Deputy Commissioner of Taxation v Sunshine Kebabs Pty Ltd (No. 2)

[2008] FCA 387

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Sunshine Kebabs Pty Ltd (No. 2)
[2008] FCA 387

INSOLVENCY - consideration of an application for an order that the defendant be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth).

DEPUTY COMMISSIONER OF TAXATION v SUNSHINE KEBABS PTY LTD 
ACN 101 750 378

QUD 381 OF 2007

GREENWOOD J
12 MARCH 2008
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 381 OF 2007

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	SUNSHINE KEBABS PTY LTD ACN 101 750 378 Defendant

JUDGE:	GREENWOOD J
DATE OF ORDER:	12 MARCH 2008
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.The Application of the plaintiff filed on 10 August 2007 for an order that the defendant be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth) is adjourned to Tuesday, 25 March 2008.

2.The costs of the plaintiff of and incidental to the hearing today are to be paid by the defendant. 

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	QUD 381 OF 2007

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	SUNSHINE KEBABS PTY LTD ACN 101 750 378 Defendant

JUDGE:	GREENWOOD J
DATE:	12 MARCH 2008
PLACE:	BRISBANE

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me an application for the winding up of Sunshine Kebabs Pty Ltd which is an application made consequent upon a notice of demand served under the Corporations Act 2001 (Cth) on 17 September 2007. The time limited by that notice expired on 8 October 2007 and at that time the debt due and payable to the Commissioner was an amount of $251,638.59. The amount presently due to the Commissioner today is $222,756.35. This matter was last before the court on 29 February 2008 at which time an application was made by the defendant for an adjournment of the winding up application on the footing that the managing director of the defendant, Mr Murat Coskun had filed an affidavit deposing to arrangements which had been struck with an incoming investor for the acquisition of what was then described as a 10 per cent interest in the company in consideration of an amount of $500,000.

2. An amount of $160,000 had been paid by way of a deposit in relation to that transaction $100,000 of which was paid into the trust account of the solicitors for the defendant and a trust account cheque written and supplied to the Commissioner.  It seems that the third party paid those monies to the solicitors for the defendant and those monies were then provided to the Commissioner.  In other words, the Commissioner seems not to have received that initial $100,000 from the defendant directly.  The effect of that payment was, as I say, to reduce the debt to what is now an amount of $222,756.35.

3. On the previous occasion on which this matter was before the court, an application for an adjournment was granted on the footing that circumstances subsisted under s 459R of the Corporations Act as special circumstances to warrant an extension, having regard to the contended arrangements with the incoming investor.  At that time I adjourned the matter on the footing that the arrangements deposed to were not reflected in any formal written agreement and therefore there was no extant evidence of a legally binding obligation on the parties to that agreement which would give comfort to the proposition that funds would be available which would clear the debt.

4. The debt payable to the Commissioner is the only extant debt to any creditor.  All other creditors are being paid in the ordinary course of business by the defendant.  On the last occasion, the court adjourned the matter on the footing that the defendant would be required to submit evidence to the court which established that the proposed arrangements had matured to documented arrangements which would reflect a legally enforceable agreement.  On that occasion, the court said:

   I should emphasis that unless these arrangements are documented in a properly enforceable form, and there is a serious prospect that the funds will be paid and cleared by 14 March 2008 then the real possibility is that on 12 March 2008 I will make orders for winding up.

5. When the matter came before the court this morning a further affidavit was filed by leave by Mr Murat Coskun.  In that affidavit, Mr Coskun provides some explanation as to the chronology of events from 29 February 2008 which influenced the development of the formal agreement between the parties, for the incoming investment.  Exhibited to that affidavit is a document dated 28 February 2008 which purports to be the sale contract between Sunshine Kebabs Pty Ltd and Tezcin Cosgun.  Under that document there are provisions which go to the sale arrangements.  The document is a one page letter and is not in precise terms and does not set out terms and conditions which would reflect the orthodoxy of a sale and purchase agreement in relation to shares.

6. The incoming purchaser has paid $160,000 of the purchase monies and there is a balance amount payable of $340,000.  In order to finance the acquisition of the shares, the third party purchaser has made an application to the Westpac Banking Corporation for funds.  That application was made on 29 February 2008.  In that letter the relationship manager in charge of this matter for the bank indicates that the bank will be in a position to assess the transaction within about two weeks.  That two week period expires on 14 March 2008 which is this Friday.  The assessment is to be the subject of certain reasonably conventional conditions such as revaluation of existing properties, formal agreements and other matters.

7. In the affidavit of Mr Coskun sworn 12 March 2008, the deponent provides some further background.  The incoming third party purchaser is acquiring a 25 per cent shareholding in the company now and not a 10 per cent share holding.  As to the company itself, the deponent deposes to the business circumstances of the company in terms of its field of operations and number of employees.  It is true to say that there is not before the court a properly documented arrangement which establishes what would conventionally be regarded as a legally enforceable obligation on the part of the incoming purchaser or that funds are now available which will have the effect of discharging the interest of the creditor.  

8. The presumption of insolvency operates in such a way that the defendant must rebut that presumption.  The defendant says that the circumstances that are presently before the court warrant a further extension of time to enable the completion of these arrangements which when completed will have the effect of providing cleared funds to discharge the interest of the Commissioner recognizing that there are no other creditors who have claims.  The Commissioner agitates quite properly that the matter has been adjourned now on five occasions and an adjournment today would be a sixth occasion. 

9. On the previous occasion, I referred to the earlier difficulties which seemed to confront the defendant which involved applications to the ANZ Bank for finance.  Those applications seemed to be influenced by the loan manager being on leave on one occasion and some suggestion that the loan manager had broken an ankle.  There is no doubt a flavour about this matter that on every occasion on which the deadline for resolution of the application comes forward, there is a difficulty in reaching the position that cleared funds are available so that the Commissioner’s interest can be discharged. 

10. I am in one sense reluctant to appoint liquidators to this company in circumstances where there is a serious prospect that within a reasonable period funds will be available to enable the interest of the Commissioner to be discharged especially in circumstances where there seems to be reasonable confidence that the payments made to the Commissioner to date are not susceptible of any preference claim.  That’s not to say that the court tolerates the continuation of circumstances where there is, as a matter of law, a presumption of insolvency running against the company. 

11. What I propose to do in this matter is grant a further adjournment and in doing so I make an order for the extension of time for the disposition of the application for winding up having regard to the special circumstances of the purchase arrangements which have now changed to increase the interest to 25 per cent and a third party application to Westpac Bank which seems to have some prospect of success having regard to the payment of $160,000.  However, plainly enough, there must be a line in the sand and I propose to draw it.  What I propose to do is adjourn the matter until Tuesday 25 March at 10.15. 

12. By that date, sufficient time will have passed to enable any and all of these questions to be ultimately resolved.  There is no point in making orders adjourning matters on the footing that the matter might simply be considered again.  Of course, any application for a further adjournment will be considered on its merits.  However, the court has the highest expectation that these matters will be dealt with on that day whether in terms of the making of a winding up order or otherwise but I wish to make it very clear to the defendant that this is as a matter of principle the last occasion on which the matter will be considered for further adjournment in the absence of extremely special circumstances.  

13. I order that the costs of the plaintiff of and incidental to today’s adjournment be paid by the defendant. 

14. I make those orders as I have indicated in the reasons. 

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:

Dated:        12 March 2008

Solicitor for the Plaintiff:	Mr P Cleary
Solicitor for the Defendant:	Ms S L Heath, Tucker & Cowan, Solicitors

Date of Hearing:	12 March 2008
Date of Judgment:	12 March 2008