Deputy Commissioner of Taxation v Walunya Intertrade Pty Ltd ACN 080 994 734

[2006] FCA 795

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Walunya Intertrade Pty Ltd ACN 080 994 734 [2006] FCA 795

DEPUTY COMMISSIONER OF TAXATION v WALUNYA INTERTRADE PTY LIMITED ACN 080 994 734

QUD 391 OF 2005

DOWSETT J
10 FEBRUARY 2006
BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QUD 391 OF 2006

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION APPLICANT
AND:	WALUNYA INTERTRADE PTY LIMITED ACN 080 994 734 RESPONDENT
JUDGE:	DOWSETT J
DATE OF ORDER:	10 FEBRUARY 2006
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1.Walunya Intertrade Pty Limited ACN 080 994 734 be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth).

2.Ian Richard Hall and Gregory Winfield Hall be appointed liquidators for the purposes of the said winding up.

3.The plaintiff’s costs of the application, fixed in the sum of $968.30, be reimbursed as a priority out of the funds in the liquidation.

AND THE COURT DECLARES:

That anything that is required or authorized by the Corporations Act 2001 (Cth) to be done by the Liquidator may be done by either or both of them.

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 391 OF 2006

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION APPLICANT
AND:	WALUNYA INTERTRADE PTY LIMITED ACN 080 994 734 RESPONDENT

JUDGE:	DOWSETT J
DATE:	10 FEBRUARY 2006
PLACE:	BRISBANE

REASONS FOR JUDGMENT

1. This is an application for the adjournment of an application to wind up a company.  The company carries on business at two restaurants, apparently in leased premises.  On 8 August 2005 the Commissioner of Taxation served a statutory demand on the company.   A winding-up application was filed and served on 4 October 2005.  On the first return date, 3 November 2005, the matter was adjourned by consent in order to allow the company to obtain information from its newly-appointed accountants and to negotiate in respect of the debt.  On 22 November 2005, new solicitors were appointed to act on behalf of the company.  On 24 November 2005, the matter was again adjourned by consent to allow the company to obtain further information and to negotiate in respect of the debt. 

2. On 2 February 2006, a further adjournment application was opposed, but the adjournment was granted in order to allow the company to prove solvency.  On 8 February 2006, that is last Wednesday, an administrator was appointed.  On 9 February 2006 the matter again came on before the District Registrar.  The administrator sought an adjournment. 

3. The history of the matter is, in my view, relevant because it demonstrates that the company has known since 8 August 2005 that the Commissioner was pressing, yet has been unable to do more than pay a part of the debt during that period.  One would have thought that if there were any prospect of entering into a scheme of arrangement, something would have been done about it in the period between 8 August 2005 and last Wednesday. 

4. There seems to be a perception that the appointment of an administrator automatically means that winding-up proceedings will be adjourned.  It is true that, pursuant to s 440A, winding-up proceedings are to be adjourned where an administrator has been appointed unless the court is satisfied that it is not in the interests of creditors that there be an adjournment.  That does not mean that on every occasion on which the directors, at a very late stage, decide to appoint an administrator, the matter must be adjourned in order to allow investigations to take place. 

5. In the present case, the circumstances of the company seem fairly simple.  It has been carrying on business.  It now owes the Commissioner about $109 000.  The only other unsecured creditors are the two directors.  Nothing is said about the way in which the affairs of the company may improve or decline in the event that it continues to trade.  The only suggestion is that the Commissioner’s debt might be paid over a period of twelve months if the company is able to obtain, from a relative of one of the directors, who apparently lives in Thailand, the sum of $120 000, such amount to be paid over that period.

6. Nothing is said about the arrangements which have been made with the lady in question to obtain the funds, nor concerning the basis upon which they will be made available.  There is no suggestion in the material that the internal creditors, that is the unsecured creditors other than the Commissioner, will be any better off at the end of twelve months than they would be if the company were wound up now.  It may be that, if the scheme were successfully implemented, the Commissioner would be better off, but he has apparently made a commercial decision to proceed with the winding up.  That is a matter to which I must give some weight.

7. The only adverse consequence to the creditors other than the Commissioner is the assertion that, in the event of a winding up, the leases of the premises at which the business is conducted will be terminated.  That is a matter to which I have given some weight.   However, given the delay in taking any constructive steps, the simple nature of the affairs of the company and the relatively simple proposal as to the way in which the Commissioner is to be paid, it seems to me that there is no further investigation to be done.  The only question here is whether the Commissioner’s application should be delayed further in the expectation that the company may be able to obtain funds to pay the Commissioner over a period of twelve months.

8. At its simplest, the proposal is nothing more than a proposal that the Commissioner be kept out of his money for a further period of time.  In those circumstances, substantial weight must be given to the Commissioner’s point of view.  

9. I am satisfied that it is not in the best interests of creditors that the administration continue.  It is impossible to see any particular benefit to creditors other than the Commissioner, and the Commissioner perceives his own best interest to lie in seeking a winding-up order.

10. There will be an order in terms of the draft.  I might say that Mr Hay has said everything that could possibly be said in support of the application for an adjournment, but in the end, I am convinced that the winding-up should proceed.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.

Associate:

Dated:             4 July 2006

Solicitor for the Applicant:	Australian Taxation Office Legal Services Branch
Administrator of the Respondent:	Mr P D Hay
Solicitor for the Respondent:	James Conomos Lawyers
Date of Hearing:	10 February 2006
Date of Judgment:	10 February 2006