Deputy Commissioner of Taxation v Australian Securities and Investments Commission

Solicitor for the Second Defendant: Harwood Andrews

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 606 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

JUDGE: KENNY J DATE OF ORDER: 21 JUNE 2013 WHERE MADE: MELBOURNE

The applicant, by his counsel, undertakes to negotiate a deed of indemnity with the liquidator of Graeme Macartney and Associates Pty Ltd pursuant to which the applicant will provide funds to enable the liquidator to carry out investigations into the affairs of the company, including any improper dispositions of property by the company and, if appropriate, pursue claims on behalf of the company to recover that property.

1. Paul Norman Uniacke be joined as second defendant to the proceeding ab initio from 28 November 2012.
2. Order 4 of the orders made by Registrar Luxton on 7 November 2012 be varied with effect that the plaintiff pay only the reasonable costs and disbursements of the Company's liquidator incurred up to and including 21 June 2013 as a result of the reinstatement of the registration of Graeme Macartney and Associates Pty Ltd ACN 006 855 509.
3. The application filed on 28 November 2012 by the second defendant, Fourth Nell Pty Ltd in its capacity as trustee of the PN Uniacke Income Trust and Strassa Pty Ltd in its capacity as trustee of the Strassa Unit Trust ('the application') be otherwise dismissed.
4. The second defendant pay the applicant's and the first respondent's costs of the application. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 606 of 2012

AND: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION

JUDGE: KENNY J DATE: 21 June 2013 PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 This proceeding was commenced by an originating application filed by the Deputy Commissioner of Taxation ('the Deputy Commissioner') on 29 August 2012, seeking various orders, including orders for the reinstatement of the registration of Graeme Macartney and Associates Pty Ltd ACN 006 855 509 ("the Company"), which was at that time deregistered, and for the winding up of the Company and appointment of a new liquidator. 2 By order made on 17 September 2012, a Registrar of the Court granted Paul Norman Uniacke, Fourth Nell Pty Ltd in its capacity as trustee of the PN Uniacke Income Trust ("Fourth Nell"), and Strassa Pty Ltd in its capacity as trustee of the Strassa Unit Trust ("Strassa") leave to be heard in the proceeding. 3 Immediately after a hearing on 7 November 2012, the Registrar made orders including that: (1) the registration of the Company be reinstated; and (2) that Jonathan McLeod continue as liquidator of the Company, and the liquidation continue as a members voluntary winding up. 4 The current application before the Court was made on 28 November 2012 by Mr Uniacke, Fourth Nell and Strassa for orders: 1. That pursuant to rules 2.13(3) and (4) of the Federal Court (Corporations) Rules 2000, section 23 of the Federal Court of Australia Act 1976, rule 9.02 of the Federal Court Rules 2011 (the Rules) and/or the inherent jurisdiction of this Honourable Court Paul Norman Uniacke, Fourth Nell and Strassa be added as defendants to this proceeding. 2. That the time within which Paul Norman Uniacke, Fourth Nell and Strassa may apply for review of the Decision [made by the Registrar on 7 November 2012] be extended pursuant to rule 1.39 of the Rules to the date of making these orders and that their application for review of the Decision be heard instanter. 3. Further or alternatively an order that order 1 of the orders of [the] Registrar … made on 7 November 2012 be set aside. 4. If order 3 above is made, an order that orders 2 to 7 inclusive of the orders of Registrar Luxton made on 7 November 2012 be set aside. 5. Further or alternatively to the extent necessary, an order that leave be granted to make this application for review to the parties named above who, by order of [the] Registrar … on 17 September 2012, were granted leave to be heard in this proceeding pursuant to r 2.13 of the Federal Court (Corporations) Rules 2000. 6. An order that the Plaintiff pay the costs of ASIC (if any), Paul Norman Uniacke, Fourth Nell and Strassa of this application. 7. Such further or other Orders as the Court considers appropriate. 5 The present application was supported by the affidavits of Ronald John Jorgensen sworn on 26 October 2012 and on 28 November 2012; Paul Norman Uniacke sworn on 14 September 2012; and Jonathan Paul McLeod sworn on 31 October 2012 and on 8 February 2013. Mr Jorgensen is the solicitor for Mr Uniacke, Fourth Nell and Strassa. Mr McLeod is the liquidator of the Company. 6 The Deputy Commissioner, who successfully sought re-instatement before the Registrar and is the contradictor on this application, relied on the affidavits of Rhett McPhie sworn on 29 August 2012, and affirmed on 7 February 2013 and on 25 March 2013; the affidavits of Julie Lee affirmed on 13 September 2012 and on 2 November 2012; and the affidavit of Brett Catton affirmed on 12 December 2012. 7 For the reasons set out below, I would dismiss the application by Mr Uniacke and others, seeking to have the Registrar's reinstatement order set aside and the Company returned to its deregistered status.

BACKGROUND 8 The Company was incorporated and registered in Victoria on 30 September 1987. Mr Uniacke was and, following the Registrar's orders on 7 November 2012, became once again, the sole director of the Company under a members' voluntary winding up. He was and remains the Company's sole shareholder. 9 Mr Uniacke is, furthermore, the director of Fourth Nell and Strassa. Both Fourth Nell and Strassa benefitted from certain loans being paid by the Company on their behalf and from payments made by the Company to the Commonwealth Bank of Australia for their benefit in 2007 and 2008. 10 On 1 October 2008, Mr McLeod was appointed as voluntary administrator of the Company. On 27 October 2008, he prepared a Report to Creditors ('the Administrator's Report') in relation to the Company referring to the Company's financial statements. These financial statements showed that the Company had assets totalling $2.00 at 30 June 2008 and liabilities totalling $1,418,248.00. Mr McLeod reported that the accuracy of the statements was unascertainable at that time. 11 After some correspondence, the Australian Taxation Office ('ATO') wrote to Mr McLeod, by letter dated 29 October 2008, advising: There is presently no claim in this administration, however there may be a claim when the income tax returns for the years ended 30 June 2007 and 30 June 2008 are lodged and issued. 12 On 13 November 2008, following a creditors' meeting, a Deed of Company Arrangement was executed and Mr McLeod was appointed administrator of the Deed. On 14 November 2008, Mr McLeod lodged on behalf of the Company a Form 5056 certifying that the Deed was wholly effectuated by its terms under s 445C(c) of the Corporations Act 2001 (Cth) ('the Corporations Act'). 13 On 24 November 2008, the Company lodged its tax return for the year ended 30 June 2007. As a result, a notice of assessment for income tax issued to the Company on 11 December 2008 under which it was entitled to a refund of $13,852.71. 14 On 26 November 2008, the Company lodged its tax return for the year ended 30 June 2008. As a result, a notice of assessment for income tax issued to the Company on 18 December 2008 under which it was entitled to a refund of $22,906.00. 15 On 27 November 2008, Mr McLeod lodged on behalf of the Company a Form 520 declaring the Company to be solvent with total realisable assets of $5,000 comprising cash at bank. 16 Pursuant to a shareholder resolution, on 3 December 2008, Mr McLeod was appointed as liquidator of the Company. 17 On 3 February 2009, the ATO provided Mr McLeod with a notice, stating: Pursuant to subsection 260-45(3) of Schedule 1 to the Taxation Administration Act 1953, the amount (the notified amount) that the Commissioner considers is enough to discharge any outstanding tax-related liabilities of Graeme Macartney And Associates Pty Ltd is $0.00. 18 A final creditors' meeting was convened on 19 March 2009, but there was no quorum in attendance. On 30 March 2009, Mr McLeod filed the Final Presentation of Accounts and Statement with ASIC, on the Company's behalf. 19 In May 2009, the ATO issued a Taxpayer Alert TA 2009/14, discussing default beneficiary arrangements. 20 On 24 June 2009, the Company was dissolved and deregistered under s 509 of the Corporations Act; and Mr McLeod ceased his role as liquidator. 21 In October 2009, the Commissioner of Taxation ('the Commissioner') issued Taxation Determination TD 2009/19, which expressed the Commissioner's position in respect of default beneficiary arrangements that were of concern to the ATO. The Commissioner took the view that a taker in default of trust capital does not have a vested and indefeasible interest in a share of the trust capital capable of falling within the scope of CGT Event E8. 22 In November 2009, the Commissioner offered reduced taxation penalties to taxpayers who voluntarily disclosed income earned from offshore activities in respect of which they may not have declared all income. 23 On 28 January 2011, an Offshore Voluntary Disclosure statement ("OVD statement") was lodged with the ATO on behalf of the Company, Fourth Nell and Mr Uniacke by their lawyers. 24 The OVD statement stated that: (1) In or about May 1995, the Company acquired land at 108 Main South Road, Hackham, in South Australia ('the Land'), together with a hotel business known as "the Aussie Inn" ('the Business') conducted from the Land. (2) By a deed dated 20 February 2006 ('the Trust Deed'), the Kapuacke International Foundation Trust ('the NZ Trust') was established in New Zealand with Atlas Trustees Limited acting as trustee ('Atlas'). The NZ Trust was set up for the purpose of conducting property development activities in New Zealand. (3) The Company and Global Admin (NA) Ltd ('Global Admin') were named in the Trust Deed as "residuary beneficiaries". (4) By a Deed of Covenant between Atlas as trustee for the NZ Trust and the Company, also dated 20 February 2006, the Company agreed to contribute $12,934,835 by 31 July 2006, failing which it would assign its residuary interest in the NZ Trust to an agreed alternative party. (5) The Company failed to make the contribution by 31 July 2006. By Notice of Assignment bearing that date, the Company assigned to Global Admin its residual interest in the trust property. As at that date, the trust property was comprised solely of $12,934,835 held in ABN Union Bank account number 212-091022. (6) By Heads of Agreement dated 9 May 2007, the Company sold the land and the Business for $16,000,000 or thereabouts, and disbursed the proceeds as follows: (a) $3,000,000 was repaid to the Commonwealth Bank of Australia in respect of a debt owed by Strassa; (b) $7,000,000 was repaid to Fourth Nell in respect of debts that the Company owed to Fourth Nell; (c) $5,000,000 was lent to Fourth Nell, which was then on-lent to Strassa; and (d) $800,000 was lent to Fourth Nell. (7) After dealing with the capital proceeds, the Company had the following unsecured creditors: (1) $1,400,000 owing to Mr Uniacke; and $15,000 to miscellaneous creditors. (8) Upon its liquidation, the Company either assigned the loans to Fourth Nell in the amounts of $5,000,000 and $800,000 to Mr Uniacke or the Company forgave the loans. (9) The Company maintained that CGT Event E8 occurred upon the forfeiture and transfer of the Company's residual interest in the NZ Trust such that it incurred a capital loss in the year ended 30 June 2007 in the amount of $12,934,835. The Company also maintained that this loss was carried forward into the following tax year and set off a capital gain of $12,300,000 derived from the disposal of the Land and Business. 25 On the basis of the information disclosed in the OVD statement, the Commissioner determined that amended notices of assessment should be issued to the Company to: (a) disallow the capital loss of $12,934,835 disclosed for the year ended 30 June 2007; (b) include the capital gain derived by the Company from the sale of the Land and Business in the assessable income of the Company in the sum of $11,428,516; and (c) impose administrative penalties for having a tax shortfall amount pursuant to Division 284 of the Taxation Administration Act 1953 (Cth) ('TAA'). 26 As already discussed, the Deputy Commissioner successfully applied to the Registrar for reinstatement of the registration of the Company. The application was made in order that the amended notices of assessment could be issued. 27 The Deputy Commissioner was later advised by the Australian Securities and Investments Commission ('ASIC') that the Company had been reinstated to the register. 28 On 20 November 2012, Mr Brett Catton, an ATO employee, attended the offices of Mr McLeod and delivered various documents, including notices of amended assessment for the years ended 30 June 2007 and 30 June 2008, a notice of assessment of shortfall penalty for the years ended 30 June 2007 and 30 June 2008; and a reasons for decision paper.

PROCEDURAL ISSUES 29 As discussed at the hearing on 25 March 2013, I considered it appropriate to order that Mr Uniacke be added as a defendant to the proceeding, with effect on and from the filing of the application with which I am now concerned. 30 Rule 2.13(3) of the Federal Court (Corporations) Rules 2000 (Cth) ('the Corporations Rules') provides that the Court may order that a person who is, or who claims to be, a creditor, contributory or officer of a corporation be added as a defendant to the proceeding. Pursuant to Rule 2.13(4), such an order may be made on application by that person, an existing party, or on the Court's own initiative. Mr Uniacke is an officer of the Company whose joinder is necessary in the sense of the generally applicable criteria for joinder (assuming that criteria of this kind apply in this context: see Shakespeares Pie Co Australia Pty Ltd v Multipye Pty Ltd [2005] NSWSC 1338 at [22]). I would therefore order that Mr Uniacke be joined as a defendant to the proceeding ab initio from 28 November 2012. 31 Neither r 2.13(3)-(4) of the Corporations Rules nor r 9.02 of the Federal Court Rules 2011 (Cth) ('the Federal Court Rules') assist Fourth Nell or Strassa and, accordingly, I would not join either of them. This would not appear to matter in any practical way, given that I indicated that I would grant them leave to be heard in the proceeding pursuant to r 2.13(1) if they sought such leave. As it happened, they did not find it necessary to do so. 32 The Registrar made the orders of 7 November 2012 in exercise of power conferred by s 35A(1) of the Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act'). Section 35A(5) provides that a party to proceedings in which a Registrar has exercised any of the powers of the court under s 35A(1) may apply to the Court to review the exercise of power within the time prescribed or within any further time allowed. The nature of the review, which takes place under s 35A(6), is explained hereafter. 33 In this connection, the relevant provisions of Rule 16.1 of the Federal Court (Corporations) Rules 2000 (Cth) ("Corporations Rules") can be noted: … (2) A decision, direction or act of a Registrar made, given or done under these Rules, may be reviewed by the Court or a Judge. (3) An application for the review of a decision, direction or act of a registrar made, given or done under these Rules, must be made within: (a) 21 days after the decision, direction or act complained of; or (b) any further time allowed by the Court. 34 It was accepted at the hearing that the current application was filed within 21 days after the Registrar made his decision. 35 As a result, the Court has before it an application for a review of the Registrar's orders of 7 November 2012 made under s 35A(5) of Federal Court of Australia Act 1976 (Cth) ('the Federal Court Act'), in circumstances where Mr Uniacke, one of the three persons seeking review, is joined as a party to the proceeding. 36 A review of a registrar's decision under s 35A of the Federal Court Act is by way of a hearing de novo in the sense that the parties may adduce fresh evidence as of right: see G & J Gears Australia Pty Ltd v Brobo Group Pty Ltd [2006] FCA 330 at [55] (Kenny J); Mazukov v University of Tasmania [2004] FCAFC 159 at [24] (Kiefel, Weinberg and Stone JJ); and Cottrell v Wilcox [2001] FCA 866 at [8] (Sundberg, Emmett and Finkelstein JJ). Since the Court may receive fresh evidence, it follows that the Court may depart from the findings of fact made by the Registrar. The hearing is a complete rehearing; and the judge is not fettered by the Registrar's decision. The Court is not, therefore, confined, to quote Mr Uniacke's counsel, to the "factual matrix as it stood when the application was made" to the Registrar: see Harris v Caladine (1991) 172 CLR 84 at 164 (McHugh J). 37 In Callegher v Australian Securities and Investment Commission (2007) 239 ALR 749 at 757 [46], Lander J succinctly explained the nature of a review by the Court under s 35A(5) of the Federal Court Act as follows: The hearing … is a hearing de novo: Mazukov v University of Tasmania [2004] FCAFC 159; Pattison v Hadjimouratis (2006) 155 FCR 226 … The right to review arises because the registrar has exercised the judicial power of the Commonwealth and, as such, is subject to the supervision of the court. The Registrar's orders are reviewable by hearing de novo: Harris v Caladine (1991) 172 CLR 84 at 124 … per Dawson J. A hearing de novo contemplates a complete rehearing. The moving party before the registrar has the responsibility of satisfying the court that the orders should have been made. The parties may adduce further evidence before the court and the rehearing is determined on the evidence put before the court which may include the evidence put before the registrar. The judge determines the rehearing without being fettered by the decision of the registrar: Southern Motors Pty Ltd v Australian Guarantee Corporation Ltd [1980] VR 187. … 38 The Court must determine the facts on the evidence that is adduced at the hearing before it, whether or not that evidence, and the facts to which they relate, were in existence at the time the Registrar made the decision under review. In so far as counsel for Mr Uniacke submitted to the contrary, I reject those submissions. 39 ASIC, which did not oppose the Deputy Commissioner's application for reinstatement of the registration of the Company before the Registrar, indicated, in a letter dated 22 March 2013 addressed to Ms Julie Lee at the ATO, that it continued not to oppose reinstatement upon satisfaction of certain conditions, none of which are presently controversial. ASIC did not appear at the hearing.

CONSIDERATION 40 The power to order reinstatement of a company's registration is conferred by s 601AH(2) of the Corporations Act, which provides: The Court may make an order that ASIC reinstate the registration of the company if: (a) an application for reinstatement is made to the Court by: (i) a person aggrieved by the deregistration; or (ii) a former liquidator of the company; and (b) the Court is satisfied that it is just that the company's registration be reinstated. (Emphasis added)

Is the Deputy Commissioner a person aggrieved? 41 The Deputy Commissioner has been held to be "a person aggrieved" where he has sought reinstatement to allow him to seek recovery of taxation liabilities: see Deputy Commissioner of Taxation v Lanstel Pty Ltd (1996) 22 ACSR 314 at 315-316 (Bryson J), citing Re Proserpine Pty Ltd and the Companies Act [1980] NSWLR 745 at 748 (Needham J); Re James Hardie Australia Finance Pty Ltd (Deregistered) (2008) 170 FCR 545 at 548 [13]-[16] ('Re James Hardie') (Lindgren J); Deputy Commissioner of Taxation v Australian Securities and Investments Commission; in the matter of Civic Finance Pty Ltd (Deregistered) [2010] FCA 1411 ('Civic Finance') at [9]-[17] (Jagot J). See also Jerry Pilarinos v Australian Securities and Investments Commission (2006) 24 ACLC 775 at 779, 789-790 (Gillard J). 42 In the present case, the Deputy Commissioner is an aggrieved person because he wishes to have the Company meet the liabilities to which the amended notices of assessment give rise. The effect of s 177(1) of the Income Tax Assessment Act 1936 (Cth) ('ITAA') is that notices of assessment have a conclusive evidentiary character both in respect of the due making of the assessment and, save in Part IVC proceedings under the TAA, that the amount and all the particulars of the assessment are correct: see McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263 at 281-282 (Taylor J) and FJ Bloeman Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 ('Bloemen') at 376-377. The Deputy Commissioner will probably need to undertake various steps in the enforcement process, including, so his counsel indicated, making application under s 447A of the Corporations Act to set aside, or vary, the Deed of Arrangement. 43 Even if, as Mr Uniacke argued, the Deputy Commissioner were unable to rely on income tax liabilities in existence at the time of the Deed of Arrangement, the liability to pay the penalties as assessed arose after the Deed of Arrangement; and, in consequence, the Company's penalty liability would not, on this analysis, be affected by the Deed of Arrangement: see Commissioner of Taxation v Kavich (1996) 68 FCR 519 at 525-526 (Lockhart J, with whom Lee J agreed). A challenge to the penalties as assessed, on the basis that there was no "shortfall amount", as Mr Uniacke argued, can only be resolved in proceedings under Part IVC of the TAA. 44 In any event, as counsel for the Deputy Commissioner submitted, although the service of notices of amended assessment and penalties had not occurred at the time of the Registrar's decision, it does not follow that the Deputy Commissioner was not a person aggrieved at the time of that decision. 45 The Deputy Commissioner was a person aggrieved both before and after he served the notices of amended assessment. This is because in order to take steps to recover taxation liabilities (or contingent taxation liabilities as they may be characterised prior to the service of the notices of amended assessment: see Civic Finance at 464 [13]) the Company must remain registered. Since the Deputy Commissioner is charged with the responsibility of administering the taxation legislation and would be hindered in discharging this responsibility in the event that the Company is not registered, both at the time of the Registrar's decision and now, the Deputy Commissioner was and remains properly regarded as a person aggrieved for the purposes of s 601AH(2) of the Corporations Act.

Is it "just" that the Company be reinstated to the register? 46 The Deputy Commissioner submitted that the following considerations were relevant to the Court's exercise of discretion as to whether or not to reinstate a company to the register: (1) the circumstances in which the company came to be dissolved; (2) whether good use will be made of the order if granted; (3) whether any person is likely to be prejudiced by the reinstatement; and (4) the public interest. 47 I accept that these considerations are relevant, although there may also be other considerations that would bear upon the exercise of discretion in the particular case. 48 At the outset of the hearing, the Deputy Commissioner sought to draw the Court's attention to a number of matters said to be disclosed in the contemporaneous documents that were in evidence, including the following. (1) The OVD statement purported to be made on behalf of the Company, even though the Company was deregistered at that time. (2) At the time Company appointed an administrator, it was unlikely the Company was insolvent: compare s 436A of the Corporations Act. (3) The loans to Fourth Nell were not apparently disclosed to the administrator, since they were not mentioned in the administrator's second report to creditors. (4) Further, the second report to creditors made no mention of what happened to the proceeds of sale of the Land and the Business, a matter the administrator noted was the subject of further investigation. The administrator also recorded that, "[t]he company's director has not provided me with an explanation as to the reason(s) for the company's financial difficulties". (The report went on to record that the administrator was "aware of ordinary unsecured creditors totalling $1,580,135.00" and indicated that an amount of approximately $19,000 was owed to unrelated creditors, whilst $2,248.00 was owed to Fourth Nell and $1,558,580.00 to Mr Uniacke.) (5) At the second meeting of creditors on 5 November 2008, a Mr Brian Palesy had represented third party and related creditors. The resolution to enter a Deed of Company Arrangement was moved by Mr Palesy, representing Mr Uniacke and carried "On the Voices", that is, by Mr Palesy. (6) The Deed of Arrangement provided, amongst other things, that "the Claims (if any) of the Related Parties, are released, discharged and extinguished when the Administrator has made all distributions to Admitted Creditors …". Notice that the deed [was] wholly effectuated was given the day after its execution. 49 After mentioning these and other matters, counsel for the Deputy Commissioner asked rhetorically: Why did Mr Uniacke go to the trouble of running this company through administration and then the deed of company arrangement when it only had debts to unrelated parties totalling approximately $20,000 and had no business that it was trying to save? It seems that Mr Uniacke or these related entities have contributed more than that amount just to go through this process, but the more important question is how was it that Mr Uniacke was able to form the opinion that the company was either insolvent or likely to become insolvent when, according to his own disclosure document, it held an asset in the form of a loan to Fourth Nell of the value of 5.8 million, which he then says was either forgiven or assigned to Mr Uniacke upon liquidation? 50 This is not the occasion to venture into the territory covered by the questions raised by counsel for the Deputy Commissioner. Whilst the matters to which the Deputy Commissioner referred throw light on his evident concern to have the liquidator "carry out investigations into the affairs of the company, including any improper dispositions of property by the company and, if appropriate, pursue claims on behalf of the company to recover that property" (see his undertaking regarding the liquidator's funding: [59] below), none of these matters are properly the subject of inquiry on this application. 51 Rather, it suffices to say that the circumstances set out above militate in favour of the Company's reinstatement to the register simply because they show that reinstatement would allow the Deputy Commissioner to carry out his statutory responsibilities in administering the taxation legislation. In discharging these responsibilities, the Deputy Commissioner wishes to have the Company meet the liabilities to which the amended notices of assessment give rise; and, in order to do so, he will probably need to undertake various steps in the enforcement process, including, it seems, making application under s 447A of the Corporations Act to set aside, or vary, the Deed of Arrangement. Unless the Company is registered, no enforcement process can be even attempted. 52 On the question whether it was just that there be reinstatement of registration, counsel for Mr Uniacke submitted that there were numerous obstacles confronting the Deputy Commissioner in any enforcement process against the Company; that the Deputy Commissioner's contemplated action is futile because of the Deed of Arrangement; and that there were other taxpayers involved in the relevant transactions that the Commissioner might more usefully pursue than the Company. 53 Counsel for the Deputy Commissioner responded that, upon application under s 447A of the Corporations Act, the Deed of Arrangement could be set aside, citing QBI Corporation Pty Ltd v Plantation Rise Pty Ltd (2010) 77 ACSR 573 ('QBI') (Wilson J). Counsel for Mr Uniacke challenged the authority of this decision, on the basis that Wilson J was mistaken as to the effect of Lindgren J's judgment in Deputy Commissioner of Taxation v Wellnora Pty Ltd (2007 163 FCR 232 ('Wellnora'), a decision on which Wilson J relied. For the reason stated in the following paragraph, however, it is unnecessary to decide this issue to resolve the current application. (In any event, I am inclined to the view that the error supposedly made by Wilson J in QBI was an immaterial one, since in Wellnora at [180] Lindgren J did in fact identify s 447A as an alternative source of power to set aside a deed of arrangement; and it was for this reason that Wilson J relied on Wellnora.) 54 Mr Uniacke's submissions as detailed above at [52] raise essentially two questions, namely: whether the Deputy Commissioner will encounter difficulties in the enforcement process (including whether the Deed of Arrangement can be set aside in an application under s 447A and/or monies recovered to meet the Company's liabilities to the Commissioner); and whether, as Mr Uniacke maintained, there are other avenues, such as those provided by Division 7A of the ITAA to recover the supposedly lost revenue. These two questions are, however, to be determined on another day. This is not a case in which it can be said that the Deputy Commissioner's proposed course of conduct is either entirely speculative or doomed to fail: contrast Graham Lewis Herbert v Nozala Pty Ltd [2006] NSWSC 1437 at [39], [46] and Blazai Pty Ltd v Gateway Development (St Marys) Pty Ltd & Anor [2009] NSWSC 800 at [28], [35]. To quote Lindgren J in Re James Hardie at 558 [86], the Deputy Commissioner "should … have the opportunity of moving to the next stage" of seeking to enforce the amended assessments. 55 Broadly speaking, I am satisfied not only that the circumstances militate in favour of the Company's reinstatement to the register, but also that reinstatement will serve some useful purpose and the public interest since the Deputy Commissioner will be assisted in discharging his statutory responsibilities. 56 As already stated, ASIC has not opposed the Company's reinstatement to the register. 57 Further, there is no evidence that Mr Uniacke (or any other third party) is improperly prejudiced by the Company's reinstatement. (There remains the possibility that the Company's liquidator may ultimately take action to recover the Company funds that were applied to the benefit of third parties such as Mr Uniacke, Fourth Nell or Strassa, but, once again, this is for another day.) 58 Finally, there is the matter of funding. In Re James Hardie, Lindgren J held (at 558 [87] that: In my opinion, it is appropriate to reinstate the registration of [the company] in order to allow the Commissioner to make a determination under s 177F and to make an amended assessment. Of course, it will be necessary for the Commissioner to put the liquidator in funds to consider the means of recovery. The Commissioner has indicated that he is prepared to consider funding the liquidator to that end, and submits that the appropriate course is for the level of funding to be determined between the Commissioner and the liquidator. I agree. 59 In all the circumstances, I consider that this is also the appropriate course in this case. The Deputy Commissioner has stated that he "is prepared to provide the funding for investigations into … the disgorging of the assets and to find out whether there's any means by which the company may bring that property back into the fund". To this end, he has said that he will undertake: to negotiate a deed of indemnity with the liquidator of Graeme Macartney and Associates Pty Ltd pursuant to which the applicant will provide funds to enable the liquidator to carry out investigations into the affairs of the company, including any improper dispositions of property by the company and, if appropriate, pursue claims on behalf of the company to recover that property. 60 Further, in view of the Deputy Commissioner's proposed undertaking, the role of Order 4 of the orders made by Registrar Luxton on 7 November 2012 is at an end. I propose to make an order reflecting this. 61 The Registrar also made an order that the Deputy Commissioner treat the OVD as validly lodged on behalf of the Company on 29 January 2011, including in relation to reduction in any penalties. No-one advocated that the Registrar's order should be disturbed.

Should there be a new liquidator appointed at this stage? 62 Referring to Donmastry Pty Ltd v Albarran (2004) 49 ACSR 745 at 748 and Citrix Systems Inc v Telesystems Learning Pty Ltd (in Liq) (1998) 28 ACSR 529 ('Citrix') at 535-536, the Deputy Commissioner submitted that since Mr McLeod was the administrator of the Deed of Arrangement and, therefore, involved in the transactions that the Deputy Commissioner was proposing to challenge, then another liquidator, who had consented to act as liquidator, should be appointed instead. The Deputy Commissioner submitted that Mr McLeod may be a witness in any subsequent proceedings, whilst at the same time being required to make decisions for the Company; and that this would give rise to a perception of conflict. 63 Having regard to the authorities to which I was referred, it does not seem to me that the time has yet come where it can be said that a conflict of interest and duty has arisen, or appears to have arisen. In this circumstance, there is as yet no "cause shown" to appoint a different liquidator: see Citrix at 535-536. I would, however, afford the Deputy Commissioner liberty to apply to renew such an application.

OTHER MATTERS 64 The Deputy Commissioner made somewhat cursory submissions in written submissions, which were scarcely developed at the hearing, that the Court should make a winding up order because it should be satisfied the Company was insolvent. Amongst other things, this submission is not consistent with all the evidence currently before the Court (see, for example, [9] above) and, indeed, it was inconsistent with some of the submissions made on behalf of the Deputy Commissioner (see [48(2)] above). The Deputy Commissioner made the alternative submission, in an equally cursory fashion, that the Company should be wound up on just and equitable grounds. There was a paucity of evidence to justify this course.

DISPOSITION 65 For the foregoing reasons, I would dismiss the application filed on 28 November 2012 by the second defendant, Fourth Nell and Strassa. 66 Counsel for Mr Uniacke invited the Court to make an order pursuant to s 1322(4) of the Corporations Act that ASIC be directed to rectify the register of companies by deleting the registration of the Company from the register. For the same reasons, I would reject this submission. 67 I would order that the second defendant pay the applicant's and the first respondent's costs of the application. I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kenny.