Bayview Concepts Pty Ltd v Commissioner of State Revenue, Victoria
[2009] VSC 655
•25 September 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT CORPORATIONS LIST
No. 7972 of 2009
| BAYVIEW CONCEPTS PTY LTD (ACN 127 530 885) | Plaintiff |
| v | |
| COMMISSIONER OF STATE REVENUE, VICTORIA | Defendant |
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ASSOCIATE JUDGE: | Gardiner AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 2 September 2009 | |
DATE OF JUDGMENT: | 25 September 2009 | |
CASE MAY BE CITED AS: | Bayview Concepts Pty Ltd v Commissioner of State Revenue, Victoria | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 655 | |
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Corporations- external administration- statutory demand - Application to set aside a statutory demand under section 459G of the Corporations Act 2001 – demand based on assessment under Taxation Administration Act 1997 (Vic) – comparison of legislative scheme with that the subject of consideration by the High Court of Australia in Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCATrans 244 – no genuine dispute raised- application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S Palmer | Oakley Thompson & Co |
| For the Defendant | Mr S J Maiden | State Revenue Office |
On 2 July 2009, the Commissioner of State Revenue, Victoria (“CSRV”) issued and subsequently served a statutory demand on Bayview Concepts Pty Ltd (“Bayview”) demanding the sum of $1,451,044.72. The debt is said to be owing for 3 assessments issued under the Taxation Administration Act 1997 (Vic). Bayview makes application pursuant to section 459G of the Corporations Act 2001 (Cth) (“the Act”) to set the demand aside.
The schedule to the demand identifies the three assessments issued by CSRV being:-
Assessment No:
Date of Assessment
Amount
568545
13 January 2009
$594,900.50
568553
13 January 2009
$518,985.12
568537
13 January 2009
$337,069.10
The demand was accompanied by an affidavit of Aurora Russell, who is a recovery officer at the office of CSRV. The affidavit complies with the requirements of Form 7 of the Supreme Court (Corporations) Rules and verifies the amount of the debt the subject of the demand.
Bayview’s submission and evidence
Bayview relies on two affidavits of Roger Charles Davis sworn 24 July 2009 and 1 September 2009.
In his 24 July affidavit, Mr Davis describes the events leading up and subsequent to the issue of the three assessments the subject of the demand. Letters were received from CSRV on or about 4 September 2008 relating to Bayview’s acquisition of shares in three land holding companies in respect of each assessment. In response to each such letter, Bayview submitted a Land Rich Acquisition Statement pursuant to section 80 of the Duties Act 2000 (Vic) in respect of Bayview’s acquisition of shares in the three companies. Those acquisition statements disclosed the date of Bayview’s acquisition of shares in the subject company, details of the land holding of that company and the value of such holding.
On 12 January 2009, in response to those acquisition statements, CSRV sent Bayview letters taking issue with the values of the holdings given by Bayview. CSRV contended that they were of a higher value than the values submitted by Bayview and enclosed the assessments to Bayview for the duty, penalty tax and interest which are now the subject of the demand.
Mr Davis contends that each of the assessments were incorrect for the reasons set out in paragraphs 13, 16 and 19 of his 24 July affidavit.
The assessments are in identical form, each stating that they were made on 12 January 2009 “under section 8(1) of the Taxation Administration Act 1997 in respect to the following instruments”. Adjacent to the assessment number, under the heading “Instrument(s)” appear the words “S80 Acq Statement”. The letters which accompanied the assessments detailed the computation of the amount demanded and the reasons why the valuation of the subject properties for the purposes of the assessment was not in conformity with the acquisition statements lodged by Bayview for those properties. Each of CSRV’s letters of 12 January culminated in the observation that, if it was dissatisfied with the assessment, Bayview could lodge an objection to the assessment within sixty days from the date of its receipt.
There was no objection to the assessments within sixty days. It was not until June 2009 that the land holding companies each sent objections to CSRV on behalf of the Plaintiff. CSRV rejected such purported objections by letters to Bayview of 6 July 2009 by reason that they were out of time.
In his affidavit sworn 1 September 2009, Mr Davis states that on 6 August 2009 Bayview sent a letter to CSRV objecting to the three assessments and requesting that such objections be considered out of time. CSRV responded on 28 August 2009. Its delegate, Ms Berdichevsky, gave detailed reasons for rejection of the application by Bayview for permission to lodge late objections. Further correspondence ensued between Bayview and CSRV concerning referral of the assessments to VCAT for review. CSRV’s position was that as Bayview had not lodged objections to the subject assessments within time, the matter was not susceptible of reference to VCAT.
The stance being taken by Bayview in its affidavit material proceeds on the implicit assumption that the subject assessments are valid and that Bayview wished to object to the assessments out of time on the basis that the valuations of the subject land were incorrect.
At the hearing of this application, Mr Palmer of Counsel appeared on behalf of Bayview and provided detailed written submissions which departed from the approach being taken in his client’s affidavit material. I will assume that the arguments now raised are available to Bayview because it could be said that they are raised by a “reasonably available inference” on the material filed within 21 days after service of the demand.[1]
[1] Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 25 ACLC 282 at [26] et seq.; Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 25 ACLC 1392 at [22]- [25].
Mr Palmer contended that the assessments are not assessments properly so called by reason that they are defective. Mr Palmer observed that the assessments identified in the schedule to the demand were said to be dated 13 January 2009, whereas the assessments exhibited by Mr Cahir in his affidavit sworn 1 September 2009 stated that they were issued on 12 January 2009.
I reject the submission that the misdescription in the demand as to the dates of the assessments gives rise to a defect in the demand such as to cause substantial injustice to Bayview. If one compares the amounts claimed in the demand with those demanded in the assessments they are, save for additional interest which has accrued, in respect of the same liability. Furthermore, the material filed by Bayview does not contend that there has been any confusion on its part as to the source of the liability underlying the assessments the subject of the demand.
Mr Palmer also contended that the notices of assessment appear to be defective in that they each assert that an assessment of duty was made under section 8(1) of the Taxation Administration Act 1997 (Vic) in respect to an instrument described as a “S80 Acq Statement”. It will be recalled that the section 80 Acquisition Statements lodged by Bayview preceded the issue of the subject assessments. I consider that it is clear that the assessments were generated by reference to the section 80 Acquisition Statements which are not “instruments” as such but are submitted to CSRV for the purposes of enabling assessment of duty. In my view, no invalidity of the assessment of the type contended by Mr Palmer arises.
Mr Palmer also contended that the notices of assessment are not expressed as an assessment of liability to any particular tax and that the notices do not show how the assessment has been made. Section 14(2) of the Tax Administration Act 1997 (Vic) provides relevantly:
“A notice of assessment must–
(a) be expressed to be an assessment of liability to the tax; and
(b) show the amount of tax assessed.”
I consider that each of the assessments is expressed to be an assessment of a liability to pay duty under section 8(1) of the Taxation Administration Act 1997 (Vic) and shows the amount assessed including the composition of duty, penalty and interest. Further, I consider that when one has regard to the factual background, including the section 80 Acquisition Statements completed and lodged by Bayview and the letters which accompanied the subject assessments, there is ample detail of how the assessments are calculated and what the nature of the duty being imposed is. The Acquisition Statements completed by Bayview make reference to section 80 of the Duties Act 2000 (Vic) which points to a familiarity on its part with the nature of the underlying liability and the basis and source used for the computation of the assessments.
Mr Palmer submitted that the recent decision of the High Court in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd[2] is of no application to the statutory regime under consideration here. The statutory demands in Broadbeach were based on a notice of assessment issued by the Federal Deputy Commissioner of Taxation pursuant to section 167 of the Income Tax Assessment Act 1936 (Cth) and the GST Legislation. The Deputy Commissioner appealed to the High Court from the Queensland Court of Appeal which had decided that, as the notices of assessment were the subject of review proceedings in the Commonwealth AAT under Part IVC of the Taxation Administration Act 1958 (Cth), there was a “genuine dispute” as to the debt and that the demand should also be set aside under section 459J(1)(b) of the Corporations Act.
[2][2008] HCA 41 (“Broadbeach”).
The High Court held that where an assessment was issued, the conclusive evidence provisions of section 177 of the Income Tax Assessment Act 1936 (Cth) meant that there could be no genuine dispute that the debt was due and that the Commissioner could seek to recover the debt pursuant to section 14ZZM of the Taxation Administration Act 1953 (Cth). Thus, despite an objection being on foot, the Commissioner was not prevented from taking steps to recover the subject tax, including service of a statutory demand.
Mr Palmer contended that the present case can be distinguished from Broadbeach by reason that in Broadbeach, the validity of the subject assessments was assumed whereas here it is not. I reject that submission. I consider that there is no reason to suppose that the assessments are not valid. The statutory scheme of the Taxation Administration Act 1997 (Vic) is identical in material respects to the Federal legislation the subject of consideration in Broadbeach. In short, the assessments here are unimpeachable.
I also reject the submission by Mr Palmer that, in Broadbeach, different policy considerations applied by reason that the duty concerned in that case was a tax on income received whereas here it is a tax on property that is already owned. I consider that to be a distinction without a difference in this context.
Mr Palmer also contended that the conclusive evidence provisions of section 127 of the Taxation Administration Act 1997 (Vic) are of no assistance to CSRV here because the subject assessments are not assessments properly so called so as to give rise to such conclusivity. As I have said above, I consider the assessments to be valid. Section 127 of the Victorian legislation is the equivalent of section 177 of the Income Tax Assessment Act 1936 (Cth) and is for practical purposes identical in its operative terms. As such, the conclusive evidence provisions of section 127 apply and, on an application of Broadbeach, there can be no genuine dispute here as to the existence or the amount of the debt the subject of the demand.
The evidence and submissions of CSRV
Mr Maiden, Counsel for CSRV, placed much reliance on the decision in Broadbeach. I agree with Mr Maiden’s submission that the legislative scheme of the Tax Administration Act 1997 (Vic) is, for practical purposes, the same as the Federal scheme and the application of the reasoning of the High Court in Broadbeach is appropriate. He emphasizes that there is presently no objection to the subject assessments on foot and, even if there was, Broadbeach is authority for the proposition that CSRV is still entitled to serve a statutory demand on Bayview.
In Broadbeach, it was held where an assessment triggered the operation of a conclusive evidence provision (such as applies here under section 127 of the Tax Administration Act), a review or appeal from the assessment, even one where the tax payer has a reasonably arguable case, did not give rise to a genuine dispute under section 459H of the Corporations Act. Those provisions could not be “side stepped” by recourse to a section 459G application.[3] The High Court held that on such applications, the debts must be considered as being undisputed.[4] The revenue authority was entitled to have recourse to the statutory demand procedure[5] even if it resulted in disruption to the taxpayer’s creditors and contributories if the taxpayer was wound up, as these were merely “ordinary incidents of reliance by the Commissioner upon the statutory demand system”.[6] Additionally, the facts here do not give rise to any basis for finding that there is “some other reason” why the demand should be set aside under section 459J of the Act.
[3]Broadbeach at [57]
[4] Broadbeach at [48]
[5] Broadbeach at [58]
[6]Broadbeach at [60].
Legal principles
The principles to be applied when deciding applications to set aside statutory demands were collected and considered by the Court of Appeal of the Supreme Court of Victoria in TR Administration v Frank Marchetti and Sons Pty Ltd.[7] Dodds-Streeton JA stated at [71]:-
“As the terms of s 459H of the Corporations Act 2001 and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something “between mere assertion and the proof that would be necessary in a court of law” may suffice.”
[7](2008) 66 ACSR 67 at [71].
In Eyota Pty Ltd v Hanave Pty Ltd[8] McClelland CJ of the Supreme Court of New South Wales said:
“It is, however, necessary to consider the meaning of the expression “genuine dispute” where it occurs in s 450H. In my opinion that expression connotes a plausible contention requiring investigation, and raises much the same sort of considerations as the “serious question to be tried” criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit “however equivocal, lacking precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be” not having “sufficient prima facie plausibility to merit further investigation as to [its] truth” (cf Eng Mee Yong v Letchumanan), [9] or “a patently feeble legal argument or an assertion of facts unsupported by evidence”: cf South Australia v Wall.[10] (emphasis added)
[8](1994) 12 ACSR 785 at 787-8.
[9][1980] AC 331 at 341.
[10](1980) 24 SASR 189 at 194.
For the reasons expressed above in rejecting the submissions made on behalf of Bayview, it has not been established that there is any plausible contention requiring investigation which would give rise to the existence of a genuine dispute nor has it been established that there is “some other reason” to set aside the demand. The application to set aside the statutory demand is dismissed with costs.
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