This article outlines a recent case where there was a successful appeal against a winding up order.[1]

[1] Commissioner of State Revenue v Leicester Pty Ltd (in liq)
[2025] VSC 622

In these types of cases, unlike most appeals, it is a hearing de novo – meaning that the Court considered all evidence, including new evidence, even if it was not presented before the Judicial Registrar who made the original decision.

The facts

• The winding up order was made on 3 September 2025 by Gitsham JR under the Corporations Act 2001 (Cth), following a statutory demand for unpaid land tax by the Commissioner of State Revenue.
• Leicester Pty Ltd was established to develop a property at 2 Leicester Street, Preston, Victoria, into six townhouses.
• The property was acquired in 2022 for about $1.55 million, funded by a secured loan of $3,274,762.33 from SF Mortgage Pty Ltd.
• Three units were completed, two were sold off the plan, and three remained unfinished.
• The property’s current estimated value is $3.8 million, expected to reach $4.4 million once all construction is finished.
• The Company’s only asset is the property; it does not operate a standard bank account, with tax refunds going to an account managed by its accountant.
• In April 2025, a statutory demand for land tax (2023 and 2024) was served by the Commissioner, but the Company did not receive it due to not updating its registered office address with ASIC.
• As a result, the Company also did not receive subsequent court documents regarding the winding up proceedings.
• The Supreme Court ordered the Company’s winding up on 3 September 2025.
• The directors first became aware of the order on 5 September 2025.
• Upon learning of the order, Mr Kapoor, a director, promptly paid the outstanding land tax and the land tax for 2025 that was due in May.
• The Company settled the Commissioner’s legal costs by 22 September 2025.
• The directors agreed to pay the liquidator’s fees and expenses in full.

The Law

• Under Australian corporate law, if a company pays the debt that is the subject of a statutory demand after a winding up application is filed, the application should generally be dismissed unless there is a compelling reason to continue (such as other supporting creditors being involved in the case).
• In the absence of evidence of other outstanding debts or creditors wishing to substitute for the Commissioner, there is typically no basis to proceed with the winding up.
• Section 95A of the Corporations Act provides that a company’s solvency is determined by its ability to pay its debts as they fall due, taking into account the company’s financial position and commercial realities.
• Evidence that a company has the means, including director support, to pay its debts, and has in fact paid the relevant debts in full, supports a finding of solvency.
• Where the applicant (here, the Commissioner) and the liquidator do not oppose the appeal, provided costs are satisfied, this supports the setting aside of the winding up order.

Lessons

Leicester Pty Ltd’s appeal centred on the fact that:

(a) the statutory demand was not received due to an address error.

(b) the Company promptly paid the outstanding debts when notified (including the Commissioner’s and liquidator’s costs).

(c) the Company was able to prove solvency.

(d) there were no other creditors supporting the winding up.

All of these factors are important if you seek to challenge an order winding up a company.

If you would like to discuss your own situation, please contact Catherine Ballantyne, Principal, Madgwicks Lawyers at catherine.ballantyne@madgwicks.com.au.

The information provided in this article is general in nature and cannot be relied on as legal advice, nor does it create an engagement. Please contact one our lawyers listed above for advice about your specific situation.