Supreme Court New South Wales Medium Neutral Citation: In the matter of DCA Capital Pty Ltd [2024] NSWSC 427 Hearing dates: 15 April 2024 Date of orders: 15 April 2024 Decision date: 15 April 2024 Jurisdiction: Equity - Corporations List Before: McGrath J Decision: Order that the applicant be substituted as the applicant in the proceedings for the winding up of the company. Catchwords: CORPORATIONS — winding up — substitution of applicant for company to be wound up — where substitute applicant might otherwise have applied for an order winding up the company Legislation Cited: Corporations Act 2001 (Cth) Cases Cited: Re C2C Investments Pty Ltd (2012) 92 ACSR 266; [2012] NSWSC 1443 Category: Principal judgment Parties: Pubdin Pty Ltd (Applicant) DCA Capital Pty Ltd (Defendant) Representation: Counsel: H Somerville (Applicant) No appearance (Defendant) Solicitors: Bridges Lawyers (Applicant) No appearance (Defendant) File Number(s): 2024/0018318 Publication restriction: Nil JUDGMENT — EX TEMPORE (REVISED 19 APRIL 2024) INTRODUCTION 1. These proceedings were commenced by the plaintiff, Gabrielle Pamela Joan Kennard, by way of an originating process which was filed on 16 January 2024. In that originating process, the plaintiff sought an order, amongst others, that the court make a winding up order pursuant to s 459P of the Corporations Act 2001 (Cth) in relation to the defendant, DCA Capital Pty Ltd. 2. I now have before me an interlocutory application which was filed on 28 March 2024 by the applicant, Pubdin Pty Ltd, seeking an order under s 465B of the Corporations Act that it be substituted as the applicant in these proceedings in place of Ms Kennard. EVIDENCE 1. Pubdin relies on the affidavit of Larry Michael Bloch sworn 28 March 2024, which sets out the relevant facts pursuant to which Pubdin seeks to be substituted for Ms Kennard. 2. Mr Somerville, instructed by Bridges Lawyers, appears on behalf of Pubdin. 3. There was no appearance on behalf of DCA Capital. LEGAL PRINCIPLES 1. The application is made under s 465B of the Corporations Act. That section provides: (1) The Court may by order substitute, as applicant or applicants in an application under section 459P, 462 or 464 for a company to be wound up, a person or persons who might otherwise have so applied for the company to be wound up. (2) The Court may only make an order if the Court thinks it appropriate to do so: (a) because the application is not being proceeded with diligently enough; or (b) for some other reason. (3) The substituted applicant may be, or the substituted applicants may be or include, the person who was the applicant, or any of the persons who were the applicants, before the substitution. (4) After an order is made, the application may proceed as if the substituted applicant or applicants had been the original applicant or applicants. 1. The principles pursuant to which a substitution application brought under s 465B of the Corporations Act is to be dealt with are conveniently summarised in Re C2C Investments Pty Ltd (2012) 92 ACSR 266; [2012] NSWSC 1443 by Black J, particularly at [11]–[23]. 2. The first matter of which I am required to be satisfied is that there has been an application under section 459P, 462 or 464 of the Corporations Act for DCA Capital to be wound up. As I have already indicated, such an application was made pursuant to s 459P by Ms Kennard. 3. As a second matter, I am also required to be satisfied that it is appropriate for the substitution to be made, either because the application has not been proceeded with diligently enough or for some other reason. In this case, the "for some other reason" ground is the relevant one to which I must direct my attention. 4. To enable an order for substitution to be made, it is not necessary for Pubdin to prove that it has served a statutory demand or to establish any of the grounds stated in s 461 of the Corporations Act to demonstrate that it might otherwise have applied for a winding up order. All that it is necessary for me to be satisfied of is that Pubdin is a person who might otherwise have applied for DCA Capital to be wound up. 5. On the facts before me, it is not necessary for me to deal with any aspect of the alleged debt owing to Pubdin as being the subject of a bona fide dispute upon substantial grounds, because there is no party before me making that submission. RELEVANT FACTS 1. It appears that DCA Capital is now the trustee of the Digital Commodity Assets Fund (Fund). Accompanying the establishment of the Fund was an information memorandum dated February 2019, which was issued by Digital Commodity Assets Pty Ltd. Pursuant to that information memorandum, it was stated that Digital Commodity Assets was to be the trustee of the Fund, and that the trustee was to issue units in the Fund. 2. Pubdin first invested in the Fund on or around 1 June 2020. Pubdin's investment was a transfer of a portion of units in the Fund held by another entity, Corpsand Pty Ltd as trustee for the Impulse Trust. 3. Following the initial investment of Pubdin in the Fund, DCA Capital began representing itself as the trustee of the Fund, including by way of email correspondence, issuing a further information memorandum dated May 2023 and also by making redemption payments to Pubdin. 4. As at 28 February 2023, Pubdin had received a statement indicating that the value of its units held in the Fund was just in excess of $4 million. 5. On 17 July 2023, Pubdin lodged a redemption request form, by which it sought to redeem all of its units held in the Fund. It did so in accordance with the information memorandum that governed the Fund, which required that DCA Capital redeem those units within 21 days of the lodgement of the redemption request form. 6. Since 28 February 2023, Pubdin has received from DCA Capital an amount of $950,000, meaning that an amount of just over $3 million remains outstanding and payable by DCA Capital to Pubdin. 7. On 26 October 2023, Pubdin issued a creditor's statutory demand to DCA Capital for payment in respect of the outstanding debt of $3,153,818.74. 8. On 23 November 2023, DCA Capital did file an originating process seeking to have the statutory demand set aside, asserting that there was a genuine dispute in respect of the debt; however, that claim was withdrawn on 4 March 2024 when DCA Capital withdrew the originating process and the proceedings were dismissed. CONSIDERATION 1. I am satisfied that DCA Capital remains indebted to Pubdin for the amount of the outstanding debt of $3,153,818.74 and that Pubdin, as at 16 January 2024, had also served a statutory demand in respect of that debt, which has now expired. 2. Accordingly, for the purposes of s 465B of the Corporations Act, I consider that Pubdin might otherwise have applied to wind up DCA Capital. ORDERS 1. Accordingly, in the circumstances, I make an order under s 465B of the Corporations Act that the applicant, Pubdin, be substituted as applicant in place of Gabrielle Pamela Joan Kennard in these proceedings, seeking that the defendant, DCA Capital, be wound up pursuant to s 459P of the Corporations Act. ********** 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: 19 April 2024