- Unreported Judgment
SUPREME COURT OF QUEENSLAND
Application No 347 of 2005
ANTHONY MERVYN PHILLIPS
INDUSTRIAL TRADE SUPPLIES PTY LTD ACN 107 155 037
HIS HONOUR: This is an application for the winding up of the respondent company. The matter first came before me on an urgent basis on the 12th of August 2005 when I ordered the appointment of a provisional liquidator.
The principal of the company and the managing director of its business took his own life on 1 August 2005. There was, at that time, a dispute between directors which prevented the proper functioning of the respondent's business. Since that date the provisional liquidator has provided two reports to the Court which have convinced me that the company is insolvent and ought therefore to be wound up.
The background to the application is somewhat unusual and this stems from the manner in which the business activities of the respondent were carried on before Mr Newling's death. The respondent was incorporated on the 25th of November 2003 to take over the business which had been operated by Mr Gregory Newling in the two preceding years.
Initially the entire shareholding of 1,000 one dollar shares were allotted to Mr Newling. He persuaded six other persons each to enter into an agreement to purchase 50 shares in the company for $100,000. There remains some confusion whether this purchase of shares was a transaction with the respondent company or with Mr Newling personally.
That scenario led to interesting legal issues which have been the subject of an opinion by Mr Philp of senior counsel.
However it is unnecessary to resolve this issue since subsequent inquiries have revealed that Mr Newling's estate is bankrupt and the respondent company can not continue to trade and pay its accounts. Any intended action between the two is unlikely to proceed.
The evidence relevant to the winding up is found in two reports from the provisional liquidator dated respectively 7th of November and 1st December 2005. I quote from the second report which is Exhibit GLM1 to the affidavit of Glen Lesley Miller sworn on the 1st of December 2005. This appears at page 6 of the report.
“As mooted above working capital is currently limited and will be depleted within the next month unless the company can obtain further equity funding to assist it meeting its trading debts. The company currently has insufficient assets to pledge for substantial secured borrowing. I note here that unsecured borrowing can not be regarded as an undertaking that may relieve the company from insolvency as the borrowing essentially increases the liabilities of the company and conversely decreases the net asset ratio.
This being said I refer the reader to my comments in my interim report where I detailed the profitable trading results of the Rockhampton branch have been offset by the operating losses accrued by the Cairns branch. I have advised the current management that the company may have a future if the Cairns branch of the company is closed and the Rockhampton branch is kept open and vigilantly managed.
I note that my comment above is an observation only and I advise that I have not investigated the full implications of this strategy as it is beyond the scope of my engagement and this report.”
The current shareholders were advised of this opinion and have not shown any indication of willingness to further support the respondent company. That being the case in its present state it can not meet its financial obligations as they fall due and it must be wound up in insolvency.
Mr Ian Jessup, the provisional liquidator, has indicated his consent which I will mark Exhibit 1 on this application. He has indicated his consent to undertake the task. I will therefore make the following orders:
1.Industrial Trade Supplies Pty Ltd be wound up forthwith.
2.Ian David Jessup be appointed liquidator of the company.
3.That the costs of the applicant, Anthony Mervyn Phillips be paid from the proceeds of the winding up.
HIS HONOUR: I will correct the transcript to delete reference to the exhibit. Thank you.
- Published Case Name:
Anthony Mervyn Phillips v Industrial Trade Supplies Pty Ltd
- Shortened Case Name:
Phillips v Industrial Trade Supplies Pty Ltd
 QSC 400
13 Dec 2005
No Litigation History