Turner v Stylewise Security & Glass Pty Ltd (In Liq)

In Turner v Stylewise Security & Glass Pty Ltd (In Liq), the Turners, who are the directors and shareholders of Stylewise Security & Glass Pty Ltd, sought to set aside a winding up order made against the company. The winding up order was made on 24 April 2015 due to an inadequate response by the company to a Statutory Demand by the Australian Taxation Office for $262,938. The Turners argued that they had taken steps to address the debt, including repaying part of it and arranging to pay the balance. They also argued that the winding up had caused practical difficulties for the business, including the suspension of the company's building licence and the suspension of the Turners from holding a licence or being an influential person of another licensed company.

The court was required to decide whether the winding up order should be set aside under r 39.05(a) of the Federal Court Rules 2011 (Cth) or terminated under s 482 of the Corporations Act 2001 (Cth). The Turners preferred an order setting aside the winding up because it would be simpler to lift the building licence suspension and continue the business. The court considered various factors in deciding whether to exercise its discretion to set aside the winding up order, including the likelihood of the company being able to pay its debts if the order were set aside, the effect of the winding up on the company's business and employees, and the availability of financial assistance to the company.

The court found that the Turners had taken significant steps to address the company's debts and to return the business to profitability. The Turners' parents had provided financial assistance of $55,000 to cover the liquidator's anticipated costs and had made available significant funds for payment of creditors. The company's suppliers wished to continue to trade with it. The Turners had also taken steps to achieve cost savings and to return the business to profitability after losses suffered by the business since 2011. The court was satisfied that it was very likely that the company was solvent and that it had the potential to return to profitability and continue to trade for many years if managed carefully and prudentially. The court concluded that the winding up order should be set aside in the interests of justice.

Accordingly, the court made an order setting aside the winding up order made in QUD 11 of 2015 on 24 April 2015. The court noted that entry of orders was dealt with in Rule 39.32 of the Federal Court Rules 2011.