New Era International (Aust) Pty Ltd v Aron Australia Pty Ltd [2006] NSWSC 1311

New South Wales Supreme Court

CITATION : New Era International (Aust) Pty Ltd v Aron Australia Pty Ltd [2006] NSWSC 1311

HEARING DATE(S) : 31/10/06

JUDGMENT DATE : 31 October 2006

JURISDICTION : Equity Division Corporations List

JUDGMENT OF : White J

EX TEMPORE JUDGMENT DATE : 10/31/2006

DECISION : 1. Order that the winding-up of Aron Australia Pty Ltd (in liq) ACN 103375962 be terminated; 2. this order takes effect today and may be entered forthwith; 3. exhibits may be returned.

CATCHWORDS : Termination of winding-up - No question of principle.

LEGISLATION CITED : Corporations Act 2001 (Cth)

New Era International (Aust) Pty Ltd PARTIES : v Aron Australia Pty Ltd

FILE NUMBER(S) : SC 4886/06

COUNSEL : Plaintiff: D Bowles Defendant: H Lu

SOLICITORS : Plaintiff: Luminous Legal Defendant: N/A

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

WHITE J

Tuesday, 31 October 2006

4886/06 New Era International (Aust) Pty Ltd v Aron Australia Pty Ltd JUDGMENT 1 HIS HONOUR: This is an application under s 482 of the Corporations Act 2001 (Cth) for an order terminating the winding-up of the defendant company, Aron Australia Pty Limited. The company was wound up on 19 October 2006 on the application of New Era International (Aust) Pty Limited. 2 Mr Scott Pascoe of Sims Partners, Chartered Accountants, was appointed liquidator. The application for winding-up was made on the basis of the company's non-compliance with a statutory demand for the amount of $46,537.10. That amount is said to comprise principal of $30,000 and interest of $16,537.10. 3 The company carried on business as an operator of an IGA supermarket in Lakemba. It purchased the supermarket business from the plaintiff in 2003. The debt claimed by the plaintiff represented the final instalment of the purchase price. A director of the company, Mr Van Tron Vu, deposes that the reason for non-payment of the debt claimed by the plaintiff was because he did not agree with the amount of interest claimed, and he was awaiting accounting advice in relation to the amount payable for the final instalment to the plaintiff. He says he did not anticipate the plaintiff would proceed to take legal action until such advice was received. He also deposes that the registered office of the company was at the offices of its accountant and that he was not advised by the company's accountant of service of the originating process for the winding-up order. He says that his first knowledge of the company having been wound up was on 20 October when he was contacted by the liquidator's office. It seems that the liquidator has not, at this stage, ceased to carry on the business but, understandably, the effect of the winding-up order has had an adverse effect on the conduct of the business. 4 There is evidence from a Mr Yuen, another accountant, who was asked to prepare a financial summary of the company's financial position from its accounting records. He has done so. That summary disclosed that, as at 18 October 2006, the company had trade creditors of just over $320,000 and total liabilities of just under $346,000. Leaving aside fixed assets and intangibles, the company had assets of almost $640,000 which could be readily realisable to meet claims of creditors. These consisted of cash or moneys on deposit of almost $165,000, and an inventory of just over $475,000. 5 I am told by Mr Bowles, solicitor, who appears for the applicant, that Mr Topp from Sims Partners has confirmed that, on the liquidator's review of the company's books in the liquidator's possession, it appears that the summary of the financial position prepared by Mr Yuen is correct. Mr Topp has confirmed that himself. There appears, therefore, to be no reason to apprehend that the company may be insolvent. The winding-up order appears to have come about as a result of either a slip in the office of the accountants, whose offices were the registered office of the company, or inattention by the directors of the company. 6 Notice of the application has been given in accordance with the rules to the Australian Securities and Investments Commission. It has not intervened in the proceedings. It neither consents to, nor opposes, the order sought. Notice of the application has also been given to the principal creditor, IGA Distribution Pty Limited. It also does not oppose the making of an order terminating the winding-up, and does not seek to be heard on the application. It says this is subject to its receiving payment of $93,444.20 in respect of stock supplied following appointment of the liquidator. The liquidator is holding a bank cheque in order to make that payment. The plaintiff, New Era International (Aust) Pty Limited, also does not oppose the payment. The liquidator is holding a cheque to meet this debt. Likewise the moneys which will be due to the liquidator in respect of liquidator's costs and expenses can be paid from the assets of the company and cheques are held for that purpose. A cheque is also held for the debt payable to the Australian Taxation Office. All of those debts are included in the provision made for creditors in the accounts prepared by Mr Yuen. There are no debts owed to directors or shareholders. The payments to be immediately made to creditors of the company are not to be made from funds advanced by a director or shareholder. Therefore, no question arises of there being any need, in order to protect the interests of future creditors, for any debt owed to a director or shareholder to be capitalised or forgiven. 7 It is appropriate to make an order terminating the winding-up. I order that the winding-up of Aron Australia Pty Limited (in liquidation) ACN 103 375 962 be terminated. This order takes effect today and may be entered forthwith.