In the matter of Plutus Payroll Pty Limited & others

1. [1]

   The plaintiff Deputy Commissioner of Taxation (“the Commissioner”) applied by originating process filed on 6 June 2017 for the winding up of eleven companies on the just and equitable ground referred to in (CTH) Corporations Act 2001, s 461(1)(k), on the footing that the companies were participants in a syndicate with the purpose of not paying, or understating, large taxation obligations to the Commonwealth. Provisional liquidators (Messrs Norman, Algeri and Senatore of Deloitte) were appointed to each of those companies, other than the eleventh defendant Synep Pty Ltd, on 9 June 2017. [1] The originating process was amended on 3 July 2017, to join BRW Services Pty Limited as twelfth defendant, and to add as a ground insolvency under Corporations Act, s 459P; in that respect, the Commissioner contended that each of the companies had incurred large taxation liabilities which apparently cannot be satisfied by them. Prior to the appointment of provisional liquidators, the only appearance had been by the first defendant Plutus Payroll Pty Limited, which appeared by its voluntary administrator, and while the companies have since formally appeared, by their provisional liquidators, only Synep has filed notice of grounds of opposition. On 31 July 2017, the Court ordered that the proceedings against the first to tenth defendants and the twelfth defendant (“the relevant defendants”) be heard on 26 September 2017, and those against Synep on 12 December 2017.

2. [2]

   This judgment is therefore concerned with the proceedings against the relevant defendants. As to the formal matters:

   1. (1)

      notice of the proceedings to the defendants (other than the twelfth defendant BRW Services, which had not yet been joined) was addressed on the application for appointment of provisional liquidators. [2] Since then, the provisional liquidators have filed an appearance for each of the relevant defendants other than BRW Services;

   2. (2)

      service of the amended originating process and supporting affidavit was effected on BRW Services at its registered office on 4 July 2017, as appears from the affidavit of Andrew Ng-Saad made 14 July 2017;

   3. (3)

      notice in Form 519 of the making of an application for the winding up of the first through tenth defendants was lodged with ASIC on 6 June 2017, as appears from the affidavit of Zhilia Jamali sworn 7 June 2017, and such notice in respect of the twelfth defendant was lodged on 4 July 2017, as appears from the affidavit of Zhilia Jamali made 4 July 2017;

   4. (4)

      notice of the hearing on 3 July 2017 in respect of the first through tenth defendants was published on 15 June 2017 on the ASIC insolvency notices website, and of the hearing on 31 July 2017 in respect of the twelfth defendant on 10 July 2017, as appears from the affidavit of Emma Whan made 17 July 2017; and

   5. (5)

      consents have been filed of Timothy Norman, Salvatore Algeri and Ezio Senatore of Deloitte to act as liquidators of the first through tenth defendants dated 7 June 2017, and of the twelfth defendant dated 5 July 2017. They are already the provisional liquidators of the first through tenth defendants, for reasons given at that time; [3] there is no apparent reason why, if winding up orders are made, they should not be appointed as liquidators.

3. [3]

   Although the proceedings are undefended, and no officer of the companies has made any application to the Court, or contacted the Commissioner to foreshadow an appearance, they give rise to several issues which require consideration. Those issues are:

   1. (1)

      whether a statutory presumption of insolvency is available against the twelfth defendant;

   2. (2)

      whether evidentiary certificates given under the taxation legislation are available in winding up proceedings: that is to say, whether such a proceeding is "a proceeding to recover an amount of a tax-related liability", for the purposes of (CTH) Taxation Administration Act 1953, Sch 1, s 255-45(1); and

   3. (3)

      whether actual (as distinct from presumed) insolvency is established in respect of the first through tenth defendants.

4. [4]

   Moreover, the proceedings have attracted some public interest. For all those reasons, this judgment is more elaborate than usual for an undefended winding-up application. The comprehensive and considered submissions provided by counsel for the Commissioner have greatly facilitated its preparation.

Statutory presumption of insolvency – the twelfth defendant

1. [5]

   After the joinder of BRW Services on 3 July 2017, the Commissioner on 18 August 2017 served on it a creditor's statutory demand for payment of debt, for a sum of $1,181,186.77, as appears from the affidavit of Michael Guest made 23 August 2017. No application was made to set aside or vary the demand, which expired unsatisfied on 8 September 2017, as appears from the affidavits of Aris Zafiriou made on 3 October and 5 October 2017. At the hearing, the plaintiff was granted leave to further amend the originating process, so as to rely on the presumption of insolvency provided for by Corporations Act, s 459C(2)(a), arising upon failure to comply with the demand. In this respect, an issue arises as to whether that presumption of insolvency can be invoked in winding up proceedings which have been instituted before the presumption arises.

2. [6]

   Section 459C(2)(a) relevantly provides that (emphasis added): "[t]he Court must presume that the company is insolvent if, during or after the 3 months ending on the day when the application was made: the company failed (as defined by section 459F) to comply with a statutory demand". The relevant application was made on 3 July 2017, when BRW was joined as a defendant. [4] The failure to comply with the demand occurred after that date, on 8 September 2017, [5] and is therefore within the words of the second limb of s 459C(2)(a).

3. [7]

   Prior to the decision of Palmer J in Woodgate v Garard Pty Ltd, [6] plaintiffs had been permitted to rely on the presumption in cases where it arose after the institution of the winding up proceedings. [7] However, in Woodgate v Garard, his Honour observed that, in the light of s 459Q, s 459C(2) should be construed as meaning that while the presumption of insolvency arising from any of the events referred to in paragraphs (b) through (f) might be relied upon if they occurred after the making of the winding up application, the presumption arising from a failure to comply with a statutory demand (paragraph (a)) could not.

4. [8]

   Woodgate v Garard was ostensibly followed in that respect by Barrett J in Golden Plantation Pty Ltd v TQM Design and Construct Pty Ltd, [8] but his Honour treated it as allowing that a presumption of insolvency arising under s 459C(2)(a) from failure to comply with a statutory demand after filing of the winding up application is available to a plaintiff where the winding up application, when filed, was based on other grounds.

5. [9]

   In Lorang Contractors Pty Ltd, [9] I expressed some reservations about, but followed, Woodgate v Garard:

6. [10]

   However, in Equititrust Limited v Willaire Pty Ltd, [10] P McMurdo J did not follow Woodgate v Garard, holding that the presumption was available where it arose after the institution of the winding up proceedings. His Honour said: [11]

7. [11]

   In Surdex Steel Pty Ltd v GB Manufacturing Pty Ltd, [12] referred to by McMurdo J, the originating process recited the failure to comply with a demand, in circumstances where an application pursuant to s 459G to set it aside had been dismissed by consent, and was filed before expiry of the 7-day period referred to in s 459F(2)(a)(ii). Thus while Gardiner AsJ expressed agreement with the approach of Palmer J in Woodgate v Garard, the decision does not depend on it. On the other hand, in Simpson v CT Partners Australia Pty Ltd, [13] Gilmour J expressed agreement with the passage set out above from Equititrust v Willaire.

8. [12]

   What Palmer J said in this respect in Woodgate v Garard was obiter dicta. Those cases which have followed it have done so with qualification [14] or reservation, [15] or in circumstances where it was unnecessary to the decision. [16] It has not been followed by two courts of co-ordinate jurisdiction. [17] It does not accord with the plain words of the introductory part of s 459C(2). It results in an inconsistency between the application of the presumption when it arises from s 459C(2)(a), and when it arises from any of s 459C(2)(b) through (f). The requirement of s 459Q, even if mandatory, can be satisfied in the context of a failure to comply with a demand occurring after institution of proceedings, by amendment of the originating process after the presumption arises. Conscious of the undesirability of different interpretations by courts of co-ordinate jurisdiction of a national statute, in my view this court should now embrace the view of McMurdo J, and no longer follow Woodgate v Garard.

9. [13]

   It follows that where proceedings are commenced invoking grounds other than a presumption of insolvency arising from failure to comply with a statutory demand, but there is subsequent such failure to comply before the hearing, the presumption becomes available. In this case, the proceeding (as against BRW Services) having been commenced invoking other grounds – namely 'actual' insolvency and the just and equitable ground, which continue to be advanced – leave was sought and granted at the hearing to amend the originating process to rely on the presumption, it having arisen subsequently, but before the hearing. In the absence of any argument let alone evidence to rebut it, the Court must presume that BRW is insolvent.

Debts owed by the defendants to the Commonwealth

1. [14]

   As the failure of the defendants to pay tax debts said to be due to the Commonwealth is at the foundation of the plaintiff’s submission that their actual insolvency should be inferred, the existence of those debts must be established. The debts relied upon are founded on notices of assessment (or amended assessment) of a net amount of GST, [18] of estimate of PAYGW, [19] of penalty for failing to provide a document where the Commissioner determined the defendant's tax-related liability without the document, [20] and/or of assessment (or amended assessment) for superannuation guarantee charge, [21] issued by the Commissioner to the relevant defendants (other than the third defendant PPA Services Australia Pty Ltd) between 8 August 2016 and 1 June 2017.

2. [15]

   To establish the existence of the relevant debts, the plaintiff invokes two evidentiary provisions of the (CTH) Taxation Administration Act 1953 (TAA). TAA, Sch 1, s 350-10(1), item 2, provides that a notice of assessment is conclusive evidence that the assessment to which the notice relates was properly made, and that the amounts and particulars of the assessments are correct. TAA, Sch 1, s 255-45(1), provides a certificate stating one or more of the matters covered by s 255-45(2) and signed by the Commissioner, a Second Commissioner or Deputy Commissioner is prima facie evidence of the matter or matters "in a proceeding to recover an amount of a tax-related liability". The matters so covered relevantly include that notice of an assessment, or any other notice required to be served on a person in respect of an amount of a tax-related liability, was, or is taken to have been, served on the person under a taxation law, [22] and that a sum specified in the certificate is, as at the date specified in the certificate, a debt due and payable by a person to the Commonwealth. [23]

3. [16]

   The Commissioner has tendered the relevant notices of assessment and estimate, and provided certificates signed on behalf of a Deputy Commissioner (a) that those notices have been served on the relevant defendant, and (b) that a specified sum is as at 7 September 2017 a debt due and payable by that defendant to the Commonwealth. There is however a question as to whether, as the plaintiff submits, such a certificate is available in winding up proceedings: that is to say, whether such a proceeding is "a proceeding to recover an amount of a tax-related liability", for the purposes of TAA, Sch 1, s 255-45(1).

4. [17]

   In Re W Carter Smith; Ex parte The Commissioners of Taxation, [24] Street J held that s 51 of the (NSW) Land and Income Tax Assessment Act 1895, which provided that any tax "may be sued for and recovered by action in any Court of competent jurisdiction by the Commissioners", sufficed to authorize a bankruptcy petition. His Honour said (at 249-250):

5. [18]

   In James v Deputy Commissioner of Taxation, [25] the High Court endorsed that approach:

6. [19]

   In Re The Gilbert Machinery Company (No 1), [26] the issue was whether a power of attorney granted by the petitioning creditor "for us and in our name to demand, sue for, and recover all and every sum of money that are or is due and owing to us ..." authorised the attorney to sign a winding up petition. Rejecting a submission that a winding up petition was not for relevant purposes "a demand or a suit", Stout CJ held that a petition to wind up a company was a mode of obtaining in a legal manner the payment of a debt (at 50):

7. [20]

   The cases were reviewed by Williams J in Bluehaven Transport Pty Ltd v DCT. [27] Holding that ITAA, s 209, by providing that the Commissioner may sue for and recover unpaid tax, empowered him to issue a statutory demand and proceed to have the taxpayer company wound up in order to recover the unpaid tax, his Honour said:

8. [21]

   His Honour’s analysis was endorsed by the High Court in DCT v Broadbeach Properties Pty Ltd: [28]

9. [22]

   While in terms what the High Court said was in the context of the issuance of a statutory demand – which being a demand for payment of a debt is more clearly a means of recovering a debt that winding up proceedings, which traditionally are not characterised as debt recovery proceedings, the reasoning which the High Court approved plainly encompassed winding up proceedings. Moreover, in form and substance, winding up proceedings brought by a creditor are a step towards recovery of the debt, in that they culminate in the proof of debts in the liquidation, and their payment out of the assets of the company. In my judgment, therefore, a winding up proceeding founded on a tax liability is "a proceeding to recover an amount of a tax-related liability", for the purposes of TAA, Sch 1, s 255-45(1), and certificates given under that section are available in such a proceeding.

10. [23]

    The notices of assessment and estimate tendered by the Commissioner are summarised in the following table:

11. [24]

    The evidence also establishes that, in addition to those assessments, for the year ended 30 June 2016, the first defendant Plutus Payroll Australia had a liability of $546,504.43 for income tax and $34,220.25 for FBT as a result of its lodgment of tax returns in April 2017; [29] and as at 27 April 2017, the third defendant PPA Services Australia had reported its tax liability for GST and PAYGW at $5,459,854 and had made payments of $2,650,020.56, leaving an outstanding balance of $2,809,833.54. Further, some of the defendants have made payments in reduction of their liabilities, and the general interest charge [30] has accrued on outstanding liabilities. Absent any evidence to the contrary, the evidentiary certificates establish that, as at 7 September 2017, the total outstanding debt due and payable by each of the relevant defendants to the Commonwealth was as follows:

12. [25]

    Notwithstanding the conclusive effect of a notice of assessment, in some cases where there is a serious question about the existence of a tax-related liability it may be appropriate for the Court to adjourn a winding up proceeding until Part IVC proceedings concerning the tax liability are resolved; however, this discretion is exercised sparingly, and the company bears the onus of showing that it should be exercised. [31]

13. [26]

    Only the first defendant Plutus Payroll Australia has lodged an objection or otherwise sought to challenge its relevant tax liabilities. On 1 May 2017 it lodged an objection to the amended assessment for GST dated 26 April 2017, and purported to lodge an objection to the PAYGW estimate. Although an estimate of PAYGW is not amenable to an objection, where a person who is given a PAYGW estimate gives the Commissioner a statutory declaration within the prescribed time period, then the "estimate is revoked if the statutory declaration is to the effect ... that the underlying liability [to pay PAYGW] never existed". [32] For that purpose, the question is whether, as a matter of substance, the statutory declaration discloses facts upon which the underlying liability to pay PAYGW never existed. [33]

14. [27]

    On 3 May 2017, Mr Brendan Thomasen on behalf of Plutus Payroll provided a statutory declaration to the Commissioner for the purposes of Div 268, which relevantly stated that he believed, based on the objection filed by Plutus on 1 May 2017, that the amount referred to in the notice, being $21,858,812, was not a liability of Plutus.

15. [28]

    That objection asserts that after about January 2017, the first defendant entered into an arrangement with some of the other defendants, whereby the first defendant paid directly to employees, superannuation accounts and a solicitors' trust account, amounts said to be owing by it to the other defendants. This amounts to the first defendant paying wages and superannuation on behalf of some of the other defendants. The first defendant contends that it was not liable to pay PAYGW in relation to those payments, because it was providing the payments as a service to the other defendants.

16. [29]

    However, TAA, Sch 1, s 12-35, provides that an entity must withhold an amount from salary, wages, etc it pays to an individual as an employee whether of that or another entity; thus, the obligation to withhold falls upon the entity making the payment to the employee, regardless of whether or not it is the employer. Accordingly, Mr Thomasen's statutory declaration does not disclose facts upon which the underlying liability to pay PAYGW never existed; and as a matter of substance, is not "to the effect" that Plutus Payroll's PAYGW liability never existed. In those circumstances, and a fortiori where no application is made for an adjournment and no evidence is adduced to cast doubt on the certified debts, there is no reason to doubt that those debts are due and payable, and that there is no real dispute about them.

Actual insolvency – first to tenth defendants

1. [30]

   A corporation is not solvent unless it is able to pay all its debts, as and when they become due and payable. [34] A conclusion of insolvency is usually an inference drawn from multiple indicia.

2. [31]

   Notwithstanding that the inquiry into insolvency ultimately depends on the company's position on an overall basis, [35] failure to pay a particular debt which is not the subject of genuine dispute may of itself provide evidence of insolvency. [36] In this case, the debts claimed by the Commissioner are substantial, and in the cases of the first and second defendants enormous. They are not open to serious challenge by any defendant, and except in the case of the first defendant (whose statutory declaration does not suffice to displace the Commissioner’s estimate), there was no challenge or dispute, either when the assessments were issued, or when garnishment notices were served on the defendants’ bank accounts. Even in the case of the first defendant, there has been no attempt to challenge the existence of its debt in this proceeding. In those circumstances, where the debts have been outstanding, in most cases, since January 2017, and in any event since 1 June 2017, the failure to pay large debts, while not disputing them, provides a firm foundation for an inference that the defendants cannot pay their debts from any source available to them.

3. [32]

   Other significant indicia of insolvency include that the first through eighth defendants appear to have outstanding unpaid obligation to employees for wages and superannuation, and the ninth and tenth defendants appear to have substantial unpaid payroll tax liabilities to the Commissioner of State Revenue.

4. [33]

   The provisional liquidators have been able to reconstruct the balance sheet of the first defendant as at the date of their appointment (9 June 2017). From that they have formed the view that there is a deficiency of at least $30 million, which (with other matters) founds their opinion that the first defendant is insolvent. While they have not been able to reconstruct the balance sheets of the second to tenth defendants, they have formed the opinion that they are likely to be insolvent, in the light of their having ceased to trade in late April or early May upon the execution of search warrants by the AFP, the cessation of funding from the first defendant, the issue of the Commissioner's garnishee notices, the apparent absence of cash and property, and the lack of accounting records.

5. [34]

   While the reconstructed balance sheet as at 9 June 2017 indicates total equity exceeding $12.7 million, that does not take into account outstanding unpaid taxation liabilities exceeding $45.5 million, including more than $44.9 million reflected in a deficit in the company's running balance account in respect of BAS amounts. Although company had cash at bank as at 13 June 2017 totaling approximately $697,000, its CBA and St George bank accounts were garnisheed on 26 April 2017, to the extent of $46,632,355. There is an outstanding unpaid debt to the Chief Commissioner of State Revenue, who has lodged a proof of debt for $35,215.16, in respect of outstanding payroll tax. The provisional liquidators have received fourteen claims from employees, totaling $97,484.09, in respect of outstanding wages and superannuation guarantee amounts as well as redundancy claims. When those matters are taken into account, the provisional liquidators consider that "a conservative net position" is that the company has a net asset deficiency of approximately $30 million.

6. [35]

   As already noted, the provisional liquidators are of the opinion that Plutus Payroll is insolvent. Moreover, voluntary administrators were appointed to the first defendant Plutus Payroll Australia Pty Ltd on 6 June 2017 by resolution of its sole director Mr Thomasen, who resolved that the company was insolvent or likely to become insolvent. That of itself is an admission of insolvency.

7. [36]

   Having regard to the outstanding unpaid taxation liabilities and their magnitude, the other outstanding debts (including that they include employee entitlements and payroll tax), the admission inherent in the appointment of voluntary administrators, and the opinion of the provisional liquidators, I am very comfortably satisfied that Plutus Payroll is unable to pay its debts as and when they fall due, and accordingly is insolvent.

8. [37]

   As already noted, the provisional liquidators are of opinion that the second defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $54,711,671.62, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 5 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received three claims from employees, totaling $7,555.75, in respect of outstanding superannuation guarantee and wages entitlements. The company has net cash at bank of approximately $435; its CBA bank account was garnisheed on 8 December 2016, to the extent of $3,388,048.91.

9. [38]

   Having regard to the outstanding unpaid taxation liabilities and their magnitude, the outstanding debts in respect of employee entitlements, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PPA Contractors is unable to pay its debts as and when they fall due, and accordingly is insolvent.

10. [39]

    As already noted, the provisional liquidators are of opinion that the third defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $3,255,682.96, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 5 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received four claims from employees, totaling $23,025.96, in respect of outstanding superannuation guarantee and wages entitlements. The company does not appear to have a bank account.

11. [40]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debts in respect of employee entitlements, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PPA Services Australia is unable to pay its debts as and when they fall due, and accordingly is insolvent.

12. [41]

    As already noted, the provisional liquidators are of opinion that the fourth defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $7,025,648.29, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 12 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received 42 claims from employees, totaling $94,937.85, primarily in respect of outstanding superannuation guarantee, wages and salary sacrifice entitlements. The company has cash at bank of approximately $4,020; its CBA bank account was garnisheed on 24 January 2017, to the extent of $7,065,778.90.

13. [42]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debts in respect of employee entitlements and their number and magnitude, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PP AUS Holdings is unable to pay its debts as and when they fall due, and accordingly is insolvent.

14. [43]

    As already noted, the provisional liquidators are of opinion that the fifth defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $7,992,806.56, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 12 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received 29 claims from employees, totaling $67,226.71, primarily in respect of outstanding superannuation guarantee, wages and salary sacrifice entitlements. The company has cash at bank of approximately $3,289.15; its CBA bank account was garnisheed on 24 January 2017, to the extent of $7,891,612.38.

15. [44]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debts in respect of employee entitlements and their number and magnitude, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PP Australia NSW is unable to pay its debts as and when they fall due, and accordingly is insolvent.

16. [45]

    As already noted, the provisional liquidators are of opinion that the sixth defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $2,709,363.58, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 12 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received 36 claims from employees, totaling $124,084.59, primarily in respect of outstanding superannuation guarantee, wages and salary sacrifice entitlements. The company has cash at bank of approximately $5,098.79; its CBA bank account was garnisheed on 24 January 2017, to the extent of $1,849,125.63.

17. [46]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debts in respect of employee entitlements and their number and magnitude, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PP Services (WA) is unable to pay its debts as and when they fall due, and accordingly is insolvent.

18. [47]

    As already noted, the provisional liquidators are of opinion that the seventh defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $5,548,631.82, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 12 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received 35 claims from employees, totaling $122,588.94, primarily in respect of outstanding superannuation guarantee, wages and salary sacrifice entitlements. The company has cash at bank of approximately $1,489.53; its CBA bank account was garnisheed on 24 January 2017, to the extent of $4,529,490.68.

19. [48]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debts in respect of employee entitlements and their number and magnitude, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PPA (SA) is unable to pay its debts as and when they fall due, and accordingly is insolvent.

20. [49]

    As already noted, the provisional liquidators are of opinion that the eighth defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $5,160,013.17, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 12 May 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The provisional liquidators have received 43 claims from employees, totaling $150,006, primarily in respect of outstanding superannuation guarantee, wages, salary sacrifice entitlements, and motor vehicle lease payments. The company has no cash at bank; its CBA bank account was garnisheed on 24 January 2017, to the extent of $5,041,630.47.

21. [50]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debts in respect of employee entitlements and their number and magnitude, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that PPA NT is unable to pay its debts as and when they fall due, and accordingly is insolvent.

22. [51]

    As already noted, the provisional liquidators are of opinion that the eighth defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $1,601,636.69, being a running balance account deficit debt in respect of BAS amounts. When these proceedings were commenced, there was already pending another application, filed on 13 April 2017, to wind up the company in insolvency, relying upon its failure to comply with an unrelated creditor's statutory demand. The Chief Commissioner of State Revenue has lodged a proof of debt for $144,389.71, in respect outstanding payroll tax. The provisional liquidators have received 43 claims from employees, totaling $150,006, primarily in respect of outstanding superannuation guarantee, wages, salary sacrifice entitlements, and motor vehicle lease payments. The company has no cash at bank; its ANZ bank account was garnisheed by the ATO in December 2016 in the amount of $561,884.54, before its closure on 10 June 2017, and its NAB account was garnisheed for a similar sum in January 2017. While the company's reconstructed balance sheet as at 9 June 2017 indicates assets of approximately $7,897,000 and liabilities of approximately $5,420,000, all significant assets are referable to "receivables", and the stated liabilities have been reduced by approximately $2.286 million referable to loans, about which there is no information apparently available.

23. [52]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debt for payroll tax, the prior failure of the company to comply with a statutory demand, and the opinion of the provisional liquidators, I am satisfied that RAM Enterprises Australia is unable to pay its debts as and when they fall due, and accordingly is insolvent.

24. [53]

    As already noted, the provisional liquidators are of opinion that the eighth defendant is likely to be insolvent. The Commissioner has lodged a proof of debt for $3,709,769.13, being (as to $2,494,772.26) a running balance account deficit debt in respect of BAS amounts; and (as to $1,214,996.87) outstanding superannuation guarantee charge. The Chief Commissioner of State Revenue has lodged a proof of debt for $723,783.95, in respect of outstanding payroll tax. The company has no cash at bank. While the company's reconstructed balance sheet as at 9 June 2017 indicates total assets of approximately $5,998,000, and liabilities of approximately $5,390,000, the assets are very largely (to the extent of $5,483,878) represented by "accounts receivable", about which no information is apparently available; the $500,000 asset represented by the proceeds of bank accounts is apparently illusory; and the stated liabilities have been reduced by approximately $723,000 referable to loans, about which there is no information apparently available.

25. [54]

    Having regard to the outstanding unpaid taxation liabilities and the apparent absence of cash or property with which to meet them, the outstanding debt for payroll tax, and the opinion of the provisional liquidators, I am satisfied that SAI Solutions Australia is unable to pay its debts as and when they fall due, and accordingly is insolvent.

Conclusion

1. [55]

   For the foregoing reasons, my conclusions are:

2. [56]

   The statutory presumption of insolvency arising from failure to comply with a creditor’s statutory demand is available against the twelfth defendant, notwithstanding that it arose after the institution of the proceedings. The twelfth defendant is presumed to be insolvent and ought to be wound up.

3. [57]

   Evidentiary certificates given under the taxation legislation are available in winding up proceedings, since such a proceeding falls within the scope of the term "a proceeding to recover an amount of a tax-related liability", for the purposes of TAA, Sch 1, s 255-45(1).

4. [58]

   On the evidence, the proper inference is that each of the first through tenth defendants is unable to pay its debts as and when they fall due and is therefore insolvent, and ought to be wound up.

5. [59]

   In Perovich v ASIC, [37] McPherson JA said, in the context of an application for leave to appeal from an order for the winding up of two companies, that such an order was “quite irregular”, and that separate applications and orders should be made:

6. [60]

   It is true that Corporations Act, s 459T, provides that two or more companies may be wound up in insolvency on one application “if they are joint debtors”. However, I do not see why a single application cannot be made in respect of multiple defendant companies where the requirements of UCPR r 6.19 for joinder of defendants are satisfied. [38] Given the original basis of this application, on the just and equitable ground, that all the defendant companies were engaged in a scheme, such requirements were plainly met when the originating process was filed. Even if that changed when insolvency was added, in that the transactions upon which relief depended were no longer identical, it was plainly a case for the grant of leave. In that context, no such difficulty as McPherson JA contemplated in connection with an appeal arises from a single order, at least so long as it is expressed in severable terms.

7. [61]

   The Court therefore orders that:

   1. (1)

      each of the companies listed below be wound up and Timothy Norman, Salvatore Algeri and Ezio Senatore of Deloitte be appointed its liquidators:

8. [62]

   The costs of the proceedings are provided for by Corporations Act, s 466(2), without the requirement for any further order.