Deputy Commissioner of Taxation v JoossÉ

[2005] FMCA 1995

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DEPUTY COMMISSIONER OF TAXATION v JOOSSÉ [2005] FMCA 1995

BANKRUPTCY – Sequestration order – discretionary decision to go behind judgment debt.

PRACTICE AND PROCEDURE – Application to reopen case after judgment reserved – discretion – application refused.

Income Tax Assessment Act 1936 (Cth)
Corporations Law

Wren v Mahony (1972) 126 CLR 212
Makhoul v Barnes (1995) 60 FCR 572
Textile Clothing and Footwear Union of Australia v Bellhop [1999] FCA 1095
Joossé v Deputy Commissioner of Taxation of the Commonwealth of Australia [2003] FCA 1325
Joossé v Deputy Commissioner of Taxation [2004] FCAFC 245
Re West Cumberland Iron and Steel Company (1889) 40 CHD 361
Re Indian Zodo and Company (1884) 26 CHD 70
Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246
Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28

Applicant: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent: WOLTER JOOSSÉ

File No: MLG 1459 of 2003

Delivered on: 13 May 2005

Delivered at: Melbourne

Hearing Date: 8 March 2005

Further Submissions Received: From respondent on 4 April 2005; from applicant on 4 April 2005; from respondent on 6 April 2005

Judgment of: Hartnett FM

REPRESENTATION

Counsel for the Applicant: Ms H.M. Riley

Solicitors for the Applicant: The Australian Government Solicitor

The Respondent: Mr W. Joossé appeared on his own behalf

ORDER

1. The Estate of Wolter Joossé be sequestrated.

2. The respondent debtor pay the applicant creditor’s costs pursuant to Order 62 of the Federal Court Rules 1976 including any reserved costs to be taxed in accordance with the Bankruptcy Act 1966 (Cth).

3. All exhibits be returned after the expiration of the time fixed for appeal and otherwise to be retained until after judgment in any appeal.

4. A copy of this order is to be provided to the Trustee and to the Official Receiver in Melbourne within 2 days after this order is entered.

AND IT IS NOTED THAT:

The date of the act of bankruptcy is 23 September 2003.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 1459 of 2003

DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Applicant

And

WOLTER JOOSSÉ

Respondent

REASONS FOR JUDGMENT

1. Before the Court is a creditor’s petition application made by the Deputy Commissioner of Taxation (the Commissioner) seeking a sequestration order against the estate of the respondent.  The creditor’s petition was filed on 17 October 2003.  The respondent debtor opposes the making of a sequestration order and filed a form 149 Notice of intention to oppose application or petition on 19 December 2003.  An affidavit in support of the grounds of opposition was filed with that notice.

2. The petition is based upon a judgment for $249,637.94 comprised of a judgment obtained in the County Court of Victoria for $200,019.43 together with interest.  The act of bankruptcy in respect of which the petition was issued was failure to comply with a bankruptcy notice deemed to have been served on 29 August 2003.  The applicant in these proceedings relies upon the following documents:

   1)Affidavit of the National Personal Insolvency Index Search sworn by Jessica Evans on 7 March 2005;

   2)Affidavit of David Ian Johnson being Affidavit of Liability sworn on 8 March 2005;

   3)Affidavit of David Ian Johnson sworn 2 October 2003 and filed 17 October 2003 being an Affidavit of Truth of Statements in Petition;

   4)Affidavit of Katherine Margaret van der Mei sworn 17 October 2003, filed 17 October 2003 being an Affidavit Verifying Paragraph 4 of the Petition;

   5)Affidavit sworn 28 February 2005 and filed 1 March 2005 of Evan Angorou, Solicitor for the applicant creditor;

   6)Affidavit of Trudi Shephard sworn 28 February 2005 and filed 1 March 2005, the said Trudi Shephard being employed by Korda Mentha Pty Ltd as a director and being a person authorised to make the affidavit on behalf of Mark Mentha in his capacity as liquidator of Bellhop Pty Ltd.  (ACN 006 964 683) (Bellhop).

3. The applicant also relies on written submissions handed to the court this day and during the course of the proceedings.  The respondent relies upon his notice of intention to oppose the application together with affidavits in support, and in addition has handed up to the court two submissions, one dated 15 January 2004, and a subsequent one dated 8 March 2005, together with further affidavits being an affidavit of the respondent affirmed 10 February 2005; an affidavit of his wife Jacqueline Evonne Joossé affirmed 9 February 2005; an affidavit of Adam David Fitzgerald affirmed 9 February 2005; and an affidavit of Gerard Joseph Sheehy sworn 31 January 2005.  The affidavits of Mrs Joossé, Mr Sheehy and Mr Fitzgerald are all contained as exhibits to the affidavit of 10 February of the respondent.  There is a further exhibit to that affidavit being an earlier affidavit of Mr Joossé dated 10 February 2004 on which he relies.

Background

1. The bankruptcy petition is founded upon a judgment debt being a default judgment entered in the County Court of Victoria on 2 August 2001.  An application to set aside the default judgment was heard on 5 November 2001 in the County Court with such application being dismissed by Holt J.

2. The respondent was refused leave to appeal (from the County Court judgment) by the Victorian Court of Appeal.  The Court of Appeal considered affidavit material not previously before the County Court and thereafter concluded that the respondent had no arguable defence to the claim which gave rise to the judgment debt.  I note that as part of the history in this matter as this court may go behind a judgment debt to ascertain whether there is a debt in truth and reality if there is substantial reason for doing so.  (Wren v Mahony (1972) 126 CLR 212). The respondent then sought leave to appeal to the High Court. On 14 February 2003 the High Court dismissed the application for special leave.

3. The bankruptcy notice was issued on 19 March 2003.  The respondent sought to argue before Gray J in the Federal Court of Australia and on his application to set aside the bankruptcy notice that there were substantial reasons for going behind the judgment debt.  Justice Gray concluded in decision of 29 October 2003 that no substantial reason was advanced by the respondent as to why the Court should go behind the judgment debt.

4. The judgment debt arose from the respondent's personal liability as a director of a company known as Bellhop Pty Ltd (Bellhop) for the estimated amount of unremitted group tax under the provisions of Divisions 8 and 9 of part VI of the Income Tax Assessment Act 1936 (Cth) (the ITAA). Bellhop as an employer was required to deduct amounts in the nature of income tax instalment deductions from the salaries and wages that it paid to its employees. It was also required to remit the deducted amounts to the Commissioner by the due date. In the currency of these proceedings, the respondent asserted that Bellhop had never been an employer and submitted that this is an assertion that he has made numerous times in numerous proceedings. The matter has been litigated and determined and should not, as a matter of discretion, be re-litigated by the respondent (Makhoul v Barnes (1995) 60 FCR 572 at 582). I refer to the following:

   a)in the judgment of Marshall J of the Federal Court of Australia (which has not been overturned on appeal) in the matter of Textile Clothing and Footwear Union of Australia v Bellhop [1999] FCA 1095 the Court ordered on 23 July 1999 that a penalty of $2,500 be imposed on Bellhop in respect of breaches for non-observances of Clause 50 of the Textile Industry Award (1994).  The declaration which preceded that imposition of penalty was one wherein the court declared that Bellhop had committed breaches of non-observances of Clause 50 of the Textile Industry Award (1994) by failing to make contributions to the Australia Retirement Fund in respect of each of the persons named in the schedule attached to the orders for the periods referred to therein.  In his reasons for judgment, Marshall J found that each of the persons referred to in paragraphs 3 and 4 of the judgment had been continuously employed by Bellhop or other companies, the relevant business of which had been transmitted or assigned to Bellhop.  In paragraphs 12 and 13 of those reasons, his Honour set out the 10 employees of the first respondent (Bellhop) and the periods for which they were so employed;

   b)in his judgment of 29 October 2003 Gray J said, at page 13, paragraph 41:

   The combination of facts in the evidence before me suggests that the applicant would have no chance at all of succeeding in relation to a defence that Bellhop Pty Ltd had no employees in the relevant period and for that reason the penalties could not have been imposed.

5. If the Commissioner had reason to suspect that an employer had made deductions but not remitted them by the due date, the Commissioner was empowered pursuant to section 222AGA of the ITAA to make an estimate of the amount of the deductions and was required to advise the employer of the amount of the estimate by a notice pursuant to section 222AGB of the ITAA.  Notices of estimate were sent to Bellhop.

6. Division 9 of the ITAA provided relevantly that the directors of a company must within 14 days after the day in which notice of the estimates was sent to the company, cause the company to pay the amount of the estimates or cause it to "begin to be wound up" within the meaning of the Corporations Law in force at the time (hereafter referred to as the Corporations Law).  Section 222APC of the ITAA provided that if the estimates were not paid or the directors did not cause the company to be placed into liquidation within the 14-day period, the directors were liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the estimates.

7. As a director of a company that was sent notices of estimate, the respondent was personally obliged to ensure, within 14 days of the dates when the notices were sent, that Bellhop:

   a)paid to the Commissioner the amount of the estimates; or

   b)entered into an agreement with the Commissioner to pay the amount of the estimates by instalments; or

   c)was put into administration; or

   d)had commenced to be wound up. 

   The applicant maintains that the respondent did not ensure that Bellhop did any of those four things within the 14 days.  Accordingly the respondent became liable at the end of the 14 day period to pay penalties equal to the amount of the unpaid estimates.

8. However, the Commissioner was not entitled to recover the director penalties until 14 days after the Commissioner had given the respondent a notice stating inter alia that the penalty would be remitted if, at the end of 14 days after the notice was given, one of the four things referred to in the preceding paragraph had been done (section 222APE of the ITAA).

9. Director penalty notices under section 222APE of the ITAA in respect of different components of the debt were given to the respondent on 15 June 1999, 15 September 1999 and 16 October 1999.  Two notices in respect of the bulk of the debt were given to the respondent on 16 October 1999.  Accordingly, for the bulk of the penalty to be remitted, the winding up of Bellhop had to have commenced by 30 October 1999 or one of the other things referred to in section 222APE needed to have been done by that date.  This was an issue before Gray J in Joossé v Deputy Commissioner of Taxation of the Commonwealth of Australia [2003] FCA 1325; that is whether Bellhop commenced to be wound up within 14 days of the day on which two of the statutory notices were given. However, the issue in that case turned solely upon the date of service of the two notices. It is also implicit in the reasons of Gray J and as found by the Full Court of the Federal Court in Joossé v Deputy Commissioner of Taxation [2004] FCAFC 245 per Jacobson J at [16] that the winding up of Bellhop began on 3 November 1999.

10. In the hearing of the creditor’s petition before the Chief Federal Magistrate (as she then was) the respondent swore for the first time in proceedings that the directors had resolved on 10 September 1999 to place Bellhop into voluntary liquidation.  A photocopy of a purported resolution was exhibited to the affidavit of the respondent.  This evidence was not put before Gray J or the Court of Appeal of the Supreme Court.

11. If Bellhop had been wound up voluntarily under Part 5.5 of the Corporations Law pursuant to a valid special resolution passed on 10 September 1999, the winding up of Bellhop would have commenced on that date. If the winding up had commenced on that date, the director penalty notices given on 16 October 1999 would have been complied with within 14 days, or rather before they were given, and the bulk of the penalty would have been remitted. However, the applicant submits in the proceedings before me that Bellhop was not wound up voluntarily under Part 5.5 of the Corporations Law pursuant to a valid special resolution passed on 10 September 1999. Rather the applicant submits that Bellhop was wound up in insolvency under Part 5.4 of the Corporations Law pursuant to the order made in the Supreme Court on 3 November 1999, such that the winding up of Bellhop commenced on 3 November 1999 being the date of the winding up order. 

12. I shall now refer to the history of judicial proceedings in relation to the winding up application and what preceded it:

    a)on 15 December 2000 the applicant issued a County Court proceeding against the respondent for the recovery of director penalties.  The respondent filed an appearance but did not file a defence.  Accordingly, on 2 August 2001, the earlier referred to judgment in default of defence was entered against the respondent.  On or about 10 August 2001 the respondent served an application to set aside the judgment.  The affidavit made no reference to the date of winding up of Bellhop.  On 5 November 2001, that application was dismissed by His Honour Judge Holt.

    b)by summons dated 19 November 2001 the respondent applied for leave to appeal to the Court of Appeal against the decision of Judge Holt.  The Court of Appeal dismissed the application holding the respondent had no arguable defence.  The application to the Court of Appeal was accompanied by the respondent filing five affidavits in connection with that application.  Those affidavits claimed that Bellhop was not an employer and that the director penalty notices given to the respondent on 16 October 1999 were not given on that date but given on 21 October 1999.  The significance of the date of 21 October 1999 was that if the notices had been given on that date, then 14 days would not have elapsed before 3 November 1999 when the Supreme Court made an order for the winding up of Bellhop.  Consequently the bulk of the penalties for which the respondent was liable would have been remitted on 3 November 1999 because the director penalty notice would have been complied with.  The wind up application was opposed by the respondent who at the time was the sole director of Bellhop.  Mr Evagorou, the Solicitor with the conduct of the wind up proceedings has filed an affidavit which is before the Court as to those proceedings.  He says:

    At no time during the hearing or at any time previously was there any suggestion from Mr Joossé that Bellhop had already begun to be voluntarily wound up or that a resolution to voluntarily wind up Bellhop had been passed on 10 September 1999 or on any other date.

    The evidence as contained in the affidavit of Evan Angorou is unchallenged by the respondent in that he did not seek to cross-examine Mr Angorou.  I accept the evidence of Mr Angorou.

    c)the respondent's argument before the Court of Appeal proceeded on the basis that the actual date when the winding up of Bellhop commenced was 3 November 1999.  It is submitted by the applicant that had the winding up actually commenced on 10 September 1999 as the respondent now alleges, having alleged same for the first time in the creditor’s petition hearing on 16 January 2004 before Chief Federal Magistrate Bryant (as she then was) the penalties referred to in the director penalty notices given on 16 October 1999 would have already been remitted and there would have been no point in arguing about when the director penalty notices were given.

    d)The affidavit evidence of Trudi Shephard is unchallenged in that the respondent did no seek to cross-examine this witness.  Her evidence is that on 3 November 1999 a winding up order was made against Bellhop and Mark Mentha was appointed liquidator.  At the time the respondent was the sole director of Bellhop.  Her evidence, which I accept, is relevantly as follows:

    Under section 530A of the Corporations Law the respondent was obliged to deliver to the liquidator all books in his possession that related to Bellhop as soon as practicable after the court ordered that Bellhop be wound up. Those books in the possession of the liquidator do not contain any documents indicating or suggesting in any way that Bellhop began to be wound up voluntarily on 10 September 1999 or any other date or any sign of a resolution to that effect. In particular, the liquidator does not possess a copy of any minute of such a resolution or correspondence referring to such a resolution.

    On the other hand, the liquidator does possess documents indicating that Bellhop continued to carry on business after 10 September 1999, including trading during the month of October 1999.  Those documents are Bellhop's production reports, delivery dockets, invoices/statements and journal/cash book. 

    Bellhop's production reports for the period 7 September 1999 to 14 October 1999 do indicate that Bellhop produced garments during that period…Bellhop's delivery dockets indicate that 1090 garments were delivered by Bellhop to David Keys Pty Ltd for the period 16 September 1999 to 19 October 1999…Bellhop's invoices/statements and journal/cash book indicate that Bellhop sold garments to David Keys Pty Ltd to the value of $15,609.50 for the month of September 1999 and to the value of $7,050 for the month of October 1999. 

13. The respondent did not argue before the Court of Appeal or give evidence to the effect that Bellhop actually commenced to be wound up on 10 September 1999.  The Court of Appeal accepted that the director penalty notices were given on 16 October 1999 and otherwise concluded that the respondent had no arguable defence to the claim.  The respondent then sought special leave to appeal to the High Court.  He did not allege that the winding up of Bellhop commenced on 10 September 1999. 

14. On 19 March 2003 when the bankruptcy notice was issued to the respondent and he applied to have it set aside on various grounds, none of those grounds included that the winding up of Bellhop had commenced before the director penalty notices were issued.  The application to set aside the notice was dismissed by Registrar Mussett.  On 14 October 2003 the respondent applied for a rehearing of the application to set aside the bankruptcy notice and that rehearing application as a hearing de novo proceeded on the basis that the winding up of Bellhop commenced on 3 November 1999 and not 10 September 1999 as thereafter and now alleged by the respondent.

15. The new allegation about the time at which Bellhop began to be wound up was raised for the first time in an affidavit in opposition to the creditor’s petition.  This allegation is inconsistent with the basis on which the respondent ran the earlier proceedings, even though I find he was aware of the significance of the date of the commencement of the winding up.

16. The respondent claims that Bellhop was wound up voluntarily on 10 September 1999 by a special resolution of its members.  If the company had indeed gone into liquidation on that day, then the respondent could not be made liable as a director for unremitted group tax under Divisions 8 and 9 of Part VI of the Income Tax Assessment Act 1936 which formed the basis of the judgment debt. This is because the effect of section 513B of the Corporations Law was that a voluntary winding up of a company would have been taken to commence on the day that the resolution was passed.

1. It is incumbent upon this court to exercise its discretion to go behind the judgment and determine in truth and reality whether there was a debt due to the petitioner.  That is, it is incumbent upon this court in considering the creditors petition to determine whether the respondent's claim that Bellhop had been wound up voluntarily on 10 September 1999 by special resolution of its members is a valid claim.  What is not disputed is that:

   a)no liquidator had been appointed as required by section 495(1) of the Corporations Law;

   b)no copy of the alleged resolution for voluntary winding up was published in the Gazette as required by section 491(2)(b) of the Corporations Law;

   c)a declaration of solvency was not made as required by section 494 of the Corporations Law; and

   d)the company was wound up by order of the Supreme Court on 3 November 1999.

   Those matters are not in dispute and are conceded by the respondent.  The company extract from the Australian Securities and Investments Commission (ASIC) is evidence that the alleged resolution for voluntary winding up was not lodged with ASIC, despite the respondent's claim that he notified ASIC. 

2. What the Court is required to consider is whether the members of the company passed a resolution to wind up the company, and if so, on what date? There is before the Court a purported special resolution of Bellhop said to be pursuant to section 492 of the Corporations Law signed by the respondent as secretary/director of the company wherein it is said the company resolved

   That in the view of recent unfounded allegations and demands made upon the company and its director (s) and in view of the fact that the company has no real purpose and intends not to conduct any business, that the company begins voluntary winding up as from this day. 

   The resolution is dated, it is alleged by the respondent, 10 September 1999.  It is quite clear on the document which has been tendered to the court and is marked exhibit WJ4 that the date has been altered.  The date appears to have been altered from 10 November 1999 to 10 September 1999.

3. The respondent's assertion that Bellhop had no employees at any time is inconsistent with his answers to a questionnaire which he provided to the liquidator of Bellhop where he clearly indicated that the company had in each of the relevant years referred to in that questionnaire a number of employees.  It was also inconsistent with the findings of Marshall J to which I have referred. 

4. The Full Court of the Federal Court of Australia in Joossé v Deputy Commissioner of Taxation [2004] FCAFC 245 found that the Chief Federal Magistrate had erred in law in ordering on 21 January 2004 the sequestration of the estate of the respondent and in her refusal to go behind the judgment upon which the bankruptcy notice, with which the respondent failed to comply, was founded and that accordingly it was necessary for the creditor’s petition to be considered afresh. The Full Court held that there was evidence before the Chief Federal Magistrate which required the Court to go behind the judgment debt. That evidence was a photocopy of a letter allegedly dated 14 September 1999 which the respondent tendered and which he claimed had been written to his accountant. The original of that letter is before the court in these proceedings.

5. Subject to the special resolution being validly passed, a voluntary winding up commences on the day on which the resolution was passed.  In Re West Cumberland Iron and Steel Company (1889) 40 CHD 361 the failure to lodge the special resolution or to publish it in the Gazette does not affect the commencement of the winding up.  Such failure merely attracts penalties (Joossé v Deputy Commissioner of Taxation [2004] FCAFC 245 at [61] per Jacobsen J). Once a valid resolution for the winding up of the company has been passed, it must appoint a liquidator but it may do so at the same meeting at which the resolution was passed or at a later meeting (Re Indian Zodo and Company (1884) 26 CHD 70 at 76 to 77).  It follows that if members of Bellhop did in fact pass the special resolution on 10 September 1999, the winding up commenced on that date.  The commencement of the winding up would not have been affected by the failure to appoint a liquidator nor failure to give the requisite statutory notices.

6. At the hearing the respondent, his wife, Mr Fitzgerald and Mr Sheehy were all cross-examined by the applicant.  Tendered in evidence by the respondent were:

   i)the original minutes of resolution of all members of Bellhop on which I find the date to have been clearly changed, and it would appear from 10 November 1999 to 10 September 1999;

   ii)a letter dated 20 September 1999 from the respondent to ASIC advising ASIC that it had been resolved by the directors and shareholders of Bellhop that at an extraordinary meeting held at Seaford on 10 September 1999, it had been resolved to voluntarily withdraw from business and wind up the companies.  That correspondence has not been received by ASIC.  That correspondence included the following:

   As Bellhop Pty Ltd never had any assets, creditors or debtors we are not familiar with the process and procedures but draw your attention to your advices dated 15 April 1999 notifying the intention by ASIC to deregister the companies.  It is therefore quite likely that this has already been done.

7. There was also tendered in evidence a letter from the respondent dated 14 September 1999 to Mr Sheehy commencing

   It is with regret that we advise you that last Friday, 10 September it was resolved to voluntary withdraw from all business and commence winding up. 

   That correspondence has a received stamp placed upon it, but the date of receipt is illegible, and the person who placed the stamp on the letter, difficult to determine through the evidence of Mr Sheehy, to which I shall return.  That correspondence referred to the company never having had employees nor a bank account, which clearly is not a correct statement of fact.

8. Finally there was tendered in evidence as exhibit WJ3 a diary of the period from 6 September 1999 to 15 November 1999 purportedly of Mrs Jacqueline Joossé wherein there is an entry on 10 September 1999, “Business closed”.

9. Tendered in evidence and by the applicant was the notice of defence filed by Bellhop in the proceedings in the Supreme Court of Victoria filed 1 November 1999 wherein Bellhop notified its intent to oppose a notice of motion for winding up in insolvency of Bellhop on the grounds as set out in that notice of defence.  One of those grounds was that the amount claimed was only an alleged debt and not based on facts but on supposed estimates.  At the same time, an affidavit in support of the notice of defence was filed and sworn by the respondent 1 November 1999 in opposition to proceedings to wind up the company.

Evidence

1. Mr Gerard Sheehy was a partner in the accounting firm “Sheehy Saw & Associates” which firm were the accountants for Mr Joossé, his family and business.  He swore an affidavit in the proceedings on 31 January 2005.  In particular he deposed to (at paragraph 4):

   That I do recall and hereby confirm receiving such letter and that I have no reason whatever to suspect that this letter was not sent to our office on or about the date that is shown on the letter.  That date was supported by the date on the resolutions that were enclosed.

   (and at paragraph 5):

   That usage of the date received stamp is not inconsistent with office procedure.

   Cross examined as to his affidavit evidence, he presented as a witness on whose testimony the respondent could not rely to establish his case.  I find he has no recall on what date he received a letter allegedly written on 14 September 1999 and forwarded to him.  His evidence is that he could have received that letter two months or two years after the date it bore.  His evidence was that he could not recall if a minute of a meeting was enclosed in any correspondence of allegedly 14 September 1999 and received by him on a date unknown.  His affidavit evidence was that usage of the date received stamp was not inconsistent with office procedure.  His evidence at trial was that he no longer uses that procedure and that the stamp date could not be read because it had not printed out properly.  His evidence did not support his affidavit material.

2. The wife of the respondent gave evidence that she was present at the office in Seaford at a time and place consistent with the evidence given by her husband and being on 10 September 1999 when the decision was made to close up the business and that she witnessed the resolution for voluntary winding up being passed.  Only herself and her husband were present.  Mrs Joossé was not a director nor shareholder of Bellhop at the time.  She described her attendance to view her husband sign a document a formality.  There were no notices in relation to any proposal for the winding up of Bellhop nor was there a vote she had to participate in nor any document she had to sign or witness.  Her evidence was that she recorded this event in her diary and a copy of that entry was attached to her affidavit and the relevant part of the diary tendered in evidence in court.  She could not however explain the evidence of Trudy Shepherd as to the company’s production report nor the evidence that the company did in fact continue working after 10 September 1999.  Her claim that the company was wound-up and ceased business on 10 September 1999 is clearly contradicted by Mr Joossé’s own statement to the liquidator in a questionnaire in which he stated that Bellhop ceased trading on 21 October 1999 (as is contained in the affidavit of Stephen Antony Linden sworn 12 December 2003 paragraph 7 and exhibit SAL-5 thereto, being two affidavits of David Ian Johnston, one sworn 6 December 2001 and the second sworn 21 February 2002, and, in particular, exhibit A to the second Johnston affidavit).  Mrs Joossé’s evidence is also inconsistent with the chronology of events relating to Bellhop set out in an affidavit sworn by Mr Joossé on 21 February 2002 which is contained in exhibit SAL-6 to the affidavit of Stephen Antony Linden sworn on 12 December 2003.  Mr Joossé’s affidavit, titled Third Supplementary Affidavit, and filed in the Court of Appeal proceedings, makes no mention of a voluntary winding up of Bellhop, although in paragraphs 6 to 11 it appears to provide a complete chronology of Bellhop for the period July to November 1999.  In paragraph 11, Mr Joossé referred to a voluntary de-registration in 1995 which it is common ground did not go ahead, and a motion for winding up dated 15 September 1999.  The company search of Bellhop (at DIJ-28 in SAL-5) does not record any resolution for winding up with that date, but does note under the heading “Petitioner Court Action” the Deputy Commissioner’s petition for winding up (by notice of motion) dated 21 September 1999.  Having gone into the degree of detail contained in that affidavit, I accept the submission of Counsel for the applicant that it is inconceivable that Mr Joossé would have failed to mention the voluntary winding up of Bellhop if it had in fact commenced on 10 September 1999.  Considering all of the evidence before the Court including the history of proceedings I do not accept her evidence.

3. The evidence of Adam David Fitzgerald did not assist the respondent.  Mr Fitzgerald gave evidence that he saw a document that purported to be a resolution for the winding up of Bellhop.  He thought he saw it in September 1999 but was not sure.  He accepted that he may have seen it two months later, in November 1999.  Mr Fitzgerald recalled that the document he saw was dated and signed but could not say that it was dated 10 September 1999.  Mr Fitzgerald did not recall seeing an alteration in the date on the document, although it has obviously been altered from 10 November 1999 to 10 September 1999.  This suggests that Mr Fitzgerald saw the unaltered document, bearing the date 10 November 1999, in November 1999.  Mr Fitzgerald’s stated reason for thinking that he might have seen the document in September 1999 was that that date fitted in with the time at which Mr Joossé’s company (which he thought to be David Keys Australia Pty Ltd rather than Bellhop) customarily ordered yarn for the following season.  However, Mr Fitzgerald also gave evidence that another Joossé company, Apsley Productions Pty Ltd, run by Mr Joossé’s son Bernard, took over the business of the earlier company and continued to purchase yarn from Mr Fitzgerald’s company for about the next six months.  Mr Fitzgerald first invoiced Apsley Productions in December 1999.  I accept the applicant’s submission that as there was continuity in Mr Fitzgerald’s business relations with Mr Joossé related companies, Mr Fitzgerald’s stated reason for thinking he saw the resolution in September 1999 does not provide a firm basis for tying his recollection to September 1999.  Moreoever, the fact that Mr Fitzgerald’s company first invoiced Apsley Productions in December 1999 is consistent with the resolution actually being purportedly passed on 10 November 1999.  The weight to be given to the evidence of Mr Fitzgerald’s supposed recollection that he saw the purported resolution in September 1999 is reduced by the fact that Mr Joossé drafted Mr Fitzgerald’s affidavit for him after asking him to recall any meetings between July and September 1999.  Mr Fitzgerald   Mr Fitzgerald impressed as a witness who endeavoured to present an accurate and truthful recall of events to the court.

4. I am not satisfied upon the requisite standard of proof and when considering the evidence as a whole, that a special resolution was passed on 10 September 1999.  There is not before me an unaltered resolution dated 10 September 1999, minuted and kept in accordance with the provisions of the Corporations Law.  The resolution before the Court is altered on its face.  The respondent’s claim in these proceedings is inconsistent with all those relevant proceedings that have gone before and with the evidence before the Court. 

5. Mr Joossé did not cause Bellhop to cease carrying on its business from the date of the purported resolution as required by section 493(1) of the Corporations Law.  The evidence is clear that Bellhop continued to carry on its business until the end of October 1999, shortly before the Supreme Court appointed a liquidator on 3 November 1999. 

6. Finally, the respondent sought to adduce further evidence in the filing of an affidavit sworn by him on 4 April 2005.  Whilst the Court had provided for the filing of post-hearing submissions the applicant’s and respondent’s cases respectively were closed at the hearing on 8 March 2005.  Leave was not granted for further evidence to be filed; evidence which might readily have been adduced at trial. 

7. The respondent had ample opportunity to put his case before the Court and to provide rebuttal evidence as to matters put by the applicant.  I decline to introduce further evidence – after the close of evidence – into the hearing.  The hearing is the time and place for the presentation of argument (Carr v Finance Corporation of Australia Ltd [No 1] (1981) 147 CLR 246 per Mason J at 258) and the requirements of court efficiency, the interests of justice and fairness to parties requires that the affidavit, filed out of time, not be considered. I refer to the postscript comments of Justice McHugh in Eastman v Director of Public Prosecutions (ACT) [2003] HCA 28 where his Honour states (at [29]):

   Parties to matters before the Court need to understand that, once a hearing in the Court has concluded, only in very exceptional circumstances, if at all, will the Court later give leave to a party to supplement submissions.  Parties have a legal right to present their arguments at the hearing…  But a party has no legal right to continue to put submissions to the Court after the hearing.  In so far as the rules of natural justice require that party be given an opportunity to put his or her case, that opportunity is given at the hearing. 

   The respondent was accorded procedural fairness and natural justice at the hearing.  Moreover, in my view, the proposed evidence is of limited significance and would not cause me to alter my assessment of the matters it raises or to lead me to reach a different conclusion in this matter.

8. Accordingly I shall order that the Estate be sequestrated and the respondent debtor pay the costs of the applicant creditor.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of Hartnett FM

Associate:  Sophie Killen

Date:  13 May 2005