GIO General v Sabko [2007] NSWSC 251

Reported Decision : (2007) 25 ACLC 935 70 NSWLR 743

New South Wales Supreme Court

CITATION : GIO General v Sabko [2007] NSWSC 251

HEARING DATE(S) : 19 March 2007

JUDGMENT DATE : 21 March 2007

JURISDICTION : Equity

JUDGMENT OF : Austin J

DECISION : Winding up order made on just and equitable ground

CATCHWORDS : CORPORATIONS - winding up by the court - winding up of reinstated company in insolvency or on the just and equitable ground - plaintiff's standing as creditor - whether, by virtue of s 601AH(5), plaintiff is a creditor with respect to a "debt" said to be incurred during company's deregistration - whether sufficient evidence of insolvency - whether sufficient evidence of failure of substratum

LEGISLATION CITED : Corporations Act 2001 (Cth), ss 459A, 459P, 461, 462, 467, 601AB, 601AD, 601AH Workers Compensation Regulation 2003 (NSW), para 49 and Form 3

CGU Workers Compensation (NSW) Ltd v Rockwall Interiors Pty Ltd [2006] NSWSC 690 CASES CITED : Diamond Hill International Pty Ltd v Xu (2001) 19 ACLC 1139 White v Baycorp Advantage Business Information Services Ltd [2006] NSWSC 441

PARTIES : GIO General Limited (Agent for the NSW WorkCover Scheme) (P) Sabko Pty Ltd (D)

FILE NUMBER(S) : SC 1101/07

COUNSEL : J O'Connor (P)

SOLICITORS : Mason Black Lawyers

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

AUSTIN J

WEDNESDAY 21 MARCH 2007

1101/07 GIO GENERAL LTD (AGENT FOR WORKCOVER SCHEME) V SABKO PTY LTD JUDGMENT 1 HIS HONOUR: By an originating process filed on 15 January 2007, the plaintiff sought an order under s 601AH(2) directing ASIC to reinstate the registration of Sabko Pty Ltd ("the company"), and orders for the winding up of the company and the appointment of a liquidator, forthwith upon its reinstatement. Registrar Flaskas made a reinstatement order on 16 March 2007. The plaintiff came before me as Corporations List Judge on Monday 19 March 2007 to seek winding up orders. For the purposes of the hearing before me, it was assumed that ASIC has reinstated the company in accordance with the court's order. 2 An ASIC company extract reveals that the company was registered in 2002. The sole director and secretary was Khoder Sabra. Only one annual return was filed, in January 2003, but it was "unprocessed". The company was deregistered under s 601AB (which relates to failure to respond to a return of particulars, lodge other documents or pay a review fee) on 25 December 2005. It was not, at that time, subject to external administration. 3 On 27 February 2007 the originating process and supporting affidavit were served on a person who identified himself as Mr Sabra, the director, at 11 Station St Guildford. That was the address given as the place of business in the company's workers compensation insurance proposal form to the plaintiff dated 8 April 2005. The plaintiff tendered a report by a registered commercial agent, who said he visited the premises at 11 Station St Guildford on 12 October 2006 and spoke to a male occupant, who declined to provide his name, but confirmed that the address was the mailing address of the company and said that the company was still trading. Mr Sabra did not seek to appear at the hearing before me. 4 The plaintiff seeks a winding up order either in insolvency under s 459A or on the just and equitable ground under s 461(1)(k). In order to have the standing to obtain the order, the plaintiff (not qualifying on any other basis) must establish that it is a creditor (s 459P(1)(b) and s 462(2)(b)). 5 The plaintiff asserts that the company owes it an amount for workers compensation insurance premium in the sum of $2717.82. The evidence given on behalf of the plaintiff is that it entered into an agreement with the company to provide workers compensation insurance cover upon the basis of the company's proposal. The insurance proposal, which is in evidence, is for insurance for the period of one year from 8 April 2005 to 8 April 2006. The plaintiff contends that the policy was automatically renewed for a further year, for a premium that fell due on 31 July 2006, after the insured company had ceased to exist. 6 Counsel for the plaintiff referred me to para 49(1)(a) of the Workers Compensation Regulation, according to which a policy of insurance must contain the provisions specified in Form 3. One of the provisions in Form 3 is as follows: " 17 Renewal of Policy This Policy is renewed on the expiration of the current period of insurance to which it applies, except where: (a) the Employer has given written notice to the Insurer (before the expiration of the current period of insurance) that renewal is not required, or (b) the Insurer has given the Employer notice in writing not less than 14 days before the expiration of the current period of insurance that the Insurer refuses to renew the Policy, but the Insurer cannot refuse to renew this Policy unless the WorkCover Authority has given its prior consent in writing to the refusal. The Period of each renewal is 12 months, or such shorter period as the Insurer and the Employer agree to before renewal." 7 In the circumstances I infer that the insurance policy contained the provisions in Form 3, including clause 17. I also infer from the evidence that no written notice to the effect that renewal was not required was purportedly given on behalf of the company, and that the plaintiff did not purport to give written notice of refusal to renew the policy, and that the parties did not purport to agree to renewal for a shorter period than 12 months. 8 The plaintiff relies on a premium invoice which says that the amount payable (a slightly smaller amount than the amount now claimed) is for renewal premium for the period from 8 April 2006 to 8 April 2007, and that the "due date" is 31 July 2006. There is no reason to doubt that if the company had been in existence at all relevant times, the statement of the due date contained in the invoice would have been correct. 9 The plaintiff's difficulty is that the asserted debt upon which it relies is said to have fallen due at a time when the company did not exist (see s 601AD). It is therefore necessary to consider whether the fact that the company was deregistered before the asserted debt became due prevents the plaintiff from having the standing of a creditor in respect of that debt. 10 The following provisions of the Corporations Act are relevant: "601AD(1) A company ceases to exist on deregistration. (2) On deregistration, all the company's property vests in ASIC. …"