[2]

For the supporting creditors Suzannah Kolovos, Saad Consulting Pty Ltd, Stan Projects Pty Ltd, and Mosca Pserras Architects Pty Ltd

Plaintiff v Defendant [2025] VSC 158 | Case summary | Zoe

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Plaintiff v Defendant

[2025] VSC 158

Supreme Court of Victoria|2025-03-31|Before: Gardiner AsJ

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General information, not legal advice.

At a glance

Source facts

Court

Supreme Court of Victoria

Decision date

2025-03-31

Before

Gardiner AsJ

Source

Original judgment source is linked above.

Judgment (204 paragraphs)

[1]

CORPORATIONS - Part 5.4 of Corporations Act 2001 (Cth) - Insolvency - s 459P of Corporations Act 2001 (Cth) - Application for winding up in insolvency relying on presumption of insolvency arising from non-compliance with a statutory demand - Defendant contended that it was solvent and relied upon unaudited and unverified accounts and report of an accountant to rebut that presumption - Accountant relied on instructions from defendant as to its financial position which were not independently verified - Whether audited accounts are required in circumstances to demonstrate solvency of the defendant - Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 - Expile Pty Ltd v Jabb's Excavations Pty Ltd [2003] NSWCA 163; (2003) 45 ACSR 711 - Defendant contended that it had valuable claims the subject of litigation in the Supreme Court of New South Wales which had substantial prospects of success and would result in the defendant being in a position to satisfy the claims of creditors - Defendant made application to reopen case to present evidence that the claims in the New South Wales proceeding would imminently be the subject of either summary judgment or default judgment in its favour - Application to reopen refused - Finding that defendant had not established on balance of probabilities that it was solvent - Order made for the winding up of the defendant.

[4]

On 15 February 2024, Blue Ridge Framing Pty Ltd (ACN 143 265 794) trading as Endeavour Cranes ('Blue Ridge') filed an originating process ('Application') seeking an order under s 459P of the Corporations Act 2001 (Cth) ('Act') for the winding up in insolvency of the defendant, Plexbuild Pty Ltd (ACN 640 362 027) ('Plexbuild').[1]
The Application was grounded on the presumption of insolvency arising from Plexbuild's failure to comply with a statutory demand dated 18 January 2024 which claimed that Plexbuild was indebted to Blue Ridge for $6,875.09 for debts incurred in the period between 15 August 2023 to 9 November 2023 ('Demand').
The Demand was served on Plexbuild on 18 January 2024. No application was made to set aside the Demand under s 459G of the Act within the statutory period which, pursuant to s 459F(2)(b), expired on 8 February 2024, giving rise to a presumption under s 459C(2)(a) that Plexbuild was insolvent.
The Application was filed on 15 February 2024, within the three month period during which such presumption subsisted. On 16 February 2024, Blue Ridge served the Application on Plexbuild and lodged notice of the Application with the Australian Securities and Investments Commission ('ASIC'). Blue Ridge also filed evidence that notice of the Application had been published on the ASIC website. A nomination and consent of liquidator has also been filed.
I am satisfied that the Application complies with the formal requirements of the Act and the Supreme Court (Corporations) Rules 2023 (Vic) ('Corporations Rules') applying to applications for a winding up order and that the evidence demonstrated the existence of a presumption that Plexbuild was insolvent arising from non-compliance with the Demand.
As a consequence of this, Plexbuild now bears the onus of discharging the presumption of insolvency by reason of its failure to comply with Blue Ridge's Demand. That presumption is available as a ground to other creditors of Plexbuild who have standing to seek to be substituted as plaintiff in the Application upon the withdrawal of Blue Ridge (or upon the withdrawal of a creditor subsequently substituted as plaintiff). It will be seen that since its commencement, several creditors were substituted as plaintiff in the Application upon the withdrawal of other creditors.

[7]

This Application has had a protracted history. There were nine adjournments of the application before the Judicial Registrar.[2] It will be seen that the predominant purposes for such adjournments were first, to provide several opportunities to Plexbuild to put on evidence as to its solvency so as to discharge the onus it bears by reason of the presumption and secondly, to enable applications to be made by a succession of supporting creditors for their substitution as plaintiff in the Application.
On the return of the Application before me on 16 October 2024, counsel for Plexbuild made application for a further adjournment by reason of the indisposition of its director which was refused. The reasons for that ruling were transcribed and have been placed on the court file.
Over the period of the adjournments before Woronczak JR, a series of orders for substitution of supporting creditors as plaintiff were made pursuant to s 465B of the Act, followed by subsequent withdrawals by those creditors (and other supporting creditors) after they had apparently negotiated a resolution with Plexbuild.
The first return of the Application took place before Woronczak JR on 20 March 2024. Only the then plaintiff, Blue Ridge, and a supporting creditor, Hanson appeared. There was no appearance by Plexbuild. The Court was informed that the matter had resolved between Blue Ridge and Plexbuild and directions were made for Hanson to file any interlocutory process for substitution by 3 April 2024. Blue Ridge was excused by the Court from further attendance in the proceeding. The Application was adjourned to 10 April 2024.
On 10 April 2024, the matter returned to court and orders were made substituting Hanson as plaintiff. Again, there was no appearance by Plexbuild. Holcim appeared as a supporting creditor. The Application was adjourned until 1 May 2024.
On 1 May 2024, Woronczak JR ordered the Application be adjourned to 15 May 2024.
On 15 May 2024, the matter returned to court. Plexbuild appeared for the first time. In addition to Hanson and Holcim, a new supporting creditor, Milestone, appeared and supported the Application. In her orders made on 15 May 2024, Woronczak JR noted in her remarks that Plexbuild sought to oppose the application on the basis that it was solvent and sought an adjournment for four weeks 'to enable it to file its evidence to oppose the application on that basis or otherwise to enable payment to be made to [Hanson] and supporting creditors'.
The Judicial Registrar directed Plexbuild to file any further affidavit on which it intended to rely in opposition to the Application including its evidence as to solvency by 4:00pm on 11 June 2024.
On 12 June 2024, the fifth return of the Application, two additional supporting creditors, Tradelink and Edmondson, appeared. Plexbuild made application for and was granted a further adjournment of four weeks. Woronczak JR noted in her remarks in the 'other matters' segment of the order that the adjournment was 'to enable the evidence to be provided of [Plexbuild's] solvency and [to] make arrangements to pay the debts claimed by [Hanson] and the supporting creditors'.[3] Woronczak JR further noted Plexbuild's non-compliance with her orders in respect of the filing of its evidence as to solvency by 11 June 2024.[4]
The time by which Plexbuild was to file and serve any further affidavit on which it intended to rely in opposition to the Application, including as to its solvency, was extended to 24 June 2024 and the Application was adjourned to 26 June 2024.
On 26 June 2024, the matter returned to Court. As well as the supporting creditors who had previously appeared, several additional supporting creditors attended the hearing. Mr J Tomaras, the solicitor for Edmondson, also made appearances on behalf of JC Geotechnics Pty Ltd, Mosca Pserras, Saad and Stan.
By that point, an affidavit of Ashraf Bishay ('Mr Bishay') sworn 24 June 2024 had been filed. Mr Bishay is an accountant appointed by Plexbuild. Mr Bishay stated that he had been engaged to prepare a 'solvency expert report' and this would require an adjournment of an additional four weeks.
Hanson and the other supporting creditors opposed the adjournment and sought to proceed with the Application to wind up Plexbuild, however, Woronczak JR acceded to Plexbuild's request for a further adjournment. Directions were made which included that Plexbuild file and serve any expert report as to its solvency by 17 July 2024. The Application was adjourned to 24 July 2024.
On 24 July 2024, the Court was informed that the issues between Hanson and Plexbuild had resolved. Hanson sought to withdraw and was excused from further attendance in the proceeding. On the same day, the Court made orders substituting Holcim as plaintiff and adjourned the Application to 31 July 2024.
On 31 July 2024, the Court was informed that the matter between Holcim and Plexbuild had resolved. Holcim made application to withdraw and was excused from further attendance in the proceeding. Shortly prior to that hearing, on 29 July 2024, Infrabuild had filed an interlocutory process seeking to be substituted as plaintiff and the Court made directions concerning that application. Infrabuild's application was adjourned to 7 August 2024.
On 7 August 2024, the interlocutory process filed by Infrabuild to be substituted as plaintiff was dismissed because Infrabuild had apparently reached an agreement with Plexbuild. Woronczak JR made directions in respect of an interlocutory process filed by Milestone on 5 August 2024 to be substituted as plaintiff. The Judicial Registrar also made orders pursuant to s 459R of the Act extending the period within which the application for winding up was to be determined to 14 February 2025.
On 14 August 2024, Woronczak JR made orders substituting the current plaintiff, Milestone, as the plaintiff in the Application. It appears that Plexbuild did not oppose that application. Woronczak JR gave leave to Plexbuild to file a further affidavit of Mr Bishay exhibiting an updated report as to Plexbuild's solvency produced by Mr Bishay. The Judicial Registrar fixed the Application for hearing on 16 October 2024.

[20]

In this affidavit, Mr Moshy stated Plexbuild was not served with the Demand as alleged by Blue Ridge however, rather than disputing service of the Demand, Plexbuild paid the amounts claimed by Blue Ridge including costs without obtaining any legal advice.
Mr Moshy deposed that as at 14 May 2024, there were three creditors[10] who were potential candidates to be substituted as plaintiff who claimed approximately $544,000 plus costs and interest against Plexbuild for works carried out by them at a construction site at Edmondson in NSW ('Edmondson Project'). Mr Moshy deposed at the time of his affidavit all other creditors were on payment plans.[11]
Mr Moshy deposed that as at the date of his affidavit, based on his review of the books and records of Plexbuild, Plexbuild was owed the sum of $975,000 in progress claims by Edmondson, the developer of the Edmondson Project, for building works pursuant to the Building and Construction Industry Security of Payment Act 1999 (NSW) ('Security of Payment Act''). Mr Moshy stated as at 14 July 2024, Plexbuild was also owed $639,000 in retention money in respect of that project and, if Plexbuild terminated the contract with Edmondson, the retention money would be due and payable to Plexbuild. Mr Moshy stated that he was informed and believed that Plexbuild had a legal right to terminate the contract with Edmondson by reason of non-payment.
Mr Moshy stated that it was his belief, based on his discussions with Edmondson's director, that Edmondson has withheld payments due to Plexbuild since becoming aware of these proceedings.
Mr Moshy stated that the superintendent appointed[12] to the Edmondson Project ('SDSS') indicated that there was no dispute that $590,667.98 of GST, together with a progress claim of $122,882.66 (a total of $713,550.64) was due and payable by Edmondson to Plexbuild.
Mr Moshy stated '[Plexbuild's] claim will be $975,000 including other payments withheld by [Edmondson] by adjudication a process which takes 20 working days.'
Mr Moshy stated that 'if the defendant (sic)[13] and the other supporting creditors allow Plexbuild to pursue this adjudication, we expect an outcome within 20 business days by operation of the [Security of Payment Act].'
An examination of the documentation exhibited to Mr Moshy's affidavit in respect of the claim for the Edmondson Project reveals that the party who contracted with Edmondson for the Edmondson Project and made the progress claims was not Plexbuild but its related entity, N.A.S. The significance of this will be discussed below.
Mr Moshy deposed that he was in the process of selling an investment property which was to be sold at auction on 1 June 2024, or earlier by private treaty. Mr Moshy stated that he expected the surplus from the sale of the property would be $440,000, which he was willing to lend to Plexbuild to pay the defendant (sic) and the other supporting creditors who have caveats on the property to secure their debts.
Mr Moshy concluded his affidavit by requesting an adjournment for four weeks in order to produce evidence of solvency and to make arrangements to pay the debts claimed.

[28]

On 15 May 2024 orders were made for [Plexbuild] to file its evidence to oppose the application on the grounds set out in its notice of appearance that being that it [is] solvent by 11 June 2024. Instead, supported by the affidavits of its director Sargon Moshy sworn 11 June 2024 and 12 June 2024 application is made for an adjournment for 4 weeks to enable the evidence to be provided of [Plexbuild's] solvency and make arrangements to pay the debts claimed by [Hanson] and supporting creditors. The contents of the 11 June 2024 affidavit extends upon the evidence set out in the affidavit of Mr Moshy sworn 14 June 2024 in support of an adjournment sought then for the same reasons and same period. No evidence is provided regarding steps that [Plexbuild] has taken to engage an expert to provide evidence as to the [Plexbuild's] solvency or the time required for that evidence. The evidence rather goes to assertions about funds owed to [Plexbuild] or which could be raised by it to put towards the claims of its creditors including those creditors in this proceeding.

[Hanson] and supporting creditors neither consent to nor oppose the adjournment sought. This is the same position that they have taken on each of [Plexbuild's] adjournment applications made on 1 May 2024 and 15 May 2024 in so far as they appeared on those dates. [Hanson] which appears for the first time today says that it should be for a shorter period than is proposed by [Plexbuild].

This is already the fifth return of the application, which was filed on 15 February 2024 some 4 months ago. There was no appearance for [Plexbuild] on the first two occasions the matter was before the Court. On the third Mr Moshy appeared for [Plexbuild] and sought and obtained an adjournment to engage solicitors and seek to resolve the matter and on the forth [Plexbuild] was represented for the first time and orders made as already indicated for the filing of the [Plexbuild's] evidence to oppose the application. There is no evidence of any progress that has been made towards the preparation of the [Plexbuild's] evidence. Another two supporting creditors now support the application. The evidence that [Plexbuild] has filed to date in insufficient to rebut the presumption of [in]solvency that has arisen by virtue of the [Plexbuild's] failure to comply with the statutory demand upon which the application relies. [Plexbuild's] evidence in support the adjournment application is lacking in the clarity and specificity that would be expected upon an adjournment application at this point in the proceeding. Had it not been for [Hanson] inter alia neither consenting to nor opposing the adjournment application, it is unlikely that a further adjournment would have been granted on the evidence before the Court. The evidence provides no clarity about the complete financial position of [Plexbuild] and how it is proposed that all of its creditors will be paid.

[31]

In this affidavit, Mr Moshy deposed he sold the investment property on 12 July 2024 and 'caused creditors to be paid including creditors of Plexbuild'. Mr Moshy stated that the then plaintiff, Hanson, demanded more than what was expected and required payment of $236,897.22 including about $62,000 in legal fees. Mr Moshy stated 'the legal fees were not expected to be this high and other creditors were not paid as a result, but settlement was allowed to proceed in the best interest of all creditors'. Mr Moshy stated that the details of the unexpected amount claimed for legal fees had been provided to Mr Bishay in order for him to produce the updated Solvency Report.
Mr Moshy stated that the solicitors for Hanson informed the other creditors on 15 July 2024 that it would be seeking to withdraw from the proceeding.
Mr Moshy stated there was a delay in receiving a refund of GST from the ATO. He stated he was informed that the lodgement of the 30 June 2024 BAS was delayed until 19 July 2024 and he expected the refund to be received within 7 to 10 days. Mr Moshy stated he was advised that Mr Bishay needed to be informed of the outcome of the refund application to finalise his updated Solvency Report.
Mr Moshy stated he undertook 'to apply the GST refund to the creditors in the order of their preference'; he does not elaborate what he meant by this. Mr Moshy stated that in the initial solvency report, Mr Bishay estimated the GST refund would be $150,000 rather than $258,000 which was now the expected refund and the Solvency Report would require revision in that regard.
Mr Moshy stated the adjudicator appointed for the Hoffman Road Project, Adjudicate Today, advised on 19 July 2024 that the result of Plexbuild's application for a $404,000 payment claim against the Kiceecs would be 'released shortly'. Mr Moshy stated at the time of his affidavit the adjudication decision had not been released and he was informed that the amount of the adjudication award was required for Mr Bishay to produce the updated Solvency Report. Mr Moshy confirmed in the 23 July Moshy Affidavit that the amount of the adjudication award would be applied to Plexbuild's creditors and that Plexbuild had paid all of the adjudication fees.
I consider Mr Moshy's evidence concerning the publishing of the adjudication certificate in respect of Plexbuild's claim against the Kiceecs for the works at the Hofmann Road Project is, at best, lacking in candour. It will be seen below in her affidavit of 30 July 2024, Ms Kolovos details the attempts made by her representatives to obtain the adjudication certificate from the adjudicator.[18] Despite the opportunity, Ms Kolovos' evidence concerning this is not contradicted by Mr Moshy or Plexbuild. On the evidence, it seems clear that Mr Moshy was complicit in delaying the release of the certificate (which determined the Kiceecs' liability to Plexbuild was '$nil' rather than over $400,000 as claimed) until after the next hearing of the matter which was scheduled for 24 July 2024. I infer the most probable reason for this was for the purposes of creating a pretext for obtaining a further adjournment by a proffering of an excuse that the adjudication certificate was not yet available.
Mr Moshy concluded the affidavit by stating that Plexbuild has provided evidence of Mr Bishay stating his opinion that it is solvent and that Plexbuild wished to update this evidence. Plexbuild sought another adjournment for two weeks to be able to file and serve that evidence.[19]

[41]

My Bishay stated that in assessing the liquidity of a business and its ability to pay its liabilities over the coming year, the current ratio test provided an indicator of the debtor's ability to meet creditor demands. Mr Bishay stated that acceptable current ratios vary by industry, however for a business to be readily able to meet its creditors' demands without issue, the generally accepted range is somewhere between 1.5 and 3. In Mr Bishay's experience, values of less than one are likely to indicate that, without other means to repay those liabilities, the business may have difficulty meeting creditor demands.
Mr Bishay stated that liquidity ratios measure a company's ability to pay off short-term debt obligations. This is done by comparing a company's most liquid assets, i.e. those that can be easily converted to cash, against its short-term liabilities.
Mr Bishay stated the current ratio is used by insolvency practitioners to test a company's liquidity (also referred to as its current or working capital position) by identifying the proportion of current assets available to cover current liabilities.
Mr Bishay stated the concept behind the current ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes). The higher the current ratio, the more likely the company is able to pay its debts as and when they fall due. Mr Bishay stated a low current ratio indicates that a company may be unable to pay its debts as and when they fall due.
Using data from Plexbuild's management accounts, Mr Bishay stated that he applied the formula noted above to calculate the current ratio of Plexbuild, and that the current ratio was calculated as Plexbuild's current assets ($7,130,468.00) divided by Plexbuild's current liabilities ($2,819,657.34), 2.53 at 30 June 2024. Mr Bishay stated that this supports a view of solvency. Again, Mr Bishay did not detail how the figures used for current assets and current liabilities are respectively comprised.

[52]

As to the Units Contract, it is contended[40] that on 1 July 2023, N.A.S. entered into a written contract with Edmondson for N.A.S. to construct 92 units with a two-level basement and plan strata subdivision at the unit property. This is referred to throughout these reasons as the Edmondson Project. It is alleged[41] that N.A.S. was entitled to monthly progress claims for the works and performed work totalling $7,167,826 in the period July 2023 and June 2024. It is contended[42] that '[N.A.S.] retained Plexbuild and other subcontractors as its Subcontractors to assist in completing the Units Contract Works' (emphasis added). As such, Plexbuild's role is pleaded as being one of subcontractor to N.A.S. not as principal, with no claim being made of any contractual privity of Plexbuild with Edmondson.
It is claimed that on or about 1 July 2023, N.A.S. and Plexbuild entered into a tripartite deed with the funders of Mr Kiceec, which made provision for the funding arrangements of Edmondson for the Units Contract i.e. the Edmondson Project.
The claim states[43] that as part of the Units Contract and with the knowledge of Mr Kiceec and Edmondson and their funders, N.A.S. appointed Plexbuild as its agent and project manager for the Units Contract (emphasis added).
The claim stated[44] that as part of the Units Contract [Mr Kiceec and Edmondson] agreed to withhold funds and demanded that N.A.S. refund to Edmondson (or to its related entitles) certain sums on terms that Mr Kiceec and Edmondson as the developer of the Unit Property hold those funds on trust for N.A.S. in order that [Mr Kiceec and Edmondson] control the funds and ensure the proper payment of subcontractors of N.A.S. for the Unit Works (defined in NSWSC Summons as 'the Subcontractor Funding Agreement').
It is contended that Edmondson made payments or caused payments to be made to N.A.S. or to the subcontractors of N.A.S. in accordance with the Units Contract and the Subcontractor Funding Agreement totalling $4,751,380.
The claim contends[45] that on 5 July 2024, N.A.S. issued a notice to show cause pursuant to the Units Contract, seeking payment of unpaid progress claims totalling $2,918,035.
On 5 August 2024, N.A.S. issued a termination notice stating that it would terminate the contract unless outstanding sums were paid.[46]
On 6 August 2024, N.A.S. demanded the sum of $1,641,864 as damages for breach of contract for amounts owing under the progress claims.[47]
The claim asserts[48] that on 6 August 2024, Mr Kiceec purported to terminate the contract. It states that on the same day, the first defendant (sic)[49] accepted the termination by Mr Kiceec as repudiation of the contract and terminated the contract.[50]
The claim[51] states that '[f]urther, part of the damages claim being the sum of $879,153 is held by [Mr Kiceec] and/or [Edmondson] as part of the Retained Contractor Agreement in order for [Mr Kiceec] and [Edmondson] to pay creditors of [N.A.S.] and [Plexbuild] for the Units Contract and the Duplex Contract'. 'Retained Contractor Agreement' is not defined in the NSWSC Summons and this reference may have been intended to be in respect of the Subcontractor Funding Agreement.
The claim[52] states that the defendants to the NSWSC Summons[53] are all claiming to be supporting creditors in this winding up application. It states that Mosca Pserras, Saad and Stan have been paid or ought to have been paid by Mr Kiceec and Edmondson from the funds they hold pursuant to the Subcontractor Funding Agreement.
The pleading in respect of the Units Contract in the NSWSC summons concludes by stating that '[t]he total claimed by all creditors in the Winding Up Proceedings is less than the amount of $879,153 held by [Mr Kiceec] and [Edmondson] under the Subcontractor Funding Agreement'.
In the present context, the most obvious observation to be made in respect of the Units Contract claim is that it is pleaded primarily as a contractual claim arising from a contract of 1 July 2023 between N.A.S. and Edmondson to which Plexbuild is not privy; as such it describes a chose in action owned by N.A.S., not Plexbuild.
While Plexbuild is mentioned in the narrative, its claim is not developed beyond assertion. In the narrative of the claim, Plexbuild is at the periphery of the transaction as an agent and project manager of N.A.S., not as a principal. Plexbuild says as much in its written submissions.[54] As such, I do not consider that the Units Contract claim in the NSWSC Summons supports Plexbuild's contention that it has a chose in action consisting of a claim against Edmondson of the character and quantum contended for by Mr Moshy and in respect of which Mr Bishay was directed to assume existed and was recoverable. In addition, it will be seen below that in his submissions, counsel for the plaintiff, Milestone, Mr Marcou pointed to large discrepancies in the amounts said to be owing to Plexbuild.

[57]

In his email, Mr Georges requested an urgent listing 'to decide on the application to reopen to file further evidence that the Defendant claims further supports its claim of solvency, that by its nature, the evidence was not available during the hearing in October 2024 and only became available on 21 February 2025'.
Plexbuild's application to reopen relied on an affidavit of Mr Moshy, sworn 4 March 2025. In this affidavit, Mr Moshy stated that the NSWSC summons was listed for Motion on 7 March 2025 and Plexbuild would be seeking summary judgment and default judgment at that hearing. He stated that if the matter was heard and was successful, the amount of the judgment will be considerably in excess of monies owed or alleged to be owed to other creditors. He stated that the first to fourth defendants (Mr Kiceec, Edmondson and the Kiceecs) have considerable and sufficient assets to meet any judgment. Mr Moshy asserted that Edmondson was holding $639,000 in trust in an account controlled by its funder for the Edmondson site. He stated that Plexbuild and N.A.S. would seek to access those funds to satisfy the judgment.
Mr Moshy exhibited a notice of listing from the New South Wales Supreme Court advising that the matter was listed for motion in the Technology and Construction List on 7 March 2025. The notice of motion seeks orders as follows:
1. default judgment be entered in favour of the plaintiffs against the first to fourth defendants;
2. further, or in the alternative, summary judgment be entered in favour of the plaintiffs against the first to fourth defendants;
3. list the matter for an assessment of damages;
4. defendants to pay the plaintiff's costs of the motion;
The motion in the New South Wales proceeding was supported by an affidavit of Mr Moshy sworn 20 February 2024. That affidavit refers to a previous affidavit of 26 November 2024 but that affidavit was not in evidence in the application to reopen. Mr Brown, of counsel, who appeared on behalf of Plexbuild, stated that it was a substantial affidavit of over 1000 pages, exhibiting contracts and other documentation. The affidavit referred to the Hoffman Road project contract, and deposes as to several events, which had occurred in respect of that project. The affidavit then stated:

[59]

Mr Moshy's affidavit then deposed as to why the listing of the motion was urgent, refers to the Kiceecs involvement in this application and asserted that they are delaying the hearing of the claims in the NSWSC summons 'so that the winding up proceeding will cause Plexbuild not to be able to continue the NSWSC summons'. He then deposed that the defendants to the NSWSC summons are in default of orders previously made by the New South Wales Supreme Court. Mr Moshy sought an order that the Court enter default judgment against the defendants for failure to comply with the orders of the Court to file and serve a list response.
I had substantially completed the composition of my reasons for judgment in this matter and was to publish those reasons at midday on 7 March 2025, and had directed my associate to inform the parties of this but Plexbuild's approach to the Court intervened before this could be done.
I heard the application to reopen late in the afternoon of 5 March 2025. Mr Brown informed me that the matter was proceeding on 7 March 2025 and that he would be appearing and moving for default judgment. He indicated that if the outcome was as expected, Plexbuild's position would be that it would have access to funds to satisfy the claims of the creditors. That application would principally rely on the failure by the first to fourth defendants in the NSWSC summons to comply with Court orders in respect of the filing of documents.
I observed to Mr Brown that on the material before me, without presuming what view the judge hearing the application would take, it was completely unlikely that summary judgment would be awarded in favour of N.A.S. and Plexbuild. I did not understand him to dissent from that observation.
Because of the proximity of the hearing in the New South Wales Supreme Court on 7 March, with considerable reluctance I decided to delay the handing down of my judgment until the outcome of that application in the New South Wales Supreme Court was known. In my brief reasons for deciding to do so, I said that this was most regrettable, having regard to the extraordinarily protracted history of this proceeding which has been detailed. I adjourned Plexbuild's application to reopen until 20 March 2025 and made directions in respect of the filing of affidavit evidence directed to reporting as to the outcome of the hearing on 7 March 2025.
On 14 March 2025, Plexbuild filed an affidavit of Mr Georges, reporting as to the outcome of the hearing in the New South Wales Supreme Court on 7 March 2025. That affidavit, despite reporting events which took place on 7 March 2025, was purportedly sworn on 15 October 2024.
In this affidavit, Mr Georges states that on 6 March 2025, the first to fourth defendants in the New South Wales proceeding, being Mr Kiceec, Edmondson Grange and the Kiceecs filed a document in the New South Wales Supreme Court described as a List Response, setting out their defences. The hearing before Stevenson J then became one confined to directions and a costs argument. Stevenson J dismissed the application by N.A.H. and Plexbuild for default judgment. There was no discussion in the brief hearing which ensued in respect of the summary judgment application, other than a passing mention of the issue of what order as to costs should be made in respect of it.
After hearing submissions in respect of the time required for the first to fourth defendants to file and serve any cross-claim, his Honour ordered that any such cross-claim be filed by 28 March 2025, and stood the matter over to 5 April 2025 for further directions before the Technology and Construction List Judge. The orders noted that the first to fourth defendants indicated that they would require eight weeks to file their lay and expert evidence in connection with the defects alleged in their cross-claim. It was indicated by Mr Young,of counsel, for N.A.H. and Plexbuild that they would not be filing expert evidence in chief, but may need to respond to the defendants evidence in respect of the allegations as to defects.
It seems clear that there is no prospect of the New South Wales proceedings being concluded in favour of N.A.H. and Plexbuild in the near future. The defendants will be required to file their evidence in support of their cross-claim two months after the filing of their cross-claim i.e., the end of May 2025, whereupon N.A.H. and Plexbuild will be filing their evidence in response. One could assume that after this, that there will be a process of discovery and perhaps other interlocutory steps.
There is no indication as to when, even if all parties abide with the directions that the Court makes in the New South Wales summons, the proceeding will be heard.
In my view, the hearing in the New South Wales Supreme Court on 7 March 2025 did nothing to advance Plexbuild's position; the primary purpose for the granting of an adjournment of the application to reopen, to enable proper evidence to be put, on came to nought.

[66]

Mr Wu deposed that between 26 October 2023 and 24 January 2024, Milestone supplied goods to Plexbuild and rendered invoices totalling $130,854.90 ('Original Debt').
Mr Wu affirmed that as of 24 April 2024, the Original Debt remained unpaid, and he instructed DHH to issue proceedings in the District Court of NSW for the Original Debt, plus costs and interest for a total of $150,559.23 ('Claim Amount').
Mr Wu deposes that the proceeding was filed on 24 April 2024 and served on Plexbuild on 29 April 2024.
Mr Wu stated that additional costs have been incurred by Milestone in pursuing the recovery of the Claim Amount, including in relation to supporting the wind-up proceedings issued against Plexbuild, in the sum of $7,440.00 ('Costs') and further interest has accrued to date in the sum of $8,564.29 ('Interest'), noting that the Costs and Interest are recoverable pursuant to clause 2 and 3 of the terms and conditions of the Agreement.
Mr Wu deposed that on or about 24 July 2024, Milestone received a part payment in the sum of $4,400.00 but that no further payments had been made by Plexbuild to Milestone at the time of his affidavit affirmed 5 August 2024.
Mr Wu stated that at the time of his affidavit affirmed 5 August 2024, and in light of the payment of $4400, the amount currently owing, being the balance owing in respect of the Claim Amount, plus the Costs and Interest which are recoverable from Plexbuild, was $162,203.52 ('the Current Debt').
Mr Wu deposed that at the date of his affidavit affirmed 5 August 2024, Plexbuild remained indebted to Milestone for the Current Debt, that Plexbuild had failed to pay the Current Debt or secure or compound for it to the reasonable satisfaction of Milestone.
Plexbuild did not file any evidence in opposition to Milestone's application for substitution or seek to contradict the position deposed to by Mr Wu. As has been noted, on 14 August 2024 Woronczak JR made orders substituting Milestone as the plaintiff in the proceeding.

[67]

Ms Kolovos deposed in her affidavit sworn 25 June 2024 that she instructed her solicitor to file an appearance as a supporting creditor in these winding up proceedings.
Ms Kolovos stated that she, together with her sister, Gabriella Maharaj (previously Gabriella Kiceec), purchased land in Hoffman Road, Edmondson Park NSW in 2022.
Ms Kolovos deposed that on or about 22 April 2022, the Kiceecs executed a building contract with Plexbuild for the construction of a two-storey residential duplex dwelling which was to be constructed by Plexbuild on the land. This has been described as the Hoffman Road Project in these reasons.
Ms Kolovos stated on or about 13 January 2023, Plexbuild commenced construction at the Hoffman Road Project. Under the terms of the construction contract the Hoffman Road Project was to be completed within 26 calendar weeks from commencement, i.e. by 13 July 2023.
Ms Kolovos stated that as at the date of her affidavit, 25 June 2024, the construction of the dwelling at the Hoffman Road Project was not complete, nor was it near completion.
Ms Kolovos deposed that Plexbuild abandoned the Hoffman Road Project on or about December 2023 and in this regard, Plexbuild breached the construction contract. The Kiceecs were in the process of receiving legal advice as to their actions against Plexbuild.
Ms Kolovos stated that on or about 20 May 2024, she received a payment claim by Plexbuild claiming approximately $388,000, which included progress payment for the 'lock up' stage and the balance of the contract for the Hoffman Road Project.
Ms Kolovos stated that Plexbuild's claim is disputed and rejected in its entirety.
Ms Kolovos deposed on or about 27 May 2024, she responded to Plexbuild's payment claim and proposed instead that Plexbuild be paid no monies.
Ms Kolovos deposed that on or about 14 June 2024, she received an adjudication notice. The Kiceecs then engaged Bartier Perry, a firm which specialises in construction disputes, to act on their behalf throughout the adjudication process.
Bartier Perry provided a response to the adjudicator, Adjudicate Today, on 21 June 2024 stating the following:

[78]

Milestone relied upon the presumption of insolvency arising from Plexbuild's failure to comply with the Demand issued by Blue Ridge on 18 January 2024 as the ground for winding up. Its standing is confirmed by the order for its substitution as plaintiff in the winding up. The application for that order was not resisted.
Milestone contended that the Solvency Report is insufficient to rebut the presumption of insolvency. Milestone observed that the Solvency Report assumed the existence of underlying receivables of around $6.5 million which are said to be owing by Edmondson and the Kiceecs. Milestone submitted that even Plexbuild's own written submissions, allege the amounts that are owing to Plexbuild are far lower than stated in the Solvency Report. Plexbuild's submissions[59] contend that it is owed $122,882.66 for progress claim 7 with an additional $590,667.98 of GST withheld by Edmondson being payable for claims numbers 1 to 6. Further, Plexbuild submits that in the NSWSC Summons it is alleged that Mr Kiceec and Edmondson owe Plexbuild and N.A.S. $879,153 under a Subcontractor Funding Agreement. Additionally, Plexbuild's submissions at paragraph 35 state that another $639,206.93 is owed in retention money against Edmondson. Milestone disputes the existence of all of those debts.
Moreover, Milestone noted that Plexbuild's own written submissions acknowledge[60] that the party which contracted with Edmondson is not Plexbuild, but rather N.A.S. As such, Edmondson is not a debtor of Plexbuild.
Milestones's submissions proceeded to identify a number of fundamental and uncontroversial principles of corporate insolvency law which have application in the current context.
Milestone observed that s 459C[61] of the Act provides that for the purposes of an application by a creditor that a company be wound up in insolvency, certain presumptions must be made including that if the company failed to comply with a statutory demand within 21 days (as per s 459F), the company is presumed insolvent, unless the contrary is proven.
Milestone also observed, citing supporting authority,[62] that in accordance with s 465B(4) of the Act, if a different creditor is substituted for the original applicant, a winding up application may proceed as if the substituted creditor had been the original applicant. Milestone submitted that it is well established that the substituted creditor may rely upon the presumption of insolvency available to the original creditor applicant, the underlying rationale being that a winding up proceeding is brought for the benefit and protection of all creditors of the company. Milestone submitted that the fact that the original debt underlying the original statutory demand had been paid does not preclude it, the substituted creditor, from relying upon the presumption.
Milestone referred to the terms of s 95A of the Act which provides that a person is solvent if, and only if, the person is able to pay all the person's debts, as and when they become due and payable. It sets out the following principles which apply:

[88]

Milestone contended that not only has Plexbuild provided very little evidence to substantiate that the Alleged Receivables are owing, the evidence which is available would suggest that the amounts are not owing at all.
Milestone contended that if the First Alleged Receivable is treated as a debt owed to N.A.S., and not Plexbuild, this results in a reduction of $5,817,429.80 to all of the various ratios calculated by Mr Bishay, resulting in a very significant change to all of the ratios calculated in the Solvency Report, such that they all strongly point towards insolvency.
Finally, reference was made to the assertion in the Solvency Report, as well as in its previous iteration, that a payment arrangement had been put in place with Milestone which was funded by the director of Plexbuild. The Solvency Report stated [68] that payment arrangements are in place with a number of creditors, some of whom were substituted as applicant in the Application and whose claims were satisfied and other creditors were then substituted.[69] In this regard, Milestone strongly denies this and refers to the affidavit of Ms Harris dated 30 July 2024 which deposed that no payment plan has ever been entered into by Plexbuild in respect of the debt alleged to Milestone.
In the course of oral submissions, counsel for Milestone, Mr Marcou, made reference to calculations he had performed which illustrated how the various ratios referred to in the Solvency Report would change if the receivables constituted by the Edmonson and Kiceec claims were not included as assets of Plexbuild. The Court directed those calculations to be reduced to writing in the form of an aide memoire. The aide memoire has been filed with the Court and served on Plexbuild and Plexbuild was given the opportunity to respond.
The calculations presented two scenarios. The first was that if both the Edmonson and the Kiceec debts were deducted from the asset quantum in the ratio calculations. A summary of those calculations for that scenario in respect of each of the ratios is as follows:

[96]

Plexbuild observed that these proceedings were originally commenced by Blue Ridge. Blue Ridge's debt was satisfied by Plexbuild and Hanson became a substituted creditor; Hanson's debt and legal fees were also satisfied by Plexbuild.
As may be expected from the evidence and other material filed by Plexbuild which is detailed above, the submissions place emphasis upon the Solvency Report[79] together with the claims made in the in the NSWSC Summons[80] in which Plexbuild is the second plaintiff.
Plexbuild pointed to Mr Bishay's qualifications listed in the Solvency Report; he is a director at MYB, a firm of accountants, a registered tax agent, a certified practising accountant and a registered company auditor with more than 40 years of accounting experience. In his report, Mr Bishay states that he has provided expert opinions in the NSW Supreme Court and prepared forensic accountancy reports.
Plexbuild referred to Mr Bishay's opinion that Plexbuild is profitable and solvent and asserted that the issue of solvency only arises because Edmondson and the Kiceecs, who are alleged to owe Plexbuild in excess of $6,000,000, have not paid it. The submissions do not elaborate on how the sum of $6,000,000 is comprised; it is at odds with Plexbuild's own evidence, departs from the amount cited in the earlier version of the Solvency Report[81] and elsewhere in the final version of the Solvency Report[82] and in Mr Moshy's evidence. These significant disparities in the amounts said to be owed to Plexbuild are the subject of a critique[83] which has been summarised above in the summary of Milestone's submissions.
Plexbuild referred to Mr Bishay's opinion that 'Plexbuild is solvent based on its ability to keep fair and reasonable books and records up to date'.[84] I do not consider that submission to have any substance. It is a fundamental requirement of the Act that a company is obliged to keep financial records which correctly record and explain its transactions and financial position and performance in compliance with s 286 of the Act and a failure to do so is a strict liability offence under s 286(4). While the failure to keep proper books as required by s 286(1) of the Act may also give rise to a presumption of insolvency for certain purposes under s 588E(4) for the purposes of voidable transaction claims under Part 5.7B, the reverse is not true; compliance with s 286 is not an indicia of solvency and a contention that that a company is solvent because 'it is able to this point to keep fair and reasonable books and records to date' is not tenable.
Plexbuild's submissions referred to Mr Bishay's opinion that Plexbuild is solvent by reason of his calculations in respect of the several positive ratios to which reference has been made at length above[85] and that the balance sheet shows a net position of $865,904 as at 30 June 2024. As has been observed, these ratios and the contention as to Plexbuild's financial position generally are fundamentally underpinned by Plexbuild establishing, on the balance of probabilities, that the assets in the form of the receivables are payable and recoverable in a period of time which will enable it to pay its debts as and when they are due to be paid. The ratios were the subject of concerted criticism by Milestone in its submissions and the calculations in the aide memoire referred to above which demonstrated the position as to the ratios in the event that the receivables were disregarded as assets.
Plexbuild referred to the parts of the Solvency Report where Mr Bishay dealt with the definition of solvency, indicators of solvency, assets and debts ratios, cash flow and liquidity analysis, quick ratios and creditors unpaid outside trading terms including creditor requests and demands. The details of Mr Bishay's opinion in respect of these matters is canvassed above.[86] Again, they are the subject of detailed criticism in Milestone's submissions[87]
Plexbuild pointed to Mr Bishay's observations as to compliance by Plexbuild with its taxation and superannuation obligations, to its ability to raise loans or capital including the willingness of the sole director, Mr Moshy, to advance it funds and the opinion that Plexbuild is trading without incurring further debt and is trading 'solvently'.
Plexbuild's submissions noted[88] that in the Solvency Report, Mr Bishay concludes that Plexbuild was solvent at the date of the Solvency Report noting that there is a 'liquidity issue' regarding 'the money withheld by the Withholding Debtors'.
The submissions identified and discussed some of the authorities concerned with insolvency generally and the interpretation of the definition of insolvency in s 95A of the Act. These included reference to the indicia of insolvency identified by Mandie J in ASIC v Plymin (No 1).[89] The principles are not controversial and it is not necessary to detail them at this point.
It was submitted that Milestone's claims were in respect of works done and materials provided at the Edmondson Project and that there is 'a necessary connection' between the debt owed to Milestone and the actions of Edmondson and what the submissions describe as 'the Withholding Debtors'.
Plexbuild's submissions made reference to the NSWSC Summons in the context that the claims made in that proceeding by Plexbuild are valuable choses in action which constituted assets which could be deployed to discharge its liabilities and resolution of those claims will redeem Plexbuild's financial position. Plexbuild pointed to the observation by Mr Bishay[90] that the sole cause of what are described as the 'liquidity issues being faced by Plexbuild' was the withholding by Edmondson and the Kiceecs of the monies they owed Plexbuild and that issue was being addressed by Plexbuild in the NSWSC Summons.
The submissions note that the NSWSC Summons was commenced on 14 August 2024. A directions hearing has been conducted with orders that evidence was due for filing on 4 October 2024.
As has been observed, the NSWSC Summons alleges that N.A.S. is the head contractor for the Edmondson Project and is the entity in the contractual relationship with Plexbuild. It is alleged that Edmondson has improperly withheld funds that have been approved for payment of progress claims under the Security of Payment Act, said to be demonstrated by an exhibit to Mr Moshay's 14 May 2024 affidavit which includes an assessment by the superintendent for a total of progress claim 7 as certified as being due on 7 May 2024 for $122,882.66. The superintendent also notes $590,667.98 of GST is being withheld by Edmondson which was payable for progress claims 1 to 6, a total of $713,490.64.
As has been observed above, that exhibit, said to contain 'Copies of assessment of monies owed to the Defendant', in fact consisted of documentation in respect of payment claims by N.A.S., not Plexbuild, directed to Edmondson.
The primary difficulty that I have in accepting the evidence and submissions as to the matters put by Plexbuild concerning the NSWSC Summons is how those matters go to discharging the onus which Plexbuild bears in discharging the presumption of insolvency, in particular how the claims made in the proceeding will, on the balance of probabilities, constitute a resource from which Plexbuild can be demonstrated to have an ability to pay its creditors when they are due to be paid. Even if the claims of the Kiceecs as supporting creditors are put to one side for being potentially controversial, the uncontested claims of Milestone and the Mosca Pserras, Saad and Stan are well overdue to be paid.
As has been submitted by Milestone, the progress claims to which the submissions refer to are claims belonging to N.A.S., as may be expected by reason that the relevant contract was between N.A.S. and Edmondson. The payments claim made in the letter dated 24 April 2024, headed 'Payment Claim Cover Letter', is said to be made 'under the contract dated 1st July 2023 by Plexbuild for and on behalf of [N.A.S.]'. Mr Moshy signs the letter in his capacity as a representative of 'N.A.S Timber Supplies'.
Plexbuild contended that in the NSWSC Summons, it is alleged that Mr Kiceec and Edmondson owe Plexbuild and N.A.S. $879,153 under the Subcontractor Funding Agreement and point to certain paragraphs of the NSWSC Summons as support for that proposition.[91] The identified paragraphs do not make out such a claim at the suit of Plexbuild. Plexbuild is only mentioned in the narrative in the context of being an agent and project manager under the contract, culminating in an undeveloped and unsubstantiated assertion of a claim that Plexbuild had some right to participate in a damages claim to pay its creditors under the Edmondson Road Project contract and the Hoffman Road Project contract.[92]
Paragraphs 16 and 17 of the NSWSC Summons state:
1. Further, part of the damages claim being the sum of $879,153 is held by the First and or the Second Defendant [i.e. Mr Kiceec and Edmondson] as part of the Retained Contractor Agreement in order for the First and Second Defendant [Mr Kiceec and Edmondson] to pay creditors of the First and Second Plaintiff [NAS and Plexbuild] for the Unit Contract and the Duplex Contract.
2. The Defendants [Edmondson Grange, Mr Kiceec, the Kiceecs, Mosca Pserras, Saad and Stan] are all claiming to be supporting creditors claiming to be owed monies by the Second Plaintiff in Supreme Court Proceedings in Victoria being proceedings number S ECI 2024 00648 ('the Winding Up Proceedings'). The Fifth, Sixth and Seventh Defendants [Mosca Pserras, Saad and Stan] have been paid or ought to have been paid by the First and Second Defendant from the funds it holds pursuant to the Subcontractor Funding Agreement.
Paragraph 18 of the NSWSC Summons asserts that the 'total claim by all creditors in these proceedings is less than the amount held by Mr Kiceec and Edmondson under the Subcontractor Funding Agreement.'
The submissions[93] characterised and described some of the defendants in the NSWSC Summons as 'disputed creditors' in the Application including:

[118]

This application, which was commenced over a year ago, was the subject of numerous adjournments. Together with allowing Plexbuild the opportunity to put on evidence as to its solvency, a predominant purpose of those adjournments was to enable creditors to be substituted as plaintiff in the application by reason of the withdrawal of the incumbent plaintiff upon its claim being satisfied. Plexbuild set about dealing with its numerous creditors who appeared in the application in a serial way, by reaching an accommodation with the creditor who had been substituted as plaintiff in the Application, whereupon the process would be repeated with the next creditor substituted as plaintiff. This process occurred a number of times over several months until Milestone, the current plaintiff, was substituted. In my opinion, this is not the conduct of a solvent company as a solvent company is required to pay all its debts as and when they fall due.
I infer that Plexbuild adopted the strategy of reaching a compromise with each of the previous parties who had been substituted as applicant in turn, by reason that it was unable to deal with them collectively because it did not have the means to do so.
The debt owed to Milestone was not contested and it was substituted as plaintiff. It prosecuted the application supported by several other unpaid creditors to the final hearing. Aside from an unjustified description of Mosca Pserras, Saad and Stan as being included amongst 'Withholding Debtors', their claims were not confronted and I accept that they are unpaid creditors of Plexbuild for the purposes of having standing to support this application.
The debts of Milestone and those supporting creditors are due to be paid and have been for some considerable time. The question is whether on the evidence Plexbuild has demonstrated on the balance of probabilities that it has the ability to pay those debts.
I put to one side the claims of the Kiceecs which are in the present context controversial. Edmondson, despite contending that it was a creditor at various junctures, did not appear in the final hearing.
Adopting the phraseology of Finklestein J in De Simone, I would characterise Plexbuild as clearly falling within the description of a 'shaky' company and at the other end of the spectrum to the circumstances of the public company described by Assaf.[109] As such, in going about the rebuttal of the presumption of insolvency for which it bears the onus, I consider that it was required to produce independently verified evidence of the 'fullest and best' kind available in the form of audited accounts. Judicial Registrar Woronczak provided a number of opportunities to Plexbuild to obtain audited accounts to demonstrate its solvency and, as has been seen, made pointed criticism of its failure to do so.
Rather than put on evidence of the optimum quality to rebut the presumption of insolvency, Plexbuild placed reliance on the Solvency Report composed by Mr Bishay, which was underpinned by the contention that it had valuable claims against Edmondson and the Kiceecs which were close to realisation, and the proceeds of which would be applied to pay its creditors. In Mr Bishay's affidavit of 24 June 2024, his opinion as to Plexbuild's solvency is conditioned by the observation that it ' should be able to pay its debts as they fall due if [Plexbuilds's] outstanding debts are collected[110]
In my view, the Solvency Report does not even approach what could be regarded as the 'fullest and best evidence' of the financial position of Plexbuild of the kind a company in its circumstances was required to produce. The accounts and other financial information are unaudited and not independently verified. The report relies completely on instructions to Mr Bishay by Plexbuild's solicitors which Mr Bishay was directed to assume were correct when he went about its preparation. Mr Bishay's does not seek to question or independently verify the assumptions that he has been directed to accept.
In my review of the Solvency Report, I have made reference to its various shortcomings[111]. The report is the subject of detailed criticism in Milestone's submissions which are detailed above. I consider those criticisms have much force and they were not successfully addressed by Plexbuild.
Mr Bishay has not detailed what, if any examination he and his staff conducted of the books and records of Plexbuild, and merely asserts that the company has kept up to date, fair and reasonable records and reporting. Despite stating that he and his staff had performed review procedures to be able to give an opinion of the true and fair value of the financial statements, he does not describe the process undertaken to come to that opinion. He states that while he has been told to assume that the claims against Edmondson and the Kiceecs 'have reasonable prospects in court', he has also reviewed the invoices issued to Plexbuild and Plexbuild in respect of the Edmonson project and the Hoffman Road project, and makes the generic, rudimentary assertion that the money received in respect of those debtors 'is less than the amount invoiced by Plexbuild' in support of a contention that the claims are valuable and are likely to succeed.
Mr Bishay's report referred to a contention that the creditors of the Company have all reached accommodations with Plexbuild, and agreed to instalment plans for satisfaction of their claims. The evidence would indicate that there is no foundation for such a contention and in the case of Milestone, the evidence is clear that there was absolutely no basis for an arrangement of that type to be contended to be in place.
Mr Bishay expressed the opinion that 'Plexbuild is solvent based on its ability to keep fair and reasonable books and records up to date'.[112] I have indicated above that I do not consider that submission to have any substance. Compliance with s 286 of the Act in respect of the maintenance of proper accounting records is not an indicia of solvency and an opinion that that a company is solvent because 'it is able to this point to keep fair and reasonable books and records to date' is not tenable.
As I have remarked, I do not consider that a generic observation by Mr Bishay as to the state of the construction industry in New South Wales is of any weight in determining the issue of Plexbuild's solvency.
The Solvency Report contends that the various ratios which are traditionally employed by insolvency practitioners in going about an assessment of an entity's solvency all point to Plexbuild being solvent. The computations of the various ratios by Mr Bishay all assume that there is a solid foundation to the value of the claims that Plexbuild is said to have against Edmondson and the Kiceecs and that those claims will be realisable in the short term and the proceeds will be available to meet the claims of creditors.
I accept the analysis of Milestone's counsel of the scenarios if, as I consider they should, the claims against Edmondson and the Kiceecs are deducted from the assets used to compute the ratios by Mr Bishay. The revised calculations all point to Plexbuild being insolvent.
If the claims against Edmonson and the Kiceecs are discounted as Milestone contends they should be, the financial position of Plexbuild is shown to be parlous.
Plexbuild's written submissions filed in response to the aide memoire prepared by Milestone's advisors provided no substantial response to what was a rather straightforward arithmetic computation of Mr Bishay's opinion in respect of the ratio analysis. I do not regard the submissions as making any inroads into the underlying rationale of Milestone's aide memoire.
As to Mr Moshy's evidence , I consider that there are numerous features of it which are unsatisfactory. As has been seen, there is a wide variation in the amount which he contends is owing to Plexbuild by Edmondson. Moreover, the evidence is clear that the relevant contract for the construction of the Edmondson project did not identify Plexbuild as the principal to that contract with Edmondson, but rather a related entity N.A.S. As such, whatever be the amount which might ultimately be recoverable, if anything, against Edmondson, the proceeds of such recovery will flow to N.A.S., not Plexbuild. In final submissions, I pressed Plexbuild's counsel, Mr Young for the particulars of the contract whereby Plexbuild would become entitled to participate in any payments made to N.A.S. but his responses were most vague and unsatisfactory.
Plexbuild contends that the asset in the form of the claim by Plexbuild against Edmondson is the most prominent in terms of its assets and underpins Mr Bishay's opinion that Plexbuild is solvent. In my view, there is no evidence of a level which would support the assertion that such claim should be brought to account as part of Plexbuild's current assets which are available to satisfy its current liabilities.
Similarly, in the same context of placing a value on it as a current asset to be applied towards satisfaction of Plexbuild's debts which are presently due to be paid, the claim against the Kiceecs is also questionable and I would discount any value to that claim in reckoning the value of Plexbuild's current assets. The claim against the Kiceecs was the subject of adjudication and, has been seen, the claim, said to be of the order of $400,000, has been reduced to nil by the superintendent who assessed the claim. Despite being aware of the outcome of the adjudication claim, as has been detailed above, I am satisfied that Mr Moshy and those associated with his interests acted to prevent the Kiceecs being informed of the outcome of that adjudication. Further, in addition to the rejection of the adjudication certificate, the Kiceecs have foreshadowed a substantial claim against Plexbuild in respect of the Hoffman Road project.
In my view, the claims made in the NSWSC Summons do not assist Plexbuild in establishing that it is solvent. The primary claim made in the proceeding is made by N.A.S. against Edmondson as may be expected by reason it is those parties who are privy to the contract in question. There is a claim made in the alternative for a declaration, in respect of which Plexbuild is claimed to be entitled to participate but, in my view, that claim is never satisfactorily developed or pleaded elsewhere in the document. Plexbuild's status is identified as a subcontractor.[113] In other parts of the claim,[114] N.A.S. is described as having appointed Plexbuild as its agent and project manager i.e. not as a principal.
The elements of the NSWSC Summons in respect of the Hoffman Road project contend that the relevant contract was between Plexbuild and the Kiceecs. It seems clear that the claim described in the NSWSC Summons is one and the same as that the subject of the adjudication certificate reducing it to $nil. It may be that that claim may bear fruit in the future but I would not characterise it as a readily realisable asset available to be deployed to satisfy the claims of Plexbuild's creditors who are due to be paid. If the claims subject to the NSWSC Summons are ultimately made good and judgment can be satisfied, application could no doubt be made by the contributories of Plexbuild to terminate the liquidation pursuant to s 482 of the Act.
Sections 459A and 467(1)(a) of the Act give the Court a discretion to decline to make a winding up order, even where the requirements of the statute are met, as they have been here. Of course, that discretion is to be exercised judicially and for the proper objects and purposes in the Act for which the discretionary power resides. There are no features of this matter which would warrant the exercise of the discretion not to make a winding up order.
In IOC Australia Pty Ltd v Mobil Oil Australia Ltd [115] stating: