FEDERAL COURT OF AUSTRALIA

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

ORDERS

THE COURT ORDERS THAT:

1.    The applicant be granted an extension of time in which to seek a review of the Registrar’s decision on 18 January 2016.

2.    The order made by Registrar Allaway on 18 January 2016, winding up Cook Islands Christian Church of Australia Limited in insolvency, be set aside.

3.    The originating process be dismissed.

4.    There be no order as to costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

DAVIES J:

1    On 18 January 2016, an order was made that Cook Islands Christian Church of Australia Limited (“the company”) be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth). Jason Glenn Stone was appointed liquidator of the company. The winding up order was made on the application of Mariam Sadiqi, a creditor of the company who relied on the failure of the company to comply with a statutory demand. The company did not attend the hearing of the application to wind up and the order was based upon the presumed insolvency of the company.

2    Application has been made by the creditor for an order that the Registrar’s order be set aside and is supported by an affidavit of Mr Makara, who is a director and chairman of the company. Both the liquidator and the creditor have consented to those orders being made. The application also seeks an extension of time to make the application for review.

3    Mr Makara has put evidence before the Court to show that the company is able to pay all its debts as and when they become due and payable and has arranged for the debt due and owing by the company to the creditor to be paid. Mr Makara has also provided an explanation for why the company did not comply with the statutory demand or attend at the hearing. Mr Makara deposed that the Board was not alerted to the statutory demand or application to wind up until after the wind up order had been made. He deposed that he suspects that the person who received the creditor’s statutory demand on behalf of the company did not understand the legal implication of the statutory demand or of the application to wind up the company. In consequence the company did not obtain legal advice in relation to the winding up until afterwards.

4    The parties have requested that the application be determined on the papers and for the reasons below, I am satisfied that the winding up order should be set aside.

5    The principles guiding the Court’s exercise of power to set aside a winding up order, made in the absence of the company, are usefully set out in George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464. At 465, Hodgson J said that a court will normally set aside a winding up order:

… 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.

The decision in George Ward Steel Pty Ltd v Kizkot Pty Ltd has been followed or applied on many occasions: Turner v Stylewise Security & Glass Pty Ltd (In Liq) [2015] FCA 518 at [12] and the cases cited.

6    Although in this case, the application was not made promptly, it has been consented to by both the creditor and the liquidator, there is evidence of the solvency of the company and an explanation provided (albeit cursory) for the non-compliance with the statutory demand and failure to attend at the hearing for the winding up of the company.

7    An extension of time would appear not to be necessary for an application to set aside the Registrar’s order having regard to r 39.05(a) of the Federal Court Rules 2011 (Cth). Rule 39.05(a) provides:

39.05 Varying or setting aside judgment or order after it has been entered

The Court may vary or set aside a judgment or order after it has been entered if:

(a) it was made in the absence of a party; …

8    However as the parties have sought and consented to an extension of time, I will make the orders sought.

Associate:

Dated:    4 July 2016