SC Projects Australia Pty Ltd v Field Deployment Solutions Pty Ltd

Federal Court of Australia|2016-06-07|Before: Mr P, Gilmour J

Field Deployment Solutions Pty Ltd be wound up by this Court under the provisions of the Corporations Act 2001 (Cth).
That Martin Bruce Jones and Malcolm Field of Ferrier Hodgson, official liquidators, be appointed the liquidators of Field Deployment Solutions Pty Ltd.
The plaintiffs' costs be taxed and reimbursed out of the property of Field Deployment Solutions Pty Ltd in accordance with s 466(2) of the Corporations Act 2001 (Cth). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

GILMOUR J: 1 The plaintiffs seek orders for the winding up of the defendant in insolvency pursuant to section 459A of the Corporations Act 2001 (Cth). 2 The application is supported by the following affidavits: (1) Affidavits of Richelle Margaret Cuthbertson sworn on 8 December 2015 and 12 February 2016; (2) Affidavit of Laura Ellen Thomas affirmed on 29 January 2016; (3) Affidavit of Service of the Originating Process of Laura Ellen Thomas, filed on 16 December 2015 and served on 23 December 2015; (4) Affidavit of lodgement of Notification of Winding Up, filed on 16 December 2015 and served on 23 December 2015; and (5) The Affidavit of Publication of the Notice of Application for Winding Up filed on 16 December 2015 and served on 23 December 2015. 3 The defendant relied upon the affidavit of Gregory Brian Browne, sworn on 3 June 2016. 4 The application is brought by the plaintiffs under s 459P of the Act, where the plaintiffs' position is as follows: (a) The plaintiffs are a creditor of the defendant, and have standing to commence the application. (b) The defendant has admitted by its director that: (i) it is insolvent, and has been insolvent since at least October 2014; (ii) it has other creditors totalling in excess of $1.2 million; and (iii) while it has had limited income from 2015, it has utilised that income for purposes of its own choosing notwithstanding the existence of its creditors including the plaintiffs. 5 The plaintiffs have filed the written consent of the liquidators, being Mr Martin Bruce Jones and Mr Malcolm Field of Ferrier Hodgson, dated 7 December 2015.

Background 6 The parties are in litigation in the Supreme Court of Western Australia concerning a contractual dispute between them. The plaintiffs' claim $8 million in damages or alternatively a claim for approximately $5.5 million damages. The defendant's counter-claim as it stands presently, subject to what I will explain later, is in the order of $2.2 million dollars. 7 The plaintiffs commenced another proceeding in the Supreme Court of Western Australia to enforce and seek payment of a determination made in its favour under the Construction Contracts Act 2004 (WA). 8 On 7 September 2015 judgment was entered in favour of the plaintiffs upon the enforcement proceeding and the defendant was ordered to pay the plaintiffs the judgment sum of $188,225.00 plus interest. 9 Subsequent to the entry of that judgment, the plaintiffs, in an attempt to recover the judgment debt, issued a means inquiry as a result of which the director of the defendant, Mr Gregory Browne, was examined on 12 November 2015 and again on 11 January 2016. 10 As a result of matters arising in the means inquiry on 12 November 2015, the plaintiffs were made aware of the following: (a) Mr Browne failed to provide bank account statements and other information required by the means inquiry summons, on the basis that he did not have access to that information and thought that he could not get the relevant documents without incurring costs that the defendant could not pay. (b) The defendant owes up to $1.2 million to other creditors. (c) The defendant has allegedly not traded since October 2014, with the reason given that doing so would mean the defendant was trading insolvent. 11 It is now established that the defendant owes in excess of $1.2 million dollars to creditors other than the plaintiffs. Counsel for the defendant acknowledged this to be so. 12 Separately, on 24 November 2015 a further adjudication determination was issued in respect of the matters in dispute between the parties. This determination: (a) arose from an application by the defendant dated 14 October 2015; and (b) was determined in the plaintiffs' favour, including an order that the defendant pay to the plaintiffs $58,709.50 in costs. 13 This determination was also the subject of a review hearing in the State Administrative Tribunal. The defendant was unsuccessful in the review: Field Deployment Solutions Pty Ltd v SC Projects Australia Pty Ltd [2016] WASAT 47.

Relevant considerations 14 The defendant is, on any test, insolvent. It has no assets and has admitted liabilities of approximately 1.4 million dollars. This figure includes, in addition to the amount in [10] above, the sums presently due to the plaintiffs of $188,225.00 plus interest and $58,209.50 plus interest. This does not take into account the damages claim in the Supreme Court proceedings in the sum of $8 million, alternatively $5.5 million, brought against the defendant by the plaintiff. Nor does it take into account the counter claim of $2.2 million dollars. 15 The defendant, by Mr Browne, has asserted that its business operations were closed down in October 2015 and from that date it has ceased to trade. The defendant, it appears, has entered into related party transactions in the past four years. 16 The defendant, recently, by Deed dated 3 June 2016, has assigned or at least purported to have signed its cause of action in the counter-claim in Supreme Court Action CIV1539 of 2015 to a company called Camp-in-a-Box Pty Ltd. Assuming the validity of this assignment, the defendant, as assignor, is entitled in the event that its proceedings in the Supreme Court are successful, to be paid 20 percent of any judgment amount less any legal fees, disbursements and the amount of outstanding costs orders. The remaining 80 percent is to go to the assignee. 17 I will assume for present purposes the validity of this assignment. I will also assume the optimum outcome for the defendant as a consequence of it. That assumption entails proceeding on the basis that the plaintiffs' claim for $8 million as well as its alternative claim for approximately $5.5 million, are each dismissed and that the counter-claim is entirely successful in the sum of $2.2 million dollars. 18 Until the assignment was bought to the attention of the Court, one basis for opposition to this application by the defendant was that it had an offsetting claim against the amount ($188,000 approximately) which founds this application. There is now, as counsel for the defendant correctly conceded, no longer an offsetting claim by the defendant as against the plaintiffs in the Supreme Court, the defendant having assigned, in its entirety, its interests in the counter-claim. 19 The sole basis, ultimately submitted by Counsel for the defendant, in resisting the application was that it "lacked utility". It is not entirely clear what is meant by that. If it is a reference to there being no financial utility then that of course is no answer. There is an important public interest in the administration of corporations which will, amongst other considerations, require the liquidators in due course to consider whether there have been any contraventions of the Corporations Act 2001 (Cth) by the defendant or its director, Mr Browne. Moreover, even on a financial basis, the liquidators may well wish to investigate the validity of the assignment.

Conclusion 20 This is a compelling case in which to make an order to wind up the defendant. The defendant is as I have mentioned undisputedly insolvent. It has no claim of a set off. 21 I will make orders in terms of the minute filed by the applicant as follows: (1) Field Deployment Solutions Pty Ltd be wound up by this Court under the provisions of the Corporations Act 2001 (Cth). (2) That Martin Bruce Jones and Malcolm Field of Ferrier Hodgson, official liquidators, be appointed the liquidators of Field Deployment Solutions Pty Ltd. (3) The plaintiffs' costs be taxed and reimbursed out of the property of Field Deployment Solutions Pty Ltd in accordance with s 466(2) of the Corporations Act 2001 (Cth). I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gilmour.

Corporations Act 2001(Cth)ss 459A, 459P, 466(2)

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