In the matter of Lainson Holdings Pty Ltd (recs and mgrs apptd) [2019] NSWSC 1511

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Lainson Holdings Pty Ltd (recs and mgrs apptd) [2019] NSWSC 1511 Hearing dates: 23 October 2019 Date of orders: 23 October 2019 Decision date: 23 October 2019 Jurisdiction: Equity - Corporations List Before: Black J Decision: Order that the Defendant be wound up. Catchwords: CORPORATIONS – winding up – application for winding up – where receivers and managers were appointed under power contained in instrument relating to circulating security interest in property of company – where appointment occurred within three month period before day winding up application was made – where no evidence of solvency led – whether company should be wound up. Legislation Cited: - Corporations Act 2001 (Cth) Pt 5.4; ss 459C, 459C(2)(c), 459C(3), 459P, 461(1)(k), 467, 467A Cases Cited: - Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) [2011] HCA 18; (2011) 83 ACSR 126 Category: Principal judgment Parties: Duffy Kennedy Pty Ltd (Plaintiff) Lainson Holdings Pty Ltd (recs and mgrs apptd) (Defendant) Parkview Property Services Pty Ltd (Supporting Creditor) Representation: Counsel: A Djurdjevic (Plaintiff) A R R Vincent (Supporting Creditor)

Solicitors: Madison Marcus (Plaintiff) Salim Rutherford Lawyers (Supporting Creditor) File Number(s): 2019/55354

Judgment 1. By Originating Process filed on 19 February 2019 the Plaintiff, Duffy Kennedy Pty Ltd ("Duffy Kennedy") applies for an order that the Defendant, Lainson Holdings Pty Ltd (recs and mgrs apptd) ("Company") be wound up in insolvency under ss 459P and 461(1)(k) of the Corporations Act 2001 (Cth). Section 459P of the Act relevantly provides that, inter alia, a creditor may apply to the Court for a company to be wound up in insolvency. Section 461(1)(k) of the Act provides that the Court may order the winding up of a company if it is of the opinion that it is just and equitable that the company be wound up. It is apparent that the application also proceeds on the basis that the Company is insolvent, and in reliance on a presumption of insolvency in that respect to which I will refer below. A supporting creditor, Parkview Property Services Pty Ltd appeared, although it was not necessary to hear it in the circumstances. The Company had, until today, been represented in the proceedings, but its solicitors today withdrew by leave. 2. Duffy Kennedy relies, in support of the winding up application, on the affidavit of its solicitor, Mr Getta affirmed on 19 February 2019, although Mr Djurdjevic, who appears for Duffy Kennedy, fairly drew to my attention that it was not dated. Mr Getta there annexes, inter alia, a search of the records maintained by the Australian Securities and Investments Commission ("ASIC"), which was undertaken within the seven days prior to the commencement of the winding up application. That search relevantly discloses the appointment of receivers and managers to the Company, notice of which was given on 6 December 2018, and who it appears were in fact appointed on 5 December 2018. That is relevant to the presumption of insolvency to which I will refer below. 3. Duffy Kennedy reads an affidavit of service of Mr Thurston sworn 25 February 2019, which records service of the Originating Process, affidavit in support and its exhibit on the Company, by leaving them at its registered office address. While the documents are not, as Mr Djurdjevic points out, annexed or exhibited to the affidavit of service, they were plainly described and there is no doubt from the affidavits that they were served, or that the Company had notice of this application, so far as it has previously appeared in the proceedings. 4. Duffy Kennedy in turn relies on the affidavit dated 20 March 2019 of its director, Mr Duffy, to establish its standing to bring the application. Mr Duffy there refers to the fact that the Company was indebted to Duffy Kennedy in a substantial amount, which is the subject of a judgment debt and, as at the date of the affidavit, remains indebted to Duffy Kennedy both in respect of that amount, and in respect of a further judgment debt, with an adjustment for an amount recovered by way of a garnishee order. By further affidavit dated 20 March 2019, Mr Getta in turn gives evidence of compliance with the requirement of giving notice of this application to ASIC and of causing a notice of the winding up application to be published on ASIC's Insolvency Notices website. 5. A further affidavit dated 17 October 2019 of Ms Boler refers to a further publication of the notice of the winding up application on ASIC's Insolvency Notices website. Mr Djurdjevic fairly points out that that publication occurred less than seven days prior to the hearing, but also fairly points out that notice of the winding up application had already previously been given. 6. A Consent of Liquidator is in evidence, in respect of Mr Nicodemou, who indicates that he is not aware of any conflict of interest or duty that would make it improper for him to act as liquidator. By further affidavit of Mr Duffy dated 18 October 2019, he confirms that the Company remains indebted to Duffy Kennedy in a substantial amount. By a further affidavit of service of Ms Boler dated 18 October 2019, she refers to service of the Consent of Liquidator upon the solicitors then acting for the Company, although they have ceased to act today in the circumstances to which I have referred above. A company search of the Company undertaken on 23 October 2019 was also tendered, and reconfirmed the position that receivers and managers were appointed to the Company, and records their appointment date as 5 December 2018, as I have noted above. 7. Mr Djurdjevic, in submissions, points to the reliance of Duffy Kennedy on the presumptions available under s 459C of the Act. Section 459C relevantly provides that, in an application under, inter alia, s 459P of the Act, the Court must presume that a company is insolvent if, during the three months ending on the day when the application was made, a receiver or receiver and manager was appointed under a power contained in an instrument relating to a circulating security interest in property of the company or an order was made for the appointment of a receiver or receiver and manager for the purpose of enforcing such a security interest. Here, as I have noted, there is evidence of the appointment of receivers and managers, within the three months preceding the commencement of the winding up application, so that presumption arises. Mr Djurdjevic, in submissions, points to the fact that the relevant appointment was an appointment under a power contained in a General Security Agreement so that it falls, relevantly, within s 459C(2)(c) of the Act. Section 459C(3) provides that presumption operates unless the contrary is proved. Here, the Company has had the opportunity to lead evidence of solvency, and the Court has extended the time for it to do so on several occasions, but ultimately no such evidence has been led so as to seek to establish the contrary of that presumption. The effect of the presumptions which arise under s 459C of the Act was noted by the High Court of Australia in Australian Securities and Investments Commission v Lanepoint Enterprises Pty Ltd (recs and mgrs apptd) [2011] HCA 18; (2011) 83 ACSR 126 at 128, where the High Court referred to, in particular, the presumption under s 459C(2)(c), and noted that the statutory presumptions under that section are an important element of the scheme of Pt 5.4 of the Act. 8. In these circumstances, the statutory resumption of insolvency arises, as I have noted above. It has not been rebutted, where the Company has not served evidence of its solvency. The formal matters necessary for a winding up have been satisfied, and, to the extent that any of the matters raised by Mr Djurdjevic may amount to anything less than strict compliance with those matters, they would plainly be of a character that would not prevent the making of the winding up order, under s 467 or s 467A of the Act. 9. In these circumstances, I am satisfied that the orders sought by the Plaintiff should be made. I therefore make the following orders: 1. Order that the Defendant, Lainson Holdings Pty Ltd (recs and mgrs apptd) be wound up under the Corporations Act 2001 (Cth). 2. Order that Mr Costa Nicodemou be appointed as liquidator of the Defendant. 3. Order that the costs of the Plaintiff, Duffy Kennedy Pty Ltd, and of the supporting creditor, Parkview Property Services Pty Ltd, of and incidental to the winding up application be costs in the winding up.