Australian Securities and Investments Commission v SA Services & PW Pty Ltd

Consideration 6 Section 461(1)(a) of the Act provides that the Court may order the winding up of a company if the company has by special resolution resolved that it be wound up by the Court. In Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371; 205 FLR 450 at [35], Barrett J observed that: Although judicial discussion of s.461(1)(a) and equivalent provisions has been limited, it seems to me that three principles should be regarded as relevant to a case in which winding up is sought on the ground that the company has by special resolution resolved that it be wound up by the court. First, the body of shareholders has a statutory right to decide that their company should be wound up by the court, being a right exercisable by whatever procedures are sufficient, in the particular circumstances, to cause a special resolution to be passed. Second, the court has discretion whether or not to make a winding up order (being the discretion created by the word "may" at the start of s.461(1)) but the discretion should not be exercised against the making of the order unless the shareholders' decision, or some aspect of the surrounding circumstances, involves something unconscionable or inequitable (or some special consideration adversely affecting creditors indicates that there should be no winding up). Third, the availability to the shareholders of the alternative of initiating voluntary winding up by special resolution does not represent any reason for declining to make a winding up order. This last point is really no more than an aspect of statutory interpretation: if there had been some intention that the voluntary winding up mechanism should have primacy, s.461(1)(a) would not form part of the Act. See also Kala Capital Pty Ltd [2011] NSWSC 1253 at [6]-[7] (Barrett J); MFS Alternative Assets (in liquidation) v Angstrom Assets Pty Limited [2012] NSWSC 447 at [4] (Black J); Griffin Energy Group Pty Ltd v Griffin Windfarm Holdings Pty Ltd, in the matter of Griffin Energy Group Pty Ltd (subject to Deed of Company Arrangement) [2012] FCA 197 at [17]-[19] (Jacobson J). 7 There is nothing in the present circumstances which would indicate that it might be unconscionable or inequitable to wind up each of the First and Second Defendants. Similarly, there is no indication in the material before the Court that the winding up of the First and Second Defendants might adversely affect the interests of creditors. 8 Further, I am satisfied that the orders sought by ASIC are appropriate to ensure that the affairs of the company can be independently and thoroughly investigated. In reaching this view, I have had regard to the matters deposed to in the Guanlao Affidavit, which have been identified by ASIC during the course of its investigations and enquiries. Those matters include a concern that the funds of prospective investors may have been fraudulently transferred into accounts controlled by the First and Second Defendants. 9 Additionally, the entities in question are associated with a Mr Larry John Dawson (Mr Dawson). Mr Dawson was arrested in December 2020, following an investigation by ASIC, and charged with offences relating to alleged financial misconduct (for a summary of the relevant conduct, see my reasons in Australian Securities and Investments Commission v Dawson [2020] FCA 1144 at [3]). Relevantly for present purposes, the registered address of the First Defendant is listed as the residential address of Mr Dawson, and the director of the First Defendant, Craig Campbell Davis (Mr Davis), has known Mr Dawson for four to five years and holidayed with him overseas. Mr Dawson is also the sole director of the Second Defendant and a complaint of misconduct has been received in connection with that company. 10 Finally, ASIC indicated that an order pursuant to s 461(1)(a) of Act was preferable because the registered liquidators may refuse an appointment pursuant to s 491 of the Act. ASIC submitted that this is so because there is no certainty that the directors of the companies would provide a prospective liquidator with an indemnity for fees associated with any appointment pursuant to that section. I agree. The making an order under s 461(1)(a) will facilitate the orderly winding up of the First and Second Defendants and may enable the liquidators to obtain access to the Assetless Administration Fund (which would not be available to liquidators of a solvent company under s 491 of the Act).

Disposition 11 For the reasons set out above, I have made an order for the winding up of the First and Second Defendants and ancillary orders. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou.