Re New Homes Shop (Vic) Pty Ltd
[2019] VSC 317
•17 May 2019
| 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 to solvency.
The accounts revealed that the defendant acted in a capacity as trustee for the NHS unit trust. The financial reports for the years ending 30 June 2017 through to and including the financial report for the period of seven months ending 31 January 2019 were, in effect, prepared on behalf of the trust and as a result of the proceeding. The full amount available for distribution to the unit holders was distributed in the year ending 30 June 2018. Accordingly, I required that the defendant demonstrate that it had available a realisable asset to meet the claims of creditors. During the course of the hearing, the bank statement for the NAB cheque account, being a current asset, was provided.
The proceeding was commenced on 2 April 2019 and substantially heard. Mr Fisher was cross-examined.
Without making any determinations, or hearing full argument as to solvency, the s 459S application or issues arising from the Estate Agents Act 1980 (Vic), I announced to the parties that I intended to, in effect, follow the course adopted by Weinberg J in Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd.[3] In Ace Contractors, having heard argument, Weinberg J at [58] said:
I propose to adjourn this matter for a period of fourteen days, until 15 June 1999. If before that date the respondent has paid to the applicant the sum of $112,106.04 (being the amount said to be due and payable to the applicant pursuant to the statutory demand), the application to have the company wound up will stand dismissed. If, on the other hand, that sum is not paid by that time, I will, on 15 June 1999, entertain an application that I order forthwith that the respondent be wound up.
[3][1999] FCA 728 (‘Ace Contractors’).
Weinberg J ordered that the respondent pay the applicant’s costs of the application including all reserved costs.
On 2 April 2019 I ordered, inter alia, that:
(a) the defendant pay the plaintiff $192,590 (being the undisputed amount claimed in the statutory demand served by the plaintiff of $177,590 plus a further undisputed amount of $15,000 that had subsequently become due as at 31 March 2019 and was not part of the claimed amount in the creditor’s statutory demand) by 4 pm on 9 April 2019 ...
(b) upon emailed confirmation from the solicitors for the parties that payment has been made in accordance with paragraph [a] of this order:
(i) the plaintiff’s application pursuant to s 459P of the Corporations Act2001 (Cth) (‘Act’) is dismissed; and
(ii) the defendant’s application pursuant to s 459S of the Act is dismissed.
I made further orders as to the filing of submissions on the question of costs and otherwise adjourned the further hearing of the proceeding unless confirmation of the payment was received in accordance with the order. That confirmation was received. Accordingly, the only issue left to resolve is the question of costs.
In Black v R & M Traders Pty Ltd,[4] I canvassed the Court’s broad discretion as to costs under s 24 of the Supreme Court Act 1986 (Vic) in circumstances where there had not been an adjudication on the merits, as in this proceeding. I will not set out those principles.
[4][2018] VSC 527.
I note that it was entirely reasonable for the plaintiff to file and serve this proceeding. There had been a failure to deal with the statutory demand thus leading to a deemed insolvency.
In a letter dated 12 February 2019, the defendant’s solicitors wrote to the plaintiff’s solicitors and set out ‘ ... our client has reviewed its internal records and documentation in relation to the services provided by your client during the period of his engagement with New Homes Shop and confirms the true amount owing to your client is $177,590. Our client is and remains ready, willing and able to pay that sum to your client’. Notwithstanding the admission that $177,590 was owing, that amount was not paid. On 27 February 2019, orders were made permitting the defendant to file and serve affidavits including as to solvency. That order also gave leave to the defendant to file any application pursuant to s 459S of the Act by 8 March 2019.
On 8 March 2019, the interlocutory process was filed and served together with the affidavits of Antonio De Pasquale and of Andrew Fisher.
From 8 March 2019, the plaintiff was on notice that it was possible that the Court would be satisfied that the defendant was solvent or that the s 459S application might be successful. However, in making the last observation, given that the amount admitted as due and owning was a large proportion of the debt claimed in the statutory demand, the s 459S application would seem to have been futile. More likely than not, the defendant needed to demonstrate that it was solvent.
I do not determine that the open offer made on 12 February 2019 ought to have been accepted. In addition to seeking that the sum which was admitted be accepted in satisfaction of all the plaintiff’s claims, such sum was offered in satisfaction of claims arising after the service of the statutory demand. In consideration of solvency on a winding up, the Court is entitled to take into account future liabilities in addition to the liabilities which arose subsequent to the service of the statutory demand.[5] As the defendant accepted that it owed a further $15,000 which is an ‘amount that has since become payable’,[6] it is appropriate that I disregard the service of that offer save to note the substantial amount being conceded as owing.
[5]Emanouel v Cube Footwear Pty Ltd (ACN 127 584 089) (2012) 92 ACSR 218.
[6]Defendant’s submissions (n 2) 10.
Accordingly, given the absence of any determination and the completion of full arguments, I will depart from the order made by Weinberg J in Ace Contractors and order that the defendant pay the plaintiff’s costs including reserved costs up to and including 15 March 2019. That date permits a reasonable time to consider the defendant’s material filed on 8 March 2019. Thereafter, there will be no order as to costs.
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