Deputy Commissioner of Taxation v Distinctive Enterprises Pty Limited
[2008] FCA 491
•4 April 2008
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation v Distinctive Enterprises Pty Limited [2008] FCA 491
DEPUTY COMMISSIONER OF TAXATION v DISTINCTIVE ENTERPRISES PTY LIMITED & ORS
NSD 2022 OF 2007
EMMETT J
4 APRIL 2008
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2022 OF 2007
DEPUTY COMMISSIONER OF TAXATION V DISTINCTIVE ENTERPRISES PTY LIMITED
BETWEEN:
MITCHELL BALL
Applicant
AND:
DEPUTY COMMISSIONER OF TAXATION
First RespondentDISTINCTIVE ENTERPRISES PTY LIMITED ACN 097 860 547
Second RespondentDAVID KERR IN HIS CAPACITY AS OFFICIAL LIQUIDATOR OF DISTINCTIVE ENTERPRISES PTY LIMITED (IN LIQUIDATION) ACN 097 860 547
Third Respondent
JUDGE:
EMMETT J
DATE OF ORDER:
4 APRIL 2008
WHERE MADE:
SYDNEY
BY CONSENT AS BETWEEN THE APPLICANT AND THE SECOND AND THIRD RESPONDENT AND THE FIRST RESPONDENT NEITHER CONSENTING TO OR OPPOSING THE ORDERS, THE COURT ORDERS THAT:
1.Pursuant to section 447A of the Corporations Act 2001, Part 5.3A of that Act operate in relation to Distinctive Enterprises Pty Limited (in Liquidation) so that the applicant be indemnified for the purposes of 443A from the assets of the second respondent for:
(a)debts of the type described in section 443A(1)(a)-(c) (inclusive) of the Act he incurred in the performance or exercise, or purported performance or exercise of any of his functions and powers as administrator of the second respondent; and
(b)his remuneration for the performance or exercise, or purported performance or exercise, of any of his functions and powers as administrator of the second respondent.
2.There be no order as to costs of the notice of motion filed on 19 February 2008.
THE COURT, NOTING THAT ALL OF THE RESPONDENTS NEITHER CONSENT TO NOR OPPOSE THE ORDERS, ORDERS THAT:
3.Part 5.3A of the Corporations Act 2001 (Cth) operate in relation to Distinctive Enterprises Pty Limited (in Liquidation) so that the combined effect of the orders of the Court on 16 November 2007, 19 November 2007 and 30 November 2007 do not operate so as to render ineffective and a nullity:
(a)the actions and operations of the applicant in the performance or exercise, or purported performance or exercise, of his functions and powers as voluntary administrator of the second respondent from 16 November 2007 to 30 November 2007 (inclusive); and
(b)the resolution of the meeting of the creditors of the second respondent convened pursuant to section 439A of the Act on 23 November 2007 that:
(i)"the fees of the administrator be approved and paid in the fixed amount of $70,000 plus GST"
4.The applicant is entitled to be reimbursed out of the assets of the second respondent for the costs ordered to be paid by the applicant on 30 November 2007 on a party/party basis as expenses properly incurred in the administration of the second respondent within the meaning of section 556(1)(dd) of the Act.
THE COURT NOTES THE AGREEMENT BETWEEN THE APPLICANT AND THE SECOND AND THIRD RESPONDENTS THAT:
A.To the extent that the applicant may, by operation of these orders or by operation of the Act or otherwise, claim an entitlement to, or indemnity from, the fund recovered by the third respondent identified as a Term Deposit 799847607 in the sum of $51,288.98 held by National Australia Bank Limited, the applicant abandons such a claim or indemnity.
B.To the extent that the second or third respondents or either of them, may, by operation of the Act or otherwise, claim an entitlement to, or indemnity from, the fund recovered by the applicant identified as the balance of the third defendant's bank accounts at the date of the appointment of the applicant as voluntary administrator of the second respondent held at Commonwealth Bank of Australia Limited and National Bank of Australia Limited in the total sum of $31,018.13, the second and third respondents each abandons such a claim or indemnity.
C.Any future recoveries of the second respondent's assets are to be paid in accordance with the priorities established by section 556 of the Act.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 2022 OF 2007
IN THE MATTER OF DISTINCTIVE ENTERPRISES PTY LIMITED ACN 097 860 547
BETWEEN:
MITCHELL BALL
Applicant
AND:
DEPUTY COMMISSIONER OF TAXATION
First RespondentDISTINCTIVE ENTERPRISES PTY LTD ACN 097 860 547
Second RespondentDAVID KERR IN HIS CAPACITY AS OFFICIAL LIQUIDATOR OF DISTINCTIVE ENTERPRISES PTY LIMITED (IN LIQUIDATION) ACN 097 860 547
Third Respondent
JUDGE:
EMMETT J
DATE:
4 APRIL 2008
PLACE:
SYDNEY
REASONS FOR JUDGMENT
On 16 November 2007, on the application of the Deputy Commissioner of Taxation (the Commissioner), a Registrar of the Court made an order that the defendant, Distinctive Enterprises Pty Limited (the Company), be wound up and that Mr David Kerr be appointed liquidator of the Company. The Registrar at that time declined to make an order adjourning the hearing of the winding up application. At the time of the winding up order, the Company was the subject of voluntary administration, with Mr Mitchell Ball (the Administrator) having been appointed on 29 October 2007.
An application was made for review of the Registrar’s decision declining to grant an adjournment of the winding up application. That matter came before me on 19 November 2007 when I stood the matter over to 23 November 2007. In the meantime, I stayed the orders made by the Registrar to that time.
The matter was further adjourned to 30 November 2007, when I ordered that the application for an adjournment of the winding up application be refused and that the application for review of the deputy Registrar’s decision be dismissed. I ordered the Administrator to pay the Commissioner’s costs of the application for review.
In an ideal world, the review of the Registrar’s decision would have been heard and determined immediately after the decision of the Registrar. It is not an ideal world and it took some time, as has been indicated, for the matter to be resolved. Complications have arisen as a consequence in relation to the position of the Administrator.
It was known to all parties and to the Court that the Administrator was continuing to act as administrator pending the determination of the review. Of course, upon the winding up order being made, the administration came to an end. However, there was a hiatus when the status of the Administrator was, at best, provisional.
The Administrator has now applied to the Court for orders under s 447A of the Corporations Act 2001 (Cth) to regularise his position. Under that section, the Court may make such order as it thinks appropriate about how Part 5.3A of the Act is to operate in relation to a particular company. The Administrator asks for an order that Part 5.3A operate in relation to the Company so that the Administrator will be entitled to be indemnified, for the purpose of s 443A of the Act, from the assets of the Company for debts incurred in the performance of his functions and powers as Administrator and for his remuneration in the performance or exercise of those functions and powers.
The Administrator also seeks an order under s 447A that the Act operate in relation to the Company so that the combined effect of the orders will not be to render ineffective and a nullity the actions and operations of the Administrator from 16 November 2007 up to 30 November 2007 or to render ineffective and a nullity the resolution of the creditors of 23 November 2007 concerning the Administrator’s fees. At the meeting of the creditors of the Company held on 23 November 2007, the creditors resolved that the fees of the Administrator be approved and paid in an amount of $70,000. On one view, the effect of the Court’s orders could have been to render that resolution ineffective.
I have no evidence before me concerning the quantum of the fees. However, I am mindful of the fact that the creditors, who are commercial organisations, approved the resolution, with the exception of the Commissioner. The Commissioner did not oppose the resolution but abstained. In the circumstances, I do not consider the absence of evidence as to the appropriateness of the quantum as being in any way a deficiency in this application.
The Administrator also asks for an order that he be entitled to be reimbursed out of the Company’s assets in respect of the costs that I ordered him to pay on 30 November 2007. The Commissioner takes the position that he neither consents to nor opposes any of the orders sought by the Administrator. The liquidator of the Company, who has appeared as a party to the Administrator’s application, consents to certain of the orders that are sought by the Administrator.
In all of the circumstances, I consider that it is appropriate that orders be made along the lines proposed by the Administrator.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate:
Dated: 16 April 2008
Counsel for the Applicant :
Mr C R Newlinds SC
Solicitor for the Applicant :
TurksLegal
Counsel for the First Respondent:
Mr Johnson
Solicitor for the First Respondent:
Craddock Murray Neumann
Counsel for the Second and Third Respondents
Mr D Pritchard
Date of Hearing:
4 April 2008
Date of Judgment: 4 April 2008
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