FEDERAL COURT OF AUSTRALIA

Sebie v ENA Development Pty Ltd (in liquidation) (Receiver Appointed), in the matter of ENA Development Pty Ltd [2023] FCA 2

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff’s application made on 6 January 2023 for a stay of the winding up of the first defendant be dismissed.

2.    The plaintiff pay the defendants’ costs of that application.

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

REASONS FOR JUDGMENT

GOODMAN J

Introduction

1    These reasons for judgment deal with an application made by Mr Robert Sebie (the plaintiff) on an urgent basis during the afternoon and evening of Friday, 6 January 2023. The plaintiff sought an order under s 482 of the Corporations Act 2001 (Cth) staying the winding up of the first defendant (ENA) until the hearing of an application filed in this Court by the plaintiff for the review of a decision of a Registrar of this Court refusing to terminate the winding up of ENA.

2    For the reasons developed below, the application is refused with costs.

Background

3    ENA was placed into liquidation on 27 January 2022, by an order of Black J of the Supreme Court of New South Wales: In the matter of ENA Development Pty Ltd [2022] NSWSC 54.

4    On 21 October 2022, Black J delivered several judgments dealing with matters arising from the liquidation of ENA including, at paragraphs [32] to [44] of In the matter of ENA Development Pty Ltd (in liq) [2022] NSWSC 1478, an application by the second defendant to this proceeding, namely the liquidator of ENA, for possession of a property at Homebush. His Honour acceded to that application on the basis that ENA was the registered owner of the Homebush property and was entitled to possession of it in circumstances where no third party established a right to possession. Orders were made for the liquidator to have possession of the Homebush property.

5    On 26 October 2022, the plaintiff commenced this proceeding by filing an Originating Process. The primary relief sought was an order pursuant to s 482(1) of the Act, that the winding up of ENA be terminated or stayed indefinitely.

6    On 16 November 2022, Registrar Segal made a series of orders including an order dismissing the Originating Process.

7    On 6 December 2022, the plaintiff filed an Interlocutory Process. The primary relief sought is a review of the orders made by Registrar Segal on 16 November 2022. On 22 December 2022, the Interlocutory Process was set down for hearing on 13 February 2023.

8    On Friday 6 January 2023, an application by the plaintiff to set aside a writ of possession of the Homebush property due to be exercised on Monday, 9 January 2023, was heard by Ierace J of the Supreme Court of New South Wales. Following a hearing which commenced at 10:00 am and concluded shortly after 4:00pm, his Honour dismissed the application. Shortly after the dismissal of that application, the plaintiff approached this Court on an urgent basis seeking the order described at [1] above.

9    At the hearing before this Court the plaintiff represented himself. The evidence upon which he relied comprised affidavits affirmed by him on 6 December 2022 and 4 January 2023 (the latter being an affidavit apparently relied upon in the hearing before Ierace J); a tender bundle comprising 93 pages; a document titled “Independent Auditor’s Report” which was in the form of an unsigned witness statement of Mr George Mawad of Mawad & Younan, Chartered Accountants dated 17 November 2022 and which attached as Annexure A thereto a document titled “Report on the Financial Report & Solvency” apparently signed by Mr Mawad; and a draft document apparently prepared by Polemic Forensic Accountants titled “Report Pertaining to Assessment of Solvency of ENA Development Pty Ltd”. The liquidator, who was represented by Mr Rose of counsel, did not adduce any evidence at the hearing.

10    On Saturday, 7 January 2023 I granted leave to the liquidator to file short written submissions as to whether the plaintiff has standing to bring his application, and for the plaintiff to file short written submissions in response. I refused an application by the liquidator to file a summary of evidence read in other proceedings in the Supreme Court of New South Wales and an affidavit concerning the plaintiff’s purported residence at the Homebush property. The liquidator filed his further submissions on 7 January 2023 and the plaintiff filed his further submissions in response on Sunday, 8 January 2023.

Consideration

11    Section 482 of the Act provides in so far as is presently relevant:

482    Power to stay or terminate winding up

(1)    At any time during the winding up of a company, the Court may, on application, make an order staying the winding up either indefinitely or for a limited time or terminating the winding up on a day specified in the order.

(1A)    An application may be made by:

(a)    in any case—the liquidator, or a creditor or contributory, of the company; or

…

12    As is apparent, s 482 of the Act provides the Court with a discretion, which may be exercised at any time during the winding up of a company upon the making of an application by particular persons, to make an order staying that winding up (either indefinitely or for a limited time) or terminating that winding up.

Standing

13    The threshold question is whether the plaintiff has standing under s 482 of the Act to bring the application. The effect of s 482(1A)(a) in the present case is that the plaintiff must be either a creditor or a contributory of ENA.

14    In his submissions, the plaintiff did not contend that he was a creditor of ENA and prior to his written submissions in reply contended that ENA had only one creditor, Mr Pham, who served a statutory demand upon ENA which ultimately led to the order made on 27 January 2022 appointing the liquidator. There is evidence in a statutory report to creditors prepared by the liquidator suggesting that ENA has other creditors, but the plaintiff is not there identified as a creditor.

15    “Contributory” is defined in s 9 of the Act , in so far as is presently relevant, as follows:

contributory means:

(a)    in relation to a company (other than a no liability company):

(i)    a person liable as a member or past member to contribute to the property of the company if it is wound up; and

(ii)    for a company with share capital—a holder of fully paid shares in the company; and

(iii)    before the final determination of the persons who are contributories because of subparagraphs (i) and (ii)—a person alleged to be such a contributory; and

…

16    There is no evidence that the plaintiff is a contributory of ENA. In this regard, a “Current & Historical Organisation Extract” obtained from the Australian Securities and Investments Commission which is in evidence records that as at the date of the appointment of the liquidator the plaintiff had formerly been, but was not then, a member of ENA. This is consistent with the plaintiff’s affidavit evidence. Further a statutory report of the liquidator includes a list of the members of ENA but does not include the plaintiff.

17    In the plaintiff’s further written submissions in reply to the liquidator’s submissions concerning the plaintiff’s standing, the plaintiff raised several new points:

(1)    first, he contended that his mother Rose Sebie (Mrs Sebie) is a creditor of ENA and that she is entitled to bring the application. The contention that Mrs Sebie is a creditor is inconsistent with the plaintiff’s earlier submissions that Mr Pham was the only creditor of ENA but it appears that a proof of debt has been lodged in her name. However, there is no application by Mrs Sebie for the urgent relief sought – the hearing was conducted on the basis that the plaintiff was the moving party and no mention was made of Mrs Sebie being a creditor of ENA until the plaintiff’s written submissions in reply. Further, Mrs Sebie is not a party to the proceeding, following the orders made by Registrar Segal and in any event no application was made on this application for the plaintiff to have leave to represent her on this application;

(2)    secondly, he contended that Enterprise ICT Pty Ltd, which is a company under his control, is also a creditor of ENA and seeks to be added to the proceeding. Again, the proposition that there is another creditor of ENA is contrary to the plaintiff’s earlier submission but it appears that it has lodged a proof of debt. However, as noted above, the hearing was conducted on the basis that the plaintiff was the moving party and no mention was made of Enterprise ICT being a creditor of ENA until the plaintiff’s written submissions in reply. Further, Enterprise ICT is not a party to the proceeding and no application for its joinder was made during the hearing. A further impediment is that Enterprise ICT as a company is required by r 4.01 of the Federal Court Rules 2011 to be represented by a lawyer unless there has been dispensation from the operation of that rule. No appearance has been filed by a lawyer and no application for dispensation from the rule has been made or granted; and

(3)    thirdly, he contended that he was a “contributor” because he provided funds for the purchase of the Homebush property and because he is prepared to pay the debt the subject of the statutory demand and the liquidator’s fees if required; and that Mrs Sebie and Enterprise ICT are also “contributors” (for reasons unexplained, but which I infer relate to the amounts which they claim to be owed by ENA). These submissions proceed upon a misunderstanding of the concept of a “contributory”, which concept is defined in s 9 of the Act as extracted at [15] above. There is no evidence that the plaintiff, Mrs Sebie or Enterprise ICT are contributories and if there were evidence that the latter two were contributories, the impediments identified in the previous two sub-paragraphs would nevertheless remain.

18    As the plaintiff is neither a creditor nor a contributory of ENA, he lacks standing to bring the application and it follows that the Court’s discretion under s 482 of the Act is not enlivened and that the application must be dismissed.

Other matters

19    In any event, I would not have exercised the discretion so as to grant the application, for the following reasons which, in the circumstances, may be briefly stated.

20    I am not satisfied, on the evidence before me, that the plaintiff has even reasonable prospects of succeeding in his application for the Court, upon review of the decision of Registrar Segal, to make an order staying or terminating the winding up, in view of the matters that inform the exercise of the discretion under s 482 of the Act: see In the matter of Sails Corp Pty Ltd [2021] NSWSC 1241 at [19] and the authorities there cited.

21    Further, there are significant discretionary reasons weighing against the grant of the relief sought by the plaintiff. First, Black J made an order for possession on 21 October 2022 for the liquidator to have possession of the Homebush property. Thus, the prejudice that the plaintiff asserts would flow from the execution of the writ of possession is a matter that has been known by the plaintiff since that date. Yet, there is no adequate explanation as to why the application before Ierace J or the present application were not brought earlier.

22    Secondly, it is clear that this application is in substance a second attempt to obtain a stay of the writ of possession, albeit by a different means. It followed immediately upon the dismissal of the application brought before Ierace J and the plaintiff explained that the urgency of the application to this Court was the imminent execution of the writ of possession. Several important matters are unexplained: (1) whether a stay of the winding up was sought before the Supreme Court of New South Wales as part of the application to stay the writs, and if this was not done, why it was not done; and (2) why the plaintiff did not seek from the Court of Appeal of the Supreme Court of New South Wales leave to appeal the decision of Ierace J and interim relief. The bringing of a second proceeding in a different court on what is in substance the same subject matter should be discouraged, particularly given the risk of inconsistent findings and the deployment of public resources involved: see Jemmott v ENA Development Pty Ltd (in liq) (Receiver Appointed) [2022] FCA 1134 at [44] (Halley J).

Conclusion

23    For the above reasons, the application should be dismissed. Costs should follow the event. I will make orders accordingly.

Associate:    

Dated:    9 January 2023