Deputy Commissioner of Taxation v Acevedo Building Services Pty Ltd [2006] FCA 381

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Acevedo Building Services Pty Ltd [2006] FCA 381 DEPUTY COMMISSIONER OF TAXATION v ACEVEDO BUILDING SERVICES PTY LTD NSD41 OF 2006 EMMETT J 21 MARCH 2006 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD41 OF 2006

BETWEEN: DEPUTY COMMISSIONER OF TAXATION

PLAINTIFF

AND: ACEVEDO BUILDING SERVICES PTY LTD

DEFENDANT

JUDGE: EMMETT J

DATE OF ORDER: 21 MARCH 2006

WHERE MADE: SYDNEY

BY CONSENT, THE COURT: 1. Notes the undertaking given to the Court by Carlos Acevedo and Manuel Acevedo to execute on or before 28 March 2006 Deeds in favour of the Company in the form attached to this order. 2. Notes the undertaking of Carlos and Manuel Acevedo to cause the company to obtain a new accountant within 7 days; 3. Orders the winding up of the Company be terminated on 21 March 2006. 4. Directs that the management and control of the Company be resumed by Carlos and Manuel Acevedo as directors in lieu of Max Donnelly of Ferrier Hodgson as Liquidator. 5. Notes the agreement of the parties that there be no further 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 NSD41 OF 2006

BETWEEN: DEPUTY COMMISSIONER OF TAXATION

PLAINTIFF

AND: ACEVEDO BUILDING SERVICES PTY LTD

DEFENDANT

JUDGE: EMMETT J

DATE: 21 MARCH 2006

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 On 3 March 2006, an order was made by the Court that the defendant company, Acevedo Building Services Pty Limited ('the Company'), be wound-up. The order was made on the application of the Deputy Commissioner of Taxation ('the Deputy Commissioner') on the basis that the Company had failed to comply with a statutory demand for payment of moneys owing to the Deputy Commissioner. It appears that the demand was served and correspondence received by the Company's former accountants who failed to bring to the notice of the directors of the Company the fact that the Deputy Commissioner had demanded payment of outstanding tax. It wasn't until the winding-up order was made that the directors became aware of the existence of the winding-up application. 2 The Company, at the time of the winding-up, had liquid funds that came under the control of the liquidator. Pursuant to a direction that I gave, arrangements have been made for funds to be released by the liquidator to the Deputy Commissioner, whose debt has now been satisfied. A balance sheet, as at 14 March 2006, indicates that the Company's current assets, which include in excess of $50,000 in cash, exceed $293,000. Its current liabilities are under $187,000. The company has total shareholders' equity in the sum of $185,306. 3 The directors have undertaken to ensure that the Company appoints a new accountant and have also undertaken to execute deeds whereby the substantial debts presently owing to the directors will be subrogated to all other unsecured creditors. In that context, the directors have applied for the termination of the winding-up of the Company. 4 It is of course the duty of the directors of a company to ensure that the company complies with its statutory requirements both under the Corporations Act 2001 (Cth) and in relation to the Income Tax Assessment Act 1997 (Cth). The statutory demand ought to have been responded to by the Company and it is unfortunate that it was ignored. Significant costs have been incurred by the Company in dealing with the application by the Deputy Commissioner to wind the company up and this application by the directors for the termination of the winding-up. 5 I am satisfied that, in all of the circumstances, since the Company appears to be trading profitably, it is appropriate for the winding-up to be terminated. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.