Back in January 2015, we published an article which detailed the law surrounding setting aside a winding up order (as distinct from terminating a winding up). The recent case of Sadiqi, in the matter of Cook Islands Christian Church of Australia Limited (in liq) v Cook Islands Christian Church of Australia Limited (in liq) [2016] FCA 786 is another reminder that it is possible to set aside a winding up order.
In Sadiqi, an order was made that Cook Islands Christian Church of Australia Limited (Company) be wound up as a result of a failure to comply with a statutory demand. The Company did not attend the hearing of an application to wind up the Company and it was subsequently wound up.
An application was, some time later, made by the Company’s director to set aside the winding up order.
In considering the application, the Federal Court referred to the case of George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464 which set out the principles guiding the Court’s exercise of power to set aside a winding up order, made in the absence of the company. In that case Hodgson J stated:
“… if an order winding up a company is made in the absence of the defendant company, and an application is brought promptly by the company, with notice being given to the liquidator, to the plaintiff and to any creditor who appeared at the hearing; and if the evidence shows an explanation for the non-appearance at the hearing and indicates solvency of the company; and if there is consent to setting aside, or at least non-opposition; and if the liquidator indicates that nothing in his [or her] investigations to date shows a reason for the company to be stopped from trading, then the court will normally set aside the order.“
In Sadiqi, while the application was not made promptly, both the creditor who obtained the winding up order and the liquidator consented to the winding up order being set aside. In addition, there was evidence of solvency and an explanation was provided for the non-compliance with the statutory demand and failure to attend at the hearing. In the circumstances, the Court set aside the order winding up the Company.
For further information on setting aside a winding up order, please view our previous article detailing applications to set aside winding-up orders or contact us.
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