Deputy Commissioner of Taxation v Patonga Beach Holdings Pty Limited
[2013] FCA 990
FEDERAL COURT OF AUSTRALIA
Deputy Commissioner of Taxation v Patonga Beach Holdings Pty Limited [2013] FCA 990
Citation: Deputy Commissioner of Taxation v Patonga Beach Holdings Pty Limited [2013] FCA 990 Parties: DEPUTY COMMISSIONER OF TAXATION v PATONGA BEACH HOLDINGS PTY LIMITED (ACN 093 452 263) File number: NSD 949 of 2013 Judge: YATES J Date of judgment: 27 September 2013 Catchwords: PRACTICE AND PROCEDURE – review of registrar’s decision to refuse an adjournment of an application to wind up the defendant in insolvency and, consequently, to make a winding up order Legislation: Federal Court of Australia Act 1976 (Cth) s 35A
Date of hearing: 27 September 2013 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 14 Solicitor for the Plaintiff: Mr C Bavin of Hunt & Hunt Counsel for the Defendant: Mr M Langenheim Solicitor for the Defendant: Angela M Frost
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 949 of 2013
BETWEEN: DEPUTY COMMISSIONER OF TAXATION
Plaintiff
AND: PATONGA BEACH HOLDINGS PTY LIMITED (ACN 093 452 263)
Defendant
JUDGE:
YATES J
DATE OF ORDER:
27 SEPTEMBER 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.On the undertaking of the defendant, by its counsel, to pay the appropriate filing fee, leave be granted to the defendant to file in court the interlocutory application dated 27 September 2013.
2.Leave be granted to the defendant to file in court the affidavit of Robert Stanley Osborne affirmed 27 September 2013 and the affidavit of Paul Edward Marsh affirmed 27 September 2013.
3.The orders made by Deputy District Registrar Hannigan on 27 September 2013 be set aside.
4.The proceeding be adjourned to 25 October 2013 at 9.30 am before a registrar of the Court.
5.The plaintiff notify any parties not appearing today of the details of the time, date and place of the adjourned hearing and other orders made.
6.The costs of today’s applications be the plaintiff’s costs in the winding up proceeding.
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 949 of 2013
BETWEEN: DEPUTY COMMISSIONER OF TAXATION
Plaintiff
AND: PATONGA BEACH HOLDINGS PTY LIMITED (ACN 093 452 263)
Defendant
JUDGE:
YATES J
DATE:
27 SEPTEMBER 2013
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)
This is an application for review of a decision of a Deputy District Registrar of the Court to refuse an adjournment of an application to wind up the defendant in insolvency and, consequently, to make a winding up order.
The plaintiff is the Deputy Commissioner of Taxation. The plaintiff’s application is based on the defendant’s failure to comply with a statutory demand in respect of a taxation debt of $542,328.22. As at 24 May 2013, the defendant was indebted to the Commonwealth for $631,763.27.
The proceeding was commenced on 29 May 2013. It has been before the Court on a number of occasions when adjournments were successfully sought. However, the Deputy District Registrar declined to grant a further adjournment when the matter was before the Court this morning and, as I have said, made an order winding up the defendant.
The evidence on the present application comprises the following affidavits: Robert Osborne of 9 August 2013; Stephen Bisgrove of 15 August 2013; Angela Frost of 26 September 2013; Robert Stanley Osborne of 27 September 2013; and Paul Edward Marsh of 27 September 2013.
Mr Osborne is the sole director of the defendant. He is also a director of Lakehouse Investments Limited (Lakehouse), a foreign corporation registered in Vanuatu with its registered office at First Floor, PKF House, Lini Highway, Port Vila, Vanuatu. Mr Marsh is the other director of Lakehouse.
Mr Bisgrove is the defendant’s accountant. He is also the accountant for Lakehouse. He has been the defendant’s accountant since September 2011. Since about March 2013, he has spent approximately 25 hours every week on the defendant’s accounts. He says that, as a result, he is aware of the week‑by‑week financial position of the defendant.
The defendant owns and operates a business known as Patonga Beach Hotel at 6‑8 Patonga Beach Drive, Patonga NSW. It also operates a business known as Patonga Beach Seafoods at 10 Patonga Beach Drive, Patonga NSW. The defendant employs approximately 10 permanent staff and 15 casual employees. The gross turnover of the two businesses is in excess of $3.2 million per year.
On about 10 August 2013, Mr Bisgrove compiled a draft financial statement in relation to the defendant for the year ended 30 June 2013. He also prepared up‑to‑date financial projections and cash flow statements. Although untested, the draft financial statement, financial projections and cash flow statements stand as some evidence that the defendant is trading profitably at the present time. Mr Bisgrove’s evidence was that, based on the draft financial statement and cash flow statements, and based on his experience and direct knowledge of the defendant’s financial position, the defendant is capable of meeting its financial obligations (including, but not limited to, paying employee wages and entitlements and paying trade creditors in accordance with agreed terms) if the hotel and shop are permitted to continue trading. Mr Bisgrove’s affidavit also expresses the opinion that the defendant’s assets exceed its liabilities by approximately $1.373 million.
One of the defendant’s assets is a loan to Lakehouse for $1 million. Lakehouse has recently sold a significant property in Vanuatu for approximately $3.1 million. The purchaser is Vanuatu National Provident Fund, the national provident fund for all employees in the Republic of Vanuatu (the Fund). All conditions applying to the sale have been satisfied except for the consent by the lessor of the property, the Minister of Lands.
However, in evidence is a letter dated 25 September 2013 that has been signed by the Acting Director of Lands, Survey and Registry of the Government of the Republic of Vanuatu. The letter relevantly states with respect to the sale by Lakehouse:
This letter is served to inform that we have completed our Departmental process for the subject title. We have submitted the transfer document to the Ministry of Lands for the Minister’s final endorsement as of the date of this letter.
We also wish to inform that the Minister is currently on official tour in Torba Province and he is expected back by this weekend. We are anticipating that the Minister will be signing the subject transfer document next week.
As to completion, the solicitors for the Fund have provided the following advice in a letter dated 26 September 2013 to the defendant’s solicitors acting on the conveyance:
We confirm that all conditions to the contract have been met save for the provision of the consent to transfer signed by the Lessor namely the Minister of Lands. We note the contents of the letter from the Department of Lands confirming the completion of the administrative processes prior to signing of the consent by the Minister.
We confirm that the contract provides for settlement to occur no later than 14 days after receipt of the signed consent to transfer and so based on the contents of the Department’s letter, we would expect that the consent to transfer will be available by the middle of next week and settlement will be effected no later than 14 days thereafter, although my client may be in a position to settle earlier if possible.
We confirm that our client is the national provident fund for all employees in Vanuatu, and as such, our client is a cash buyer with more than sufficient resources to complete the acquisition out of their own funds.
The defendant has called for repayment of the loan to Lakehouse. Lakehouse appears to be in a position to repay the loan on completion of the sale, which seems to be imminent. Its directors, Mr Osborne and Mr Marsh, have given evidence that the loan will be repaid to the defendant when the sale of the Vanuatu property completes. No supporting creditor has come forward. No other creditor of the defendant appears to be pressing for payment of any debt. The evidence suggests the real prospect that the defendant is, at the present time, solvent despite its failure to comply with a statutory demand issued by the plaintiff.
Although I can well understand why the Deputy District Registrar was not persuaded to grant an adjournment, I am satisfied on the evidence before me that the appropriate course is to set aside the orders made today and to grant a further adjournment to enable the sale of the Vanuatu property to complete, for Lakehouse’s debt to the defendant to be repaid and for the defendant to discharge its indebtedness to the plaintiff.
I wish to stress that, even if those expected events transpire, the position may well be that another creditor will seek to be substituted for the plaintiff on the adjourned date. Nothing I have said should be taken as an expression of the Court’s satisfaction that the defendant has positively demonstrated its solvency.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates. Associate:
Dated: 30 September 2013
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