserved.
[1]By orders made on 8 October 2020 on the Court’s own motion, the proceeding was referred to me for hearing and determination, pursuant to r 84.04 of the Supreme Court (General Civil Procedure) Rules 2015 and r 16B.2 of the Supreme Court (Corporations) Rules 2013.

The plaintiff is a creditor of the defendant due to a judgment debt in its favour, which will be discussed below. The plaintiff relies on the following in support of its application:

(a) affidavit of Stephen Sedgman sworn 28 August 2020 (‘Sedgman Affidavit’). Mr Sedgman is a director of the plaintiff;

(b) liquidators’ consent to act and schedule of rates on behalf of Nicholas Giasoumi and Shane Leslie Deane dated 29 July 2020;

(c) affidavit of Jessica Minter sworn 17 September 2020 as to the publication of the notice of winding up application on the ASIC insolvency notices website (‘First Minter Affidavit’). Ms Minter is a solicitor employed by Piper Alderman, the plaintiff’s solicitors in this proceeding;

(d) affidavit of Ms Minter sworn 21 September 2020 as to the lodgement with ASIC of the notice of winding up (‘Second Minter Affidavit’);

(e) affidavit of Ms Minter sworn 29 September 2020 (‘Third Minter Affidavit’); and

(f) affidavit of Ms Minter sworn 30 September 2020 (‘Fourth Minter Affidavit’).

In addition, the plaintiff relies on a number of affidavits of service, which will be referred to when the need arises.

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: [2020] VSC 775
Decision Date: 25 November 2020

CaseChat Overview and Summary

In the matter of MSB Capital Holdings Pty Ltd, the applicant, the Federal Court was presented with an application to wind up the respondent corporation in insolvency. The applicant did not rely on an unmet statutory demand but instead sought to establish the respondent’s actual insolvency. The application proceeded without a defence from the respondent, leading to the court examining the necessary criteria for determining actual insolvency under the Corporations Act 2001 (Cth).

The central legal issue before the court was whether the applicant had sufficiently demonstrated that the respondent was actually insolvent. The court considered the relevant statutory provisions, specifically sections 459A and 459P of the Corporations Act, and applied the legal principles established in cases such as Cornhill Insurance plc v Improvement Services Ltd, Re Taylor’s Industrial Flooring Ltd, In the matter of Plutus Payroll Pty Limited & others, and FP Leonard Advertising Pty Ltd v KD Travel Service Pty Ltd. These authorities underline the necessity for clear and compelling evidence to establish actual insolvency, particularly in the absence of a defence from the respondent.

The court found that the applicant had not provided adequate evidence to meet the statutory threshold for actual insolvency. The applicant’s submissions, which were not countered by any defence from the respondent, did not sufficiently demonstrate that the respondent was unable to pay its debts as they fell due. As a result, the application was dismissed, and the court declined to wind up the respondent on the basis of actual insolvency. The decision underscores the stringent requirements for proving insolvency in such proceedings and the importance of robust evidence in supporting an application for winding up.

Orders