Deputy Commissioner of Taxation v Erolyarn Pty Limited, in the matter of Erolyarn Pty Ltd [2005] FCA 1182

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Erolyarn Pty Limited, in the matter of Erolyarn Pty Ltd [2005] FCA 1182 DEPUTY COMMISSIONER OF TAXATION v EROLYARN PTY LIMITED NSD 1252 OF 2005 EMMETT J 12 AUGUST 2005 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD1252 OF 2005

IN THE MATTER OF EROLYARN PTY LTD

BETWEEN: DEPUTY COMMISSIONER OF TAXATION

PLAINTIFF

AND: EROLYARN PTY LIMITED

DEFENDANT

JUDGE: EMMETT J

DATE OF ORDER: 12 AUGUST 2005

WHERE MADE: SYDNEY

THE COURT: 1. Orders that the proceeding be dismissed. 2. Notes the parties' agreement that there be no order as to costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD1252 OF 2005

IN THE MATTER OF EROLYARN PTY LTD

BETWEEN: DEPUTY COMMISSIONER OF TAXATION

PLAINTIFF

AND: EROLYARN PTY LIMITED

DEFENDANT

JUDGE: EMMETT J

DATE: 12 AUGUST 2005

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 In this proceeding, the Deputy Commissioner of Taxation seeks an order for the winding up of the defendant, Erolyarn Pty Limited. The petition is returnable in the first instance on a date in September 2005. The petition is based on a taxation liability of the Company to the Commissioner that has now been paid in full. 2 By letter of 4 August 2005, the Commissioner confirmed receipt of an amount equal to the taxation liability and cheque for the costs of the proceeding. In the letter the Commissioner indicated that at the proposed hearing on 16 September 2005 the Commissioner would apply for the proceeding to be dismissed with no order as to costs. 3 However, so long as there is a petition on foot there is an inconvenience to the company. The company therefore seeks to have the proceedings brought to an end immediately. The Commissioner, notwithstanding what is said in his letter of 4 August 2005, has signed a notice of discontinuance. Whether the proceeding is discontinued or dismissed probably does not matter. To the extent that the Court is being asked to make an order, it should be satisfied that the Company ought to be permitted to trade. 4 I have evidence before me indicating that the Company's current liabilities are some $4 million, while its current assets are shown in a balance sheet, as at 30 June 2004, as some $376,000. However, the current liabilities include beneficiaries' funds and borrowings from a company described as Dan Samuels Pty Limited, which I am informed by the solicitor for the company is a related entity. Henderson Associates, chartered accountants, by letter of 9 August 2005, have confirmed that to the best of their knowledge, the Company, which is a trustee company, is solvent at the present time. 5 In all of the circumstances there does not appear to me to be any risk in permitting the company to continue to trade.