In the matter of Pasta La Vista Pty Ltd [2024] NSWSC 413

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Pasta La Vista Pty Ltd [2024] NSWSC 413 Hearing dates: 11 April 2024 Date of orders: 11 April 2024 Decision date: 11 April 2024 Jurisdiction: Equity - Corporations List Before: Black J Decision: Orders for winding up and appointment of liquidator made. Catchwords: CORPORATIONS – Winding up - Whether winding up on the just and equitable ground should be ordered - Where common ground that there has been a failure in the relationship between shareholders – Where the Company has no assets and its business is apparently now operated by another entity. Legislation Cited: Corporations Act 2001 (Cth) s 461 Cases Cited: - Re DJG Securities Pty Ltd [2013] NSWSC 588 - Re Munja Bakehouse Pty Ltd [2024] NSWSC 6 Category: Principal judgment Parties: Elsayed Saad Takha Motawa (Plaintiff) Hussein Salah Hussein Mohamed Salim (First Defendant) Pasta La Vista Pty Limited (Second Defendant) Representation: Counsel: C Robinson (Plaintiff) R D Turnbull (Defendants)

Solicitors: Stamford Law (Plaintiff) Abbas Jacobs (Defendants) File Number(s): 2023/305538

Judgment – EX TEMPORE (Revised 12 April 2024)

Nature of proceedings 1. By Originating Process filed on 26 September 2023, the Plaintiff, Mr Motawa, seeks an order winding up Pasta La Vista Pty Ltd ("Company") under several specified grounds in s 461(1) of the Corporations Act 2001 (Cth) ("Act"). Mr Motawa relied in the Originating Process on s 461(1)(e) of the Act, namely, that the Company's director, the First Defendant, Mr Salim, has acted in the affairs of the Company in his own interest rather than in the interests of members of a whole, or in a manner that appears to be unfair or unjust to other members; s 461(1)(f), broadly, the oppression ground; and s 461(1)(k), namely that it is just and equitable that the Company be wound up. 2. It is common ground that a fourth ground on which the Company could be wound up is available, namely that the Company has suspended its business for a whole year, within s 461(1)(c) of the Act, and it is common ground that that is the case. Mr Turnbull, who appears for the Defendants, or at least Mr Salim, rightly submits that the fact that the ground in s 461(1)(c) is plainly satisfied does not require the Court to make a winding-up order, and I accept that submission. I will, however, address matters below which indicate that a winding-up order is plainly properly made in the relevant circumstances. 3. By Grounds of Opposition filed on 1 February 2024, Mr Salim took issue with Mr Motawa's contentions and with each of the grounds on which Mr Motawa sought to wind up the Company; pointed to the fact that each of Mr Motawa and Mr Salim now held 50 of the 100 issued shares in the Company; denied that Mr Salim had ever effected, or purported to effect, a transfer of Mr Motawa's shares in the Company to him, although it appears that that denial has been qualified as the case has proceeded; noted, consistent with the availability of relief under s 461(1)(c) of the Act, that the Company is not trading; and indicated that the Company had no assets and had liabilities of $8,000, described as accounts payable, although Mr Salim's later evidence contradicts that that proposition. 4. By his Grounds of Opposition, Mr Salim also contended that he had not caused any of the Company's assets to be transferred to Pasta La Vista Australia Pty Ltd ("Newco"), an entity which, it appears, may now be operating the same business under the same name at the same address at which it was previously operated by the Company. I pause to note that one of the issues which, in my view, provides strong support for the need for a winding-up order and the appointment of a liquidator is the lack of explanation as to how, if Mr Salim has not transferred the Company's assets to Newco, the Company has lost those assets, and Newco, it appears, has acquired the ability to operate the same business at the same site under the same name. That mystery has not been explained by the evidence led, inter alia, by Mr Salim in the proceedings. 5. The parties filed pleadings, by way of an Amended Statement of Claim on the part of the Plaintiff and a Defence, which have crystallised some of the issues, and identified may aspects of the history of the Company which are in dispute between them. In particular, there is a dispute as to the circumstances in which Mr Motawa ceased to work in the business previously operated by the Company and now, it appears, operated by Newco. It is ultimately not necessary to determine many of the matters that are in dispute between the parties, and, in particular, any question of who contributed and in what way to the breakdown of Mr Motawa's and Mr Salim's relationship, to conclude that an order should be made to wind up the Company because it has now ceased business and lost its assets, or that the Company should be wound up on the just and equitable ground for that reason.