Chief Commissioner of State Revenue v ACN 073 215 791 Pty Ltd

[2009] NSWSC 1276

CITATION:	Chief Commissioner of State Revenue v ACN 073 215 791 Pty Ltd [2009] NSWSC 1276
HEARING DATE(S):	6 October 2009
JURISDICTION:	Equity Division Corporations List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	6 October 2009
DECISION:	Leave under s 459S refused – adjournment granted
CATCHWORDS:	CORPORATIONS – creditors statutory demand – where defendant did not make an application under s 459G to set aside statutory demand – where plaintiff seeks application to wind-up defendant – application by defendant under s 459S for leave to oppose winding up by disputing debt – where defendant arguably solvent – where debt claimed will make no difference to solvency issue – leave refused – Whether to adjourn winding up application – special considerations
LEGISLATION CITED:	(CTH) Corporations Act 2001, s 459G, s 459S
CATEGORY:	Procedural and other rulings
PARTIES:	Chief Commissioner of State Revenue (plaintiff) ACN 073 215 791 Pty Ltd (defendant)
FILE NUMBER(S):	SC 3467/09
COUNSEL:	Mr A Ng (sol) (plaintiff) Mr B DeBuse (defendant)
SOLICITORS:	Matthews Folbigg (plaintiff) Marsdens (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

BRERETON J

Thursday, 6 October 2009

3467/09 Chief Commissioner of State Revenue v ACN 073 215 791 Pty Limited

JUDGMENT (ex tempore)

1 HIS HONOUR: The plaintiff Chief Commissioner of State Revenue served a creditor’s statutory demand on the defendant ACN 073 215 791 Pty Limited – on 25 May 2009, demanding a sum of $64,694.50 said to be land tax unpaid and interest thereon for the 2006, 2007, 2008 and 2009 land tax years. The defendant did not make application under (CTH) Corporations Act 2001, s 459G to set aside the statutory demand within the 21 day period limited by the demand. On 30 June 2009, the Commissioner filed an application for the winding up of the defendant in insolvency, on the ground of failure to comply with the demand. By interlocutory process filed on 10 September 2009 the company seeks leave pursuant to s 459S to oppose the winding up application, essentially on the ground that the debt claimed is disputed, notwithstanding that that issue could have been but was not raised in an application to set aside the demand.

2 On such an application, the Court can grant leave only if satisfied that the issue to be raised is material to the solvency of the defendant. At this stage, although the evidence of solvency is limited, the following observations can be made.

3 First, it appears that the defendant is a trustee company, and has never traded. Secondly, its only asset is its trustee’s right of indemnity against the trust property at Belrose. Thirdly, that the trust property (which is the property in respect of which the land tax is claimed) is worth some $6 million to $6.3 million. Fourthly, there is secured against that property a mortgage debt to the National Australia Bank of about $5.2 million, which prima facie leaves a surplus of between $800,000 and $1.1 million.

4 A surplus of fixed assets (such as real property) against current liabilities (such as that the Commissioner’s claim for land tax) does not necessarily establish solvency. But the existence of that surplus and its amount, and the acceptance by the defendant that its right of indemnity against the property is its only asset, means that the existence or quantum of the $64,000 debt claimed by the Commissioner could not possibly be material to the solvency of the defendant. That is because, if the defendant is solvent – which it arguably may be – then even if I were to find the debt established, it would still be solvent; whereas if the debt were not established that would make no difference to that conclusion.

5 Accordingly, I must dismiss the interlocutory process filed 10 September 2009, with costs.

6 Ordinarily, the Court is not inclined to adjourning winding up applications. There are, however, a number of special considerations in the present case. The first is that the company is not trading. The second is that its sole asset is currently for sale, and there is a realistic prospect that it will soon be sold. The third is that that asset, on the evidence currently before the Court, significantly exceeds in value the apparent liabilities of the company. The fourth is that the Chief Commissioner is a secured creditor pursuant to a statutory charge for land tax and is entitled to be paid out on the sale (and indeed would have been entitled, as I understand the position, to enforce that statutory charge by sale himself, if he so wished). The fifth is that there is no apparent prejudice to the position of the Chief Commissioner nor any other creditor from an adjournment. True it is that a sale of the property is proposed but, as I have said, that is known to all involved; the defendant offers an undertaking to keep the plaintiff informed of progress of the sale; and, if the Commissioner wishes to protect his position to ensure that he is paid out on completion, he would be entitled to lodge a caveat in respect of his statutory charge, to prevent completion without his being paid out at that time.

7 Despite the fact that the matter has been adjourned a number of times the prospect of the defendant being able to establish a real likelihood of a sale and the absence of prejudice to the plaintiff persuade me, just, that the defendant should be allowed a further indulgence to establish that there is a real prospect of a sale in the short term.

8 I adjourn the proceedings to Friday 16 October 2009 at 9.45 before me. I direct that by 14 October 2009 the defendant serve and lodge with my associate an affidavit as to solvency, and as to its proposal for and the prospects of a sale of the Belrose property. In the absence of satisfactory evidence in that respect from the defendant, the matter will proceed to final hearing on 16 October 2009. I order that the defendant pay the plaintiff’s costs of today on an indemnity basis. I grant liberty to proceed to assessment forthwith.

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