New South Wales Supreme Court CITATION : Nagler v SLM Constructions; Nagler v H Volski [2001] NSWSC 1107 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 5344/01; 5342/01 HEARING DATE(S) : 29/11/01 JUDGMENT DATE : 29 November 2001 Lucie Nagler - Plaintiff PARTIES : SLM Constructions Pty Ltd (In Liquidation) - Defendant H Volski & Co Pty Ltd (In Liquidation) - Defendant JUDGMENT OF : Barrett J COUNSEL : Mr D. Neggo, Solicitor - Plaintiff SOLICITORS : Koffels - Plaintiff CATCHWORDS : CORPORATIONS - termination of winding up - only one director remaining - constitution contemplates multiple directors - desirable to direct that second director be appointed LEGISLATION CITED : Corporations Act 2001 DECISION : Winding up terminated in each matter 2 IN THE SUPREME COURT REVISED OF NEW SOUTH WALES EQUITY DIVISION BARRETT J THURSDAY, 29 NOVEMBER 2001 5344/01 - LUCIE NAGLER v SLM CONSTRUCTIONS PTY LTD (IN LIQUIDATION) 5342/01 - LUCIE NAGLER v H VOLSKI & CO PTY LTD (IN LIQUIDATION) JUDGMENT HIS HONOUR: 1 In relation to each of SLM Constructions Pty Ltd and H Volski & Co Pty Ltd there is before the court an application for an order terminating its winding up. The winding up is, in each case, a members' voluntary winding up. The application is expressed to be under s.482 of the Corporations Act 2001. That section appears in Pt 5.4B, dealing with winding up in insolvency or by the court, but s.511 makes it clear that the court may exercise the s.482 power in relation to a members' voluntary winding up. 2 The plaintiff, Mrs Nagler, is a member of each company and therefore a contributory. That being so, she has standing under s.482 (as activated by s.511) to make the application for termination of the winding up. 3 As to the substance of the application, there is evidence before the court in each matter that the members' voluntary winding up was initiated with a view to a rearrangement of commercial and family affairs considered in 1998 to be advantageous. As things have unfolded, however, it has become clear that certain commercial disadvantages which were unforeseen will emerge if the original plan is pursued. In each case transactions consequent upon the winding up, which it had thought could be effected without undue expense, will, as things turn out, attract substantial expenses which Mrs Nagler would prefer not to have the companies bear. 4 There is evidence from the liquidator to show that the company in each case is financially sound and healthy. Indeed, there is, within each company, a substantial quantity of assets and virtually no creditors and no hint of insolvency, with the result that the public interest in seeing insolvent companies put into liquidation and remaining there plays no part in this instance. Furthermore, the evidence of the liquidator shows that there is no other reason why either company should be prevented from being restored to its former status, with the ability to carry on business in the normal way. 5 An ancillary direction sought in each case is that action be taken to install a second director forthwith. Such directions are contemplated by s.482(3). The application for the direction arises from the fact that Mrs Nagler is now the only director, her husband and co-director, Mr Nagler, having died since the commencement of the winding up. Such a direction is, I think, desirable where, as Mr Neggo tells me is the case here, the constitution of the company has not been modified to cater for the situation of a single director company which the Corporations Act now allows. Untoward doubts and difficulties can arise if a company with a constitution contemplating, in the former fashion, multiple directors embarks upon a new life with one director only. It is obviously desirable that the directorships be in accordance with the contemplation of the constitution and the court would not wish to sanction any other situation. If, in due course, it is desired to adopt a single director configuration, the constitution should be altered to accommodate this. An alternative would be to repeal the constitution so that the Corporations Act's replaceable rules apply in unmodified form. 6 In each of matter No. 5342/01 and matter No. 5344/01 I make an order that the winding up of the defendant be terminated this day, 29 November 2001. I also make order 2 in the originating process in each case. ****** Last Modified: 12/04/2001 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.