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Mar 2018

Would the real Applicant please wind-up! – Standing under s 459P of the Corporations Act

In the decision of In the matter of IR Services (Qld) Pty Limited [2017] NSWSC 1823Black J considered who could apply pursuant to section 459P of the Corporations Act 2001 (Cth) (Act) for an order that a company be wound up.

The Plaintiffs, Jason Murray and Robert Maguire, were the executors and trustees of the Estate of Ms Cynthia Marshall (Plaintiffs) and applied under sections 459A and 459P of the Act for an order winding up IR Services (Qld) Pty Ltd (Company). Before her death Ms Marshall was the only director  of the Company.

Given that the Company’s sole director, Ms Marshall, was deceased and there was no-one who could cause the Company to bring the application.  While section 201F(2) of the Act provides for a trustee appointed to manage the estate of a sole director and shareholder (of a company) to appoint a person in their stead, the Plaintiffs pointed out that a properly advised person would unlikely wish to be appointed in circumstances where the Company is likely insolvent.

The Court considered a number of authorities in respect of this issue, including Treadtel International Pty Ltd v Cocco [2016] NSWCA 360 where Barret AJA (with whom Gleeson and Leeming JJA agreed) observed at [84] that:

“Under s 462(2) of the Corporations Act, an application for a winding up order may be made by a person within one of the categories there specified. Application by a person not within any of those categories is not permitted and the court may not order winding up on such an application. That is made plain by s 462(5).”

Black J considered that the same reasoning would apply, by way of analogy, to an application under section 459P of the Act where section 459P(1) specifies the relevant persons and, importantly, section 459P(5) provides that, except as permitted by the section, a person cannot apply for a company to be wound up in insolvency.

After these issues were raised, the Plaintiffs, sought leave to amend the Originating Process to add an additional Plaintiff, Alpha Consulting Group (Norwest) Pty Ltd, which was the Company’s accountant, to apply for the winding up order.

Having regard to the evidence, Black J was satisfied that the Company was, in fact, insolvent, and that a basis for winding up on the just and equitable ground is also established.

The decision serves as a timely reminder of the strict limitations imposed by section 459A and 459P of the Act and that a Court does not have an inherent jurisdiction to wind up a company, outside the statutory jurisdiction.

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