Case: Australian Securities and Investments Commission v Eastlands Pty Ltd (No 1) [2006] FCA 1101
Outcome: cited
The respondents were represented, on the hearing of the winding up application, by Norman Carey their common director who was given leave to represent them. Mr Carey had applied to strike out the application in August 2006 on the basis that it was invalid for failure to comply with s 459Q of the Act which requires verification, by affidavit, of the currency of the debts at the time of the making of the application. On 16 August 2001 that motion was dismissed Australian Securities &amp; Investments Commission v Eastlands Pty Ltd (No 1) [2006] FCA 1101. Other interlocutory orders refusing leave to issue certain subpoenas and requiring ASIC to provide a list of documents in its possession relevant to the question of solvency were made on the same day Australian Securities &amp; Investments Commission v Eastlands Pty Ltd (No 2) [2006] FCA 1193. 9 At the commencement of the substantive hearing counsel appeared for the respondents and applied for an adjournment. That application was refused. Counsel, whose instructions were limited to the application for an adjournment, then withdrew and Mr Carey represented the respondent companies in person. 10 At the hearing ASIC relied upon a number of affidavits including those of Oren Zohar and ASIC investigators, Kevin Chin and Richard Gomm. It also relied upon the affidavit of Wendy Chan, formerly an assistant accountant with Westpoint Corporation and David McEvoy, a partner in PricewaterhouseCoopers. The affidavits went variously to the records of intragroup debts in the books of Westpoint Corporation, the financial position of the respondents as disclosed in computer databases held by Westpoint Corporation, the way in which the accounting system operated, the service of the relevant statutory demands and of the originating process and supporting affidavits. There were no affidavits relied upon by the respondents. However Mr Carey gave oral evidence at the hearing. 28 The submissions by ASIC outlined the evidence upon which it relies in relation to each of the respondents. The factual outline in its submissions, with respect to each of the respondents, was supported by reference to the relevant parts of the affidavits filed in support of the application. It is convenient to refer to that outline in respect of each of the contested applications. It is not necessary to repeat individually the reference to the basis upon which the debts were asserted, the service of the statutory demands, the non-compliance with those demands and the currency of the relevant debts. Eastlands Pty Ltd (Eastlands) 29 Eastlands has two issued shares, one held by Heca Nominees Pty Ltd (Heca) and the other by Mr Carey. Mr Carey is the company's only director. 30 Eastlands is trustee of the Eastlands Unit Trust. The computer database containing the financial records of Westpoint Corporation and associated companies was kept on a "Triumph" accounting system. According to Mr Richard Gomm, an ASIC investigator, who examined records obtained by ASIC from that system in relation to Eastlands, its business records are almost exclusively concerned with its role as trustee of the Eastlands Unit Trust. The records relating to the Trust, as appears from Mr Gomm's affidavit of 16 October 2006, indicate that: (a) Eastlands Unit Trust earned no income and incurred expenses leaving a net loss before tax of $4,417.50 for the seven months to 31 January 2006. (b) At 31 January 2006 the Eastlands Unit Trust had: (i) net liabilities of $761.68 by way of a bank overdraft or debit; (ii) non-current assets comprising: an investment in land at Innamincka Road $178,000 motor vehicles and office equipment $270,000 a loan to the Quartz Trust $3,714,295 loans to various Westpoint subsidiaries and related trusts (iii) current liabilities of: Westpoint Corporation $3,594,000 Bowesco Pty Ltd (Bowesco) for the Dyson Family Trust $216,650 (iv) non-current liabilities of $96,440; (v) net negative assets of $220,460.