Federal Court of Australia

Nano v Sound Advice Australia Pty Ltd [2026] FCA 1608

ORDERS

THE COURT ORDERS THAT:

1. Pursuant to s 472(2) of the Corporations Act 2001 (Cth), Aaron Torline of Slaven Torline Chartered Accountants, Level 3, 23 Challis Street, Dickson ACT 2602, is appointed as provisional liquidator of the first defendant (the Company) pending the making of a winding up order or until further order.

2. The provisional liquidator shall have, in respect of the Company, all the powers that a liquidator of a company would have pursuant to ss 472(3) and (4), 477 and 436B of the Act and, without limiting the foregoing, the powers to:

(a) carry on the business of the Company, including by entering into contracts, paying wages and employee entitlements, and dealing with suppliers and credit accounts;

(b) take possession of, get in, collect and protect the property, books and records of the Company, wherever held and in whatever form, including electronic records, email accounts, cloud storage, software licenses and access credentials;

(c) take control of and operate the Company’s bank accounts (including operating, opening and closing any accounts) and manage its financial affairs;

(d) investigate the Company’s affairs, property, business and financial position and report to the Court on those matters (see Order 3 below);

(e) appoint solicitors, accountants, valuers, agents or other professionally qualified persons to assist the provisional liquidator;

(f) delegate to the provisional liquidator’s partners, employees and agents any matter that can be more conveniently done by them;

(g) commence, continue, defend, discontinue or compromise any proceeding in the name of and on behalf of the Company;

(h) compromise any debt, claim or liability of or against the Company;

(i) make any application to any court, tribunal or regulatory agency for the purposes of exercising any of the foregoing powers; and

(j) do any other act or thing the provisional liquidator considers necessary or desirable for the purposes of the provisional liquidation.

3. The provisional liquidator may, without the need for any further direction of the Court, investigate the affairs of the Company as the provisional liquidator thinks fit, and to report to the Court on those matters, including (without limitation):

(a) the financial position and solvency of the Company, and the date (if any) on which it became insolvent;

(b) the business, property, affairs and dealings of the Company, and any transaction to which the Company is or has been a party;

(c) the conduct of each current and former director, officer and member of the Company, including all loan accounts and all dealings between the Company and any director, member or their associates;

(d) whether the Company has proper financial records;

(e) wages, employee entitlements, superannuation, PAYG withholding and other taxation liabilities of the Company;

(f) the Company’s supplier and credit arrangements, including any guarantee given or withdrawn in respect of them;

(g) any claim available to the Company against any person, including any director, officer or member;

(h) any suspected contravention of the Act or any other law by the Company or any of its directors or officers; and

(i) any other matter the provisional liquidator considers relevant.

4. Within 28 days of these orders, the provisional liquidator is to provide a report to the Court and the parties on:

(a) the matters referred to in Order 3 herein, so far as investigated;

(b) the financial position of the Company; and

(c) whether, in the provisional liquidator’s opinion, the Company should be wound up, placed into administration, sold as a going concern, or continue to trade.

5. The provisional liquidator shall have liberty to provide any part of the report to the Court on a confidential basis where disclosure to the parties may prejudice any claim or investigation.

6. The provisional liquidator’s remuneration and expenses be paid from the Company’s assets, subject to further order of the Court and determination in accordance with Division 60 of Schedule 2 to the Act.

7. The proceedings be referred to the National Operations Registrar for allocation to a docket judge.

8. Costs reserved.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

YOUNAN J:

1 I am satisfied that it is appropriate to make the interlocutory orders sought in the originating application filed on 22 October 2026 (i.e., proposed orders 5 to 11), pursuant to s 472(2) of the Corporations Act 2001 (Cth).

2 The interim relief sought by the plaintiff, a director of the first defendant (the Company), concerns the appointment of a registered provisional liquidator, and ancillary orders. Mr Aaron Torline of Slaven Torline Chartered Accountants has consented to be appointed, and to act, in that capacity.

3 The final relief sought concerns the winding up of the Company and the appointment of Mr Torline as liquidator. The Company currently employs 15 employees.

4 On the evidence before me, the plaintiff has a reasonable prospect of obtaining a winding up order in respect of the Company on the just and equitable ground under s 461(1)(k) of the Corporations Act: see Australian Securities Commission v Solomon (1996) 19 ACSR 73 at 80 (Tamberlin J).

5 Further, that evidence demonstrates good reason for intervention prior to the final hearing of the winding up application: see Krejci (liquidator) v Panella, in the matter of Richmond Lifts Pty Ltd (in liq) [2025] FCA 151 at [55] (Cheeseman J). To that end, I note that the plaintiff (through his counsel) has proffered the usual undertaking as to damages.

6 As there is significant overlap in the factors that serve both considerations, I will address the factors collectively.

7 First, the evidence suggests a breakdown in the relationship of the Company’s two directors (being the plaintiff and Mr Norman Korte, who recently resigned as an employee of the Company).

8 The “deadlock”, as it is described by the plaintiff, is demonstrated in the ‘inability’ of the Company to appear at the hearing (i.e., represented by its two directors), reflecting in turn the inability of its two directors to agree on the management of the Company’s financial affairs: cf. Riviana (Aust) Pty Ltd v Laospac Trading Pty Ltd (1986) 10 ACLR 865 at 866 (Young J).

9 It is evident that Mr Korte does not enjoy the confidence of his co-director for reasons that the plaintiff outlines in his affidavit of 21 October 2026, including for reasons that post-date Mr Korte’s resignation as an employee of the Company. It is also evident from the correspondence I have examined in the affidavit (of service) of Mr Sheffield affirmed on 26 October 2026 from Mr Korte’s legal representative, specifically the email correspondence of 23 October 2026, that those misgivings are mutual.

10 Indeed, that same correspondence from Mr Korte’s legal representative suggests efforts on the part of Mr Korte to have an external administrator appointed.

11 Second, the evidence supports the plaintiff’s “serious concerns” as to the financial position of the Company.

12 Those concerns relate primarily to certain taxation liabilities. The most recent notice of the Australian Taxation Office demanded payment of $931,115.26 by 11 September 2026. To date, that amount has not been paid. This raises a question as to the Company’s present ability to acquit that liability.

13 The plaintiff’s concerns also relate to the provision, and differences in the reporting, of loans (from the Company) to the second defendant and to Mr Korte, as well as to the plaintiff.

14 Those concerns are exacerbated by the plaintiff’s claims of previously limited access to the Company’s financial accounts. Notwithstanding the recent grant of full access, the plaintiff claims to be presently unable to verify the accuracy of those accounts.

15 The plaintiff has further concerns regarding:

(1) the present ability of the Company to pay its debts as and when they fall due;

(2) the exposure to liability (of the Company and personally as a director) in continuing to trade; and

(3) the protection of the Company’s assets, and concerns as to the diversion of those assets by the Company’s other director and his son.

16 Third, the appointment of a provisional liquidator will allow the necessary investigations into the Company’s financial affairs to be carried out: see Krejci at [56].

17 As indicated, a consent to act by the proposed (provisional) liquidator has been provided to the Court.

18 Fourth, I am satisfied that the orders for service on the defendants made by Stewart J on 22 October 2026, were complied with, as affirmed in the affidavit (of service) of Mr Sheffield affirmed on 26 October 2026, and that the defendants have been given notice of the application.

19 While the defendants did not appear at the hearing of the interlocutory application, the Court has been informed that the other director, Mr Korte, and the second defendant, do not oppose the application (subject to any order as to costs against them, which was not sought by the plaintiff).

20 The email correspondence from Mr Korte’s legal representative of the 23 October 2026, indicates Mr Kortes’ consent to the final orders sought, save as to the question of costs. That is not in issue today, but it reinforces the mutual desire for external administration. The so-called ‘inability’ of the first defendant (i.e., the Company) to appear also reinforces the “deadlock” or “paralysis” of which the plaintiff speaks.

21 The second defendant is the holder of a share in the Company. The other shareholder is the plaintiff. Like the first defendant, the second defendant did not provide any evidence or submissions in relation to the relief sought.

22 For completeness, I note also that the plaintiff has notified the Australian Securities and Investments Commission of this proceeding on 22 October 2026, with no substantive response to date.

23 In view of the foregoing, I will exercise my discretion to make the interim orders sought by the plaintiff.

Associate:

Dated:    27 October 2026