C THE APPLICATION
12 Westpac puts its application for the appointment of a liquidator on two grounds: first, that Forum Finance should be wound up on the ground of insolvency; and secondly, that Forum Finance should be wound up on the basis that it is just and equitable to do so. For reasons I will explain, it is unnecessary for me to form a final view in relation to the solvency or otherwise of Forum Finance; although, given the nature of the evidence advanced there must, at the very least, be real concerns as the company's financial position generally and, more particularly, its capacity to pay its debts as they fall due.
13 A court may order a winding up if it is of the opinion that it is just and equitable that a company be wound up: see s 461(1)(k) of the Corporations Act 2001 (Cth) (Act). That provision has been said to authorise the court to apply broad equitable considerations. Winding up on the just and equitable ground has a long history stemming from s 5(8) of the Joint Stock Companies Winding Up Act 1848 (UK). It appears that until the end of the 19th Century it was thought that winding up on a just and equitable ground only covered situations which were comparable to those envisaged in preceding subsections of that Act. That idea, expressed by Lord Cottenham LC in Ex parte Spackman (1849) 1 Mac & G 170; (1849) 41 ER 1228 (at 1229-30), was later abandoned, but courts still tended to limit the breadth of the section by subdividing its application into relevantly narrow categories.
14 The flaw in this approach was made clear by the House of Lords in Re Westbourne Galleries Ltd [1973] AC 360 (at 374 per Lord Wilberforce, with whom Viscount Dilhorne, Lord Pearson and Lord Salmon agreed, and at 383-4 per Lord Cross of Chelsea). In that case, their Lordships stressed that the provision confers upon a court a discretionary power of very wide character and that courts should be ready to apply it to new situations falling outside previous illustrations. However, given the seriousness of the remedy, the discretion must be exercised judicially.
15 This is quite an unusual application because the winding up is consented to by the company. Of course, if a company by special resolution so resolves, it can agree to be wound up by the Court: see s 461(1)(a) of the Act. At least in my experience, this is rarely done because the members could adopt the alternative course of a voluntary winding up. But as Barrett J explained in Hillig v Darkinjung Local Aboriginal Land Council [2006] NSWSC 1371; (2006) 205 FLR 450 (at 458 [35]), the body of shareholders have a statutory right to decide that the company should be wound up by the court, being a right exercisable by whatever procedures are sufficient to cause a special resolution to be passed. Although this course has not been undertaken (formally or otherwise), the fact of express consent, through the company's counsel, to orders being made by the court on the application of a third party does seem to me to inform the ultimate consideration of whether it is just and equitable for the company to be wound up.
16 There is no point traversing the various non-exclusive categories where such orders have been made. They include, for example, where a company cannot be carried on consistently with candid and straightforward dealings with the public: see Australian Securities and Investments Commission v Austimber Pty Ltd [1999] FCA 566; (1999) 17 ACLC 893 (at 895 per Merkel J), citing Re Producer's Real Estate v Finance Co Ltd [1936] VLR 235 (at 246 per Mann CJ). Other examples include where there is a lack of propriety in the management and conduct of a company's affairs and there are public interest considerations which make it desirable that a company, however solvent, be wound up (although most of the examples falling into this category generally relate to applications made on behalf of a regulator).
17 As I have noted, both Mr Papas and Mr Tesoriero have not sought to be heard; nor have they sought to challenge any of the evidence read on this application. At present, it is only necessary to make factual findings for the purposes of determining the separate question as to whether Forum Finance should be wound up, but on the evidence, I have no confidence at all in the ability of Mr Papas to discharge his obligations as a director of Forum Finance in a way which is consistent with the legitimate conduct of the affairs of the company (if the company was to continue to trade in some form).
18 I have already mentioned the fact that Mr Papas is presently overseas. He has previously failed to apprise his solicitor of his whereabouts at a level of specificity other than that he is somewhere on the continent of Europe, although it is now said that he either is in, or presently en route to, the Greek capital of Athens. Delphic details of a proposed return to Australia have been provided orally, but no itinerary or corroborative material showing details of a suggested Japan Airlines flight have been provided. It may be that Mr Papas returns to Australia tomorrow, although at present, this is not entirely clear.
19 Forum Finance has two named directors: one of whom does not consider himself a director; and the other is currently not being candid, even with his solicitor, as to his whereabouts and has apparently let the company engage in fraudulent transactions. To use considerable understatement, this is a suboptimal state of affairs. Indeed it is a state of affairs that should not continue. In circumstances where the relevant provision of the Act confers upon a court a discretionary power of very wide character, the company agrees to orders it should be wound up on a just and equitable ground, and no shareholder or officer of the company opposes such a course, I am amply satisfied that such an order should be made.