Deputy Commissioner of Taxation v ASD Laguna Investments Pty Ltd, in the matter of ASD Laguna Investments Pty Ltd

MOSHINSKY J: 1 This proceeding was commenced on 11 March 2016 by the Deputy Commissioner of Taxation as plaintiff against ASD Laguna Investments Pty Ltd (ASD) as defendant. By the originating process, the Deputy Commissioner sought the winding up of ASD pursuant to s 459P of the Corporations Act 2001 (Cth) (Corporations Act). 2 Subsequently, on 15 July 2016, the Deputy Commissioner indicated to the Court that the Deputy Commissioner did not wish to proceed with the application. 3 By interlocutory process dated 1 August 2016, Steelfinne Fabrications Pty Ltd and Steelfinne Holdings Pty Ltd (the Steelfinne Companies) applied to be substituted for the Deputy Commissioner, and thus to become the plaintiffs in the proceeding, pursuant to s 465B of the Corporations Act. 4 The matter came before me together with three related proceedings on 5 December 2016. On 6 December 2016, I gave reasons and made orders dealing substantively with the three related proceedings: Deputy Commissioner of Taxation v ASD Laguna Investments Pty Ltd, in the matter of ASD Laguna Investments Pty Ltd [2016] FCA 1481 (the December Reasons). However, I adjourned the application for substitution to a later date: see [38] of the December Reasons. 5 These reasons should be read together with the December Reasons. I will adopt the same abbreviations as used in the December Reasons. 6 The application for substitution came on for hearing today. At the hearing, the Steelfinne Companies made submissions in support of the application for substitution. ASD did not oppose an order for substitution being made. 7 Section 465B of the Corporations Act provides as follows: (1) The Court may by order substitute, as applicant or applicants in an application under section 459P, 462 or 464 for a company to be wound up, a person or persons who might otherwise have so applied for the company to be wound up. (2) The Court may only make an order if the Court thinks it appropriate to do so: (a) because the application is not being proceeded with diligently enough; or (b) for some other reason. (3) The substituted applicant may be, or the substituted applicants may be or include, the person who was the applicant, or any of the persons who were the applicants, before the substitution. (4) After an order is made, the application may proceed as if the substituted applicant or applicants had been the original applicant or applicants. 8 It is a requirement of s 465B(1) that the Steelfinne Companies be persons "who might otherwise have so applied for the company to be wound up". In the circumstances of the present case, as was accepted by the Steelfinne Companies, this means that they need to show that they might have applied for ASD to be wound up as at the commencement of this proceeding (ie, 11 March 2016). On behalf of the Steelfinne Companies it was submitted that they satisfied this standing requirement because, as at that date, they were creditors of ASD within the meaning of s 459P(1)(b): see Beverage Holdings Pty Ltd v Greater Pacific Investments Pty Ltd (1990) 3 ACSR 743 at 745 (Beverage Holdings). That paragraph of the Corporations Act refers to, as one of the persons who may apply to the Court for a company to be wound up in insolvency, "a creditor (even if the creditor is a secured creditor or is only a contingent or prospective creditor)". The Steelfinne Companies submit that they were, at least, contingent or prospective creditors of ASD as at 11 March 2016. 9 I accept the submission that the Steelfinne Companies were, at least, contingent or prospective creditors of ASD as at 11 March 2016. Although, as described in the December Reasons, they had not served a demand under the Guarantee, there was at that date a debt due and payable by the primary obligor, namely Turtle Point, and there was an existing obligation upon ASD under the Guarantee. In these circumstances, the Steelfinne Companies were contingent or prospective creditors: see Community Development Pty Ltd v Engwirda Construction Company (1969) 120 CLR 455 at 459 per Kitto J and 461 per Owen J. 10 In the circumstances, it is in my view appropriate to make an order for substitution of the Steelfinne Companies for the Deputy Commissioner. Such an order would, in the circumstances of the present case, further the purpose of s 465B, as described by Needham J (with respect to certain of its predecessor provisions) in DMK Building Materials Pty Ltd v CB Baker Timbers Pty Ltd (1985) 2 NSWLR 711 at 714, as referred to in Beverage Holdings at 744. 11 I will, therefore, make an order for the substitution of the Steelfinne Companies for the Deputy Commissioner so that they become the plaintiffs in the proceeding. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.