In the matter of Wise & Young Pty Ltd; In the matter of Wyse Partners Pty Ltd; In the matter of Wolgan Consulting Pty Ltd; In the matter of Defined Property Group Pty Ltd (No 2)

HER HONOUR: Before the Court are four applications by the Commissioner of Fines Administration, Revenue NSW (Revenue NSW) to appoint a liquidator to four companies in respect of unpaid traffic fines totally some $301,213 arising from 276 traffic fines issued since 2015. Four issues arise:

In October 2011, Wise & Young Pty Limited was incorporated. It carried on business as a corporate lender of finance. Since incorporation, George Dimitriou has been the sole director and secretary of the company. His address as notified to the Australian Securities and Investments Commission (ASIC), was in Kenthurst, New South Wales. At the time of the hearing, Wise & Young had 100 ordinary shares issued for $100,000, held by Mr Dimitriou (two shares) and Wyse Partners Pty Limited (98 shares).

In December 2011, Mr Dimitriou became the sole director, secretary and shareholder of Wolgan Consulting Pty Limited. The company has issued share capital of $2. Mr Dimitriou’s address, as notified to ASIC, was in Bella Vista, New South Wales.

In October 2012, Defined Property Group Pty Limited was incorporated. Since incorporation, Mr Dimitriou has been the sole director and secretary of the company. Mr Dimitriou’s address, as notified to ASIC, was the same address in Bella Vista. The company had 100 shares issued at $100 of which two shares are held by Mr Dimitriou and 98 shares by Wyse Partners Pty Limited.

In October 2013, Wyse Partners Pty Limited was incorporated. Mr Dimitriou was appointed the sole director and secretary. His address as notified to ASIC was the Kenthurst address. The company has 100 shares issued at $100 which are held by Mr Dimitriou.

The four companies were issued with a large number of traffic fines, as I understand it, because the traffic fines were issued to motor vehicles registered by the companies with Roads and Maritime Services (RMS) or its statutory predecessors. A Senior Adviser of Debt Resolution Targeted Team at Revenue NSW has supervised the efforts to recover these fines.

In October 2016, a Property Seizure Order was issued against a motor vehicle registered to Defined Property Group, being a black coupe Lamborghini. According to the Revenue NSW officer, this “was unsuccessful and completed on 21 December 2016”, from which I take it that the Property Seizure Order lapsed on that date without acquiring the Lamborghini.

In May 2017, a garnishee order was issued to Westpac Banking Corporation in respect of debts owed by the four companies to Revenue NSW, but it was unsuccessful. This suggests that the companies had no funds in any bank accounts at Westpac at that time.

On 11 April 2018, Mr Dimitriou says that the Bella Vista office was vacated. Mr Dimitriou gives no evidence of any steps which he took to make arrangements for mail sent to that office to be forwarded to another address or to be collected from time to time. The companies having their registered office at Bella Vista did not notify any change to ASIC.

On 1 June 2018, a member of the Targeted Team, Fines Debt at Revenue NSW sent an email to Mr Dimitriou at Defined Property Group, referring to a telephone request that day in respect of overdue fines owed by himself and his companies, advising that the total balance owing was $274,627. The officer set out the outstanding balance owed by each of the four companies and an additional amount owed by Mr Dimitriou personally. The officer added:

Mr Dimitriou replied to Revenue NSW on 4 June 2018:

On 5 October 2018, Wise & Young and Wyse Partners changed their registered offices to an address in Parramatta, being the office of the defendants’ solicitor.

On 30 October 2014, Wise & Young had advanced $1.07 million to Kathleen and Mark Leishman who own a property at The Hill, a suburb of Newcastle. On 15 November 2015, Wise & Young was sued by the borrowers in this Court in Furlong v Wise & Young Pty Limited, proceedings number 2015/326698, apparently in respect of a caveat registered by Wise & Young over the property at The Hill. The proceedings have been listed before Sackar J at least 64 times since commencement. On 8 November 2018, Sackar J made orders by consent in the proceedings as follows:

On 12 December 2018, Mr Dimitriou sent an email to Revenue NSW, using the same email address at Defined Property Group, referred to at [11], in respect of fines owed by the four companies. Mr Dimitriou sought until March 2019 to pay the outstanding fines:

Revenue NSW replied the same day, advising that it was unable to place any of the matters on hold given the significant balance owing, set out the outstanding balance owed by each company and, further, the information which it required in respect of each company before agreeing to any payment plan:

On 21 December 2018, RMS placed a manual vehicle block on a motor vehicle registered with Wise & Young. A manual vehicle block involves an individual direction from Revenue NSW to RMS that a vehicle which has had its registration cancelled under a sanction should not be allowed to be transferred to another person unless approved by Revenue NSW, and has the effect that a “Customer Business Restriction” should apply.

On 6 March 2019, Revenue NSW issued a garnishee order to the National Australia Bank in respect of debts owed by the four companies, but the garnishee order was unsuccessful. This suggests that the companies had no funds in bank accounts at the National Australia Bank at that time.

On 11 April 2019, Revenue NSW issued a statutory demand to each of the companies.

It should be noted that a further 44 traffic fines have been issued by Revenue NSW to Wise & Young since the service of the statutory demand, such that the amount now owed by that company increased from $26,982 to $40,060.

These proceedings were commenced on 28 May 2019. On 4 and 5 June 2019, the Originating Processes and supporting affidavits were served on the respective registered offices in Bella Vista and Parramatta. On 5 June 2019, the Originating Processes and supporting affidavits were served by express post on Mr Dimitriou at the Kenthurst address. The records of Australia Post indicate that these letters were delivered at that address on 7 June 2019. Mr Dimitriou says that he has not resided at the Kenthurst address since January 2019.

On 24 June 2019, a notice of appearance was filed by three supporting creditors in relation to Wolgan Consulting, being The Hills Motorway Limited, WSO Co Pty Limited and LCT-MRE Pty Limited. The same day, Mr Dimitriou says that he became aware of these proceedings by coincidence when conducting a search of the online court list in respect of other proceedings. On 25 June 2019, Mr Dimitriou obtained a copy of the Originating Processes from the plaintiff’s solicitors.

On 1 July 2019, the proceedings came before Registrar Walton for directions. The same day, Wise & Young issued a Statement to “Kathleen Leishman and Mark Leishman (a bankrupt)”, noting a balance due of $1,402,991.68. On 9 July 2019, Mr Dimitriou obtained a real estate appraisal from McGrath estate agents in respect of their property at The Hill, indicating a selling price in the vicinity of $2 million to $2.2 million. Again, there is no title search to indicate whether any proceeds of sale may be expected to come to an equitable chargee.

In October 2014, Wise & Young had advanced $424,000 to Darren Culley. In 2018, Wise & Young commenced proceedings against Mr Culley: Wise & Young Pty Limited v Culley, proceedings number 2018/117026. Mr Culley sought and obtained an order for security for costs. On 9 July 2019, Registrar Walton extended the time for Wise & Young to pay security until 4.00 pm on 16 July 2019, failing which the proceedings would be dismissed. On 16 July 2019, a bank cheque was obtained in the amount of $70,000. Mr Dimitriou says that, with this cheque, Wise & Young paid security for costs into court. At 4.50 pm on 16 July 2019, Mr Dimitriou sent an email to Registrar Walton confirming that security had been paid at the Supreme Court Registry and providing a receipt number, adding:

On 18 July 2019, Mr Dimitriou instructed a valuer to value both the property at The Hill and a property owned by Mr Culley at Cessnock. He deposed:

It would appear that no steps were taken to progress Wise & Young Pty Limited v Culley further and on 23 July 2019, Registrar Walton made the following orders:

On 30 July 2019, the four proceedings were listed for hearing before me, but the defendants sought an adjournment at the hearing to allow them to file an expert report as to solvency by no later than 12 August 2019. I granted that adjournment, but commenced the hearing in respect of the other three issues before the Court and stood the matter over, part-heard, until 2.00 pm on 15 August 2019 when any expert report as to solvency might be tendered and any further submissions in respect of it might be made; In the matter of Wise & Young Pty Ltd; In the matter of Wyse Partners Pty Ltd; In the matter of Wolgan Consulting Pty Ltd; In the matter of Defined Property Group Pty Ltd [2019] NSWSC 1092.

No solvency report was served. Instead, at 12.37 pm, 12.38 pm and 12.46 pm on 15 August 2019, Mr Dimitriou filed affidavits online annexing bank cheques obtained from Westpac that day in favour of Revenue NSW in the sums of $26,982 and $71,696. The amount of $26,982 corresponds to the amount in the statutory demand in the Wise & Young proceedings but does not cover the further 44 traffic fines issued to that company since the statutory demand was served. The amount of $71,696 corresponds to the statutory demand in the Wyse Partners proceedings. The source of the funds is not stated in Mr Dimitriou’s affidavits: there is no evidence that the bank cheques were issued from the funds of the companies the subject of these proceedings; nor that the bank cheques were issued from Mr Dimitriou’s funds; nor that the bank cheques were issued from funds which Mr Dimitriou had authority to deploy in payment of the companies’ debts: cf. Rubino v Pineview Property Holdings Pty Ltd [2016] NSWSC 904.

No bank cheque was tendered in respect of the statutory demand addressed to Wolgan Consulting. Mr Dimitriou deposed that he was waiting on invoices to be paid to Wolgan Consulting and gave an undertaking to meet the plaintiff’s legal costs if the proceedings against Wolgan Consulting were dismissed.

No bank cheque was tendered in respect of the statutory demand addressed to Defined Property Group. Mr Dimitriou deposed that invoices were expected to be paid to Defined Property Group on 23 August 2019 after which time he said that the company would have a surplus of $185,000.

That is the extent of the evidence by the defendants as to the position of solvency of each company.

Section 109X(1)(a) of the Corporations Act provides that a document may be served on a company by posting to the company’s registered office. The Acts Interpretation Act 1909 (Cth) applies to the Corporations Act: section 5C of the Corporations Act. Section 29 of that Act provides that, “unless the contrary is proved”, service by post is effected at the time at which the letter would be delivered in the ordinary course of post. Section 29(2) notes that the section does not affect the operation of section 160 of the Evidence Act 1995 (Cth). The identical section 160 of the Evidence Act 1995 (NSW), which applies to proceedings in this Court, provides that it is presumed “unless evidence sufficient to raise doubt about the presumption is adduced” that an article sent by post was received on the seventh working day after having been posted. As 19 and 22 April 2019 were public holidays, the companies are presumed to have received the statutory demands on 24 April 2019.

The question is whether the defendants have proved to the contrary or adduced evidence sufficient to raise doubt about the presumption. The defendants submit that I should accept the evidence of Mr Dimitriou that these proceedings did not come to his attention until 24 June 2019 as sufficient to prove that the statutory demands were not received at either of the addresses to which they were sent.

I am not inclined to accept Mr Dimitriou’s evidence in circumstances where the statutory demands were also emailed to Mr Dimitriou at an apparently current and working email address, nor where one of the registered offices was that of the defendants’ solicitors. But even if I did accept his evidence, it does not prove that the statutory demands did not arrive in the post in the usual way at the registered offices in Bella Vista and Parramatta. Where Mr Dimitriou says he vacated the Bella Vista property but does not say that arrangements were put in place to bring any mail received at the address to his attention, it is entirely consistent with post arriving in the ordinary course of mail. As Debelle J explained in Dwyer v Canon Australia Pty Ltd (2007) 247 LSJS 438; [2007] SASC 100 at [9]:

If companies implement a method of monitoring and superintending the collection of mail from their registered office which leaves open the prospect of mail not coming to the attention of the companies, that non-receipt cannot enliven the granting of leave under section 459S of the Corporations Act: Nick Scali Limited v JSK Logistics Pty Limited [2008] NSWSC 597 per Rein J, cited with approval by Farrell J in Hadley v BetHQ Pty Limited [2016] FCA 1263 at [41]. On Mr Dimitriou’s own admission, these companies failed to maintain a system whereby mail addressed to their registered office would be properly attended to. This failure has the consequence described by Black J In the matter of Vangory Holdings Pty Limited [2015] NSWSC 546 at [21]:

For these reasons, I am satisfied that the statutory demands were served on 24 April 2019.

Section 459G of the Corporations Act provides that a company may apply to the Court to set aside a statutory demand, but only if the application is made within 21 days of service. No application was made. As such, the defendants need leave under section 459S(1) to oppose the application on the basis of a genuine dispute. The Court must not grant leave unless it is satisfied that the existence of a genuine dispute concerning the debt is material to proving that the company is solvent: section 459S(2).

The defendants submitted that Austin J in Chief Commissioner of Stamp Duties v Paliflex Pty Ltd (1999) 149 FLR 179; [1999] NSWSC 15 at [49] outlined the three considerations that a Court must take into account when deciding whether to grant leave under section 459S(1). They are:

As to the first matter, the defendants dispute the existence of the debt on the basis that it is unclear as to how the purported debt arose. As to why indebtedness was not raised in an application to set aside the statutory demand, the defendants rely on the suggested fact that Mr Dimitriou did not become aware of the statutory demands until 24 June 2019.

But the obstacle to the grant of leave is whether the existence of a genuine dispute about the debt is material to proving that the companies are solvent. Revenue NSW submitted that, even if one adopts the broader interpretation of the meaning of the expression “material to proving solvency” espoused in Ewen Stewart & Associates Pty Ltd v Blue Mountains Virtual Air Helitours Pty Ltd (No 2) [2011] NSWSC 113 per White J at [35]–[48], it is nevertheless necessary to establish a nexus between the grounds for a genuine dispute and its likely impact upon an examination of the company’s overall solvency. The defendants have made no attempt to do this.

I agree. I have no financial picture of the defendant companies. As such, it is not possible to say whether the amount of the traffic fines is such that the fines would tip a solvent company into insolvency, or whether the fines have no material effect on the financial position of each of the companies. There is no evidence which would enable me to conclude that the existence of a genuine dispute as to the debt is material to proving the solvency of any of the four companies. In the circumstances, section 459S(2) provides that I must not grant leave.

If I am wrong about this, then it seems to me in any event there is no evidence of a genuine dispute that would meet the admittedly very low threshold which is set by the authorities in this area. In Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344 at [31], the Court of Appeal approved McLelland CJ in Eq’s consideration of a “genuine dispute” in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787 as involving a plausible contention requiring investigation, raising much the same sort of considerations as the “serious question to be tried” criterion that applies in the case of an interlocutory injunction. As McLelland CJ in Eq stated in Eyota v Hanave at 787:

The Court, at [48], also approved the following statement of Thomas J in Re Morris Catering (Australia) Pty Ltd (1993) 11 ACSR 601 at 605:

The characteristics of a “genuine dispute” were described in similar terms in TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd (2008) 66 ACSR 67; [2008] VSCA 70, by Dodds-Streeton JA (with whom Neave and Kellam JJA agreed), at [71]:

The defendants rely on LSI Australia Pty Ltd v LSI Holdings Ltd (2007) 25 ACLC 1,602; [2007] NSWSC 1406, where Austin J held, at [54], that:

The defendants submitted that the companies were only sent two documents on which to assess the existence of the debts: the statutory demands and the affidavits accompanying them. The defendants submitted that the statutory demands and their schedules did not contain vital information on which the director could assess the existence of the debts. It is said that the schedules should have referred to the vehicle in respect of which the enforcement order was issued, whether the defendants were the registered owner of the vehicle, the date when, and location where, the enforcement orders were issued and whether the defendants knew that the enforcement orders existed. I am not sure how Revenue NSW could ever have provided the last item of information, and the submission seems perhaps better directed to an application under section 459J than section 459H.

However, each statutory demand was accompanied by a detailed schedule — running for pages — entitled “Description of debt — debts due in respect of the enforcement orders particulars of which are set out below”. Each schedule contained six columns which listed, for each traffic fine: the enforcement order number, the due date for payment of the fine, a description of the fine, the original fine, any amounts paid, and the amount outstanding. The schedule concluded with a total. Revenue NSW submitted, and I agree, that the information presented in the schedule was more than sufficient to accurately identify to a reasonable person in the shoes of Mr Dimitriou the general nature of the debt to a sufficient degree that he could assess whether there was a genuine dispute as to the existence of the amount of the debt or any offsetting claim.

Mr Dimitriou says he is unaware of how the debt arose and has not seen a penalty notice or enforcement notice addressed to the company. He contends that the schedule annexed to the statutory demands does not provide him with any information that demonstrates when he received the enforcement orders and the address to which they were sent. He says he intends to have all of the enforcement orders referred to in the schedule reviewed to determine the validity of the claims once he has received them. He has requested his solicitors to issue a notice to produce for the enforcement orders and penalty notices, although I note that no such notice to produce has been issued.

That is the extent of the evidence of Mr Dimitriou as to the suggested genuine dispute. It falls well short of the standard of proof required to satisfy the Court that there is a genuine dispute. Further, it is abundantly clear from the history of the matter that Mr Dimitriou has communicated with Revenue NSW in relation to the traffic fines and the amounts owing to Revenue NSW at length over a substantial period of time. The matters which he now says should be set out in the statutory demand are matters which, it is apparent from the history of this matter, have been within his knowledge for some time.

I have already set out the evidence going to solvency. As matters stand, there is a presumption of insolvency by reason of the companies’ failure to comply with the statutory demand. In the substantive proceedings, therefore, the onus is on the defendants to prove that the company is solvent: section 459C(3). Section 95A(1) of the Corporations Act provides:

To discharge that onus the Court should ordinarily be presented with the “fullest and best” evidence of its financial position: Commonwealth Bank of Australia v Begonia Pty Ltd (1993) 11 ACLC 1,075 at 1,081 per Hayne J. As Santow JA (with whom Meagher and Handley JJA agreed) explained in Expile Pty Limited v Jabb’s Excavations Pty Ltd (2003) 45 ACSR 711; [2003] NSWCA 163 at [16]:

To the extent that Wise & Young is said to have an equitable charge over the property at The Hill, there is no evidence to indicate that there is likely to be any moneys coming to the equitable chargee should that property be sold. Indeed, there is evidence that there are other claims on that property, including by the trustee in bankruptcy of Mark Leishman. It is also reasonable to infer that there is a secured mortgage on that property given the absence of any title search tendered to the Court to prove that the property is otherwise unencumbered.

To the extent that Wise & Young is said to have a valuable chose of action against Mr Culley, the proceedings brought by Wise & Young against Mr Culley stand dismissed. There is no evidence that Wise & Young is entitled to recover its debt against Mr Culley’s property, nor that it stands to receive any of the proceeds of sale of Mr Culley’s property.

There is no evidence as to the assets or liabilities, income or expenses of Wolgan Consulting or Defined Property Group.

The defendants frankly concede that they have failed to put before the Court the “fullest and best” evidence as to solvency as contemplated by the authorities. The position before the Court is that there is a presumption of insolvency by reason of the defendants’ failure to comply with the statutory demands which were properly served in accordance with the Corporations Act. The evidence, to the extent there was any, that the defendants sought to bring before the Court, did nothing to displace the presumption of insolvency. In all of the circumstances the presumption of insolvency stands.

For these reasons, I proposed to make orders under section 459A of the Act, winding up the defendant companies in insolvency and appointing a liquidator to each. However, I have, at the request of the parties, stood the matter over as Mr Dimitriou proffered bank cheques and a signed undertaking to the pay Revenue NSW’s costs of these proceedings in an extraordinary adjournment application by the defendants as I was part-way through delivery of this oral judgment.

Accordingly, I make the following orders: