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[2005] FCA 1939
Federal Court of Australia
2005-12-02
Emmett J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 Mr Sayed Nassif is the only shareholder of Star Building Formwork Pty Limited ('the Company'). The Company was ordered to be wound up by a Deputy Registrar of the Court on 12 August 2005. Mr Nassif now applies under s 482 of the Corporations Act 2001 ('the Act') for an order that the winding up of the Company be terminated. Section 482(1) of the Act provides that in any time during the winding-up of a company, the Court may, on application, make an order terminating the winding-up on a day specified in the order. 2 Under s 482(1)(a), an application may be made by a contributory of the Company. Mr Nassif, as the only shareholder, is a contributory of the Company. 3 The winding up order was made on the application of the Deputy Commissioner of Taxation on the basis of failure to comply with a notice of demand. 4 The Company is a formwork company contracted to complete formwork for construction. Mr Nassif, whose native language is Arabic, speaks and reads English poorly. Most of his time is spent on sites where the company is engaged and most of the builders with whom he communicates also speak Arabic. 5 When Mr Nassif received a notice indicating that the Company had been wound up he took advice. The precise circumstances in which Mr Nassif failed to deal with demands from the Australian Taxation Office are not clear. However, I am prepared to accept that the Company is in the straits in which it now finds itself by reason of Mr Nassif's problems communicating in English. Mr Nassif should be aware that if he chooses to engage in business through the means of the Company he should take great care to ensure that he is properly advised, by someone who understands English as to the duties and obligations of the Company and the directors of the Company. 6 The Company is currently working on a job at Gladesville which consists of the construction of 32 residential apartments and some commercial retail apartments. The value of the contract is approximately $290,000. Mr Nassif estimates that expenses for employees and materials would be approximately $90,000. 7 The Company presently employs between seven and ten men for the job, depending on the amount of work. He expects that the work would be completed within three months. The Company has also been given approval to complete other residential apartment buildings for the same builder at Parramatta. That job consists of approximately 125 residential apartments and some retail units. The job is not scheduled to commence for another four to six months, but the contract would involve payments in excess of $700,000. 8 The explanations offered by Mr Nassif are not totally convincing. However, an affidavit by Mr Graham Stevenson, an employee of the liquidator, provides the Court with some detailed information as to the financial position of the Company. The liquidator presently has cash at bank in the sum of $155,896. The liquidator is satisfied that the total liabilities of the Company including costs of liquidation amount to $223,140. The liquidator proposes to disburse funds as follows:
That will leave a balance of $10,532.70. The balance of the debts owed by the Company will be paid by Mr Nassif by way of loan to the Company. 9 Mr Nassif has paid superannuation contributions in excess of $33,000 and income tax for the 2005 year in the sum of $34,410. The liquidator is satisfied that the BAS return for September 2005 is ready for lodgement and that the Company's income tax return for the year ended 30 June 2005 is also ready for lodgement. He is also satisfied that the Company's employees' superannuation liability returns are also ready for lodgement. The liquidator has provided details of his remuneration and expenses and the Company has indicated that it consents to the payment of that remuneration and the expenses, including retention for work yet to be completed. 10 On the basis that the BAS return, the income tax return and the superannuation liability returns are lodged and paid, the liquidator has no objection to the termination of the winding up. The Company's solicitors have written to Australian Securities and Investment Commission informing the Commission of its proposal to make this application. There has been no response from the Commission to date. The Commission was informed of the application by means of a copy of the original interlocutory process, showing a return date of 28 October 2005 and a copy of the amended interlocutory process, which showed no return date. Those documents were forwarded to the Commission on 14 November 2005. 11 I am satisfied that the debts of the Company will be paid in full. With some reservation, I am therefore prepared to make the order asked by the Company in order to afford the Company the opportunity to continue to conduct what seems to be a profitable business and to continue to employ workers. As I have said, however, Mr Nassif must take much greater care in future to ensure that the Company complies with its onerous obligations. If he choses to carry on business through a company, he must take the consequences that are imposed upon him and the Company by the law. I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.
Associate: Dated: 30 March 2006 Solicitors for the Plaintiff: Australian Taxation Office
Deputy Commissioner of Taxation
Star Building Formwork Pty Ltd