Maamari v Ringwood & Ply Pty Ltd

Equity Division JURISDICTION : Corporations List

CATCHWORDS : CORPORATIONS - winding up - whether Supreme Court of New South Wales may make an order terminating winding up where the winding up order was made by the Supreme Court of Queensland

LEGISLATION CITED : Corporations Act 2001 (Cth), ss.58AA, 459A, 482

Acton Engineering Pty Ltd v Campbell (1991) 31 FCR 1 Re FAI General Insurance Co Limited [2002] NSWSC 262 CASES CITED : Re Macks; Ex parte Saint (2000) 204 CLR 158 Sihota v Pacific Sands Motel Pty Ltd (2003) 56 NSWLR 721

Issa Maamari - Plaintiff PARTIES : Ringwood & Ply Pty Limited - First Defendant Arthur William Butterell - Second Defendant

Mr J.K. Chippindall - Plaintiff COUNSEL : Mr K.C. Gourlie, Solicitor - First Defendant Mr P.J. Cooper - Second Defendant

Jordan Djundja - Plaintiff SOLICITORS : Craddock Murray Neumann - First Defendant Gray & Perkins - Second Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

1 On 30 November 2004, an order for the winding up in insolvency of Buildx Construction and Building Group Pty Ltd ("the company") was made by the Supreme Court of Queensland. The successful applicant for the winding up order was Ringwood & Ply Pty Ltd. It relied upon the presumption of insolvency arising under s.459C of the Corporations Act 2001 (Cth) in consequence of failure to satisfy a statutory demand. 2 Now before the Court is an application by Mr Maamari, the sole director and sole shareholder of the company, for an order under s.482 of the Corporations Act terminating the winding up. 3 Mr Chippindall of counsel, who appeared for the plaintiff, informed me that the present application had come before the Vacation Judge during the latter part of January and subsequently before the Duty Judge and that a threshold question had, on each occasion, been recognised but not addressed, namely, whether this court has power to make an order terminating a winding up which has resulted from the making of an order for winding up by another court having jurisdiction under the Corporations Act of the Commonwealth. 4 Mr Chippindall submitted that power does exist. Neither of the defendants to the present proceeding, being the liquidator and the creditor which made the successful application for winding up in the Supreme Court of Queensland, sought to argue otherwise. Reference was made to the fact that that creditor is based in Brisbane, whereas Mr Maamari and the company are based in Sydney. 5 I am satisfied that this court does have power to make the order sought. The relevant jurisdiction is wholly statutory. It derives from the provisions of the Corporations Act. Section 482(1) reads: "At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order."

Section 482(1A) goes on to say who may make such an application. Mr Maamari is within that specification so far as the company is concerned. 6 The source of the power to order winding up in insolvency is s.459A. Just as s.482(1) empowers "the Court" to make an order terminating a winding up, so s.459A empowers "the Court" to make an order for winding up in insolvency. Section 9 says that "Court" (with an upper case "C") "has the meaning given by s.58AA". The latter section is as follows: "(1) Subject to subsection (2), in this Act: court means any court. Court means any of the following courts: (a) the Federal Court; (b) the Supreme Court of a State or Territory; (c) the Family Court of Australia; (d) a court to which section 41 of the Family Law Act 1975 applies because of a Proclamation made under subsection 41(2) of that Act. (2) Except where there is a clear expression of a contrary intention (for example, by use of the expression "the Court"), proceedings in relation to a matter under this Act may, subject to Part 9.7, be brought in any court." 7 Having regard to s.58AA(2) and the definition of "Court" in s.58AA(1), it is clear that the jurisdiction conferred by s.459A is exercisable by any one of the courts referred to in that definition and that the jurisdiction separately conferred by s.482(1) is likewise exercisable by any one of those courts. 8 The order of the Supreme Court of Queensland under s.459A was effective to cause the company to become subject to winding up and thereby to be exposed to the range of statutory provisions applicable to a company in the course of being wound up. As a result of the order made by the Queensland court, there is in existence and in progress "the winding up of a company" as referred to in s.482(1). Many of the provisions dealing with a state of winding up confer jurisdiction on the "Court" and, as the decision of Austin J in Sihota v Pacific Sands Motel Pty Ltd (2003) 56 NSWLR 721 shows, it is open to any of the courts within the s.58AA definition of "Court" to exercise that jurisdiction. Older thinking to the effect that, in a court ordered winding up, the winding up continues to be administered by the court that made the winding up order must yield to the clear statutory specification. In that respect, I would no longer adhere to the approach suggested in Re FAI General Insurance Co Limited [2002] NSWSC 262 which was the subject of analysis by Austin J in the Sihota case. 9 Sihota itself was a case about the grant of leave to proceed under s.471B, but the thinking it exemplifies holds good in all cases in which a winding up order has been made and an application is later made under a particular provision conferring jurisdiction on the "Court" in relation to the winding up stemming from that order. 10 In these respects, the definition of "Court" in s.58AA of the Corporations Act seems to me to operate in the same way as s.588AA of the former Corporations Law, as it applied to the Australian Capital Territory by force of Commonwealth law and to each State and the Northern Territory as a matter of State or Territory law. In Re Macks; Ex parte Saint (2000) 204 CLR 158, Gummow J observed, at p.224, that, having regard to the corresponding definition of "Court" in the Corporations Law, the exercise of the statutory jurisdiction to give directions to a liquidator "was not confined to the Federal Court as the court which had made the winding-up orders and had appointed Mr Macks as liquidator". His Honour cited, in that connection, the decision of the Full Federal Court in Acton Engineering Pty Ltd v Campbell (1991) 31 FCR 1, another decision under the Corporations Law, which was held by Austin J in Sihota v Pacific Sands Motel Pty Ltd (above) to be applicable to a case arising under the Commonwealth Act. 11 Nor, in my opinion, is there room for discomfort, on the grounds of comity, about the idea that one superior court within the s.58AA definition of "Court" may order the termination under s.482 of a winding up brought about by an order made by another superior court within that definition. The first court is not invited to review or countermand the order of the other court, as would be the case if the subsequent application were an application to set aside the original order either because it was made in the absence of the defendant or for some other reason. On the contrary, the court asked to make an order under s.482 is invited to accept the full force and effect of the winding up order, to recognise the existence of the administration in winding up produced by that order and to consider, as a separate and subsequent question, whether grounds exist to justify release of the relevant company from that form of administration. 12 I am accordingly satisfied that the circumstance that the winding up in respect of which the present application under s.482 is made is a winding up produced by an order made by a court other than this court is not a circumstance that either denies this court's power to act under s.482 or makes it inappropriate as a matter of comity for it to do so. 13 I therefore turn to the merits of the application, noting, as I do, that the liquidator neither consents to nor opposes the making of the termination order and that there is also no opposition by the original plaintiff in the Queensland proceedings, which is a defendant in the current proceedings. These positions, as I have outlined them, are predicated on the assumption that any termination order will be made in circumstances which sees certain debts recognised and paid out of funds held by the liquidator, including the debt of the original plaintiff. I have been given short minutes of detailed orders to deal with this. 14 Evidence of the circumstances in which the company failed to comply with the statutory demand and did not appear when the winding up application came before the Supreme Court of Queensland has been given by both Mr Maamari and his wife, who was involved in the administration of the company. The story is a lamentably familiar one. Mr and Mrs Maamari did not fully understand the significance of the statutory demand and the winding up application, although they knew enough to contact the party seeking the winding up order in an attempt to negotiate a payment regime with it. They say that they believed that they had come to a successful result in their attempt to negotiate and, in effect, believed that they had staved off the threat. They were surprised when a representative of the liquidator later told them that orders had been made and took steps to take over the administration of the company. 15 I have before me evidence about the identities and attitudes of the company's creditors. None of them is averse to the termination of the winding up, provided sums due which are not, in the scheme of things, substantial are paid. The liquidator has received some $148,000 by way of payment of debts due to the company. 16 Mr Maamari commissioned Mr Wily, a recognised insolvency practitioner, to prepare a report on the question of solvency for the purposes of the present application. The report is dated 17 January 2005. There have been some more recent supplements to it, particularly about tax matters where it is suggested that the tax liability may be less than the figure Mr Wily took into account. There are some slight differences in the evidence about the values of certain properties, but even the more conservative view of valuation does not undermine Mr Wily's central opinion, which is that the company is solvent. 17 On the whole of the evidence, I am satisfied that the company is solvent after allowing for the immediate claims of all the identified creditors, which claims will be satisfied as part of the regime to be put in place by the orders in the proposed short minutes. 18 A case for the making of a termination order under s.482 has been made out. I therefore order that the winding up of Buildx Construction and Building Group Pty Ltd, ACN 090623304, be terminated this day, 7 February 2005. I also make a direction in accordance with item 2 of the short minutes of order which I initial and date. The order terminating the winding up may be taken out forthwith. **********

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