Supreme Court New South Wales Medium Neutral Citation: In the matter of Right on Track Auto Parts Pty Ltd [2015] NSWSC 2065 Hearing dates: 15 June 2015 Date of orders: 15 June 2015 Decision date: 15 June 2015 Jurisdiction: Equity - Corporations List Before: Brereton J Decision: Winding up order made; liquidator appointed. Catchwords: PROCEDURE – adjournment – where adjournment sought to file evidence of solvency – absence of evidence as to prospects of establishing defence – where evidence available to demonstrate prospects of establishing defence but not tendered – where payment plan proposed by defendant – held, adjournment refused; CORPORATIONS – winding up – winding up in insolvency – failure to comply with creditor's statutory demand – presumption of insolvency – absence of evidence of solvency – compliance with formal requirements – held, winding up order made. Category: Principal judgment Parties: Deputy Commissioner of Taxation (plaintiff) Right on Track Auto Parts Pty Ltd ACN 058 332 746 (defendant) Representation: Counsel: K Metlej (solicitor) (plaintiff) J Tholley (solicitor) (defendant) Solicitors: Craddock Murray Neumann Lawyers Pty Ltd (plaintiff) Minas & Associates (defendant) File Number(s): 2015/104767 Judgment (ex tempore) Application for further adjournment of proceedings 1. HIS HONOUR: By originating process filed on 9 April 2015, the plaintiff Deputy Commissioner of Taxation seeks an order that the defendant be wound up in insolvency and a liquidator appointed. The application relies on failure to comply with a creditor's statutory demand for a tax debt of $119,000 approximately. 2. A notice of appearance, which stated that the ground of opposition was that the defendant was solvent, was filed on 12 May 2015. 3. The originating process was first returnable before the Court on 12 May 2015, when the Registrar, by consent, adjourned the application until 26 May and directed that any further adjournment application be supported by affidavits to be served by 12 noon on 25 May. 4. No such affidavit as was contemplated by the orders of 12 May 2015 had been served when the matter returned before the Court on 26 May. On that occasion, the Registrar (presumably on the defendant's application, because the paper is marked "not by consent"), adjourned the proceedings to 15 June, and directed that the defendant serve any evidence as to solvency by 9 June. No such evidence had been served by 15 June when the matter returned before the Registrar and was referred to me for hearing as a contested winding up, given that the notice of opposition had been filed. 5. Before me, application is made for a further adjournment, it being said that the defendant has recently lodged its tax return with the Australian Taxation Office and will be in a position to file its evidence of solvency within the next week. 6. However, there is absolutely no evidence before the Court which suggests that there is any prospect of the defendant establishing a defence. What is known is that there is a tax debt of about $120,000; that no payments have been made on account of it; that a tax return, presumably for the last financial year, has recently been lodged; that the defendant's solicitor, although not until the hearing in possession of a copy of that return, has now been provided with a copy and has chosen not to tender it, although I invited its tender; and that as from that tax return the defendant must have at least some material which could cast light on its financial position to inform a decision on an adjournment application and to enable me to conclude whether there were any realistic prospects of its establishing solvency if granted an adjournment, the proper inference is that the material would not assist an argument that there was a prospect of establishing solvency. 7. Moreover, it was indicated that a payment plan had been proposed, but declined. The very fact that a payment plan is proposed bespeaks an inability to pay the debt as and when it falls due. There is nothing to suggest that the debt has ever been the subject of dispute – certainly not that any application to set aside the demand was ever made – and it also appears that an earlier application for a winding up order was made in 2009, though dismissed later that year. 8. This is the third time the matter is before the Court. The defendant has done nothing to show that there is a prospect of it establishing a defence. It has been afforded sufficient opportunity to do so. In my view, the proper exercise of discretion in those circumstances is to decline the application for an adjournment. Winding up application 1. By originating process filed on 9 April 2015, the plaintiff Deputy Commissioner of Taxation seeks an order that the defendant Right on Track Auto Parts Pty Ltd be wound up and a liquidator appointed. Nicholas Malanos of Worrells has consented to being appointed as liquidator. 2. As appears from the affidavit of Karen Martin, sworn 2 March 2015, a creditor's statutory demand, dated 26 February 2015, was served on the date it bears on the defendant by mail addressed to its registered office, demanding an amount of $119,726.58, being the tax debts described in the schedule on running balance account. 3. The evidence establishes that the demand has not been complied with, and that no application was made to set aside or vary it. Accordingly, the defendant is presumed to be insolvent. 4. The affidavit of Khaja Ahmed Mohiuddin of 8 April 2015 establishes that, since the date of the demand, an additional sum of $4,629 has become due and payable and, as at the date of that affidavit, a total amount of $124,356.10 was due and payable to the defendant. 5. The affidavit of Monica Daley of 11 May 2015, leave to file which in Court is granted, establishes that notice of the application for a winding up order has been published on 1 May 2015 on the ASIC Insolvency Notices website and notification of the application in Form 519 was lodged with ASIC on 9 April 2015. 6. Although the affidavit of Tania Payne of 5 May 2015 proves service on the defendant of the originating process and supporting documents, service is sufficiently established by the defendant's Notice of Appearance filed on 12 May 2015. 7. The affidavit of Karen So of 12 June 2015 establishes that, an additional sum of $9,195.36 having become due and payable, the amount of $133,551.46 is now due by the defendant to the plaintiff and that no payments have been made on account of the debt the subject of the creditor's statutory demand. 8. The Notice of Appearance raises as the grounds of opposition that the defendant is solvent, but there is no evidence whatsoever of solvency, let alone such evidence as would rebut the presumption of insolvency. I am satisfied that all requisite formal matters have been complied with. The ground of insolvency is established, and the plaintiff is entitled to have the defendant wound up. 9. The Court therefore orders that: 1. The defendant Right on Track Auto Parts Pty Ltd be wound up. 2. Nicholas Malanos of Worrells be appointed liquidator of the defendant. 3. The plaintiff's costs of these proceedings are fixed in the amount of $2,495.91. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 March 2016