Deputy Commissioner of Taxation v Fyna Constructions

Federal Court of Australia|2019-04-29|Before: Griffiths J

Solicitor for the Plaintiff: Mr K Metlej of Craddock Murray Neumann

Counsel for the Defendant: Mr T S Hale SC with Ms C Palmer

Solicitor for the Defendant: Diamond Conway Lawyers

AND: FYNA CONSTRUCTIONS (HIRE & SALES) PTY LTD ACN 000 842 606 (ADMINISTRATORS APPOINTED) Defendant

JUDGE: GRIFFITHS J DATE OF ORDER: 29 APRIL 2019

The defendant's interlocutory application filed on 24 April 2019 be dismissed.
The defendant be wound up in insolvency under s 459A of the Corporations Act 2001 (Cth).
Stephen Hathway of Stephen Hathway, be appointed liquidator of the defendant.
The plaintiff's costs of the applications be paid out of the defendant's assets. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 On 17 August 2018, the plaintiff (DCT) filed an originating process seeking an order that the defendant company (Company) be wound up in insolvency under ss 459A and 459P of the Corporations Act 2001 (Cth) (the Act). The plaintiff relies on the defendant's non-compliance with a statutory demand under s 459E of the Act. The statutory demand is in the amount of $1,291,308.07, representing the Company's outstanding taxation liabilities to the plaintiff. On 27 February 2019, the defendant's objection to the outstanding taxation liabilities the subject of the statutory demand was wholly disallowed. To date, no review or appeal has been taken from the objection decision under Pt IVC of the Taxation Administration Act 1953 (Cth). The administrators say that they have not had sufficient time to determine whether review or appeal proceedings should be commenced against the objection decision. 2 The Company operated as a hire and sales business, providing scaffolding and construction equipment in the construction industry. 3 The defendant's failure to comply with the statutory demand within the period of three months prior to the plaintiff's application gave rise to a presumption that the Company is insolvent (s 495C(2)(a) of the Act). The Company can rebut that presumption with appropriate evidence (see s 459C(3) of the Act). 4 The plaintiff has filed evidence which demonstrates that it has complied with relevant formal requirements, as set out in s 459Q(a), (b) and (c) of the Act, as well as rr 2.4 and 2.5(c) of the Federal Court (Corporations) Rules 2000 (Cth). Evidence has also been adduced which establishes that the plaintiff has complied with the formal requirements set out in s 465A, 470(1)(a) and s 465A(c) of the Act. 5 By order dated 12 February 2019, the Court extended the period within which the originating process had to be determined to 16 August 2019. 6 On 11 April 2019 (i.e. less than two weeks before the scheduled hearing of the plaintiff's winding-up application), joint and several administrators were appointed to the defendant. The administrators issued an initial notification to creditors on the same day. The first meeting of creditors was scheduled to take place at 10:00 am on 23 April 2019, i.e. the day before the hearing. One of the matters which was to be considered at that meeting was a proposal by Company's sole director for a Deed of Company Arrangement (DOCA). The proposal is outlined in a two page letter dated 10 April 2019 which is addressed to the administrators notwithstanding that they were not appointed until the following day. The outlined proposal included information concerning the proposed subordination of claims and the establishment of a Deed Fund, which will be described more fully below. The plaintiff is the predominant external creditor of the defendant. There is no evidence before the Court of what happened at the meeting on 23 April 2019. 7 By an email dated 23 April 2019, which was sent shortly before the scheduled first meeting of creditors, the plaintiff advised the Company's solicitors that, having "considered the terms of the proposed DOCA, and having regard to the composition of creditors, our client does not consider it to be in the interests of creditors for the proceedings to be adjourned". The plaintiff said that he would seek to proceed with the winding-up application on 24 April 2019. 8 Mr David Hurst, one of the joint administrators, swore an affidavit dated 23 April 2019. His evidence may be summarised as follows: (a) immediately following his appointment, he negotiated terms of a licence agreement with Winlina Plant Hire Pty Limited (Winlina) to facilitate a resumption of the Company's operations, which occurred on 11 April 2019; (b) this enabled the Company's business to continue to operate while steps were taken to realise funds for the benefit of creditors and/or to enable the Company's sole director to propose a DOCA; (c) current indications were that the Company has a significant shortfall of assets to liabilities; (d) present indications were that the Company's creditors are owed approximately $2,556,254 and it was estimated that there would be little or no return to unsecured creditors of the Company if it were immediately wound up; (e) the proposed DOCA was intended to be for the benefit of unrelated unsecured creditors and would provide a better return to creditors than an immediate winding-up; (f) the proposed DOCA as set out in the director's letter dated 10 April 2019 had the following key elements: a Deed Fund, including funds to be recovered from outstanding debtors, with respect to the Company's bank account collected by the administrators during the administration and the licence period; funds paid by the Company's director into the administrators' Trust Account with respect to an upfront contribution by the director; an upfront contribution of $75,000 to be paid by the Deed Contributor (Fyna Projects Pty Ltd) upon execution of the DOCA; and five monthly contributions of $45,000 (from unspecified sources), with each instalment being payable on the last business day of each month following the month in which the DOCA is executed. (g) the "deed fund payments" outlined above would be guaranteed by Winlina who would also grant a security interest to the deed administrators which would be registered on the Personal Property Securities Register. 9 Mr Hurst deposed that, in order to enhance the distribution to unsecured creditors, the director had told him that, as part of the DOCA proposal, he and a number of related entities would postpone or subordinate any claims they may have against the Company. 10 Mr Hurst opined that it was in the best interests of creditors to adjourn the winding-up proceeding to allow further progress in investigating the Company's affairs and to receive and review any formal DOCA proposal in order to enable him to prepare a report to creditors on whether the proposal represents a better outcome for creditors than an immediate winding-up. He added that his preliminary view was that it "seems there is likely to be a better return to creditors from the DOCA process than from the immediate winding-up of the Company". 11 Noting that the convening period for the administration will end on 21 May 2019, Mr Hurst stated that if the winding-up was adjourned to a date after then, he would undertake not to hold the major meeting of creditors prior to that return date and would provide his report to creditors by 14 May 2019 so that the plaintiff could consider and determine before 21 May 2019 whether he would agree to a further adjournment to enable a major meeting of creditors to proceed. Alternatively, Mr Hurst deposed that, if the Company is wound up, given the work already undertaken by the administrators, it was in the best interests of creditors that he be appointed liquidator of the Company in order to eliminate the replication of costs. He described the actions which he and his joint administrator had taken to date. He provided a written consent to act as liquidator of the Company.

(a) Winding-up 12 The DCT properly acknowledged that the Court has a discretion to decline to make a winding up order (see ss 459A and 467(1)(a) of the Act). The DCT also acknowledged that instances where the Court has exercised its discretion not to make a winding up order have generally related to the prospect that the company will overcome its difficulties in the short-term. 13 The Company gave notice of its opposition to the making of a winding up order on the grounds that it disputes the debt, it is solvent and it also relied on the Court's power to refuse the application on discretionary grounds. 14 The Company filed four affidavits in response to the winding-up application, including an affidavit dated 23 November 2008 sworn by an accountant, Mr Asif Aman, who deposed that he has been employed by the group of companies of which the defendant is a member since 2007. He annexed a balance sheet for the Company, based on MYOB records as at 20 November 2018. He also annexed a profit and loss statement for the Company for the period from July 2017 through to June 2018. Mr Aman opined that, on the basis of his professional experience and available records, the Company is able to meet its current obligations as and when they fall due, other than the "disputed" tax assessment. 15 The Company filed two affidavits in support of its application for an adjournment: one by its instructing solicitor and the other by one of the joint administrators (Mr Hurst), the contents of which are summarised in [8] to [11] above. It also relied upon parts of Mr Aman's affidavit and the balance sheet attached thereto. 16 The relevant principles guiding the consideration and determination of an application for winding up based on non-compliance with a statutory notice of demand were helpfully summarised by Weinberg J in Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 at [44] (with reference to s 459G of the Corporations Law): 44. The authorities which govern the operation of s 459G of the Corporations Law seem to me to establish the following propositions: • The respondent is presumed to be insolvent and as such bears the onus of proving its solvency: s 459C(2) and (3); Elite Motor Campers Australia v Leisureport Pty Ltd (1996) 22 ACSR 235 per Spender J; Commissioner of Taxation v Simionato Holdings Pty Ltd. (1997) 15 ACLC 477 per Mansfield J. • In order to discharge that onus the Court should ordinarily be presented with the "fullest and best" evidence of the financial position of the respondent: Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1081 per Hayne J. • Unaudited accounts and unverified claims of ownership or valuation are not ordinarily probative of solvency. Nor are bald assertions of solvency arising from a general review of the accounts, even if made by qualified accountants who have detailed knowledge of how those accounts were prepared: Simionato Holdings Pty Ltd (supra); Re Citic Commodity Trading Pty Ltd v JBL Enterprises (WA) Pty Ltd [1998] FCA 232 per Heerey J; Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 at 463 per Sackville J. • There is a distinction between solvency and a surplus of assets. A company may be at the same time insolvent and wealthy. The nature of a company's assets, and its ability to convert those assets into cash within a relatively short time, at least to the extent of meeting all its debts as and when they fall due, must be considered in determining solvency: Rees v Bank of New South Wales (1964) 111 CLR 210; Re Tweeds Garages Ltd [1962] Ch 406 at 410 per Plowman J; Simionato Holdings Pty Ltd (supra); Melbase Corporation Pty Ltd v Segenhoe Ltd (1995) 13 ACLC 823 at 832 per Lindgren J; Leslie v Howship Holdings Pty Ltd (supra) at 465-466. • The adoption of a cash flow test for solvency does not mean that the extent of the company's assets is irrelevant to the inquiry. The credit resources available to the company must also be taken into account: Sandell v Porter (1966) 115 CLR 666 at 671 per Barwick CJ (with whom McTiernan and Windeyer JJ agreed); Leslie v Howship Holdings Pty Ltd (supra) at 466; Taylor v ANZ Banking Group Ltd (1988) 6 ACLC 808 at 812 per McGarvie J. • The question of solvency must be assessed at the date of the hearing. However, this does not mean that future events are to be ignored: Leslie v Howship Holdings Pty Ltd (supra) at 466-467. • It is no abuse of process for an applicant to seek to wind up a company presumed to be insolvent by reason of its failure to comply with a statutory demand merely because that company contends that it is solvent, or because there may be alternative means available to the applicant to vindicate its rights: Elite Motor Campers Australia v Leisureport Pty Ltd (supra). 17 Although ordinarily unaudited accounts do not have probative evidentiary value in such proceedings, there may be circumstances in which "the fullest and best" evidence available need not necessarily include audited accounts (see Deputy Commissioner of Taxation v De Simone Consulting Pty Ltd [2007] FCA 548 at [13]-[14] per Finkelstein J; Leslie v Howship Holdings Pty Ltd (1997) 15 ACLR 459 at 463 per Sackville J and Tony Innaimo Transport Pty Ltd (ACN 166 497 847) v Skyroad Logistics Pty Ltd (ACN 606 973 237) [2018] FCA 1134; 129 ACSR 224 at [42] per Griffiths J). 18 At the hearing, Mr TS Hale SC (who appeared with Ms C Palmer for the defendant) confirmed that the defendant no longer opposed the winding up application but instead sought an adjournment of the plaintiff's application to enable the administrators to conduct further inquiries as to what was in the best interests of creditors. The plaintiff opposed any adjournment of the winding up application.

(b) Adjournment of winding-up application 19 It is desirable to set out in full the terms of s 440A of the Act: Winding up company (1) A company under administration cannot be wound up voluntarily, except as provided by section 446A or 446AA. (2) The Court is to adjourn the hearing of an application for an order to wind up a company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. (3) The Court is not to appoint a provisional liquidator of a company if the company is under administration and the Court is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than have a provisional liquidator appointed. 20 It is to be noted that under s 440A(2) the Court is obliged to adjourn the winding-up proceedings if it is satisfied that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. Relevant factors to be taken into account in considering any such adjournment application include the length of the proposed adjournment and whether there is persuasive evidence (assessed by reference to the civil standard of proof) that creditors' interests will be better served by the adjournment. An example is where there is persuasive evidence that assets would produce a larger dividend to creditors if realised under a voluntary administration, as opposed to a winding up. As Black J pointed out in Inglewood Farms Pty Ltd v AM No 1 Pty Ltd (administrators appointed) [2012] NSWSC 564 at [4], little evidence may be needed to justify a short adjournment if that is sought at an early point in an administration, as contrasted with the need for stronger evidence as the administration proceeds. 21 There is an alternative source of the Court's power to adjourn the hearing of a winding-up application. It is set out in s 467 of the Act. As Perram J noted in Deputy Commissioner of Taxation v Polcarp Pty Ltd [2011] FCA 1142 at [4], the difference between the two sources of power is that s 440A(2) requires the Court to adjourn the proceedings if the Court has the requisite satisfaction under that provision, whereas s 467(1)(b) is not mandatory and confers a broad discretion on the Court. The Company did not rely upon this alternative source of power. 22 As noted above, the administrators were appointed on 11 April 2019. The Court is entitled to have regard to the lateness of the appointment of an administrator if this occurs immediately prior to the scheduled hearing of a winding up application: see, for example, Offshore and Ocean Engineering Pty Ltd v Greenwich Contractors Pty Ltd [2012] NSWCA 371 at [20]-[21] and In the matter of TMTE Group Pty Ltd [2014] NSWSC 1895 at [4]-[5] per Black J. Having regard to the terms of s 440A(2), I do not view the lateness of the appointment of an administrator as providing a basis for a residual discretion to refuse an adjournment. There is no such discretion under s 440A(2). Rather, I consider that the timing and background to the appointment of the administrators may be a relevant contextual matter that affects the Court's assessment of the evidence which is relied upon by the defendant as establishing the state of satisfaction required of the Court under s 440A(2) for an adjournment to be granted under that provision. 23 There are several aspects of the chronology of events leading up to these proceedings which are relevant to that assessment. The plaintiff's statutory demand was first served on the defendant as long ago as 20 November 2017. The defendant then applied in the Supreme Court of New South Wales to have the statutory demand set aside. By consent, on 14 May 2018, the Supreme Court ordered that the application be dismissed by consent. As noted above, on 17 August 2018, the plaintiff then filed its application to wind up the Company. That application was first returned on 26 September 2018, then again on 10 October 2018, then again on 23 November 2018 and then, most recently, on 12 February 2019. On the first three of those occasions, the plaintiff sought to proceed on his winding-up application. Notwithstanding that the defendant filed no evidence in respect of the winding-up application after 11 February 2019 (when the matter was set down for hearing), it delayed requesting an adjournment of the proceeding until very recently and shortly after administrators were appointed on 11 April 2019. 24 As might be expected, there are numerous cases relating to the operation of s 440A(2) and its predecessor provisions. They provide helpful guidance as well as some useful statements of general principle. Ultimately, however, each case necessarily turns on its own facts and evidence, with particular attention having to be paid to the express terms of the statutory provision when construed with appropriate regard to context and purpose (which includes the object set out in s 435A and related provisions which define the processes and duties of an administrator, such as ss 438A, 439A and 439C). 25 Without derogating from these core considerations, the following matters are relevant. First, the defendant carries the onus of persuading the Court that it should attain the requisite satisfaction under s 440A(2), bearing in mind the following observations of Santow J in Waste Recycling and Processing Services of New South Wales (T/as Waste Service NSW) v Local Government Recycling Co-Operative Ltd [1999] NSWSC 507; 32 ACSR 194 (Waste Recycling) at [6]: 6 Whether adjournment is as required by s 440A(2) "in the interests of the company's creditors" must be affected by the length of adjournment envisaged, where the adjournment is only for a limited time. It is also affected by the envisaged purpose and likely consequences of such adjournment. This must frequently be judged in circumstances where outcomes are not susceptible of certain prediction, with the onus nonetheless remaining with the administrator. A short adjournment may in some cases permit a greater level of assurance of salvageability or otherwise to be assessed in the interests of creditors by an independent administrator, without adverse countervailing consequences from such a short delay. On the one hand to grant such an adjournment there must be a sufficient possibility, as distinct from mere optimistic speculation, that such a deferment for the envisaged time is in the interests of creditors; see Deputy Commissioner of Taxation v Yates Security Services Pty Ltd (1998) 15 ACLC 48. On that question, views may legitimately differ. Often to be weighed is the certainty of adverse consequence for creditors if liquidation ensues as against the prospect of a better outcome, but no certainty, under administration, provided a deed of company arrangement can be successfully negotiated with creditors to underpin that outcome. To be taken into account, along with level of uncertainty of outcome, are any consequences of delay for even a short time… 26 Secondly, the question whether an administration should continue, as opposed to a winding up, is closely related to the question whether the creditors could hope to benefit more financially from an administration as opposed to a winding up (Creevey v Deputy Commissioner of Taxation (1996) 19 ACSR 456 (Creevey) at 457 per McPherson JA, with whom Pincus and Davies JJ concurred). 27 Thirdly, persuasive evidence is required to enable the Court to be satisfied (on the civil standard of proof) that there are assets which, if released under one form of administration rather than the other, would produce a larger dividend or, alternatively, at least an accelerated dividend for the creditors (Creevey at 457). 28 Fourthly, it is relevant to take into account the extent to which the administrator has had an opportunity to examine the affairs of the relevant entities (Waste Recycling at [17]); noting also the potential relevance of the fact that the timing of the commencement of the administration is not determinative where, for example, the administrator has had previous involvement with the affairs of the company (Deputy Commissioner of Taxation v Bradley Keeling Management Pty Ltd (administrators appointed) [2003] NSWSC 47; 44 ACSR 377 at [40] per Campbell J). 29 Fifthly, the principal inquiry under s 440A(2) is whether the administration for the period of the adjournment is in the interests of creditors, as opposed to the broader question whether the administration generally is in the interests of creditors (TCS Management Pty Ltd v CTTI Solutions Pty Ltd [2001] NSWSC 830 (TCS Management) at [15] per Hamilton J referring to Deputy Commissioner of Taxation v Choice Design Homes Pty Limited [1999] NSWSC 589 at [13] per Young J and Waste Recycling at [6] per Santow J), but that is not to deny the potential relevance of matters which are related to, but might occur outside, the period of the requested adjournment. 30 Sixthly, the reference in s 440A(2) to "the interests of the company's creditors" is a reference to their interests in recovering that which is owed to them, not to the interests which arise from family relationships, friendship or emotional attachment (Deputy Commissioner of Taxation v Alternative Business Solutions (Aust) Pty Ltd (Administrators Appointed) [2006] FCA 400; 24 ACLC 435 (Alternative Business Solutions) at [9] per Lindgren J). 31 Seventhly, the views of a primary external creditor as to his or her best commercial interests, including whether he or she prefers for good reasons to have the company immediately wound up, deserve significant weight, without losing sight of the need to pay proper regard to the interests of other creditors (Alternative Business Solutions at [9] per Lindgren J and Deputy Commissioner of Taxation v Allodium Holdings Pty Ltd [2006] FCA 830 at [8] per Dowsett J). 32 Finally, as Hamilton J wisely observed in TSC Management at [18]: 18 What I derive from a consideration of the foregoing authorities, as perhaps appears from my reflections during their recitation, is that it is dangerous, as in so many cases, to place any gloss upon the statute. The sole consideration posited as the criterion for the Court's decision in s 440A(2) is the interests of the company's creditors. It is clear that the onus is on the person seeking the adjournment to establish to the satisfaction of the Court that the adjournment is in the interests of those creditors. In general terms, that will be difficult to do unless there is a good case that there will be a greater or more accelerated return from the course contended for. But considerations beyond mere quantum may be relevant to take into account in determining what is in the interests of the creditors and whether it is established that an adjournment may be said to be in the creditors' interests. Where there are advantages in either course, in general terms it may well be the proper course to give such adjournment as will allow the creditors themselves to vote upon the proposal and determine which course they prefer.

Analysis and determination 33 As noted above, the Company did not seek to contest the winding-up application, but rather sought an adjournment. Mr Hale SC acknowledged that the appointment of the administrators was telling in terms of the Company's insolvency. He accepted that the non-compliance with the statutory demand was prima facie evidence of insolvency. In those circumstances, he acknowledged that in the event the application for an adjournment was unsuccessful, an order to wind up the company would follow. 34 Unless the winding-up application is adjourned, I am satisfied that the Company should be wound up. 35 For completeness, I should state that I do not consider that the plaintiff is required to obtain leave under s 440D of the Act to continue the winding-up proceeding in the absence of the administrators' written consent. I respectfully agree with the views expressed by Gyles J in Australian Prudential Regulation Authority v Rural & General Insurance Ltd (ACN 000 007 492) [2004] FCA 185; 136 FCR 149 at [11] (as affirmed by Jagot J in Cory v Registrar of the Federal Court of Australia [2010] FCA 1215; 275 ALR 286 at [23]) and of Brereton J in In the matter of Plutus Payroll Australia Pty Limited [2017] NSWSC 1041 at [14]-[16] on this issue. 36 I turn now to consider the defendant's application for an adjournment against the background of the observations and general principles outlined above. 37 I accept the plaintiff's submission that the Court's assessment of the defendant's evidence in support of its adjournment application attracts a degree of scepticism in circumstances where: (a) 17 months has now elapsed since the plaintiff served the statutory demand; (b) the Company's proceedings to have the statutory demand set aside were subsequently dismissed by consent; (c) the defendant has filed only scant evidence in the proceedings in response to the winding-up application and has filed no additional evidence since 11 February 2019 when the matter was set down for hearing, apart from two affidavits in support of its belated application for an adjournment; (d) the administrators were appointed only two weeks prior to the scheduled hearing of the winding-up application in circumstances where: the winding-up proceedings have been on foot for more than eight months; the plaintiff has sought to move on the winding-up application on three occasions before the Registrar; and no appeal or review has yet been commenced in respect of the disallowance of the defendant's objection to tax liabilities on 27 February 2019. 38 These contextual factors mean it is difficult to know how much underlying value there remains in the Company which in turn hinders my ability to be satisfied that continuing to trade under administration is likely to be a realistically superior alterative for the creditors, rather than merely resulting in further delay to recovery and erosion of remaining assets. 39 As to the proposed DOCA, I accept the plaintiff's submission that: (a) the proposal is largely speculative; and (b) there is insufficient material before the Court to be sufficiently confident that the proposal will see a necessarily larger or more accelerated dividend paid to creditors. 40 The speculative nature of the proposed DOCA is revealed by the following considerations. Although the defendant sought to emphasise the significance of the amount of $300,000 being available for the DCT under the proposed Deed Fund as outlined in the 10 April 2019 letter and the proposed subordination by virtually all of the unsecured creditors apart from the DCT, there are significant uncertainties surrounding these matters, including: (a) the absence of any evidence concerning the financial capacity of the Deed Contributor (Fyna Projects Pty Ltd) to make an upfront contribution of $75,000; (b) the absence of any evidence which identifies the sources of the proposed five contributions which would commence on the last business day of each month following the month in which the DOCA is executed; (c) the absence of evidence concerning the value of Winlina's proposed guarantee or the value of the security offered by it in relation to the deed fund payments, noting the lack of any financial or accounting records in respect of that company; (d) under the proposal, even if the DOCA were executed, the entire $300,000 would not be available for at least a further six months; and (e) although the first meeting of creditors took place the day before the hearing, and it was intended that the proposed DOCA would be considered, no evidence was placed before the Court as to the outcome of that meeting. 41 I also accept that significant weight should be given to the DCT's assessment of his own interests as the Company's largest creditor by value. The DCT is strongly opposed to the adjournment and has indicated that he would vote against the proposed DOCA. Having regard to the considerable uncertainties surrounding key elements of the proposed DOCA as outlined above, the DCT's position is a rational commercial decision. I accept the DCT's submission that it is too early in the process to determine what might be available to creditors in a liquidation. The DCT's position, after considering the outline of the proposed DOCA, is that his commercial interests are better served by the Company being immediately wound up as opposed to that process being adjourned. I am not persuaded that that position is outweighed by the interests of the other creditors all, or virtually all, of whom are related entities. 42 For all these reasons, I am not persuaded that the defendant has discharged its onus of demonstrating that the Court should be satisfied that it is in the interests of creditors that the winding-up proceeding be adjourned. Even allowing for the short time since the administrators were appointed, the existing material rises no higher than optimistic speculation that creditors' interests will be accommodated to a greater degree if the administration were to continue for the time of the requested adjournment and the Company not be wound up. 43 As to Mr Hurst's suggestion that he be appointed liquidator as opposed to the liquidator proposed by the plaintiff, generally the Court will appoint a liquidator nominated by the petitioning creditor unless there is good reason to take a contrary course. Although I acknowledge the work already undertaken by Mr Hurst and his co-administrator, I accept the plaintiff's submission that issues of independence arise from dealings since February 2019 between the Company and Mr Hurst and his firm, including Mr Hurst's involvement in the licence negotiations with Winlina and the adequacy of his disclosures in his affidavit relating to his consent to be the liquidator. I acknowledge that Mr Hurst has experienced considerable time pressures in relation to these matters, but I consider it is preferable that the liquidator be Stephen Hathway of Stephen Hathway (who provided a written consent dated 2 October 2018t o be appointed liquidator, which the Court assumes replaced a prior written consent dated 17 August 2018 by Andrew John Scott of Pricewaterhousecoopers), as sought by the plaintiff.

Conclusion 44 For these reasons, the defendant's adjournment application should be refused and the Company should be wound up in insolvency. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths.

Corporations Act 2001(Cth)ss 435A, 438A, 439A, 439C, 440A, 459A, 459C, 459E, 459P, 459Q, 465A, 467, 470

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