Supreme Court New South Wales Medium Neutral Citation: Workers Compensation Nominal Insurer v Perfume Empire Pty Ltd [2011] NSWSC 380 Hearing dates: 5 May 2011 Decision date: 05 May 2011 Jurisdiction: Equity Division - Corporations List Before: Barrett J Decision: 1. Order that Giles Geoffrey Woodgate have leave under s 532(2) of the Corporations Act 2001 to consent to be appointed, and to act as, liquidator of Perfume Empire Pty Ltd (ACN 108 883 325). 2. Order that the said Perfume Empire Pty Ltd be wound up in insolvency. 3. Order that Giles Geoffrey Woodgate, an official liquidator, be appointed liquidator of the said Perfume Empire Pty Ltd. 4. Order that the defendant pay the plaintiff's costs of the proceedings. 5. Order that the defendant pay the Deputy Commissioner's costs also. Catchwords: CORPORATIONS - winding up - application for winding up in insolvency - whether application should be adjourned because company under administration - held no - ground for winding up established - choice of liquidator - whether there should be departure from usual approach of appointing plaintiff's nominee - where administrator has done substantial work - administrator appointed Legislation Cited: Corporations Act 2001 (Cth), ss 9, 440A(2), 532(2)(c)(i) Cases Cited: Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 25 ACSR 167 Glenwood Village Pty Ltd v Glen Alpine Constructions Pty Ltd [2009] NSWSC 516 Unifor Office Systems Aust Pty Ltd v Brewer Partnership Pty Ltd [1999] NSWSC 137; (1999) 17 ACLC 642 Category: Principal judgment Parties: Workers Compensation Nominal Insurer - Plaintiff Representation: Counsel: Mr A W Smith - Plaintiff Mr P M Stern - Defendant Mr D M Jay - Deputy Commissioner of Taxation Solicitors: P H Legal - Plaintiff Addisons - Defendant ATO Legal Services Branch - Deputy Commissioner of Taxation File Number(s): 2011/39721 Judgment 1I am now dealing with the plaintiff's winding up application following dismissal of the plaintiff's application for an order terminating the voluntary administration now in place in relation to the defendant. 2Because of the voluntary administration, s 440A(2) of the Corporations Act applies. That section requires that the winding up application be adjourned if the court is of the opinion that it is in the interests of the company's creditors for the company to continue under administration rather than be wound up. 3None of the parties now before me - the plaintiff, the defendant company (represented by its administrator, Mr Woodgate) and the Deputy Commissioner of Taxation (a supporting creditor) - contends that it is in the interests of creditors that the administration continue. The administrator has concluded that the defendant is insolvent and has been in that state since 31 August 2010 and perhaps earlier. There is no remaining business. No deed of company arrangement has been proposed. Winding up is, in the administrator's view, the inevitable fate of the company. 4In these circumstances, there is no basis for concluding that continuation of the administration will serve creditors' interests. Section 440A(2) therefore does not require adjournment of the hearing of the winding up application. 5The plaintiff has presented its evidence in support of winding up. A statutory presumption of insolvency applies because of non-compliance with a statutory demand. No attempt has been made to displace the presumption. The insolvency ground is therefore made out. 6The plaintiff has also proved the advertising and other matters necessary to establish the claim. There will be a winding up order. 7There is then a question as to the choice of liquidator. The plaintiff has filed a consent of Ms Amirbeaggi to act as liquidator. The administrator, Mr Woodgate, has indicated a willingness to act and the defendant has filed an interlocutory process seeking his appointment instead of that of the plaintiff's nominee. He also seeks leave to act. 8In an abstract sense, each potential appointee is suitable and there is no apparent reason at all why either of them should be rejected. In the normal course, it is the practice to appoint the plaintiff's nominee: see, for example, Glenwood Village Pty Ltd v Glen Alpine Constructions Pty Ltd [2009] NSWSC 516. 9Here, however, Mr Woodgate, as administrator, has done substantial work already investigating the position of the defendant, as is evidenced by his report to creditors for the purposes of the administration. That is put forward as a reason for appointing him: see, for example, Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 25 ACSR 167. 10I am satisfied that there will be advantages, including by way of likely costs savings, in appointing Mr Woodgate. I note that his charging rates and those of Ms Amirbeaggi are comparable. Also, it is shown that he is already in touch with a number of creditors. 11It was submitted that the fact that Mr Woodgate had been appointed administrator by the sole director militates against his now being appointed liquidator. Reference was made to Unifor Office Systems Aust Pty Ltd v Brewer Partnership Pty Ltd [1999] NSWSC 137; (1999) 17 ACLC 642. But it must be borne in mind against this that it is the norm, in cases where administration matures into creditors voluntary winding up, for the administrator to become the liquidator unless a positive decision to displace him or her is made by creditors. 12In this particular case, I see no basis for any apprehension of inability on Mr Woodgate's part to act independently and dispassionately. 13There is a technical obstacle to this appointment in that, under s 532(2)(c)(i) of the Corporations Act , a person may not, except with the court's leave, consent to be appointed, and must not act, as liquidator of the company if the person is an officer of the company (other than its liquidator); and, under paragraph (d) of the s 9 definition of "officer", an administrator is an officer. 14For the reasons I have stated, there is a sufficient basis, in this particular case, for the grant of leave under this provision to allow Mr Woodgate to be the liquidator. 15The orders are as follows: 1. Order that Giles Geoffrey Woodgate have leave under s 532(2) of the Corporations Act 2001 to consent to be appointed, and to act as, liquidator of Perfume Empire Pty Ltd (ACN 108 883 325). 2. Order that the said Perfume Empire Pty Ltd be wound up in insolvency. 3. Order that Giles Geoffrey Woodgate, an official liquidator, be appointed liquidator of the said Perfume Empire Pty Ltd. [SUBMISSIONS ON COSTS] 16I make the following additional orders 4. Order that the defendant pay the plaintiff's costs of the proceedings. 5. Order that the defendant pay the Deputy Commissioner's costs also. ********** 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. Decision last updated: 05 May 2011