Apostolou v VA Corporation of Australia Pty Ltd

REASONS FOR JUDGMENT 1 The plaintiffs seek an order pursuant to s 482(1) of the Corporations Act 2001 (Cth) ("Act") that the winding up of Maneroo Pty Ltd (in liquidation) ("Maneroo") be terminated. 2 Section 482(1) provides: At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order. 3 After hearing submissions on 22 July 2015 from Mr Jackman SC on behalf of the plaintiffs, I made the order sought. This judgment records my reasons for making that order. 4 The evidence in support of the application comprised two affidavits of the first plaintiff ("liquidator") and an affidavit of service of the application on the Australian Securities and Investments Commission ("ASIC"). Mr Jackman SC tendered a letter from ASIC dated 1 July 2015 recording that ASIC did not propose to intervene in the application or seek leave to appear at the hearing of the application. 5 Maneroo has no creditors apart from the liquidator and the liquidator's solicitor ("PwC") and, according to the balance sheet submitted by the liquidator, has net assets of approximately $164 million. Provision has been made for payment of the liquidator's fees and PwC's fees. PwC does not object to the termination of the winding up. The liquidator is satisfied that Maneroo will be able to meet any liabilities in the immediate future if the winding up of Maneroo is terminated by the Court and that Maneroo has sufficient financial strength and stability to continue trading without an appreciable risk of becoming insolvent. 6 The application is made (and was required to be made) pursuant to the settlement of a tax dispute with the Australian Taxation Office ("ATO").

Legal principles 21 The jurisdiction to terminate a winding up under s 482 is discretionary. The court ordinarily has regard to a range of factors which were set out in the judgment of Master Lee QC in Re Warbler Pty Limited (1982) 6 ACLR 526: Benedict v Olde; in the matter of ATS (Asia Pacific) Pty Ltd [2011] FCA 1008 ("Benedict v Olde") at [5]. Those factors are not to be rigidly applied but it is well accepted that the eight factors listed by Master Lee provide useful guidance: Benedict v Olde at [5], citing Dubolo Pty Ltd (t/as Fender Signs) v Codrington Investment Corporation Pty Ltd (1998) 26 ACSR 723. See also In the matter of 311 Hume Highway Liverpool Fund Pty Ltd (in liquidation) [2013] NSWSC 465; (2013) 93 ACSR 683 ("311 Hume Highway") at [4] and the cases there cited. 22 The Warbler factors are as follows: (1) The grant of a stay is a discretionary matter, and there is a clear onus on the applicant to make out a positive case for a stay: Re Calgary & Edmonton Land Co Ltd (in liq) (1975) 1 WLR 355 ("Re Calgary") at 358-359 per Megarry J. (2) There must be service of notice of the application for a stay on all creditors and contributories, and proof of this: Re South Barrule Slate Quarry Co (1869) LR 8 Eq 688; Re Bank of Queensland Ltd (1870) 2 QSCR 113. (3) The nature and extent of the creditors must be shown, and whether or not all debts have been or will be discharged: Krextile Holdings Pty Ltd v Widdows [1974] VR 689 ("Krextile") ; Re Data Homes Pty Ltd [1972] 2 NSWLR 22. (4) The attitude of creditors, contributories and the liquidator is a relevant consideration: Re Calgary. (5) The current trading position and general solvency of the company should be demonstrated. Solvency is of significance when a stay of proceedings in the winding-up is sought: In Re a Private Company [1935] NZLR 120; Re Mascot Home Furnishers Pty Ltd [1970] VR 593 at 598. (6) If there has been non-compliance by directors with their statutory duties as to the giving of information or furnishing a statement of affairs, a full explanation of the reasons and circumstances should be given: Re Telescriptor Syndicate Ltd [1963] 2 Ch 174. (7) The general background and circumstances which led to the winding-up order should be explained: Krextile. (8) The nature of the business carried on by the company should be demonstrated, and whether or not the conduct of the company was in any way contrary to "commercial morality" or the "public interest": Krextile. 23 In Apostolou v VA Corporation of Australia Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84 at [58], Finkelstein J noted that there may be cases, which he characterised as exceptional, where a stay of a company's winding up would not be granted when the company was solvent, but noted that such an order would usually be made if all the creditors are paid out, the liquidator's costs and expenses are covered and the members agree. 24 In this case, the liquidator gave evidence that the company is solvent and that he is not aware of any non-compliance by directors with their statutory duties. There are no relevant creditors apart from the liquidator, whose fees will be paid from funds deposited in an account for that purpose. The second and third plaintiffs agreed to indemnify the liquidator against any fees charged by the plaintiffs' solicitors. 25 I was satisfied that the relevant factors were sufficiently complied with in the present case to make an order. The order was plainly in the interests of the members of Maneroo and the liquidator supported the application. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gleeson.

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