Rohan Trading Company Pty Ltd v. Glengor Pastoral Company Pty Ltd [2003] NSWSC 1265

New South Wales Supreme Court

CITATION : Rohan Trading Company Pty Ltd v. Glengor Pastoral Company Pty Ltd [2003] NSWSC 1265 HEARING DATE(S) : 19 December, 2003 JUDGMENT DATE : 19 December 2003 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Winding up order made.

CATCHWORDS : CORPORATIONS - STATUTORY DEMAND - "CREDITOR" - the Plaintiff assigned in equity the debt owed by the Defendant. - HELD - the Plaintiff, as a creditor at law, was a "creditor" for the purposes of s.459E and s.459P Corporations Act. LEGISLATION CITED : Conveyancing Act 1919 (NSW) - s.12 Corporations Act 2001 (Cth) - s.459E, s.459P - Manzo v 555/255 Pitt Street Pty Limited (1990) 21 NSWLR 1 CASES CITED : - Reale Bros Pty Ltd v Reale (2003) NSWSC 666 - In re Steel Wing Co Limited [1921] 1 Ch 349 PARTIES : Rohan Trading Company Pty Ltd - Plaintiff Glengor Pastoral Company Pty Ltd - Defendant FILE NUMBER(S) : SC 5659/03 J. Cunningham (Sol) - Plaintiff COUNSEL : M. Foley (Sol) - Defendant S. McGlynn - Supporting creditor S. Taleski - Supporting creditor SOLICITORS : John Cunningham - Plaintiff Foleys - Defendant

JUDGMENT – Ex tempore

On application for adjournment

1 The Plaintiff seeks to proceed today with a winding up application under s.459P of the Corporations Act 2001 (Cth), which was filed on 10 November 2003. The Defendant seeks an adjournment of that application on two grounds: first, because it wishes to put on evidence as to its solvency; second, because it says that if a winding up order is made today then there is a risk that a sale of a substantial property by the Defendant will be rescinded and the proceeds of sale thereby lost to creditors. The Plaintiff and two supporting creditors oppose any adjournment. I am dealing, at this stage, with the application for adjournment. 2 The winding up application is founded upon a Statutory Demand issued by the Plaintiff to the Defendant on about 10 October 2003. No application to set aside that Statutory Demand was made by the Defendant. Indeed the Defendant, according to the evidence which I have seen, does not dispute the debt. The debt claimed was some $90,513. After some payments in reduction of that debt, it is quite clear there is a substantial sum still owing by the Defendant to the Plaintiff. 3 The matter came before the Registrar on 9 December 2003. The Defendant made an application for an adjournment on the basis that it wished to prove solvency. The Registrar allowed an adjournment for seven days and directed the Defendant to file such evidence as it intended to rely upon by 18 December 2003. The Defendant has not complied with that direction. 4 Today the Defendant has filed in Court two affidavits of Mr G. Hart, the Managing Director of the Defendant. What emerges from those affidavits may be summarised thus: the accounts of the company as at 31 December 2002 are annexed. A request to the company's accountants clearly made some time late in December this year was answered on 18 December by the accountants, who said that the accounts for the company for the year ended 30 June 2003 would probably be ready by late January 2004, assuming that they were able to obtain the financial records which they needed. 5 There is no evidence in the affidavits of the company's present ability to meet its debts as and when they fall due. Indeed, quite the opposite emerges from that affidavit and the shorter affidavit of Mr Hart filed today. What emerges from those affidavits is that the Defendant is endeavouring to sell assets in order to meet liabilities, but even the assets to which it refers do not seem to be able to discharge on sale all of the present liabilities of the company. At least, there is no evidence to that effect. 6 In my view it was not necessary, perhaps even not relevant, for the Defendant to endeavour to procure its accounts for the year ended 30 June 2003 in order to be able to demonstrate its solvency as at the date of the hearing of the application. What was essential was some evidence that the company is presently able to meet its debts as and when they fall due. As I say, the affidavits of Mr Hart filed today do not show that. Indeed, they indicate the contrary. 7 There is no evidence that the appointment of a liquidator now poses a serious or appreciable risk that the sale of the company's real estate pursuant to exchanged contracts of sale due for settlement in early January will go off. The only evidence as to whether the sale will proceed is a letter from the purchaser's solicitor making a time for settlement of the sale on 7 January, 2004. 8 The application for adjournment, as I say, has been opposed by two supporting creditors. They have not adduced evidence of their debts. In relation to one of them, P & O Nedlloyd, the Defendant has produced a record of payments made by the Defendants in reduction of a debt which shows that the debt is now some $85,000. 9 It seems to me that the Defendant has had a reasonable opportunity to procure some evidence, if not the complete evidence, as to its ability to pay its debts as and when they fall due. It has not availed itself of that opportunity and I am not satisfied that there is any reasonable explanation for its omission to do so. 10 The Defendant is trading. The evidence that I have seen so far suggests that it is struggling to pay its creditors and, indeed, is paying off some of its creditors, apparently by instalments. There is, accordingly, an appreciable risk of continued insolvent trading. It seems to me, therefore, that the adjournment application should be refused and that I should proceed to hear the winding up application.