Supreme Court New South Wales Medium Neutral Citation: In the matter of Squirrel Limited (In Liquidation) [2021] NSWSC 1658 Hearing dates: 3 May 2021 Date of orders: 16 December 2021 Decision date: 16 December 2021 Jurisdiction: Equity - Corporations List Before: Williams J Decision: See orders at [86]. Catchwords: PRACTICE AND PROCEDURE – application for summary judgment in respect of insolvent trading claim under Corporations Act 2001 (Cth), ss 588G(2) and 588M – Uniform Civil Procedure Rules 2005 (NSW), r 13.1 – principles applicable to summary judgment application ­– whether plaintiffs' claims will ultimately succeed – where the defendant has not filed a notice of appearance, has not appeared and has not filed any defence or evidence – whether defendant has no defence to insolvent trading claims. CORPORATIONS – insolvent trading – director's liability – whether the company was insolvent when the debts were incurred – whether reasonable grounds for suspecting insolvency – whether a reasonable person in the director's position would have been aware at that time that there were grounds for suspecting that the company was insolvent. Legislation Cited: Corporations Act 2001 (Cth), ss 95A, 443A, 588G, 588H, 588M Federal Court of Australia Act 1976 (Cth), s 31A Supreme Court Rules 1970 (NSW), Pt 3.2 Trans-Tasman Proceedings Act 2010 (Cth) Pt 2, Div 2 Uniform Civil Procedure Rules 2005 (NSW), r 13.1 Cases Cited: General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125; [1964] HCA 69 Hambleton (liquidator), in the matter of China Cooking Group Aus Pty Ltd (in liq) v Zhang [2020] FCA 1879 Harrison v Lewis [2001] VSC 27 Ke Qin Ren v Hong Jiang (2014) 104 ACSR 149; [2014] NSWCA 388 Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512 O'Brien v Bank of Western Australia Ltd (2013) 16 BPR 31,705; [2013] NSWCA 71 Re Humur Pty Limited [2020] NSWSC 1759 Re Salfa Pty Ltd (in liq) [2014] NSWSC 1493 Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 Treloar Constructions Pty Ltd v McMillan (2017) 318 FLR 58; (2017) 120 ACSR 130; [2017] NSWCA 72 Yeo (in their capacity as liquidators of Bradi Transport Pty Ltd (in liq)) v Sklenovski [2020] FCA 1540 Category: Principal judgment Parties: Brent Kijurina and Richard Lawrence in their capacity as liquidators of Squirrel Limited (In Liquidation) (First Plaintiffs) Squirrel Limited (In Liquidation) (Second Plaintiff) Damien Linn (Second Defendant) Representation: Counsel: Mr P Dunn (Plaintiffs) Solicitors: Dentons Lawyers (Plaintiffs) File Number(s): 2020/186798 Publication restriction: N/A Judgment Introduction 1. The first plaintiffs in these proceedings, Mr Brent Kijurina and Mr Richard Lawrence are the joint and several liquidators (the Liquidators) of the second plaintiff Squirrel Limited (in liquidation) (the Company). [1] 2. The proceedings were commenced by originating process filed on 24 June 2020 seeking declarations that the Company's three directors had contravened s 588G(2) of the Corporations Act 2001 (Cth) and orders pursuant to s 588M(2) requiring the directors to pay to the Company an amount equal to the loss and damage suffered by creditors as a result of the contravention. 3. A settlement between the plaintiffs and two of the three directors – the first defendant, Mr Steven Fornasaro and the third defendant, Mr Stuart Adamson – resulted in the filing of a notice of discontinuance on 11 March 2021 in relation to the proceedings against the first and third defendants. 4. The second defendant, Mr Damien Linn has been a director of the Company since its incorporation in May 2015. Mr Linn was personally served with the originating process and points of claim in New Zealand on 23 July 2020 in accordance with Part 2, Division 2 of the Trans-Tasman Proceedings Act 2010 (Cth). Mr Linn has not filed a notice of appearance, there has been no appearance on his behalf at any of the interlocutory hearings and he has not filed any points of defence or evidence in accordance with directions made by the Court applicable to all defendants. 5. By interlocutory process filed on 22 March 2021, the plaintiffs applied for summary judgment against Mr Linn pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR). The plaintiffs seek: 1. a declaration that Mr Linn contravened s 588G(2) of the Corporations Act 2001 (Cth) by failing to prevent the Company from incurring specified debts during the period from October 2018 to October 2019; 2. judgment against Mr Linn pursuant to s 588M(2) of the Corporations Act in the sum of $447,714.90, being the amount of loss and damage said to have been suffered by the Company's creditors in relation to those debts; and 3. interest. 1. The plaintiffs adduced evidence of the interlocutory process having been served on Mr Linn by email and subsequently by copies being left at his residential addresses and business address in New Zealand together with correspondence advising him of the hearing date for the interlocutory process. Mr Linn did not appear at that hearing on 3 May 2021. 2. Default judgment is not available because the proceedings were commenced by originating process under the Supreme Court (Corporations) Rules rather than by statement of claim: Re Salfa Pty Ltd (in liq) [2014] NSWSC 1493 at [8]-[10]. In order to obtain summary judgment under UCPR r 13.1, the plaintiffs are required to prove by admissible evidence the facts on which their claims are based. The Court must be satisfied to a high degree of certainty that the plaintiffs' claims will ultimately succeed because there is no underlying defence, or any defence has no more than a fanciful prospect of success, such that the outcome is so certain that it would be an abuse of the Court's process to allow the action to go forward. These issues must be addressed not merely by reference to pleadings. The question is whether there is an underlying defence, not merely whether one has been pleaded. The courts have repeatedly emphasised the exceptional caution with which the power to give summary judgment must be exercised: General Steel Industries Inc v Cmr for Railways (NSW) (1964) 112 CLR 125 at 129-130; [1964] HCA 69 (Barwick CJ); Spencer v Commonwealth (2010) 241 CLR 118; [2010] HCA 28 at [23]-[26] (French CJ and Gummow J) and [54]-[55] (Hayne, Crennan, Kiefel and Bell JJ); O'Brien v Bank of Western Australia Ltd (2013) 16 BPR 31,705; [2013] NSWCA 71 at [3] (Macfarlan JA, Beazley P agreeing); Ke Qin Ren v Hong Jiang (2014) 104 ACSR 149; [2014] NSWCA 388 at [49]-[50], [55] (Barrett, Gleeson and Leeming JJA). 3. Counsel for the plaintiffs referred me to the judgment of Reeves J in Hambleton (liquidator), in the matter of China Cooking Group Aus Pty Ltd (in liq) v Zhang [2020] FCA 1879. In that case, Reeves J determined an application under s 31A(1) of the Federal Court of Australia Act 1976 (Cth) for summary judgment on a claim under s 588M of the Corporations Act arising out of an alleged contravention of s 588G(2). Contrary to the submission made by counsel for the plaintiffs, s 31A of the Federal Court of Australia Act imposes a lesser standard on an applicant for summary judgment than UCPR r 13.1: Spencer v Commonwealth, supra, at [56] (Hayne, Crennan, Kiefel and Bell JJ); Ke Qin Ren v Hong Jiang, supra, at [49] (Barrett, Gleeson and Leeming JJA). Under s 31A, the Court must be satisfied that the defendant "has no reasonable prospect of successfully defending the proceeding" and this does not require that the defence be "hopeless" or "bound to fail". Reeves J determined the application in China Cooking Group in accordance with s 31A. 4. The plaintiffs' short written and oral submissions in these proceedings were directed to whether Mr Linn had reasonable prospects of defending the proceedings and whether it was reasonable to conclude that the Company had incurred the relevant debts whilst it was insolvent and that Mr Linn was aware that the Company was insolvent at those times. Despite these submissions, I have approached the determination of the summary judgment application in accordance with the principles summarised at [7] above and by considering the plaintiffs' evidence against the elements of ss 588G and 588M and the statutory defences referred to at [12]-[18] below. 5. UCPR r 13.1(b) requires an applicant for summary judgment to adduce evidence given by some responsible person that, in the belief of that person, the defendant has no defence to the claim, or no defence except as to the amount of damages claimed. However, non-compliance with that rule will not necessarily justify refusal of the application for summary judgment if the Court is in fact satisfied to the high degree of certainty required by the authorities referred to above that there is no defence to the claim: Long Leys Co Pty Ltd v Silkdale Pty Ltd (1991) 5 BPR 11,512. In that case, Sheller JA (with whom Priestley and Meagher JJA agreed) said in relation to Pt 3.2 of the Supreme Court Rules 1970 (NSW) (which was in the same terms as UCPR r 13.1): [2] "… provisions such as those contained in Pt 13.2 are salutary provisions for the purpose of preventing a defendant, who knows perfectly well that he owes the sum claimed, postponing the time of payment, and putting the plaintiff to further expense in a litigation which ought never to have taken place. To refuse an application for summary judgment because of the form of the affidavit in a case where the existence of an arguable defence has been fully investigated and there is found to be none uses the rule to defeat the purpose that it is intended to achieve …" 1. For the reasons that follow, the evidence adduced by the plaintiffs establishes with the requisite degree of certainty that their claim against Mr Linn under ss 588G(2) and 588M of the Corporations Act will succeed in respect of some, but not all, of the debts relied on by the plaintiffs and that Mr Linn has no defence to the claim (insofar as it relates to those debts). Consideration and determination 1. The elements of a contravention of s 588G(2) of the Corporations Act may be summarised as follows: 1. the company incurred a particular debt or debts; 2. the company was insolvent when the debt or debts were incurred; 3. there were at that time reasonable grounds for suspecting that the company was insolvent; 4. that time was after the commencement of the Corporations Act; 5. the defendant director failed to prevent the company from incurring the debt; and 6. the director was aware at that time that there were grounds for suspecting that the company was insolvent, or a reasonable person in the director's position would have been so aware. 1. The word "debt" in s 588G bears its ordinary meaning of a liability or obligation to pay, and is to be applied in a practical and common sense fashion. It includes present or contingent debts: Treloar Constructions Pty Ltd v McMillan (2017) 318 FLR 58; (2017) 120 ACSR 130; [2017] NSWCA 72 (Treloar Constructions) at [43]-[48] (Beazley P, Gleeson JA and Emmett AJA). 2. Section 558GA provides that s 588G(2) does not apply in relation to a debt incurred during a period of time in which the director had begun to suspect that the company may be or may become insolvent and was developing or carrying out a course of action reasonably likely to lead to a better outcome for the company than insolvency. 3. Where s 588G(2) does apply and is contravened and the company is subsequently being wound up, s 588M provides that the liquidator may recover from the contravening director an amount equal to the loss or damage suffered by the company's creditors in relation to the unsecured debts that the director failed to prevent the company from incurring. That amount may be recovered by the liquidator from the director as a debt due to the company. 4. The debts and the loss and damage recoverable under s 588M(2) are distinct concepts. However, non-payment of a debt will usually establish that the creditor has suffered loss and damage equivalent to the amount of the debt unless there is evidence to the contrary, such as evidence of part-payment or a distribution from the liquidator on the winding up: Treloar Constructions at [49]-[60] (Beazley P, Gleeson JA and Emmett AJA). 5. Section 588H applies to proceedings for a contravention of s 588G(2) and in proceedings under s 588M relating to the incurring of a debt. Section 588H relevantly provides: "Expectations and belief about company's solvency (2) It is a defence if it is proved that, at the key time, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent despite all its debts incurred, and dispositions of its property made, at that time. (3) Without limiting the generality of subsection (2), it is a defence if it is proved that, at the key time, the person: (a) had reasonable grounds to believe, and did believe: (i) that a competent and reliable person (the other person) was responsible for providing to the first‑mentioned person adequate information about whether the company was solvent; and (ii) that the other person was fulfilling that responsibility; and (b) expected, on the basis of information provided to the first‑mentioned person by the other person, that the company was solvent at that time and would remain solvent despite all its debts incurred, and dispositions of its property made, at that time. (3A) Subsections (2) and (3) do not apply for the purposes of proceedings relating to the disposition of the company's property if the key time was less than 12 months before: (a) the start of an external administration (as defined in Schedule 2) of the company that occurred as a direct or indirect result of the disposition; or (b) the company ceased to carry on business altogether as a direct or indirect result of the disposition. Director who did not take part in management (4) If the person was a director of the company at the key time, it is a defence if it is proved that, because of illness or for some other good reason, he or she did not take part at that time in the management of the company. Reasonable steps taken to prevent debt or disposition (5) It is a defence if it is proved that the person took all reasonable steps to prevent the company from incurring the debt or making the disposition of its property. (6) In determining whether a defence under subsection (5) has been proved, the matters to which regard is to be had include, but are not limited to: (a) any action the person took with a view to appointing an administrator of the company or a restructuring practitioner for the company; and (b) when that action was taken; and (c) the results of that action. This subsection does not apply to a defence in proceedings relating to a disposition of the company's property." 1. The "key time" referred to in s 588H(4) is the time at which the relevant debt was incurred. 2. The plaintiffs relied on: 1. an affidavit of Mr Kijurina sworn on 12 October 2020 and Exhibits BK-1 and BK-2 to that affidavit; 2. a further affidavit of Mr Kijurina sworn on 19 March 2021; and 3. an expert report of Mr John Vouris dated 12 October 2020. Mr Vouris is a chartered accountant and registered liquidator with over 40 years' experience in insolvency and restructuring. 1. The evidence establishes that Mr Linn has been a director of the Company at all times since its incorporation on 14 May 2015. At the times relevant to these proceedings, he was one of three directors, and was also the secretary of the Company. 2. Messrs Kijurina and Lawrence, together with Mr Richard Albarran, were appointed as joint and several administrators of the Company pursuant to Part 5.3A of the Corporations Act on 1 July 2019. The appointment was made by the Company's secured creditor, Cadmon Advisory Pty Ltd, pursuant to s 436C. By a resolution of the Company's creditors passed on 8 October 2019 pursuant to s 439C, they were appointed as joint and several liquidators. Mr Albarran subsequently resigned as liquidator on 16 June 2020, shortly before these proceedings were commenced on 24 June 2020. [3] 3. The Liquidators allege that the Company was insolvent from at least 1 October 2018. The evidence to which I refer later in these reasons establishes with a very high degree of certainty that the Company was insolvent from at least that date. 4. Schedule A to Mr Kijurina's affidavit sworn on 19 March 2021 lists the debts on which the plaintiffs rely in support of their claim against Mr Linn. It is convenient to reproduce Schedule A in full: Item Creditor Date Debt(s) Incurred Amount of Debt ($) 25 January 2019 1,951.35 1 Ansarada Pty Ltd 25 February 2019 2,004.02 25 March 2019 2,004.02 2 CBRE Pty Limited Property Management Trust 1 July 2019 15,350.78 3 Citadel Magnus 23 October 2018 7,686.25 4 Exetel 1 July 2019 1,010.00 5 Google 30 June 2019 1,045.65 6 Grant Thornton 31 October 2019 28,386.50 7 Investorlend 29 January 2019 225,000.00 28 October 2018 26,125.00 8 Jera Superannuation Fund 28 November 2018 25,750.00 28 December 2018 25,375.00 18 June 2019 547.90 9 Levit8 Business IT Solutions 18 June 2019 1,345.06 25 June 2019 1,726.18 10 Murchisons Services Pty Ltd 31 May 2019 3,245.00 15 April 2019 2,916.66 11 SKF Advisory Pty Ltd 15 May 2019 3,666.66 15 June 2019 3,666.66 22 May 2019 19,956.20 12 Sparke Helmore Lawyers 31 May 2019 29,885.46 12 July 2019 5,822.30 13 Squirrel Superannuation Services Pty Ltd N/A 1,362,836.82 14 Supplier Services Pty Ltd (Administrators Appointed) N/A 1,320,254.00 15 Macquarie Leasing N/A 62,546.76 16 PPCS Lawyers 3 July 2019 1,043.90 15 May 2019 6,820.00 17 Sparke Helmore Consulting 28 June 2019 2,090.00 9 July 2019 2,153.25 18 Vodafone 4 July 2019 1,141.10 TOTAL $3,193,352.48 1. For present purposes, items 13, 14 and 15 of Schedule A can be disregarded because Mr Kijurina's affidavit sworn on 19 March 2021 makes it clear that the amounts of those debts are not included in the loss and damage that the plaintiffs seek to recover as a debt due by Mr Linn to the Company in these proceedings. The Court was informed that those debts have been excluded because the Liquidators have been unable to ascertain when they were incurred by the Company. 2. Once items 13, 14 and 15 are excluded from consideration, the total amount that the plaintiffs seek to recover from Mr Linn is $447,714.90 plus interest. That amount was not further reduced by the proceeds of the plaintiffs' settlement with the first and third defendants referred to at [3] above because those moneys were applied to payment of the Liquidators' remuneration approved by the Company's creditors. 3. I now turn to consider the plaintiffs' evidence in relation to the debts referred to in items 1 to 12 and 16 to 18 of Schedule A. 4. In his affidavit sworn on 12 October 2020, Mr Kijurina gives general evidence about these debts. Mr Kijurina describes the books and records of the Company to which he has had access as administrator and, subsequently, liquidator. Those books and records include the Company's electronic management accounts. Mr Kijurina deposes that the investigations undertaken by his staff, under his supervision, have revealed that the Company incurred the debts itemised in Schedule A, and those debts remained outstanding at the time of the appointment of the administrators on 1 July 2019. In his affidavit sworn on 19 March 2021, Mr Kijurina deposed that each of the debts itemised in Schedule A remain outstanding, are unsecured and are not recoverable because the Company has no assets and "no dividends have been issued". I assume that the reference to no dividends having been issued refers to no distribution having been paid by the Liquidators to creditors of the Company in the winding up. That inference is consistent with the Liquidators' report to creditors dated 18 December 2019, in which the Liquidators advised creditors that a dividend was unlikely to be paid and suggested that creditors write off any debt owing by the Company. 5. Neither Mr Kijurina's affidavits nor the plaintiffs' written or oral submissions addressed the documents in Exhibit BK-2 to Mr Kijurina's affidavit sworn on 12 October 2020 which the plaintiffs rely on as evidencing each of the alleged debts itemised in Schedule A. I have now reviewed the documents in Exhibit BK-2. The specific evidence in relation to items 1 to 12 and 16 to 18 of Schedule A may be summarised as follows. 6. Item 1: [4] These three debts are recorded in the Company's aged payables report as at 1 July 2019 as having been due on 24 February, 27 March and 24 April 2019, respectively, under invoices issued one month prior to each due date. Mr Kijurina's affidavit sworn on 12 October 2020 establishes that the aged payables records were financial records maintained electronically by the Company to which he was given access upon his appointment as joint and several administrator. The aged payables report exhibited to his affidavit has been generated from those electronic records. There is no evidence to suggest that the Company incurred the debts for the invoiced amounts at a time earlier than the issue of the invoices: Yeo (in their capacity as liquidators of Bradi Transport Pty Ltd (in liq)) v Sklenovski [2020] FCA 1540 (Bradi Transport) at [23]-[27] and the authorities there referred to. I am satisfied that the amounts totalling $5,959.39 in item 1 of Schedule A are debts incurred by the Company after 1 October 2018. 7. Item 2: [5] This debt is also recorded in the Company's aged payables report as at 1 July 2019. According that report, an invoice was issued by the creditor on 1 July 2019 and the invoiced amount was payable on that date. Having regard to the identity of the creditor (CBRE Pty Limited Property Management Trust), I infer that the invoice was for rent payable either in arrears or in advance. The plaintiffs have not adduced any evidence of when the Company entered into the lease pursuant to which that rent was payable or the terms of that lease. I am therefore unable to be satisfied that the amount of $15,350.78 in item 2 of Schedule A is a debt that was incurred by the Company after 1 October 2018. 8. Item 3: [6] This relates to an invoice issued on 9 October 2018 and payable by 23 October 2018 according to the Company's aged payables report. For the reasons given in relation to item 1 above, I am satisfied that the amount of $7,686.25 in item 3 of Schedule A is a debt incurred by the Company after 1 October 2018. 9. Item 4: [7] This relates to an invoice issued on 1 July 2019 that also payable on that date according to the Company's aged payables report. For the reasons given in relation to item 1 above, I am satisfied that the amount of $1,010.00 in item 4 of Schedule A is a debt incurred by the Company after 1 October 2018. 10. Item 5: [8] This relates to an invoice issued on 30 June 2019 and payable on 31 July 2019 according to the Company's aged payables report. For the reasons given in relation to item 1 above, I am satisfied that the amount of $1,045.65 in item 5 of Schedule A is a debt incurred by the Company after 1 October 2018. 11. Item 6: [9] This is the unpaid balance of an invoice issued to the Company by Grant Thornton Audit Pty Ltd on 31 October 2018 in relation to the first progress payment for work undertaken by Grant Thornton in relation to the audit of the Company and one of its related entities for the year ended 30 June 2018. Whilst there is no evidence about when the Company engaged Grant Thornton, the terms of that engagement, or when the work was undertaken, the nature of the work means that it must have been undertaken after 30 June 2018. Typically, such work is not commenced for some time after the end of the financial year, once relevant records and information have been gathered and provided to the auditors. Having regard to the nature of the professional services provided, it would be commercially unrealistic in my view to treat the Company as having incurred the debt prior to the provision of the services that entitled Grant Thornton to issue an invoice for the first progress payment: Harrison v Lewis [2001] VSC 27 at [27]-[28]. I infer that the invoice would have been issued promptly after that time, and that the work was done within a relatively short period of time prior to 31 October 2018. For those reasons, I am satisfied that the amount of $28,386.50 in item 6 of Schedule A is a debt incurred by the Company after 1 October 2018. 12. Item 7: [10] The only evidence adduced by the plaintiffs is a letter dated 15 July 2019 from Investorlend Pty Ltd to the Company's administrators which states: "We advise that we are a creditor of the Company on the basis of the Deed of Release between the Company, Mr Damien Stewart Linn and Investorlend Pty Ltd ('Investorlend'). The terms of the deed specify that the Company make payment of $225,000 to Investorlend on or before 14 April 2019. As of the writing of this letter, the amount is outstanding. We kindly request that Investorlend be included in the list of creditors of the Company going forward, including any Deed of Company Arrangement ('DOCA') to be proposed." 1. The plaintiffs did not adduce any evidence of the deed of release referred to in the letter, or the date on which the Company entered into that deed. Mr Kijurina's affidavits do not refer to this creditor's claim or any investigation or assessment of the claim undertaken by the Liquidators (including in their prior capacity as administrators). Counsel for the plaintiffs did not refer the Court to any evidence of any such investigation or assessment contained in the various reports issued by the administrators or Liquidators to creditors. It seems to me that the alleged debt would have been likely to have been incurred as at the date of the deed, although I acknowledge that the terms of the deed (if known) may warrant a different conclusion: Bradi Transport at [23]-[27]. The evidence adduced by the plaintiffs is insufficient for me to be satisfied that the amount of $225,000 in item 7 of Schedule A is a debt incurred by the Company after 1 October 2018. 2. Item 8: [11] The evidence adduced by the plaintiffs establishes that the Company (as borrower) entered into a loan agreement with Jera Superannuation Pty Ltd (as lender) on 6 December 2016. Pursuant to that loan agreement, the lender made a loan of $200,000 to the Company at an interest rate of 18 per cent per annum, repayable one year from the date on which the loan amount was transferred into the Company's nominated bank account. On 21 June 2018, the Company and the lender entered into a deed of variation pursuant to which they varied the loan agreement with effect from 6 December 2017 by providing for the principal and interest to be repaid by the Company in eight instalments of specified amounts on specified dates between 28 May 2019 and 28 December 2018. I infer from the deed of variation that the $200,000 loan funds were in fact paid by the lender to the Company on or about the date of the loan agreement and were due for repayment under that agreement (prior to the deed of variation) by 6 December 2017. The three amounts in item 8 of Schedule A are the last of the three repayment instalments specified in the deed of variation. Under clause 1.1 of the deed of variation, those instalments fell due on 28 October 2018, 28 November 2018 and 28 December 2018. 3. In my opinion, the amounts in item 8 of Schedule A totalling $77,250.00 are debts that were incurred by the Company prior to 1 October 2018. They fell due for payment on the later dates specified in the deed of variation, but the Company became indebted to the lender for those amounts either when the loan agreement was entered into and the loan was made on about 6 December 2016, when the Company defaulted on its obligation to repay the loan with interest on about 6 December 2017, or at the very latest when the Company entered into the deed of variation on 21 June 2018: Bradi Transport at [23]-[27]. It is not necessary to choose between these dates, but I am inclined to the view that the Company incurred at least the principal components of the debts on about 6 December 2016. 4. Item 9: [12] This relates to three invoices issued in June 2019 and payable one week later according to the Company's aged payables report. For the reasons given in relation to item 1 above, I am satisfied that the three amounts totalling $3,619.14 in item 9 of Schedule A are debts incurred by the Company after 1 October 2018. 5. Item 10: [13] This relates to an invoice issued to the Company by Murchisons Services Pty Ltd on 31 May 2019 for professional fees for "Preparation of reports for the meeting with notes holders, including attendance to a meeting". There is no evidence about when the Company engaged Murchisons to provide those services or the terms of that engagement. However, it would be commercially unrealistic in my view to treat the Company as having become liable for the fees charged until the services described in the invoice were provided. I infer that the invoice would have been issued promptly after the services were provided and that the work was therefore done within a relatively short time prior to 31 May 2019 and, in any event, after 1 October 2018. For those reasons, I am satisfied that the amount of $3,245.00 in item 10 of Schedule A is a debt incurred by the Company after 1 October 2018. 6. Item 11: [14] According to the Company's aged payables report, item 11 of Schedule A relates to three invoices issued by SKF Advisory Pty Ltd on 15 April, 15 May and 15 June 2019, each of which was due for payment 14 days after the date of the invoice. I infer from the name of the creditor that the invoices were for professional services. My reasons in relation to item 10 above apply equally to item 11 and I am satisfied that the amounts totalling $10,249.98 in item 11 of Schedule A are debts incurred by the Company after 1 October 2018. 7. Item 12: [15] The three amounts in item 12 of Schedule A, totalling $55,663.96, relate to two invoices issued to the Company by Sparke Helmore Lawyers on 31 May 2019 and 28 June 2019 in relation to legal work performed during the months of May and June 2019. Each invoice was payable within 14 days. It is clear from the proof of debt submitted by Spark Helmore Lawyers that the $55,663.96 amount is for legal services provided during May and June 2019 itemised in those two invoices. The evidence does not explain why the plaintiffs have divided the total amount in the May invoice into the two sub-amounts in item 12 of Schedule A. On the basis of the invoices, I am satisfied that the amounts totalling $55,663.96 in item 12 of Schedule A are debts incurred by the Company after 1 October 2018. 8. Item 16: [16] This relates an invoice issued to the Company by PPCS Lawyers on 3 July 2019 in relation to legal work performed on 21 June 2019 and 1 July 2019. The invoice was payable within 7 days. As the invoice is addressed to Mr Linn's email address and as work performed on 1 July 2019 is described in the invoice as "drafting email to Damien", I infer that s 443A of the Corporations Act does not apply to the work performed on 1 July 2019, being the date of appointment of the administrators. For those reasons, I am satisfied that the amount of $1,043.90 in item 16 of Schedule A is a debt incurred by the Company after 1 October 2018. 9. Item 17: [17] This relates to three invoices issued to the Company by Sparke Helmore Consulting on 15 May 2019, 28 June 2019 and 9 July 2019 for consulting work in relation to GST grouping. Each invoice was payable within 14 days. Although it is not entirely clear from the narrative in the invoices when the work was done, the invoices indicate a pattern of frequent invoicing throughout a period in which a series of professional services relating to the same issue appear to have been provided. I therefore infer that each invoice was issued promptly after the services were provided. I also infer that the third invoice, although issued after the appointment of the administrators, related to work commenced prior to that appointment at the Company's request and that s 443A of the Corporations Act does not apply to the third invoice. For those reasons, I am satisfied that three amounts totalling $11,063.25 in item 17 of Schedule A are debts incurred by the Company after 1 October 2018. 10. Item 18: [18] This relates to a demand issued to the Company on 4 July 2019 in respect of $1,141.10 owing to Vodafone. It is clear from the terms of the demand that this was not the first demand that had been issued in respect of this outstanding amount. It is also clear from the terms of the demand that Vodafone had not referred the debt to its solicitors for recovery. I infer that the demand related to a debt that most likely became payable to pay after 1 October 2018 and I am therefore satisfied that the amount of $1,141.10 in item 18 of Schedule A is a debt incurred by the Company after 1 October 2018. 11. The question whether the Company was insolvent during the period after 1 October 2018 when the debts in items 1, 3-6, 9-12 and 16-18 of Schedule A were incurred falls to be determined by reference to s 95A of the Corporations Act. That section provides that a company is solvent if, and only if, it is able to pay all of its debts as and when they become due and payable. A company that is not solvent is insolvent. 12. The applicable principles are well known, and were recently summarised by Black J in Re Humur Pty Limited [2020] NSWSC 1759 at [17]‑[18]. I gratefully adopt his Honour's summary. After referring to the provisions of s 95A, his Honour said: "17 … That definition adopts a 'cash flow test' of insolvency which turns upon the income sources available to the company and the expenditure obligations that it has to meet, although a balance sheet test can provide context for the application of the cash flow test: Southern Cross Interiors Pty Ltd (in liq) v Deputy Cmr of Taxation (2001) 39 ACSR 305; [2001] NSWSC 621 ; Australian Securities and Investments Commission v Plymin (No 1) (2003) 46 ACSR 126; [2003] VSC 123 at [370] ff, aff'd Elliott v Australian Securities and Investments Commission (2004) 10 VR 369; [2004] VSCA 54 ; and see Re Swan Services Pty Limited (in liq) [2016] NSWSC 1724 at [136] ff, on which I have drawn for this summary of the applicable principles. 18 Whether a company is able to pay its debts as and when they fall due and payable is a question of fact to be determined objectively and without hindsight in all the circumstances, including the nature of its assets and business, and the Court will have regard to commercial realities in that regard: Southern Cross Interiors Pty Ltd (in liq) v Deputy Cmr of Taxation above at [54]; White Constructions (ACT) Pty Ltd (in liq) v White [2004] NSWSC 71; (2004) 49 ACSR 220 at [289] ; Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran [2005] NSWCA 243; (2005) 54 ACSR 410 at [103] ; Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd (2011) 248 FLR 384; [2011] NSWSC 186 at [48] –[49] . Matters which may support a finding of insolvency include those referred to in Australian Securities and Investments Commission v Plymin (No 1) above at [386], where Mandie J identified several indicia of insolvency including: continuing losses; liquidity ratios below one; overdue Commonwealth and State taxes; a poor relationship with the lenders, including any inability to borrow further funds; no access to alternative finance; inability to raise further equity capital; suppliers placing a company on cash on delivery arrangements or otherwise demanding special payments before resuming supply; creditors unpaid outside trading terms; the issuing of postdated cheques; dishonoured cheques; special arrangements with selected creditors; solicitors' letters, summonses, judgments or warrants issued against a company; payments to creditors of rounded sums not reconcilable to specific invoices; and inability to produce timely and accurate financial information to display a company's trading performance and financial position, and make reliable forecasts; see also Morris v Danoz Directions Pty Ltd (in liq) (No 2) [2010] FCA 836 at [13] . In determining a company's solvency, the Court may also have regard to the likelihood that it will have funds available to it from sources with which it has no formalised agreement or understanding, including loans from its directors or from third parties, at least if they are not repayable in the short term, and the company's ability to borrow funds can also be taken into account: Lewis (as liquidator of Doran Constructions Pty Ltd) v Doran above at [109]–[112]; International Cat Manufacturing (in liq) v Rodrick [2013] QCA 372; (2013) 97 ACSR 200 ; First Strategic Development Corporation Ltd (in liq) v Chan [2014] QSC 060 at [67]–[69]." 1. It is important to approach the question of solvency or insolvency objectively and without hindsight, having regard only to the circumstances that were known or ought reasonably to have been known at the relevant time: Lewis v Doran (2005) 219 ALR 555; 54 ACSR 410; [2005] NSWCA 243 at [103], cited with approval in Treloar Constructions at [81]. 2. Mr Vouris' report describes the Company's principal business activity as being a holding company for various subsidiary companies that provided cloud based self-managed superannuation fund administration software and services. [19] 3. In Mr Vouris' opinion, the Company was insolvent from 30 July 2018 and remained insolvent thereafter. [20] The reasons for Mr Vouris' opinion may be summarised as follows. 4. Mr Vouris' review and analysis of the Company's books and records [21] revealed that, at the end of each calendar month during the period from 31 July 2018 to 30 June 2019, the Company's cash at bank was manifestly insufficient to meet its current liabilities. In each of those months other than July 2018, the cash at bank was insufficient even to meet current debts owing to trade creditors. For example, as at 28 February 2019, the Company had cash at bank of $85,696.44, current debts to trade creditors totalling $1,167,524 and total current liabilities of $3,013,608. On 1 July 2019 when the administrators were appointed, the Company had $1,555.95 cash at bank, $662,690 current debts owing to trade creditors and total current liabilities of $2,863,378.00. [22] 5. Based on his review of the Company's profit and loss reports extracted from the Company's management accounts, Mr Vouris has calculated that the net profit margin of the Company was negative in the 2016 to 2019 financial years in the range of between negative 546.68 per cent (as at 30 June 2018) and negative 3403.47 per cent (as at 30 June 2019). Mr Vouris explains that the net profit margin measures a company's profitability by comparing its net profit to its sales to calculate whether it is generating sufficient sales to meet its costs of sales. Mr Vouris opines that the Company's negative margins indicate that the Company was unprofitable due to its significant expenses. [23] 6. Based on his review of the Company's profit and loss accounts and balance sheets, Mr Vouris has calculated that the Company also had a negative ROI margin (being a measurement of its return on investments by comparing its EBIT to its total assets) in the 2016 to 2019 financial years. Mr Vouris opines that this indicates that the Company was unable to generate a positive yield on investment and lacked solvency for future trading and working capital. [24] 7. The Company did not earn income, but received research and development grants or rebates from the Australian Taxation Office. The Company made net losses in each of the 2015 to 2019 financial years. In the year ended 30 June 2015 (less than two months after the Company was established), the net loss was $63,690. At the end of the Company's first full financial year, the net loss was $610,009. By 30 June 2017, the trading result had deteriorated by approximately 670% to a net loss of $4,110,330. Further significant net losses were incurred in the 2018 and 2019 financial years ($2,518,197 and $2,146,265 respectively). [25] 8. The Company's balance sheets do not detract from the picture of insolvency presented by the above cash flow analysis. The Company had a surplus of net assets at the end of the 2015 and 2016 financial years ($270,228 and $867,580 respectively), but a deficiency of $1,076,616 for the 2017 year and a deficiency of $1,659,728 for the 2018 year. The net asset position returned to a modest surplus of $4,381 at the end of the 2019 year. [26] Mr Vouris attributes the improvement in the 2019 year to the reallocation of $4,000,000 in convertible notes from a non-current liability to share capital. The resulting improvement in the net asset position was accompanied by an 87 per cent decrease in the Company's current assets at the same time as its current liabilities increased by 30 per cent. [27] 9. The Company's liquidity ratio was below one (indicating insolvency) for the 2015 to 2019 financial years. [28] 10. The Company did not have any outstanding tax debts at the time the administrators were appointed. [29] 11. Based on his review of the Company's aged payables reports extracted from its management accounts, Mr Vouris has ascertained that 39 per cent of the Company's trade creditors were aged in excess of 90 days as at 31 July 2018. In his opinion, this indicates that the Company was experiencing financial difficulty from this time and was unable to pay its creditors as and when the amounts owing to them fell due and payable. By 1 July 2019, the percentage of trade creditors aged in excess of 90 days had increased to 55 per cent, indicating that the Company was experiencing reduced cash flows and was in greater financial difficulty. [30] 12. Cadmon Advisory Pty Ltd (Cadmon) had undertaken the raising for the $4,000,000 in convertible notes referred to at [55] above pursuant to a mandate letter executed by the Company on 9 April 2018 appointing Cadmon to act as sole lead manager. After Cadmon had provided its services for the successful convertible note raising, a dispute arose between the Company and Cadmon in about August 2018 as a result of the Company granting a security interest over its assets to DCF Asset Management Pty Ltd (DCF) without Cadmon's consent, in breach of one of the terms of the Company's mandate with Cadmon for the convertible note raising. 13. The Company had entered into a mandate with DCF on 29 June 2018 by which the Company engaged DCF exclusively to seek and obtain a finance facility to be provided by DCF or a fund managed by DCF. The exclusivity period expired on 30 July 2018. The Company was obliged to pay a due diligence fee of $50,000 on the date of the mandate and transaction fee of $250,000 on the expiry of the exclusivity period on 30 July 2018 if the mandate was not completed or terminated earlier. 14. The Company entered into a further mandate with DCF on 2 August 2018 following the expiry of the exclusivity period under the 28 June 2018 mandate. By this second mandate, the Company again appointed DCF exclusively to seek and obtain a finance facility to be provided by DCF or a fund managed by DCF. The mandate letter described the purposes of the finance, including to provide working capital. The exclusivity period expired on 14 September 2018. Again, the Company was obliged to pay a due diligence fee of $50,000 on the date of the mandate and a transaction fee of $250,000 on the expiry of the exclusivity period on 14 September 2018 if the mandate was not completed or terminated earlier. 15. The dispute between the Company and Cadmon was resolved on the terms set out in a deed of settlement executed on 19 October 2018 (consider revising). [31] The deed required the Company to offer to redeem the convertible notes from noteholders and to pay to those noteholders who accepted the offer the full face value of the notes plus a five per cent break fee, subject to at least 50 per cent of noteholders accepting the offer. The total amount payable to noteholders who accepted the redemption offer – up to $4,200,000 - was required to be paid by the Company into Cadmon's trust account within 60 days after expiry of the redemption offer (referred to as the redemption payment date). Cadmon was responsible for distributing that total amount to the relevant noteholders. The Company agreed to procure Mr Linn to execute a guarantee and indemnity in respect of its obligations under the deed of settlement. The deed of settlement was executed by Mr Linn in his capacity as a director of the Company. 16. On 1 November 2018, the parties agreed to extend the redemption payment date to 31 December 2018. 17. By deed of variation dated 21 January 2019, the parties agreed to further extend the redemption payment date to 31 March 2019. [32] Pursuant to clause 3.1 of the deed of variation, the Company's obligation to make the redemption payment was secured by a security interest granted in favour of Cadmon (as trustee for redeeming noteholders) over all of the Company's present and after-acquired assets. Mr Linn also granted Cadmon a security interest over his personal assets (excluding his shares in the Company) pursuant to clauses 3.2 to 3.3 of the deed of variation. Subject to obtaining consent from the Company's other shareholders, clause 4 of the deed of variation required Mr Linn to deliver to Cadmon's solicitors executed share transfer forms for the transfer of his shares in the Company to noteholders in specified proportions. In the event that the Company defaulted on its obligation to make the redemption payments by the extended redemption payment date of 31 March 2019, Cadmon's solicitors were authorised by clause 8 of the deed to release the share transfer forms to the relevant noteholders to facilitate the transfer of Mr Linn's shares to those noteholders. 18. I note that Mr Linn executed the deed of variation in his capacity as a director of the Company. 19. According to Mr Kijurina's affidavit sworn on 12 October 2020, the Company defaulted on its obligation to make the redemption payments in respect of the convertible notes by the extended date of 31 March 2019. [33] As referred to at [55] above, the notes were ultimately converted into shares in the 2019 financial year. 20. On 16 April 2019, DCF issued a creditors' statutory demand to the Company in respect of fees of $550,000 owing to DCF under the mandates referred to at [60]-[61] above. The Company failed to comply with the statutory demand, which resulted in DCF filing a winding up application on 17 May 2019. [34] It will be recalled that administrators were appointed to the Company shortly thereafter on 1 July 2019. 21. I infer from the non-payment of the transaction fees under the DCF mandates and the Company's default on its redemption payment obligations that DCF was unsuccessful in its efforts to raise finance for the Company in accordance with those mandates. 22. The statements for the Company's Macquarie Bank cheque account and its NAB Everyday Business account reveal numerous dishonoured payments to creditors in the period after 4 October 2018. [35] 23. Under various intercompany loans between the Company and its subsidiaries, the Company had a net indebtedness of $818,988 as at 31 July 2018 which had increased to $2,226,656 by 30 June 2019. That is to say, in addition to its increasing indebtedness to third parties arising from its inability to pay trade creditors, its failure to make the redemption payments to convertible noteholders, and the other matters referred to above, the Company was indebted to its related companies. [36] 24. The Company's potential external funding sources appeared to have run dry by October 2018. As I understand Mr Vouris' report, [37] the mandates entered into with DCF referred to at [59] did not result in any finance being successfully raised. I infer from the Company's efforts to raise external finance through DCF, at considerable cost, in mid‑2018 that further finance by way of loans from its related companies was either not available at all or inadequate to meet the Company's needs. 25. Mr Vouris' report refers to the presumption of insolvency in s 588E of the Corporations Act. However, his opinion that the Company was insolvent from 30 July 2018 is founded on the matters referred to at [51] to [71] above and does not rely on the presumption. 26. Notwithstanding Mr Vouris' opinion that the Company was insolvent from 30 July 2018, the Liquidators' claims against Mr Linn in these proceedings depend on establishing insolvency only from 1 October 2018 onwards. 27. This is no finely balanced case. Applying the principles referred to at [47] above, the evidence summarised at [50]-[72] overwhelmingly points to the conclusion that the Company was insolvent by at least 1 October 2018, before any of the debts in items 1, 3-6, 9-12 and 16-18 of Schedule A were incurred, and remained insolvent thereafter. 28. By 1 October 2018, the Company had been in business for three full financial years. Throughout the 2016, 2017 and 2018 financial years, the Company had operated at a loss with negative net profit margins and had lacked sufficient cash to pay its current trade creditors in each month (let alone meet its other current liabilities). By 31 July 2018, 39 per cent of debts owing to the Company's trade creditors were in excess of 90 days. The Company's liquidity ratio was consistently below one. This situation had persisted despite the Company accumulating a net debt under various intercompany loan arrangements with its subsidiaries. 29. The position had not improved in the first quarter of the 2019 financial year up to 1 October 2018. The Company had raised $4,000,000 from a convertible note issue in mid-2018, but was in dispute with Cadmon in relation to that private finance raising. By 19 October 2018, the Company had entered into an obligation to offer to redeem those notes at face value plus 5 per cent, which would require a payment of up to $4,200,000 depending on the proportion of noteholders who accepted the offer. As at 1 October 2018, the Company had twice sought to raise external finance through DCF for a range of purposes including working capital. Both attempts had been unsuccessful, and had cost the Company fees of $500,000 (plus GST) which the Company had not yet paid to DCF. Assuming that the Company's assets could be realised to raise some funds, this would not solve the problem. The Company had a net asset deficiency of $1,659,728 as at 30 June 2018. Having regard to the history of negative profit margins, there does not appear to have been any reasonable basis to expect that the Company could generate sufficient profit to turn its finances around. As referred to at [54] above, the Company's sources of revenue were limited to research and development grants and taxation income. 30. The position did not improve after 1 October 2018. The Company defaulted on its obligation to make the redemption payment to the convertible noteholders, despite two extension of the deadline for payment. The Company experienced ongoing cash deficiencies, the proportion of its trade creditors outstanding for more than 90 days increased, and payments to trade creditors began to be dishonoured by the Company's banks. In addition, there was a further deterioration in the Company's negative profit margin and another net loss in the 2019 financial year. The liquidity ratio remained below one. A winding up application was filed by DCF following the Company's failure to comply with the statutory demand. Cadmon appointed administrators on 1 July 2019. 31. The matters referred to at [75]-[77] above plainly constituted reasonable grounds for suspecting that the Company was insolvent during the period from October 2018 to October 2019 in which the relevant debts were incurred. 32. The evidence referred to above also establishes with a very high degree of certainty that a reasonable person in Mr Linn's position, as one of the Company's three directors, would have been aware of the Company's limited sources of revenue, its net losses during the 2018 and prior financial years, and its inability by mid‑2018 to pay a significant proportion of its trade creditors within 90 days. A reasonable person in Mr Linn's position would have been aware of these matters from a basic understanding of the nature of the Company's business and a cursory review of the Company's annual financial statements and key data from the Company's management accounts. There is no suggestion that the Company failed to maintain adequate books and records. 33. As at 1 October 2018, a reasonable person in Mr Linn's position would also have been aware of the significant fees that the Company was liable to pay to DCF in respect of two unsuccessful attempts to raise further finance and the unresolved dispute concerning the issue of the convertible notes through which the Company had raised $4,000,000. By 19 October 2018, the reasonable person would have been aware that the Company had undertaken a binding obligation to offer to redeem those notes in order to resolve the dispute, and that this would require the Company to raise funds of up to $4,200,000. Indeed, the evidence establishes that Mr Linn was in fact aware of these matters. Mr Linn signed both DCF mandates in his capacity as a director of the Company. [38] As referred to earlier in these reasons, Mr Linn was also one of the directors who signed the deed of settlement that the Company entered into with Cadmon on 19 October 2018 and the subsequent deed of variation executed on 21 January 2019. Mr Linn gave a personal guarantee and put his own shares in the Company at risk in order to secure the Company's obligations to Cadmon and noteholders. 34. A reasonable person in Mr Linn's position from 19 October 2018 would have paid close attention to the Company's finances in working towards the Company being able to comply with its obligations to Cadmon and the noteholders. The reasonable person would have been aware of the matters referred to at [77]. 35. It is difficult to conceive of any evidence that could be adduced to cast doubt on the Company's insolvent status from 1 October 2018 or to raise questions about whether there were reasonable grounds to suspect insolvency. Other defences potentially available to a director in Mr Linn's position would require evidence of matters that would be peculiarly within the knowledge of Mr Linn, such as any reliance that he placed on information provided to him by competent and reliable persons, any good reason that precluded him from taking part in the management of the Company, any steps that he took to prevent the Company from incurring the relevant debts, or any course of action that he was developing or pursuing that was reasonably likely to lead to a better outcome for the Company: see [14] and [17]-[18] above. In the period since these proceedings were commenced in June 2020, Mr Linn has had ample opportunity to adduce any evidence available to him to defend the plaintiffs' claims. He has not done so, choosing instead not to participate in the proceedings and not to appear at the hearing of the plaintiffs' application for summary judgment. In those circumstances, the plaintiffs' non-compliance with UCPR r 13.1(b) does not justify refusal of the summary judgment application: see [10] above. 36. My observations immediately above should not be taken as casting any legal or evidentiary onus on Mr Linn. The onus of establishing that the claim will succeed and that there is no defence rests with the plaintiffs. My observations simply reflect the reality that the summary judgment application has been determined on the basis of all of the available evidence, which has not included any evidence adduced by Mr Linn. Where a defendant chooses to put forward no evidence, the Court is not required to speculate in their favour about defences that may hypothetically be available to them, depending on circumstances within the defendant's knowledge about which they have adduced no evidence. 37. All of the evidence referred to above, taken as a whole, establishes with a high degree of certainty that Mr Linn failed to prevent the Company from incurring the unsecured debts referred to in items 1, 3-6, 9-12 and 16-18 of Schedule A totalling $130,114.12, that each of those debts were incurred at a time when the Company was insolvent, there were reasonable grounds for suspecting insolvency at the time the debts were incurred, and either Mr Linn was aware or a reasonable person in his position would have been aware at those times that there were reasonable grounds for suspecting insolvency. Those debts remain unpaid and represent loss and damage suffered by the creditors. [39] The total amount of those debts are recoverable by the Liquidators from Mr Linn as a debt due to the Company. Conclusion and orders 1. I have reviewed the plaintiffs' evidence in detail so as to determine the application for summary judgment with the exceptional degree of caution that is required. For all of the reasons explained above, I am satisfied to a very high degree of certainty that the plaintiffs' claims against Mr Linn will succeed in respect of the debts in items 1, 3-6, 9-12 and 16-18 of Schedule A totalling $130,114.12 and that Mr Linn has no defence to those claims. 2. The declaration and orders of the Court are as follows: Pursuant to r 13.1 of the Uniform Civil Procedure Rules 2005 (NSW): 1. Declare that the second defendant contravened s 588G(2) of the Corporations Act 2001 (Cth) by failing to prevent the second plaintiff (the Company) from incurring the following debts totalling $130,114.12 in the period after 1 October 2018: Creditor Invoice date Amount of Debt ($) 25 January 2019 1,951.35 Ansarada Pty Ltd 25 February 2019 2,004.02 25 March 2019 2,004.02 Citadel Magnus 23 October 2018 7,686.25 Exetel 1 July 2019 1,010.00 Google 30 June 2019 1,045.65 Grant Thornton 31 October 2018 28,386.50 18 June 2019 547.90 Levit8 Business IT Solutions 18 June 2019 1,345.06 25 June 2019 1,726.18 Murchisons Services Pty Ltd 31 May 2019 3,245.00 15 April 2019 2,916.66 SKF Advisory Pty Ltd 15 May 2019 3,666.66 15 June 2019 3,666.66 Sparke Helmore Lawyers 31 May 2019 $49,841.66 28 June 2019 5,822.30 PPCS Lawyers 3 July 2019 1,043.90 15 May 2019 6,820.00 Sparke Helmore Consulting 28 June 2019 2,090.00 9 July 2019 2,153.25 Vodafone 4 July 2019 1,141.10 TOTAL $130,114.12 1. Judgment against the second defendant in favour of the second plaintiff in the sum of $130,114.12 pursuant to s 588M(2) of the Corporations Act 2001 (Cth). 2. Order pursuant to s 100 of the Civil Procedure Act 2005 (NSW) that the second defendant pay interest on the amount of the judgment for the period from the commencement of the winding up of the second plaintiff on 8 October 2019 until the date of judgment on 16 December 2021, such interest to be payable at the rates in Practice Note SC Gen 16. 3. Order that the plaintiffs' interlocutory process filed on 22 March 2021 is otherwise dismissed. ********** Endnotes 1. Mr Richard Albarran is also named as one of the first plaintiffs, but the evidence establishes that he resigned as liquidator of the second plaintiff shortly before the commencement of these proceedings: affidavit of Mr Brent Kijurina, sworn 12 October 2020, paragraph 8. 2. Referring to Part 13.2 of the Supreme Court Rules 1970 (NSW), which was in the same terms as UCPR r 13.1. 3. Mr Kijurina's affidavit sworn 12 October 2020, paragraphs 5-8; Mr Vouris' report, section 2 (p 7). 4. Exhibit BK-2, p 3. 5. Exhibit BK-2, p 3. 6. Exhibit BK-2, p 3. 7. Exhibit BK-2, p 3. 8. Exhibit BK-2, p 3. 9. Exhibit BK-2, pp 8-10. 10. Exhibit BK-2, p 11. 11. Exhibit BK-2, pp 12-19. 12. Exhibit BK-2, p 4. 13. Exhibit BK-2, pp 29-30. 14. Exhibit BK-2, p 6. 15. Exhibit BK-2, pp 31-44. 16. Exhibit BK-2, pp 66-67. 17. Exhibit BK-2, pp 68-81. 18. Exhibit BK-2, pp 82-83. 19. Section 2 (p 7). 20. Mr Vouris' report, executive summary, paragraphs 1 and 2 (p 6). 21. Including the bank statements and the aged payables report generated from the Company's electronic accounting records referred to in section 3 of Mr Vouris' report (pp 7-8). 22. Mr Vouris' report, paragraphs 6.1.1 to 6.1.4, 6.1.7 (pp 10-12). 23. Mr Vouris' report, paragraphs 6.1.5 to 6.1.6 (p 12). 24. Mr Vouris' report, paragraphs 6.1.5, 6.1.7 (p 12). 25. Mr Vouris' report, paragraphs 6.1.8-6.1.10 (p 13). 26. Mr Vouris' report, paragraphs 6.2.1-6.2.9 (pp 14-16). 27. Mr Vouris' report, paragraph 6.2.6 (p 15). 28. Mr Vouris' report, paragraphs 6.2.10-6.2.11 (pp 16-17). 29. Mr Vouris' report, paragraphs 6.3.7-6.3.9 (pp 18-19). 30. Mr Vouris' report, paragraphs 6.3.12-6.3.14 (p 19). 31. Annexure 16 to Mr Vouris' report. The deed is undated, but the date of its execution is referred to in the deed of variation subsequently entered into on 21 January 2019 at Annexure 17 to Mr Vouris' report. 32. Annexure 17 to Mr Vouris' report. 33. Mr Kijurina's affidavit sworn on 12 October 2020, paragraph 25. 34. Mr Vouris' report, paragraph 6.3.26 (p 22). 35. Mr Vouris' report, paragraph 6.3.25 (p 21) and Annexures 8 and 9. 36. Mr Vouris' report, paragraphs 6.3.27-6.3.30 (pp 22-23). 37. Especially paragraph 6.3.30 (p 23). 38. Annexure 14 and 15 to Mr Vouris' report. 39. See [16] above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 December 2021