Clone Pty Ltd v Players Pty Ltd

Supreme Court of NSW|2018-08-20|Before: Brereton J

Solicitors: Jemmeson & Fisher Lawyers & Accountants (Plaintiff) Moray & Agnew (Defendants) File Number(s): 2018/218442

Section 482 Application

After some communications with the liquidator on 16 July 2018, Mr Vaughan as a contributory of Dansar filed an Originating Process seeking an order pursuant to (CTH) Corporations Act 2001, s 482 ("Corporations Act") staying the winding up indefinitely. By an amended Originating Process, the relief sought was clarified, in that the plaintiff accepted that he should pay the reasonable costs incurred to date of the liquidator and the winding up, the costs of the application, and the costs of the Council as plaintiff in the winding up proceedings.
Mr Vaughan's Originating Process was, for reasons that are not apparent, irregularly filed in new proceedings. The application should have been brought by interlocutory process filed in the proceedings in which the winding up order was made. However, that formal irregularity does not prevent or preclude the Court from considering the present application on its merits.
On an application under Corporations Act, s 482, to stay or terminate a winding up, the Court must be satisfied first, in essence, that the state of affairs that required that the company be wound up no longer exists. Where the winding up was on grounds of insolvency, it will usually be necessary for the applicant to demonstrate that the company is not, or is no longer insolvent, and that is typically the most significant consideration. An order terminating the winding up will usually be made if all the creditors have been paid out, the liquidator's costs and expenses are covered, and the members agree. [1]
An application under s 482 is not the exclusive remedy available to a company which has been wound up in its absence. As I explained in K-Bek Motors Pty Ltd, where a winding up order is made by a Registrar in the absence of a defendant company, there are a number of courses open to the company. [2] One is an appeal under (NSW) Supreme Court (Corporations) Rules 1999, r 16.1; a second is an application to set aside the Registrar's order under (NSW) Uniform Civil Procedure Rules 2005 ("UCPR"), r 36.16; and a third is to apply pursuant to Corporations Act, s 482, for an order terminating or staying the winding up.
The first may be appropriate where there has been a hearing on the merits or where it is contended that the Registrar's decision was wrong in law or in fact on the material before the Registrar. Ordinarily, an application under UCPR, r 36.16, is the appropriate vehicle where the application has proceeded in the absence of the company and it seeks to be let in to defend the application. An application under s 482 is the appropriate course where there has been no defect or error in the winding up proceedings and the order was rightly made, but since then, the position has changed so that the circumstances which require the company be wound up no longer obtain. But by one or other of those courses, where a company has been wound up in its absence, and it can explain why it was absent and can show that it is solvent, the Court will normally terminate the winding up, or at least set aside the order and let it in to defend.
On the present application, there is evidence of draft financial statements for the company provided by it to the liquidator on 31 July 2018. Those statements show that the company claims to have assets of $630,320, of which $2 is 'Cash and cash equivalents', and the whole of the balance is described as 'Capitalised legal expenses'. Just how 'capitalised legal expenses' are an asset is not entirely clear; indeed, it is thoroughly mysterious. However, on any view, it is not apparent how they could conceivably be "current assets" capable of being realised for the benefit of creditors in the short term.
So far as liabilities are concerned, the balance sheet shows "current liabilities" of $630,318 described as 'Loans from associates - Vaughan Family Trust'; that being an amount equivalent to, and presumably representing, the capitalised legal expenses. The balance sheet does not show, but the notes to the financial statements refer to, 'Contingent Liabilities' in the following terms: 'Dansar Pty Ltd is currently involved in a legal dispute with the Byron Shire Council. At 30 June 2018 the case has not been determined and the Byron Shire Council is seeking $1,411,461.80 in compensation. Dansar Pty Ltd is currently involved in a legal dispute with King & Wood Mallesons lawyers. At 30 June 2018 the case has not been determined and King & Wood Mallesons lawyers are seeking $617,528.30 in compensation.'
It is simply incorrect to describe either of those as 'contingent' liabilities, and it is misleading to state that the case with Byron Shire Council has not been determined. The amount of $1,411,461.80 is the amount of a judgment of the Court which reflects the awards for costs made in favour of Byron Shire Council in litigation in the Common Law Division at first instance and then in the Court of Appeal and then on a special leave application to the High Court of Australia.
The notes to the financial statements also refer as "Contingent Assets" to legal action against Chris Pratt (a former officer of Byron Shire Council) and the Byron Shire for fraud against Dansar: 'As at 30 June 2018 the case has not been determined. Dansar Pty Ltd is seeking compensation of $3,500,000.'
That is certainly no more than a contingent asset, and it may be ambitious to describe it as a contingent asset insofar as the statements suggest that any action is on foot. So far as the evidence discloses, no such action is on foot.
As it seems to me, the company has, as current liabilities, the petitioning creditor's costs of $6,600; the liquidator's costs of approximately $16,000; the liability to Byron Shire Council of $1,411,000; a liability to King & Wood Mallesons, which is variously described as $550,000 to $617,000; and no current assets with which to meet any of them.
Mr Vaughan, as I have said, does not dispute the existence or the amount of the debt to Byron Shire Council, but wishes to propound a claim to set aside the judgments under which the debt arises, and to recover damages for fraud said to affect the underlying judgment in circumstances to which I shall return. It is important to note that he says that he is able to pay the debt to Byron Shire Council, but is unwilling to do so because he believes Dansar has a claim in fraud against the Council, and that the compensation that would be recovered for that would include the costs payable to King & Wood Mallesons.

Previous proceedings and Development Application background

It is necessary then to return to some of the background. For this, I am indebted, in large part, to the judgment of Macfarlan JA, albeit in dissent, in the Court of Appeal. [3]
At all material times, clause 45(1) of the Byron Local Environment Plan provided: 'The Council shall not consent to the carrying out of development on any land to which this plan applies unless it is satisfied that prior adequate arrangements have been made for the provision of sewerage, drainage and water services to the land.'
As a result of interim upgrade works undertaken to improve the Byron Bay area's sewerage capacity, in mid-2000 an officer in the Council's engineering department, Mr Ian Cook, calculated the sewerage capacity of the West Byron Sewerage Treatment Plant available for allocation by the Council, and derived a figure of 371 equivalent persons, which was converted by Council staff to 92.4 equivalent tenements ("ETs"). At its meeting on 19 September 2000, the Council noted that the West Byron Sewerage Treatment Plant had an unused capacity of 371 equivalent persons available for allocation to applicants for Development Approval.
Dansar lodged a Development Application ("DA") in respect of land which it had acquired in the relevant area on 6 February 2001, after Mr Vaughan had been advised by the Mayor of Byron Bay that there was sewerage capacity available to cover the development. In a memorandum of 27 February 2001 to the Council's General Manager, its Senior Development Engineer, Mr Handy, said that 32 ETs of the 92 previously identified spare capacity had been allocated to various approved DAs, and that the allocations required to satisfy further applications that had been lodged with Council exceeded the balance of the spare capacity. He said that it was therefore necessary that a protocol be put in place with regard to allocation of the remaining ETs and further acceptance of DAs. The allocations made to that point did not include that required for Dansar's development.
These figures were repeated by Council's General Manager, Ms Robin Reid, in a memorandum to councillors of 28 February 2001, in which she concluded that there was no remaining spare capacity in the West Byron STP, assuming the success of a large percentage of lodged DAs. The Mayor showed Mr Vaughan a copy of that memorandum the following day. What he said indicated that Dansar's development was one of those to which the previously identified spare capacity had been or would be allocated. Further communications with Council representatives in the following months confirmed Mr Vaughan's belief that this was so.
On 1 March 2001, the Mayor issued a media release stating that the DAs that the Council was then processing would consume the remaining capacity of the West Byron STP and that any spare capacity that emerged because of the failure of current DAs would be allocated on the basis of date of receipt. The Council passed a resolution to that effect on 24 April 2001, and Mr Vaughan read the press release and also a notice to the same effect posted at the Council's offices.
In a memorandum of 14 August 2001, Council staff recommended that the Council defer a decision on Dansar's DA for two months, to allow for the submission of a revised proposal addressing various concerns set out in the report - none of which related to sewerage. The Council so resolved that day.
On 31 August 2001, Dansar lodged with the Land and Environment Court an appeal against the deemed refusal of its DA, which occurred by reason of the Council not having determined the application within the prescribed period. The deemed refusal did not preclude the Council from thereafter considering and determining the application.
In a memorandum presented to Council on 28 August 2001, Council staff noted that there were sufficient ETs to allocate to DAs lodged prior to 6 March 2001. Dansar lodged amended plans in October 2001. On 2 November 2001, the Council filed, in Dansar's Land and Environment Court proceedings, a draft Statement of Issues which raised as issues whether adequate arrangements could be made for the provision of services to the proposed development in accordance with clause 45, and whether the proposal could be approved having regard to the inability to make prior adequate arrangements to the satisfaction of Council.
An internal Council document of 18 December 2001 referred to the Dansar DA as requiring, originally, 11.6 ETs, and, in its amended form, 12.4 ETs. A report dated 18 December 2001, prepared by Council staff, recorded that only five ETs of the available capacity of the 92 remained unallocated, and that those did not include any for Dansar's application, which required 11.6. In a memorandum of 18 December 2001, Council officers recommended the refusal of Dansar's DA for a number of reasons, the first of which was that the proposed development exceeded the available additional loading on sewerage services and therefore prior adequate arrangements had not been made in accordance with clause 45.
At a meeting on 18 December 2001, the Council resolved to defer consideration of Dansar's DA and to invite it to amend the application to address a number of points, none of which included sewerage. The resolution also stated that Council recognised that Dansar's application of 6 February 2001 was included in the pre-March 2001 allocation. However, an extraordinary meeting on 29 January 2002 rescinded that aspect of the resolution.
The Council's final Statement of Issues filed in the appeal to the Land and Environment Court, dated 13 February 2002, contained the same first two issues concerning sewerage as mentioned above.
On 15 February 2002, the Council's Acting Director of Water and Waste Services, Mr Warner, advised councillors that recent sewerage proposed for Byron Bay showed significant unanticipated growth, and that further technical work was being commissioned to verify the data and suggest appropriate next steps. Appended to the memorandum was a note from the General Manager which included a statement that under no circumstances should there be a reallocation of any ETs that are released through failed court cases. That statement was not included in the final version dated 1 March 2002 of the memorandum. It did not suggest, in any event, that the identified spare capacity of 92 ETs should not remain allocated to those developments to which they had been allocated and which continued to require it.
Mr Warner made a statement of evidence for use in the March 2002 hearing before a Commissioner of the Land and Environment Court, in which he supported the Council's decision to refuse Dansar's DA: '… as the proposal will place an additional sewerage load in excess of the current and committed loads of 10,395 equivalent persons on the West Byron STP. This plant does not have spare sewerage capacity to cater for this additional load.'
But he did not say that the spare capacity of 92 ETs, previously identified, should no longer be allocated; rather, he was saying that the development could not be accommodated within that total capacity because it was already committed. As Macfarlan JA observed: [4] 'The evidence before the primary judge indicates that this was an erroneous proposition because, contrary to the apparent belief of Council officers, the part of the capacity that had previously been identified as 'spare' (92.75 ETs) had not, with due care, been allocated to developments that required it.'
In submissions to the Land and Environment Court on 11 March 2002, the Council's solicitor opposed Dansar's appeal on the same basis.
The Commissioner's judgment of 15 March 2002 [5] stated that the parties were agreed that one of the two principal issues was that concerning sewerage. The Commissioner dismissed the appeal against the deemed refusal, concluding that the requisite sewerage capacity was not available, as insufficient of the spare capacity of 92 ETs remained available for Dansar's development.
Dansar appealed to a Judge of the Court. Such an appeal is confined to a question of law alone. [6] The appeal was heard by Lloyd J, whose decision was given on 22 September 2002. [7] His Honour identified that there were arguments as to whether or not the Commissioner had made incorrect findings of fact, but the appeal being limited to a question of law failed, because no error of law in the Commissioner's conclusion that the conditions in clause 45 were not satisfied was identified.
In a memorandum of 27 March 2003 from the then General Manager of the Council to councillors and the executive team, it was stated that the allocation of sewerage capacity to DAs would continue to be made on the basis of a total spare capacity of 92.75 ETs as advised on 28 February 2001. The availability of that number of ETs was confirmed in a letter from Council to Mr Vaughan on 29 April 2004, and a resolution to the same effect on 11 May 2004. After further dealings, the Council approved Dansar's amended DA on 20 June 2005. In the meantime, Dansar brought, in the then Administrative Law Division of this Court, an application for review of the Commissioner's decision, but that application was discontinued.
Dansar subsequently brought proceedings, the ultimate outcome of which resulted in the presently relevant debts, in the Common Law Division of this Court, for damages for negligence against the Council, alleging that the Council owed it a duty of care in connection with the consideration and management of its DA and that, in breach of that duty, it had made negligent errors from time to time in the calculation of, and representations about, the available spare capacity. Dansar's proceedings in the Common Law Division were heard by McCallum J in December of 2011 and decided on 30 January 2013. [8] Her Honour heard the proceedings on the question of liability only, and concluded that there was no such duty of care as that for which Dansar and Mr Vaughan contended. The proceedings were therefore dismissed, with costs.
Dansar appealed to the Court of Appeal. [9] The only real issue in the appeal was whether there was any such duty of care as that for which Dansar contended. Macfarlan JA would have found such a duty of care, [10] but Meagher JA and Leeming JA each held to the contrary. [11] It is nonetheless pertinent to note that, by the time the matter was in the Court of Appeal, it was, as recorded by Macfarlan JA, [12] common ground that, at all material times, sufficient of the 92.75 ETs total spare capacity remained available to accommodate Dansar's proposed DA, and that was confirmed by correspondence tendered on the hearing of the appeal. His Honour referred to the Council's errors which led to it having incorrectly acted, for a considerable period, on the basis that there was insufficient total spare capacity to accommodate Dansar's proposed development, which included failing to note that some applications had been withdrawn, and double counting others. [13] However, because there was no duty of care, the appeal was, by majority, dismissed, with costs, on 27 October 2014. An application for special leave to appeal to the High Court of Australia was dismissed on 17 April 2015, also with costs.
It is the three costs orders to which I have referred that, once assessed (in the case of the Common Law Division and Court of Appeal orders), and taxed (in the case of the High Court order), found, through registration or filing of the certificates of assessment and taxation in this Court, the judgment debts the subject of the creditor's statutory demand and the winding up proceedings.
It is necessary to understand that background in order to appreciate, on the one hand, that, as is evident enough from Macfarlan JA's judgment, Dansar's complaints were not without merit. Palpable errors had been made, resulting in incorrect assumptions by Council as to the availability of sewerage capacity. Had those errors not been made, then there is good reason to suppose that Dansar's DA would have been approved in 2000 or 2001, when it was deemed to be refused, and/or that Dansar would have succeeded on its application before the Commissioner of the Land and Environment Court in early 2002.
But it is also necessary to understand from that background the nature of the proceedings that gave rise to the judgment debts, because of the way in which Mr Vaughan now seeks to put the case. The proceedings were proceedings in negligence, and the fundamental question throughout was whether or not there was, at law, a relevant duty of care.

Termination of winding up

One matter at least is clear, and it is that, whatever might be Dansar's prospects in respect of any of the causes of actions which Mr Vaughan now wishes it to propound, it cannot presently be said to be solvent. It has liabilities determined by judgment of close to $1.5 million; other liquidated liabilities of close to another $500,000; and no assets whatsoever with which to satisfy them. It does not currently have assets available to meet debts which are currently due and payable. Indeed, absent an injection of funds, whether from Mr Vaughan or from elsewhere, it is hopelessly insolvent.
On the other hand, the evidence of Mr Vaughan to which I have referred sufficiently explains why Dansar was not represented at the hearing of the winding up proceedings. The order was made in its absence and, in those circumstances, the discretion to set aside the winding up order, at least to allow Dansar to defend the winding up proceedings, is enlivened. But whether it has an arguable defence is highly material to the exercise of that discretion, and an arguable defence would involve establishing, to some extent at least, that Dansar was arguably not insolvent.

Fraud Claims

Mr Vaughan wishes to propound claims for fraud against one Mr Pratt, a former officer of the Council, and the Council as his employer. These claims were not precisely formulated. However, as I understand them, they can be characterised in the way in which I will describe below. In this respect, it is important to distinguish a claim to set aside a judgment for fraud on the one hand, and a claim for damages for fraud on the other. These tended to be insufficiently distinguished, if not confused, in the way in which Mr Vaughan has sought to raise the matters on behalf of Dansar.
It appears that the notion of a claim to set aside a judgment for fraud may have been the trigger for the present application, because Mr Vaughan refers to having read the recent judgment of the High Court in Clone Pty Ltd v Players Pty Ltd (in liq), [14] which dealt with that ground. As was explained in that decision, a judgment may be set aside in a suit before the court of first instance where it is procured by deceit or dishonesty by the opposing party, or by 'fraud on the court'. [15] It is a requirement that there must be 'actual fraud', and it must be fraud 'in the course of the proceedings'. [16] In other words, the cause of action depends on showing some deceit or dishonesty in the course of the proceedings.
As I apprehend the case that Mr Vaughan would wish Dansar to advance, it turns on the failure to discover a minute of Council's Planning Review Committee on 16 May 2001, at which were present Councillors Barham, Cardiff, and Comon, and Mr Pratt, Director Local Approvals and Compliance Services. This meeting considered whether certain DAs were to be determined by the Council alone or by officers of the Council under delegated authority. Relevantly, in respect of Dansar's application, the decision was 'No delegation - to be determined by Council.' It is important to understand what that means. It does not mean that Council officers can do nothing; it means that any decision to approve or refuse the DA is not delegated and can only be made by the Council.
It is accepted that that report was not discovered in the Common Law Division proceedings, although a cover sheet of a file which bore a 'No Delegation' stamp was discovered, and although Mr Vaughan had been asking for some years - indeed, from as early as early 28 November 2001 - whether Mr Pratt or any other officer had had authority to instruct the solicitors then acting for the Council to 'make clause 45 of the Byron Local Environment Plan an issue'. However, the evidence of Mr Brothers makes tolerably clear that while this document was not discovered, that was not an intentional suppression of relevant evidence. Moreover, it seems to me that it had nothing to do with the real issues in dispute in the Common Law Proceedings. which were whether there was a duty of care and, if so, whether there was a breach of it. It is therefore highly doubtful that it was discoverable at all in those proceedings. But assuming that it was, it does not seem to me that an arguable case that its non-disclosure amounted to such fraud in the proceedings as would justify setting aside the judgment could possibly be made. That is because, among reasons, disclosure of this document would have made no difference whatsoever to the ultimate conclusion that there was no duty of care, and therefore that the Common Law Proceedings could not succeed. For those reasons, I do not accept that any prospect of disturbing the judgments which gave rise to the costs orders which found the debts, on the basis of fraud in the proceedings, has been shown.
Beyond that, however, Mr Vaughan, as I understood his evidence and submissions, sought to contend that there was what was described as 'fraud' by Mr Pratt at an earlier stage of the DA process, when it was before the Council. In effect, he contends, as I understand it, that Mr Pratt - not negligently, but intentionally - manipulated the allocations of sewerage capacity and, without authority, caused clause 45 to be raised as an issue in the proceedings before the Commissioner in the Land and Environment Court.
Insofar as the complaint is about 'raising' or authorising the raising of the clause 45 issue, the argument is misconceived. Clause 45 did not have to be 'raised'. The Commissioner was sitting in the shoes of the Council and had to make the decision that the Council ought to have made. Clause 45 meant that the Commissioner had to be satisfied that 'prior adequate arrangements have been made for the provision of sewerage, drainage and water services to the land'. The Commissioner had to be satisfied both that prior arrangements had been made, and that they were adequate. It was suggested that the decision of the Court of Appeal in Codlea Pty Ltd v Byron Shire Council ("Codlea") [17] meant that the Commissioner could not consider the first question, and that clause 45 was not a live issue unless raised by the Council. That is not what Codlea says at all. As was explained by Macfarlan JA in the Court of Appeal, [18] in that case the Court held that an appeal against the refusal of the DA entitled the Court to substitute its own satisfaction under clause 45 for the Council's lack of satisfaction, but the Court could not make an arrangement concerning sewerage when none had been made by the Council. So the Commissioner had to be satisfied that there was an arrangement, and could not himself negotiate or make such arrangement, but still had to turn his mind to the issue; and the Commissioner would have had to do so whether or not the Council expressly raised it as an issue.
Further, there is nothing in the point that the issue may have been raised 'without authority'. It was raised by lawyers acting for the Council and conducting the proceedings on the Council's behalf, and the fact that the application was reserved for determination only by the Council without delegation has no impact at all on who on behalf of the Council gives instructions to solicitors for the purposes of the conduct of proceedings against the Council and for review of its decision.
But Mr Vaughan's argument goes still further, and suggests that Mr Pratt intentionally manipulated the entitlements and then caused clause 45 to be raised without the Council's knowledge, presumably for some unstated improper purpose. It is at this point that it is necessary to remember what is involved in the tort of fraud, or deceit, which is committed when a defendant - relevantly the Council - makes a false representation to the plaintiff - relevantly Dansar - knowingly or without belief in its truth, with the intention that the plaintiff should believe and act on it. To be actionable, the plaintiff's reliance on the false representation must result in damage to the plaintiff.
No representation, made by the council to Dansar, on which Dansar relied so as to suffer damage, has been identified. The mere characterisation of conduct as fraudulent, if it be that, does not amount to a cause of action in deceit sounding in damages. Maybe what Mr Vaughan would like to invoke is the tort of misfeasance in public office, which involves an invalid or unauthorised act or omission, done knowingly or maliciously by a public officer in purported discharge of his or her public duties, which causes loss or harm to the plaintiff. However, where a public officer acts outside the scope of his or her office, there is ordinarily only personal liability, and unless there is some de facto authority there is no vicarious liability. [19] Thus, even if Dansar could establish the tort of misfeasance in public office against Mr Pratt, it would not result in the Council incurring vicarious liability for it.
Moreover, given that these events occurred in 2001 or thereabouts, and that Dansar must have suffered loss by the time of the Commissioner's decision in 2002, it would face very considerable limitation hurdles in raising any such cause of action now.
For those reasons, it seems to me that any of the causes of action that Mr Vaughan would wish Dansar to propound are highly speculative, to say the least.

Other considerations

There are further considerations. Mr Vaughan's evidence suggests that any cause of action that Dansar once had now resides in another company which has been appointed trustee of the Vaughan Family Trust in place of Dansar. That argument is not entirely straightforward, but if correct (and it seems to me that, even if the assignment has not been perfected, the liquidator could be called on to perfect it), then Mr Vaughan could cause the new trustee to pursue any of the causes of action if he is minded to do so.
Alternatively, if he can persuade the liquidator that the cause of action has merit, the liquidator can bring it; and if not, Mr Dansar may apply to the Court for leave to bring a derivative action if the liquidator refuses to do so. Or, he can avoid all of that by funding the liquidation, paying the creditors, and having the liquidation terminated on payment in full of all the creditors.
In circumstances where there is no reason to doubt the solvency of the Byron Shire Council, the course of the last seventeen or eighteen years and the outcome of the proceedings support the view that, prima facie, the money for the time being should be with the creditor who has a judgment debt, rather than with an insolvent company on the basis of a highly speculative cause of action that a former director wishes it to pursue.

The form of the statutory demand

That leaves one matter to which I must return, which is the form of the creditor's statutory demand to which I adverted at the outset.
For reasons which I explained in In the matter of International Materials & Technologies Pty Ltd ("International Materials"), [20] I am of the opinion that a creditor's statutory demand which, in non-compliance with the requirements of Corporations Act, s 459E, and the prescribed form of demand, fails to specify an address for service in the state in which the demand is served and specifies an address for service in another state which is not the creditor's registered office, is null and void, because it is calculated to mislead the debtor into making an ineffective application to set aside the demand. That decision, which I have applied in other cases, [21] was not followed in the Supreme Court of Victoria in Slap Corporation v Civil, Infrastructure & Logistics Pty Ltd. [22] Nonetheless, for present purposes, I adhere to the view which I expressed in International Materials. It needs to be appreciated in that behalf that, unless one takes that view, such a demand will not be capable of being set aside in a case in which it does cause mischief, because no valid application to set aside the demand could be made within time.
The consequence of that view is that, on the hearing of the winding up summons before the Registrar, there was no valid creditor's statutory demand, no failure to comply with a valid demand, and, therefore, no presumption of insolvency - and, as it would seem that no evidence was adduced of actual insolvency, nor any attempt to rely on actual insolvency, there was no evidence of insolvency. Had Dansar appeared before the Registrar on 7 June 2018 with a lawyer who was familiar with the authorities, it would no doubt have obtained an adjournment for the purposes of arguing that there was no valid demand, and, therefore, no presumption of insolvency. Had that been done, the creditor would no doubt have sought to obtain and adduce evidence of actual insolvency to support the application.
This court is not hearing an application under UCPR, r 36.16, to set aside the order for winding up and let the company in to defend, although I have had regard to the principles that are relevant on such an application. Given the evidence that establishes, as it does before me, a plain case of insolvency, there would be no utility nor justice in setting aside the order for the purpose of allowing the company to defend an allegation of insolvency when, on the evidence here, it is plainly insolvent. Mr Vaughan's remedy, if he wishes one, is to fund the liquidator to pay the creditors, in which circumstances the Court might well be minded to terminate the winding up. But unless and until that is done, the company is plainly insolvent, and liquidation is the appropriate status for it.

Orders

For the foregoing reasons, the Court orders that: 1. The Originating Process filed on 16 July 2018 as subsequently amended be dismissed with costs; and 2. The exhibits may be returned.

Endnotes

In the matter of Glass Recycling Pty Ltd [2014] NSWSC 439 at [18]-[19] (Brereton J).
[2017] NSWSC 1838 at [8] (Brereton J).
See Dansar Pty Ltd v Byron Shire Council (2014) 89 NSWLR 1 at 5-9 [13]-[41] (Macfarlan JA); [2014] NSWCA 364 ("Dansar Appeal").
Dansar Appeal at 8 [32] (Macfarlan JA).
See Vaughan v Byron Shire Council (Land and Environment Court (NSW), Commissioner Hoffman, 15 March 2002, unrep).
(NSW) Land and Environment Court Act 1979, s 57(1).
See Vaughan v Byron Shire Council (No 2) [2002] NSWLEC 158.
Dansar Pty Ltd v Byron Shire Council (2013) 196 LGERA 39; [2013] NSWSC 17.
Dansar Appeal.
Dansar Appeal at 20 [87] (Macfarlan JA).
Dansar Appeal at 39-40 [181] (Meagher JA), 41 [190] (Leeming JA).
Dansar Appeal at 8-9 [39] (Macfarlan JA).
Dansar Appeal at 9 [40] (Macfarlan JA).
(2018) 264 CLR 165; [2018] HCA 12 ("Clone").
Clone at 191-192 [53] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ).
Clone at 192 [54] (Kiefel CJ, Gageler, Keane, Gordon and Edelman JJ).
(1999) 105 LGERA 370; [1999] NSWCA 399.
Dansar Appeal at 18 [79] (Macfarlan JA).
See Northern Territory v Mengel (1995) 185 CLR 307 at 347 (Mason CJ, Dawson, Toohey, Gaudron and McHugh JJ); [1995] HCA 65; Racz v Home Office [1994] 2 AC 45; 2 WLR 23 at 25-28 (Lord Jauncey; Lord Templeman, Lord Goff, Lord Brown-Wilkinson and Lord Mustill agreeing); James v Commonwealth (1939) 62 CLR 339 at 359-360 (Dixon J); [1939] HCA 9.
(2013) 282 FLR 362 at 367-368 [16]-[21] (Brereton J); [2018] NSWSC 787.
See, eg, In the matter of Glenevan Pty Ltd [2015] NSWSC 201 at [6] (Brereton J).
(2017) 50 VR 542 at 560-562 [71]-[75] (Randall AsJ); [2017] VSC 168. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 November 2021

(1999) 105 LGERA 370

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