Hambleton v Commissioner of Taxation
[2009] QDC 9
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- Unreported Judgment
- Hambleton v Commissioner of Taxation[2009] QDC 9
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Hambleton v Commissioner of Taxation[2009] QDC 9
Hambleton v Commissioner of Taxation[2009] QDC 9
DISTRICT COURT OF QUEENSLAND
CITATION: | Hambleton & Anor v Commissioner of Taxation [2009] QDC 9 |
PARTIES: | DAVID HAMBLETON AND ROBERT MURPHY AS LIQUIDATORS OF ACN 010 666 994 PTY LTD Plaintiffs AND COMMISSIONER OF TAXATION Defendant |
FILE NO/S: | BD3084/08 |
DIVISION: | |
PROCEEDING: | Application |
ORIGINATING COURT: | District Court, Brisbane |
DELIVERED ON: | 30 January 2009 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 20 January 2009 |
JUDGE: | McGill DCJ |
ORDER: | Judgment that the defendant pay the plaintiffs the sum of $73,027.65, including $1,856.30 by way of interest. |
CATCHWORDS: | CORPORATIONS LAW – Winding up – preferences – insovlence – whether reasonable grounds to suspect insolvency – summary judgment. Corporations Act 2001 (C’th) s 588FF, s 588FG. Deputy Commissioner of Taxation v Salcedo [2005] QCA 227 – applied. Emanuel Management Pty Ltd v Fosters’ Brewing Group Ltd (2003) 178 FLR 1 – cited. George v Rockett (1990) 170 CLR 104 – cited. Hymix Concrete Pty Ltd v Garrity (1977) 2 ACLR 559 – cited. Keith Smith East West Transport Pty Ltd v Australian Taxation Office [2002] NSWCA 264 – cited. Mt Nathan Land Owners Pty Ltd v Morris [2008] QSC 239 – cited. Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 – applied. Sandell v Porter (1966) 115 CLR 666 – applied. Sheldrake v Paltoglou [2006] QCA 400 – followed. Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213 – applied. Wily v Commissioner of Taxation [2002] NSWSC 909 – cited. |
COUNSEL: | PW Evans (Solicitor) for the plaintiffs MJ Henry (Solicitor) for the defendant |
SOLICITORS: | Piper Alderman for the plaintiffs Australian Government Solicitor for the defendant |
- [1]The plaintiffs are the liquidators of the unimaginatively named ACN 010 666 994 Pty Ltd. They claim that during the relation back period the company made four payments to the defendant which are recoverable as unfair preferences under s 588FF of the Corporations Act 2001 (“the Act”). The proceeding being defended, the plaintiffs have applied for summary judgment. Given the nature of the application, what matters is not the current state of the pleadings, but what will happen if the matter goes to trial.
- [2]It was expressly conceded on behalf of the defendant that he was an unsecured creditor of the company, the payments were made and were transactions for the purposes of the relevant provisions, the defendant and the company were parties to the transactions (a matter which is in issue on the pleadings but in respect of which additional material has since been made available by the plaintiffs to the defendant) and that the transactions occurred during the relation back period. It is therefore unnecessary for me to address these issues any further.
- [3]Only three matters have been raised as justifying a trial of this action. The first was the question of whether the company was insolvent at the time the payments were received. Second, it was submitted that the defendant had a defence under s 588FG(1) of the Act, on the basis that he became a party to the particular transactions in good faith, valuable consideration was provided under the transaction, he did not then have reasonable grounds for suspecting that the company was insolvent or would become insolvent because of entering into the transaction, and a reasonable person in the defendant’s circumstances would have had no such grounds for so suspecting. The point was also taken that the plaintiffs had failed to prove that the transactions resulted in the defendant’s receiving more from the company than would have been received in respect of the debts if they had been proved for in the winding up.
Was there a preference?
- [4]This last point was taken on a very narrow basis. The plaintiff’s affidavit filed 9 December 2008, after deposing to the existence of a list of creditors totalling over $2,600,000, continued in para 11:
“The costs and expenses of the administration and liquidation are likely to be significant, such that I am unable to provide a precise figure as to the likely return to creditors at the end of this liquidation. Indeed, it may be nil cents in the dollar. I am, however, able to verify that the defendant has received, by way of the payments that have been made to the defendant, significantly more than if the transactions were set aside and the defendant was to prove for their debt in the winding up of the company.”
- [5]It was submitted that this was not sufficient to prove that the defendant had received more than if it proved in the winding up, and that in these circumstances a vital element of the plaintiffs’ proof was missing. It may well be that if one looks only at this paragraph and takes a very technical view of it, there is some substance in this submission. There is, however, other information available about the financial position of the company. For example, as at 30 June 2006 the company’s records showed a deficiency of assets compared with liabilities of over $2.6 million. The plaintiff in a further affidavit filed 19 January 2009 has sworn that the company’s position during this entire period only became worse: para 2.6(a).
- [6]Furthermore, an examination of the balance sheet as at 30 June 2006, which is part of Exhibit VH5 to the first affidavit of the plaintiff, shows that the assets included an amount of just over $400,000 for research and development and an amount of just under $160,000 for “goodwill at cost”. It included an amount of over $200,000 for work in progress; stock in hand was a little over $200,000, and the only other significant asset was debtors of just over $480,000. The evidence therefore shows the company had huge debts at the time of winding up, and strongly suggests that there were no significant assets at that time. In these circumstances, any deficiency in paragraph 11 is irrelevant. When the material available is considered as a whole, the conclusion is irresistible that if the matter went to trial it would be shown that the transactions resulted in the defendant’s receiving from the company in respect of the unsecured debts more than would have been received if they had been proved for in the winding up.
Proof of insolvency
- [7]The liquidators seek to rely on the statutory presumption of insolvency in s 588E(3), a presumption which applies relevantly to an application under s 588FF by a company’s liquidators: subsection (1)(a). That presumption, which is designed to simplify the proof of insolvency at particular dates for the purposes of these proceedings, bearing in mind that there may well be deficiencies in the record keeping of a company which is in financial difficulty, operates except so far as the contrary is proved for the purpose of the proceeding concerned: subsection (9). I am somewhat concerned, however, about relying on the presumption in an application of this nature, which looks to the outcome, or possible outcome, of the trial. The issue is whether there is any real possibility that, if the matter goes to trial, the plaintiff will fail to prove that the company was insolvent at the relevant times. In these circumstances, I think it would be safer to look at what evidence there is about the actual state of solvency of the company, with a view to showing whether this might prove to be a real issue at a trial, or at least if the matter were investigated at a trial, whether there is any real possibility of any other finding.
- [8]I have already touched on the financial position as shown in such financial records as are available, which include financial records for the financial year which covered the four payments in issue. Those financial records show that during that financial year the company made a loss of $990,617;[1] according to those records, this came on top of losses in the previous financial year of over $1.3 million, and in the financial year before of over half a million dollars. As at 30 June 2006 liabilities exceeded assets by $2,650,889. There had been an excess of liabilities over assets 12 months earlier, but a much smaller one, reflecting the loss made during the 12 months. The amount shown as current liabilities at as 30 June 2006 was almost $1 million greater than the amount shown as current assets, which is certainly suggestive of insolvency, and during that financial year this deficiency had grown from about $826,000.
- [9]The company’s director has advised the liquidator that the company was unable to obtain further funds from its bankers from at least 2 June 2005, a position that the liquidator regards as consistent with his knowledge of the books and records of the company.[2] He also noted that payments to creditors were commonly made in rounded sums that were less than the total amounts owing, which could not be reconciled with particular invoices.[3] The liquidator has also said that he was told by the company’s director that the defendant was paid in circumstances where other creditors were not paid, and that he had intentionally preferred payment of the defendant over other creditors due to a mistaken belief that the defendant was entitled to some form of statutory priority. It is conceded that there was no statutory priority so far as the company was concerned, although the defendant had statutory remedies available, including remedies which could in appropriate circumstances give rise to personal liabilities on the part of the director of the company, so that he had a particular incentive to be making payments to the defendant.
- [10]The plaintiff has also prepared an estimated aged listing of creditors as at 25 August 2006, which was not long after these payments were made. At this time the creditors identified exceeded $3.5 million,[4] of which about $400,000 had been outstanding for six months or more.[5] Although there are no details available as to the credit terms for these creditors, one would expect that, apart from the long‑term liabilities where there might have been at least an expectation that payment would not be required in the immediate future, most at least of the other amounts would have been payable either immediately or after 30 days. This analysis strongly suggests that the company was seriously insolvent as at 25 August 2006. On 25 August 2006, a voluntary administrator of the company was appointed pursuant to s 436A of the Act.[6] Subsequently on 10 October 2006 a deed of company arrangement was entered into by the company, but that was terminated on 20 May 2008 when the company went into voluntary liquidation.
- [11]The material refers to the history of the company’s payments and contacts between the defendant’s officers and the company in the period leading up to, and covering, the payments; the relevant payments were made on 5 April, 23 May, and 19 June 2006. During this period, a number of payments were not made when they became due and payable, or within the period allowed for their payment, either originally or under arrangements entered into by the defendant. The running balance account for the company maintained by the defendant showed that as at 24 June 2005 the amount owing overall was $128,161.02.[7] There were then a series of payments received in late June or early July, but with one exception these appear to be round figure part payments; a payment of $35,578 made on 30 June 2005 appears to relate to tax withheld as at 21 June 2005, which is some delay but not a great delay.
- [12]On 4 August 2005 the company entered into a payment arrangement in respect of an amount of just under $80,000 which was payable; the arrangement involved the company paying about half the following day, with further payments to be made weekly over the next four weeks. However, the following day the director of the company advised that the first payment would not be made until 10 August. A substantial reduction was achieved by the payment on 10 August 2005, and thereafter there were three payments of $10,000 under the arrangement, but another amount of withholding tax was not paid.
- [13]On 1 September the director telephoned again and advised that he would not be able to make the payment due on 2 September, and it was pointed out that a liability for withholding tax of over $20,000 due on 22 August had not been paid, with the result that the payment arrangement was in default anyway.[8] The director indicated that his company was still waiting for another settlement and that due to cash flow problems they could not arrange for the withholding tax to be paid. On 7 September the director advised that he would pay the outstanding debt by 16 September, and possibly earlier though he was awaiting confirmation about the cash flow.[9] There was a timely payment of tax withheld on 19 September 2005 which was actually a couple of days before the tax came to be payable, which put the company briefly into credit. A further payment on 26 September 2005 seems to have generated a genuine credit. There was then a timely payment in October of GST and tax withheld, a timely payment at the end of November of tax withheld, and a timely payment at the end of December of tax withheld.
- [14]The next return of tax withheld was lodged on 16 February with payment due on 21 February 2006, but neither it nor the tax payable following the quarterly return for the period to 31 December 2005, lodged 17 February 2006, was paid prior to the two payments on 4 April 2006, which are two of the challenged payments.[10]
- [15]The next contact was on 22 February 2006 when the director called the ATO seeking an extension of time within which to pay. He explained that the company was involved in a merger which should be completed by March 2006, at which point he would have sufficient funds to pay in full.[11] An extension was granted, though that is consistent with insolvency in the latter part of February 2006. As at 4 April, there had been no payment to the defendant by the company since 20 December 2005, although other amounts had become payable, including an amount of over $11,000 for tax withheld for February, payable on 16 March 2006.[12]
- [16]On 24 April 2006 a return for Goods and Services Tax was lodged which generated a credit. On 12 May 2006 an amount for withholding tax became payable which was not paid, presumably because as a result of the credit from the Goods and Services Tax the running account went into credit for a large sum. A further instalment of tax withheld became payable on 22 May 2006, which was paid the following day, another of the payments challenged by the plaintiffs.[13] The account is then complicated by the fact that there was an amended determination issued by the defendant for the amount payable in respect of the period ended 30 June 2001, as a result of which an amount of just over $8,000 became payable, and the general interest charge was amended in consequence for the period up to 26 May 2006, so that about an additional $13,000 became payable. No particular payment was made in response to this.
- [17]On 6 June 2006 a representative of the company said that an amount owing would be paid by 16 June, that a payment of over $11,000 for withholding tax would be made by 21 June 2006, and that payment of a further amount would be withheld pending determination of a request for a remission of interest.[14] The payment to be made by 16 June 2006 was in fact made on 19 June 2006, a further payment of just under $5,000 made just before an amount of tax withheld of over $11,000 became payable, on 21 June 2006. This was the fourth of the payments claimed by the plaintiffs. On 17 August 2006 a second reminder was sent to the company’s accountant that the tax return for 2004 had not yet been lodged. It was noted that the return for 2005 was also outstanding.
- [18]Accordingly, during this period payments were not being made in a timely way to the defendant even for something as fundamental as tax withheld. This was in substance a continuation of “a long history of financial difficulties and endemic shortage of cash with consistent late payment of its debts”[15] which is not a temporary lack of liquidity, but “an endemic shortage of working capital.”[16]
- [19]Section 95A of the Act provides:
“1. A person is solvent if, and only if, the person is able to pay all of the person’s debts as and when they become due and payable.
- A person who is not solvent is insolvent.”
- [20]Solvency does not depend simply on a consideration of cash resources, but depends on the ability of the debtor to meet debts as they fall due, utilising such cash resources as are available or can be commanded through the use of assets within a relatively short time: Sandell v Porter (1966) 115 CLR 666 at 670.[17] As I understand the position a debt does not cease to be due and payable merely because the creditor is not actively taking steps to enforce it by legal action or by other means of applying pressure,[18] so long as the creditor has not actually entered into some agreement, which may occur tacitly, to postpone payment.[19] I do not regard as solvent a company which is able, merely by providing money in drips and drabs to a range of creditors, to hold them at bay, even over an extended period of time. That is something quite different from the test of solvency defined in the statute, and laid down by the High Court.
- [21]Obviously if the matter went to trial there could potentially be a good deal more evidence available on the issue of solvency. The question remains, however, whether there is any real possibility that at the end of the trial the result could be anything other than a conclusion that the company was insolvent. Having considered carefully the material which is presently available, I am satisfied that there is no real possibility that if there were a trial about this matter the court would come to any conclusion other than that the company was insolvent, at least during the relevant period, and indeed for a good deal longer. I do not consider that there is any real prospect of the defendant or anyone else being able to show to the contrary, or that any additional evidence on the subject would result in a different conclusion being reached. I do not think that there is any need for a trial to show that the company was insolvent. I am approaching the test in r 292 on the basis laid down by the Court of Appeal in Deputy Commissioner of Taxation v Salcedo [2005] QCA 227.
Defence under s 588FG
- [22]The next question is whether it is sufficiently clear that there is no real prospect of the defendant being able to substantiate the defence under s 588FG. That would be a matter for the defendant to prove, to show that he became a party to the transaction in good faith, that he had no reasonable grounds for suspecting that the company was insolvent at that time, or would become insolvent because of entering into the transaction, that a reasonable person in his circumstances would have had no grounds for so suspecting,[20] and that he provided valuable consideration under the transaction. For the purposes of this application, it is appropriate to assume that the defendant became a party to the transaction in good faith and provided valuable consideration under the transaction, and the plaintiffs’ argument was that the defence would necessarily fail because the information that the defendant had necessarily provided reasonable grounds for suspecting that the company was insolvent. Unlike the position in relation to insolvency, what matters here is not the actual situation of the company’s finances, but what information the defendant had and whether it was grounds to suspect that the company was insolvent.
- [23]In relation to this, a good deal of evidence has been put before me, which effectively reproduces the dealings between the defendant and the company during the relevant period, and indeed for a considerably longer period. Because detailed notes were taken of such oral interaction as occurred, and the defendant otherwise kept good records of what passed between it and the company, it seems to me that this is not an issue which is likely to be assisted very much by a consideration of oral evidence. I have before me the information which the plaintiffs allege clearly amounted to grounds for suspecting insolvency. It was not suggested that in the event of a trial the evidence as to what information was then available to the defendant would be significantly different. In those circumstances, I am in much the same position in terms of arriving at a conclusion on this issue as I would be after a trial of the action. The issue therefore becomes whether it is clear enough that the defendant had reasonable grounds for suspecting that the company was insolvent that the matter is appropriately decided on an application for summary judgment. If that is the case, there is no need for a trial of the action.
- [24]I have already referred to a number of telephone conversations between representatives of the company, usually the director of the company, and officers of the defendant during the period from late 2005 until July 2006 and the liabilities and payments made. The plaintiffs put in a good deal more material, directed to what had passed between the defendant and the company during earlier years, in respect of which it appears that there were actually rather greater difficulties, in that there were greater delays in making payments which ought to have been made, the defendant’s officers were pressing more vigorously for payment, and the amounts outstanding were somewhat greater. I do not think that this material is of much relevance. It is not the case that, once reasonable grounds exist for suspecting insolvency, the defence ceases to be available thereafter; the defence has to be applied at the time the particular transaction occurs, here the time the particular payment was made.
- [25]That does not mean that everything that happened at any earlier time is to be disregarded, but the focus is on what material was available at that time, and more recent material is obviously more significant than earlier material in relation to whether a suspicion of insolvency appropriately arises. This is the case particularly in circumstances where there is some indication of change. Indeed, if the situation has improved that may well be a matter which would assist the defendant, in that it would suggest that reasonable grounds to suspect insolvency had ceased to be present. On the other hand, where a particular tax payer has an established pattern of being a bad payer, there would need to be some fairly significant change in its behaviour before it could reasonably be seen that it had turned over a new leaf.
- [26]It is apparent that there were a number of deficiencies in the company’s dealings with the defendant. There was a failure to lodge the 2004 and 2005 income tax returns in a timely way, and the 2004 return had not been lodged notwithstanding that the company had been on at least one occasion pressed to lodge it. Apart from this, Business Activity Statements ought to have been lodged by the company, and it was required to remit tax withheld from employees, and superannuation payments. I expect it had no reason to make payments from time to time on account of income tax.
- [27]In the period from September 2005 until July 2006 all of the Business Activity Statements and Instalment Activity Statements required to be lodged by the company were lodged prior to the due date, as they were supposed to be. The Business Activity Statement for the quarter July to September 2005, which was lodged on 17 October 2005, showed total sales for the quarter of $1,142,596 and non‑capital purchases of $980,396, producing a gross profit of $162,200.[21] However, the next page shows that for the month of September 2005 wages, salary and other payments in respect of which PAYG tax was to be withheld came to $86,937 gross. Assuming that this amount was typical for the three months, that indicates a wage bill for that same period of approximately $240,000, so that even apart from other expenses it is apparent that the company was operating at a loss of at least $75,000 during this period.[22]
- [28]The Business Activity Statement for the following quarter lodged 13 February 2006 shows total sales of $1,003,688 and non‑capital purchases of $893,599, giving a gross profit of $110,089, while wages for December came to $51,084 gross.[23] Instalment Activity Statements for the previous two months show wages for October of $81,702 and November $71,885. Wages for the three months therefore came to $204,671, so that just after allowing for wages the company was operating at a loss over this period of $94,582. The Business Activity Statement for the first quarter in 2006, lodged 19 April 2006, showed gross sales of only $557,096, while non‑capital purchases were $679,339, a gross loss of $122,243.[24] Wages for January 2006 were $52,640, for February 2006 $41,481, and for March 2006 $33,228, a total for the period of $127,349, which when added to the gross loss produces a loss for the three months of at least $249,592.
- [29]Apart from the fact that these documents show that the company has consistently operated with a significant loss, they also show a steady decline in sales, a worsening of the trading position as shown by an increase in the loss from quarter to quarter, and a steady reduction almost every month in the wages bill. These documents paint a clear picture of a company which is failing. Its business is declining, its losses are getting higher and higher, and it is reacting by slashing costs, such as wages. This is not consistent with a healthy business which is suffering a temporary liquidity problem; it is indicative in my view of a business which is in serious decline, probably terminal. Given that the company was certainly in serious trouble in the past, that it is continuing to operate at a loss and showing signs of declining business in my opinion amount to clear indicia of continuing insolvency.
- [30]It was submitted on behalf of the defendant that the evidence was suggestive of a company with a temporary liquidity problem, which was not uncommon in business and would be cured on completion of the merger. The problem with the merger was that there had been talk of this merger for some time, and as early as 1 September 2005 the company’s officers were admitted to a cash flow problem and claiming that that would be fixed by the merger, although the merger was six months away.[25] That is not a temporary liquidity problem, it is effectively an admission of insolvency. The conversation on 22 February was to the same effect; the company was unable to pay money which was due to the tax office until the merger was completed, that is to say, it was still insolvent. Against this background, and in circumstances where the various Business Activity Statements being lodged showed a business which was continuing to be unprofitable and continuing to decline, and money was not being paid when due, in my opinion the material available to the defendant contained ample evidence of insolvency. Far from being simply something which would give rise to a mere suspicion of insolvency, one would have thought that the mind of a reasonable person who assessed the available information, as at the time when each of the impugned payments was made, would have been drawn naturally to the conclusion that the company was probably insolvent. However, it is not necessary for the plaintiffs to show that much.
- [31]The issue is whether the defendant had reasonable grounds for suspecting the company was insolvent at the time the payment was made. What is involved in “suspicion” was authoritatively described by Kitto J in Queensland Bacon Pty Ltd v Rees (1966) 115 CLR 266 at 303:
“A suspicion that something exists is more than a mere idle wondering, whether it exists or not; it is a positive feeling of actual apprehension or mistrust, amounting to ‘a slight opinion but without sufficient evidence’, as Chambers’s Dictionary expresses it. Consequently, a reason to suspect that a fact exists is more than a reason to consider or look into the possibility of its existence.”[26]
- [32]Applying that test, in my opinion the material available to the defendant at the relevant time provided ample grounds for suspicion that the company was insolvent. On the material that I have seen it seems to me clear that the defendant cannot establish this defence. For the reasons given earlier, there is no reason to think that the situation is likely to be any different if there is a trial. In those circumstances, I am satisfied that there is no real possibility of the defendant being able to make out its defence, and that there is no need for a trial of the action.
Interest
- [33]Accordingly, it is appropriate to give judgment to recover the amount claimed, $71,171.35. It is also appropriate to allow interest, and the plaintiff sought interest from the date of commencement of the winding up, on the basis that interest from that date was allowed by the Court of Appeal in Sheldrake v Paltoglou [2006] QCA 400, although without any particular analysis of the issue.
- [34]The entitlement to interest arises under the Supreme Court Act 1995, s 47, which provides that the court may award interest for the whole or any part of the period between the date when the cause of action arose and the date of judgment. Although a transaction which amounts to an unfair preference is a voidable transaction for the purposes of the Act, it appears from s 588FF that the transaction is voidable in the sense that the court sets it aside by making an order for repayment, rather than being voidable at the instance of the liquidator. It is necessary for the liquidator to apply to the court for the court to have jurisdiction to make the order for repayment, but strictly speaking the money becomes repayable when the court makes the order. However, in my opinion s 47 operates by reference to the time at which it would be open to the liquidator to apply to the court for an order under s 588FF; that is the point at which it could be said that the liquidator’s “cause of action” under the statute has arisen.[27] It seems to me from the legislation that the liquidators could have applied immediately the winding up began and they became liquidators, and accordingly on that basis it is open to allow interest from the date on which the company went into liquidation. The plaintiffs became liquidators of the company on 20 May 2008 when a meeting of creditors resolved that the company be placed into voluntary liquidation.[28]
- [35]The difficulty with this argument is that what was actually ordered in Sheldrake was that interest run from the date on which the liquidators wrote to the defendant demanding a return of the moneys received by him.[29] Plainly that was after the date on which they were appointed as liquidators. In the present matter, it appears that the liquidators first wrote to the defendant seeking repayment of the moneys subject to this proceeding on 3 October 2008.[30] I will therefore allow interest from that date until the date of judgment. There was no particular argument before me as to the rate of interest. I understand that 8% is the rate commonly allowed under s 47 in commercial matters and I will therefore allow interest at that rate. Interest at that rate on the amount of $71,171.35 to the date of judgment is an amount of $1,856.30.
- [36]There will therefore be judgment that the defendant pay the plaintiffs the sum of $73,027.65 including $1,856.30 by way of interest. I will hear submissions in relation to costs, but unless another order is appropriate, the defendant should also pay the plaintiffs’ costs of and incidental to the action to be assessed.
Footnotes
[1] Some information about the progress of the business during this year also emerges from the company’s quarterly returns to the defendant, considered in more detail below.
[2] Affidavit of Hambleton filed 9 December 2008, para 9.5.
[3] Ibid para 9.8.
[4] This figure included long‑term liabilities of $2,730,728.50.
[5] This is in the context of total sales for the company for the period of April to June 2006 of only $501,871: affidavit of Hambleton filed 19 January 2009 Exhibit DH13 p 605.
[6] Ibid paras 4.2 – 4.6.
[7] This and subsequent material about amounts payable and paid comes from the affidavit of Hambleton filed 9 December 2009, Exhibit DH6, a document generated by the defendant.
[8] Affidavit of Dale filed 14 January 2009, para 24.
[9] Ibid para 26, 27.
[10] Affidavit of Dale filed 14 January 2009 para 32, 33.
[11] Ibid para 29. The merger had also been mentioned on 1 September 2005.
[12] Ibid para 35.
[13] Ibid para 37.
[14] Ibid para 40.
[15] Mt Nathan Land Owners Pty Ltd v Morris [2008] QSC 239 at [115] per Atkinson J.
[16] Hymix Concrete Pty Ltd v Garrity (1977) 2 ACLR 559 at 566.
[17] See also the analysis in Emanuel Management Pty Ltd v Fosters’ Brewing Group Ltd (2003) 178 FLR 1 at 24-30, [2003] QSC 205 at [67]—[95].
[18] Southern Cross Interiors Pty Ltd v Deputy Commissioner of Taxation (2001) 53 NSWLR 213 at 224, point 4.
[19] Keith Smith East West Transport Pty Ltd v Australian Taxation Office [2002] NSWCA 264 at [33].
[20] I do not need to consider whether this part of the defence adds anything, and if so what: see Wily v Commissioner of Taxation [2002] NSWSC 909 at [21] – [23].
[21] Affidavit of Hambleton filed 19 January 2009 Exhibit DH12 p 585.
[22] It does not matter much for present purposes whether this was returned on a cash basis or an accruals basis. I suspect it was a cash basis, which is probably more relevant to the question of solvency.
[23] Ibid p 593.
[24] Ibid p 599.
[25] Apart from the records exhibited to Mr Hambleton’s affidavit, see affidavit of Dale filed 14 January 2009 para 24.
[26] See also George v Rockett (1990) 170 CLR 104 at 115-6.
[27] cf Do Carmo v Ford Excavations Pty Ltd (1984) 154 CLR 234 at 245.
[28] Affidavit of Hambleton filed 9 December 2008 paras 4.5, 4.6.
[29] To be fair to the plaintiffs’ solicitor, the submission was ultimately withdrawn.
[30] Affidavit of Hambleton filed 19 January 2009 Exhibit DH13 p 639.