Deputy Commissioner of Taxation v Garden Makers (Qld) Pty Ltd
[2008] FCA 613
•2 May 2008
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation v Garden Makers (Qld) Pty Ltd
[2008] FCA 613INSOLVENCY – consideration of an application for a winding‑up order and evidence relied upon by the defendant to rebut a presumption of insolvency
Corporations Act 2001 (Cth)
DEPUTY COMMISSIONER OF TAXATION v GARDEN MAKERS (QLD) PTY LTD (ACN 098 191 890)
QUD55 OF 2008GREENWOOD J
2 MAY 2008
BRISBANE
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QUD55 OF 2008
BETWEEN:
DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND:
GARDEN MAKERS (QLD) PTY LTD (ACN 098 191 890)
Defendant
JUDGE:
GREENWOOD J
DATE OF ORDER:
2 MAY 2008
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.Garden Makers (Qld) Pty Ltd ACN 098 191 890 be wound up in insolvency, under the provisions of the Corporations Act 2001 (Cth).
2.John Richard Park be appointed liquidator for the purposes of the said winding‑up.
3.The plaintiff’s costs of the application fixed in the sum of $1,091.92 be reimbursed as a priority out of the funds in the liquidation.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
QUD55 OF 2008
BETWEEN:
DEPUTY COMMISSIONER OF TAXATION
PlaintiffAND:
GARDEN MAKERS (QLD) PTY LTD (ACN 098 191 890)
Defendant
JUDGE:
GREENWOOD J
DATE:
2 MAY 2008
PLACE:
BRISBANE
EX TEMPORE REASONS FOR JUDGMENT
I have an application before me by the Deputy Commissioner of Taxation for an order for the winding‑up of the defendant, described as Garden Makers (Qld) Pty Ltd. The matter has been adjourned on a number of occasions and Mr Brett Cameron Smallwood, who is a director of the defendant, appears in person and seeks to rebut the presumption of insolvency arising by reason of a failure on the part of the defendant to comply with a statutory demand served on 1 February 2008. The failure to comply with the demand thus arose on 22 February 2008.
Mr Smallwood has sworn a number of affidavits in the matter, including affidavits sworn on 28 April 2008 and 29 April 2008. Mr Stephen Peruinder Singh Dhillon has sworn an affidavit on 7 April 2008 in the proceeding which exhibits correspondence received by the Australian Taxation Office from Mr Smallwood and, more importantly, copies of four contracts of sale of lots of land by the defendant. Three of the contracts, each made on 16 April 2008, involve sales of lots by the defendant to an entity described in the contracts of sale, as BC and GM Smallwood Family Trust. Mr Smallwood, in addition to the sworn affidavits, has given oral evidence from the witness box about these contracts.
Each of these contracts is made by the defendant in favour of a buyer as trustee of the nominated trust which is the family trust of Mr Smallwood’s family. Each contract recites a consideration of $120,000 with a deposit paid of $1000. That deposit has been paid to the agents for the vendor. The balance purchase monies are to be funded by the trustee of the trust by making application to the Commonwealth Bank for loan funds to facilitate each purchase. In Mr Smallwood’s oral evidence, he explained that the Commonwealth Bank is not his normal banker but by reason of a particular introduction, he was able to make an approach to the Commonwealth Bank and complete a loan application form which was sent to a gentleman called ‘James’, who is an officer of the Commonwealth Bank in Sydney.
Mr Smallwood had a conversation this gentleman called James recently and sent some further information on behalf of the trustee of the trust and, no doubt, other financial information to the Commonwealth Bank. Mr Smallwood says that he was anticipating hearing a response as to the success or otherwise of that application this week but has not done so and he proposes to talk to James again this afternoon with an expectation that he might hear something favourable or unfavourable next week. The remaining contract is a contract in favour of a company called Laverton Corporation Pty Ltd and the purchase price recited in that contract is $110,000.
Each of the first three contracts were entered into on 16 April and seemed to emerge in circumstances where there was some pressing urgency about this very application. According to the affidavit material, the calculations that I have made suggest that if each of these four contracts proceeds to settlement, sale proceeds of $470,000 would be generated. There is a debt due to a Mr Benson of $120,000 which is secured by consent caveats granted by the defendant over the blocks of land and there is a debt due to the National Australia Bank of $218,000. The present debt due to the Deputy Commissioner of Taxation is approximately $120,000 which would result in a balance surplus proceeds of $12,000, assuming finance is obtained and those contracts settle so as to realise the value of the sale price in each case.
A further matter arises in relation to a recent GST audit which was conducted, involving transactions associated with the defendant. The result of the audit is that the Deputy Commissioner contends that there is a further amount of additional tax payable of $55,427.79, and that sum falls due as debt due to the Commonwealth on 21 May 2008. Mr Smallwood contends that the defendant proposes to lodge an objection to the GST assessment arising out of the audit and that having regard to documents which were not made available to, or obtained by, the Australian Taxation Office, the result of an objection, taking account of all of those documents, would be that there would be no additional taxation liability and moreover there would be a refund of $60,000.
There is not sufficient material before the Court to make any informed assessment of the merits or otherwise of that objection, and for present purposes I simply put to one side the GST liability in any event since it does not fall due until 21 May 2008. The present question is whether or not in respect of debts which are due and payable by the defendant to the plaintiff, the defendant has, by proper admissible evidence, discharged the onus of rebutting the presumption of insolvency. I am not prepared to rely upon the evidence in relation to the finance application to the Commonwealth Bank.
There is no affidavit which deposes in detail to the chronology or sequence of conversations between Mr Smallwood and the Commonwealth Bank, nor the loan application documents, nor copies of materials sent to the Commonwealth Bank, nor any information in relation to the officer of the Commonwealth Bank or the branch, and in particular, no specificity is given about the gentleman with whom Mr Smallwood has been dealing. He can only be identified by reference to the Christian name ‘James’.
Accordingly, because I am not satisfied, on the evidence, that the presumption of insolvency has been rebutted, the company is, as a matter of law, insolvent. Accordingly, I propose to make the following orders:
(1)Garden Makers (QLD) Pty Ltd ACN 098 191 890 be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth).
(2)John Richard Park be appointed liquidator for the purposes of the said winding up.
(3)The plaintiff’s costs of the application, fixed in the sum of $1091.92 be reimbursed as a priority out of the funds of the liquidation.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood. Associate:
Dated: 2 May 2008
Counsel for the Plaintiff: No counsel appeared Solicitor for the Plaintiff Mr Dhillon, Australian Taxation Office Counsel for the Defendant: No appearance by counsel Solicitor for the Defendant: No appearance by a solicitor Defendant appearing in person: Leave given to Mr Brett Cameron Smallwood, a director of the Defendant to appear on behalf of the Defendant Date of Hearing: 2 May 2008 Date of Judgment: 2 May 2008
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