WRL Pty Ltd v Vertical Telecoms Pty Ltd

[2008] NSWSC 1089

CITATION:	WRL Pty Ltd v Vertical Telecoms Pty Ltd [2008] NSWSC 1089
HEARING DATE(S):	13/10/08
JUDGMENT DATE :	13 October 2008
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Barrett J
EX TEMPORE JUDGMENT DATE:	13 October 2008
DECISION:	Winding up application summarily dismissed with costs on the indemnity basis
CATCHWORDS:	CORPORATIONS - winding up - application for winding up in insolvency - reliance on s 459C(2)(a) presumption of insolvency alone - non-compliance with statutory demand not shown - application for order setting aside statutory demand duly made and undetermined - in any event, alleged non-compliance more than three months before filing of winding up application - winding up application devoid of prospects of success
LEGISLATION CITED:	Corporations Act 2001 (Cth), ss 109X(1)(a), 459C(2)(a), 459G, 459P
CATEGORY:	Principal judgment
CASES CITED:	David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265 Gryst v Dromana Estate Ltd [2008] FCA 1148
PARTIES:	WRL Pty Limited - Plaintiff Vertical Telecoms Pty Limited - Defendant
FILE NUMBER(S):	SC 5135/08
COUNSEL:	Mr K R Williams, Director in person - Plaintiff Mr D P M Ash - Defendant
SOLICITORS:	Mr K R Williams, Director in person - Plaintiff Eakin McCaffery Cox - Defendant

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

BARRETT J

MONDAY 13 OCTOBER 2008

5135/08 WRL PTY LIMITED v VERTICAL TELECOMS PTY LTD

JUDGMENT

1 The plaintiff makes application under s 459P of the Corporations Act 2001 (Cth) for an order that the defendant be wound up in insolvency and an order appointing a liquidator.

2 The only evidence of insolvency upon which the plaintiff relies is alleged failure by the defendant to comply with a statutory demand served by the plaintiff. The plaintiff makes no attempt to prove in any other way that the defendant is insolvent.

3 The defendant says that the proceedings should be summarily dismissed or, in the alternative, that the plaintiff should be restrained from taking any further step in the proceedings. It has filed an interlocutory process claiming this relief.

4 The defendant takes this attitude in a context where there is on foot an undetermined application by it under s 459G for an order setting aside the relevant statutory demand. The plaintiff's position, as set out in Mr Williams' affidavit of 10 October 2008, is that the defendant’s s 459G application was not made within the period of 21 days required by s 459G(2) (which the court cannot extend: David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265) and that there is accordingly no such application pending at all.

5 The court file shows, however, that the statutory demand dated 10 June 2008 was served on 11 June 2008 and that the s 459G application and supporting affidavit were filed on 27 June 2008. In those circumstances, the court simply cannot find that that the 21 day time limit in respect of the making of the s 459G application was not met in the way that the plaintiff alleges.

6 The plaintiff next says that the application under s 459G was not properly served because it was not served at the address for service stated in the statutory demand. If there was no valid service, the second event that must occur within the 21 day period specified in s 459G(2) will be seen to be lacking.

7 It has been established, however, that the s 459G application and supporting affidavit were, on 27 June 2008, served at an address which, at the time, was recorded in ASIC records as the registered office of the plaintiff company. The ASIC records show that the situation of the registered office changed on 18 July 2008. But service took place on 27 June 2008 at the then registered office and that service must be regarded as good service under s 109X(1)(a).

8 In light of the matters concerning filing and service of the s 459G application, the situation is one in which that application was duly made and continues on foot, so that there has been no failure to comply with the statutory demand. That position comes from s 459F(2)(a). Under that section, there cannot be non-compliance unless and until the application has been “finally disposed of”; and even then the question of non-compliance will depend on how the application is disposed of.

9 It is clear, therefore, that no presumption of insolvency has arisen under s 459C(2)(a) and that the sole basis on which the plaintiff seeks to establish insolvency is simply not made out.

10 There is another matter. Even if there had been non-compliance with the statutory demand in the way the plaintiff suggests – that is, that non-compliance was complete at the end of the period of 21 days after service of the statutory demand on 11 June 2008 - the present winding up application could not be based on any presumption of insolvency. This is because a court determining a winding up application is authorised and required to act on such a presumption only where failure to comply with the statutory demand occurred within (or after) the period of three months ending on the day on which the winding up application was made.

11 If, as the plaintiff says, non-compliance had been complete 21 days after 11 June 2008, the resultant presumption of insolvency would have been available in support of winding up proceedings initiated within the period of three months immediately following the non-compliance. That is not the position here. The winding up application was filed on 10 October 2008 which is after the end of that period of three months.

12 This is a case in which the winding up application is entirely devoid of prospects of success. Summary dismissal is warranted: see Gryst v Dromana Estate Ltd [2008] FCA 1148.

13 I therefore make order 4 in the interlocutory process filed in court today.

[APPLICATION FOR COSTS]

14 Having regard to the e-mail at annexure “T” to Mr Doble's affidavit, an order for the payment of costs on the indemnity basis is warranted. The plaintiff has persisted with a hopeless case despite having been alerted to the fact that it is hopeless.

15 I therefore order that the plaintiff pay the defendant's costs of the proceedings including the interlocutory process; such costs to be assessed on the indemnity basis.

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