Deputy Commissioner of Taxation v Video and Audio (Australia) Pty Ltd

[2008] FCA 213

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Video & Audio (Australia) Pty Ltd

[2008] FCA 213

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 VIDEO & AUDIO (AUSTRALIA) PTY LTD ACN 103 053 587
QUD337 OF 2007

GREENWOOD J
29 FEBRUARY 2008
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD337 OF 2007

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	VIDEO & AUDIO (AUSTRALIA) PTY LTD ACN 103 053 587 Defendant

JUDGE:	GREENWOOD J
DATE OF ORDER:	29 FEBRUARY 2008
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.Video & Audio (Australia) Pty Ltd ACN 103 053 587 be wound up in insolvency, under the provisions of the Corporations Act 2001 (Cth).

2.John Lethbridge Greig be appointed Liquidator for the purposes of the said winding up.

3.The Plaintiff’s costs of the application fixed in the sum of $1,127.14 be reimbursed as a priority out of the funds in the liquidation.

4.The costs of Workcover Queensland of and incidental to the Application be costs in the winding up.

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	QUD337 OF 2007

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION Plaintiff
AND:	VIDEO & AUDIO (AUSTRALIA) PTY LTD ACN 103 053 587 Defendant

JUDGE:	GREENWOOD J
DATE:	29 FEBRUARY 2008
PLACE:	BRISBANE

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me an application for the making of a winding up order concerning Video and Audio (Australia) Pty Ltd.  I also have before me an application by the defendant for an adjournment of the application on the footing that over some period of time there has been before the Deputy Commissioner an application by companies within the consolidated group of companies, of which Video and Audio (Australia) Pty Ltd is one, for a refund of GST which would, if paid, fall in for the benefit of this defendant.  The amount of tax due to the plaintiff is, as at 15 January 2008, $224,400.92, and there are increments upon that amount as between 15 January and today.

2. If the tax audit conducted by the Deputy Commissioner results in a favourable determination to the defendant, an amount of 441,000-odd dollars would become payable to either the defendant or entities within the consolidated group.  The Deputy Commissioner puts submissions to me that even if the refund became payable, those moneys would not become payable to the defendant.  However, there is material filed in relation to the scheme of arrangement which suggests that if this refund fell in according to a favourable determination, it would not form part of the scheme debts.  The analysis of the claim and the conduct of the audit leading to a determination by the Deputy Commissioner as to whether a refund is due and payable has been proceeding for some little time.  On 15 January 2008, the Deputy Commissioner wrote to Mr Hall on behalf of the defendant and said that:

   We advise that the Deputy Commissioner will consent to an adjournment for four weeks until Thursday, 21 February 2008, or the next available court date, to allow completion of the current audit investigation and for any resulting refund to be processed.

3. On the footing of that statement, Mr English of counsel on behalf of the defendant has made an application that the application for a winding up order be adjourned for one month.  That application is put on the footing that an interim decision or, at least, a recommendation has been made by the audit investigation group to the relevant decision-maker concerning the defendant’s application.  The interim recommendation apparently is that the application for a refund is to be rejected.  That decision, once made by the decision-maker, is to be the subject of review, and it is anticipated that a period of one month will enable sufficient time to determine the ultimate merits of that application.  In the letter from the Deputy Commissioner of 15 January 2008 the author, Anna-Marie Scott, also says - immediately following the previously quoted paragraph:

   However, we advise should this matter not be resolved to the Deputy Commissioner’s satisfaction by the next return date, we hold instructions for the company to be wound up at the next hearing.

4. Matters have progressed to at least a point where an interim decision has been made which is adverse to the defendant, and it seems clear enough to me, from the Deputy Commissioner’s letter of 15 January 2008, that the Deputy Commissioner would not press for a winding up order for the period of four weeks, but would not allow for an extended rolling period until the determination of the application for a refund, more generally.  It is clear that the defendant is insolvent, subject to this question of the refund.  I am not satisfied that there are circumstances which would warrant granting an adjournment.

5. I am not satisfied that the circumstances are special.  The position in this matter is that the audit has progressed and the application for winding up has been adjourned on a number of occasions, pending the anticipated determination, favourably, to the defendant of that refund.

6. I propose to make an order in terms of the draft as initialled by me, and a further order that the costs of Workcover Queensland be costs of and incidental to the application in the winding up.

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.

Associate:

Dated:        29 February 2008

Solicitor for the Plaintiff:	Australian Taxation Office
Solicitor for the Second Plaintiff:	Tucker Cowen
Counsel for the Defendant:	SJ English
Date of Hearing:	29 February 2008
Date of Judgment:	29 February 2008