Deputy Commissioner of Taxation v Radarn Pty Ltd

[2001] WASC 41

DEPUTY COMMISSIONER OF TAXATION -v- RADARN PTY LTD [2001] WASC 41

Jurisdiction:	SUPREME COURT OF WESTERN AUSTRALIA	Citation No:	[2001] WASC 41
Published:	16/02/2001
Case No:	COR:159/2000	Heard:	14 FEBRUARY 2001
Coram:	MASTER BREDMEYER	Delivered:	14/02/01
No of pages:	6	Judgment Part:	1 of 1
Result:	Application adjourned
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Parties:	DEPUTY COMMISSIONER OF TAXATION RADARN PTY LTD
Catchwords:	Application to wind up company
Legislation:	Nil
Case References:	Nil Nil

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION : DEPUTY COMMISSIONER OF TAXATION -v- RADARN PTY LTD [2001] WASC 41 CORAM : MASTER BREDMEYER HEARD : 14 FEBRUARY 2001 DELIVERED : 14 FEBRUARY 2001 PUBLISHED : 16 FEBRUARY 2001 FILE NO/S : COR 159 of 2000 BETWEEN : DEPUTY COMMISSIONER OF TAXATION

Plaintiff

AND

RADARN PTY LTD
Defendant

Catchwords:

Application to wind up company

Legislation:

Nil

Result:

Application adjourned

(Page 2)

Representation:

Counsel:

Plaintiff : Ms T M Kelly
Defendant : In person (Mr J Tilli)

Solicitors:

Plaintiff : Australian Taxation Office
Defendant : In person

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Nil

(Page 3)

1 MASTER BREDMEYER: This is an application by the Deputy Commissioner of Taxation to wind up Radarn Pty Ltd ("the company") in insolvency.

2 The application was lodged on 26 June 2000 based on a statutory demand dated 13 April 2000 for $62,977.25. The application has been adjourned on numerous occasions at the request of the company, whilst it put forward proposals to pay sums and sell certain properties. This company is one within the Tilli group of companies. The affairs of the Tilli group are complex. All its properties are heavily mortgaged. There are various lenders involved who are pressing the Tilli group for payment. I know this from other cases. Efforts are being made by the group to sell properties.

3 The plaintiff, today, seeks a winding up of the company. The company seeks a dismissal of this application, or a further adjournment. The dismissal is sought because it is said the ATO reneged on an agreement reached between the parties on 4 December 2000 to allow for term repayments of the debt.

4 That agreement is contained in a letter from the Australian Tax Office of 4 December 2000, and I quote:

"Conditions

1. By 4.00pm 5 December 2000, you provide to this office either by fax or by courier copies of the valuations of the two properties located at 38 and 40 Deverell Way, Bentley, copies of the mortgages and mortgage statements in respect of these properties, copies of the offer and acceptance documents in relation to the properties in Serpentine and also copies of the searches undertaken in relation to all of these properties;

2. By 4.00pm 5 December 2000, you provide to this office details of the contact at the Bendigo Bank who can discuss the placement of the second mortgage over the properties located at 38 and 40 Deverell Way, Bentley;

3. A mortgage is put in place over the two properties located at 38 and 40 Deverell Way, Bentley this will be required to be executed on or before 15 December 2000;

(Page 4)

4. Payment of $10,000 is paid on a monthly basis on or before the last day of each month commencing with a payment on 31 December 2000;

5. A payment of $10,000 (which was originally to be paid on 30 November 2000) is paid before the execution of the mortgage and on or before 15 December 2000;

6. Payment and lodgment or the Business Activity statements which were due on 21 November 2000 (October 2000 PAYG-ITW) and the extended due date of 30 November 2000 (September 2000 PAYG-ITW, July 2000 - September 2000 GST) are to be paid and lodged before the execution of the mortgage and on or before 15 December 2000;

7. All payments to be sent either to PO Box 747, Cannington WA 6987 or dropped at the front counter of the Cannington office and are to be marked to the attention of Brad Lambert, Receivables Management Legals Team CBB;

8. Costs involved in the winding up application in respect of Radarn Pty Ltd to be paid by Radarn and to be included in the amount covered by the mortgage;

9. Any costs involved in the preparation and execution of the mortgage to be paid for by Radarn Pty Ltd with a bank cheque to be provided for the payment of the stamp duty on or before 15 December 2000, this amount is to [sic be] calculated and advised."

5 The company says the ATO reneged on this, in that it declined to take a second mortgage over 38 Deverell Way, Bentley, offered to it by the company. The company says that the letter got it wrong. The company only offered a second mortgage over 38 Deverell Way, not over 38 and 40. 40 Deverell Way is the home of Mr Peter Tilli. That argument may well be right. The ATO letter of 4 December 2000 refers to a fax from the Tillis of 1 December. I do not have that fax but it may be a seven page letter of 29 November from the Tillis to the ATO. That may have been faxed on 1 December. I only have it in letter form, attached to Ms Kelly's affidavit (Annexure "TK4"). In that letter the offer of a second mortgage is over 38 Deverell Way only.
(Page 5)

6 Also, the letter of 4 December was based, or at least partly based, on discussions which took place between Mr Brad Lambert of the ATO and Mr Kim Strickland of Hall Chadwick Accountants on behalf of the company. On 14 December Mr Strickland faxed a letter to the Tillis and he summarised the present position to the Tillis, in that he referred to the mortgage over 38 Deverell Way, Bentley, only.

7 Since 4 December, has the agreement been kept? Has it been kept by the Tillis? And has it been kept by the ATO?

8 A second mortgage over 38 Deverell Way was offered. The Bendigo Bank was willing to release the title for the registration of this mortgage. ATO went cold on the idea when it discovered that the mortgage to the Bendigo Bank secured debts of $1,622,904 plus interests costs and fees. I consider the ATO was entitled to reject that mortgage. I would readily imply a term into the agreement that the mortgagor must have some equity in the property being offered as security. When the property was offered in the letter of 29 November 2000 already mentioned, it was said to be worth $375,000 with a first mortgage of $150,000, leaving an equity of $225,000 available to cover the ATO debts. On the evidence before me there is no equity in 38 Deverell Way being offered as security. I consider the company breached that term of the agreement. Assuming, as I do, that the agreement to provide security related to one property only, number 38, then the security offered is not as the Tillis represented. The first mortgage is not for $150,000; it is for $1,622,000.

9 Has the company breached the agreement of 4 December in other ways? In answering that question I propose to ignore a November 2000 BAS debt of $4,031. Mr J Tilli says he paid this sum on 21 December 2000, the day before the Christmas break, and has quoted a cheque number. He says he put the cheque in an envelope and dropped the envelope into the ATO Cannington. The envelope was addressed to Mr Brad Lambert. The ATO says it was not received. The company has not produced a bank statement showing its debit. A further cheque was paid recently for the same sum. I accept Mr Tilli's evidence on this and will not regard this late payment as a breach of the agreement.

10 The agreement of 4 December required a payment of $10,000 on 15 December (this was the payment due on 30 November under an earlier similar agreement to pay $10,000 per month off arrears); and then $10,000 off arrears per month on the last day of each month, beginning on 31 December 2000. The first payment of $10,000 was paid on 15 December, plus BAS July - September $5,259 and October PAYG

(Page 6)

$3,241. The $10,000 payment due on 31 December was missed. It was paid on 31 January 2001. This late payment was apparently allowed by an oral agreement between Mr Brad Lambert of the ATO and Mr Greg Dudley, I think of Hall Chadwick, on behalf of the company.

11 In summary, I do not consider the ATO has reneged on the agreement of 4 December. The ATO was justified in rejecting the second mortgage offer.

12 I consider that the ATO has proved their case for a winding up. But, as an indulgence to the company, which is trading and which I consider is trying to pay off the arrears, I will adjourn the case for one month. This should not be taken as an indication that a further adjournment will or will not be granted by me, or any other Master. The company will need to pay off $10,000 per month and strictly meet all current tax commitments which is a part of the December agreement. I note that when the winding up application was filed in June 2000, the debt was approximately $62,000. As at 30 January 2001 the debt is $74,560. The court would like to see a reduction of the debt.