By notice of motion filed on 25 November 2016 the Applicant, Mr Raymond Roberts, applies to terminate the winding up of Randle Edge Pty Ltd ("Company") under s 482 of the Corporations Act 2001 (Cth) and for an order contemplating that the Company be returned to the management and control of its officers.
Notice of the application has been given to the liquidator, who neither consents to nor opposes the application, on the basis that arrangements have been made for all of the Company's debts to be paid and for the liquidator's fees, remuneration and costs to be paid. Notice of the application has been given to the petitioning creditor in the winding up, the Chief Commissioner of State Revenue, who also does not oppose the application. Notice has, properly, also been given to the Australian Securities and Investments Commission ("ASIC") which has indicated that its position is that the application to terminate the winding up is a matter for the Court.
The application is supported by an affidavit of Mr Roberts dated 24 November 2016 and two affidavits of the solicitor for the Applicant, Ms Owens, dated 25 November and 8 December 2016. The Applicant also relies on the affidavit of the liquidator, Mr Michael Smith, dated 7 December 2016.
The Company's business is in narrow scope, so far as it owns 11 company title parking spaces located at Surry Hills, New South Wales. It was wound up on the application of the Office of State Revenue for its failure to pay parking space levies, of a very substantial amount. It appears from Mr Roberts' evidence that although requirements to pay the levies, and documents relating to the winding up, had been sent to the Company's registered office, at the office of its then strata managers, those documents had not reached the then shareholders or directors of the Company. Mr Roberts also in turn indicates that he became aware of the winding up after the liquidator's appointment. Steps have been taken to address the issues which led to the winding up, including the raising of levies which have placed the liquidator in sufficient funds to meet the Company's debts, both to the Office of State Revenue and to the City of Sydney and its former strata manager, and the remuneration and costs of the liquidator. Certain issues as to the currency of ASIC records have also been corrected.
There is relatively limited information as to the Company's solvency, and Mr Cutler, who appears for Mr Roberts, fairly points out that the liquidator does not expressly say that the Company is solvent. On the other hand, the Company conducts relatively limited activities, so far as it owns parking spaces, is obliged to pay strata levies, and presumably council rates, in respect of those parking spaces, and levies its shareholders for the cost of doing so, and its shareholders presumably pay those levies for the convenience of occupying those parking spaces. That relatively straightforward business proposition appears to have failed, so far as the evidence goes, because of the issues relating to bringing the levies to the attention of shareholders and directors of the Company, although one might have thought that one or more of them might have noticed that they have not had a recent opportunity to pay their respective contribution to parking levies.
Mr Roberts has instructed his solicitor, who has informed the Court, that he has "absolutely learnt" his lesson from this experience, and it seems to me likely that the Company and its shareholders, who will have been exposed to significant costs in respect of this application, including the liquidator's costs and the legal costs of the application, would be highly unlikely to put themselves in a position where that occurred again. Where the Company's shareholders seek the convenience of occupancy of the parking spaces, then it is likely that they would keep the Company in funds to meet requisite expenses, rather than risk that it be wound up for a second time, where they might well have greater difficulty in terminating a second winding up.
Mr Roberts fairly acknowledges, in his affidavit, that there has been some delay in bringing this application. However, it seems to me that his evidence of the complexity of dealing with several shareholders provides explanation of that matter, and, in any event, that delay is not disadvantageous to any of the affected parties. There is evidence, in the affidavit of Ms Owens, and in the liquidator's affidavit, that levies necessary to place the liquidator in funds to pay all creditors have been made and paid, and that a modest surplus will remain, after those payments, which will be returned to the strata managers for the Company. A sensible approach has been adopted, which contemplates the deferring of the termination of the winding up, to a fixed future date, so as to allow the liquidator to discharge the relevant debts.
The principles that are applicable to an application of this kind have been addressed in the case law and are not controversial, and have been summarised, for example, in the useful decision of Brereton J in Re Glass Recycling Pty Ltd [2014] NSWSC 439 at [15], which has been applied in several subsequent decisions of the Court. It is not necessary, in an uncontroversial application of this kind, to do more than refer to those principles in broad terms. Here, the Company's creditors are in narrow scope, and there is no opposition by those creditors to the application. The Company's contributories support, and one of them brings, the application. There is an explanation for noncompliance with the Company's obligations in respect of parking levies, and that explanation is such as to give a degree of comfort that, with a change of strata manager as has occurred, and with greater consciousness of parking levies in the future, those events are not likely to be repeated. The primary issue in an application of this kind is solvency. While the evidence of solvency is not strong, in respect of the future cash flow of the Company, I recognise that the Company does not conduct a trading business, and that all that is ultimately required to achieve solvency is that levies to its shareholders be issued and paid in amounts sufficient to pay the outgoings in respect of the parking spaces. That should be able to occur, providing the administration of the Company's affairs is properly undertaken.
The case law establishes that the Court will generally terminate a winding up, providing that it can be satisfied that the state of affairs that led to the winding up no longer exists and, where a company was wound up in insolvency, that the company is no longer insolvent and is likely to remain solvent in the future. The liquidator's attitude is a significant matter, and the liquidator here does not oppose the application, and steps have been taken to pay his remuneration and fees. Although the circumstances of this case, and particularly the failure to pay revenue obligations over a period, do raise public interest considerations, I give weight to the fact that the Commissioner of State Revenue does not oppose the termination of the winding up, and has remitted some of the interest that was charged on unpaid amounts. It seems to me that no public interest consideration prevents termination of a winding up, where steps can be taken to ensure that revenue obligations are met in the future. I also have regard to the fact that, although the winding up order was made regularly - in the sense that there is no suggestion that it was not properly served upon the Company at its registered office - it appears that the fact that the order was sought was not known to its shareholders and directors at the relevant time, and that is a matter that also supports the termination of the winding up.
The liquidator seeks approval of his remuneration as liquidator of the Company under s 473 of the Corporations Act, in the amount of $39,690 (exclusive of GST) for the period from the date of his appointment on 18 April 2016 to the termination of the winding up. I have held, in earlier judgments, that the Court will not ordinarily delay the termination of a winding up for the determination of a liquidator's remuneration, where there is any controversy as to that question, and sufficient funds to pay the claimed amount of remuneration are set aside. In this case, however, there appears to be little controversy as to that remuneration. The appointing creditor, the Office of State Revenue, has indicated that it does not oppose an order that remuneration be approved in the amount claimed. Mr Roberts, the Applicant, has also indicated that he does not oppose that order. The order is supported by detailed time records, which record the work done by the liquidator, and it should be recognised that he has been in office for several months, and the amount of remuneration claimed reflects activities over that extended period. In these circumstances, I am satisfied that an order may properly be made under s 473 of the Corporations Act approving the liquidator's remuneration.
Accordingly, I make orders in accordance with the Short Minutes of Order, initialled by me and placed in the file.
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Decision last updated: 18 July 2017