In the matter of Salfa Pty Limited (In Liquidation) (ACN 082 308 101) (No 2)

[2014] NSWSC 1907

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Salfa Pty Limited (In Liquidation) (ACN 082 308 101) (No 2) [2014] NSWSC 1907
Hearing dates:	14 November 2014
Date of orders:	14 November 2014
Decision date:	14 November 2014
Jurisdiction:	Equity Division - Duty List
Before:	Brereton J
Decision:	Judgment that third defendant pay plaintiffs $887,338.79
Catchwords:	CORPORATIONS – external administration – winding up – insolvent trading – proof of amount of loss or damages suffered by creditor
Legislation Cited:	(Cth) Corporations Act 2001, s 588G (NSW) Supreme Court (Corporations) Rules 1999 (NSW) Uniform Civil Procedure Rules 2005, Pt 16
Cases Cited:	In the matter of Salfa Pty Limited (in liquidation) (ACN 082 308 101) [2014] NSWSC 1493
Category:	Consequential orders (other than Costs)
Parties:	Angus Carnegie Gordon as liquidator of Salfa Pty Ltd (in liquidation) ACN 082 308 101 (plaintiff) Salfa Pty Limited (in liquidation) ACN 082 308 101 (second plaintiff) Philip Harold Mudge (first defendant) James Joseph Ferry (second defendant) Andrew Bagg (third defendant)
Representation:	Counsel: J Laman (solicitor) (plaintiffs) Solicitors: Colin Biggers & Paisley (plaintiffs) Fortis Law Group (third defendant)
File Number(s):	2011/166361

Judgment (ex tempore)

1. HIS HONOUR: On 31 October 2014 I gave judgment in these proceedings [In the matter of Salfa Pty Limited (in liquidation) (ACN 082 308 101) [2014] NSWSC 1493] in which I concluded that default judgment under (NSW) Uniform Civil Procedure Rules 2005, Pt 16, was not available in respect of proceedings commenced by originating process under the (NSW) Supreme Court (Corporations) Rules 1999, and that the plaintiffs must prove their case by admissible evidence. On the current state of the evidence I was satisfied that the company was insolvent and that there were reasonable grounds to expect that it was insolvent when the ATO debt was incurred from early 2007 onwards, but not when the SCC debt was incurred in September 2004. I was satisfied that the third defendant Mr Bagg had contravened (Cth) Corporations Act 2001, s 588G, in respect of the ATO debt, but not the SCC debt. Accordingly, it seemed that the plaintiffs were entitled to recover the amount of the ATO’s loss or damage in relation to the ATO debt because of the insolvency, but in the absence of evidence as to what, if any, dividend had been or was likely otherwise to be paid, I was unable to be satisfied what, if any, loss had been suffered. The proceedings were adjourned to today to enable the liquidator to consider that judgment and, if so advised, to adduce any further evidence.

2. Today, the liquidator has filed an affidavit of 13 November 2014 in which he deposes to having, in 28 March 2014, made an interim dividend distribution to creditors, including $23,648.81 to the ATO. The liquidator deposes that he does not anticipate paying any further dividend to creditors unless funds are recovered from Mr Bagg. On that basis, he calculates the amount of loss and damage suffered by the ATO as the debt deposed to in his original affidavit of $910,987.60, less the interim dividend, leaving a balance of $887,338.79.

3. In circumstances such as the present, the evidence should not depend upon the bald assertion of the liquidator that no further dividend is likely to be distributed, but should show the basis upon which that assertion is made. The ordinary way of doing that would be to show what the receipts of the liquidation were and what the expenses were and how much remained. In the ordinary way that would be done by providing the liquidator’s statement of receipts and expenditure which should not be a particularly difficult task since the liquidator is required to lodge such statements with the Australian Securities and Investments Commission on a regular basis.

4. That said, in the present case the matter is proceeding ex parte. The defendant has in effect elected not to participate in the proceedings on the merits, while taking jurisdictional points, and there is no challenge to the bare assertions of the liquidator. In those circumstances, though not without reservation, I will act on the liquidator’s evidence, suboptimal as it is.

5. Accordingly, the court gives judgment that the third defendant pay the plaintiffs the sum of $887,338.79. The court orders that the third defendant pay the plaintiffs’ costs.

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