Dray v Trackmate [2003] NSWSC 482

New South Wales Supreme Court

CITATION : Dray v Trackmate [2003] NSWSC 482 HEARING DATE(S) : 2 June 2003 JUDGMENT DATE : 2 June 2003 JURISDICTION: Equity JUDGMENT OF : Austin J DECISION : Leave granted; winding up order made

CATCHWORDS : CORPORATIONS - winding up - application by contributory/director for leave under s 459P(2) - whether prima facie case of insolvency when creditor failed to comply with statutory demand - relevant considerations in application for leave LEGISLATION CITED : Corporations Act 2001 (Cth) ss 459A, 459C, 459F, 459P CASES CITED : Bingham v Iona Corporation Pty Limited (1995) 13 ACLC 560 Melbase Corporation Pty Limited v Segenhoe Ltd (1995) 13 ACLC 823 PARTIES : Marilyn Chantal Dray (P) Trackmate Australia Pty Ltd (D) FILE NUMBER(S) : SC 2559/03 COUNSEL : Mr G Burton (P) SOLICITORS : Abbott Tout (P)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

MONDAY 2 JUNE 2003

2559/03 MARILYN CHANTALL DRAY V TRACKMATE AUSTRALIA PTY LTD JUDGMENT (ex tempore; revised 3 June 2003) 1 HIS HONOUR: In this proceeding the plaintiff seeks an order for the winding up of the defendant and also an order granting her leave under s 459P(2) of the Corporations Act to make the winding up application. 2 Section 459P(3) states the Court may give leave if it is satisfied there is a prima facie case that the company is insolvent, but not otherwise. It is clear that if there is a prima facie case of insolvency the Court, nevertheless, has a residual discretion to decline to grant leave. That point was considered by Lindgren J in Melbase Corporation Pty Limited v Segenhoe Ltd (1995) 13 ACLC 823, especially at 826 and 834; see also his Honour's decision in Bingham v Iona Corporation Pty Limited (1995) 13 ACLC 560. 3 In those cases the principal concern of the Court was whether the applicant had satisfied the requirement of s 459P(3) that there be a prima facie case of insolvency. In the present case, it is clear that sub-section 459P(3) has been satisfied. A statutory demand was served on the defendant company on 4 February 2003 on behalf of a company called Work Environment Systems Technology, which has an address in Ireland. The plaintiff, who is a contributory and director of the defendant company, deposes to the fact that the defendant has failed to comply with that statutory demand (see s 459F). In those circumstances, s 459C(2)(a) has the effect that a presumption arises that the company is insolvent in any proceedings commenced within three months of the company's failure to comply with the statutory demand. The present proceedings were commenced within that three-month time period. 4 In my view, once a presumption of insolvency arises, in circumstances where there is no evidence before the Court to rebut it, the requirement that there be a prima facie case that the company is insolvent is necessarily satisfied. The only question that remains is whether I should exercise my discretion in favour of, or against, granting leave under s 459P(2). 5 I was concerned, at the hearing of the application, that there is no evidence to explain why a person who is a contributory and director of the defendant company, but is not the creditor in respect of the statutory demand, is the plaintiff. On reflection, however, it seems to me that the question why the plaintiff is a contributory and director, rather than the creditor, is not a relevant consideration for the Court for the purpose of exercising its discretion to grant or refuse leave under s 459P(2). 6 As Lindgren J pointed out in the Melbase case at 834, the kinds of factors that go to the exercise of the discretion are such matters as the public interest that an insolvent company should not continue trading and should be wound up, and the interest of the shareholder who seeks a winding up order that she should not remain locked into a insolvent company that continues to trade. I should add that in the present case, because the plaintiff is also a director, there is obviously an interest on her part in bringing the company's activities to an end so as to put an end her exposure to liability for insolvent trading. 7 Those considerations point firmly towards the granting of leave. I see no need to require further evidence to explain the constitution of the proceeding. Therefore, I shall exercise my discretion to grant leave to the plaintiff under s 459P(2) to bring this proceeding for winding up the company in insolvency, and I shall make orders for the winding up of the company in insolvency under s 459A, and for the appointment of a liquidator. **********