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…

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: [2008] NSWSC 1089
Decision Date: 13 October 2008

CaseChat Overview and Summary

The applicant, WRL Pty Ltd, sought to wind up the respondent, Vertical Telecoms Pty Ltd, under s 459C(2)(a) of the Corporations Act 2001. The respondent, Vertical Telecoms, opposed the application, arguing that the presumption of insolvency was not satisfied and that the application was brought without reasonable prospects of success. The court was required to determine whether the presumption of insolvency under s 459C(2)(a) was applicable and if the application was devoid of prospects of success.

The court examined the statutory demand made by WRL to Vertical Telecoms. It found that the respondent had not demonstrated non-compliance with the statutory demand, nor had it shown that an order setting aside the demand had been made and remained undetermined. Additionally, the court noted that any alleged non-compliance with the statutory demand had occurred more than three months before the winding up application was filed, which was irrelevant under s 459C(2)(a). The court concluded that the presumption of insolvency was not established, and the application for winding up was brought without reasonable prospects of success.

The court found that the winding up application was devoid of prospects of success as it was based solely on the presumption of insolvency, which was not established. The court dismissed the application for winding up and ordered that WRL pay Vertical Telecoms' costs of the application. This decision highlights the importance of establishing the presumption of insolvency under s 459C(2)(a) and the requirement that a winding up application must have reasonable prospects of success.

Orders