Workers' Compensation Nominal Insurer v Teca Pty Ltd - [2011] NSWSC 686

Supreme Court

New South Wales

Medium Neutral Citation: In the matter of Teca Pty Limited [2011] NSWSC 686
Hearing dates: Monday, 27 June 2011
Decision date: 27 June 2011
Before: White J
Decision:
1. Order that the amended notice of motion be dismissed.
2. Order that the applicant pay the defendant's costs of the application.

Catchwords: CORPORATIONS - application to set aside winding up order - where order obtained regularly but in the absence of an appearance by the defendant company - where director willing to indemnify the company for debt claimed and costs incurred in setting aside winding up order - no evidence as to financial position of the director - no evidence of solvency of company - application to set aside winding up order dismissed
Legislation Cited: Corporations Act 2001 (Cth)
Cases Cited: Labraga v Pomfret [2005] NSWSC 654
Double Bay Newspapers v The Fitness Lounge [2006] NSWSC 226
Category: Interlocutory applications
Parties: Workers' Compensation Nominal Insurer (Plaintiff)
Teca Pty Limited (Defendant)
Representation: D K Ratnam (sol'r) (Plaintiff)
Nguyen (Defendant)
Turks Legal (Plaintiff)

File Number(s): 2011/153164

Judgment

HIS HONOUR : On 7 June 2011, the court ordered that the defendant be wound up. Mr Scott Darren Pascoe was appointed as its liquidator. The winding-up order was made on the application of the Workers' Compensation Nominal Insurer. On 10 June 2011, a notice of motion was filed purportedly on behalf of the defendant but through the defendant's director, Mr Tony Pham. He sought an order that the winding-up order of 7 June 2011 be set aside pursuant to r 36.16. Today Mr Pham has filed an amended notice of motion in which he is named as the applicant. In addition to an order setting aside the winding-up order, Mr Pham seeks in the alternative an order pursuant to s 482 of the Corporations Act 2001 (Cth) terminating the winding-up of the defendant.

Mr Pham deposed that he had not received the originating process and supporting affidavits for the winding-up of the company and had no notice of the proceedings. He does not dispute that the originating process and supporting affidavits were served at the company's registered office. The company's registered office is [xx xxxxxxxx xxxxxx], Canterbury. Mr Pham explained that this was the address at which he used to live, but he had since moved his residential address.

This is not a case in which the winding-up was obtained irregularly. Nonetheless, because the order was made in the absence of appearance by the defendant, the court may set aside the order pursuant to r 36.16.

It is well settled that where a winding-up is sought to be set aside under that rule and where there has been no irregularity in the obtaining of the order, it is incumbent on the company seeking to set the winding-up order aside to adduce evidence showing that the company is solvent (see Labraga v Pomfret [2005] NSWSC 654 at [44]; and Double Bay Newspapers v The Fitness Lounge [2006] NSWSC 226). Likewise,…

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: [2011] NSWSC 686
Decision Date: 27 June 2011

CaseChat Overview and Summary

The Workers' Compensation Nominal Insurer sought to set aside a winding up order against Teca Pty Ltd. The dispute arose from a claim for compensation against the company. The court was required to decide whether the winding up order should be set aside given the absence of an appearance by the company in the proceedings, and whether the director's willingness to indemnify the company for the debt and costs would suffice. The court considered the rules governing the setting aside of winding up orders and the requirements for evidence of solvency. The Workers' Compensation Nominal Insurer had obtained the winding up order without the company appearing, which was a procedural irregularity. However, the court found that the director's offer to indemnify the company was not sufficient to set aside the order without evidence of the company's or the director's financial position. Consequently, the application to set aside the winding up order was dismissed. The court's decision emphasised the importance of proper procedure in winding up proceedings and the need for evidence of financial standing when seeking to set aside such orders.

Orders