Cowen v Motoring World Pty Ltd [2013] FCA 1247

FEDERAL COURT OF AUSTRALIA

Cowen v Motoring World Pty Ltd [2013] FCA 1247 Citation: Cowen v Motoring World Pty Ltd [2013] FCA 1247

Parties: MAURICE JOHN COWEN and MOTORING WORLD PTY LTD

File number(s): QUD 493 of 2013

Judge(s): GREENWOOD J

Date of judgment: 17 October 2013

Catchwords: BANKRUPTCY AND INSOLVENCY – consideration of an application to wind up the respondent company

Date of hearing: 17 October 2013

Date of last submissions: 17 October 2013

Place: Brisbane

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 13

Solicitor for the Applicant: Harry Jordaan, Quinn & Scattini Lawyers

Solicitor for the Respondent: Mark Winn, Sparke Helmore Lawyers

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 493 of 2013

BETWEEN: MAURICE JOHN COWEN

Applicant

AND: MOTORING WORLD PTY LTD

First Respondent

JUDGE: GREENWOOD J DATE OF ORDER: 17 OCTOBER 2013 WHERE MADE: BRISBANE

THE COURT ORDERS THAT:

1. The respondent company be wound up in insolvency in the terms of the draft orders handed to the Court on the hearing of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 493 of 2013

BETWEEN: MAURICE JOHN COWEN

applicant

AND: MOTORING WORLD PTY LTD

Respondent JUDGE: GREENWOOD J DATE: 17 OCTOBER 2013 PLACE: bRISBANE

EX TEMPORE REASONS FOR JUDGMENT 1 This is an application for the winding up of a company called Motoring World Pty Ltd. The matter was to be heard and determined on Tuesday, 1 October 2013 but the Court caused the matter to be relisted for today, 17 October 2013. In the period leading up to the first return date on Tuesday, 1 October 2013, a man called Mr Anton Swampillai instructed Mr Mark Winn of the law firm Sparke Helmore Lawyers in relation to the matters. 2 In Mr Winn's affidavit sworn and filed on 30 September 2013, Mr Winn deposes to having received instructions from Mr Swampillai, described as the former director and authorised representative of the company in the matter, instructing Mr Winn to act on behalf of the company in the matter. Those instructions were received on Friday, 27 September 2013, which of course, was the Friday immediately preceding the week commencing Monday, 30 September, being the day before the first return date for the matter. 3 In Mr Winn's affidavit, he deposes to a number of facts upon which he sought to have the matter adjourned on 1 October 2013, to enable information to be gathered together to rebut the presumption of insolvency. In para 5 of the affidavit, Mr Winn says that he was informed by Mr Swampillai, and he verily believes, that the bookkeeper for the company, Mr Calvert, who was then in possession of the books of the company, was admitted to the Gosford Hospital on 25 September 2013 and would not be released until Wednesday or Thursday of the week commencing 30 September 2013. 4 That meant that Mr Calvert, who was in possession of the books of account, would be released from hospital on 2 October 2013 or 3 October 2013. Mr Winn has appeared today on behalf of the company and seeks a further adjournment to enable facts to be gathered together to establish the solvency of the company. Mr Winn says that it proved to be the case that Mr Calvert was indeed released from hospital on Wednesday, 2 October 2013, but it was only 16 October 2013 when the books of account became available. 5 No further affidavit has been sworn by Mr Winn deposing to facts, but I am advised by Mr Winn from the Bar table that there were problems with the MYOB accounting records, but the truth of the matter is, as he says, that the books of account are "in a mess". On 16 October 2013, they were delivered up either to the company or to the company's accountants and an adjournment is sought to investigate those matters further so that evidence might be put on to rebut the presumption of insolvency. Mr Winn's affidavit of 30 September 2013, upon which the present application for an adjournment is based, also refers to some evidence from Mr Bentwitch of Bentwitch & Co, practising accountants, who say that they will need about a month to consider the books of account in order to determine the question of solvency. 6 Of course, it should also be noted that there is no affidavit from Mr Swampillai in his capacity as the agent of the company for these purposes, asserting as a fact the solvency of the company and perhaps, more importantly, there is no affidavit from the present director of the company deposing to the solvency of the company. The director as at 31 July 2013 is a woman called Ms Janice Separa and she was appointed as a director of the company on 6 August 2010. Mr Swampillai was appointed as a director on 22 September 2010 but ceased to be a director on 1 June 2011. 7 In relation to the substance of the matter, it is not contested that a statutory demand was served upon the respondent company, which remained unsatisfied and that an originating application for a winding-up order was filed and served as well. It is said by Mr Winn in his submissions on behalf of the company, that the company does not dispute that the applicant plaintiff is owed an amount of $46,500.00 and the concession that that debt is due and owing is the explanation as to why the statutory demand was not opposed, nor is it asserted that there is any dispute or genuine dispute or any dispute at all as to the fact that the debt is owing. 8 It is said that there is this debt owing by the company and I am advised from the Bar table that there is also a debt owing to the Commissioner of Taxation, but that representatives of the company are in negotiations with the Commissioner in relation to making arrangements about that debt. In the materials before me in relation to the application, there is also a bank statement on behalf of the company attached to the papers. 9 That bank statement shows that the company has balance funds available to it of $2,788.22, although it has available funds through that account of $3,278.22. The simple fact of the matter is that a demand has been made and it remains unsatisfied. An application for a winding-up order was served and filed. It remained undealt with until the last possible moment, being late on Friday, 27 September 2013, immediately before the following week in which the application would be dealt with. No further affidavit has been filed in relation to Mr Calvert's circumstances, although it appears that he was discharged from hospital on 2 October 2013. 10 The books of account of the company are not, apparently, in the possession of the company but rather they are in the possession of Mr Calvert and they have only been delivered up yesterday or possibly the day before and, in any event, the books of account are "in a mess." The applicant plaintiff is owed $46,500.00. It has been outstanding for some considerable time. There is absolutely no reason why this man should be held out of this money and there is no evidence upon which it can be said that there is any demonstrated solvency on the part of the company. 11 It would be one thing if the directors of the company, or the present director, swore an affidavit asserting to some foundation facts of solvency, but the best we have is a former director of the company who, he says, is the agent of the company and in a capacity to instruct lawyers, has put on an affidavit in brief terms talking about the difficulties confronting Mr Calvert. We have a bank statement showing very limited funds with a very substantial debt to the plaintiff and debts due to the Commissioner of Taxation, which are the subject of present negotiation. 12 It is perfectly obvious that the cash flow of the company does not enable the debts of the company to be paid as and when they fall due. I am entirely satisfied that this company is insolvent. There is no evidence which rebuts the presumption or would provide a proper basis upon which an adjournment should be granted to enable any other evidence to be put together, which might suggest a rebuttal of the presumption of insolvency. 13 It follows that the company must be wound up in insolvency. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.