JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	23 November 2023
DATE OF JUDGMENT:	9 April 2024
CASE MAY BE CITED AS:	Re SSKT Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 147

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CORPORATIONS — Part 5.4 of Corporations Act 2001 (Cth) — Insolvency — s 459P — Application for winding up in insolvency relying on presumption of insolvency arising from non-compliance with a statutory demand — Defendant abandoned application for leave under s 459S of the Corporations Act 2001 (Cth) for leave to dispute debt subject of the statutory demand— Defendant trustee of unit trust with several unitholders — Defendant contended that it was solvent and relied upon unaudited accounts and report of insolvency practitioner — Evidence that unitholders supported the defendant, had advanced funds to defendant, undertook not to call for repayment of such loans for three years and to ‘quarantine’ funds sufficient to meet any judgment in respect of the plaintiff’s claim until the expiry occurring on the earliest of 3 specified events — Whether audited accounts are required in circumstances to demonstrate solvency of the defendant — Finding that defendant had established on balance of probabilities that it was solvent – Application for winding up order dismissed – International Cat Manufacturing & Anor v Rodrick & Ors (2013) 97 ACSR 200; Re Aquaqueen International Pty Ltd [2014] NSWSC 1645 applied.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr N Paterson, of counsel	Capree Lawyers
For the Defendant	Ms K Wangmann, of counsel	Macpherson Kelley

TABLE OF CONTENTS

Factual background........................................................................................................................... 4

Bulleye’s evidence......................................................................................................................... 4
SSKT’s evidence............................................................................................................................. 4
Mr Fettes‘ Solvency Report.......................................................................................................... 9
Bullseye’s submissions............................................................................................................... 20
SSKT’s submissions.................................................................................................................... 23

Legal principles................................................................................................................................ 32

Consideration.................................................................................................................................... 38

HIS HONOUR:

On 29 June 2023, the plaintiff, Bullseye Group Pty Ltd (ACN 633 847 533) (‘Bullseye’), filed an originating process in this Court seeking an order under s 459P of the Corporations Act 2001 (Cth) (‘the Act’) for the winding up in insolvency of the defendant, SSKT Pty Ltd (ACN 642 363 988) (‘SSKT’).[1]
[1]On 2 November 2023 I ordered pursuant to s 459R(2) of the Corporations Act 2001 (Cth) (‘the Act’) that the time for the determination of the application be extended to 30 April 2024.

As its ground for the application, Bullseye relied on the presumption of insolvency arising from SSKT’s failure to comply with a statutory demand for the payment of debt dated 19 May 2023 which claimed that SSKT was indebted to Bullseye for $55,000 (‘the demand’).

The demand was served on SSKT on 23 May 2023. No application was made to set aside the demand under s 459G of the Act within the statutory period which, pursuant to s 459F(2)(b), expired on 13 June 2023,…

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.

Continue reading Re SSKT Pty Ltd

Details

AGLC: Re SSKT Pty Ltd [2024] VSC 147
Case: [2024] VSC 147
Decision Date: 9 April 2024

CaseChat Overview and Summary

The case involves an application for winding up SSKT Pty Ltd in insolvency under section 459P of the Corporations Act 2001. The plaintiff sought a winding up order based on a presumption of insolvency arising from the defendant’s failure to comply with a statutory demand. The defendant, who was the trustee of a unit trust, abandoned its application for leave to dispute the debt. The defendant contended that it was solvent and submitted unaudited accounts and a report from an insolvency practitioner to support this claim. The unitholders had provided financial support, including loans that they had agreed not to call for repayment for three years and had pledged to use to meet any judgment against the defendant.

The legal issues before the court were whether the defendant needed to produce audited accounts to demonstrate solvency, and whether the defendant had established on the balance of probabilities that it was solvent. The court considered the nature of the evidence provided by the defendant, including the unaudited accounts and the support from the unitholders, and whether this was sufficient to rebut the presumption of insolvency. The court also looked at relevant case law, including International Cat Manufacturing & Anor v Rodrick & Ors and Re Aquaqueen International Pty Ltd.

The court found that the defendant had provided sufficient evidence to rebut the presumption of insolvency. The unaudited accounts and the financial support from the unitholders, which included a commitment to use quarantined funds to meet any judgment against the defendant, were sufficient to establish on the balance of probabilities that the defendant was solvent. The court dismissed the application for a winding up order, holding that the defendant had demonstrated solvency through the evidence presented.

As a result, the application for a winding up order was dismissed. The court found that the defendant had satisfied the necessary criteria to demonstrate solvency without the need for audited accounts, and that the presumption of insolvency had been rebutted by the evidence provided.

Orders