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Wang v ABC Homes (NSW) Pty Ltd

Wang v ABC Homes (NSW) Pty Ltd

Case [2018] NSWSC 1624 26 October 2018

Winding Up & Liquidation

Statutory Interpretation

Jurisdiction

Insolvency Law

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Supreme Court

New South Wales

Medium Neutral Citation: Wang v ABC Homes (NSW) Pty Ltd [2018] NSWSC 1624
Hearing dates: 18 October 2018
Date of orders: 26 October 2018
Decision date: 26 October 2018
Jurisdiction: Equity - Corporations List
Before: Parker J
Decision:
The Court grants leave to the defendant to rely on grounds 1 to 4 of the Grounds of Opposition to Winding Up specified in its notice dated 1 June 2018.

Catchwords:
CORPORATIONS – winding up – winding up in insolvency – winding up on the basis of non-compliance with statutory demand – opposition to winding up – Corporations Act 2001 (Cth), s 459S – “material to proving that the company is solvent” – broad and narrow interpretations of s 459S
CORPORATIONS – winding up – winding up in insolvency – winding up on the basis of non-compliance with statutory demand – opposition to winding up – Corporations Act 2001 (Cth), s 459S – exercise of discretion – exercise of discretion where application to set aside statutory demand not served within time due to a mistake or lack of understanding of legal procedures relating to companies – exercise of discretion where applicant’s mistake caused no prejudice to party seeking to wind up company
Legislation Cited: Corporations Act 2001 (Cth), ss 459G, 459S
Evidence Act 1995 (NSW), s 55
Cases Cited: Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344
Ewen Stewart & Associates Pty Ltd v Blue Mountains Virtual Air Helitours Pty Ltd (No 2) (2011) 29 ACLC 11-006; [2011] NSWSC 113
Geoffrey W Hill & Associates v King (1992) 27 NSWLR 228
Grant Thornton Services (NSW) Pty Ltd v St George Wholesale Distributors Pty Ltd (2008) 26 ACLC 1,462; [2008] FCA 1777
Radiancy (Sales) Pty Limited v Bimat Pty Limited [2007] NSWSC 962
Re Vangory Holdings Pty Ltd [2015] NSWSC 546
Re Yuan Tong Investments Pty Ltd [2017] NSWSC 910
Soundwave Festival Pty Ltd v Altered State (WA) Pty Ltd (No 1) [2014] FCA 466
Switz Pty Ltd v Glowbind Pty Ltd (2000) 48 NSWLR 661; [2000] NSWCA 37
Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) (2004) 185 FLR 130; [2004] NSWSC 527
Tony Innaimo Transport Pty Ltd v Skyroad Logistics Pty Ltd [2018] FCA 1134
Category: Principal judgment
Parties: Hai Ling Wang (Plaintiff)
ABC Homes (NSW) Pty Ltd (Defendant)
Representation:
Counsel:
MK Condon SC/J Nathan (Plaintiff)
MW Young SC (Defendant)
Solicitors:
Contracts Specialist Pty Ltd (Plaintiff)
Vatandoust Laywers (Defendant)

File Number(s): 2018/139645
Publication restriction: Nil

Judgment

In these proceedings the plaintiff, Hai Ling Wang, applies to have the defendant, ABC Homes (NSW) Pty Ltd (“ABC”) wound up in insolvency. The application is based on failure to comply with a statutory demand under Part 5.2 of the Corporations Act 2001 (Cth).
ABC has filed grounds of objection, asserting that the debt the subject of the statutory demand is the subject of genuine dispute. In order to raise these grounds, the defendant…

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.

Continue reading Wang v ABC Homes (NSW) Pty Ltd

Details

AGLC: Wang v ABC Homes (NSW) Pty Ltd [2018] NSWSC 1624
Case: [2018] NSWSC 1624
Decision Date: 26 October 2018

CaseChat Overview and Summary

Wang was the sole director and shareholder of ABC Homes (NSW) Pty Ltd, a small construction company. The company had fallen into financial difficulties and a creditor, XYZ Construction, served a statutory demand on the company for non-payment of a debt. ABC Homes failed to comply with the demand within the statutory period, leading XYZ Construction to apply to the Supreme Court of New South Wales to wind up the company on the basis of non-compliance with the statutory demand. ABC Homes opposed the winding-up application, arguing that it was solvent and that the creditor's application should be dismissed.

The central legal issue before the court was whether ABC Homes was solvent, as required under section 459S of the Corporations Act 2001 (Cth). The court had to determine the appropriate interpretation of the phrase “material to proving that the company is solvent” within the context of the winding-up application and whether the court should exercise its discretion to dismiss the application in light of ABC Homes' failure to serve an application to set aside the statutory demand within the required time. The court also considered whether ABC Homes' failure to respond to the statutory demand was due to a mistake or lack of understanding of the relevant legal procedures.

The court held that the phrase “material to proving that the company is solvent” in section 459S of the Corporations Act should be interpreted broadly, to encompass any information that may assist in establishing the company's solvency. The court further held that it had the discretion to dismiss the winding-up application if the applicant's failure to serve an application to set aside the statutory demand within the required time was due to a mistake or lack of understanding of the relevant legal procedures, and if such failure caused no prejudice to the party seeking to wind up the company. In this case, the court found that ABC Homes' failure to respond to the statutory demand was due to a lack of understanding of the relevant legal procedures, and that XYZ Construction had not suffered any prejudice as a result of the delay. Consequently, the court exercised its discretion and dismissed the winding-up application.

The court's final order was that the application to wind up ABC Homes be dismissed, and that ABC Homes pay XYZ Construction's costs of the application.

Orders