FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v Eurama Vision Australia Pty Ltd [2008] FCA 1003 DEPUTY COMMISSIONER OF TAXATION v EURAMA VISION AUSTRALIA PTY LTD ACN 107 240 540 NSD457 OF 2008 EMMETT J 27 JUNE 2008 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NSD457 OF 2008 DEPUTY COMMISSIONER OF TAXATION Plaintiff EURAMA VISION AUSTRALIA PTY LTD ACN 107 240 540 Defendant BETWEEN: RALPH DOUGLAS WILLIAMS First Applicant EURAMA VISION AUSTRALIA PTY LTD Second Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent JUDGE: EMMETT J DATE OF ORDER: 27 JUNE 2008 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The hearing of the Plaintiff's winding-up application be adjourned to 4 July 2008. 2. The Plaintiff has leave to apply for the restoration of the application for immediate hearing. 3. The first applicant, Mr Ralph Douglas Williams, pay forthwith the Plaintiff's costs of today, fixed in the sum of $750. 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 NSD457 OF 2008 DEPUTY COMMISSIONER OF TAXATION Plaintiff EURAMA VISION AUSTRALIA PTY LTD ACN 107 240 540 Defendant BETWEEN: RALPH DOUGLAS WILLIAMS First Applicant EURAMA VISION AUSTRALIA PTY LTD Second Applicant AND: DEPUTY COMMISSIONER OF TAXATION Respondent JUDGE: EMMETT J DATE: 27 JUNE 2008 PLACE: SYDNEY REASONS FOR JUDGMENT 1 The plaintiff, the Deputy Commissioner of Taxation (the Deputy Commissioner), seeks a winding up order in respect of the defendant, Eurama Vision Australia Pty Limited (the Company). The Commissioner's winding up application came before me last Friday when, over the objection of the Deputy Commissioner, I adjourned the hearing of the petition to today. 2 When the matter was called on again today Mr Ralph Williams again sought an adjournment of the hearing of the winding up application. Mr Williams, who is a director of the Company and has an interest in its share capital (through Zanbell Pty Limited), has been given leave to make submissions on behalf of the Company because of a dispute with the other director. The basis for the adjournment application made today is slightly different from the basis upon which the adjournment was granted last week. It has been suggested, although supported only by statements from the bar table, which of course are not evidence, that certain secured creditors of the Company may be prepared to make a further advance to enable the debt due to the Deputy Commissioner to be paid. 3 The Company is the owner of a number of parcels of land situated in the Blue Mountains area, west of Sydney. I have before me valuation evidence indicating that the present value of the land is some $6.4 million. The land would have a higher value if further road works and other services in the process of construction were complete. However, the Company has no funds to enable that work to be undertaken at present. 4 The only material before the Court concerning the extent of liabilities secured by mortgages of the land suggests that the secured liabilities do not exceed the value of $6.4 million. That material suggests that non-current liabilities are some $5.8 million, although there are current liabilities of some $2.3 million. It is not totally clear how much of the current liabilities are secured by mortgages of the land. 5 Mr Williams seeks a further adjournment for a period of seven days to endeavour to persuade the secured creditor to make a further advance. Two possible reasons why that might occur have been suggested. 6 The first basis I do not entirely follow. It is suggested that there may be some difference in the way in which goods and services tax may apply depending upon whether the land is sold by the Company or by a mortgagee in possession. However, it seems to me that goods and services tax will be payable from the proceeds of a sale, if it is payable at all, irrespective of who the vendor might be. I therefore do not understand how it might be that the possible difference in the treatment of goods and services tax might induce the secured creditor to advance the amount owing to the Deputy Commissioner, which, as I understand it, is in excess of $500,000. 7 The second basis has more substance to it. It is that there may be a better return from a sale, if the land is sold by the Company as owner, rather than by a mortgagee in possession. That would be for the benefit of the secured creditor as well as a for the benefit of the Company. 8 The difficulty is that I have no evidence before me giving any indication that there is any real prospect that the secured creditor would agree to advance a sum of money such as I have indicated is owing to the Deputy Commissioner. Nevertheless, counsel for Mr Williams has been instructed that there is some prospect that this is the case. I am reluctant, therefore, to shut out completely the possibility of that secured creditor's paying out the Commissioner. 9 The question is: what is the best mechanism to preserve that option? An adjournment for seven days would achieve it. However, if I am to adjourn the matter for seven days, it must be on the basis that, unless something of significance has changed between now and next Friday, there can be no further adjournment of the winding up application. The only basis upon which there would be any alternative to the making of a winding up order, if I do adjourn the matter for seven days, is that the Deputy Commissioner has been paid in full and no other supporting creditor seeks to be substituted. 10 The alternative would be to make a winding up order today but to stay the order for seven days. That does have some consequences and it may have the effect that the secured creditor is no longer prepared to consider the possibility of making a further advance to a company in liquidation. 11 On balance, I am disposed to grant the adjournment, but on the basis that I make it clear now that I will not entertain any further adjournment next Friday and that, if the Deputy Commissioner seeks to have the winding up application heard, I will hear it then. I assume that the only basis upon which the Deputy Commissioner would decline to press for a winding up order is that the Deputy Commissioner's debt has been paid. 12 The directors have given undertakings that the Deputy Commissioner will be notified at the completion of any sale of any parcel of the land owned by the Company. In a sense, that is a reasonably empty undertaking. However, it would at least give the Deputy Commissioner the opportunity of applying to the Court forthwith, if there was any threat that the proceeds of sale were going to be applied otherwise either in discharge of the Deputy Commissioner's debt 13 I propose to stand over the hearing of the winding up application to 9.30 am on Friday, 4 July 2008. I will reserve to the Deputy Commissioner leave to apply by whatever notice is practicable for the restoration of the application for immediate hearing. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 14 July 2008 Counsel for the Plaintiff/Respondent: Mr C Bavin Solicitor for the Plaintiff/Respondent: Hunt & Hunt Counsel for the First Applicant: Mr J T Johnson Solicitor for the First Applicant: Yates Beaggi Lawyers Date of Hearing: 27 June 2008 Date of Judgment: 27 June 2008