His mother, also administrator of his estate, was reluctant to take the mantle
The Federal Court has ordered the winding up of a company under s. 461(1)(k) of the Corporations Act 2001 (Cth) and the appointment of a liquidator after the death of the company’s sole director and shareholder.
In Millynn, in the matter of Sagerland Pty Ltd v Sagerland Pty Ltd, [2025] FCA 391, the plaintiff’s son was a nutritionist and dietitian. His business involved providing personal services in the nutrition and diet industry as sole director and shareholder of a company, which was the defendant in these proceedings.
The son had liabilities to various creditors, including a significant debt to the taxation commissioner under the Taxation Administration Act 1953 (Cth). The son died in a road accident in October 2022.
The plaintiff became the company’s only shareholder in her capacity as administrator of her son’s estate. She applied to the court for an order to wind up the company under s. 233 of the Corporations Act 2001 (Cth) on just and equitable grounds.
The plaintiff was unwilling to become a director of the company. She expressed concerns that, if she would appoint herself as a director:
The Federal Court issued a judgment to wind up the company under s. 461(1), not under s. 233. The court also appointed a registered liquidator as the company’s liquidator under s. 472(1) of the Corporations Act.
First, the court noted that the evidence supported that accountants working for the company seemed to believe a company should always have a director and thus adopted a policy of backdating an appointment of a new director to the date of the prior director’s resignation or death in situations where the company had only one director.
The court determined that this practice of backdating a director’s appointment to a date other than the date when the appointment actually took effect appeared to be unlawful under s. 1308 of the Corporations Act.
Next, the court considered the plaintiff’s written submissions supporting her application and noted that she seemed to be seeking an order under s. 461(1)(k), which conferred a power to wind up a company if the court found it just and equitable to do so.
The court added that the plaintiff appeared to be conflating the power in s. 461(1)(k) with the power to wind up a company under s. 233(1) based on the grounds identified in s. 232. The court ruled that this case met none of the preconditions for making an order under s. 233(1).
However, the court deemed it just and equitable to wind up the company under s. 461(1). The court explained that winding up the company would not negatively affect anyone, would instead ensure effective management of its affairs, and would benefit its creditors.
The court noted that neither the plaintiff nor anyone else expressed a willingness to accept an appointment as a director of the company. Nor would anybody benefit from becoming a director of the company, according to the court.
The court said the plaintiff did not carry on the company’s business, act as if she were one of its directors, or lead it to incur liabilities. The court added that she would only be willing to act as a director for the purpose of convening a meeting to obtain a resolution to wind up the company.
The court noted that it did not need to consider the merits of the plaintiff’s identified concerns about becoming a director in the circumstances of this case. The court concluded that the company could no longer trade as it did before or attain its objects, given the son’s death.
