Deputy Commissioner of Taxation v Australian Investment & Property Corporation Pty Ltd

REASONS FOR JUDGMENT 1 The Deputy Commissioner of Taxation (the Commissioner) sought an order that Australian Investment & Property Corporation Pty Ltd (ACN 098 891 840) (the Company) be wound up in insolvency under the provisions of the Corporations Act 2001 (Cth) (the Act). On 2 May 2014, the Company was wound up in insolvency under the Act and Mr Brent Leigh Morgan was appointed liquidator of the Company. 2 The order for the winding up of the Company was made on the application of the Commissioner following the Company's failure to comply with a creditor's statutory demand in respect of debts of $59,157.04. That amount represented a running balance account deficit debt as at 24 July 2013 in respect of amounts due under the BAS provisions (as defined in the Income Tax Assessment Act 1997 (Cth)), administrative penalties and interest charge under the Taxation Administration Act 1953 (Cth) and superannuation guarantee charges (as defined in the Superannuation Guarantee (Administration) Act 1992 (Cth)). 3 On 2 May 2014, the Registrar dispensed with r 4.01(2) of the Federal Court Rules 2011 (Cth) (FCR) which enabled the Company to be represented by Mr William Meehan, a director of the Company. 4 By an interlocutory process filed on 10 June 2014, the Company stated that: 1. Certain vital information referred to by the Registrar in his summary, and therefore a contributory basis for deciding the case (during our hearing of 2 May 2014), was fundamentally and materially incorrect. The [Company] had included in its evidence an official [Australian Taxation Office (ATO)] document which showed that the ATO owed [the Company] $6.45; rather than [the Company] owing [the] ATO anything at all. This did not receive any recognition by the court. 2. We believe from the content of the Registrar's summation, that he was of the understanding that [the Company] owed the ATO at least $15,000; which he thought was agreed to by the [Company's] Accountant. Whereas, the $15,000 approx referred to by the Accountant, was a different matter. It referred to the total amount that [the Company's] employees had accrued in Super and which had been paid over their years of employment. This was set out in our affidavit which explained that the ATO was claiming that the total amount accumulated by our employees was around $19,000. However, evidence was provided by the [Company] to show that [the ATO] had included an additional 3 quarters of calculations; in error, which was computed after the employees had left, and after the [C]ompany had ceased to operate. This matter can be very easily verified to [the] ATO who first need to be prepared to allocate the time to fairly examine our case from the documentation compiled. 3. Our evidence, presented primarily in the form of tables representing payments to either [the] ATO or to Super Companies, was described as "all over the place" by the court, and we feel it was thereafter discounted by both the court and the representative for the [Commissioner]. The representative for the [Commissioner] summarily dismissed our material when addressed by the Registrar without, we believe, having had it properly reviewed (The [Commissioner] only received a copy of our affidavit the day before the hearing and it is highly unlikely that a competent ATO officer could have verified what had taken us 3 months to collect and compile in one night). An affidavit from the ATO examining officer would be helpful, and the opportunity to cross examine this officer would be a worthwhile pursuit. While the Court asked a number of important questions about our material, we feel we did not have leave to present the case we had prepared which would have clarified what had been superficially seen as being "all over the place". 4. We, the [Company], had, during the period of the hearing and several adjournments, been in productive discussion with an ATO officer, … who, on the eve before the Hearing on 2 May 2014, was getting a good grasp of our case with [the] ATO, and we (Frank Benjamin and William Meehan) were of the understanding that he would be briefing [the solicitor for the Commissioner], to arrange for [the Company] to be given further leave to obtain additional evidential information from the Super companies that represented our former employees, and to work with him to reach a suitable result outside of the court. Additional time was crucial, as even on the morning of the Hearing, a letter from North Super Fund was received by the [Company] which provided clear evidence that (another one) of the five [Company] employees super contributions had been paid up completely. We offered this new evidence to the court but there seemed to be little interest in it so late in the case. 5 No orders were sought. I have treated that application as an application for a review of the Registrar's exercise of power pursuant to s 35A(5) of the Federal Court of Australia Act 1976 (Cth) (the FCA). 6 The Commissioner opposes the application on three grounds: 1. The application is defective because it fails to articulate any orders sought by the Company; 2. The application for review of the Registrar's exercise of power pursuant to s 35A(5) of the FCA was out of time and there is no basis for extending the time in which to file that application; 3. Even if the Company was granted an extension of time to file the application for review, the application would fail. 7 Rule 3.11 of the FCR requires a party to make an application for review of a Registrar's decision within 21 days after the day on which the power was exercised. The winding up order was made on 2 May 2014. The Application was filed on 10 June 2014. There was no evidence to support any contention that any application was filed earlier. Rule 1.34 of the FCR allows a party seeking a review to apply to the Court to dispense with any requirement of the FCR. The Company did not seek dispensation in the Interlocutory Application and I have therefore treated this application as containing such an application for dispensation. For the reasons that follow, that application is refused. 8 The matters the Court may take into account when determining and considering an application to grant an extension of time to file an application pursuant to s 35A(5) of the FCA include any explanation for the delay, whether there is an arguable case that the winding up order should not have been made and the prejudice to other parties: see Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344 at 348-9 and Lemmen v Porcu [2013] FCA 1056.