Deputy Commissioner of Taxation v Platinum Builders Pty Ltd

REASONS FOR JUDGMENT 1 This matter has become before me on a referral from the Registrar's company list which was dealt with this morning. The plaintiff, the Deputy Commissioner of Taxation, seeks a winding‑up order on the ground of insolvency under s 459P of the Corporations Act 2001 (Cth). The application is unopposed but an issue has arisen as to the costs of a supporting creditor, Workers Compensation Nominal Insurer (WCNI). 2 The cost issue arises in the following way. The Deputy Commissioner's originating process was filed in this court on 24 January 2008 and was returnable today. WNCI commenced an identical application for winding‑up on the grounds of insolvency in the Supreme Court of New South Wales by originating process filed on 22 January 2008. 3 Although the WCNI application was first in point of time of filing, it was last in point of time as to its return date. The originating process in the Supreme Court is not returnable until 6 March 2008. The WCNI has, therefore, taken the step of coming to this court as a supporting creditor. 4 WNCI seeks to have its costs as supporting creditor paid out of the winding‑up of the defendant company, but it wishes to have these costs include the costs of the application which was made in the Supreme Court of New South Wales. 5 Coincidentally, both the Deputy Commissioner of Taxation and WCNI's solicitors, sought to have the same firm of accountants, Messrs Simms Partners, or more accurately a person from that firm, appointed as the liquidator of the company. The solicitor for WCNI has spoken to a member of the firm of accountants who is apparently likely to take the conduct of the matter. That firm of accountants has indicated that the question of costs is a matter for the Court. 6 The effect of the communications is that the proposed liquidator would not oppose the making of an order in the terms sought by WCNI. The only question is whether or not the Court has power to make the order. 7 The present situation has come about through no fault on the part of either the Deputy Commissioner or WCNI. This is because when the originating process was filed in the Federal Court on 24 January 2008, an ASIC search did not, and could not, have then revealed the existence of the earlier originating process. Accordingly, the Deputy Commissioner filed the originating process in this Court without any knowledge of the existence of the earlier proceeding in the Supreme Court. 8 In my view I do have power to make the order sought by WCNI. The power is to be found in s 43 of the Federal Court of Australia Act 1976 (Cth). In DSE (Holdings) Pty Ltd v InterTAN Inc [2004] FCA 1251 at [14], Allsop J said that s 43 is a broad and ample power, which is not to be read down otherwise than by judicial principle conformable with its amplitude. His Honour's remarks were made in a different context, but I consider that they are applicable to the present application. 9 It seems to me that what is necessary for the exercise of the power is to find some connection between the Supreme Court proceeding and the proceeding in this Court, in order to justify the order for payment of the supporting creditor's costs, including the costs of commencing in the Supreme Court, out of the process of the winding‑up. 10 The course which has been followed by WCNI, in coming to this Court as the supporting creditor, is the cheapest and most expedient course which could have been followed. In my view this step has rationalised the processes before this Court and has, indeed, rationalised both sets of proceedings, in a way which produces the most convenient and expeditious result in terms of costs incurred in the Court's processes. 11 What, in effect, has happened is that WCNI has taken the convenient course of coming here as a supporting creditor, in circumstances in which it had, on foot, an identical application in another court, although that application is not due to come before the Supreme Court until next month. Its status as a supporting creditor today is inextricably linked to the fact that it commenced the earlier winding‑up application in the Supreme Court of New South Wales. 12 In my view the order which is sought, therefore, falls within the broad power to which Allsop J referred in considering the amplitude of s 43 of the Federal Court Act. It follows that I propose to accede to the application made to me by Mr Davis of counsel for WCNI. 13 Mr Davis's instructing solicitor is in Court and he has informed me that when the Supreme Court proceedings are returnable on 6 March, an order will be sought that the proceedings be dismissed, with no order as to costs. Plainly, the Supreme Court could not now entertain the application to wind‑up the company, because I will make a winding‑up order this afternoon and in light of the course proposed today, the obvious approach in the Supreme Court is that there be no order as to costs sought in that matter. Mr Davis's instructing solicitor has undertaken to the Court to seek those orders in the Supreme Court on 6 March 2008. 14 Accordingly, the orders that I will make this afternoon are as set out in [1] to [3] of the originating process filed by the Deputy Commissioner of Taxation on 24 January 2008. I will also order that the costs of WCNI, as supporting creditor, be paid out of the assets of the defendant, and in particular that those costs include the costs of WCNI of and incidental to proceedings No. 1199 of 2008 in the Supreme Court of New South Wales, Equity Division. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson.