Vanguard 2017 Pty Limited, in the matter of Modena Properties Pty Limited v Modena Properties Pty Limited
[2018] FCA 1020
•4 July 2018
FEDERAL COURT OF AUSTRALIA
Vanguard 2017 Pty Limited, in the matter of Modena Properties Pty Limited v Modena Properties Pty Limited [2018] FCA 1020
File number(s): NSD 27 of 2018 Judge(s): THAWLEY J Date of judgment: 4 July 2018 Catchwords: CORPORATIONS – winding up – winding up in insolvency – where s 459G application dismissed– where company did not oppose but did not consent to being wound-up – company wound up – liquidator appointed Legislation: Corporations Act 2001 (Cth) ss 109X, 459A, 459C, 459E(1), 459E(3), 459H, 459J, 459P, 459P(2)(a), 459Q(c)(i), 459S, 470(1)(a)
Evidence Act 1995 (Cth) s 160
Federal Court Rules 2011 (Cth) r 29.02
Date of hearing: 4 July 2018 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 26 Counsel for the Plaintiff: Mr G George Solicitor for the Plaintiff: Pateman Legal Counsel for the Defendant: Ms M Tovey Solicitor for the Defendant: Rockliff Lawyers
Table of Corrections 9 July 2018 In paragraph 21, the word “contested” has been replaced with “contended”. ORDERS
NSD 27 of 2018
IN THE MATTER OF MODENA PROPERTIES PTY LIMITED ACN 165 456 173
BETWEEN: VANGUARD 2017 PTY LIMITED ACN 616 285 673
Plaintiff
AND: MODENA PROPERTIES PTY LIMITED ACN 165 456 173
Defendant
JUDGE:
THAWLEY J
DATE OF ORDER:
4 JULY 2018
THE COURT ORDERS THAT:
1.Modena Properties Pty Ltd be wound up in insolvency.
2.Nicholas Crouch of Crouch Amirbeaggi is appointed the liquidator of the defendant corporation.
3.The costs of today be reserved.
4.The plaintiff be granted leave to file in court and serve its interlocutory application dated 4 July 2018.
5.The plaintiff be granted leave to file and serve an amended interlocutory application by 6 July 2018.
6.The plaintiff be granted leave to file in court and serve an affidavit in support of the interlocutory application sworn by Mr Timothy James McGrath on 4 July 2018.
7.Mr Andrew Carr file and serve any evidence on the interlocutory application by 18 July 2018.
8.The plaintiff file and serve any evidence in reply by 27 July 2018.
9.The hearing of the interlocutory application be listed at 10:15am on 3 August 2018, with an estimate of half a day.
10.The originating process filed on 17 January 2018 is otherwise dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
THAWLEY J:
By originating process filed on 17 January 2018, the plaintiff applies under s 459P of the Corporations Act 2001 (Cth) for an order that Modena Properties Pty Ltd (the Company) be wound up in insolvency under s 459A of the Act. The plaintiff also seeks an order appointing a liquidator.
In the originating process, the plaintiff indicated it relied on the failure of the company to comply with the creditor’s statutory demand dated 27 September 2017, an affidavit in support sworn by William Ronald Pomering on 27 September 2017, an affidavit sworn by Samantha Bolt on 15 January 2018 and an affidavit sworn by William Ronald Pomering on 15 January 2018, copies of which were attached to the originating process.
At the hearing, reliance was also placed on an affidavit sworn by Mr Pomering on 3 July 2018 to the effect that the debt remained due and payable and an affidavit sworn by Mr McGrath on 4 July 2018 dealing with ASIC searches. At the hearing, counsel for the Company indicated that the order for winding up and appointment of a liquidator were not consented to, but not opposed.
The material annexed to the originating process reveals the following background facts. The plaintiff had an opportunity to acquire two development sites, one in Tweed Heads West in New South Wales and the other in Springwood in Queensland. In the context of considering the opportunity so presented, the plaintiff was introduced to Mr Andrew Carr, the sole director of the Company, trading as Westchester Properties.
The plaintiff and the Company entered into two agreements: the Tweed Heads Agreement and the Springwood Agreement. These were signed by the plaintiff on 13 January 2017 or at least appear to have been signed on or around that day. The agreements contemplated that the Company assist the plaintiff with procuring finance and with other aspects of the two proposed property developments. The “commitment fee” in each agreement was said to be payable on execution of the initial agreement. Each agreement stated: “We underwrite the agreement for the refund of the upfront fee if this facility does not go unconditional”.
In accordance with those two agreements, the plaintiff (by a related entity, Ronpom Pty Ltd) paid a commitment fee of $69,000 under each agreement. Payment under the Springwood Agreement occurred on 22 February 2017 and payment under the Tweed Heads Agreement occurred by two instalments on 7 and 31 March 2017.
The plaintiff terminated the Springwood Agreement on 14 August 2017 and the Company terminated the Tweed Heads Agreement on the same day. Mr Carr undertook on behalf of the Company to refund the two commitment fees “no later than 29 March 2018”. Mr Pomering, on behalf of the plaintiff, responded on 14 August 2017 that the agreement did not provide for that date and requested the fees be refunded promptly.
On 15 August 2017, Mr Carr responded in an email stating:
I am aware there is no clause to cover a time period for refund of fees with the contract, as this is the first occurrence of this scenario. Accordingly, I have committed to refunding the fee by 29th March 2018.
Neither Mr Carr nor the Company, on the evidence, responded to Mr Pomering’s further attempts to communicate. Accordingly, on 31 August 2017, the plaintiff instructed its solicitor to demand payment by 7 September 2017. Mr Carr responded by letter dated 7 September 2017, stating that the Company did not deny the obligation to refund the payments and pointing out that the words “no later than 29 March 2018” when understood in context was that the Company “will refund the fee as soon as possible but in any instance no later than 29 March 2018”. Mr Carr therefore described the plaintiff’s solicitor’s assertion of “refusal to make the repayment until 29 March 2018” as “simply fabricated and misleading”. He continued:
Westchester does however, agree with the statement “There is no foundation whatsoever for Westchester retaining any of the payments beyond the time it would reasonably take for Westchester to make repayment of the funds in the usual course”. Whereby Mr Pomering took a period of 200 days to make payment to Westchester post commencement of services, the usual course would be to refund Mr Pomering within the same period. In the circumstances, Westchester has committed to refunding the fee no later than 29 March 2018.
On 4 October 2017, the plaintiff served, in accordance with s 459E(1) of the Act, a creditor’s statutory demand dated 27 September 2017. This demanded from the Company payment of $138,000 which comprised the two amounts of $69,000 paid by the plaintiff to the Company as “commitment fees”.
The statutory demand was accompanied by an affidavit of Mr Pomering sworn on 27 September 2017. This verified, in accordance with s 459E(3) of the Act, that the debt was due and payable.
Service of the statutory demand was effected in accordance with s 109X of the Corporations Act. Under s 160 of the Evidence Act 1995 (Cth), it is presumed that a postal article sent by prepaid post addressed to a person at a specified address in Australia is received on the fourth working day after having been posted. The deemed date of service is 10 October 2017. The actual date of service appears to have been 5 October 2017.
On 24 October 2017, the Company filed an originating process in the Supreme Court of Queensland under ss 459H and 459J of the Act (Qld originating process). In that application, the Company sought an order that the statutory demand be set aside and that the Company and Ronpom Pty Ltd pay the costs of the application. The originating process claimed that the statutory demand contained a number of defects, as follows:
1. Reference to an affidavit sworn prior to the statutory demand;
2.The failure to identify supposed debts in appropriate detail within the Demand’s schedule;
3. Verification that the debt is due and payable by the company;
4.Failure to identify how the debt is due and payable within the affidavit accompanying the Demand;
5. Ambiguity as to the identity or entity purporting to be a Creditor; and
6. The knowledge of an existing dispute in relation to the debt.
AND
The Applicant has an offsetting claim.
In fact, no affidavit was filed with the Qld originating process on 24 October 2017. On 22 December 2017, Mullins J dismissed the application with costs. This was done with the consent of the Company, assisted by Mr Carr and the Company’s “in-house counsel”.
Where an application to set aside a statutory demand has been determined adversely to the company, the period for compliance is: “the period beginning on the day when the demand is served and ending 7 days after the application under section 459G is finally determined”: see s 459F(2)(a)(ii). The defendant was accordingly deemed to be insolvent on 29 December 2017: see s 459C(2)(a).
GROUNDS OF OPPOSITION
Pursuant to an amended notice of appearance filed 28 February 2018, the Company identified five grounds of opposition:
1. The Plaintiff failed to comply with s. 470(1)(a) of the Corporations Act 2001.
2. The Application is an abuse of process because it was issued for an unlawful purpose in circumstances in which the Applicant was at all material times aware that a bona fide dispute existed as to the date upon which the debt was payable.
3. The Plaintiff failed to seek leave of the Court for standing as a prospective creditor in terms of s. 459P(2)(a) of the Corporations Act 2001 (Cth).
4. The Originating Application fails to identify a debt that is due and payable as required by s. 459Q(c)(i) of the Corporations Act 2001 (Cth).
5.The affidavits accompanying the origination Application do not comply with rule 29.02 of the Federal Court Rules 2011 (Cth).
No submissions were advanced in support of the grounds of opposition given the Company did not oppose the order for winding up.
CONSIDERATION
There are two real issues: the first, whether the plaintiff is a creditor; and secondly, whether the company is insolvent.
As to the first issue, s 459S operates to prevent challenge to the plaintiff’s standing as a creditor.
As to the second issue, the presumption of insolvency created by s 459C has not been rebutted.
Ground one: compliance with s 470(1)(a) of the Act
In relation to the grounds of opposition, it is no longer contended that s 470(1)(a) of the Act was not complied with and the uncontested evidence is that it was.
Ground two: abuse of process
As to the second ground of opposition, no abuse of process has been made out.
Ground three: failure to seek leave as prospective creditor
As to the third ground of opposition, it was unnecessary for the plaintiff to seek leave nunc pro tunc to apply for an order under s 459A as a prospective creditor because s 459S prevented any challenge to the plaintiff’s standing.
Ground four: originating application fails to identify debt that is due and payable
As to the fourth ground of opposition, the originating application did identify a debt that was due and payable as required by s 459Q(c)(i).
Ground five: originating application does not comply with r 29.02 of the Federal Court Rules 2011 (Cth)
As to the fifth ground of opposition, this was unparticularised and no submissions were advanced as to what the failures were. In any event, those failure would not have resulted in a company which does not purport to advance the proposition that it is solvent from being wound up.
In those circumstances, I make orders winding up the Company under s 459A of the Act and appointing the liquidator. I reserve the costs of today and grant leave to the plaintiff to file in court an interlocutory application seeking orders to the effect that Mr Carr pay the plaintiff’s costs of the proceedings.
I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Thawley. Associate:
Dated: 5 July 2018
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