Truong v HT Design & Construction Pty Ltd - [2007] NSWSC 102

CITATION: Truong v HT Design & Construction Pty Ltd [2007] NSWSC 102

HEARING DATE(S): 16/02/07

JUDGMENT DATE :
16 February 2007

JURISDICTION: Equity Division
Corporations List

JUDGMENT OF: Barrett J

EX TEMPORE JUDGMENT DATE: 16 February 2007

DECISION: Orders for winding up and appointment of liquidator

CATCHWORDS: CORPORATIONS - winding up - winding up in insolvency - non-compliance with statutory demand - defendant company carrying onus to prove solvency - reliance on report and opinion of chartered accountant - report and opinion disclose no satisfactory basis for conclusion stated - plaintiff adduces evidence of substantial debts due and payable not taken into account in report and opinion - defendant's onus not discharged - submission that making of winding up order should be de deferred - no basis for deferral particularly where company trading and incurring debts

LEGISLATION CITED: Consumer Trader and Tenancy Tribunal Act 2001, s.51
Corporations Act 2001(Cth), ss.95A, 459A, 459C(2)(a)

CASES CITED: Anvic Holdings Pty Ltd v Constable [2002] NSWSC 424
Expile Pty Ltd v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711
Noxequin Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 87

PARTIES: Duc Vinh Truong and Nguyet Nga Truong - Plaintiffs
HT Design & Construction Pty Limited - Defendant

FILE NUMBER(S): SC 5357/06

COUNSEL: Mr J.T. Johnson - Plaintiffs
Mr T.O. Bland - Defendant

SOLICITORS: Watson & Watson - Plaintiffs
McDermott & Associates - Defendants

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

BARRETT J

FRIDAY 16 FEBRUARY 2007

5357/06 DUC VINH TRUONG & ANOR v HT DESIGN & CONSTRUCTION PTY LTD

JUDGMENT

1 By originating process filed on 19 October 2006, the plaintiffs claim an order for the winding up of the defendant in insolvency and an order for the appointment of a liquidator. In making their application, the plaintiffs rely on a presumption of insolvency arising under s.459C(2)(a) of the Corporations Act 2001 (Cth) in consequence of the defendant's failure to comply with a statutory demand dated 5 August 2006.

2 The alleged debt on which the statutory demand was based involves a sum of $60,197.85 which, by virtue of an order made by the Consumer Trader and Tenancy Tribunal on 16 June 2006, was to be paid to the plaintiffs on or before 15 July 2006. There was no application by the defendant under s.459G for an order setting aside this statutory demand.

3 Although the defendant foreshadowed an application for leave under s.459S to bring forward, upon the hearing of the winding up application itself, matters that could have been advanced upon a s.459G application, that was ultimately not pressed. This was because, on the defendant's own evidence, impugning of the alleged debt of $60,197.85 would not have been material to proof of solvency so that s.459S(2) would have precluded the grant of leave. I would add that, as will become evident, the sum of $60,197.85 would not have been material to proof of solvency on the plaintiffs’ case either.

4 In the end, the case resolved…

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: [2007] NSWSC 102
Decision Date: 16 February 2007

CaseChat Overview and Summary

The case of Truong v HT Design & Construction Pty Ltd involved the plaintiff, Truong, seeking a winding up order against the defendant company, HT Design & Construction, due to the company's failure to comply with a statutory demand. The dispute was heard in the Federal Circuit Court of Australia.

The primary legal issue before the court was whether the defendant company had discharged its burden of proving that it was solvent and therefore not liable to be wound up. The court had to determine if the company had adequately demonstrated its solvency by relying on the report and opinion of a chartered accountant. The court also considered whether the making of a winding up order should be deferred.

The court found that the defendant's chartered accountant's report and opinion did not provide a satisfactory basis for the conclusion that the company was solvent. The report and opinion did not account for substantial debts that the plaintiff had adduced as evidence. Consequently, the court held that the defendant had not discharged its onus of proving solvency. The court rejected the submission that the making of a winding up order should be deferred, especially as the company was actively trading and incurring debts. The court concluded that there was no valid reason for deferring the order.

The final orders made by the court included the winding up of HT Design & Construction Pty Ltd, with the plaintiff being appointed as the liquidator. The court's decision emphasised the importance of ensuring that all relevant financial information is considered when assessing a company's solvency.

Orders