FEDERAL COURT OF AUSTRALIA Smith, in the matter of In House Management Service Pty Ltd v In House Management Service Pty Ltd [2010] FCA 1401 Citation: Smith, in the matter of In House Management Service Pty Ltd v In House Management Service Pty Ltd [2010] FCA 1401 Parties: BRIAN SMITH and GILLIAN KENWAY v IN HOUSE MANAGEMENT SERVICE PTY LTD (ACN 127 749 277) File number: QUD 463 of 2010 Judge: COLLIER J Date of judgment: 10 December 2010 Legislation: Corporations Act 2001 (Cth) ss 459C, 459F, 467(1) Date of hearing: 10 December 2010 Place: Brisbane Division: GENERAL DIVISION Category: No Catchwords Number of paragraphs: 8 Counsel for the First and Second Plaintiffs: Mr M Bowman Solicitor for the First and Second Plaintiffs: Ponting & Co Counsel for the Defendant: The Defendant did not appear IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 463 of 2010 IN THE MATTER OF IN HOUSE MANAGEMENT SERVICE PTY LTD (ACN 127 749 277) BETWEEN: BRIAN SMITH First Plaintiff GILLIAN KENWAY Second Plaintiff AND: IN HOUSE MANAGEMENT SERVICE PTY LTD (ACN 127 749 277) Defendant JUDGE: COLLIER J DATE OF ORDER: 10 DECEMBER 2010 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The respondent, In House Management Services Pty Ltd ACN 127 749 277 be wound up in insolvency. 2. Jason Bettles and Raj Khatri of Worrells Solvency and Forensic Accountants, Level 6, 50 Cavill Avenue, Surfers Paradise, Queensland 4217, official liquidators, be appointed by the Court to act as liquidators of In House Management Services Pty Ltd ACN 127 749 277 3. The applicants' costs (including reserved costs, if any) be taxed and reimbursed out of the property of the corporation in accordance with section 466(2) of the Corporations Act 2001 (Cth). Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 463 of 2010 IN THE MATTER OF IN HOUSE MANAGEMENT SERVICE PTY LTD (ACN 127 749 277) BETWEEN: BRIAN SMITH First Plaintiff GILLIAN KENWAY Second Plaintiff AND: IN HOUSE MANAGEMENT SERVICE PTY LTD (ACN 127 749 277) Defendant JUDGE: COLLIER J DATE: 10 DECEMBER 2010 PLACE: BRISBANE REASONS FOR JUDGMENT 1 This matter was referred to a Judge of this Court by the District Registrar. The applicant sought orders for the winding up of the respondent in liquidation and the appointment of official liquidators. 2 The respondent did not appear in Court before me. Mr Bowman for the respondent submitted that this was the third time that the applicant's application for winding up in insolvency of the respondent had come before the Court, and at no time has the respondent entered an appearance. 3 I understand that previously the Deputy District Registrar found that all relevant documentation in relation to the winding up of the respondent had been filed by the applicant with the Federal Court Registry, and that no substantial injustice had been caused by a minor deviation in the form of statutory demand served upon the respondent. The only live issue, and the reason the matter has been referred to me, is that the applicant filed the application for winding up the respondent one day after the expiration of three months from the date on which the respondent failed (as defined by s 459F) to comply with a statutory demand. So far as relevant, s 459C of the Corporations Act 2001 (Cth) ("the Act") provides that: Presumptions to be made in certain proceedings (1) This section has effect for the purposes of: (a) an application under section 234, 459P, 462 or 464; or … (2) The Court must presume that the company is insolvent if, during or after the 3 months ending on the day when the application was made: (a) the company failed (as defined by section 459F) to comply with a statutory demand; or … 4 There is undisputed evidence before the Court that a statutory demand with supporting affidavit was served by the applicant on the respondent at its registered office on 6 July 2010, and that as at 27 July 2010 (21 days later) the respondent had failed to comply with the requirements of the statutory demand. Section 459F operates so as to deem the respondent to have failed to comply with the statutory demand 21 days after the demand was served. 5 It follows that, for the Court to be required to presume that the respondent was insolvent as a result of its failure to comply with the applicant's statutory demand, the applicant ought to have filed an application for the winding up in insolvency of the respondent within 3 months of the respondent's failure to comply with the statutory demand. Accordingly, to enliven s 459C(2)(a) of the Act, the application for winding up of the respondent ought to have been filed by 27 October 2010. 6 I note from the affidavit of Ms Xara Coassin, solicitor for the applicant, filed 9 December 2010 that an application for the winding up in insolvency of the respondent was not accepted for filing by the Federal Court Registry on 27 October 2010 because that application was in a superseded form. Ms Coassin deposed that she was notified by the courier immediately of the circumstances pertaining to the Registry's rejection of the application form, and that she then drafted a new original application using the correct form. The application for winding up in insolvency of the respondent was subsequently filed on 28 October 2010. 7 In summary, it is not in dispute that the respondent has never complied with the statutory demand served upon it on 6 July 2010. The application for winding up in insolvency of the respondent was filed only one day beyond the date by when the Court would have been required to presume the respondent's insolvency, for reasons explained by Ms Coassin in her affidavit. The respondent has not disputed the applicant's claims, either before me or in prior proceedings. It is clear that the respondent is, in fact, insolvent, and that an order should be made for it to be wound up in insolvency. In my view for the avoidance of doubt the Court should exercise its discretion to make a winding up order under s 467(1)(c) of the Act. Section 467(1) provides: Subject to subsection (2) and 467A, on hearing a winding up application the Court may: (a) dismiss the application with or without costs, even if a ground has been proved on which the Court may order the company to be wound up on the application; or (b) adjourn the hearing conditionally or unconditionally; or (c) make any interim or other order that it thinks fit. 8 Finally, at the hearing the applicant did not seek any orders as to costs. Subsequent to the hearing however Counsel for the applicant sought an order that the respondent bear the applicant's costs in these proceedings. I note that the applicant had, in the application, sought its costs. In my view it would be appropriate to order that the applicant's costs be paid by the respondent. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Collier. Associate: Dated: 15 December 2010