Deputy Commissioner of Taxation v Camelot Units Pty Ltd
[2014] FCA 961
•4 September 2014
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation v Camelot Units Pty Ltd [2014] FCA 961
Citation: Deputy Commissioner of Taxation v Camelot Units Pty Ltd [2014] FCA 961 Parties: DEPUTY COMMISSIONER OF TAXATION v CAMELOT UNITS PTY LTD ACN 000 232 379 File number: NSD 6 of 2014 Judge: GRIFFITHS J Date of judgment: 4 September 2014 Catchwords: COSTS – originating process seeking order that defendant be wound up in insolvency – dismissal by consent – order as to costs – whether solvency of defendant apparent in statements of financial position annexed to affidavit – whether plaintiff used proceeding for purposes of debt recovery. Legislation: Corporations Act 2001 (Cth) Date of hearing: 4 September 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 12 Counsel for the plaintiff: Mr K Metlej Solicitor for the plaintiff: Craddock Murray Neumann Lawyers Counsel for the defendant: Mr P Wallis Solicitor for the defendant: Konstan Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 6 of 2014
BETWEEN: DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND: CAMELOT UNITS PTY LTD ACN 000 232 379
Defendant
JUDGE:
GRIFFITHS J
DATE OF ORDER:
4 SEPTEMBER 2014
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The originating process be dismissed.
2.The defendant pay the plaintiff’s costs up to and including 6 March 2014, but from that date thereafter, the parties should each bear their own costs.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 6 of 2014
BETWEEN: DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND: CAMELOT UNITS PTY LTD ACN 000 232 379
Defendant
JUDGE:
GRIFFITHS J
DATE:
4 SEPTEMBER 2014
PLACE:
SYDNEY
REASONS FOR JUDGMENT
The originating process filed on 6 January 2014 sought an order that the defendant be wound up in insolvency under the relevant provisions of the Corporations Act 2001 (Cth). An affidavit in support relied on a statutory demand, which was said to have been served on the defendant and is in the amount of $1,024,259.24.
The defendant disputed whether in fact the statutory demand had been properly served on it. Several affidavits were filed on behalf of the defendant seeking to make good that proposition.
I accept Mr Metlej’s submission on behalf of the plaintiff that the Court was placed in the difficult position of making a finding of fact in favour of the defendant that the statutory demand had not been properly served in the absence of the defendant calling as a witness an employee of the defendant who apparently had responsibility for distributing within the defendant’s registered office copies of postal materials received by it.
The assessments underpinning the statutory demand were apparently the subject of several objections lodged on behalf of the defendant which were not resolved either at the time that the statutory demand was served or when these proceedings were commenced in the Court. Many of these objections were successful and the Commissioner accepted before me today that the defendant’s underlying debt was substantially reduced as a consequence.
The Commissioner also accepted that, on or around 30 May 2014, the defendant paid the full amount of the remaining debt, apart from issues relating to penalties and the GIC attaching to the earlier amounts.
On 7 February 2014, Mr Konstantinidis, who is a director of the defendant, swore an affidavit which was filed on 11 February 2014 and presumably was served on the defendant shortly thereafter. In that affidavit, Mr Konstantinidis deposed that, in his opinion, the defendant was solvent and able to meet its liabilities as and when they fell due. His affidavit annexes a single page document headed “Statement of Financial Position as at 30 June 2013”. This identified the value of the defendant’s fixed assets for land and buildings at $3.2 million. The statement of financial position, which was not audited, identified the total liabilities of the defendant as $200,000, leaving net assets of $3,008,243 million.
Mr Metlej submitted, and I accept, that the form and substance of the statement of financial position were not sufficient to establish the solvency of the defendant.
However, this is not the end of the matter. On 6 March 2014, the defendant filed an affidavit sworn by Emmanuel Karamihas, who described himself as an accountant and tax agent. This affidavit is dated 5 March 2014 and the Court assumes it was served on the Commissioner on or about that time. Mr Karamihas referred to the “running balance account” which the plaintiff had opened in respect to the defendant and which underpinned the statutory demand. He also deposed that he had prepared the statement of financial position which was annexed to the earlier affidavit of Mr Konstantinidis and that he had prepared a more recent statement of financial position which was annexed to his affidavit of 5 March 2014. Again, this statement was lacking in detail. It identified $2.95 million in total assets of the defendant and total liabilities of $180,000, leaving net assets, according to the statement, of about $2.77 million.
There is a significant difference between the information contained in the two statements of financial position and the additional material contained in Mr Karamihas’ affidavit which relates to the value of the land and buildings. The affidavit identifies the relevant land and buildings as the Latitude 33 Penthouse, located at 12/2 Denison Street, Manly. Mr Karamihas annexed to his affidavit a market appraisal dated 25 February 2014 and prepared by Belle Property in respect of that penthouse. It gave a market appraisal by a licensed real estate agent that the property was expected to sell in a range of between $2.9 to $3 million.
In my view, upon receipt of that material, the Commissioner could quite properly have been satisfied that the defendant was solvent. I believe that this is an important consideration to be taken into account by the Court in the exercise of its discretion to determine how costs ought to be borne in these proceedings.
Although Mr Wallis submitted on behalf of the defendant that the Court should find that the Commissioner had made an improper use of the winding-up procedure, that is, for debt recovery purposes, and while there were outstanding objections and doubts raised as to the statutory demand being served, I do not accept that there was anything untoward or inappropriate in the Commissioner bringing these proceedings. In my view, however, the matter ought to have been revisited on or around 6 March 2014, when Mr Karamihas’ affidavit was filed. That affidavit contained strong evidence that the defendant was in fact solvent.
The appropriate order as to costs is that the defendant should pay the Commissioner’s costs up to and including 6 March 2014, but that from that date thereafter, the parties should each bear their own costs.
I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Griffiths . Associate:
Dated: 4 September 2014
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