Supreme Court New South Wales Medium Neutral Citation: In the matter of TMPL Pty Limited (in liquidation) [2012] NSWSC 1059 Hearing dates: 6 August, 3 September 2012 Decision date: 06 September 2012 Jurisdiction: Equity Division - Corporations List Before: Black J Decision: The winding up of the Defendant be terminated. Catchwords: CORPORATIONS - Winding up - Termination - Power of court to terminate winding up - Attitude and interests of creditors, liquidator and contributories - Whether termination is in the public interest and the company is solvent - Whether any non-compliance with statutory duties and circumstances leading to wind up explained. Legislation Cited: - Corporations Act 2001 (Cth) s 482 - Evidence Act 1995 (NSW) s 91 Cases Cited: - Anderson v Palmer [2002] NSWSC 192 - Apostolou v VA Corporation of Australia Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84 - Deputy Commissioner of Taxation v TMPL Pty Ltd (subject to deed of company arrangement) (No 3) [2011] FCA 1403; (2011) 289 ALR 69 - Mercy & Sons Pty Ltd v Wanari Pty Ltd [2000] NSWSC 756; (2000) 35 ACSR 70 - Prendergast v Rolcross Pty Ltd (in liq) [2008] NSWSC 146 - Re Kitchen Dimensions Pty Ltd (in liq) [2012] VSC 280 - Re SWL Group Pty Ltd (in liq) [2010] NSWSC 797 - Re Warbler Pty Ltd (1982) 6 ACLR 526 - Re Yelin Group Pty Ltd [2012] NSWSC 74 - Vero Workers Compensation (NSW) Ltd v Ferretti Pty Ltd [2006] NSWSC 292; (2006) 57 ACSR 103 Category: Principal judgment Parties: Triguboff GP Pty Limited (Plaintiff) TMPL Pty Limited (in liquidation) (Defendant) Representation: Counsel: S. Golledge (Plaintiff) Solicitors: Kemp Strang (Plaintiff) File Number(s): 12/222047 Judgment 1By application filed on 6 August 2012, Triguboff GP Pty Limited ("TGP") applies for an order that the winding up of TMPL Pty Limited (in liq) ("Company") be terminated under s 482 of the Corporations Act 2001 (Cth). That section relevantly provides that, at any time during a company's winding up, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order. Factual background 2The application is supported by affidavits of Mr Michael Triguboff dated 16 July 2012 and 3 September 2012. Mr Triguboff is the sole director of the Company. The application is also supported by affidavits of the liquidator of the Company, Mr Max Donnelly ("Liquidator") dated 18 July and 3 August 2012; and by affidavits of Mr Ross Newcombe dated 3 September 2012 and Mr Peter Harrison also dated 3 September 2012. 3By way of background, the Company was incorporated in April 1994. All of the shares in the Company are held by TGP which, on Mr Triguboff's evidence, is the general partner in a limited partnership in which the other partners are Mr Triguboff and his wife. Mr Triguboff's evidence is also that: * The Company's principal business was to provide administrative and management services to companies and entities controlled by Mr Triguboff ("Triguboff Group"). * The Company also provided consulting services to parties outside the Triguboff Group in which he, or members of the Triguboff Group, had a financial interest and had made investments in shares, art work and film production, through its ownership of shares in another entity, Pitch Black Pty Limited. * The Company's operations were principally funded by fees charged to other entities in the Triguboff Group to which administration and management services were provided. Investments made by the Company were typically financed by loans made to the Company by other members of the Triguboff Group, typically on an 8 year term, with no interest being payable. 4Administrators were appointed to the Company on 1 July 2009. The Company entered into a deed of company arrangement on 7 August 2009; that deed of company arrangement was subsequently set aside by an order made by the Federal Court of Australia and Mr Donnelly was appointed as liquidator. The Deputy Commissioner of Taxation was then the Company's major creditor and claimed to be owed a substantial amount arising out of two assessments of income tax. The Company's objection to the first of those assessments was subsequently upheld by the Administrative Appeals Tribunal. The Liquidator did not proceed with the Company's objection to the second assessment. 5On 29 June 2012, the Liquidator, Mr Triguboff and the Deputy Commissioner of Taxation entered into a deed of settlement and a settlement sum and the Liquidator's costs to date were paid on the exchange of the deed. Clause 4 of the deed provides that it is in full and final settlement of the Company's then tax liabilities and the Deputy Commissioner of Taxation has withdrawn its proof of debt lodged in the liquidation and consents to this application to terminate the Company's winding up. The former administrators have also released their claims against the Company in respect of costs and the Company's other creditors have also released claims against it. 6Mr Triguboff's evidence is that the Company lodged its tax returns annually and has, since incorporation, met its tax liabilities and liabilities to its trade creditors, other than in respect of the matters arising from the two tax assessments to which I referred above. His evidence is that the Company's only substantial liabilities have been to other members of the Triguboff Group in respect of loans made by them and a loan from a third party lender, which was repaid in full in June 2008. The Company did not rent premises and it had no employees other than Mr Triguboff. 7Mr Triguboff's evidence is that, if the Court terminates the winding up, his intention is that the Company will resume its former business of providing administrative and management services to the Triguboff Group and its operations will continue to be funded by administrative fees paid by other members of that group. Mr Triguboff will be employed by the Company at a specified salary. Mr Triguboff has deposited a sum of money into the trust account of the Company's solicitors, to be gifted to the Company as working capital to fund its operations for the foreseeable future. His evidence is that he does not have present plans for the Company to make investments but, if it were to do so, those investments would be funded by the Company entering new loan agreements with other members of the Triguboff Group on substantially the same terms and conditions as previously. Mr Triguboff intends that the Company will continue to lodge income tax returns on an annual basis and meet liabilities to the Deputy Commissioner of Taxation in respect of tax which may accrue from profits earned by the Company on investments and to its trade creditors. 8Mr Newcombe has been the Company's external accountant since 2007 and his evidence is that he is familiar with the Company's business. His evidence confirms Mr Triguboff's account of the Company's business and of its revenue and expenditures. Mr Newcombe has prepared a draft cash flow for the Company for the period commencing September 2012 and ending on 31 December 2013, on the assumption that the Company will continue to conduct its business consistent with its previous business model and that the pattern of past income and expenditures will continue in the period from September 2012 to December 2013. Mr Newcombe gives evidence that, in his opinion, the insurance, accounting and other expenses included in the cash flow he has prepared are reasonable, given the size and scope of the Company's operations and that, on the basis of the working capital provided by Mr Triguboff, his view is that the Company will have sufficient resources immediately available to enable it to meet virtually all of the costs and expenses which might be expected to be incurred in the first year of its operations, even if no money is earned from its activities. 9Three further matters should be noted. Although the administrators were appointed in the context of disputed tax assessments and the deed of company arrangement in respect of the Company was set aside on the application of the Deputy Commissioner of Taxation, the Deputy Commissioner of Taxation does not (as I noted above) oppose a termination of the winding up and has not expressed any concern that the Company might not meet its income tax obligations in the future. Nor has the Liquidator identified any matters that might provide a reason not to terminate the winding up. Notice of this application was given to the Australian Securities and Investments Commission ("ASIC") on 20 July 2012 and ASIC has not opposed the application. Legal principles 10The Court's power to make an order terminating a winding up under s 482 of the Corporations Act is discretionary and a person who seeks such an order must establish that the order is appropriate even when the liquidator consents to it. Relevant factors include the attitude and interests of creditors including future creditors whose interests might be prejudiced if the Company were released from winding up; the interests of the liquidator, particularly with regard to costs; the interests of contributories, so that a stay or termination will not generally be granted unless each member of the company either consents to it or is bound not to object to it or his or her rights are properly secured; and the public interest, including matters of commercial morality, whether all the company's debts have been discharged; the company's current trading position and general solvency; and any explanation for any non-compliance with statutory duties and of the circumstances leading to the winding up: Re Warbler Pty Ltd (1982) 6 ACLR 526; Mercy & Sons Pty Ltd v Wanari Pty Ltd [2000] NSWSC 756; (2000) 35 ACSR 70 at [47]ff; Anderson v Palmer [2002] NSWSC 192 at [6]; Vero Workers Compensation (NSW) Ltd v Ferretti Pty Ltd [2006] NSWSC 292; (2006) 57 ACSR 103 at 17; Re Yelin Group Pty Ltd [2012] NSWSC 74 at [8]-[11]. 11In Prendergast v Rolcross Pty Ltd (in liq) [2008] NSWSC 146, White J directed attention to the question: "... whether it appears that it would be, or may be, contrary to the public interest if the company were permitted to resume operations. In a case such as the present where all of the shares are held by the plaintiff, the public interest means primarily the interests of existing and future creditors." In Re SNL Group Pty Ltd (in liq) [2010] NSWSC 797 at [24], Bergin CJ in Eq observed that: "it is clear that in determining whether to terminate the winding up of a company, it is usual that the most significant matter for consideration is the solvency of the Company. The other considerations, such as the extent of the creditors, the status of the debts and the nature of the company's business will be taken into account in determining whether the company has returned to, or will be returned to solvency." In Apostolou v VA Corporation of Australia Pty Ltd [2010] FCA 64; (2010) 77 ACSR 84 at [58], Finkelstein J noted that there may be exceptional cases where a stay of a company's winding up would not be granted when the company was solvent, but noted that such an order would usually be made if all the creditors are paid out, the liquidator's costs and expenses are covered and the members agree; see also Re Kitchen Dimensions Pty Ltd (in liq) [2012] VSC 280. 12In the present case, the Company's existing creditors do not oppose the termination of the winding up; the interests of future creditors have, in my view, been adequately addressed by the provision of working capital to the Company in the manner I have noted above; the interests of the Liquidator have been addressed; and the applicant for termination of the winding up is the Company's sole shareholder. There is no suggestion of any lack of diligence in the Company's previous corporate governance or any failure to lodge requisite statutory returns with ASIC or income tax returns with the Deputy Commissioner of Taxation. To the extent that the disputed tax assessments led to the Company being placed in administration, the Company's successful application to the Administrative Appeals Tribunal suggests its position as to the first assessment was well founded and its position as to the second is now resolved by the deed of settlement. 13I have had regard to the decision of Perram J in Deputy Commissioner of Taxation v TMPL Pty Ltd (subject to deed of company arrangement) (No 3) [2011] FCA 1403; (2011) 289 ALR 69, where his Honour set aside the deed of company arrangement, although I have also been conscious that his Honour's observations as to factual matters are not evidence in this application by reason of s 91 of the Evidence Act 1995 (NSW). So far as his Honour considered that certain matters warranted the termination of the deed of company arrangement and the appointment of the Liquidator, that took place and the Liquidator does not oppose the reinstatement and has not raised any matter adverse to the application to terminate the winding up for consideration by the Court. 14In these circumstances, I am satisfied that this is a proper case in which to make an order that the winding up of the Company be terminated. 15Accordingly, I make the following order: 1. An order pursuant to s 482 of the Corporations Act 2001 (Cth) that the winding up of the Defendant, TMPL Pty Limited (in liquidation) be terminated with effect from the date of this order. ********** 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: 07 September 2012