Commissioner of State Revenue v Leicester Pty Ltd (in liq)

[2025] VSC 622

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL COURT

S ECI 2025 04299

COMMISSIONER OF STATE REVENUE	Plaintiff
v
LEICESTER PTY LTD (IN LIQUIDATION)	Defendant

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JUDGE:	COSGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	1 October 2025
DATE OF JUDGMENT:	1 October 2025
CASE MAY BE CITED AS:	Commissioner of State Revenue v Leicester Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2025] VSC 622

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APPEAL — Supreme Court (General Civil Procedure) Rules 2025 (Vic) r 84.05 — Application to set aside winding up order — Where the company did not receive statutory demand or originating process at the time it was served — Where the company has now paid its outstanding debt to the Commissioner — Appeal allowed — Winding up order set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	No appearance
For the Defendant	Mr G Scott, solicitor appearing	Hunt & Hunt Lawyers

HIS HONOUR:

Introduction

1. This is an appeal by Leicester Pty Ltd (in liquidation) (“the Company”) under r 84.05 of the Supreme Court (General Civil Procedure) Rules 2025 (Vic). The appeal is brought by notice of appeal filed by the Company on 17 September 2025. The Company seeks to appeal the order made by Gitsham JR on 3 September 2025 which wound up the Company in insolvency pursuant to the provisions of the Corporations Act 2001 (Cth) (“Corporations Act”).  The Company seeks to set aside the winding up order and have its appeal granted.

1. There are two directors and shareholders in the Company, Rajesh Maharjan and Neeraj Kapoor. Mr Maharjan has sworn affidavits in support of the appeal. The liquidator of the Company, Craig Bolwell, has consented to Mr Maharjan initiating the appeal on behalf of the Company. Mr Bolwell has indicated that he will not be appearing or represented at the hearing of the appeal provided that his costs of the winding up proceeding are paid. He has asked to be excused from attending court.

1. The plaintiff, the Commissioner of State Revenue (“the Commissioner”), has advised the Court that he will neither consent to nor oppose the appeal.

Background

1. The Company is the sole proprietor of a property at 2 Leicester Street, Preston in the State of Victoria (“the Property”). The Company was incorporated for the purpose of developing the Property with the construction of six townhouses.

1. The Company purchased the Property in 2022 for approximately $1.55 million. The Company borrowed a total of $3,274,762.33 from SF Mortgage Pty Ltd in order to fund the purchase and development of the Property. This loan is secured by a mortgage over the Property together with personal guarantees.

1. The Company has completed the construction of units 1, 2 and 3 within the development. Although units 5 and 6 have already been sold off the plan, the remaining three units are currently unfinished. Mr Kapoor, who is a real estate agent, is holding deposits in respect of the sale of units 5 and 6.

1. The current value of the Property is approximately $3.8 million. It is expected that, upon completion, the property should realise approximately $4.4 million.

1. The Company has made all progress payments to the builder, Melzone Homes Pty Ltd, in respect of the building development work performed at the Property.

1. The evidence indicates that the Company does not own any other assets and does not operate a bank account. The Company has lodged a Business Activity Statement to claim input tax credits. A tax refund has been deposited into a bank account maintained by the Company’s accountant.

1. On 1 April 2025, the Commissioner served a statutory demand on the Company in respect of land tax owing on the Property for the years 2023 and 2024.

1. The Company says that it did not receive the statutory demand. At the time, the Company’s registered office was at 46 Schotters Road, Mernda. However, in about August or September 2024, the Company moved from its registered office without updating the ASIC records. Accordingly, the statutory demand did not come to the notice of the Company or its directors in a timely manner.

1. The Commissioner commenced the winding up proceeding by an originating process issued on 29 July 2025. Again, because the Company had changed its offices without updating the ASIC records, it did not receive copies of the court documents.

1. On 3 September 2025, the Court ordered the winding up of the Company.

1. Mr Maharjan first became aware on 5 September 2025 that the Company had been wound up when he received an email and letter from the liquidator. Mr Kapoor then promptly arranged for payment on 6 September 2025 of the amount stated in the statutory demand. In addition to meeting the statutory demand which covered the land tax payable in respect of 2023 and 2024 (together with interest), Mr Kapoor also paid the land tax for 2025 which fell due on 2 May 2025.

1. On 16 September 2025, the Commissioner provided a bill of costs and disbursements totalling $8,088.30. The Commissioner confirmed that disbursements in the sum of $1,197.30 had already been paid in full. Mr Kapoor paid the balance of the Commissioner’s legal costs on 22 September 2025.

1. Messrs Maharjan and Kapoor have agreed to pay the liquidator’s reasonable fees and expenses.

Legal principles

1. The hearing is a de novo hearing where the court hears the case from the beginning with the evidence as it is at the time of the appeal. Thus, the determination of the appeal depends on the evidence presented at the appeal. The appellant is not restricted to the evidence as it was at the hearing before the Judicial Registrar. An appeal under r 84.05 is not like a traditional appeal whereby the Court’s powers can be exercised only if the appellant can identify an error in the judgment the subject of the appeal.[1]

   [1]Bendigo and Adelaide Bank Ltd v Grahame [2020] VSC 86 at [15]–[18].

1. In relation to the Court’s attitude to such an application, the cases suggest that where the Company (or a third party) has paid the debt the subject of the statutory demand after the filing of the winding up petition, the Court should dismiss the winding up application unless there is some positive reason why the winding up order should be made.[2] A court might decide not to dismiss the winding up application where there was evidence of other outstanding debts either to the applicant creditor or some other creditor or another creditor had applied to be substituted for the applicant.

   [2]Deputy Commissioner of Taxation v Guy Holdings Pty Ltd (1994) 116 FLR 314 at 318–19.

1. In the present case, there is no evidence of the Company owing other debts or another creditor seeking to be substituted for the Commissioner.

1. Pursuant to s 95A of the Corporations Act, a person is solvent if the person is able to pay all their debts as and when they become due and payable. The “cashflow” test of insolvency is viewed as the appropriate test for assessing solvency in these circumstances. The test refers to whether or not a company has sufficient liquid assets, either of its own or from other sources, to meet its current and future debts as and when they fall due.[3]

   [3]Standard Chartered Bank Australia Ltd v Antico (1995) 38 NSWLR 290 at 328–9.

1. The Court must have regard to commercial reality in assessing whether a company is able to pay its debts as and when they are due. [4] If the Court is satisfied that as a matter of commercial reality a company has the resources available to pay all its debts as they become payable, then it does not matter that the resources are unsecured borrowings or a voluntary extension of credit by a director or some other party.[5]

   [4]Ibid at 331.

   [5]Lewis v Doran (2004) 208 ALR 385 at [116].

1. The commercial reality in the present case is that the Company has paid the outstanding debt of the Commissioner which formed the basis of the creditor’s demand.  No other creditor supported the Commissioner’s winding up application. There is no evidence that the Company is insolvent or is struggling to pay other creditors.

1. In circumstances where:

·the Company and its directors did not receive the statutory demand at or about the time it was served on the Company;

·the directors of the Company would have paid the outstanding land tax to the Commissioner had they been aware of the demand;

·the Company paid the outstanding land tax debt as soon as it came to the attention of the Company’s directors;

·the Commissioner does not oppose the appeal;

·the liquidator does not oppose the appeal;

·there is no other creditor opposing the appeal;

·the builder of the development and the financier of the development each support the appeal; and

·the directors of the Company have agreed to pay the liquidator’s reasonable fees and expenses,

I consider that there is no good reason to permit the winding up application to proceed. Accordingly, I allow the appeal.

Conclusion

1. For the reasons set out above, I grant the appeal and subject to hearing from the parties propose to make the following orders:

(a)   the appeal filed by the Company on 17 September 2025 be allowed;

(b)  the orders of Judicial Registrar Gitsham made on 3 September 2025 be set aside;

(c)   the Originating Process filed on 29 July 2025 be dismissed with no order as to costs;

(d)  the liquidator of the Company be excused from attendance at the appeal hearing listed for 1 October 2025 at 10:30am;

(e)   the directors of the Company, Rajesh Maharjan and Neeraj Kapoor, pay the liquidator’s reasonable remuneration, costs and expenses in respect of the liquidation, as agreed or assessed; and

(f)    liberty to apply.