WORKERS COMPENSATION NOMINAL INSURER ABN 83 564 379 108 v DELI GLENBROOK PTY LIMITED ACN 118 296 325

REASONS FOR JUDGMENT 1 This matter has come before me today in the Corporations List, having been referred from the Registrar. The reason that the matter has come before me is that it appears, from the evidence to which I have been taken, that a winding up order made by Registrar Hedge on 5 March 2010 for the winding up of the defendant, would not have been sought if the plaintiff had been aware that the debt due from the defendant was, in fact, as it turns out to have been, paid to the plaintiff at the time when the winding up order was obtained. Importantly, for present purposes, the winding up order was made on the plaintiff's application in the absence of the defendant. 2 Mr Metlej, the solicitor for the plaintiff, appears before me this morning to seek an order that the winding up order be set aside pursuant to Order 35, rule 7(2)(a) of the Federal Court Rules. 3 The matter was before Stone J as the Corporations Duty Judge on 10 March 2010. Her Honour made orders on that date, including an order for a stay of the Registrar's order pending further consideration of the matter by the Registrar, and further order of the Court. The matter was then referred back to the Registrar and, in those circumstances, came before me this morning. 4 The evidence before me indicates that on 4 March 2010 the defendant notified the plaintiff by email that it would be making full payment of the amount of the debt which was then outstanding, and that there would be posted to the plaintiff, by express post, a cheque for the full amount. The cheque was sent to the plaintiff but the plaintiff's solicitor was unaware of the fact that the email had been received and the payment made when he attended Court before the Registrar on 5 March 2010 to seek the winding up order. The email of 4 March asks the question "Could you please advise that this is the end of the court action?" This suggests that the defendant must have assumed that it was unnecessary for it to appear before the Registrar, having indicated that payment was being made of the debt. 5 The power of the Court to set aside a winding up order, made in the absence of the defendant company, and the circumstances which attend the exercise of the discretion, were explained by McDougall J in Labraga v Pomfret [2005] NSWSC 654 ("Labraga"). His Honour referred, with approval, to the observations of Hodgson J, in George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 ("George Ward Steel"). 6 McDougall J set out the relevant passage from the decision of Hodgson J at [35] of the decision in Labraga. It is evident from the remarks of McDougall J at [36] - [37] that this approach has been followed in other instances, including in this Court, in Registrar of Aboriginal Corporations v Murnkurni Women's Aboriginal Corporation (1995) 58 FCR 125 ("Murnkurni"). It is also evident from the remarks of McDougall J that the Supreme Court Rule which was relevant to his consideration, namely Part 40, rule 9(3)(b), corresponds to the provisions of Federal Court Rule Order 35, rule 7(2), under which the present application is made. 7 The relevant considerations to which Hodgson J referred in George Ward Steel, indicate that the discretion will ordinarily be exercised to set aside a winding up order, so long as an application is brought promptly by the company, with notice being given to the liquidator, and to the plaintiff, and to any creditor who appeared at the hearing. Also, evidence should be given showing an explanation for the non appearance at the hearing and, in addition, evidence which "indicates solvency" of the company. As R.D. Nicholson J observed in Murnkurni at [128], Hodgson J only required evidence which "indicates solvency"; he did not say that solvency was to be established as a fact. If it were, this would necessitate substantial evidence to prove that the company was solvent. 8 At [43] of the reasons for judgment in Labraga, McDougall J said that it is not practicable, or perhaps possible, to seek to formulate in an exhaustive way, the considerations that attend the exercise of the discretion conferred by the rule. His Honour said that he did not think it was possible to say that, in any given case, certain things "must be shown". His Honour thought it was apparent from Hodgson J's remarks in George Ward Steel that he was not purporting to lay down a rule of general application but merely to indicate a list of relevant considerations which, if established, would result in the Court "normally" setting aside the order. 9 In the present case I am satisfied that the discretionary considerations, which were referred to in the statements of principle mentioned above, have been sufficiently established. Of course, each case must turn on its own facts, but here I am satisfied that the email from the defendant of 4 March to which I have referred, explains the reason for the defendant's non attendance at Court on 5 March 2010. 10 An indication of solvency is, obviously, an important factor which guides the exercise of the discretion. Here I think I have a sufficient indication of solvency, in particular, because the liquidator has indicated that he does not consent or object to the winding up order being set aside. In the circumstances of this case I can be satisfied that if the liquidator had doubts about the solvency of the company, he would not have taken the neutral position indicated in his letter of 10 March 2010. Moreover, no creditor appeared at the hearing on 5 March 2010 when the winding up order was made, nor has any creditor appeared today. The matter was listed before the Registrar and no creditor appeared seeking an order to be substituted as the plaintiff. 11 I should add that the circumstances indicate that the application was made promptly. Also, in this case, an unusual feature is that the application was brought by the plaintiff, rather than by the company itself. This seems to me to be a factor which I should take into account in the exercise of my discretion. The effect of what the plaintiff has put before me today is that the winding up order would not have been sought on 5 March 2010 if the plaintiff were aware of the fact that the debt had been paid on that day. 12 It seems to me that in all of those circumstances it is appropriate that I exercise the power conferred on me under Order 35, rule 7(2)(a) of the Federal Court Rules to make an order setting aside the order the Registrar made in this proceeding on 5 March 2010. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.