FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v Vallod Pty Limited; in the matter of Vallod Pty Limited [2007] FCA 535 Deputy Commissioner of Taxation v Fairchild Development Pty Ltd (in liq) [2006] FCA 714 cited George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464; (1989) 7 ACLC 838 referred to IN THE MATTER OF VALLOD PTY LIMITED ACN 052 234 214; DEPUTY COMMISSIONER OF TAXATION v VALLOD PTY LIMITED ACN 052 234 214 NSD 1988 OF 2006 GYLES J 5 APRIL 2007 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD 1988 OF 2006 IN THE MATTER OF VALLOD PTY LIMITED ACN 052 234 214 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Plaintiff AND: VALLOD PTY LIMITED ACN 052 234 214 Defendant JUDGE: GYLES J DATE OF ORDER: 5 APRIL 2007 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Leave be granted to Terence James Chatterton to bring this application instanter. 2. The order of Registrar Hedge made on 30 March 2007 winding up Vallod Pty Limited and appointing Steve Sherman as liquidator of Vallod Pty Limited be set aside. 3. The time within which this application for the winding up of the Defendant in insolvency must be determined be extended to 1 June 2007. 4. The proceedings be adjourned to the Registrar's corporations list on 20 April 2007 at 9.15 am. 5. Terence James Chatterton is to pay: (a) the costs of the Plaintiff of this application agreed in the sum of $1815.44. (b) the costs and expenses of the liquidator of the liquidation. 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 NSD 1988 OF 2006 IN THE MATTER OF VALLOD PTY LIMITED ACN 052 234 214 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Plaintiff AND: VALLOD PTY LIMITED ACN 052 234 214 Defendant JUDGE: GYLES J DATE: 5 APRIL 2007 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 30 March 2007 the defendant, Vallod Pty Limited (the company), was wound up by order of a Registrar of the Court and a liquidator was appointed. The winding up had been opposed and the matter had been before the Court on more than one occasion. There was no attendance for the company on 30 March 2007. That led to the order being made. The explanation for that has been frankly disclosed by the solicitor for the defendant as being due to his fault. There is some question as to the fine detail of the dealings between the solicitors on that day. However, on any view, it was the fault of the solicitor, not apparently the fault of the company. 2 The application has been made promptly and has been supported by not only the evidence of the solicitor concerned but of the applicant on this motion, Terence James Chatterton, a director and the party with the substantial interest in the company. The company is actively trading and Mr Chatterton has given evidence as to the financial position of the company. It has substantial assets and is conducting a substantial business. 3 On the face of the balance sheet the company is solvent in the sense that it has an excess of assets over liabilities. It plainly has some cash flow issues, as is illustrated by the problems it has had in maintaining arrangements so far as payment of the debt claimed by the plaintiff, the Deputy Commissioner of Taxation, is concerned. With an application of this kind made so promptly, the considerations are different from those which apply where there has been a liquidation on foot for some time. Whilst the Court is always astute to ensure that insolvent companies are not returned to trading, the reality is that setting aside this order made in default of appearance will simply mean that the matter will then be heard in the normal way. At that point the Court can take account of the full circumstances if that becomes necessary. 4 I have been referred to the decision of Hodgson J in George Ward Steel Pty Ltd v Kizkot Pty Ltd (1989) 15 ACLR 464; (1989) 7 ACLC 838, an authority I have myself applied in other cases, including Deputy Commissioner of Taxation v Fairchild Development Pty Ltd (in liq) [2006] FCA 714. Hodgson J's points are not, of course, a statutory formula but they are a useful checklist of things to at least take into account. Because of the very short time involved here, the indication of solvency is a fairly low threshold that is well met by the evidence which has been put before me. 5 I take into account the fact that the plaintiff neither opposes nor consents to the application. The liquidator has indicated that, subject to the costs of the liquidation being paid, he has no objection to the order. The liquidator has drawn nothing to my attention which would lead to any concern about the winding up order being set aside. 6 I therefore make the orders which are sought. I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles. Associate: Dated: 13 April 2007 Solicitor for the Plaintiff: Mr D Crompton of Church & Grace Counsel for the Defendant: Mr P Cutler Solicitor for the Defendant: Dawson Lawyers Date of Hearing: 5 April 2007 Date of Judgment: 5 April 2007