FEDERAL COURT OF AUSTRALIA Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Limited [2012] FCA 363 Citation: Deputy Commissioner of Taxation v Bayconnection Property Developments Pty Limited [2012] FCA 363 Parties: DEPUTY COMMISSIONER OF TAXATION v BAYCONNECTION PROPERTY DEVELOPMENTS PTY LIMITED ACN 103 848 862 File number: NSD 1944 of 2011 Judge: ROBERTSON J Date of judgment: 16 April 2012 Catchwords: CORPORATIONS – application to wind up company in insolvency by reason of tax debt – tax debt the subject of pending review proceedings in the Administrative Appeals Tribunal – application to adjourn winding up application until decision in review proceedings CORPORATIONS – extension of period within which application for company to be wound up in insolvency be determined – "special circumstances" under s 459R(2) of the Corporations Act 2001 (Cth) TAXATION – application to wind up company – tax debt the subject of pending review proceedings in the Administrative Appeals Tribunal – adjournment PRACTICE AND PROCEDURE – corporate respondent – leave to appear otherwise than by a lawyer – dispensing with r 4.01(2) of the Federal Court Rules 2011 EVIDENCE – "fullest and best" evidence principle – standard of proof – balance of probabilities Legislation: Corporations Act 2001 (Cth) ss 459C(2)(a), 459P, 459R(2), 465C Taxation Administration Act 1953 (Cth) ss, 8AAZI, 14ZZM Federal Court (Corporations) Rules 2000 reg 2.9(3) Federal Court Rules 2011 r 4.01(2) Cases cited: Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728 cited Coates Hire Operations Pty Ltd v D-Link Homes Pty Ltd [2011] NSWSC 1279 followed Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 followed Deputy Commissioner of Taxation v Caporale Group Pty Ltd [2011] FCA 1189 considered Deputy Commissioner of Taxation v De Simone Consulting Pty Ltd [2007] FCA 548 cited Deputy Commissioner of Taxation (WA) v Australian Machinery and Investment Co Pty Ltd (1945) 3 AITR 236 followed Deputy Commissioner of Taxation v Tilley Property Management Services Pty Ltd [2011] FCA 678 considered Deputy Commissioner of Taxation v TDE Nominees Pty Ltd (No 2) [2011] NSWSC 1528 cited Expile Pty Ltd v Jabb's Excavations Pty Ltd (2002) 194 ALR 138 cited Expile Pty Ltd v Jabb's Excavations Pty Ltd (2003) 45 ACSR 711 cited Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 cited London City Equities Ltd v Penrice Soda Holdings Ltd (No 3) [2012] FCA 361 applied Re Bayconnection Property Developments Pty Ltd [2011] NSWSC 1048 cited Re Roma Industries Pty Ltd (1976) 1 ACLR 296 considered Snow v Deputy Commissioner of Taxation (1987) 14 FCR 119 considered Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation (2006) 64 ATR 316 considered Xat Ky v Australvic Property Management Pty Ltd [2007] FCA 1541 cited Date of hearing: 5 April 2012 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 68 Solicitor for the Plaintiff: Ms M Agbinya, ATO Legal Services Branch Counsel for the Defendant: Ms R Caporale appeared on behalf of the Defendant IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1944 of 2011 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Plaintiff AND: BAYCONNECTION PROPERTY DEVELOPMENTS PTY LIMITED ACN 103 848 862 Defendant JUDGE: ROBERTSON J DATE OF ORDER: 16 APRIL 2012 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. Compliance by the defendant with rule 4.01(2) of the Federal Court Rules 2011 is dispensed with and Rosa Caporale, director of the defendant, may represent the defendant in the Federal Court of Australia for the purposes of this application until further order. 2. Leave be granted under s 465C of the Corporations Act 2001 (Cth) for the defendant to oppose the application on the grounds advanced. 3. On condition that the defendant take all steps available to it to have its proceedings under Part IVC of the Taxation Administration Act 1953, pending in the Administrative Appeals Tribunal, heard as soon as possible, under s 459R of the Corporations Act 2001 (Cth) the period within which the application for the defendant company to be wound up in insolvency is to be determined be extended to 5.00pm on 17 August 2012. 4. On condition that the defendant take all steps available to it to have its proceedings under Part IVC of the Taxation Administration Act 1953, pending in the Administrative Appeals Tribunal, heard as soon as possible, the plaintiff's proceedings under s 459P of the Corporations Act 2001 (Cth) be adjourned to 9.30 am on 17 August 2012. 5. Costs be reserved. 6. Liberty to apply on 3 days' notice. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1944 of 2011 BETWEEN: DEPUTY COMMISSIONER OF TAXATION Plaintiff AND: BAYCONNECTION PROPERTY DEVELOPMENTS PTY LIMITED ACN 103 848 862 Defendant JUDGE: ROBERTSON J DATE: 16 APRIL 2012 PLACE: SYDNEY REASONS FOR JUDGMENT Introduction 1 The plaintiff Deputy Commissioner of Taxation filed on 4 November 2011 an application under s 459P of the Corporations Act 2001 (Cth) (Corporations Act) for the winding up of the defendant on the ground of insolvency. It was common ground that the defendant company had failed to comply with the Deputy Commissioner's statutory demand and that the Court was required to presume that the company was insolvent: s 459C(2)(a). 2 The defendant company accepted that it was insolvent but submitted that the application to wind up the company should be adjourned pending the outcome of its proceedings under Pt IVC of the Taxation Administration Act 1953 (Cth) (the Administration Act) in the Administrative Appeals Tribunal (the Tribunal). The company submitted it was insolvent only by reason of the tax debt which it could not challenge in the present proceeding: see Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 (Broadbeach) and Re Bayconnection Property Developments Pty Ltd [2011] NSWSC 1048. 3 The issue turns on the exercise of the Court's discretion in s 459A of the Corporations Act whereby: On an application under section 459P, the Court may order that an insolvent company be wound up in insolvency. If, as a matter of discretion, I decided that the company should not be wound up pending the outcome of its Pt IVC proceedings in the Tribunal then the company submitted that I should extend the period under s 459R. That section provides: 459R (1) An application for a company to be wound up in insolvency is to be determined within 6 months after it is made. (2) The Court may by order extend the period within which an application must be determined, but only if: (a) the Court is satisfied that special circumstances justify the extension; and (b) the order is made within that period as prescribed by subsection (1), or as last extended under this subsection, as the case requires. (3) An application is, because of this subsection, dismissed if it is not determined as required by this section. (4) An order under subsection (2) may be made subject to conditions. Procedural Question 4 A preliminary procedural question is whether I should dispense with compliance with rule 4.01(2) of the Federal Court Rules 2011 so that Ms Rosa Caporale may represent the defendant company. Rule 4.01(2) provides: "a corporation must not proceed in the Court other than by a lawyer." By rule 1.34 the Court may dispense with compliance with this rule. 5 The plaintiff did not oppose an order dispensing with compliance with rule 4.01(2). 6 Ms Caporale is the sole director of the company. Since early March 2012 she has been representing the company in these proceedings without objection. She has also been in control of the Pt IVC proceedings in the Tribunal. She deposed that she also been involved in the legal process on behalf of other related companies. 7 In London City Equities Ltd v Penrice Soda Holdings Ltd (No 3) [2012] FCA 361 at [8] I recently considered the nature of the Court's discretion. I noted that the discretion under similar rules was considered by Full Courts in Molnar Engineering Pty Limited v Burns (1984) 3 FCR 68 and ACT General Cleaning Company Pty Ltd v Naoum (1996) 67 FCR 361 and by French J in Termi-Mesh Australia Pty Ltd v Josu Manufacturing Pty Ltd [1999] FCA 1241. 8 In my opinion in the present case it is appropriate for the orderly disposition of the proceedings that the company be represented and Ms Caporale is an appropriate person to represent the company. She is the only office holder of the defendant company. Ms Caporale has a detailed knowledge of the facts relevant to the application. There is a public interest in the expeditious disposal of the application. No disadvantage was suggested to either the plaintiff or the defendant. Although Ms Caporale was a deponent no difficulty arose from that circumstance as there was no cross-examination. For those reasons I dispense with compliance with rule 4.01(2) to permit the defendant company to be represented by Ms Caporale. Relevant principles 9 The Deputy Commissioner conceded before me, as he did in Broadbeach (above) at [13]: Notwithstanding the presumption of insolvency that would apply under s 459C(2)(a)…upon the hearing of such winding up applications the court might properly have regard to whether the taxpayer had a "reasonably arguable" case in proceedings under Pt IVC of the Administration Act, if those proceedings then still be on foot; questions of the kind canvassed in General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 might arise. 10 Broadbeach was a case which largely concerned whether a genuine dispute about the existence or amount of a debt could exist in light of the recovery provisions of the federal tax laws. The High Court held that a genuine dispute could not so exist. The plurality did however note the "important concession" I have set out. 11 The bulk of the submissions on behalf of the plaintiff Deputy Commissioner before me were directed to the question of solvency. He submitted that none of the evidence adduced by the defendant company bore on any of the substantive issues to ground an adjournment (i.e. solvency or the merits of any tax dispute). However the main burden of his argument was that one only gets to the point of considering the question of a reasonably arguable case if the Court is satisfied that, but for the tax debt, the defendant company would be solvent. 12 This approach followed, it was submitted, from the judgment in Deputy Commissioner of Taxation v Caporale Group Pty Ltd [2011] FCA 1189. There Yates J at [11] noted the same submission. 13 The facts in that case were that each defendant company had adduced no evidence and advanced no argument to establish that it had a "reasonably arguable case" in its appeal proceeding. Further, there was no appropriate evidence establishing the defendant companies' solvency, or their solvency but for the tax debts. It was on these bases that Yates J refused the adjournment applications and, there being no other argument put, ordered that the companies be wound up. 14 It was accepted before me that one important factor in guiding the exercise of the Court's discretion in the present circumstances was s 14ZZM of the Administration Act which provides: The fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending. 15 As long ago as Deputy Commissioner of Taxation (WA) v Australian Machinery and Investment Co Pty Ltd (1945) 3 AITR 236 at 241 Latham CJ said: My brothers Rich, Dixon and Williams JJ and myself are of the opinion that the contention that there is no jurisdiction to grant a stay in these proceedings by reason of the provisions of the Income Tax Assessment Act, s 201 and the associated sections, should not be accepted. We are of the opinion that there is jurisdiction to grant a stay in such proceedings, but that in considering any application for a stay the policy of the Act as stated in s 201 is a matter to which great weight should be attached. In that case the High Court, by majority, granted a stay. Section 201 of the Income Tax Assessment Act 1936 (Cth) (the 1936 Assessment Act) was the predecessor of s 14ZZM. 16 Another decision to which I should refer is Re Roma Industries Pty Ltd (1976) 1 ACLR 296 (Roma), a judgment of Bowen CJ in Eq which was cited extensively and with approval in Broadbeach. 17 In Roma, the company proved that in respect of each relevant assessment an objection had been lodged and had been disallowed, and that a request had been made to refer the decision to disallow the objection to a Board of Review for review. Those appeals had not yet come on for hearing, and it seemed likely that some substantial time would elapse before they did. As to the solvency of the company, Bowen CJ in Eq said that if the debt due to the Commissioner under the assessments was to be regarded as a debt to be taken into account in determining whether or not the company was solvent, on the evidence the company was insolvent. In view of the terms of s 201 of the 1936 Assessment Act his Honour considered he was obliged to consider the debts due under the assessments as debts to be taken into account in considering the matter. 18 Bowen CJ in Eq concluded, at 300: In view of the fact that the only substantial "outside" creditor is the Commissioner of Taxation, that the company desires to continue in operation and has expressed its willingness to give security for the amount which may be found to be due to the Commissioner, I am disposed, without making a winding up order at this time, to stand the matter over for fourteen days to enable the parties to consider the possibility of arriving at some interim arrangement. There would, I imagine, need to be offered to the Commissioner something more substantial than a second mortgage over the two properties to have any likelihood of gaining his agreement, and in the end it is a matter for him as to whether he enters into any arrangement or not. When the matter is listed before me again after the expiry of 14 days if the parties have not reached agreement I would propose to make a winding up order, and also an order for payment of the Commissioner's costs out of the assets of the company. 19 A more recent winding up case is Deputy Commissioner of Taxation v Tilley Property Management Services Pty Ltd [2011] FCA 678. In that case, the company submitted that the circumstances were such that the winding up application should be adjourned to a time after the determination of whether or not documents which it sought to have treated as objections had been or had not been so treated by the Commissioner and, if treated as objections, determined. It was necessary to put matters that way because, in respect of the assessments or as the case may be notices, which grounded the liability to the Commonwealth payable to the Commissioner and which gave the Commissioner his status as a creditor, the company did not make objection to those assessments or notices within the prescribed time. 20 Justice Logan declined to adjourn the application. His Honour said, at [30]-[31]: the position remains there is no objection as of right on foot. Further, it would not, in my opinion in this particular case be appropriate for me to pass any comment on the merits of the documents which are asked to be treated as objections. There are difficulties in the language of Div 6D in terms of the circumstances which give rise to an excusing from liability and it would take a more developed case than that advanced today to make patent that there was a strong likelihood that it would be other than perverse for the Commissioner not to extend time and, for that matter, allow objections. All there is at present is a supplication, not an objection as of right. Further, there is nothing at all put forward which would see any assurance that any part of that demand by the Commissioner is even secured, pending the determination of the request to treat the documents as an objection. Neither, in my opinion, is there evidence which would support, even prima facie, that there has been conduct which could amount to conscious maladministration in the sense described by the High Court in Federal Cmr of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146. 21 I refer also to three general recovery cases. 22 In Trade World Enterprise Pty Ltd v Deputy Commissioner of Taxation (2006) 64 ATR 316, a pre-Broadbeach case, Nettle JA first referred at [19] and following to the legislative scheme established in relation to tax recovery, as manifested in provisions like s 14ZZM, reflecting a clear policy in favour of the revenue against the taxpayer and the Commissioner being placed by the legislature in a position of special advantage and thus in general being free to pursue recovery proceedings, despite outstanding appeals and reviews against the disallowance of objections. His Honour then said at [24] that different considerations may apply once judgment is obtained and the dispute comes before the court by way of an application to adjourn proceedings for the winding up of the taxpayer. Nettle JA said it had been held that, in general, a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of the debtor where an appeal is pending against the judgment which is the foundation of the bankruptcy proceedings (provided the appeal is based on genuine and arguable grounds). Similar considerations operated in applications to wind up companies on the grounds of insolvency. But that was not the case before the Court of Appeal. 23 In Deputy Commissioner of Taxation v TDE Nominees Pty Ltd (No 2) [2011] NSWSC 1528 the defendant sought a stay of the Supreme Court recovery proceedings pending the outcome of an appeal or review under Pt IVC. Gzell J collected and reviewed the authorities and said that the principles were conveniently summarised in Snow v Deputy Commissioner of Taxation (1987) 14 FCR 119 at 139 (Snow). 24 In Snow, the assessments had been objected to but the objections had been disallowed. The applicant had asked the respondent to refer his disallowance of the objections to the Tribunal but that had not yet been done. The applicant had also asked the respondent to grant him an extension of time for payment, not to impose additional tax for late payment, and not to issue any writ for recovery of the amounts due until he had exhausted his avenues of appeal against the amended assessments. Those requests had all been refused. The applicant had therefore begun proceedings in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth) seeking a review of the respondent's decisions refusing his requests. Pending the hearing of the judicial review proceedings the applicant asked the Court to make an order suspending the operation of the respondent's decision to issue a writ for recovery of the tax. 25 French J, as his Honour then was, said at 139: It may generally be concluded from the preceding review, that the power of State courts to stay recovery proceedings instituted in them under the ITAA is well established and that courts exercising it have regard to the following propositions: 1. The policy of the ITAA as reflected in its provisions gives priority to recovery of the revenue against the determination of the taxpayer's appeal against his assessment. 2. The power to grant a stay is therefore exercised sparingly and the onus is on the taxpayer to justify it. 3. The merits of the taxpayer's appeal constitute a factor to be taken into account in the exercise of the discretion (although some judges have expressed different views on this point). 4. Irrespective of the legal merits of the appeal a stay will not usually be granted where the taxpayer is party to a contrivance to avoid his liability to payment of the tax. 5. A stay may be granted in a case of abuse of office by the Commissioner or extreme personal hardship to the taxpayer called on to pay. 6. The mere imposition of the obligation to pay does not constitute hardship. 7. The existence of a request for reference of an objection for review or appeal is a factor relevant to the exercise of the discretion. (I have reproduced paragraph 7 with a correction for a typographical error in the report.) 26 I have referred to these earlier decisions for the principles which guide the exercise of the relevant, or a related, discretion. I have noted factual differences not for the purpose of reasoning merely from a factual difference to a conclusion in the present case but to identify what were the important considerations in those cases. There is no doubt that there is a discretion and that there are principles relevant to the exercise of that discretion. A principle of great importance is that the collection of the revenue should not be prejudiced. But there may be circumstances where an application to wind up the company on the grounds of insolvency should be adjourned until the outcome of Pt IVC proceedings is known. The circumstances in which such a discretion may be exercised include where the collection of the revenue is not prejudiced or any such prejudice is insubstantial, where a debtor company has a reasonably arguable case in proceedings under Pt IVC of the Administration Act and where those proceedings are soon to be heard. The course of the present proceedings 27 I turn next to outline the course these proceedings have taken in the Federal Court. 28 The matter first came before the Court on 9 December 2011, the date given when the application was filed. The District Registrar adjourned the application until 19 December 2011. 29 On 19 December 2011, on the application of the defendant company, the District Registrar adjourned the application until 8 February 2012. The District Registrar directed that the defendant file and serve evidence on or before 6 February 2012 as to solvency by way of supporting financial statements including profit and loss balance sheets, cash projections and bank statements but not limited to those documents. It was also directed that the defendant file and serve on or before 6 February 2012 evidence as to the defendant having a reasonable and arguable case before the Tribunal. 30 On 8 February 2012 the Registrar ordered, on the application of the defendant, that the application be adjourned until 2 March 2012. The Court directed that the defendant file and serve evidence by 27 February 2012; the plaintiff file and serve evidence in response by 1 March 2012 and the defendant file and serve any notice of appearance including grounds of opposition and affidavits (with any question of leave under s 465C of the Corporations Act stood over until the next adjourned date). 31 On 2 March 2012, the Registrar ordered that the application of the defendant be adjourned until 21 March 2012 before the docket judge. The court directed that any further adjournment application be supported by an affidavit and that the defendant file and serve any further affidavits in respect of solvency by 19 March 2012. 32 The matter came before me on 21 March 2012 and, by consent, the matter was listed for hearing on 5 April 2012 for half a day. I directed that the plaintiff file and serve its updated affidavit of liability by 2 April 2012 and that if any further accounting evidence was sought to be relied on by the defendant, an affidavit setting out that material be filed and served by 2 April 2012. 33 To the extent necessary I grant leave under s 465C of the Corporations Act to the defendant to oppose the application on the grounds advanced before me. By reg 2.9(3) of the Federal Court (Corporations) Rules 2000 any notice or affidavit would otherwise be required to be served, the person being named in the originating process, three days before the date fixed for hearing. The facts 34 The application under s 459P was supported by three affidavits affirmed by Mr Claudio Casonato, an affidavit of service of Mr William Quach, a consent of the proposed liquidator and other formal documents. No issue was taken as to the correctness of this material. 35 The plaintiff submitted, and I find, that the debt the subject of the demand was a Running Balance Account (RBA) deficit debt comprising the following amounts: (a) amounts due under the BAS provisions as defined in s 995–1(1) of the Income Tax Assessment Act 1997 (the 1997 Assessment Act); (b) administrative penalties due under Pt 4-25 of Schedule 1 to the Administration Act, with respect to the late lodgement of BAS statements; (c) general interest charges payable under s 8AAZF of that Act (which general interest charges were, by reason of s 8AAZH of that Act, debts due and payable by the company to the Deputy Commissioner of Taxation) accruing on the unpaid GST moneys. 36 The creditor's statutory demand for payment of debt dated 1 April 2011 said that the company owed the Deputy Commissioner of Taxation the amount of $145,922.55 described in the schedule as being the RBA deficit debt as at 1 April 2011 in respect of amounts due under the BAS provisions as defined in s 995–1(1) of the 1997 Assessment Act. An affidavit affirmed on 1 April 2011 by Mr Casonato verified that the amount was due and payable by the debtor company. 37 By a further affidavit affirmed on 1 April 2011, filed on 4 November 2011, Mr Casonato deposed that he served the defendant company. There was no issue as to service. 38 By a third affidavit affirmed on 3 November 2011, filed on 4 November 2011, Mr Casonato deposed to the indebtedness of the defendant to the plaintiff in the sum of $145,922.55 on 1 April 2011 which sum was then due by the defendant to the Commonwealth of Australia, payable by the defendant to the Commissioner of Taxation and recoverable by the plaintiff Deputy Commissioner under and in pursuance of the provisions of the Administration Act. 39 Mr Casonato also deposed that on 27 April 2011 the defendant company applied to set aside the demand under s 459G of the Corporations Act, which application was finally determined in the Supreme Court of New South Wales on 8 September 2011. That reference is to the judgment of Barrett J, as his Honour then was, in Re Bayconnection Property Developments Pty Ltd (above). Barrett J applied Broadbeach and said the outcome was inevitable and there was no basis whatsoever for relief based on either ss 459H(1)(a) or 459J. 40 Mr Casonato's affidavit went on to say that the defendant failed to pay the amount of the debt demanded or to secure or compound for that amount to the reasonable satisfaction of the plaintiff within seven days after the application to the Supreme Court of New South Wales was finally determined. 41 At the date of affirming the affidavit, 3 November 2011, the sum of $144,354.09, being the outstanding balance of the sum demanded of $145,922.55, remained due to the Commonwealth and payable by the defendant to the plaintiff. 42 By his last affidavit, affirmed on 29 March 2012, Mr Casonato said that after the plaintiff issued the demand on 1 April 2011, the defendant's RBA deficit debt increased and as at 29 March 2012 the defendant was indebted to the plaintiff in the sum of $162,344.41. This included additional liabilities that became due and payable after the issuing of the demand. Mr Casonato annexed to his affidavit an RBA statement detailing the history of the running balance account and the additional liabilities referred to. 43 Also in evidence is a consent dated 4 November 2011 by Mr David Lombe of Deloitte Touche Tohmatsu to be appointed by the Court and to act as liquidator of the defendant company. 44 There was no objection by the defendant to any of this material and there was no cross-examination. I accept the facts to which Mr Casonato and Mr Quach deposed. 45 I note that the plaintiff Deputy Commissioner did not rely on the relevant conclusive evidence provisions in s 105-100 of Schedule 1 to the Administration Act, but on the prima facie evidence provision in s 8AAZI of that Act. Nothing turns on that because in these proceedings there was no challenge to the amount of the debt owing. Thus no question arose of leave under s 459S to rely on a fresh solvency ground. 46 The defendant read four affidavits. There was no objection by the plaintiff to any of this material and there was no cross-examination. 47 First was an affidavit by Ms Caporale affirmed on 6 February 2012. Annexure A was a summary of the defendant company's position to date. It showed a total income of zero for the years 2003 to 2011 inclusive and "business development costs" for 2006 of $504,515.00. It also showed total assets of $818.98. Further entries were "interest bearing liabilities to Rosa Caporale plus 10% p.a. interest" in the amount of $505,515.00 plus interest and loans from Ms Caporale of $7,000.00 plus interest. Ms Caporale said that these entries were in respect of work done by her on behalf of the company and she did not intend to seek payment of those monies until the company had sufficient cashflow to repay her. Annexure B was the defendant company's Statement of Facts and Contentions lodged at the AAT on 20 October 2011. 48 I was taken in the course of submissions to a number of Business Activity Statements, said to be contemporaneous and which I accept for present purposes to be so, which supported the defendant company's case in the Tribunal, that is, that the defendant company was involved in a real enterprise; that the defendant company did not make any sales or claim any credits in the periods in question; and that Caporale Designs Pty Ltd "made the sales and owed the credits" in those periods and issued invoices to the defendant company. As I have indicated, there was no objection to this material and there was no cross-examination. In these circumstances I regard this material as relevant and probative and as showing a "reasonably arguable" case in the Pt IVC proceedings. 49 No detailed submissions to the contrary were made by the plaintiff Deputy Commissioner. His submissions were directed, at a general level, to the onus being on the defendant; the ascertainment of solvency; and the need for the "fullest and best" evidence of the defendant's financial position. It was submitted that the defendant company had failed to provide important financial information. In my view these submissions by the Deputy Commissioner have to be assessed by reference to the apparently uncontroversial fact that there was no further trading by the company after 30 July 2006 due to the company being de-registered for GST by the Deputy Commissioner and that the Business Activity Statements submitted by the company after 30 July 2006 showed nil activity. 50 The second affidavit by Ms Caporale was affirmed on 26 February 2012. This affidavit annexed as Annexure A, an affidavit affirmed by Mr Shannon Michael Cavanagh, chartered accountant, dated 24 February 2012. I treated Mr Cavanagh's affidavit as read in its own right. He was available for cross-examination but was not required. 51 Ms Caporale's second affidavit also annexed, at Annexure B, the defendant company's supplementary statement of facts issues and contentions and supplementary evidence and statement of Ms Caporale in the Tribunal each dated 27 February 2012. 52 The supplementary statement of facts issues and contentions stated that the defendant company did not make any sales or claim any credits in the periods in question and therefore did not owe any GST to the Deputy Commissioner. It said that Caporale Designs Pty Ltd made the sales and owed the credits in the periods in question and issued an invoice to the defendant company. 53 The supplementary evidence and statement of Ms Caporale was to the same effect and annexed Business Activity Statements and other material in relation to Caporale Designs Pty Ltd. 54 Amongst the material annexed to this affidavit was a copy of a direction given by Deputy President Handley on 17 February 2012 in the Tribunal. The last direction is that by 21 May 2012 the parties file and serve hearing certificates for a hearing. 55 The affidavit of Mr Cavanagh, to which I have referred, stated that he had reviewed a number of documents, which he identified. Mr Cavanagh said that from his review of the balance sheet provided by Ms Caporale it appeared that the only creditors of the company were the Deputy Commissioner and Ms Caporale. 56 The third and last affidavit of Ms Caporale is dated 1 April 2012. This seems to be largely submissions. The deponent did however say, at paragraphs 6 and 7, that on 17 February 2012 at a directions hearing at the Tribunal, she requested that the ATO consent to the matters, including related companies, being separated to allow each matter to be heard separately in order to expedite the process for all parties, rather than waiting for all of the evidence to be produced before the matters were set down for hearing, but that the Deputy Commissioner of Taxation refused to consent to the proposal. Consideration 57 First, s 14ZZM is a matter to be given substantial weight in exercising the discretion under s 459A of the Corporations Act. However no prejudice to the revenue was identified, in terms of the timing of recovery or otherwise, and I have been unable to discern such a prejudice. The defendant is not trading and has not been trading for six years and it has no assets. 58 Next, in my opinion, as I have indicated, the defendant has a "reasonably arguable" case in proceedings under Pt IVC, and those proceedings will be heard before long, either by themselves or, on present indications, in proceedings also involving related companies. In so saying I make no comment on what either a fuller examination or, more particularly, a testing of the factual material might show. 59 Third, I am satisfied that although the company is insolvent it has no third party creditors apart from the Deputy Commissioner suing as or on behalf of the Commonwealth. 60 I am so satisfied despite the submission on behalf of the Deputy Commissioner, with reference to Ace Contractors & Staff Pty Ltd v Westgarth Development Pty Ltd [1999] FCA 728, Expile Pty Ltd v Jabb's Excavations Pty Ltd (2003) 45 ACSR 711 and Deputy Commissioner of Taxation v De Simone Consulting Pty Ltd [2007] FCA 548, that the defendant had not adduced the "fullest and best" evidence. This is because the defendant before me was not attempting to prove that the company was solvent but merely that it had no other third party creditors. No such creditors have come forward in these proceedings and, in the circumstances of the company not trading for the last six years it is in my view unlikely that there are any such creditors. The documentary material read on behalf of the defendant showed no such creditors. 61 I doubt whether the principle of the "fullest and best" evidence applies where the evidence is unchallenged, that is, no objection is taken to the material and there is no cross-examination directed to the suggested deficiency in the quality of the evidence. Also, as pointed out by White J in Coates Hire Operations Pty Ltd v D-Link Homes Pty Ltd [2011] NSWSC 1279: [60] The origin of the requirement for the "fullest and best" evidence of the financial position is the statement of Hayne J in Commonwealth Bank of Australia v Begonia (1993) 11 ACLC 1075 at 1081. Hayne J used the expression in describing evidence relied upon by the company that the terms of a loan between it and a related company were that it was only liable to pay the related company such sum as the related company was liable to pay the bank. The only evidence about the arrangement was from a director of the related company who described the effect of the agreement. No document was produced and no evidence was given by the individuals of any conversations that might be said to give rise to such a term if the alleged term were part of an oral contract. Hayne J admitted the evidence of the director and assumed that the effect of the agreement between the companies was as stated. His Honour held that as the related company had no defence to the claim by the bank, the company in question was insolvent because it admitted in those circumstances that it owed the same amount to the related company. Hayne J said (at 1081): Ordinarily one would expect that on an application of this kind the company would provide the fullest and best possible material in support of its case. Thus one would ordinarily expect that the agreements between Texel and Redlock (for I would assume them to be written and not oral) would be produced in evidence. [61] Hayne J was describing the nature of the evidence one would expect a company to lead in opposition to the application that it be wound up in insolvency. His Honour did not say that only the fullest and best possible evidence of a company's financial position would be sufficient to displace a presumption of insolvency. After referring to Leslie v Howship Holdings Pty Ltd (1997) 15 ACLC 459 per Sackville J and Expile Pty Ltd v Jabb's Excavations Pty Ltd (above), White J concluded: [66] Ultimately the question of solvency is to be decided on the balance of probabilities. Proof is not required beyond reasonable doubt. I believe Mr Hoang's evidence that all trade creditors have been paid. Bearing in mind the need for proper verification of a company's financial position, I am nonetheless satisfied on the balance of probabilities that the company is able to pay its debts as they become due and payable, except for the debt owing to Mr Hoang. I agree with this approach. In my view the "fullest and best" evidence requirement is a tool to be used, where appropriate, by the finder of fact to evaluate the balance of probabilities. In the present case I accept the submission made by the plaintiff that the defendant's evidence is not the "fullest and best". However, where the company has not been trading for some years and no other creditors have come forward I find that on the balance of probabilities the defendant had no other third party creditors. 62 Fourth, I accept that in the present case the only or substantial effect of refusing the application for an adjournment would be that control of the company would pass to a liquidator. A liquidator may choose not to pursue the Pt IVC review which I have held to be reasonably arguable on the untested material before me. No advantage, apart from the bare fact of liquidation, was suggested on behalf of the plaintiff. Conclusion and orders 63 For these reasons, in the unusual circumstances of the case, I grant an adjournment. I shall do so for a specified period with a view to the decision in the Pt IVC proceedings in the Tribunal being known by that time. The appropriate period in the first instance is approximately four months, that is, to 17 August 2012. I shall list the matter at 9.30 am on that day. The parties will have liberty to apply on three days' notice. 64 To give effect to that conclusion, it is also necessary that I extend the period within which the application for the company to be wound up in insolvency must be determined, the specified period being within six months after the application is made. By s 459R(2) the Court may extend the period only if the Court is satisfied that special circumstances justify the extension and the order is made before the expiry of the original six-month period or that period as last extended. 65 It has been observed that there is a public interest underlying s 459R to ensure that winding up proceedings for insolvency are speedily disposed of; see Expile Pty Ltd v Jabb's Excavations Pty Ltd (2002) 194 ALR 138 at [9]. As I have already found, the defendant is not trading and has not been trading for six years. It has no assets or third party creditors other than the Deputy Commissioner. This being so, this case does not present those factors which concerned Hamilton J in Expile Pty Ltd v Jabb's Excavations Pty Ltd (2002) 194 ALR 138 at [9]; see also Xat Ky v Australvic Property Management Pty Ltd [2007] FCA 1541 at [64]. In particular, it is unlikely that the defendant will be "trading or engaging in transactions whilst it is insolvent" or that evidence will become "stale". 66 The special circumstances are, first, that I have adjourned the application for the company to be wound up in insolvency, rather than dismissed it. Second, I have adjourned the application on the basis I have explained. Those circumstances are, in my opinion, special circumstances within the meaning of s 459R(2). 67 I note that by s 459R(4) an order under s 459R(2) may be made subject to conditions. I impose as a condition of the adjournment and as a condition of the extension of the period under s 459R(2) that the defendant take all steps available to it to have the Pt IVC proceedings in the Tribunal heard as soon as possible. 68 I reserve the question of costs. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Robertson. Associate: Dated: 16 April 2012