DCT v Sydney Concrete Steel [1999] NSWSC 494

Reported Decision : (1999) 17 ACLC 972

New South Wales Supreme Court CITATION : DCT v Sydney Concrete Steel [1999] NSWSC 494 CURRENT JURISDICTION : Equity FILE NUMBER(S) : 4795/99 HEARING DATE(S) : 14 May 1999 JUDGMENT DATE : 14 May 1999

Deputy Commissioner of Taxation (P) PARTIES : v Sydney Concrete Steel Fixing Pty Ltd (D) JUDGMENT OF : Austin J

COUNSEL : R Hamilton (Applicant) SOLICITORS : Gordon & Johnstone (Applicant) CATCHWORDS : Corporations - companies - winding up - application to terminate winding up - evidence required DECISION : Winding up terminated

CASES CITED:

George Ward Steel Pty Limited v Kizkot Pty Limited (1989) 15 ACLR 464 STATUTES CITED: Corporations Law, s 482

THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

AUSTIN J

FRIDAY 14 MAY 1999

4795/98 - DEPUTY COMMISSIONER OF TAXATION V SYDNEY CONCRETE STEEL FIXING PTY LIMITED

JUDGMENT

1 HIS HONOUR: In this matter the applicant, Deborah Russell, as a contributory, seeks orders including an order under s 482(1) of the Corporations Law for the termination of the winding up of the defendant company, which was ordered to be wound up by the Registrar of this Court on 6 May 1999. The applicant also seeks on order that she be joined as a party to the proceedings and that the summons for winding up be dismissed. 2 The evidence indicates that her notice of motion has been served on the plaintiff/creditor, the Deputy Commissioner of Taxation, and that the plaintiff neither supports nor opposes her application. Additionally the application has been served on the liquidator and he also neither supports nor opposes the application. Both of those parties note their fees and I am informed by counsel that payment of the fees will be attended to today. 3 When the matter first came before me on Wednesday 12 May 1999 I was not satisfied that the evidence was sufficiently strong to justify the orders sought at that stage. I, therefore, adjourned the matter to today to give the applicant the opportunity to present further evidence and to serve her application on the parties to the proceedings. 4 The applicant has now produced further evidence which satisfies me that the substantive orders sought in her application should be made. 5 This is only one of a number of applications which have come before the Court in the last few days of the kind which is quite frequently made. Typically the problem arises because those in control of the company have failed to take proper steps to deal with a statutory demand and summons for winding up, and consequently the company is ordered to be wound up in their absence. Sometimes there is evidence that the director, or directors, of the company have not acted swiftly enough to dispute the statutory demand and resist the summons for winding up, though grounds were available. Sometimes the evidence is that instructions have been given to an accountant or solicitor to ensure that payment is made in a timely fashion and, for one reason or another, those instructions have not been complied with. Other explanations are possible. 6 In George Ward Steel Pty Limited v Kizkot Pty Limited (1989) 15 ACLR 464 Hodgson J considered what is required in an application of this kind. The headnote for the case states: 'A court will normally set aside a winding up order if: (a) the order is made in the absence of the defendant company; (b) an application is brought promptly by the company; (c) notice is given to the liquidator, to the person who sought to have the company wound up and to any creditor who appeared at the hearing; (d) the evidence shows an explanation for the non-appearance; (e) there is consent or at least no opposition to the setting aside; and (f) the liquidator shows there is nothing in his investigations to date showing a reason for the company to be stopped from trading.' 7 What sometimes happens is that an application is brought which literally complies with these requirements but says nothing significant about the solvency of the company or the capacity of the former managers to resume management of it, except by virtue of affidavit evidence supplied by a director. Typically nowadays the company is a one director company in which the director is also the shareholder. 8 It seems to me that an application which relies only on evidence deposed to by a single director-shareholder without any external confirmation is unlikely to be adequate to persuade a court to exercise the discretion conferred by s 482(1) or to exercise a discretion to set aside the orders under Part 40 rule 9(3) of the Supreme Court Rules. 9 The present case conforms to the typical pattern only partly. In the present case the applicant is a contributory who was the shareholder of the company. There are affidavits purporting to explain the company's non-appearance at the winding up hearing and relevant financial matters, given by both the company's sole director and the company's external accountant. 10 I nevertheless hesitated to make the orders when the matter came first before me because the evidence showed that the debt upon which the plaintiff took winding up proceedings was a debt for group tax and that the company had had a history of late payment of group tax and prescribed payments tax. I was also concerned that according to a balance sheet annexed to the external accountant's affidavit as at 30 April 1999 the company's assets included a very large amount described as 'receivable-trade debtors' and I was apprehensive that those debts might be, to a substantial degree, aged debts which could be unrecoverable. The balance sheet also identified a significant amount for current liabilities to trade creditors without any further explanation. 11 In these circumstances, although there was evidence that the plaintiff and the liquidator neither supported nor opposed the application, I thought it appropriate to adjourn the matter so that evidence could be obtained particularising the company's history of payment of group tax and prescribed payments tax, and giving more information about trade debtors and trade creditors. The plaintiff and the liquidator would have the opportunity to appear at the adjourned hearing. 12 Now that further information has been supplied along the lines indicated, verified by the affidavit of the external accountant, rather than simply an affidavit by the director, it seems to me appropriate that an order be made under s 482. 13 I make the following orders on the motion: Orders 3, 4, 5 and 7. I note the matter referred to in paragraph 6 of the motion. * * * * * * * * * * *