FEDERAL COURT OF AUSTRALIA Tipsy Cake Pty Ltd, in the matter of Tipsy Cake Pty Ltd [2020] FCA 190 File number: NSD 2115 of 2019 Judge: YATES J Date of judgment: 12 February 2020 Catchwords: CORPORATIONS – application for winding up order – Pt 5.7 body – source of power to wind up - application unopposed Legislation: Corporations Act 2001 (Cth) ss 459A, 583, 585 Corporations Law Cases cited: Peninsular Group Limited v Kintsu Co Limited (1998) 44 NSWLR 534 Re Reef Cove Resort Limited [2009] QSC 378 Date of hearing: 12 February 2020 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: Corporations and Corporate Insolvency Category: Catchwords Number of paragraphs: 10 Counsel for the Plaintiff: Mr D Sulan Counsel for Crown Melbourne Limited (a creditor): Ms C Hamilton-Jewell Solicitor for Cape Proprietary Inc (a creditor): Mr H J Howard of Thomson Geer Lawyers Table of Corrections 25 February 2020 Catchwords amended ORDERS NSD 2115 of 2019 IN THE MATTER OF TIPSY CAKE PTY LTD ARBN 601 620 580 TIPSY CAKE PTY LTD ARBN 601 620 580 Plaintiff JUDGE: YATES J DATE OF ORDER: 12 FEBRUARY 2020 THE COURT ORDERS THAT: 1. The plaintiff be wound up pursuant to Pt 5.7 of the Corporations Act 2001 (Cth). 2. Brian Raymond Silvia of BRI Ferrier, Level 30, Australia Square, 264 George Street, Sydney NSW 2000, and David John Coyne of BRI Ferrier, Level 10, 45 William Street, Melbourne VIC 3000, be appointed jointly and severally as liquidators of the plaintiff. 3. The costs of these proceedings be paid out of the assets of the plaintiff. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (Revised from transcript) YATES J: 1 On 20 December 2019, Brian Raymond Silvia and David John Coyne were appointed as provisional liquidators of the plaintiff, Tipsy Cake Pty Limited, on its own application. The plaintiff carries on a restaurant business under the name "Dinner by Heston Blumenthal" in the Crown Casino complex in Melbourne. 2 The matter came before me for case management on 3 February 2020, at which time counsel appearing for Mr Silvia and Mr Coyne stated that because of recent events, including the giving of notice terminating the lease under which the plaintiff conducts its restaurant, the view had been formed that the plaintiff should be placed in liquidation. The matter was stood over until today to enable the application to wind up the plaintiff to be advertised. On 3 February 2020, notice of the winding-up application was published on the Insolvency Notices webpage of the Australian Securities and Investments Commission. On 5 February 2020, notice of the application was published in The Age newspaper. 3 The present application is supported by an affidavit of Susan Elizabeth Clair St Maur made 19 December 2019; an affidavit of Andrew Paul Tennent Sutherland made 10 February 2020; and two affidavits by Mr Silvia made 2 February 2020 and 10 February 2020. 4 In his first affidavit, Mr Silvia reports on events during the provisional liquidation and the conduct of the plaintiff's business to that time, including the state of the provisional liquidators' negotiations with Crown Melbourne Limited (Crown), the lessor of the restaurant premises. In his first affidavit, Mr Silvia said that the provisional liquidators estimated a deficiency of approximately $10.8 million. At [22] of that affidavit, he noted certain debts in particular: a debt to Crown of approximately $1.1 million; a debt to the plaintiff's principals of approximately $1.885 million; and employee debts in excess of $4.4 million. 5 In his second affidavit, Mr Silvia said that the deficiency the provisional liquidators had identified may have been understated. He deposed that the plaintiff is insolvent and should be wound up, having regard to the information contained in his first affidavit, being the fact that the plaintiff will cease trading shortly; that it will not have premises to trade from after 14 February 2020; that it is unable to pay its debts as and when they fall due; and that it will not be in a position to generate further income. 6 The plaintiff is a Part 5.7 body under the Corporations Act 2001 (Cth) (the Act). It is a foreign company registered under Pt 5B.2, Div 2 of the Act. In written submissions filed in support of the present application, it is said there are two sources of power by which the Court may make the proposed winding-up order. First, s 459A (which appears in Pt 5.4 of the Act) provides that the Court may order that an insolvent company be wound up in insolvency. Secondly, s 583, which provides that a Part 5.7 body may be wound up under Pt 5.7 of the Act on various grounds, including that the body is "unable to pay its debts". Meaning is given to that expression by s 585. 7 I think it is doubtful that there are two sources of power. In Peninsular Group Ltd v Kintsu Co Ltd (1998) 44 NSWLR 534 (Peninsular Group), Sheppard AJA, with whom Meagher and Sheller JJA agreed, observed at 537D that the provisions of ss 583 and 585 provide a comprehensive procedure for winding up Part 5.7 bodies: see also at 540G to 541C, noting his Honour's observations that the legislature appears to have intended to treat companies incorporated in Australia and Part 5.7 bodies in different ways. That case was dealing with the provisions of the then Corporations Law. However, the provisions at play in that case are mirrored in substantially the same terms in the Act. The question in that case was whether the provisions of Pt 5.4 of the Corporations Law with respect to statutory demands applied to the insolvency of the appellant, which was a Part 5.7 body. The Court of Appeal held that they did not. 8 In Re Reef Cove Resort Limited [2009] QSC 378, at [14], the Supreme Court of Queensland understood Peninsular Group to hold that the provisions of Pt 5.4 of the Act relating to winding up and insolvency, which I have said includes s 459A, do not apply to a Part 5.7 body. I will proceed on that basis. 9 The relevant question is: is the plaintiff unable to pay its debts? On the basis of Mr Silvia's evidence, which I accept, the answer to that question is plainly yes. That is sufficient for me to make the order that is sought. I note that Mr Silvia and Mr Coyne have consented to act as liquidators of the plaintiff. They have filed written consents. As I have said, today's application has been advertised. No person has come forward to oppose it. There have been appearances today by Cape Proprietary Inc and Crown, two of the plaintiff's major creditors. Those companies do not oppose the making of a winding-up order. 10 For these reasons, the orders sought by the plaintiff will be made. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate: Dated: 24 February 2020