The Owners - Strata Plan No 17572 v Nomak Holdings Pty Ltd

[2009] NSWSC 1412

CITATION:	The Owners - Strata Plan No 17572 v Nomak Holdings Pty Ltd [2009] NSWSC 1412
HEARING DATE(S):	30 November, 1 December 2009
JUDGMENT DATE :	15 December 2009
JURISDICTION:	Equity Corporations List
JUDGMENT OF:	Austin J
DECISION:	Winding up order made
CATCHWORDS:	CORPORATIONS - winding up in insolvency - requirements for service of statutory demand and originating process - effect of tender of payment of creditor's claim - presumption of insolvency from non-compliance with statutory demand - requirements for proof of solvency
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss 109X, 459A, 459C, 459S
CASES CITED:	Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 Australian Mid-Eastern Club Ltd v Yassim (1989) 1 ACSR 399 Bank Australasia v Hall (1907) 4 CLR 1514 Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 149 FLR 179; [1999] NSWSC 15 Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163 Lane Cove Council v Geebung Polo Club Pty Ltd (No 2) (2002) 41 ACSR 15; [2002] NSWSC 118 Lewis (as liquidator of Doran Constructions Pty Ltd (in liq)) v Doran (2005) 54 ACSR 410; [2005) NSWCA 243
PARTIES:	The Owners - Strata Plan No. 17572 (Plaintiff) Donna Batiste, Director of Nomak Holdings Pty Ltd (Defendant)
FILE NUMBER(S):	SC 3293/09
COUNSEL:	D Radman (Solicitor)(Plaintiff)
SOLICITORS:	Grace Laywers (Plaintiff)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

AUSTIN J

TUESDAY 15 DECEMBER 2009

2919/09 THE OWNERS STRATA PLAN NO 17572 V NOMAK HOLDINGS PTY LTD

JUDGMENT

1 HIS HONOUR: The plaintiff is the owners' corporation for residential strata premises in Oxford Street Darlinghurst. The defendant is the owner of a lot in the strata plan entitling it to occupy one of the residential units. In fact the unit is occupied by Ms Donna Batiste, the sole director and shareholder of the defendant, and she has told the court she has been there for 12 years.

2 By an originating process filed on 18 June 2009, the plaintiff applies under s 459P of the Corporations Act 2001 (Cth) for an order under s 459A for the winding up of the defendant on the ground of insolvency, and for the appointment of a liquidator accordingly.

3 At the hearing of the winding up proceedings the plaintiff was represented by a solicitor and the defendant appeared by its director, Ms Batiste, without legal representation. She had made an application to me 10 days earlier, on behalf of the defendant, for an order vacating the hearing date on various grounds, including grounds relating to the prospects for mediation and settlement negotiations, and matters to do with her ill-health. I rejected that application, for ex tempore reasons delivered on 20 November 2009. When the final hearing of the winding up proceedings began on 30 November 2009, she announced that she wished to discuss an adjournment with me, but said she would wait. In fact she made a further adjournment application at the very end of the hearing, submitting that the court should await the outcome of the attempt she was making to sell the defendant's property. I shall deal with that application under the heading "Conclusions".

4 The plaintiff's case pursues the traditional route for proving the insolvency ground for winding up. The plaintiff relies on the defendant's failure to comply with a statutory demand for the payment of a debt of $5,629.30, which it claims to have served on the defendant on 23 April 2009.

5 The statutory demand, a copy of which is in evidence, described the debt as:

"Unpaid strata levies plus interest and costs thereon for Lot 105 of Strata Plan No 17572."
Particulars of the debt were said to be:
"Amount due under a judgment obtained by the Creditor against the Company in the Downing Centre Local Court, Sydney on 17 February 2009 (Case No 171508 of 2008) in the sum of $5,629.30."

Service of the statutory demand

6 I am satisfied by the evidence that the statutory demand was served on the defendant on 21 April 2009, for the following reasons.

7 The evidence indicates that the statutory demand was posted with a covering letter on 17 April 2009, by registered post directed to the proper officer of the defendant company at the unit address for the defendant's residential unit in the premises in Oxford Street, Darlinghurst. The address used was the registered office of the defendant at that time, according to a search of the ASIC register, which is in evidence.

8 Section 109X(1) of the Corporations Act specifies posting to the company's registered office as a permissible means of service of a document on a company. Questions of service by post arising under the Corporations Act are governed by s 29 of the Acts Interpretation Act 1901 (Cth), rather than s 160 of the Evidence Act 1995 (NSW): see, for example, Lane Cove Council v Geebung Polo Club Pty Ltd (No 2) (2002) 41 ACSR 15; [2002] NSWSC 118.

9 Under s 29 of the Acts Interpretation Act, where service by post is authorised or required by a Commonwealth Act (as it is by s 109X of the Corporations Act), service is taken to be effected by properly addressing and posting (under pre-paid post) the document as a letter to the last known address of the person to be served. That was achieved here, though the address used was the address of the registered office, since the addressee was a company.

10 Under s 29, unless the contrary is proved, service is taken to have been effected at the time at which the letter would have been delivered in the ordinary course of post (compare s 160 of the Evidence Act, under which it is presumed that a postal article sent by prepaid post addressed to a person at a specified address in Australia was received at that address on the fourth working day after having been posted). There is no direct evidence as to the time at which the letter containing the statutory demand in this case would have been delivered in the ordinary course of post, but the person who posted it, a receptionist at the office of solicitors, asserted that she duly served the document on 23 April, implying that in her view the document would have been received in the ordinary course on about that day. That corresponds approximately with the result that would have been obtained by applying the Evidence Act. My conclusion is that this evidence would suffice to establish that the statutory demand was served on 23 April, or some time before that date.

11 However, there is direct evidence of the date of receipt of the statutory demand in this case. Ms Batiste, the director of the defendant, said in her affidavit made on 24 November 2009, para 81, that the statutory demand was received by the defendant on 21 April 2009.

12 It was open to the defendant, under s 459G(2), to make an application to set aside the statutory demand by making an application within 21 days after the demand was served: that is, by no later than 12 May 2009 if the demand was served on 21 April. I was informed from the bar table during the hearing that an application was made but it was unsuccessful. On that basis, by virtue of s 459C(2)(a), the court is required to presume in the present proceedings that the defendant is insolvent, unless (under s 459C(3)) the contrary is proved.

Service of the originating process for winding up, and accompanying affidavits and evidence

13 The originating process for these proceedings was served by a licensed process server, who affixed that document, and accompanying affidavits and the consent of the liquidators, to the front door of the defendant's registered office address on 19 June 2009 - that it is, the door of the residential unit occupied by Ms Batiste. Section 109X authorises service of a document on a company by leaving the document at the company's registered office. If a document is left at the registered office, it is effectively served even if it never comes to the attention of a director or other officer of the company. But if the person relying on literal compliance with s 109X knows positively that there has been no receipt by the company of the document, there cannot have been effective service (see Ford's Principles of Corporations Law at [4.056]; earlier cases were summarised by me in Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 149 FLR 179; [1999] NSWSC 15). In the present case, there appears to be no issue as to the efficacy of service, because Ms Batiste said in her affidavit made on 24 November 2009, para 88, that the originating process was served on the defendant on 19 June 2009.

Compliance with the requirements of the statute and the rules

14 I am satisfied that the plaintiff has attended to the "formalities" for the making of a winding up order, by tendering the consent of liquidators and providing affidavits of service of the statutory demand and originating process, affidavits of publication and lodgement of Form 519, and up-to-date affidavits of debt and search. The affidavit of debt is by Christopher Whelan, a strata manager employed by the strata managing agent of the plaintiff, with delegated authority to maintain the plaintiff's records. Mr Whelan gave evidence by affidavit made on 30 November 2009, that the defendant had not made payment of the amount of $5,629.30 specified in the statutory demand and that some was still due and payable (an issue concerning a tender of payment, not accepted, is considered below).

Conclusions as to plaintiff's case based on a presumption of solvency

15 As the formal requirements for a winding up order have been satisfied, and the plaintiff has proven non-compliance with a properly served statutory demand that has not been set aside, the court is required to presume insolvency under s 459C, as noted above, unless actual solvency is proven. The question therefore is whether the defendant has proven that it is solvent.

16 The evidence tendered by Ms Batiste on behalf of the defendant is poorly organised and repetitive, and much of it is irrelevant to the question of solvency or any other issue in these proceedings. I have nevertheless tried to distil from her evidence what is relevant and open to contention the question of solvency. It seems to me that the defendant's evidence raises the following questions:

(i) what, if anything, is the effect of the defendant's tender of payment on a "without admission" basis, well after the expiry of the period for compliance with the statutory demand?
(ii) what is the status of the Local Court judgment upon which the statutory demand was based, and does it matter for the purposes of the winding up application?
(iii) has the defendant's evidence of solvency rebutted the presumption?
(iv) is there evidence of abuse of process on the part of the plaintiff?

17 On the third question, the plaintiff has tendered some further evidence at the hearing tending to show, according to its submission, that the company is actually insolvent quite apart from the presumption arising from non-compliance with the statutory demand.

18 I shall review these four questions in turn.

The tender of cheques on a "without admission" basis

19 On 31 July 2000 and Ms Batiste inquired in an e-mail to the plaintiff's solicitor ("Grace Lawyers") what the plaintiff's "procedure" would be if she were to pay the alleged debt on behalf of the defendant, "without admission as to the debt". Grace Lawyers replied on 11 August 2009 saying, in summary, that if payment were received the plaintiff would seek to dismiss the winding up proceedings and the review proceedings in the Local Court, but it would require payment of its costs of those proceedings. On 14 August 2009 Grace Lawyers provided copies of tax invoices they had rendered to the plaintiffs for costs totalling $11,025.86. On the same day Ms Batiste offered to pay the amount of the statutory demand by two instalments and made no mention of costs. At that stage, therefore, the parties were well apart from one another. The defendant retained GH Healey & Co ("Healey") on the 20 August.

20 On 25 September 2009 Healey wrote to Grace Lawyers tendering two bank cheques, for $5,629.30 (the amount of the statutory demand) and $408. The letter specified that the payments were being made "without any admissions", and purported to put Grace Lawyers on notice that the defendant disputed the reasonableness of any additional costs and fees that Grace Lawyers had incurred. There followed some correspondence between Healey and Grace Lawyers including a letter from Grace Lawyers dated 13 October 2009 seeking clarification of what was meant by "without any admission", and also some correspondence between Grace Lawyers and Ms Batiste, who was unrepresented in some matters. It seems to me, having reviewed these letters, that neither Healey nor Ms Batiste provided any satisfactory answer to Grace Lawyers' questions as to what was meant by the tender of payment without any admissions.

21 Healey filed a notice of ceasing to act on 23 October 2009. On 2 November 2009 Grace Lawyers wrote a substantial letter to the defendant adverting to the previous correspondence, rejecting the tender of the cheques and tendering trust cheques by way of return of the payments. Ms Batiste has repeatedly complained that the Grace Lawyers cheques were different cheques from the bank cheques that Healey had tendered, and that the Grace Lawyers cheques were "slipped into her hand" as she was entering court. If that is so, it has no significance for anything I have to decide. The plaintiff was entitled to reject the tender when the defendant failed to clarify the conditions upon which it had been made and failed to address the question of costs, and the preparation and handing over of equivalent cheques were simply part of the mechanism by which the tender was rejected, the much more important part being Grace Lawyers' letter of 2 November.

22 It seems to me that the defendant's tender of the cheques, followed by the plaintiff's refusal of the tender did not, in the circumstances of this case, have the effect of extinguishing the debt claimed by the plaintiff. In Australian Mid-Eastern Club Ltd v Yassim (1989) 1 ACSR 399, Meagher JA observed:

"If a valid tender be made, a refusal of that tender (whether for good or bad reason, or for no reason at all) does not eliminate the debt in question. The relationship of creditor and debtor still subsists. The tender is no answer to a claim for the debt unless … there is a continued readiness to pay, coupled with actual payment into court."

23 The evidence in this case falls short of establishing a continuing readiness to pay, and indeed there is an element of hostility in Ms Batiste's dealings with the plaintiffs suggesting the unlikelihood of any such willingness. The defendant might have elected to pay the money into court, as suggested in the Yassim case, or perhaps into a controlled money account without conditions or qualifications, but has not done so.

24 In the circumstances of this case, I am not persuaded that the tender of the cheques, in the way it has happened, has any legal or discretionary significance in this case. It does not have any effect on the creation of the presumption of insolvency, because the relevant events occurred well after the presumption arose. Nor does it affect the standing of the plaintiff as a creditor to bring the present winding up proceedings, because the events occurred after the originating process for winding up and the accompanying evidence was served. It does not affect the question of actual solvency because the debt has not in fact been paid. And the circumstances of the tender were not such as to attract the exercise of the court's discretion under s 467 to dismiss a winding up application even though the ground has been proved, because in my view the defendant behaved unreasonably in stipulating that the tender was without any admissions, failing to explain what was meant by that stipulation in circumstances where it was appropriate for the plaintiff to require explanation, and in failing to address the question of the plaintiff's costs if the amount were to be paid.

The status of the Local Court judgment

25 Ms Batiste has given evidence that during 2007, 2008 and 2009 the defendant company disputed a debt claimed by the plaintiff for levies, and demanded that the plaintiff produce the financial records that would enable the defendant to confirm whether there was a debt and if so, of what amount. She alleged that the plaintiff obtained a judgment against the defendant in the Local Court by failing to serve the defendant with the statement of claim in those proceedings. She claimed to have evidence from Australia Post that the registered letter containing the statement of claim had been returned to sender and that Grace Lawyers had picked up the letter from the post shop on 15 January 2009, a month before the default judgment in the Local Court was entered.

26 Evidently, however, the matter of proper service was tested before the Registrar in the Local Court on 4 June 2009, when the defendant's motion to set aside the default judgment was considered and rejected. On 17 June 2009 the defendant company filed a notice of motion to review the Registrar's decision.

27 The defendant company has appealed against the Local Court decision to the District Court and the matter is yet to be heard, but if the appeal succeeds then the default judgment against the defendant will be overturned. I understand from submissions that the District Court hearing has been set down for a date in March 2010.

28 It seems to me that the setting aside of the default judgment of the Local Court, if it were to occur now, just before my decision, would make no difference to the determination have to make. The defendant would still have failed to seek to set aside the statutory demand and the presumption of insolvency would still have arisen, even if the foundation of it had been undermined. Once the presumption of insolvency has arisen and the hearing of the winding up application has begun, the focus of the court's attention must be on whether the presumption of insolvency has been rebutted, that is whether it has been shown that the company is solvent. Here the evidence falls well short of showing that the company is solvent and, indeed, would suggest insolvency even without the operation of the presumption, for reasons explained below. Moreover, the presence or absence of the judgment debt of $5,629.30 is not of any critical significance to the assessment of solvency.

29 Moreover, in seeking to rely on such grounds for setting aside the Local Court judgment for the purposes of the present winding up proceedings, the defendant encounters an obstacle in s 459S. Under that section, the defendant cannot oppose the winding up application on a ground that it relied on for the purposes of its application to set the demand aside, or could have relied on in such an application, unless the leave of the court has been obtained. Under s 459S(2), the court is not to grant leave unless it is satisfied that the ground is material to proving the company is solvent. For reasons just indicated, I am not satisfied that this is the case.

The evidence of solvency

30 In Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163, Santow JA (with whom Meagher and Handley JJA agreed) adopted some statements of principle of Weinberg J in Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728, including the propositions that:

in order to discharge the onus of proving solvency, the defendant should ordinarily present the court with the "fullest and best" evidence of its financial position; and
there is a distinction between solvency and a surplus of assets, such that the ability to convert assets into cash within a relatively short time must be considered in determining solvency.

31 It seems to me that the defendant's evidence about actual solvency falls very much short of the "fullest and best" evidence of the company's financial position. Further, the defendant's reliance upon ownership of an asset, the residential home unit, to prove solvency does not help it to do so, for reasons I shall explain.

32 Ms Batiste informed the court that the defendant is not a trading company and simply owns the residential unit, which has been her home for the past 12 years. She said she pays for the defendant's mortgage and for its debts. The only evidence I can find in her affidavits that goes directly to the question of solvency is in her affidavit of 27 November 2009, paras 6-8. There she claimed that the only debts of the defendant are debts associated with the property, and that they are approximately:

Water rates $350
Council rates $947.92 in September 2009
Mortgage $650,000
Levies (unsure amount due to litigation).

The residential property and the mortgage

33 Ms Batiste said that the defendant's residential unit property was valued by Addison Valuers for $700,000 and that she would be able to sell it for that amount. The valuation is dated 11 March 2008. She concluded that the defendant's assets are greater than its total liabilities. Additionally, she said that as the sole director and shareholder she supported the company and was personal guarantor of the mortgage debt.

34 I note that Ms Batiste has not substantiated by any documentary evidence her claim that the amount owing on the mortgage is $650,000. There are possession proceedings in this court brought by the mortgagee of the residential unit, Perpetual Trustee Company Ltd, against the defendant and Ms Batiste (No 13062 of 2009). A notice of motion has been filed for summary judgment, but it has evidently been adjourned to February 2010.

35 The amended statement of claim in the possession proceedings is evidence. It indicates that according to the mortgagee, the amount owing as at 3 June 2009 was $628,478.26, a figure that does not include the mortgagee's costs of bringing the possession proceedings, further interest accruing since that date, or further instalments accruing at the rate of about $5,000 per month and remaining unpaid after 23 February 2009 (the last monthly instalment taken into account in calculating the sum due in the amended statement of claim).

36 The plaintiff submitted that at the rate of $5,000 per month, approximately an additional $45,000 in mortgage repayments had accrued to the end of November, over and above the $628,478.26 claim in the amended statement of claim, making the amount owing now about $673,000.

37 The evidence about the amount owing on the mortgage is too sketchy for me to make any positive finding about the amount now owing. But it is plain that the defendant has not discharged the onus it bears of showing, as a practical matter, that the value of the residential unit exceeds the total amount owing to the mortgagee by a comfortable enough margin to render the defendant solvent in the event that the property is sold. There is at least a plausible case for inferring that another $45,000 has accrued owing to November 2009, taking the total to $673,000 which is getting uncomfortably close to the valuation for the unit, which may not be entirely reliable in view changed circumstances in the property market over the period since March 2008, when the valuation was prepared.

38 In his affidavit of 20 November 2009, Mr Wallace gave evidence of a conversation he had with the solicitor for the mortgagee on 19 November 2009, in which she told him her instructions were to continue with the possession proceedings. Ms Batiste has put into evidence a letter dated 26 November 2009 from the solicitors for the mortgagee to the Registrar of this court, informing him that the parties had entered into an agreement to resolve the proceedings, and asking for an adjournment of the notice of motion until 1 February 2010 to enable the defendant to comply with the terms of the agreement. However she has not deposed to the terms of the agreement (apart from some statements to the court during submissions, noted below) and in those circumstances there is a reasonable basis for inference that the mortgagee will pursue recovery either by means of an agreement or, in default of performance of the agreement, by seeking relief in the possession proceedings.

39 There is another issue about the residential property and the mortgage. While authorities such as Bank Australasia v Hall (1907) 4 CLR 1514 and Lewis (as liquidator of Doran Constructions Pty Ltd (in liq)) v Doran (2005) 54 ACSR 410; [2005) NSWCA 243 at [103] per Giles JA, indicate that the court is able to look into the future in making its assessment of solvency, the general approach to the protection of future events has been cautious. Specifically, the court will be cautious about accepting an argument that debts known to be due or about to become due will be met by the realisation of an asset, unless it can be confident that the realisation will take place in the short term.

40 In the present case Ms Batiste told the court during her submissions that she had an arrangement with the mortgagee's lawyers that she would attend to repairs and then put the unit on the market for sale, while at the same time seeking to refinance. Her statement was quite vague but it appears that the repairs include fixing a leaking roof, a matter that could be quite substantial, and the completion of some doors and plastering of walls and the ceiling. She said the repairs would be done within a week, but one cannot but be sceptical of that claim, in the absence of some supporting evidence. If the repairs drag on for some time it may not be feasible to put the property on the market before Christmas, and presumably then the attempted sale will miss the time of greatest market activity. In the circumstances, the court can have no confidence that the property is realisable sufficiently quickly that the sale price can be taken into account for the purpose of assessing solvency.

Administration and sinking fund levies

41 Mr Whelan, the strata manager, has annexed to his affidavit an extract from the "Owner Ledger" of the plaintiff in respect of the defendant's residential unit, which, he says, shows the balance of arrears owing on the defendant's account as at 26 November 2009. The document covers the period from 30 July to 25 November 2009. The total amount said to be owing at the end of that period is $38,042.36.

42 Mr Whelan's affidavit was not sworn until the day of the hearing and Ms Batiste has not had the opportunity to respond to it. I think it would be unfair to the defendant to accept the affidavit as evidence of a total debt of over $38,000. On close inspection of the ledger, I think there is a good reason for rejecting most of the evidence in the ledger, quite apart from the question of the unfairness of its late tender. Some of the items are too unspecific to be accepted as reliable evidence of debts. I include in this category the "opening balance arrears" totalling $6,887.50, and the "opening balance misc charges" of $7,292.84. Additionally there are five items of legal fees amounting to $23,739.97, which are not particularised but evidently they are the plaintiff's legal fees which are being charged to the defendant, on a basis that is not disclosed.

43 The one matter where I think it is fair and appropriate to accept the ledger relates to levies. The document indicates that quarterly "admin/sinking" levies fell due on 1 August and 1 November 2009, for amounts of $1064.70 and $1068.35 respectively. I think it is appropriate to infer that liability to pay levies is accruing to the defendant at the rate of about $1065 per quarter. It appears that a little over $2000 was outstanding for those levies as at 25 November 2009. I do not accept Ms Batiste’s claim that the levy amount is uncertain “due to litigation”.

Conclusion as to actual solvency

44 The evidence is a very long way short of establishing the proposition that the defendant company is solvent. Even if the property is sold in the near future, there is no certainty that there will be a net surplus sufficient to pay the debt owing to the plaintiff and debts for local rates and taxes and for levies, after not only the total amount owing to the mortgagee but also legal fees associated with the sale and the discharge of mortgage and the possession proceedings or taken into account, even putting aside any cost liability in the present proceedings or before the Local or District Court.

Abuse of process

45 Throughout Ms Batiste's affidavits she has made allegations against people involved with the strata corporation, including Christine Byrne and Jim McDonald, and the Grace Lawyers, Mr Radman and Mr Wallace. At times she has referred to the concept of good faith in various parts of the UCPR, but I think her central complaint is probably about abuse of process.

46 She claimed that the Supreme Court proceedings have nothing to do with levies, and that they are the product of a "vicious vendetta" against the defendant and herself by those individuals. Unfortunately for her, Ms Batiste's allegations are unsubstantiated, and amount to the articulation of a theory (or more accurately, several theories, not always consistent) as to why various steps have been taken in the litigation in this court and in the Local and District Courts and as to the motivations of those concerned, in circumstances where there are always other more plausible explanations equally consistent with the objective evidence.

Discretion

47 In my view there is no discretionary ground that would justify withholding a winding up order at this stage. If it is possible to sell the property in the near future, that is a task that a liquidator would be competent to carry out, and indeed, judging from the confused and disorganised way Ms Batiste has presented the defendant's case, it seems to me desirable to take the control of the sale process away from her, in the interests of the creditors. As I am not persuaded that the sale process will happen quickly, I think it is important to recognise the insolvency of the defendant before additional debts are incurred for levies, rates and taxes and mortgage instalments.

48 A matter that would point against the exercise of discretion in favour of the defendant relates to the plaintiff's notice to produce served on 20 November 2009. The notice to produce sought various financial records of the defendants. Only one document was produced, a copy of a council rate notice. Ms Batiste told the court that a substantial amount of the required documentation was in storage and was being "shipped down on Friday". She did not explain why the stored documents could not have been "shipped down" in time to comply with the notice to produce at the hearing. Non-compliance with the notice to produce has the consequence that the defendant's compliance with the requirements of the Corporations Act for financial records and financial statements is left as an open question.

49 Finally, Ms Batiste placed some reliance on an offer of compromise made on the defendant's behalf by Foleys Solicitors on 16 November 2009. The offer was for payment of the bank cheques that had earlier been tendered, but this time without conditions, in consideration of consent orders dismissing the matters before this Court and the District Court and providing for costs in favour of the plaintiff. On 24 November 2009 Grace Lawyers responded on behalf of the plaintiff, saying that the precise terms of the offer were unclear. The letter outlined a more specific procedure according to which the defendant would consent to the proceedings in the Supreme Court and the District Court being dismissed with an order that the defendant pay the plaintiff's costs of the whole proceedings, as agreed or assessed. The letter also asserted that the plaintiff would be at liberty to pursue costs under s 80 of the Strata Schemes Management Act 1996 (NSW). It does not appear that the defendant accepted that revised offer, which expired on the evening of 27 November.

50 I cannot see that this exchange provides any discretionary reason for declining to make the winding up order. It does not seem to me that the approach taken by Grace Lawyers on behalf of the plaintiff was so unreasonable (if unreasonable at all) as to imply that the plaintiff was seeking a winding up order for an improper purpose.

Conclusions

51 I have decided that the defendant has failed to prove solvency and consequently the presumption of insolvency that has arisen under s 459C(2) has not been rebutted and the ground for winding up by order under s 459A post has been made out. There is no good reason for declining to make a winding up order.

52 Ms Batiste submitted that if I decided that a winding up order should be made, I should select an independent liquidator other than those nominated by the plaintiff. But no good reason was advanced to depart from the current practice.

53 At the end of her submissions Ms Batiste asked me to adjourn until the property has been sold, but it seems to me that the point of sale is uncertain, if sale occurs at all other than under the supervision of the mortgagee, and in any event I am not persuaded that it would be better to creditors that the sale process be supervised by Ms Batiste rather than by liquidators. Consequently I shall not grant an adjournment.

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