In the matter of Allfunds Australia Pty Limited [2016] NSWSC 1965

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Allfunds Australia Pty Limited [2016] NSWSC 1965 Hearing dates: Tuesday, 9 February 2016 Date of orders: 09 February 2016 Decision date: 09 February 2016 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Interlocutory process dismissed with costs Catchwords: CORPORATIONS – winding up – winding up in insolvency – creditor's statutory demand – where defendant seeks leave pursuant to (CTH) Corporations Act 2001, s 459S to challenge applicant's standing as creditor and indebtedness – whether application for leave satisfies three main considerations under s 459S – whether there is serious question to be tried as to whether debt exists – misnomer of corporate identity – whether debt claimed was payable – whether bill of costs was given to the company – where no sufficient explanation for delay – where unable to ascertain whether company would be solvent if not indebted – application dismissed Legislation Cited: (CTH) Corporations Act 2001, s 459G (NSW) Legal Profession Uniform Law 2015 (NSW) Legal Profession Act 2004, s 331, s 332A Cases Cited: New South Wales Land and Housing Corporation v Australia and New Zealand Banking Group Limited [2015] NSWSC 176 Category: Principal judgment Parties: Julie Ann Orsini (plaintiff) Allfunds Australia Pty Limited (defendant/applicant) Representation: Counsel: D Elliot (plaintiff) J Johnson (defendant/applicant) File Number(s): 2015/00227426

Judgment (EX TEMPORE) 1. On 29 June 2015, the plaintiff Julie Ann Orsini, a solicitor, served a creditor's statutory demand dated 26 June 2015, addressed to Allfunds Finance Australia Pty Limited ACN 161 707 900, by post to 494 Marrickville Road, Dulwich Hill, demanding a sum of $240,503.36 described in the schedule to the demand. The ACN referred to in the demand is that of the defendant company Allfunds Australia Pty Limited. The registered office at which the demand was served is the registered office of Allfunds Australia Pty Limited. There does not appear to be any company by the name of Allfunds Finance Australia Pty Limited. However, there is a company Allfunds Finance Pty Limited ACN 097 117 658, of which the defendant's sole shareholder, director and secretary Miss Carmel Cappelleri was, until 14 January 2013, a director and at all material times was one of two apparently equal shareholders. Carmel Cappelleri ceased to be a director of Allfunds Finance, as I have said, on 14 January 2013 when one Marisa Cappelleri was appointed director in her place. 2. Allfunds Finance went into voluntary administration on 16 January 2013 when Mr Cvitanovic was appointed administrator. It seems that a deed of company arrangement was entered into on 9 May 2013, and the company ceased to be subject to the deed of company arrangement on 4 August 2015. 3. Following service of the creditor's statutory demand on 29 June 2015, no application was made pursuant to (CTH) Corporations Act 2001, s 459G to set aside or vary the demand. On 4 August 2015, the plaintiff filed an originating process seeking an order that the defendant Allfunds Australia be wound up in insolvency and a liquidator appointed. On 31 August 2015, the defendant Allfunds Australia filed a notice of appearance identifying five grounds of opposition, as follows: 1. there is no available presumption of insolvency under s 459(2)(a) of the Corporations Act 2001 as the creditor's statutory demand for Payment relied upon by the plaintiff was addressed to "Allfunds Finance Australia Pty Limited", a separate legal entity; 2. the plaintiff is not a creditor of the defendant entitled to commence and maintain the present proceeding pursuant to the provisions of s 459P of the Corporations Act 2001; 3. alternatively to paragraphs 1 and 2 above, to the extent that it is necessary to do so, the defendant intends to make an application under the provisions of s 459S of the Corporations Act 2001 to challenge the indebtedness and/or standing of the plaintiff as a creditor of the defendant; 4. subject to the dispute as to standing of the plaintiff as a creditor of the defendant and any indebtedness capable of being recovered, the defendant is solvent; 5. further, and in the alternative, the commencement and maintenance of the present proceeding by the plaintiff constitutes an abuse of the process of the Court in that: 1. the plaintiff is not a creditor of the defendant; 2. any liability that might be due to the plaintiff is a liability due by Allfunds Finance Pty Limited (ACN 097 117 658); 3. requests have been made for the plaintiff to provide to the defendant, by its solicitors, details of relevant invoices and costs agreement relied upon by the plaintiff and they have not been made available. Further grounds will be identified following response to a notice to produce by the defendant; 4. the issue of the relevant creditor's statutory demand for payment and the filing of the originating process relying upon that creditor's statutory demand for payment by the plaintiff is in the circumstances improper, there having been no appropriate disclosure in accordance with the provisions of the Legal Profession Act 2004 or assessment of any relevant costs to or as against the defendant as required by the Legal Profession Act such that the plaintiff is precluded from seeking to recover any costs. 1. By interlocutory process also filed on 31 August 2015, Allfunds Australia seeks leave, pursuant to (CTH) Corporations Act 2001, s 459S, to the extent necessary, to challenge the standing of the applicant as a creditor of the respondent and the indebtedness claimed to be due by the respondent. 2. On an application for leave pursuant to (CTH) Corporations Act 2001, s 459S, there are three main considerations. The first – which is mandatory – is imposed by s 459S(2), which provides that the court is not to grant leave unless it is satisfied that the ground, leave to raise which is sought, is material to proving that the company is solvent. The second – which goes to the discretionary question of whether leave should be granted but is, generally speaking, also regarded as essential – is whether there is a serious question to be tried on the ground, leave to raise which is sought. The third is the adequacy of any explanation for the failure to apply within the time permitted by s 459G to vary or set aside the demand. 3. It is convenient to deal first with whether a serious question to be tried on the grounds sought to be raised has been established. The applicant company bears the onus of showing that there is a serious question to be tried, and adducing evidence to discharge that onus.