State Bank of New South Wales v Australian Securities Commission

[1995] FCA 917

IN THE FEDERAL COURT OF AUSTRALIA                  ) 
  )  
NEW SOUTH WALES DISTRICT REGISTRY                )  NG 3243 of 1995
  )     
GENERAL DIVISION  )     

BETWEEN:               STATE BANK OF NEW SOUTH WALES

Applicant

AUSTRALIAN SECURITIES COMMISSION

First Respondent        

AND:  NIKUTU PTY LIMITED

Second Respondent

Coram:           Davies J.
Place:              Sydney
Date:              20 October 1995

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. Nikutu Pty Limited be wound up by this Court under the provisions of the Corporations Law.

1. David Lombe of Deloitte Touche Tohmatsu of 255 George Street, Sydney, an official liquidator, be appointed the liquidator of the company.

1. The applicant's costs (including reserved costs) be taxed and reimbursed out of the property of the company in accordance with subsection 466(2) of the Corporations Law.

NOTE:           Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA                  ) 
  )
NEW SOUTH WALES DISTRICT REGISTRY                 )  NG 3243 of 1995
  )     
GENERAL DIVISION  )     

BETWEEN:               STATE BANK OF NEW SOUTH WALES

Applicant

AUSTRALIAN SECURITIES COMMISSION

First Respondent        

AND:  NIKUTU PTY LIMITED

Second Respondent

Coram:           Davies J.
Place:              Sydney
Date:              20 October 1995

REASONS FOR JUDGMENT

This is an application for the winding up of Nikutu Pty Limited on three grounds: first, under s.459A of the Corporations Law, that the company is insolvent, secondly, under s.461(c), that the company has suspended its business for a whole year and thirdly, under s.461(k), that it is just and equitable that the company be wound up.

I am not satisfied on the material before the Court that the company's business was suspended for a whole year.  The evidence does not, in my opinion, deal adequately with that matter. 

The evidence of insolvency is based upon the non-payment to the State Bank of New South Wales, the applicant, of the moneys due to it.  The information before the Court shows that, from about 1987, Nikutu had an overdraft account with the State Bank of New South Wales and also that, in 1987, moneys were borrowed for the purchase of a property at 1136 Barrenjoey Road, Palm Beach.  The sum lent by the State Bank was $276,000 which was secured by a mortgage.  It appears that the company was advised in March 1991 that it had exceeded its overdraft limit which had by then risen to $172,824.  Later, in 1991, Nikutu was advised that future instalments of the mortgage principal would not be paid unless there were deposits to cover the payment.   Later in 1991, the sum due under the mortgage was called up and, on 26 July 1991, the sum due under the mortgage was transferred to the overdraft account.  The amount transferred was $303,614 bringing the amount outstanding at that time to $486,452, which subsequently rose during 1991 to $512,492.  The substance of that amount is still outstanding.  When the application was first lodged, the amount deposed to be outstanding was $485,589 and an affidavit sworn today shows the amount outstanding to be $518,336.

That sum has been outstanding for a very considerable period of time and from that I think an inference can be drawn that the company is unable to pay its debts as and when they fell due.  In support of that is the fact that there is no affidavit from the company to say that it is able to pay its debts or that it is solvent.  A further fact from which an inference of insolvency can be drawn is that it appears that the company failed to file annual returns for three years and was deregistered for some time.  It was indeed only reinstated during the currency of these proceedings.

The case that was put for the company by Mr J.T. Svehla, counsel for the company, when he sought an adjournment of the application, did not in fact give me any encouragement that the company was solvent.  The case put was that the company wished to make inquiries, that it could not ascertain its solvency because its documents were in a parlous state and that it wished to be able to go to the bank's documents to be able to find out whether the bank's claim was correct or not.  That type of circumstance is indicative of a company whose affairs are out of control.

I would draw the same inferences in this case as did McLelland J (CJ in Eq) in Re Sparrer Limited (1993) 12 ASCR 12, namely that the company is insolvent.  And, as did McLelland J, I would also draw the inference from the matters that I have stated that it is just and equitable that the company be wound up.  Accordingly I will make an order that the company be wound up.

I will order that David Lombe of Deloitte Touche Tohmatsu be appointed official liquidator of Nikutu Pty Limited.

I will order that the applicant's costs be taxed and paid out of the assets of Nikutu Pty Limited, those costs to include all costs reserved.

I certify that this and the 3 preceding pages
are a true copy of the reasons for judgment herein of
the Honourable Justice Davies.

Associate:

Date:   20 October 1995

Appearing for the applicant:  N. Bearup

Solicitors for the applicant:  Parish Patience

Counsel for the respondent:  J.T. Svehla

Solicitors for the respondent:  G.H. Healey & Co

Date of hearing:  20 October 1995

Date of judgment:  20 October 1995