By Interlocutory Process filed on 29 July 2019 the Applicant, Mr Pierre Anjoul, applies for an order under s 482 of the Corporations Act 2001 (Cth) that the winding up of the First Defendant, Beauvale Nominees Pty Ltd (in liq) ("Company") be, relevantly, terminated.
There is evidence that Mr Anjoul is the sole shareholder and sole director of the Company and he plainly has standing to bring the relevant application. Mr Mirzai, who appears for Mr Anjoul, refers to the observations of Palmer J as to the circumstances in which a winding up will be terminated in Leveraged Capital Pty Ltd (recs and mgrs apptd) (in liq) v Modena Imports Pty Ltd (in liq) [2010] NSWSC 739. The Court will ordinarily have regard to the factors summarised by Master Lee QC in Re Warbler Pty Ltd (1982) 6 ACLR 526, to which Palmer J referred and the case law has emphasised that the solvency of the company will be a significant consideration in that respect. Brereton J reviewed the relevant authorities in, inter alia, Re Glass Recycling Pty Ltd [2014] NSWSC 439 and noted (at [18]-[19]) that where a winding up was on the grounds of insolvency, the applicant must demonstrate that the company is not, or is no longer, insolvent and that is usually the most significant consideration: see also Re MWM Sydney Pty Ltd (in liq) [2016] NSWSC 688. This application does not raise any matters of particular controversy in respect of those principles.
Mr Anjoul has led comprehensive evidence to support the application. He reads his affidavits dated 22 July 2019 and 23 August 2019 and an affidavit of his brother, Mr Raymond Anjoul dated 16 August 2019, which explains the circumstances in which the debt that prompted the winding up application was not paid, and a creditor's statutory demand and winding up application also did not come to the Company's attention, by reason of administrative failures in respect of the collection of its mail, and the steps which have now been taken to address those very unfortunate failures. Mr Anjoul also relies on the affidavit of his accountant, Mr Boutros dated 22 August 2019 which refers to steps which have been taken to complete financial reports and place the Company in a position where it can file outstanding tax returns. I have also been taken to evidence of tax returns now lodged including up to the 2018 financial year.
Mr Anjoul also relies on the affidavit dated 27 August 2019 of one of the liquidators appointed to the Company, Mr Topp, which provides a comprehensive account of his investigation into the Company's position. While Mr Topp neither supports nor opposes the application, his review indicates that a number of debts that existed at the time he was appointed have now been paid; business activity returns have now been lodged by the Company; and the Company has both an excess of assets over liabilities, and excess of income over expenditures on an annual basis, although it continues to owe a secured debt to the Commonwealth Bank of Australia ("CBA") and debts to related party creditors which have been subordinated by arrangements with those creditors.
Mr Mirzai, in submissions, in turn refers to the history of the Company and its business, and, in particular, to the fact that the Company, as trustee of several family trusts, owns a property at Dundas Valley which generates a monthly return exceeding the expenditures connected with it, including moneys which must be repaid to CBA in respect of a secured loan. Mr Mirzai also refers to the circumstances in which the Company was wound up, by reason of an unpaid debt owed to Sydney Water Corporation, in a small amount, by comparison with its assets. Mr Mirzai also refers to the failures which led to the Company not paying that amount and then not opposing the winding up application.
Mr Mirzai in turn refers to the evidence as to the solvency of the Company, which I have addressed above, and to the fact that the Company has, depending on which valuation is adopted, either a very substantial or a substantial surplus of assets over liabilities, as well as a surplus of income over expenditures. Mr Mirzai fairly recognises that the secured debt remains owed to CBA, and that the Company's position depends, at least to some extent, on the subordination of related entity debt, since the Company would not necessarily be able to realise its property asset immediately, if related parties called upon this debt. Quite apart from any subordination arrangement, there seems to me to be substantial force in Mr Mirzai's submission that, where Mr Anjoul has taken the steps to seek to terminate the winding up, including undertaking to pay the liquidators' fees and paying the debts which existed at the time of the winding up, then it is highly unlikely that he would permit related companies that are under his control to now require payment of related party, so as to place the Company's solvency at risk.
For these reasons, and subject to one matter, I am satisfied that the Company has established its solvency and that its winding up should be terminated. That one matter is to recognise the likelihood that the winding up of the Company would have been an event of default under its financing arrangements with CBA. There is some evidence that interests associated with the Company are negotiating a further facility, for different purposes, with CBA, which not surprisingly has not been progressed while the Company is in liquidation. There is not, however, any evidence as to whether the Company, or those associated with it, continue to have CBA's confidence, in the sense that CBA will continue dealing with them on a business as usual basis, if the winding up is terminated. Such evidence would ordinarily be led in an application of this kind, where a company is dependent on bank financing, and is plainly significant here, because any lack of confidence of CBA, or an unwillingness to continue its existing facility subject to its terms and conditions, would be a matter which would significantly impact the Company's solvency.
I will therefore indicate that, subject to evidence that addresses CBA's attitude and the matters noted above, I will make an order terminating the winding up. I should note, for completeness, that the Company and those associated with it have not yet paid the liquidators' costs associated with the winding up, which will ordinarily need to be paid to terminate the winding up. The liquidators have, however, referred to a confirmation that the solicitors acting for Mr Anjoul hold the necessary funds to do so on trust and has accepted an undertaking to pay the amounts due to the liquidators within seven days of a successful application to terminate the winding up. If the liquidators are content to accept payment on that basis, rather than prior to the termination of the winding up, then it seems to me that the Court should also be prepared to proceed on that basis.
I make the following further directions and note the following undertaking:
Mr Anjoul to serve upon the liquidators, and send to the Associate to Black J, by 4pm on 6 September 2019, any further evidence relating to the position of the Commonwealth Bank of Australia.
Relist the matter in the Corporations Motions List at 9.15am on 9 September 2019.
There be liberty to apply.
Note the undertaking of Mr Anjoul, to the liquidators and to the Court, that within seven days of the making of an order terminating the winding up, Mr Anjoul will pay, or cause to be paid, the liquidators' time costs of $30,430.59 inclusive of GST, disbursements of $358.52 inclusive of GST, and legal fees of $20,350 inclusive of GST.
The exhibits be returned.
After this judgment was delivered, Mr Anjoul exercised the liberty to apply to rely on a further affidavit dated 4 September 2019 of his solicitor, Mr Dale, which annexed an email from CBA confirming that it would continue to support the Company through its continued facility and had no intention, subject to any subsequent default or breach of covenant, to call on or otherwise enforce its rights under or any security for the existing facility. CBA also noted that required payments had been made during the liquidation and the Company was not in arrears under the existing facility. The liquidators, by their solicitor, in turn confirmed, that he was satisfied, having regard to that correspondence, that the Court should make an order that the winding up be terminated. I subsequently made that order in chambers, on the basis of the undertaking as to the liquidators' fees noted above.
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Decision last updated: 30 December 2019
Parties
Applicant/Plaintiff:
Leveraged Capital Pty Ltd (recs and mgrs apptd) (in liq)