On 13 February 2018, a sequestration order was made against Craig Browne-Kerr (‘Mr Browne-Kerr’) on the petition of the Deputy Commissioner of Taxation. Daniel Juratowitch (a registered liquidator and registered trustee) was appointed as trustee in bankruptcy (‘the Trustee in Bankruptcy’).
In the understandable belief[1] that Mr Browne-Kerr was the sole shareholder of The Thoroughbred Consultants Pty Ltd (‘TTC’), the Trustee in Bankruptcy believed that the entirety of the shares in TTC had vested in him pursuant to s 58(1) of the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’).
[1]A company search of TTC obtained by the Trustee in Bankruptcy on 13 February 2018 showed that Mr Browne-Kerr was the sole shareholder and director of TCC. It also showed that TCC had been deregistered on 26 June 2016. A further company search obtained by the Trustee in Bankruptcy on 20 March 2018 showed the same information but that the company had been re-registered.
On 13 June 2018, the Trustee in Bankruptcy, as the purported sole…
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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AGLC
Re The Thoroughbred Consultants Pty Ltd [2021] VSC 627
Case
[2021] VSC 627
Decision Date
CaseChat Overview and Summary
The case of Re Thoroughbred Consultants Pty Ltd was before the Supreme Court of Victoria. The plaintiff, Thoroughbred Consultants Pty Ltd, sought to terminate a winding up order of its company under section 482 of the Corporations Act 2001 (Cth). The winding up had been initiated on grounds other than insolvency, and the plaintiff contested the legality of the winding up process, including the compliance with the procedural requirements of the Corporations Act 2001 (Cth). Additionally, the plaintiff raised issues concerning the enforceability of certain provisions of the Duties Act 2000 (Vic) and whether these provisions should preclude the plaintiff from proving the transfer of shares or if they constituted a contravention that disentitles the plaintiff from proving the transfer of shares. The case also examined whether section 1322 of the Corporations Act 2001 (Cth) could override any irregularities in the winding up process.
The court was tasked with determining several legal issues. Firstly, it had to decide whether an applicant seeking to terminate a winding up on non-insolvency grounds must prove solvency, and if so, what standard of proof applies. Secondly, the court had to assess whether the winding up complied with the Corporations Act 2001 (Cth) procedures, particularly regarding the compliance with section 465(1) of the Act. Thirdly, the court examined whether sections 272(1) and 270(1)(b) of the Duties Act 2000 (Vic) precluded the plaintiff from proving the transfer of shares. Lastly, the court considered whether section 1322 of the Corporations Act 2001 (Cth) could validate the winding up despite procedural irregularities.
In its decision, the court found that the onus does not lie on the applicant to prove solvency in a non-insolvency winding up, as the presumption of solvency is not displaced. The court held that the winding up did not comply with the procedural requirements of the Corporations Act 2001 (Cth), particularly in relation to notice requirements. Regarding the Duties Act 2000 (Vic), the court found that section 272(1) did not preclude the plaintiff from proving the transfer of shares, and that a contravention of section 270(1)(b) did not disentitle the plaintiff from proving the transfer of shares. The court concluded that section 1322 of the Corporations Act 2001 (Cth) could not override the irregularities in the winding up process.
The court ordered the winding up of Thoroughbred Consultants Pty Ltd to be terminated, and that the company's assets be returned to the company. The court also directed that any further proceedings regarding the company's affairs be conducted in accordance with the Corporations Act 2001 (Cth) and the Duties Act 2000 (Vic). The decision emphasised the importance of procedural compliance in winding up and the limited scope of section 1322 in validating such processes.