In the matter of Jireh Karalae Pty Ltd [2011] NSWSC 1162

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Jireh Karalae Pty Ltd [2011] NSWSC 1162 Hearing dates: Monday, 29 August 2011 Decision date: 29 August 2011 Jurisdiction: Equity Division - Corporations List Before: White J Decision: Order that the interlocutory processes be dismissed with costs. Catchwords: CORPORATIONS - winding up - winding up in insolvency - application to set aside orders winding up the company - no evidence of solvency Legislation Cited: Corporations Act 2001 (Cth) Category: Interlocutory applications Parties: Etihad Airways PJSC (Plaintiff) Jireh Karalae Pty Ltd (Defendant) Representation: O Anderson (Liquidator of Defendant) N Nasr (Secretary of Defendant) Watson Mangioni (Liquidator) File Number(s): 2011/13237

Judgment 1HIS HONOUR: On 17 May 2011 the defendant was wound up on the application of the plaintiff Etihad Airways PJSC Pty Limited. The company was wound up in insolvency. There was evidence before the Registrar that the company had been served with a statutory demand from the plaintiff in which the plaintiff claimed the sum of $102,858.15, being the amount of a judgment debt obtained in the District Court at Parramatta on 10 December 2009, plus interest. 2The originating process against the defendant was filed on 14 January 2011. The defendant filed an appearance. Orders were made for the service of the evidence. 3On 3 May 2011 the Registrar ordered that any application under s 459S of the Corporations Act 2001 (Cth) be filed and served on 10 May 2011 and be returnable on 17 May 2011. No application was filed under s 459S of the Corporations Act , notwithstanding that on 5 April 2011 the defendant had filed a notice of motion in the District Court seeking to have the default judgment entered in favour of the plaintiff set aside. 4The effect of s 459S is that unless an application was made and leave was given under that section, the company was not entitled to oppose the winding-up application on a ground on which it could have relied to set aside the statutory demand. 5On 17 May 2011 the company, as I understand it, was not represented by its solicitor. But I was told that its secretary, Mr Nabil Nasr, appeared for it. The Registrar made the winding-up order. 6On 8 June 2011 Mr Nasr filed an interlocutory process in which he sought the following relief: " Set aside winding-up procedure. " This was evidently an application to set aside the winding-up order made by the Registrar. The application was supported by an affidavit of Mr Nasr who said that he was seeking to set aside the winding-up order. He deposed that "... although the current value of the company is hardly one dollars ... we have another court case against another party who bought airline tickets from us to the value of $817,000 and did not pay the money claiming that those issued were fraud and the airlines such as Etihad and others have denied boarding the passengers at Sydney airport. " 7Thus, the application seems to raise two questions. One is whether moneys were owed to Etihad as claimed in the statutory demand, and secondly, whether the company has a claim against the third party. 8Other material relied upon by Mr Nasr shows that the third party against whom he says the company has a claim is called Future Movement Australia (Tayr Al-Moustaqbal)) Limited ("Future Movement"). 9It seems that proceedings were commenced by the defendant against that company and others by a statement of claim in the Common Law Division of this Court in 2009. The amount of the claim was $811,777. However, that claim was discontinued against all of the defendants on 12 May 2011. I am told by Mr Nasr that the claim was discontinued on the basis that Future Movement agreed to pay to the current defendant's solicitors, Slattery Thompson, an amount of approximately $400,000. 10There is no evidence before me of that agreement. Doubtless it is a matter that the liquidator may wish to pursue. Mr Nasr prepared a statement of affairs. He included in the report as to affairs a sundry debtor of a debt of $817,000 said to be owed by " Future Movement and Middle East Travel ". 11Mr Nasr disclosed the existence of a debt of $134,000 said to be owed to Ali El Hamed. A company search shows that Mr Ali El Hamed is the sole director and shareholder of the company. Mr Nasr also listed three unsecured creditors whose claims were said to be disputed, namely Etihad Airways, the Australian Taxation Office and Westpac Banking Corporation. 12Mr Hillig, the liquidator, deposed that based on his investigations to date, the company has five creditors comprising Etihad Airways, Westpac Banking Corporation, the Australian Taxation Office, the National Australia Bank for a minimal amount, and Mr Ali El Hamed. Curiously, Mr Hillig said that based on his investigations, the debt owed to Etihad Airways amounts to some $67,514.58 plus costs. 13A letter from the solicitor for Etihad Airways of 24 August 2011 suggests that the debt was inclusive of costs and interest. 14This is not an appeal from the making of the winding-up order. If it were, it would not succeed because there is nothing to indicate that the Registrar was in error in making the winding-up order. The presumption of insolvency had been raised by non-compliance with the statutory demand served on the defendant by the plaintiffs. 15Though the Registrar was acting properly in making the winding-up order there is power under r 36.15 and r 36.16 of the Uniform Civil Procedure Rules 2005 for the court to set aside a winding-up order on various grounds. None of those grounds is engaged in the present case. In particular, the order was not made irregularly, illegally or against good faith. Nor was it made in the absence of the defendant. 16Even had there been a ground for setting aside the winding-up order under one of those rules, as the order was regularly obtained, it would be necessary on this application for the defendant to prove that the company was solvent. The applicant's evidence does not establish solvency. 17The other, more usual, way in which a winding-up is brought to an end is by application under s 482 of the Corporations Act for an order staying or terminating the winding-up. Such an application may only be made by a limited class of persons including a creditor of the company or a contributory, that is to say, a shareholder, of the company. Mr Nasr is neither a creditor of the company, nor a contributory. He does not have standing to apply for an order terminating the winding-up. Mr Ali El Hamed would have that standing and though there is evidence that he is supportive of the application being brought by Mr Nasr, the application is Mr Nasr's application and not Mr Ali El Hamed's. Nor is the application expressed to be for an order terminating the winding-up. 18If an application were brought under s 482 it would be necessary for the applicant, by the fullest and best evidence, to establish that the company is solvent and has an excess of assets over liabilities. The evidence on the present application does not show that. 19For these reasons I order that the interlocutory process filed by Mr Nasr on 8 June 2011 be dismissed. I will hear the parties on costs. [Parties addressed on costs.] 20The rules provide that unless the court otherwise orders, costs follow the event. I see no reason to depart from the policy in the rules. 21I order that the interlocutory processes be dismissed with costs. 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: 28 September 2011