Massage parlour owner claims solicitor misled him

The business owner failed in his assertions that he was misled or that the administrators were negligent, and that the advice he received from the solicitor and administrators was self-interested and was part of a conspiracy to charge professional fees for themselves by putting his company under voluntary administration (VA).

Elvin was the sole director, secretary, shareholder, and owner of Foot and Thai Massage. The company faced two unfair dismissal claims, was subject to outstanding Australian Taxation Office tax debt, was historically behind in paying quarterly tax obligations pursuant to BAS that had been lodged, and had claims against it of underpayment of wages for employees, giving rise to a potential investigation by the Fair Work Ombudsman (FWO).

In her 20 July 2026 decision, Justice Verity Alexandra McWilliam found that the massage parlour owed $522,866.01 in ATO tax, including a debt of $73,397 for the Superannuation Guarantee Charge, unpaid employee entitlements totalling $938,935.52, and $712,936 in unredeemed gift vouchers.

Based on a 15 December 2015 account of the “true position of the company”, the court found that the parlour had a negative equity of $911,594.01, including BAS statements that had not been lodged.

“He chose to spend half a million dollars renovating the business premises, rather than paying the tax,” Justice McWilliam said.

“He believed the business would make that money back and be able to pay the tax in the longer term, but the profit that the business was making was derived in part from an underpayment of employee wages and failure to pay superannuation.”

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Despite selling the business after placing it under voluntary administration following engagement with a solicitor, administrators, and an insolvency practitioner, Elvin was still personally liable for $150,450 in penalties.

“The plaintiff has come to regret losing control of his company when he resolved to put it into voluntary administration,” Justice McWilliam said.

“The plaintiff believed that the steps he took in entering into the VA process, proceeding with the DOCA and selling the company, would mean that he had no future liability for any debts or claims that were made against the company.”

“In the events that transpired in the FWO proceeding, that was not the case, and he feels he was either misled about that or that the administrators were negligent in not taking any steps to establish the position of the FWO and its potential status as a creditor or claimant and not procuring deeds of release from the employees in respect of any entitlements they were owed under the VA.”

Elvin sought that the solicitor, administrators, and insolvency practitioner involved pay his penalties to the FWO and compensation for personal loss.

“Neither external administration nor winding up and deregistering a company that has underpaid employees will prevent the FWO from seeking the payment of personal penalties by those found to be accessories to a corporate employer’s contraventions under the Fair Work Act,” Justice McWilliam said.

“VA had the effect of extinguishing all claims for employee entitlements against the company that existed as of 15 December 2015. It did not extinguish or protect the plaintiff from subsequent claims made by the FWO against the plaintiff personally.”

“It is implausible that an experienced insolvency practitioner would make any statement about a director’s personal liability, when the evidence revealed that his experience had been the opposite – for example, his experience that the ATO may be working in the background to bring a claim against the director.”

Justice McWilliam determined that the business’s financial state meant that there were not many options left for Elvin.

“As will be explained, the reality was that the company was insolvent, and there was no prospective buyer realistically able to pay more than $150,000 to take on the business at that time,” Justice McWilliam said.

In consideration of all the evidence, Justice McWilliam ruled that Elvin failed to establish any of the allegations, dismissing the proceeding and ordering him to pay the defendants’ costs.

The case citation: Elvin v Vuleta (No 2) [2026] ACTSC 244