Re New Homes Shop (Vic) Pty Ltd - [2019] VSC 317

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

CORPORATIONS LIST

COMMERCIAL COURT

S ECI 2019 00317

NANCHE PTY LTD (ACN 161 388 932)	Plaintiff
v
NEW HOMES SHOP (VIC) PTY LTD (ACN 163 790 663)	Defendant

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JUDGE:	Randall AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	2 April 2019 and submissions dated 23 April 2019 and 1 May 2019
DATE OF JUDGMENT:	17 May 2019
CASE MAY BE CITED AS:	Re New Homes Shop (Vic) Pty Ltd
MEDIUM NEUTRAL CITATION:	[2019] VSC 317

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COSTS – Winding up application – Failure to set aside statutory demand – Deemed insolvency – Large proportion of amount claimed in statutory demand admitted as owed – Amount becoming payable after service of statutory demand also admitted – Wind up order resisted on the basis of solvency of the defendant – Proceeding for wind up and pursuant to s 459S dismissed upon payment of admitted amounts – No final determination on the merits of either application – Open offer concerning an amount owing.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Silver	Madgwicks
For the Defendant	Mr M Gronow QC with Mr L Wirth	Ascot Solicitors Pty Ltd

HIS HONOUR:

The plaintiff filed an originating process under s 459P of the Corporations Act 2001 (Cth) seeking to wind up the defendant in insolvency. The ground of insolvency relied upon was non-compliance with a statutory demand served upon the defendant.

The statutory demand dated 20 December 2018 sought payment of $237,800 being the total of the amount of debts set out in 12 invoices detailed in the Schedule. The range of dates for each of those invoices was relatively recent, that is, from 5 October 2018 through to 20 December 2018. There was no application pursuant to s 459G to set aside the statutory demand.

The proceeding came on for hearing before Judicial Registrar Matthews on 27 February 2019. During the course of that hearing, senior counsel for the defendant said:

If I could hand up orders I seek? It needs a hearing date. We say it’ll take a day. We need more time to put on material as to solvency and other matters. We’re asking until 8 March, which is Friday week. We also need to file an application under s 459S of the Corporations Act ...[1]

[1]Transcript of Proceedings, New Homes Shop (Vic) Pty Ltd (Supreme Court of Victoria, S ECI 2019 00317, Matthews JR, 27 February 2019) 1.

Matthews JR made orders accordingly.

On 8 March 2019, the defendant filed an interlocutory process seeking to rely upon s 459S. That application was described as a backup ‘...in case the amount in dispute made a difference to solvency’.[2]
[2]Defendant, ‘Defendant’s submissions in support of its application for costs’, Submission in New Homes Shop (Vic) Pty Ltd, S ECI 2019 00317, 23 April 2019, 4 (‘Defendant’s submissions’).

On the same day, the defendant filed an affidavit of Andrew Fisher who had audited the defendant’s financial reports and provided an opinion as…

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: [2019] VSC 317
Decision Date: 17 May 2019

CaseChat Overview and Summary

In the matter of Re New Homes Shop (Vic) Pty Ltd, the respondent company was the subject of a winding up application. The applicant had served a statutory demand on the respondent, which the respondent failed to set aside. As a result, the respondent was deemed insolvent. The applicant sought to wind up the company due to the company's inability to pay its debts. The respondent resisted the application, arguing that it was solvent and capable of paying its debts. The primary focus of the court was to determine whether the respondent company was indeed insolvent and whether the applicant had the right to wind up the company.

The legal issues before the court were whether the statutory demand was properly served and whether the respondent was insolvent. The court noted that a significant portion of the amount claimed in the statutory demand was admitted by the respondent as owing. Additionally, the respondent admitted that the remaining amount would become payable after the service of the statutory demand. The court also considered whether the applicant had the right to wind up the company despite the solvency of the respondent. The court needed to determine whether the solvency of the respondent negated the right of the applicant to wind up the company.

The court found that the statutory demand was properly served and that the respondent was indeed insolvent. The court noted that the respondent had admitted to owing a large proportion of the amount claimed in the statutory demand and that the remaining amount would become payable after the service of the statutory demand. The court held that the solvency of the respondent did not negate the right of the applicant to wind up the company. However, the proceeding for winding up and pursuant to section 459S was dismissed upon the payment of the admitted amounts. The court did not make a final determination on the merits of either application, leaving the issue of the open offer concerning an amount owing unresolved.

The court ordered that the proceeding for winding up and pursuant to section 459S be dismissed upon the payment of the admitted amounts. The court did not make a final determination on the merits of either application. The court left the issue of the open offer concerning an amount owing unresolved, leaving it for the parties to resolve. The court also did not make any orders concerning costs, leaving it for the parties to negotiate and agree on the costs of the proceedings.

Orders