Supreme Court New South Wales Medium Neutral Citation: In the matter of Resicomm Electrical Pty Ltd [2024] NSWSC 811 Hearing dates: 1 July 2024 Date of orders: 1 July 2024 Decision date: 01 July 2024 Jurisdiction: Equity - Corporations List Before: McGrath J Decision: (1) Leave granted nunc pro tunc for the defendant to be wound up voluntarily (2) Order to fix relation-back day at earlier time (see [22]) Catchwords: CORPORATIONS — winding up — competing measures to wind up company — where plaintiff creditor applied to have the defendant company wound up in insolvency for failure to comply with statutory demand — where subsequent resolution passed to voluntarily wind up the company and appoint applicant as liquidator — where applicant unaware of plaintiff's application and undertook work in liquidation — liquidator applies for leave nunc pro tunc for the company to be wound up voluntarily — where plaintiff creditor supports present application — HELD — leave granted Legislation Cited: Corporations Act 2001 (Cth), ss 91, 490, 556(1)(b), s 90-15 of the Insolvency Practice Schedule (Corporations) Cases Cited: GIO NSW v Krey Investments Pty Ltd (unreported, Supreme Court of New South Wales, Young J, 29 October 1990) GIO NSW v Krey Investments Pty Ltd (unreported, Supreme Court of New South Wales, Young J, 29 October 1990) In the matter of ACN 060 242 515 Pty Ltd (unreported, Supreme Court of New South Wales, Black J, 15 March 2021) In the matter of Tow.com.au Pty Ltd (In Liquidation) [2018] FCA 1069 Mcveigh v Gogo's Food Service Pty Ltd, in the matter of Gogo's Food Service Pty Ltd [2018] FCA 936 Progress Printers & Distributors Pty Ltd v Production & Graphics Communications Pty Ltd (1996) 21 ACSR 241 Re Camarda and Cantrill Pty Ltd [2015] NSWSC 2067 Re Halal Meats Australia Pty Ltd [2016] NSWSC 1946 Re Horsham Kyosan Engineering Co Ltd [1972] VR 403 Re Northwestern Fruit Growers Pty Ltd [1965] VR 306 Re Pendonna Pty Ltd [2012] NSWSC 631 Re South Australian Air Conditioning Centre Pty Ltd (1977) 2 ACLR 539 Re U-Nited Warranties Pty Ltd [2012] NSWSC 1087 Category: Principal judgment Parties: Graeme Robert Beattie in his capacity as Liquidator of Resicomm Electrical Pty Ltd ACN 166 443 894 (Applicant) Koolie Communications Pty Ltd (Plaintiff) Resicomm Electrical Pty Ltd (Defendant) Representation: Counsel: J Parrish (Applicant/Defendant) K Aydinlioglu (solicitor) (Plaintiff) Solicitors: Turks (Plaintiff) Concordia Legal (Applicant/Defendant) File Number(s): 2024/00193647 Publication restriction: Nil JUDGMENT INTRODUCTION 1. This is an application by Graeme Beattie of Worrells in his capacity as the liquidator of Resicomm Electrical Pty Ltd for an order that leave be granted nunc pro tunc pursuant to s 490(1)(a) of the Corporations Act 2001 (Cth) for Resicomm to be wound up voluntarily, along with a number of consequential ancillary orders. 2. The application arises in the unusual circumstances of an earlier application made by Koolie Communications Pty Ltd (as a creditor of Resicomm) to this court for an order that Resicomm be wound up in insolvency. That application did not come to the attention of the sole member and controller of Resicomm or Mr Beattie when a member's resolution was made for Resicomm to be wound up voluntarily. The present application is made to regularise the position. RELEVANT FACTS 1. The sole shareholder, director and secretary of Resicomm is Rudin Ansut. 2. Resicomm carried out an electrical contracting services business which ceased trading in May 2024. 3. At various times between January 2024 and June 2024, members of the staff at Worrells were contacted by members of the staff at Resicomm regarding the potential appointment of an external administrator to Resicomm. On 29 January 2024 and 20 May 2024, Mr Beattie caused members of the staff at Worrells to undertake searches of the records relating to Resicomm held by the Australian Securities and Investments Commission (ASIC). The results of those searches did not indicate any existing external administration appointment or winding up application in respect of Resicomm. 4. On 24 May 2024, Koolie filed the originating process seeking an order that Resicomm be wound up in insolvency and the appointment of a liquidator to it. The application was based on the failure of Resicomm to comply with a statutory demand dated 4 April 2024 and served on 5 April 2024 by paying Koolie the total amount of $41,452.26 for invoices issued by Koolie to Resicomm in October and December 2023. 5. Notice of Koolie's application for an order to wind up Resicomm in the insolvency was not processed by ASIC until 3 June 2024. 6. On 3 June 2024, a member of Mr Beattie's staff at Worrells conducted a further search of the records relating to Resicomm held by ASIC. There was no indication in those search results that a winding up application had been made by Koolie in respect of Resicomm. 7. On 3 June 2024, Mr Ansut passed a resolution of Resicomm for a creditors' voluntary winding up and resolving that Mr Beattie be appointed liquidator. 8. At the time that Mr Beattie accepted his appointment as the liquidator of Resicomm, he believed that his appointment was valid and had no reason to believe that a winding up application had been filed in respect of Resicomm. 9. Between the date of his appointment as the liquidator of Resicomm and 19 June 2024, Mr Beattie has taken the following steps: 1. Opened a separate bank account for the purpose of the administration of Resicomm with the Commonwealth Bank of Australia (CBA). 2. Provided Mr Ansut with a blank copy of a Report on Company Activities and Property, a completed copy of which he has not yet received. 3. Requested that Xary (the accountants for Resicomm) provide him with the books and records of Resicomm. 4. Sent a letter to various financial institutions throughout Australia advising them of his appointment as liquidator of Resicomm, directing them to freeze any accounts held by Resicomm and requesting that they notify him of any accounts held by Resicomm with them. Mr Beattie has received confirmation of the existence of accounts in Resicomm's name with CBA and the Australia and New Zealand Banking Group (ANZ). 5. Caused the lodgement with ASIC and the Australian Taxation Office (ATO) of the requisite forms advising of Mr Beattie's appointment as liquidator to Resicomm. 6. Requested from the ATO copies of various documents relating to Resicomm. 7. Caused an initial report to creditors to be circulated to the creditors of Resicomm and received proofs of debt from various creditors, being ANZ, Australian Regional Wholesalers, iCare and Metro Finance. 1. On 20 June 2024, Mr Beattie was first made aware of the existence of the application by Koolie to wind up Resicomm in insolvency when he read a daily notice received by Worrells alerting the firm to various insolvency-related matters. Mr Beattie then caused a member of staff at Worrells to conduct a further search of the records relating to Resicomm held by ASIC. This search revealed that Koolie had made the application to wind up Resicomm in insolvency on 24 May 2024 and that an ASIC form notifying of that application was lodged with ASIC on 27 May 2024 and processed on 3 June 2024. 2. Since 20 June 2024, Mr Beattie has received legal advice on the validity of his appointment and has refrained from undertaking any further work as liquidator of Resicomm other than those tasks necessary for maintaining the status quo of the liquidation or the making of this application. 3. Mr Beattie has not yet conducted an analysis of Resicomm's antecedent transactions so as to identify or determine which, if any, transactions might be recoverable as voidable transactions if Resicomm was deemed to have an earlier relation-back day of 24 May 2024. 4. At present, the only ASIC Published Notices concerning Resicomm are the notice of appointment of Mr Beattie as liquidator of Resicomm on 3 June 2024 and the notice of the application of Koolie for a winding up order published on 19 June 2024. 5. On 24 June 2024, Mr Beattie filed the interlocutory process commencing the present application. 6. Koolie consents to the application made by Mr Beattie. LEGAL PRINCIPLES 1. Section 490(1) of the Corporations Act provides: When company cannot wind up voluntarily (1) Except with the leave of the Court, a company cannot resolve that it be wound up voluntarily if: (a) an application for the company to be wound up in insolvency has been filed; or (b) the Court has ordered that the company be wound up in insolvency, whether or not the order was made on such an application; or (c) the company is a trustee company that is in the course of administering or managing one or more estates. 1. Only s 490(1)(a) is relevant to the present application. 2. The following principles emerge from the cases that have considered the application of s 490(1): 1. Section 490(1) confers upon the court a broad discretion as to the factors to be taken into account in determining whether leave should be given: In the matter of Tow.com.au Pty Ltd (In Liquidation) [2018] FCA 1069, Greenwood ACJ at [3]. 2. The leave in s 490(1) can be granted retrospectively: Re Horsham Kyosan Engineering Co Ltd [1972] VR 403, Gowans J at 406; Progress Printers & Distributors Pty Ltd v Production & Graphics Communications Pty Ltd (1996) 21 ACSR 241, Tamberlin J at 244; Re Pendonna Pty Ltd [2012] NSWSC 631, Brereton J at [2]; Re U-Nited Warranties Pty Ltd [2012] NSWSC 1087, Black J at [3]. It has been said that it will be a rare case in which that leave will be granted retrospectively: Pendonna, Brereton J at [3] citing GIO NSW v Krey Investments Pty Ltd (unreported, Supreme Court of New South Wales, Young J, 29 October 1990). 3. It is ordinarily necessary to establish that it is preferable that the company be wound up voluntarily, rather than compulsorily: Re Northwestern Fruit Growers Pty Ltd [1965] VR 306, Adam J at 309–11; Re South Australian Air Conditioning Centre Pty Ltd (1977) 2 ACLR 539, Jacobs J at 541–2; Pendonna, Brereton J at [3]; U-Nited Warranties, Black J at [3]; Re Halal Meats Australia Pty Ltd [2016] NSWSC 1946, Black J at [4]. 4. The powers of a liquidator appointed pursuant to a creditors' voluntary winding up, as opposed to a members' voluntary winding up, do not differ significantly from those of a court-appointed liquidator: Pendonna, Brereton J at [4]; U-Nited Warranties, Black J at [4]; Halal Meats, Black J at [5]. In such a case, it may well require less to establish that it will be in the interests of the creditors that the voluntary winding up proceed, rather than the company be wound up compulsorily: Re Camarda and Cantrill Pty Ltd [2015] NSWSC 2067, Brereton J at [7]. In the case of a members' voluntary winding up, it will often be difficult to show that the interests of the creditors are promoted by a voluntary winding up, because in the context of a members' winding up, a liquidator does not have the same range of powers and remedies as one in a compulsory winding up: Camarda, Brereton J at [6]. 5. The extent of the work already undertaken by the liquidator is a relevant factor because otherwise time will be lost and effort wasted if it was necessary to appoint a new liquidator: Pendonna, Brereton J at [5]. The work undertaken by the liquidator since his or her appointment is relevant because otherwise there would be a duplication of work and additional expense, which would ultimately reduce the returns to the company's creditors if the liquidator cannot remain and a different court-appointed liquidator is ultimately appointed:; U-Nited Warranties, Black J at [3]–[5]; Halal Meats, Black J at [5]. 6. It will also be relevant to consider whether the voluntary winding up has proceeded in the face of knowledge of the application for a court-ordered winding up or in ignorance of it, and if in ignorance of it, whether that has been despite all reasonable caution, or on the other hand, reckless to the possibility: Camarda, Brereton J at [9]. 7. A significant factor is whether the petitioning creditor consents to the relief which is sought because it serves to indicate a view of a creditor that its interests will at least be as well served by the voluntary winding up continuing as by the alternative of a compulsory winding up ordered by the court: Pendonna, Brereton J at [6]; U-Nited Warranties, Black J at [7]; Halal Meats, Black J at [6]. 8. Consideration should be given to whether there would be any difference between the relation-back day arising on the appointment of a court-appointed liquidator and that arising on the appointment of a liquidator pursuant to a members' voluntary winding up, and whether the liquidator has identified any potential voidable transactions which would be affected by a change in the relation-back day: Pendonna, Brereton J at [5]; U-Nited Warranties, Black J at [6]; Halal Meats, Black J at [6]. In circumstances where the earlier relation-back day may be an advantage to the creditors, an appropriate order may be made pursuant to s 90–15 of the Insolvency Practice Schedule (Corporations) of the Corporations Act in relation to the external administration of the company, that s 91 of the Corporations Act operate such that the relation-back day be fixed at the date on which the application was made for the winding up in insolvency: see, for example, orders made in McVeigh v Gogo's Food Service Pty Ltd, in the matter of Gogo's Food Service Pty Ltd [2018] FCA 936, McKerracher J; Tow.com.au, Greenwood ACJ; In the matter of ACN 060 242 515 Pty Ltd (unreported, Supreme Court of New South Wales, Black J, 15 March 2021). CONSIDERATION 1. Applying these various principles to the facts of this case, I am satisfied that it is appropriate to make the orders sought in the present application. The matters that I have taken into account and weighed in arriving at my decision to exercise the discretion in this way are as follows: 1. There is little difference in the liquidator's powers from a creditors' voluntary winding up compared to those from a court-appointed winding up. 2. Although not substantial, Mr Beattie has already taken a significant number of important steps in carrying out the liquidation of Resicomm. A court-appointed liquidator would have to duplicate these steps. Replacing Mr Beattie with a court-appointed liquidator would result in a loss of time, a waste of the effort already expended, disruption to those parties such as ASIC, the ATO, banks, creditors and accountant who have already dealt with Mr Beattie and, most importantly in relation to the interests of creditors, additional expense. 3. Koolie as the petitioning creditor consents to the orders which are sought, indicating that its interests are met whether it be a creditors' voluntary liquidation of Resicomm or a court-ordered liquidation of Resicomm. 4. Mr Beattie has adequately explained how it is that the voluntary liquidation proceeded despite the filing of Koolie's application to the court to wind up Resicomm in insolvency. I am satisfied that this arose because the records maintained by ASIC were not kept up to date in a timely fashion, so that Mr Beattie had no way of knowing about Koolie's application until it came to his attention on 20 June 2024. Since he became aware of that fact, Mr Beattie has proceeded with this application in a timely fashion. 5. Although Mr Beattie has not yet identified any transactions which might be recoverable as voidable transactions if Resicomm was deemed to have an earlier relation-back day of 24 May 2024, for the purpose of protecting the interest of creditors, I consider it is appropriate to make an order which fixes the relation-back day at 24 May 2024. ORDERS 1. For the reasons set out above, I propose to make the following orders: 1. Leave is granted nunc pro tunc pursuant to s 490(1)(a) of the Corporations Act 2001 (Cth) for the defendant Resicomm Electrical Pty Ltd ACN 166 443 894 to be wound up voluntarily. 2. Leave is granted pursuant to r 5.8 of the Supreme Court (Corporations) Rules 1999 (NSW), for the plaintiff's originating process filed 24 May 2024 to be discontinued. 3. Order pursuant to s 90-15 of the Insolvency Practice Schedule (Corporations) of the Corporations Act, that s 91 of the Corporations Act operate such that the relation-back day be fixed at 24 May 2024. 4. Order that the plaintiff's costs of the proceedings be fixed in the sum of $10,350.30 and be payable in accordance with s 556(1)(b) of the Corporations Act as if the defendant were wound up in these proceedings. ********** 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: 01 July 2024