Deputy Commissioner of Taxation v Pacific Islands Express Pty Ltd, In the matter of Pacific Islands Express Pty Ltd

REASONS FOR JUDGMENT 1 In this proceeding, the plaintiff, Deputy Commissioner of Taxation (the Commissioner) seeks an order winding up the defendant in insolvency and consequential relief. 2 The Commissioner relies upon s 459A and s 459P of the Corporations Act 2001 (Cth) (the Act) as the source of the Court's power to make the orders which he seeks. It is not now disputed that the Commissioner is a creditor of the defendant. 3 In addition, the Commissioner relies upon the presumption of insolvency created in his favour by the circumstance that, during or after the three months ending on the day when the application was made, the defendant failed to comply with a statutory demand served upon it by the Commissioner (see s 459C(1) and s 459C(2)(a) of the Act). The presumption for which s 459C provides operates except insofar as the contrary is proved for the purposes of the application in which the presumption is relied upon (see s 459C(3)). 4 On 6 February 2013, the Commissioner served a Creditor's Statutory Demand for Payment of Debt (the Demand) upon the defendant at its registered office. The amount claimed in the Demand was $348,255.78. That amount was said to be the amount due to the Commissioner as at 6 February 2013 in respect of amounts due and payable under the BAS provisions (as defined in subs 995-1(1) of the Income Tax Assessment Act 1997 (Cth)). By the Demand, the Commissioner demanded payment of the said amount of $348,255.78 within 21 days after service of the Demand upon the defendant, that is to say, by 27 February 2013. This proceeding was commenced on 23 May 2013. Thus, the defendant failed to pay the amount demanded by the Commissioner in the Demand within the three (3) month period provided for in s 459C(2) of the Act with the consequence that, subject to the defendant discharging the burden of proving that it is solvent, the presumption of insolvency provided for in that section will have arisen. 5 I am satisfied that the Originating Application, supporting affidavits and Consent of Liquidator were duly served upon the defendant on 23 May 2013. I am also satisfied that the Commissioner has proved that notice of the filing of his Application to wind up the defendant was duly given to Australian Securities and Investments Commission (ASIC) and published on the ASIC Insolvency Notices website (as to which see s 465A of the Act and reg 5.6.75 of the Corporations Regulations 2001). The Commissioner has also procured an appropriate consent from an official liquidator (Scott Pascoe of PPB Advisory). 6 By the Affidavit of Nehemias Javier affirmed on 18 February 2014, the Commissioner brought up to date the amount currently due from the defendant to him ($282,346.12) and otherwise updated the position of the defendant insofar as its obligations to lodge BASs and Income Tax Returns are concerned. I shall return to other evidence given by the deponent of this affidavit later in these Reasons. 7 By Order made by me on 15 November 2013 pursuant to s 459R(2) of the Act, the period within which the Commissioner's Application for the winding up of the defendant must be determined was extended for six (6) months from 22 November 2013. That is to say, the Commissioner's Application must now be determined by 22 May 2014. 8 The hearing of the Commissioner's Application has been adjourned on a number of occasions. I shall refer to these adjournments in detail below. 9 The last adjournment was granted on 19 February 2014 for a period of thirteen (13) days. That adjournment was granted over the objection of the Commissioner. However, the defendant was informed that it was very likely that no further adjournments of the hearing would be granted. 10 When the proceedings were called on for hearing on 4 March 2014, Counsel for the defendant sought a further adjournment of the hearing of the Commissioner's winding up Application. On that occasion, she asked for six (6) weeks. I refused that adjournment. I then proceeded to hear the Commissioner's Application. These Reasons for Judgment determine that Application. I will also include some brief reasons as to why I refused the further adjournment sought by the defendant. 11 By Amended Notice of Appearance filed on 4 March 2014 (with leave), the defendant specified only one ground upon which it proposed to oppose the making of a winding up order. That ground was expressed in the following terms: The Defendant company, Pacific Islands Express Pty Limited ACN 080 511 600 is solvent and is able to pay its debts including the Plaintiff's debt, upon a refinance taking place. 12 During the course of argument, it became apparent that, in addition to the single ground specified in its Amended Notice of Appearance, the defendant also wished to contend that the Court ought not make a winding up order against it on discretionary grounds. To some extent, these grounds included the circumstance that, according to the defendant, it is solvent. However, Counsel for the defendant submitted that, even if I were to conclude that the defendant had not displaced the presumption of insolvency, I ought nonetheless not make a winding up order in the exercise of the Court's discretion to decline to do so. Counsel went so far as to submit that the appropriate order in the present case was to dismiss the Commissioner's Application. 13 In order to explain why I refused the defendant's application for a further adjournment on 4 March 2014 and why I intend to make an order winding up the defendant, it is necessary to set out some matters of history which relate to endeavours on the part of the defendant and the group of companies of which it is part to refinance a significant debt owed by that Group to National Australia Bank Limited (NAB) and which, to some extent, relate to the course of events in the proceeding itself.