New South Wales Supreme Court CITATION : Chief Commissioner of State Revenue v Zafco Franchise Company Pty Ltd [2006] NSWSC 1440 HEARING DATE(S) : 14/12/06 JUDGMENT DATE : 14 December 2006 JURISDICTION : Equity Division Corporations List JUDGMENT OF : White J EX TEMPORE JUDGMENT DATE : 12/14/2006 DECISION : Order that the interlocutory process filed on 24 October 2006 be dismissed; order that the applicant pay the costs of the company and of the interveners of that application. CATCHWORDS : CORPORATIONS – Winding-up – Termination of winding-up – Director of company now being wound up brought application to terminate winding-up – Application dismissed – Director brought second application to terminate winding-up – Director seeks adjournment of application – Whether director entitled to adjournment of application – Where application brought prematurely – Where adjournment of application would be disruptive of winding-up and wasteful of costs – Adjournment refused – Application to terminate winding-up dismissed. Chief Commissioner of State Revenue PARTIES : v Zafco Franchise Company Pty Ltd FILE NUMBER(S) : SC 5524/05 Applicant: G C Fullick COUNSEL : Liquidator: R P L Lancaster Interveners: A S Street SC, D V Robinson SOLICITORS : Plaintiff: Champion Legal Defendant: Bruce Stewart Dimarco Solicitors OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST WHITE J Thursday, 14 December 2006 5524/05 Chief Commissioner of State Revenue v Zafco Franchise Company Pty Ltd JUDGMENT 1 HIS HONOUR: On 9 October 2006, Young CJ in Eq dismissed an application by Mr Zafiropoulos to terminate the winding-up of Zafco Franchise Co Pty Limited ("the company"). His Honour was not satisfied that the company was solvent or that the winding-up should be terminated. In dismissing the application, his Honour made it clear that if the position of the company improved, a further application could be made. 2 On 24 October 2006, Mr Zafiropoulos brought a further application to terminate the company's winding-up. The interlocutory process for termination of the winding-up was supported by an affidavit of Mr Zafiropoulos. 3 In that affidavit, Mr Zafiropoulos deposed, in substance, that he had given instructions to obtain a report from an independent expert on solvency of the company. He also deposed that he had given instructions to his solicitor to ask the liquidator to obtain an independent legal opinion as to the validity and prospects of various cross-claims brought against the company, and had given instructions to his accountant to "provide further articulation and financial reporting of capitalisation of moneys paid by me personally to [company]". 4 The interlocutory process was returnable on 27 November 2006. On that day, orders were made for the applicant to serve all evidence upon which he proposed to rely by 6 December 2006, and for certain interveners to serve any evidence upon which they proposed to rely by 12 December 2006. The matter was adjourned to 14 December 2006 with a view to its being referred to the Corporations Judge for hearing. 5 Why it was made returnable on 14 December 2006, rather than on Monday, 11 December 2006, as should have been the case, is not apparent. 6 Be that as it may, the matter has been referred to me by the interveners, namely: Jobstar Port Pty Limited, Jobstar Coffs Pty Limited and Britstar Pty Limited. 7 The applicant seeks to have the interlocutory process adjourned to early next year. The solicitor for the applicant says that the applicant is in the process of refinancing a debt or debts which the company owes to the St George Bank, such that, upon the debt being refinanced, St George will no longer be a creditor of the company. Instructions have also been given to obtain a report as to the financial position of the company. 8 In that regard, the expert retained by the applicant is awaiting information from the company's accountant and the company's accountant is expected to be able to provide that information within the next few days. 9 The applicant says, through his solicitor, that all of the company's debts, other than a disputed claim brought by the interveners, should be discharged within the next few days. 10 I was told that the interveners have lodged a proof of debt. That proof of debt has not been dealt with. It is quite clear that the applicant, when he filed his interlocutory process of 24 October 2006, was not in a position to establish that an order for termination of the winding-up should be made. Even now, he is not in a position to proceed with the application, notwithstanding the orders made on 27 November 2006 that all of the evidence upon which he relies be served by 6 December 2006. 11 It is disruptive of the orderly winding-up of the company and wasteful of costs, both for the applicant, for the company, and for the interveners, for the application to have been made when it was not ready to be proceeded with. 12 It may be that in due course there will be evidence to establish, to the Court's satisfaction, that the company is solvent, even allowing for the disputed claim brought by the interveners. However, at the moment, it is clear that the applicant is not in a position to proceed with his application. 13 I should not assume that if the matter is adjourned to next year the applicant will then be in a position to proceed. He was required to serve the evidence upon which he relied by 6 December 2006. However, even that is not a satisfactory position. Having regard to the orders made on 9 October 2006, the applicant should not have brought the application unless he was then in a position to proceed with it. 14 His affidavit in support of the interlocutory process was manifestly deficient. It established no ground upon which the order sought in the interlocutory application would have been made. I do not think that it is in the interests of any person, particularly not in the interest of the company being wound up, that the application be further adjourned. If the applicant finds himself in a position in which he is able to establish that the company is solvent and that the winding-up ought to be terminated, then he can bring an application for termination of the winding-up. However, until that position is reached, it is wasteful of costs, the company's resources and the Court's time for the application to be made. 15 I order that the interlocutory process filed on 24 October 2006 be dismissed. I order that the applicant pay the costs of the company and of the interveners of that application. ****** 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.