FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v KVPS International Pty Limited [2011] FCA 331 Citation: Deputy Commissioner of Taxation v KVPS International Pty Limited [2011] FCA 331 Parties: DEPUTY COMMISSIONER OF TAXATION v KVPS INTERNATIONAL PTY LIMITED File number(s): NSD 1459 of 2010 Judge: EMMETT J Date of judgment: 11 March 2011 Date of hearing: 11 March 2011 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 5 Solicitor for the Plaintiff: K. Metlej, Craddock Murray Neumann Solicitor for the Defendant: M. Nair, M S Nair & Co IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1459 of 2010 BETWEEN: Deputy Commissioner of Taxation Plaintiff AND: KVPS INTERNATIONAL PTY LIMITED Defendant JUDGE: EMMETT J DATE OF ORDER: 11 MARCH 2011 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The notice of motion of 25 February 2011 be dismissed. 2. The District Registrar's winding up order of 9 February 2011 be confirmed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1459 of 2010 BETWEEN: Deputy Commissioner of Taxation Plaintiff AND: KVPS INTERNATIONAL PTY LIMITED Defendant JUDGE: EMMETT J DATE: 11 MARCH 2011 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 9 February 2011, the District Registrar made an order that KVPS International Pty Limited be wound up. The Registrar appointed Mr Max Donnelly as liquidator of the company. It appears that at the hearing the company sought an adjournment of the hearing of the winding up application to enable a director to continue negotiations in Malaysia to raise moneys to lend to the company. The District Registrar was not persuaded that that circumstance justified an adjournment of the hearing. By notice of motion filed 25 February 2011, purportedly on behalf of the company, an order was sought that the winding up order said to have been on 4 February 2011 be set aside and that the hearing of the winding up application be adjourned to 15 April 2011 to enable the company to pay the debt due to the applicant, the Deputy Commissioner of Taxation. That motion was apparently filed on behalf of a director of the company. 2 The Deputy Commissioner of Taxation opposes the making of the orders sought in the notice of motion and contends that the applicant on the motion, a director of the company, has no standing to bring such an application in the name of the company. The application is supported by the evidence of the director of the applicant on the motion, Mr Sivagurunathan, in affidavits sworn on 8 February 2011 and 28 February 2011. The Deputy Commissioner foreshadowed objections to parts of those affidavits which are clearly inadmissible. However, on the assumption that all of the facts asserted in the affidavits were formally proved, I do not consider that they would justify the grant of an adjournment for the hearing of the winding up application. 3 The most that can be said is that the director is endeavouring to raise money in Malaysia to enable him to make a loan to the company to enable it to pay the debt to the Deputy Commissioner of Taxation, which does not appear to be disputed. Annexed to Mr Sivagurunathan's affidavit of 8 February 2011 is a copy of an agreement made on 31 January 2011 between the director and a Mr Gregory Manuel relating to a loan of $US 260,000. For whatever reason, that loan does not appear to have been drawn down. There appears to me to be no basis at all upon which the court could exercise its discretion to allow a company which is apparently insolvent to continue without liquidation. 4 The evidence of Mr Sivagurunathan's affidavit of 28 February 2011 purports to propound some of the reasons as to the why the company is now insolvent. It may well be that it is most unfortunate that the company is insolvent. Be that as it may, there is no suggestion that the company is able to pay its debts as and when they fall due. The only basis upon which the debt due to the Deputy Commissioner of Taxation might possibly be discharged is that a director may raise funds in order to lend to the company. There is no evidence as to the financial position of the company generally to indicate that it has no other creditors. It is not suggested that any moneys that might be borrowed by the director would be applied by the director in paying up share capital of the company to render it solvent. 5 In all of the circumstances, I do not consider there is any basis for adjourning the hearing of the winding up application. In the circumstances, I consider that it is appropriate to dismiss the motion filed on 25 February 2011 and to confirm the winding up order made by the Deputy Registrar on 9 February 2011. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett. Associate: Dated: 6 April 2011