Deputy Commissioner of Taxation, in the matter of R and J Percy Pty Ltd v R and J Percy Pty Ltd
[2011] FCA 1266
•21 October 2011
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation, in the matter of R & J Percy Pty Ltd v R & J Percy Pty Ltd [2011] FCA 1266
Citation: Deputy Commissioner of Taxation, in the matter of R & J Percy Pty Ltd v R & J Percy Pty Ltd [2011] FCA 1266 Parties: DEPUTY COMMISSIONER OF TAXATION v R & J PERCY PTY LTD ACN 072 363 869 File number: QUD 292 of 2011 Judge: LOGAN J Date of judgment: 21 October 2011 Catchwords: CORPORATIONS – winding up – application for winding up in insolvency – no issue about company’s insolvency – choice of liquidator – whether there should be departure from usual approach of appointing plaintiff’s nominee – where administrator had done substantial work – where no indication that administrator had not acted other than in dispassionate and independent manner – administrator appointed as liquidator Legislation: Corporations Act 2001 (Cth) ss 459P, 523 Cases cited: Glenwood Village Pty Ltd v Glen Alpine Constructions Pty Ltd [2009] NSWSC 516 considered
Workers Compensation National Insurer v Perfume Empire Pty Ltd [2011] NSWSC 380 consideredDate of hearing: 21 October 2011 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 14 Solicitor for the Plaintiff: Australian Taxation Office Counsel for the Defendant: Mr VG Brennan Solicitor for the Defendant: Taylor David Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 292 of 2011
IN THE MATTER OF R & J PERCY PTY LTD ACN 072 363 869 BETWEEN: DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND: R & J PERCY PTY LTD ACN 072 363 869
Defendant
JUDGE:
LOGAN J
DATE OF ORDER:
21 OCTOBER 2011
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.R & J Percy Pty Ltd (Administrators Appointed) ACN 072 363 869 be wound up in insolvency pursuant to the provisions of the Corporations Act 2001 (Cth).
2.Gavin Charles Morton be granted leave pursuant to s 532(2) of the Corporations Act 2001 (Cth) to consent to be appointed and to act as the liquidator of R & J Percy Pty Ltd (Administrators Appointed) ACN 072 363 869.
3.The plaintiff’s costs be fixed in the sum of $5,145.43 and reimbursed in accordance with s 466(2) of the Corporations Act 2001 (Cth).
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 292 of 2011
IN THE MATTER OF R & J PERCY PTY LTD ACN 072 363 869 BETWEEN: DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND: R & J PERCY PTY LTD ACN 072 363 869
Defendant
JUDGE:
LOGAN J
DATE:
21 OCTOBER 2011
PLACE:
BRISBANE
REASONS FOR JUDGMENT
This is a reference from the Registrar’s Corporations List. A Deputy Commissioner of Taxation has applied for the winding up of R & J Percy Pty Ltd (R & J Percy) pursuant to s 459P of the Corporations Act 2001 (Cth) (Corporations Act). The basis for the winding-up application lies in a failure on the part of R & J Percy to comply with a statutory demand. The resultant consequence of that non-compliance in terms of a presumption as to insolvency.
The statutory demand is based on a liability to the Commonwealth payable to the Commissioner in respect of an indebtedness arising under Federal revenue law. The Commissioner’s application was filed on 14 September 2011. Two days previously R & J Percy ceased trading. Later that month the company was placed in voluntary administration. Mr Morton, an official liquidator, was appointed administrator. Thereafter, he carried out investigations in the course of that administration.
A first meeting of creditors was held on 6 October 2011. A second meeting of creditors has yet to be held. It is not now proposed that such a meeting be held. Mr Morton’s investigation of the affairs of R & J Percy have progressed to the point where he has prepared in draft a report which would have been sent, as the Corporations Act requires, to creditors for the purpose of their consideration at such a creditor’s meeting. In that draft report he voices the opinion, to which he adheres, that the corporation should be wound up.
Inferentially to reach that position, Mr Morton has gained at least a preliminary understanding of the affairs of the corporation and where best lie the interests of creditors. It is uncontroversial today that a winding-up order should be made and the Commissioner’s material discloses the necessary proofs in that regard. Included in the Commissioner’s material is consent by another liquidator, Mr Marky, to act as liquidator of the corporation if so appointed in the event of the making of a winding-up order.
All that is controversial as between R & J Percy and the Commissioner is whether Mr Morton should be appointed as liquidator or whether Mr Marky should be so appointed. For Mr Morton to be appointed a grant of leave is necessary: see s 523(2)(c)(i) of the Corporations Act.
In Glenwood Village Pty Ltd v Glen Alpine Constructions Pty Ltd [2009] NSWSC 516 at [1] (Glenwood Village v Glen Alpine Constructions), Brereton J observed in respect of the practice of the New South Wales Supreme Court that “all things being equal, it will appoint the plaintiff or the applicant’s nominee as receiver or liquidator where there is a contest as to the identity of the appropriate appointee and there is nothing to be said between the competing nominees as to their respective fitness, qualification or cost.” In so doing his Honour made reference to earlier authority to which it is not necessary today to refer.
Much may lie behind his Honour’s qualifying statements “all things being equal,” and “there is nothing to be said between the competing nominees as to their respective fitness, qualification or cost.” His Honour’s reasons for judgment do not disclose whether the observation which he made was made in the context of a corporation which was in voluntary administration at the time when it fell to consider who should be appointed liquidator upon the making of a winding-up order.
In contrast, just such a background was present in Workers Compensation Nominal Insurer v Perfume Empire Pty Ltd [2011] NSWSC 380 (Workers Compensation National Insurer v Perfume Empire). There, Barrett J granted the requisite leave for an administrator to succeed in office as liquidator of the company on its winding up. In so doing, his Honour adverted at [9] to the “substantial work already [performed] investigating a position of the defendant as is evidenced by his report to creditors for the purpose of the administration.” He, too, referred to earlier authority but again it is not necessary today so to do.
As in Workers Compensation Nominal Insurer v Perfume Empire, there is no basis for any apprehension of inability on the part of the administrator, in this case, Mr Morton, to act independently or dispassionately. A liquidator appointed pursuant to court order on the winding-up of a corporation is an officer of the court. It is the expectation of this Court that such officers act truly in an independent and dispassionate fashion.
Here, the pool of assets, at least so far as present materials take one, is not terribly large. That raises in my mind a very particular concern that there be no duplication of effort in relation to the investigation of the company’s affairs, even to the extent of having a liquidator other than Mr Morton read into the position reached thus far. I am not persuaded that it is in the interests of creditors that this occur.
Reference was made on behalf of the Commissioner to an advantage which might be brought by a fresh mind being applied. In itself that is an ephemeral advantage.
Were there to be any question of Mr Morton as administrator having not acted, as the Corporations Act requires, in a dispassionate and independent matter in investigating and preparing his report, there would be no question other than that position of liquidator should be filled by some other person. That though is not this case.
Whilst I respectfully agree with the observation made by Brereton J in Glenwood Village v Glen Alpine Constructions at [5] that disputes about the appointment of a particular liquidator, in the absence of a matter of substance to be said against the plaintiff’s nominee should be discouraged, it does not follow from this that such discouragement should be at the price of burdening the creditors of the company with the potential for duplicated expenditure. That, in itself, does offer a matter of substance to be said against a plaintiff’s nominee.
These matters very much turn on value judgements arising from the circumstances of a particular case. It is important, in my opinion, that a plaintiff approaches the question of who ought to be liquidator with an open mind. It is no less important that a defendant not assume that a person who has been administrator will automatically be attractive by virtue of having held office as administrator. In this case, I am persuaded that Mr Morton ought to fill the office of liquidator.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate:
Dated: 4 November 2011
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