Issue 1: Application to wind up on just and equitable grounds
3 The principles to be applied in considering whether to wind up a company on just and equitable grounds are well established. As stated by Beach J at [56] in Australian Securities and Investments Commission v Bilkurra Investments Pty Ltd [2016] FCA 371 'there are three factors that are of central significance' in relation to the exercise of the power to wind up a company on just and equitable grounds:
(a) First, is there a justifiable lack of confidence in the conduct and management of the relevant company or its affairs?
(b) Second, is there a real risk to the public or the public interest that warrants protection by such an order and the incidents flowing from liquidation?
(c) Third, is the relevant company solvent?
4 The last question arises because '[a] court may be reluctant to wind up a solvent company' on just and equitable grounds.
5 As to the third factor, there can be no doubt because on 4 October 2018 the directors of Bux Global resolved that the company was insolvent and appointed Mr Graeme Beattie as administrator of the company.
6 For the following reasons, the other two factors are satisfied.
7 First, despite the serious matters raised in support of the application, the directors provided no substantive response to those claims in the course of these proceedings. The winding up application was commenced in December 2017. After an adjournment of the initial hearing dates which were to commence in July 2018, Bux Global was required to file affidavits in substantive response on 17 September 2018. It did not do so and terminated the instructions for solicitors who have had the conduct of the proceedings for Bux Global on 19 September 2018.
8 Second, the unanswered claims made in these proceedings include the following matters, which are supported by evidence before the Court on the winding up application:
(1) Bux Global was established to conduct a business in relation to an application for mobile devices whereby funds may be transferred in different currencies from one Bux account to another to facilitate the international transfer of funds (Bux App);
(2) investors in the business have contributed at least $65 million over a period of a number of years;
(3) Bux Global was the latest in a series of companies which had been used to raise funds from investors for the development of the Bux App on the basis that there would be a public listing of a company conducting the business in which the investors would have shares that could be publicly traded;
(4) despite representations over a number of years by those involved with the companies and Bux Global, that listing has not occurred;
(5) in relation to the establishment of Bux Global as an Australian publicly listed company, those involved as its controllers disseminated offers of shares without complying with the prospectus provisions of the Corporations Act;
(6) responses provided by Mr Andrew Webber, as a director of Bux Global, to inquiries by the Australian Securities and Investments Commission concerning its fundraising activities were of a character that are properly described, as submitted, as being not candid;
(7) in the weeks prior to this hearing, those in control of Bux Global took steps which support the conclusion that the business relating to the Bux Apps was, to use the modern parlance, phoenixed into another company. Indeed, this is a view which Mr Beattie, in the affidavits that he has provided, has identified evidence to support in the course of the administration that has been conducted to this time;
(8) a licence agreement entered into by the directors of Bux Global with 2WayWorld as part of recent activities by directors allows that company the right to take over the assets of Bux Global if certain costs were not met by the company;
(9) some of the investments made in the Bux App were deposited into Australian bank accounts and those funds have been used to meet the personal expenses of those associated with the company. In particular, between 2007 and 2011, a total of about $1.2 million was transferred to Mr Raymond Webber's wife, Roslyn Webber;
(10) Bux Global has received minimal earnings from the Bux App;
(11) on the evidence before me, as I noted on the application for the appointment of a provisional liquidator, there is an issue as to whether the Bux App works. Since his appointment as administrator Mr Beattie has made inquiries about these matters. He says:
I have not been able to test the mobile phone app because I have not been able to locate the apps on either the Android and Apple App Stores … I am informed that the app was removed as a result of my appointment … Andrew Webber informed me, in effect, that, (a) as a result of my appointment, he turned off the company's website with download links to the app due to the freezing of the company's bank accounts subsequent to my appointment and the loss of the company's Australian Financial Services licence as authorised representative of Flexewallet, (b) there was a third party audit conducted in June 2017 showing that the app was working.
The affidavit of Mr Beattie also says that he is informed and believes that Mr Webber advised his staff, that is Mr Beattie's staff, that there are hardly any active users of the App given that there has not been sufficient advertising conducted with funds being spent on defending the current litigation. As to the truth of that explanation, Mr Beattie says:
However, upon review of the financial records, the company recorded advertising expenditure of circa $1.5 million for the financial year ended 30 June 2018 as opposed to legal fees of circa $621,000 paid to K&L Gates in defending the current proceedings. These records do not accord with the comments made by Mr Webber and further investigation is required.
(12) Mr Beattie, as administrator, supports the appointment of a liquidator of Bux Global and does not seek an adjournment of the winding up application under s 440A(2) of the Corporations Act in the interests of creditors; and
(13) the majority of the staff of Bux Global have resigned.
9 As I have noted, an issue was raised in these proceedings as to the standing of the parties who have been the plaintiffs in the application up until this point prior to my determination that Dr Crawford should be joined as a third plaintiff. Although the plaintiffs claim to have standing as contributories, it was contended that they were not contributories. Those plaintiffs also claimed that they were creditors and still claim that they are creditors of Bux Global on the basis that it was a knowing recipient of trust property which had been held for their benefit.
10 The issue as to whether the claims made by the plaintiffs as to their standing should be upheld was addressed on an unsuccessful application for summary dismissal of the winding up application that was brought by Bux Global and those issues are dealt with in the reasons relating to that application: Hooke v Bux Global Limited [2018] FCA 740 (Colvin J) and Bux Global Limited v Hooke [2018] FCA 882 (McKerracher J).
11 As matters presently stand, it is not necessary to determine this question because Dr Crawford, who is now the third plaintiff, clearly has standing and he supports the grounds that have been advanced for many months by the other plaintiffs.
12 For all of those reasons, I am satisfied that there should be an order winding up the company on just and equitable grounds.