FEDERAL COURT OF AUSTRALIA Twin Peaks Leisure Pty Limited (in liq), in the matter of Twin Peaks Leisure Pty Limited (in liq) v Workers Compensation Nominal Insurer [2012] FCA 1501 Citation: Twin Peaks Leisure Pty Limited (in liq), in the matter of Twin Peaks Leisure Pty Limited (in liq) v Workers Compensation Nominal Insurer [2012] FCA 1501 Parties: TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) and ZEAD HOUCHAR v WORKERS COMPENSATION NOMINAL INSURER (ABN 835 643 791 08) and ANDREW JAMES BARNDEN IN HIS CAPACITY AS OFFICIAL LIQUIDATOR OF TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) File number: NSD 1667 of 2012 Judge: JACOBSON J Date of judgment: 13 December 2012 Legislation: Corporations Act 2001 (Cth), s 471A Federal Court Rules 2011 (Cth), r 39.05 Cases cited: Deputy Commissioner of Taxation, in the matter of JJs Prestige Pave Pty Limited (in liq) v JJs Prestige Pave Pty Limited (in liq) [2011] FCA 1473 George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 Date of hearing: 13 December 2012 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 9 Solicitor for the Applicants/Defendant: Mr DS McCrostie of Turks Legal Solicitor for the Respondents/Plaintiff: Mr S Agosta of Leonard Legal IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1667 of 2012 IN THE MATTER OF TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) BETWEEN: TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) First Applicant/Defendant ZEAD HOUCHAR Second Applicant AND: WORKERS COMPENSATION NOMINAL INSURER (ABN 835 643 791 08) First Respondent/Plaintiff ANDREW JAMES BARNDEN IN HIS CAPACITY AS OFFICIAL LIQUIDATOR OF TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) Second Respondent JUDGE: JACOBSON J DATE OF ORDER: 13 DECEMBER 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicants, upon the undertaking of their solicitor, to pay the applicable filing fee, the applicants have leave to file the interlocutory application dated 12 December 2012 in Court. 2. Pursuant to s 471A(1A) of the Corporations Act 2001 (Cth), the Court approves the performance or exercise by Zead Houchar of his functions and powers as a director of the second applicant/defendant in brining this application. 3. Pursuant to rule 39.05(c) of the Federal Court Rules 2011, the order of the District Registrar winding up the defendant on 5 December 2012 is set aside. 4. The Court notes the agreement of the applicants and the second respondent, that the second respondent is to pay out of the funds he personally controls, the following: (a) the second respondent's remuneration and expenses; (b) the plaintiff's debts and costs of these proceedings; and (c) the Australian Taxation Office in respect of any amount due for tax or superannuation. 5. The parties have liberty to apply to relist the matter on 48 hours notice. 6. Each party pay its own costs of this application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1667 of 2012 IN THE MATTER OF TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) BETWEEN: TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) First Applicant/Defendant ZEAD HOUCHAR Second Applicant AND: WORKERS COMPENSATION NOMINAL INSURER (ABN 835 643 791 08) First Respondent/Plaintiff ANDREW JAMES BARNDEN IN HIS CAPACITY AS OFFICIAL LIQUIDATOR OF TWIN PEAKS LEISURE PTY LIMITED (IN LIQ) (ACN 093 053 671) Second Respondent JUDGE: JACOBSON J DATE: 13 DECEMBER 2012 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This is an application under r 39.05(a) of the Federal Court Rules 2011 (Cth), seeking an order that the Court set aside an order made by the District Registrar on 5 December 2012, ordering the winding up of the company Twin Peaks Leisure Pty Limited. A number of other orders were sought in the alternative to that order, but for reasons indicated in debate with the legal representatives of the parties this morning, I indicated that the appropriate order seems to me to be for the winding up order to be set aside. 2 The principles which have been applied in such an application were stated by Hodgson J in George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 at 465. The approach stated by Hodgson J in that case has been followed in this court on a large number of occasions: see, for example, Deputy Commissioner of Taxation, in the matter of JJs Prestige Pave Pty Limited (in liq) v JJs Prestige Pave Pty Limited (in liq) [2011] FCA 1473 at [5]. 3 I am satisfied that the application has been brought promptly by the applicant. The approach taken by Jagot J was to make an order under s 471A(1A) of the Corporations Act 2001 (Cth), approving the performance or exercise by the applicant, in this case Mr Zead Houchar, who is named as the second applicant in the present application, to bring this application. 4 I am also satisfied that notice has been given to the liquidator, who has appeared this morning by his solicitor. I am informed that the petitioning creditor has been notified of the application, and that the petitioning creditor consents to the making of the order which is sought. The consent is given upon the basis of arrangements that have been made for the payment of the petitioning creditor's debt and costs and disbursements. 5 I am also satisfied that there is an explanation for the failure of the company to attend the hearing when the winding up order was made. The evidence is that the registered office of the company was located at the company's then accountants, who apparently did not bring the winding up application to the attention of the relevant officers of the company. 6 Importantly, I am satisfied that the evidence before me this morning indicates that the company is solvent. The evidence is that the company is solvent on a balance sheet test, as well as upon the basis of a cash flow forecast, which shows substantial cash balances on forecast trading over the next six months. That evidence is contained in the affidavit of Mr Hassan Hammoud, which was sworn on 13 December 2012. 7 As I have said, the petitioning creditor consents to the setting aside of the winding up order, and the liquidator has indicated that he does not oppose the making of the order which is sought. The effect of what I have been told today by the liquidator's legal representative is to establish within the test stated by Hodgson J that there is nothing to show any reason for the company to be stopped from trading. 8 In those circumstances it seems to me that, having regard in particular to the evidence of solvency and the arrangements which have been made for the payment of the debt and legal expenses due to the petitioning creditor, as well as for the payment of the liquidator's costs and expenses, as well as for the payment of the creditors, including the ATO, an order should be made setting aside the winding up order. I should also mention that there was evidence that the largest creditor of the company, Alibi Holdings Pty Limited, unconditionally supports the making of the order. 9 Accordingly, I will make orders in terms of the orders handed to me by the solicitor for the applicants. I will, in addition to those orders, make the order I have indicated pursuant to s 471A(1A), approving the performance of Mr Houchar of his functions and powers as a director of the company in bringing this application. I also note the agreement which is recorded in paragraph 3 of the draft orders handed to me by Mr McCrostie, and I will sign and date the orders contained in the handwritten document provided by Mr McCrostie, dated with today's date. I will order that the orders that I have made may be taken out forthwith. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate: Dated: 13 December 2012