Consideration
149 Having regard to the relevant circumstances I am satisfied that the Chief Commissioner has made out the grounds in subs 445D(1)(e) and (f)(ii) and that effect cannot be given to the DOCA without injustice and/or because the DOCA is contrary to the interests of the creditors as a whole. That is because while the DOCA remains in place a liquidator will not be appointed, Dalma Form's affairs will not be subjected to investigation and there will be no possibility of recovery proceedings against alleged wrongdoers for insolvent trading, unfair preferences or other available relief. My reasons for reaching that conclusion follow.
150 A relevant factor and the starting point in considering whether the grounds relied on by the Chief Commissioner are made out is the question of whether Dalma Form will continue in existence as contemplated by s 435A of the Corporations Act, which is one of the objects of the voluntary administration process set out in Pt 5.3A of the Act.
151 Although the recitals in the DOCA state that its purpose is to provide for the business, property and affairs of Dalma Form to be administered in a way that maximises its chances, or as much as possible of its business, continuing in existence, there is no operative provision in the DOCA that provides a mechanism for this to occur, nor any clause directed in any way to the continuation of Dalma Form following the period of the administration.
152 The evidence before me established that Dalma Form had (and has) no employees. It entered into contracts with major builders and then engaged sub-contractors to undertake the relevant work. In the first report, the Administrators noted that Dalma Form ceased to actively trade during 2023 and was liaising with builders in order to have retentions released to it. In other words, the evidence before me establishes that Dalma Form had ceased trading before it entered into voluntary administration.
153 Dalma Form contends that it is continuing to trade. It relies on a contract dated on or about 17 May 2024, being after Dalma Form was handed back to Mr Andrijic, with Jonathan and Nicholas Grego to install formwork and steel reinforcement to retaining walls for two residential properties in Gladesville NSW 2111 (Gladesville Contract). The Gladesville Contract is annexed to an affidavit sworn by Celina Rosemary Elsusu, a solicitor in the employ of the Dalma Defendants' solicitors, on 18 June 2024.
154 The Gladesville Contract is described on its face as a "Small Works Contract". It is lacking in detail. For example it includes:
3. Contract Price:
• Day Labour plus materials
• Breakdown:
o Formworker: $70/hr + GST
o Steelfixer: $75/hr = GST
o Materials: Cost + 10%
4. Payment Terms:
• Full Payment: As calculated using above rates and agreed hours of work 7 days after satisfactory completion of all works and removal of formwork.
5. Duration of Work:
• The contractor agrees to complete the work within the specified period, subject to force majeure events.
155 However, it does not provide for when the work is to start or finish with any precision, nor provide any detail beyond a broad description of the scope of work, the number of workers required to complete the work, the timeline for the works or the total contract price, for example by way of estimate.
156 In the circumstances, the evidence of Dalma Form's intention to continue in existence is less than compelling and consists solely of the Gladesville Contract. Mr Andrijic provided no evidence about his intentions for Dalma Form and there was no evidence about whether Dalma Form was negotiating any other contracts for the provision of formwork services and, more generally, how it intended to resume its trading activities to meet the objective of continuing in existence. The Dalma Defendants submit that, given alleged deficiencies in the Chief Commissioner's evidence (which I address below), no significance attaches to Mr Andrijic's absence as a witness. At least in relation to this issue, I reject that submission. Mr Andrijic could have explained his intentions as to the future trading of the company. He did not do so such that the only evidence I am left with is the Gladesville Contract which, of itself, does not satisfy me that the intention is for Dalma Form to continue in existence.
157 It is clear that as a result of entry into the DOCA there will be no investigations undertaken into the affairs of Dalma Form as would be the case in a liquidation and no consequential proceedings.
158 In their supplementary report, among other things, the Administrators reported on their investigations to date. A summary of the supplementary report is set out at [25]-[28] above. The following emerges from the supplementary report.
159 First, the Administrators did not have access to all of the books and records of Dalma Form while undergoing their investigations. In particular they did not have all of Dalma Form's emails. For example, there was no offline synchronised copy of an online email account and there were no emails in the "Sent Items" folder.
160 Secondly, and despite this, the Administrators identified that there may be potential causes of action in the following categories:
(1) unfair preferences estimated to be in the range of $325,840 (pessimistic scenario) to $1,622,559.56 (optimistic scenario);
(2) uncommercial transactions. Given the lack of records, the Administrators were unable to determine the extent and, if pursued, value of these claims and further investigation would be required by a liquidator;
(3) creditor-defeating dispositions or illegal phoenixing. The Administrators' investigations in relation to this category of claim were, at the time of the issuing of the supplementary report, incomplete. They noted that "further investigations, including public examinations, would need to be completed in a Liquidation scenario";
(4) breach of directors' duties by the sole director, Mr Andrijic, under ss 180, 181 and 588G of the Corporations Act. The Administrators noted that Mr Andrijic "may seek to raise certain defences … and therefore, whilst the above is our initial view, such view may ultimately change in a Liquidation scenario once either further investigations are conducted or any potential defences are raised";
(5) against Igor Cikes, Rade Cikes or other persons who may have been acting as a shadow director of Dalma Form. Based on the information available to them the Administrators were unable to conclude whether either of the Messrs Cikes (or any other person) was a shadow director but identified certain areas of concern which, in their view, warranted further investigation including examinations under s 596A and s 596B of the Corporations Act to determine the existence of any shadow directors. The Administrators stated:
We are not at liberty to provide creditors with complete details of our concerns given such disclosure may prejudice any ongoing investigations, however, they arise from the following matters:
• The inadequacy of [Dalma Form's] books and records (which is addressed further at Section 4(a) of this Report);
• The failure by certain parties to adequately respond, or in some instances respond at all, to information requests issued by us; and
• The potential claims available to [Dalma Form] and any liquidators of [Dalma Form] should creditors resolve to wind up the Company as set out in Sections 4(c) and 4(h) of this Report.
(6) in relation to the Alleged Scheme, the Administrators reported that they had undertaken an investigation in relation to it which disclosed that during the period Dalma Form traded it had "engaged numerous labour hire companies which have gone into liquidation including Admin Form and SQM Group". Relevantly, the supplementary report included:
The liquidator of Admin Form has disclosed that the ATO is a creditor of Admin Form for an amount in the sum of $635,455 and the liquidator of SQM Group has disclosed that the ATO is a creditor of SQM Group for an amount in the sum of $8,946,449. The liquidator of Admin Form and SQM Group is of the view that Rade Cikes and Igor Cikes were shadow directors of each company. The investigation has disclosed that Dalma Services has received payments from [Dalma Form] over the past 10 years of amounts totalling $4,480,800.25.
The Director of [Dalma Form] has been unable to provide any [Dalma Form] records disclosing how charges invoiced by Dalma Services were calculated and that the service provided by Dalma Services was provided by Rosa Ayoul. Present investigations disclose that the amounts paid by [Dalma Form] to Dalma Services are disproportionate to the services provided by Dalma Services to [Dalma Form].
The Director of [Dalma Form] is also a director of Incline Hire. Incline Hire has submitted invoices which are marked up by 10% on invoices issued by third party service providers. There seems no reason as to why the Director of [Dalma Form] did not simply request the third party service provider to invoice [Dalma Form] direct. By failing to do so the Director appears to have used his position as a director of [Dalma Form] to gain an advantage for Incline Hire to the detriment of [Dalma Form] in breach of section 182 of the Corporations Act.
If [Dalma Form] goes into Liquidation, we are of the view that a public examination will enable further information and evidence to be obtained to consider whether there is a claim that [Dalma Form] may have against the Director, Rade Cikes and Igor Cikes and other entities as a result of [Dalma Form] potentially incurring liabilities to the ATO as a participant in the Alleged Scheme.
(7) insolvent trading. The Administrators are of the view that Dalma Form may have been insolvent from at least 12 August 2022 but that in a liquidation scenario they would be able to conduct detailed investigations to determine an insolvency date with more precision. Notwithstanding that, the Administrators said that, subject to potential defences, "[b]ased on the estimated insolvent trading date of 12 August 2022 and on the claims received to date, the estimated claim against the [Mr Andrijic] for insolvent trading is $668,468.60".
161 There is sufficient reason to terminate the DOCA to permit a liquidator to undertake the investigations identified by the Administrators to date.
162 Contrary to the Dalma Defendants' submissions, the Chief Commissioner identifies the nature of the claims which are sought to be pursued in a liquidation. He does so by reference to the supplementary report in which the Administrators, within the time available to them under the scheme imposed by the Corporations Act for voluntary administrators, have identified potential claims and areas for further investigation by a liquidator. The Dalma Defendants rely on Vero Insurance at [114] (see [149] above) in relation to the standard of evidence that they contend must be led where a creditor seeks to terminate a deed of company arrangement in the present circumstances. But, as Campbell JA made plain in Vero Insurance, the decision to terminate a deed of company arrangement to enable further investigation is to be made by reference to the circumstances of the particular case. In Vero Insurance, the hearing before the trial judge took place almost one year after commencement of the proceeding. Despite that the plaintiff who sought termination of the deed had not put on any further evidence and relied on the voluntary administrators' report.
163 In contrast, here the Chief Commissioner relies on the supplementary report in circumstances where the second meeting took place on 12 April 2024, he commenced this proceeding on 3 May 2024 and the hearing took place on 8 and 9 July 2024 with all parties agreeing that expedition should be given to its resolution. The opportunity and ability for the Chief Commissioner to "show that there is a real practical point in conducting the further investigations" beyond what arises from the supplementary report was extremely limited. Further the Chief Commissioner, like the Administrators, would have been hampered in any such efforts in the limited time available by the failure on the part of those responsible within Dalma Form to produce all of its books and records.
164 The first report and the supplementary report were admitted into evidence without objection and relied on by all parties. However, the Dalma Defendants submit that, as the reports were admitted without proof of the factual matters on which the opinions contained therein were based, the Administrators' opinions have little or no value. I am not persuaded that is the case. In their report the Administrators set out the factual matters on which their opinions are based and their reasons for forming those opinions. In cross-examination of Mr Soire, the Dalma Defendants did not seek to undermine those opinions. In my view the Administrators set out sufficient facts which were identified in the course of their investigations to support their preliminary views and/or suspicions.
165 In any event, as the Dalma Defendants point out, the Administrators quite candidly and properly stated in their reports that they could not assess the strength of a number of the claims either because they required additional investigation and/or because they did not know the nature of the defences, if any, that would be raised. In addition, the Administrators were unable to estimate the likelihood of recovery against individuals. Their investigations in relation to Mr Andrijic's assets are set out in the first report and, although not yet concluded, they had not at that time identified any significant assets.
166 The Dalma Defendants say the only attempt by the Chief Commissioner to overcome the deficiency in his evidence is by reference to a potential insolvent trading claim against the director. They rely on McCabe at [92] and [151]-[152] and submit that, as in that case, the question of whether Dalma Form was insolvent and the date of its insolvency will depend on the application of the relevant taxation legislation and the resolution of Dalma Form's objections to the Assessments.
167 McCabe concerned an application by the Commissioner of State Revenue for the termination of a deed of company arrangement under subs 445D(1)(a), (b), (c), (f) and/or (g) or s 447A of the Corporations Act. The Commissioner's primary submission was that it was detrimental to the interests of the public generally and contrary to commercial morality for the deed to stay on foot, relying primarily on s 445D(1)(g): at [2], [4]. He contended that it was in the public interest that the affairs of the relevant companies, referred to as the Comlek Companies, be investigated by a liquidator.
168 Justice SC Derrington set out the circumstances which the Commissioner contended established the detriment to the interests of the public generally at [89]:
(a) The extent of the payroll tax debt and grouping of the Comlek Companies;
(b) The systemic failure to account for payroll tax;
(c) The Comlek Companies' accountants' involvement in the failure to so account;
(d) The likelihood that the Comlek Companies were insolvent much earlier;
(e) The misuse of the Pt 5.3A process; and
(f) The matters that may be revealed, and actions taken, by further investigation.
169 In addressing the matters set out at (a), (b), (c) and (d) her Honour observed (at [91]) that the Commissioner's central contention was that the directors of the Comlek Companies permitted those companies to trade for more than a decade without declaring and paying the full extent of their payroll tax and, in effect, that tax fraud and alleged phoenixing were a reason to terminate the deed of company arrangement. Her Honour said at [92]:
However, the Commissioner eschewed that these proceedings concern breaches of Queensland Revenue laws (as defined in s 6 of the TAA). Consequently, the first two circumstances (being (a) and (b) above) are matters upon which no findings can be made without the application of those laws, and as to which this Court was not invited to make any findings beyond accepting the conclusive nature of the amounts recorded in the assessment certificates: see [48] above. Further, without making findings as to whether there was a systemic failure to account for payroll tax, nor can findings be made about any alleged responsibility on the part of the Comlek Companies' accountants - who, it must be observed, were not party to these proceedings, and so have not been heard on the issue. Similarly, "the likelihood that the Comlek Companies were insolvent much earlier", as contended, cannot be determined without the precise and careful application of the Payroll Tax Act, and the resolution of the outstanding Objection. Again, all parties, including the Commissioner, expressly disavowed that it was necessary in these proceedings for the Court to determine the date on which the Comlek Companies became insolvent, and I have proceeded on that basis.
170 Justice SC Derrington also rejected the Commissioner's submission that it was in the public interest for the deed to be terminated because the Comlek Companies were insolvent earlier than September 2022. In doing so her Honour accepted (at [151]) that there was a real possibility that the companies were insolvent at an earlier date but said that whether that was so depended on the resolution of an objection to the assessments which had been lodged by the Comlek Companies and which, in turn, would "involve the application of the grouping provisions in Pt 4 of the Payroll Tax Act, and the Commissioner's consequent calculations of interest and penalty tax". Her Honour found that these were matters within the purview of the Commissioner and were not matters in relation to which a liquidator is typically expert such that the appointment of a liquidator was "unlikely to resolve the question of the precise date of insolvency without specialist payroll tax advice".
171 While there are some parallels between the facts in McCabe and those before me there are also distinguishing differences. In both this case and in McCabe the objections were not resolved prior to hearing, though here, unlike in McCabe, the objections were lodged after the company was returned to its director. In McCabe the resolution of whether the likely first date of insolvency of the Comlek Companies was earlier than September 2022, which was the time at which the Commissioner first served notices of assessment and garnished one of the Comlek Companies' bank accounts, depended on the resolution of the objection to the Commissioner's assessments lodged by the Comlek Companies. In contrast, the Administrators' analysis in the supplementary report which led to the conclusion that Dalma Form may have been insolvent from at least 12 August 2022 does not turn on the date of issue of the Assessments nor any payroll tax liability. Nor could it, given that the supplementary report predated the lodgement of the Chief Commissioner's POD which was the first quantified notice of the Chief Commissioner's claim and, even then, it was expressed to be an estimate.
172 It may well be that in the final analysis the Assessments and the objections will affect the identification of the precise date of insolvency but how that will occur was not the subject of any evidence or developed submission before me. There is no evidence as to whether the objections will be pursued if the DOCA is terminated and Dalma Form goes into liquidation. Nor is there any evidence of the effect, or the likelihood, of the objections succeeding.
173 I turn to consider the relative benefits of the DOCA and a winding up. The Dalma Defendants rely on Britax Childcare Pty Ltd v Infa Products Pty Ltd [2016] FCA 848; (2016) 115 ACSR 322 at [93]-[94]. In Britax Burley J considered whether a deed of company arrangement should be terminated under s 445D of the Corporations Act. The plaintiffs in that case relied on subs 445D(1)(c), (e), (f) and (g) based on an analysis which showed that there would be a greater return to creditors in a liquidation (and prosecution following a liquidator's investigation) than available under the deed of company arrangement. In that context his Honour said at [93]-[94]:
[93] The analysis required under s 445D(1) does not require the Court to determine whether the proposed courses of action identified by Britax as potentially available are made out on the balance of probabilities. It is sufficient if the Court is satisfied that there is a "not unrealistic prospect that there may be a return to creditors on a winding up that is better than under the [Deed]"; Mustang Marine at [136]. Put another way, the plaintiff must establish a "serious case for the recovery of assets in a liquidation"; Public Trustee (Qld) v Octaviar Ltd (subject to a deed of company arrangement) (recs and mgrs apptd) (ACN 107 863 436) (BS 1848 of 2009) (2009) 73 ACSR 139; [2009] QSC 202.
[94] In Molit (No 55) Pty Ltd v Lam Soon Australia Pty Ltd (admin apptd) (1997) 24 ACSR 47 at 51; [1997] FCA 395, Branson J adopted the following test set out by Lehane J in Hamilton v National Australia Bank Ltd (1996) 66 FCR 12 at 34; 137 ALR 231 at 253; 19 ACSR 647 at 669 (emphasis added):
In my view the task of the Court in a case such as this is to form a view, on all the material before it, as to whether there is a real prospect that in [sic] a liquidation claim in which (or in the fruits of which) the second secured creditor has an interest could and would be pursued so as to afford to the second secured creditor recovery of more of the debt owed to it than it would obtain under the proposed deed of company arrangement.
174 Also relevant are the observations of Dodds-Streeton J in Mediterranean Olives Financial Pty Ltd v Loaders Traders Pty Ltd (Subject to Deed of Company Arrangement) (No 2) [2011] FCA 178 where at [195]-[197] her Honour said the following in relation to the phrase "the interests of creditors of the company as a whole" in s 445D(f)(ii) of the Corporations Act:
195 The interests of creditors as a whole in the relevant context do not, as the plaintiffs submitted, necessarily require certainty of greater material benefit on winding up. Nevertheless, if there is no prima facie evidence of misfeasance, concealment or a materially inadequate preliminary examination; the DOCA offers both real financial benefits credibly estimated on preliminary investigation to exceed those available on liquidation and indirect or collateral benefits from the survival of the company's business; and no worthwhile avenues for further recovery on liquidation are identified, a major creditor's curiosity or preference for further exploration of speculative claims is unlikely to render termination of the DOCA in the interests of the creditors as a whole.
196 In contrast, where, for example, the dividend or other benefits to creditors under, or as a result of, a DOCA are small; there are potential claims which, on a preliminary view, warrant further investigation because they afford reasonable prospects of greater returns on winding up; funding is probably available for an investigation; there are reasonable prospects that litigation or other necessary steps to prosecute the claims can be funded; and the defendants appear capable of satisfying their liability; termination of the DOCA may be in the interests of the creditors as a whole.
197 Each case will depend upon its own facts and combination of circumstances, which must be mutually balanced.
175 Contrary to the Dalma Defendants' submissions, the Chief Commissioner is not required to establish either that the potential causes of action will be made out or the prospects of any claim succeeding.
176 The Chief Commissioner has not himself undertaken any analysis or given evidence as to how the returns on a liquidation (following prosecution of some or all of the claims identified above) would result in a better return to creditors. This may be explained by the limited time the Administrators had to undertake their investigations, the inadequate and incomplete company records produced to the Administrators and the expedition of the listing of this matter for hearing. Despite that, there was evidence of the relative potential returns to creditors before me.
177 As set out at [62] above, the Administrators prepared an updated analysis of estimated returns to creditors calculated as at 19 June 2024 for three scenarios: the DOCA; an amended DOCA (based on the variation proposal); and liquidation in the event the DOCA is terminated.
178 That analysis shows that on a "low" estimate the return to creditors is at best 1.31% (amended DOCA) and at worst nil (liquidation) and on a "high" estimate the return to creditors is at best 43.51% (liquidation) and at worst 23.3% (DOCA). In other words, the analysis demonstrates, subject to the assumptions made by the Administrators, that the return to creditors on a "high" estimate in a liquidation will exceed those under the DOCA or amended DOCA based on the variation proposal. On a "low" estimate the difference in return to creditors is negligible.
179 The Dalma Defendants rely on Annexure A which sets out estimated returns to creditors based on the evidence given by Mr Soire in cross-examination. A copy of Annexure A is reproduced as Annexure A to these reasons. Based on the percentage recoveries shown in Annexure A the Dalma Defendants contend that the return on a "high" liquidation scenario is only marginally better than returns under the DOCA or amended DOCA when one takes into account potential cost recoveries in this proceeding.
180 The essential difference between the returns in Annexure A and those calculated by the Administrators is the addition of potential costs recoveries in this proceeding in the former. However, for the following reasons, the calculations in Annexure A are unreliable and do not assist the Dalma Defendants.
181 First, they assume that the Administrators will recover their costs of the proceeding and in the high scenario assume they will recover 90% of those costs. At the conclusion of the hearing the parties agreed that I should reserve on the question of costs to permit them to consider the outcome and my reasons. The outcome on costs is unknown and, in the event an order is made in the Administrators' favour, the percentage recovery is also unknown.
182 Secondly, if a costs order is made in the Administrators' favour, then those funds will be available in both a DOCA (or amended DOCA scenario), if the DOCA is not terminated, and in a liquidation scenario, if the DOCA is terminated. The cross-examination of Mr Soire and thus Annexure A do not account for the latter, making Annexure A at least incomplete if not unreliable.
183 Thirdly, the question of the extent to which the Chief Commissioner will be admitted as a creditor is unknown, particularly given the objections lodged by Dalma Form. However, Annexure A only accounts for admission of the Assessments in full in the "high" liquidation scenario.
184 True it is, putting to one side potential voidable preference claims, that: there is nothing before the Court, other than incomplete inquiries made in relation to Mr Andrijic's assets, as to the capacity of any putative defendant to meet a claim; the "high" liquidation scenario assumes that recovery actions and other litigation will be pursued which may or may not be successful and which will bring with it a level of uncertainty as to likely recovery; and it is likely that a liquidation will take longer than administration of the DOCA to completion, although how much longer is somewhat uncertain.
185 As to the last of those matters, while Mr Soire estimated the outer time limit for liquidation at seven years and the timeframe for effectuation of the DOCA (or amended DOCA) at 12 to 14 months, he gave the following evidence in re-examination, making his latter estimate somewhat uncertain:
Mr Krochmalik: … You were also asked some questions by Mr Anderson about the estimated duration of the time to effectuate either the current deed of company arrangement or the revised deed of company arrangement?
Mr Soire: Yes, yes.
Mr Krochmalik: And my recollection is that you said that your best estimate is that it might be between 12 and 14 months to have that DOCA effectuated or either of those DOCAs effectuated, yes?
Mr Soire: Yes.
Mr Krochmalik: All right. What are the factors that would dictate the length of time, while the DOCA remained on foot, before it could be effectuated?
Mr Soire: The payment terms. So I think the payment terms are nine or 10 months. So it's at least nine or 10 months. 10 And then at the end of that period, we would have to process and declare a dividend. It requires notification, advertisement of a dividend notice. That takes some time. Payment then of the dividend - adjudicating on any claims that might arise from calling a proof of debts - those types of things would, basically - at the end, when the funds are available for a dividend distribution, cause it to be that
Mr Krochmalik: Right?
Mr Soire: length of time.
Mr Krochmalik: One of the things you said there was adjudication of the various claims, yes?
Mr Soire: Yes.
Mr Krochmalik: Is there anything that you can think of in relation to this particular administration that might cause some potential delay in relation to adjudication?
Mr Soire: We would look to do that throughout the period of the repayment period. We wouldn't wait to the end for - for doing that.
Mr Krochmalik: Right. But is there any particular - is there any particular claim that might be the subject of some lengthier adjudication process that might be out of your hands?
Mr Soire: Revenue New South Wales.
Mr Krochmalik: And can you just explain to her Honour why that is?
Mr Soire: Because it's subject to an objection.
Mr Krochmalik: All right. And do you have any indication as to how long that objection process might take?
Mr Soire: No, I don't.
Mr Krochmalik: Right. Is it correct that the adjudication process would need to await the determination of the objection?
Mr Soire: For that claim, yes.
Mr Krochmalik: All right. So it's possible that it could take longer than 12 to 14 months. Do you agree with that?
Mr Soire: Correct.
186 The final matter to address is funding in a liquidation scenario. As the Dalma Defendants submit it is apparent based on the available analysis that a liquidation would not be self-funding. There is no evidence before me that either the Chief Commissioner or the Deputy Commissioner (or any other creditor) intend to fund liquidators to carry out investigations, if appointed.
187 In an exchange of correspondence between the Administrators and the Deputy Commissioner in late January 2024 it was clear that at that time the Deputy Commissioner did not intend to fund the Administrators. At the time the Deputy Commissioner maintained that Mr Hathway should be appointed as administrator and, indeed, until the morning of the second day of the hearing, he pressed a prayer for relief that, in the event of termination of the DOCA, Mr Hathway should be appointed as Dalma Form's liquidator.
188 In their letter dated 19 January 2024, sent to the ATO following a meeting between the Administrators, their lawyers and representatives of the ATO, the Administrators noted, among other things (emphasis added):
We repeat our request that you forward all documentation relevant to the fraud issue to this office so that we may properly investigate these issues. We note you have indicated that it remains the preference of the ATO for Stephen Hathway to be appointed as administrator of [Dalma Form] and that the ATO will proceed with an application to the Court for the purpose of seeking orders appointing Stephen Hathway as the administrator of [Dalma Form] in place of ourselves. You have also indicated that you are not interested in funding any investigation to be conducted by us.
189 In its letter in response dated 24 January 2024 the ATO relevantly said:
The [Deputy Commissioner] is firmly of the view that the appointment of Mr Hathway as either Administrator and/or Liquidator of [Dalma Form] would be beneficial to the creditors of all three entities. It is envisaged those benefits, given the evident relationship between the entities, would include reduced costs and more streamlined investigations.
Regarding the matter of funding, the [Deputy Commissioner] is unable to properly consider an application for funding at this time as he has made clear his preference that Mr Hathway be appointed as Administrator and until that outstanding issue resolves it would be premature to consider a funding request.
190 In his affidavit affirmed on 17 May 2024, Liam Sweeney, Technical Leader in the Lodge and Pay section of the ATO, deposes that the Deputy Commissioner is prepared to engage in discussion with Mr Hathway as liquidator of Dalma Form to provide him with indemnity funding to conduct investigations into its affairs and to pursue any arguable claims which the liquidator or Dalma Form may have in the liquidation.
191 The Deputy Commissioner invited me to infer that, if the DOCA is terminated and Dalma Form placed in liquidation, there may be and is likely to be a source of funding from him. He submits that this is particularly so in circumstances where he is interested in resolving the Alleged Scheme which he contends includes Dalma Form.
192 It is apparent that the Deputy Commissioner was prepared to fund Mr Hathway in carrying out investigations in the event that he replaced the Administrators as administrator of Dalma Form or the Deputy Commissioner was successful in his application to have him appointed as liquidator if the DOCA is terminated. I would readily infer that, at the very least, the Deputy Commissioner would engage in discussions with the Administrators in relation to funding if the DOCA is terminated, and they are appointed Dalma Form's liquidators. I am satisfied that the Deputy Commissioner wishes to have an investigation undertaken into the affairs of Dalma Form and may be prepared to fund those investigations.
193 Further, while there is no evidence before me of any inquiries made, it will be open to liquidators, if appointed, to pursue funding from a commercial funder.
194 I am satisfied that the Chief Commissioner has for these reasons established the grounds in s 445D(1)(e) and (f)(ii) of the Corporations Act. Given that conclusion, it is not necessary for me to consider the other matters on which the Chief Commissioner relies to establish the grounds under s 445D(1)(e) and (f) nor the alternate ground relied on under s 445D(1)(c) of the Corporations Act.