Deputy Commissioner of Taxation v RMC (Cooloola) Pty Ltd ACN 123 000 064

[2009] FCA 1185

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v RMC (Cooloola) Pty Ltd ACN 123 000 064 [2009] FCA 1185

DEPUTY COMMISSIONER OF TAXATION v RMC (COOLOOLA) PTY LTD ACN 120 000 064

QUD 158 of 2009

DOWSETT J
4 SEPTEMBER 2009
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION	QUD 158 of 2009

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	RMC (COOLOOLA) PTY LTD ACN 123 000 064 Defendant

JUDGE:	DOWSETT J
DATE:	4 SEPTEMBER 2009
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. This is a motion to wind up the respondent on the ground of insolvency. An administrator was previously appointed to the respondent. The time for holding the second meeting pursuant to s 439A of the Corporations Act 2001 (Cth) (the “Act”) was, on 27 August 2009, by order of Martin J in the Supreme Court of Queensland, extended for 45 days. Similar orders relating to the administration of associated companies were also made.

2. I would normally have treated the order extending time as an appropriate basis for granting an adjournment of the application to wind up.  However, I have been told that Martin J was not made aware of the existence of the winding up proceedings.  In my view, he should have been.  It is probable that had his Honour been provided with such information (and other information concerning the respondent which is now before me) he would not have made that order.

3. The task which I must undertake is that contemplated by s 440A of the Act – determining whether or not I am satisfied that it is in the interests of the respondent’s creditors that it continue under administration, rather than be wound up. I have been provided with a number of affidavits, primarily from the administrators, which are said to go to that issue. I find myself unpersuaded that there is any basis upon which I could conclude that it would be in the interests of the creditors of this company that the application for winding up not proceed.

4. It is said that the purpose of the administrators in seeking the extension of time, and in opposing the application, is that they wish to investigate further a security given in favour of a company called The Esplanade 1 Proprietary Limited in order to see whether or not the security can be set aside.

5. It is also said that various shareholders of the respondent have advanced amounts to the company, described in the balance sheet as “equity”.  The administrators claim to have formed a preliminary view that such people may be creditors as well as shareholders and, therefore, entitled to participate in the distribution of assets on that basis.

6. No real basis has been demonstrated for the belief that either of these matters requires investigation.  Further, the respondent seems to have virtually no assets apart from those which might arise from the off-setting of various inter-company liabilities within the group of which it is part.  Even then, the excess of assets over liabilities appears to be quite small, and there are various curiosities about the balance sheet, into which I need not delve at the moment.

7. Nothing in the affidavits suggests a basis for inferring that any substantial amount may be available to creditors.  Of those identified unsecured creditors about which there can be no dispute, it is clear that the present applicant, the Commissioner, is owed the largest debt.  That, of course, takes no account of the possible claims by the shareholders.  I am told and, indeed, it is supported by the balance sheet, that the Commissioner’s debt relates primarily to unpaid group tax, that is, money deducted from employees’ salaries and wages for the purpose of paying their tax liabilities.

8. A liquidator will be able to investigate the matters identified by the administrators in the event that an order for winding up is made.  Indeed, if there is reason to believe that there has been misconduct conferring a benefit on associated companies, then the better course is that the company be wound up. 

9. In the end, however, I am simply not satisfied that there is any reason to believe that the creditors will be any better off under the administration than they would be if the company were wound up.  I therefore propose to make the appropriate order.  I order in terms of the draft.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:       15 October 2009

Solicitor for the Plaintiff:	Ms A Walker of the Australian Taxation Office
Solicitor for the Defendant:	Mr JL Bickford of Bickford Lawyers

Date of Hearing:	4 September 2009
Date of Judgment:	4 September 2009