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17 Apr 12 Winding up application adjourned pending review proceedings – Bayconnection Property Developments Pty Ltd

The Federal Court has, in the exercise of its jurisdiction, adjourned a winding up application brought by a Deputy Commissioner against a company, because the tax debt which was the subject of the winding up proceedings was also the subject of pending review proceedings in the Administrative Appeals Tribunal.

The taxpayer company was effectively moribund. It had not traded for six years and had no assets. Its only third-party creditor was the Deputy Commissioner, who claimed a tax debt consisting of an RBA deficit debt comprising amounts due under the BAS provisions, administrative penalties and general interest charge. That tax debt was the subject of Pt IVC TAA proceedings in the Administrative Appeals Tribunal. The taxpayer argued that it was insolvent only by reason of the tax debt, which it could not challenge in the winding up proceedings (see DCT v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473).

The court exercised its jurisdiction under s 459A of the Corporations Act 2001 (Cth) to adjourn the winding up proceedings pending the outcome of the Pt IVC proceedings, and also made an order under s 459R extending the period of determination of the winding up proceedings, on condition that the taxpayer take all steps available to it to have its Pt IVC proceedings heard as soon as possible.

Robertson J said, at [26]:

“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 [Taxation] Administration Act and where those proceedings are soon to be heard.”

DCT v Bayconnection Property Developments Pty Ltd [2012] FCA 363 (Federal Court, Robertson J, 16 April 2012).

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