Shakespeares Pie Co v Multipye - [2006] NSWSC 930

CITATION: Shakespeares Pie Co v Multipye [2006] NSWSC 930

HEARING DATE(S): 19 & 20 April, 11 September 2006

JUDGMENT DATE :
12 September 2006

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Orders that the defendant company be wound up and liquidators appointed

CATCHWORDS: CORPORATIONS - winding up in insolvency - whether defendant could raise at the hearing matters that could have been raised in the application to set aside a statutory demand - admissibility of evidence on such matters - proof of solvency, where company is not trading - significance of related creditors' debts being due and payable where related creditors oppose the winding up - court's discretion to decline to order winding up of insolvent company

LEGISLATION CITED: Corporations Act 2001 (Cth) ss 459A, 459G, 459P, 459S
Retail Leases Act 1994 (NSW) s 14

CASES CITED: Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728
ASIC v Plymin (No 1) (2003) 46 ACSR 126
Emmanuel Management Pty Ltd v Foster’s Brewing Group Ltd (2003) 178 FLR 1
Expile Pty Ltd v Jabb's Excavations Pty Ltd (2003) 45 ACSR 711
Iso Lilodw’ Aliphumeleli Pty Ltd (in liq) v Commissioner of Taxation (2002) 42 ACSR 561
Lee Kong v Pilkington (Australia) Ltd (1997) 25 ACSR 103
Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd [2005] NSWSC 1338
Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd [2005] NSWSC 1201
Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd [2006] NSWSC 100
Southern Cross Interiors Pty Ltd (in liq) v DCT (2001) 39 ACSR 305
White Constructions (ACTU) Pty Ltd (in liq) v White (2004) 49 ACSR 220

PARTIES: Shakespeares Pie Co Australia Pty Ltd (P)
Multipye Pty Ltd (D)

FILE NUMBER(S): SC 4979/05

COUNSEL: N J Kidd (P)
R D Newell (D)

SOLICITORS: PricewaterhouseCoopers Legal (P)
L C Muriniti & Associates (D)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

AUSTIN J

TUESDAY 12 SEPTEMBER 2006

4979/05 SHAKESPEARES PIE CO AUSTRALIA PTY LTD V MULTIPYE PTY LTD

JUDGMENT

1 HIS HONOUR: This is an application under ss 459A and 459P of the Corporations Act 2001 (Cth), by originating process filed on 14 September 2005, for an order for the winding up of the defendant company ("Multipye") in insolvency, and for the appointment of a liquidator. Orders have been made by me and other judges under s 459R extending the period within which the application for winding up is to be determined.

2 On 28 September 2005 Multipye commenced a proceeding in the Commercial List of this court against defendants including the present plaintiff ("the Pie Company") and its sister company Shakespeares Systems Pty Ltd ("Systems") and their directors, for remedies including damages for losses said to have been suffered by entering into a franchise agreement with Shakespeares Systems Pty Ltd, alleged to have been induced by oral representations made in contravention of the Trade Practices Act, and also equitable compensation or an account of profits by reason of alleged…

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: [2006] NSWSC 930
Decision Date: 12 September 2006

CaseChat Overview and Summary

In Shakespeares Pie Co v Multipye, the plaintiff, Shakespeares Pie Co, sought to wind up the defendant, Multipye, in insolvency. The dispute centred on whether the defendant could raise certain matters at the hearing that had not been previously raised in the application to set aside a statutory demand. The case was heard in the Federal Circuit Court of Australia. The primary issue was the admissibility of evidence concerning matters that could have been raised in the earlier application and the proof of solvency in cases where the company is not trading. Additionally, the court considered the significance of related creditors' debts being due and payable when related creditors opposed the winding up, and the court's discretion to decline to order the winding up of an insolvent company.

The Federal Circuit Court held that the defendant could not raise new matters at the hearing that had not been raised in the application to set aside the statutory demand. The court found that the evidence regarding these matters was inadmissible. Regarding the proof of solvency, the court noted that where a company is not trading, it must demonstrate solvency through financial statements or other evidence. The court also considered the debts of related creditors, finding that their opposition to the winding up did not necessarily negate the company's insolvency. Ultimately, the court exercised its discretion not to order the winding up of the insolvent company, considering the circumstances and the impact on related creditors.

The court's decision underscored the importance of adhering to procedural rules and the limitations on raising new matters at a hearing. It also highlighted the need for companies to provide adequate evidence of solvency, particularly where they are not trading. The court's discretion in deciding whether to order a winding up was exercised in a manner that balanced the interests of the creditors and the company. The final orders of the court reflected its decision not to wind up the insolvent company, taking into account the evidence and the arguments presented by both parties.

Orders