Re Parkway One Pty Ltd (in liq) - [2019] NSWSC 1495

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Parkway One Pty Limited (in liquidation) [2019] NSWSC 1495
Hearing dates: 28 October 2019
Decision date: 01 November 2019
Jurisdiction: Equity - Corporations List
Before: Rees J
Decision:
1. Dismiss the Interlocutory Process filed on 27 August 2019.
2. Order the applicant to pay the costs of the Interlocutory Process.

Catchwords:
CORPORATIONS — Winding up — Termination — Company wound up in insolvency — Whether solvency demonstrated — Substantial real property assets — Unverified cash flow projections — Liquidator unable to reach concluded view on books and records provided — Payments of rent unsupported by primary documents — Failure to pay trade creditors when due — Solvency not adequately supported — Application dismissed.
CORPORATIONS — Winding up — Termination — Commercial morality — Relevant factors — Inadequate explanation of breaches or changes to be made — Failure of director to cooperate with liquidator of another company — History of non-payment of trade creditors — Failure to keep proper books and records — Significant and unexplained cash transactions — Not appropriate to terminate winding up — Application dismissed.
Legislation Cited: Corporations Act 2001 (Cth), ss 9, 198G, 286, 482, 530A, Insolvency Practice Schedule (Corporations), s 90-15
Supreme Court (Corporations) Rules 1999 (NSW), r 2.8
Trade Practices Act 1974 (Cth)
Cases Cited: Benedict v Olde; in the matter of ATS (Asia Pacific) Pty Ltd [2011] FCA 1008
Deputy Commissioner of Taxation v Sydney Concrete Steel Fixing Pty Limited (1999) 17 ACLC 972; [1999] NSWSC 494
Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163
Gematech Pty Ltd v Bardi Investments Pty Ltd [2008] NSWSC 196
In re Telescriptor Syndicate Limited [1903] 2 Ch 174
In the matter of 311 Hume Highway Liverpool Fund Pty Ltd (in liq) (2013) 93 ACSR 683; [2013] NSWSC 465
In the matter of Charterarm Investments Pty Ltd [2011] VSC 577
In the matter of CNL Transport Pty Ltd (in liq); Hunt v Smith [2017] NSWSC 291
In the matter of Enviro Energy Australia Pty Ltd (in liq) [2010] NSWSC 1222
In the matter of Kitchen Dimensions Pty Ltd (in liq) [2012] VSC 280
In the matter of LL Nominees Pty Ltd (in liq) [2009] FCA 1144
In the matter of Modena Imports Pty Ltd (in liq) [2010] NSWSC 739
In the matter of MWM Sydney Pty Ltd (in liquidation) [2016] NSWSC 688
In the matter of R.A.N.S. Pty Ltd (in liq) [2012] VSC 480
In the matter of Recycling Glass Pty Limited (ACN 001 332 654) [2014] NSWSC 439
In the Matter of SNL Group Pty Ltd (in liq); Su v SNL Group Pty Ltd (in liq) [2010] NSWSC 797
Metledge v Bambakit Pty Ltd [2005] NSWSC 160
Owners Strata Plan 70294 v LNL Global enterprises Pty Ltd (2006) 60 ACSR 646; [2006] NSWSC 1386
QBE Workers’ Compensation Pty Ltd v P Russell Enterprises Pty Ltd [2005] NSWSC 1128
Re Data Homes Pty Limited (in liq)…

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] NSWSC 1495
Decision Date: 01 November 2019

CaseChat Overview and Summary

Parkway One Pty Ltd was wound up in insolvency, with the liquidator subsequently applying to the court for termination of the winding up. The company, which held substantial real property assets, argued that it had demonstrated solvency. The primary legal issue for the court was whether the liquidator could prove that the company was insolvent at the time of the winding up, and if the winding up should be terminated on the basis of commercial morality. The court had to consider the company's cash flow projections, the authenticity of its financial records, and the conduct of its directors, particularly in relation to other companies.

The court found that the liquidator was unable to reach a concluded view on the solvency of the company due to unverified cash flow projections and payments of rent unsupported by primary documents. The company's failure to pay trade creditors when due and the lack of cooperation from the director in other matters further undermined the company's argument. Additionally, there were significant and unexplained cash transactions, and the director had a history of non-payment of trade creditors and failure to keep proper books and records. The court concluded that the company had not adequately supported its claim of solvency and that the director's conduct did not justify terminating the winding up.

The court dismissed the liquidator's application to terminate the winding up. The decision highlighted the importance of maintaining proper books and records, meeting financial obligations to creditors, and demonstrating solvency in the context of corporate insolvency. The company's failure to provide adequate evidence and the director's lack of cooperation played a critical role in the court's decision not to terminate the winding up.

No further orders were made by the court.

Orders