Re Sails Corp Pty Ltd - [2021] NSWSC 1046

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Sails Corp Pty Ltd [2021] NSWSC 1046
Hearing dates: 18 August 2021
Date of orders: 18 August 2021
Decision date: 18 August 2021
Jurisdiction: Equity - Corporations List
Before: Black J
Decision:
Order that the Defendant be wound up in insolvency and liquidators be appointed. Costs of the application to be costs in the winding up.

Catchwords:
CORPORATIONS — Winding up — Presumption of insolvency arising from unsatisfied creditor’s statutory demand — Contention that company was solvent — Where defendant relies upon amount in bank account to establish solvency — Where no evidence that amount arose other than as loan to company.

Legislation Cited:
- Corporations Act 2001 (Cth), ss 95A, 286, 459A, 459C, 459R

Cases Cited:
- Bank of Western Australia Ltd v Scotia Downs Pty Ltd (2011) 87 ACSR 42; [2011] FCA 1302
- Commonwealth Broadcasting Corp Pty Ltd v Pacific Mobile Phones Pty Ltd (2008) 219 FLR 422; [2008] QSC 210
- Deputy Commissioner of Taxation v TD Preece Pty Ltd [2013] FCA 1365
- Quin v Vlahos [2021] VSCA 205
- Re Leasing Holdings Pty Ltd (formerly Charlie Lovett Pty Ltd) [2015] NSWSC 771
- Re Universal Consultants Group Pty Ltd [2016] NSWSC 1508
- TQM Design and Construct Pty Ltd v Golden Plantation Pty Ltd [2011] NSWSC 500

Category: Principal judgment
Parties: Jean Pierre Christian (Plaintiff)
Sails Corp Pty Ltd (Defendant)
Representation:
Counsel:
D Allen (Plaintiff)
N Bailey (Defendant)
Solicitors:
Edmond Khoury Solicitors (Plaintiff)
Solve Legal Services (Defendant)

File Number(s): 2021/56299

Judgment – ex tempore (Revised 18 August 2021)

Nature of the application

By Originating Process filed on 27 February 2021, the Plaintiff, Mr Jean Christian, seeks an order for the winding up of Sails Corp Pty Ltd ("Company") and an order that a liquidator be appointed. The application relies on a presumption of insolvency arising from a creditor's statutory demand dated 3 January 2021 (“Demand”). The Demand claimed the sum of $92,947, being the balance of an amount due to Mr Christian pursuant to a judgment entered by the Local Court of New South Wales on 11 December 2020. There has been reference, in the course of submissions, to pending applications to set aside or vary that judgment, but it is notable that no application to set aside the Demand was brought, nor has that judgment been varied in the eight months or so in which it has been on foot, and it continues to take full effect as a judgment of the Local Court.
The Company in turn filed Grounds of Opposition to the winding up application on 24 March 2021 which contended that the winding up application was opposed on the basis that the Company was solvent; the winding up application was liable to be dismissed as an abuse of the Court's process; and the debt the subject of the Demand was disputed and that was material to proving the Company was solvent. I will address the first…

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.

Keep reading for free

Create a free CaseChat account to read Re Sails Corp Pty Ltd and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2021] NSWSC 1046
Decision Date: 18 August 2021

CaseChat Overview and Summary

The case of Re Sails Corp Pty Ltd involved a winding up petition brought against Sails Corp, with the petitioner being an unsatisfied creditor. The petitioner alleged that the company was insolvent, triggering the presumption of insolvency under the relevant statute. The dispute was heard in the Federal Circuit Court of Australia. The central issue for the court was whether Sails Corp was insolvent at the relevant time, as claimed by the petitioner, or whether the company could demonstrate that it was solvent.

The court considered the evidence provided by Sails Corp to support its solvency, including the presence of funds in a bank account. However, the court found that the company had not provided any evidence to demonstrate that the funds in the account were derived from sources other than a loan to the company. The petitioner argued that the funds could simply be a loan, which would not negate the presumption of insolvency arising from the unsatisfied statutory demand. The court needed to determine whether the company had successfully rebutted the presumption of insolvency.

After reviewing the evidence, the court concluded that Sails Corp had failed to prove that it was solvent. The funds in the bank account were treated as a loan, which did not establish solvency in the eyes of the law. Consequently, the presumption of insolvency remained unrebutted. The court found in favour of the petitioner, affirming the presumption of insolvency. The final order of the court was that Sails Corp Pty Ltd be wound up.

Orders