Deputy Commissioner of Taxation v Donnison Developments Pty Ltd ACN 104 010 200 (No. 1)

[2009] FCA 456

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Donnison Developments Pty Ltd
ACN 104 010 200 (No. 1) [2009] FCA 456

DEPUTY COMMISSIONER OF TAXATION v DONNISON DEVELOPMENTS PTY LTD ACN 104 010 200

NSD 1632 of 2008

EMMETT J

27 MARCH 2009

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1632 of 2008

BETWEEN: DEPUTY COMMISSIONER OF TAXATION
Plaintiff

AND: DONNISON DEVELOPMENTS PTY LTD ACN 104 010 200
Defendant

JUDGE:	EMMETT J
DATE OF ORDER:	27 MARCH 2009
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The affidavit of Richard Anthony Licardy sworn on 26 March 2007 be filed in Court.

2.The Notice of Motion be dismissed.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1632 of 2008

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	DONNISON DEVELOPMENTS PTY LTD ACN 104 010 200 Defendant
JUDGE:	EMMETT J
DATE:	27 MARCH 2009
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. The plaintiff, the Deputy Commissioner of Taxation (the Deputy Commissioner), seeks orders for the winding up in insolvency of the defendant (the Company).  The Deputy Commissioner claims that the Company is indebted to her for tax arising in respect of Business Activity Statements lodged by the Company with the Deputy Commissioner.  It appears to be common ground that any liability that the Company has to the Deputy Commissioner arises as a consequence of a transaction involving the purchase of a parcel of land in respect of which goods and services tax was paid.  The Company claims that it is entitled to a credit in respect of the tax that was paid in connection with that transaction. 

2. The Company lodged an objection to the Deputy Commissioner’s assessment some years out of time, although the Deputy Commissioner has recently extended the time for lodging the objection.  The Deputy Commissioner has also asked the Company to provide further information concerning the transaction.  That request was only made on 23 March 2009, and has not yet been complied with.  It is common ground that, if the Company succeeded in its objection, the Deputy Commissioner would not be a creditor of the Company.  However, until such time as the assessment is withdrawn or set aside, there is a debt due and owing by the Company to the Deputy Commissioner in the amount claimed by the Deputy Commissioner. 

3. The Company seeks an adjournment of the winding up application, pending the Deputy Commissioner’s objection decision.  It asserts that its objection has some prospects of success. 

4. The ground upon which the Deputy Commissioner seeks the winding up of the Company is the failure to comply with a statutory demand.  No steps were taken by the Company to object to or set aside the statutory demand. 

5. The Company has filed evidence, including unaudited accounts as at 31 December 2008.  Those accounts indicate that, as at that time, the Company had current liabilities for trade and other payables to unsecured creditors and for short term borrowings in a sum in excess of $1,064,000.  The accounts also show that, as at 30 June 2008, the Company had current liabilities in excess of $1,036,000.  The accounts show that the only current assets that the Company had at each of those times were loans to related parties of $304,815. 

6. The accounts certainly show that the Company has significant non-current assets and non-current liabilities.  It has property, plant and equipment having a value in excess of $10 million and total liabilities under $8 million, showing total shareholders funds in excess of $2,800,000.  However, for the six months ended 31 December 2008, the Company incurred a loss of in excess of $5,000, having shown an operating profit for the period ended 30 June 2008 of some $29,230. 

7. I have no information as to the realisability of the assets of the Company.  One test of insolvency is whether a company’s current liabilities exceed its current assets.  While that is not decisive, in the absence of any other evidence, that test is a fair indication that the Company is insolvent as at today.  Even if the Company succeeded in its objection, that would have no significant effect at all on its solvency position.  While that may result in the Deputy Commissioner ceasing to have standing to press the winding-up application, I have no evidence as to the nature of the other liabilities of the Company, such that another creditor may seek to be substituted. 

8. In all of the circumstances, I am not persuaded that the Company’s present application for an adjournment of the hearing of the winding-up application should be granted.  Accordingly, I decline to adjourn the hearing of the winding-up application.

I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:       6 May 2009

Counsel for the Plaintiff:	Ms EA Collins
Solicitor for the Plaintiff:	Church & Grace
Solicitor for the Defendant:	Licardy, Harris and Co.

Date of Hearing:	27 March 2009
Date of Judgment:	27 March 2009