Jahani (liquidator) v Commissioner of Taxation

• Jurisdiction: Australia Federal only
• Judgment Date: 12 November 2020
• Neutral Citation: [2020] FCA 1642
• Court: Federal Court
• Date: 12 November 2020

Federal Court of Australia

Jahani (liquidator) v Commissioner of Taxation [2020] FCA 1642

File number:	NSD 2208 of 2018
Judgment of:	STEWART J
Date of judgment:	12 November 2020
Catchwords:	PRACTICE AND PROCEDURE – application for referral of questions of insolvency in unfair preference claims to a referee under s 54A of the Federal Court of Australia Act 1976 (Cth) – questions of insolvency of four related companies during a specified time period – whether referral will facilitate the resolution of the insolvency questions justly and as quickly, inexpensively and efficiently as possible – consideration of same questions arising in a separate proceeding against multiple defendants ; PRACTICE AND PROCEDURE – application for consolidation under r 30.11 of the Federal Court Rules 2011 (Cth) to bring unfair preference proceedings against multiple unrelated defendants – where common issues exist in relation to all the proposed defendants – application granted
Legislation:	Corporations Act 2001 (Cth) ss 95A, 553C, 588E, 588FC, 588FE, 588FF, 588FG Federal Court of Australia Act 1976 (Cth) ss 37M, 37P, 54A Federal Court Rules 2011 (Cth) r 30.11, Div 28.6
Cases cited:	Australian Securities & Investments Commission v AMP Financial Planning Pty Ltd [2018] FCA 1708 Commissioner of Taxation v Caratti [2018] FCA 465 Jahani (liquidator) v Alfabs Mining Equipment Pty Ltd, in the matter of Delta Coal Mining Pty Ltd (in liq) [2020] FCA 752 Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139; 252 FCR 298 Optiver Australia Pty Ltd v Tibra Trading Pty Ltd [2012] FCA 558; 203 FCR 520 Sheehan v Lloyds Names Munich Re Syndicate Ltd [2017] FCA 1340; 19 ANZ Insurance Cases 62-158 Stone v Ebeid [2020] FCA 343 Super Pty Ltd v SJP Formwork (Aust) Pty Ltd (1992) 29 NSWLR 549 Weston in his capacity as liquidator of Starcom Group Pty Ltd (in liq) v Rajan [2019] FCA 1455
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Corporations and Corporate Insolvency
Number of paragraphs:	42
Date of last submissions:	6 November 2020
Date of hearing:	Determined on the papers
Counsel for the Plaintiffs:	M L Rose
Solicitor for the Plaintiffs:	McCullough Robertson Lawyers
Counsel for the Defendant:	S Golledge
Solicitor for the Defendant:	Craddock Murray Neumann

ORDERS

		NSD 2208 of 2018
BETWEEN:	SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF DELTA COAL MINING PTY LTD (IN LIQUIDATION) ACN 114 283 706 First Plaintiff ; SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF DELTA MINING PTY LTD (IN LIQUIDATION) ACN 056 692 883 Second Plaintiff ; SAID JAHANI AND JOHN MCINERNEY AS JOINT AND SEVERAL LIQUIDATORS OF SBD SERVICES PTY LTD (IN LIQUIDATION) ACN 124 019 816 (and another named in the Schedule) Third Plaintiff
AND:	COMMISSIONER OF TAXATION Defendant

order made by:	STEWART J
DATE OF ORDER:	12 November 2020

THE COURT ORDERS THAT:

1. Pursuant to rule 30.11 of the Federal Court Rules 2011 (Cth), this proceeding be consolidated with proceeding NSD577/2020.

2. For the purposes of the consolidation:

   1. the defendant in this proceeding be referred to hereafter in proceeding NSD577/2020 as the twenty-ninth defendant;

   2. the pleadings in this proceeding stand as the pleadings between the parties to this proceeding in proceeding NSD577/2020;

   3. the evidence filed by the parties in this proceeding be treated as evidence filed by them in proceeding NSD577/2020;

   4. the parties to this proceeding be subject to the orders made in proceeding NSD577/2020 on 22 October 2020.

3. The defendant pay the costs of the plaintiffs’ interlocutory application filed on 23 October 2020.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

STEWART J:

The present proceeding

1. The plaintiffs are the liquidators of four related companies, namely Delta Coal Mining Pty Ltd, Delta Mining Pty Ltd, SBD Services Pty Ltd and Delta SBD Ltd. In November 2018, the plaintiffs commenced the present proceeding against the Commissioner of Taxation. The amended statement of claim identifies approximately $9 million of payments to the Commissioner in the six month period before the relation back day, which is pleaded to be 31 May 2017 for all the companies.

2. It is pleaded that the payments are insolvent transactions within the meaning of s 588FC of the Corporations Act 2001 (Cth) and that they are hence voidable transactions pursuant to s 588FE(2). It is accordingly a necessary, and pleaded, element of the claims that each company was insolvent when the payments were made, namely in the period 1 December 2016 until the relation back day.

3. In respect of each company, in his defence the Commissioner has pleaded that he does not admit the allegations of insolvency. Thus, whether the relevant company was insolvent at the time of each payment is in issue in the proceeding.

4. The last pleading, being the plaintiffs’ reply, was filed in March 2019. Thereafter, there were orders for a mediation which was apparently unsuccessful. Discovery then took place later in 2019. The plaintiffs’ evidence was served in May 2020. That evidence includes a 4,000 page report by one of the liquidators, Mr Jahani, on the solvency of the companies. After some extensions, the Commissioner served his evidence in August 2020. Reply evidence has not yet been served. The matter is close to being ready for trial.

5. The plaintiffs by interlocutory application now seek orders that may be summarised as follows:

1. pursuant to r 30.11 of the Federal Court Rules 2011 (Cth), that this proceeding be consolidated with proceeding NSD577/2020 (which is a related proceeding I will come to describe presently);

2. alternatively, an order that this proceeding be case managed together with the other proceeding and consequential orders;

3. alternatively to the order for consolidation, an order pursuant to s 37P(2) and s 54A of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and Div 28.6 of the Rules that a referee be appointed to inquire into and report on the questions of whether each of the companies was insolvent during the period 1 December 2016 to 31 May 2017 inclusive (the insolvency questions), together with orders for the identification and appointment of the referee and for the conduct of the reference.

6. The reason why the third order, being the referral of the insolvency questions to a referee, is sought only as an alternative to the consolidation order is that orders of referral of the insolvency questions to a referee have already been made in the other proceeding. Thus, if the two proceedings are consolidated then those referral orders will in any event apply to the defendant in the present proceeding.

7. Because of the inter-relatedness of the orders that are sought with the other proceeding, it is necessary to identify some material aspects of it.

The mothership proceeding

8. On 27 May 2020, in Jahani (liquidator) v Alfabs Mining Equipment Pty Ltd, in the matter of Delta Coal Mining Pty Ltd (in liq) [2020] FCA 752 I gave leave to the liquidators of the four...