Graham Lindsay Starkey in his capacity as Liquidator of Allan Fitzgerald Pty Ltd (n Liquidation) v The Deputy Commissioner of Taxation for Queensland

This matter came before the High Court of Australia concerning an application for special leave to appeal. The applicant, Graham Lindsay Starkey, in his capacity as Liquidator of Allan Fitzgerald Pty Ltd (in liquidation), sought to challenge a decision of the Queensland Court of Appeal. The dispute centred on whether the Commissioner of Taxation held a priority over moneys recovered by a liquidator under former section 451 of the Companies Code (now section 565 of the Corporations Law), in circumstances where the company had failed to remit group tax or prescribed payments. The applicant argued that this issue was of general importance, affecting numerous liquidations and involving a conflict between a Crown priority and the equitable distribution of company assets to creditors.

The primary legal issue before the High Court was the construction of sections 221P and 221YHJ of the relevant tax legislation in relation to moneys recovered by a liquidator under section 451 of the Companies Code. Specifically, the court was asked to determine whether the Commissioner's priority extended to funds recovered by a liquidator through actions to avoid preference payments, and if so, whether such a construction was valid. The applicant contended that moneys recovered under section 451 did not constitute property of the company, and therefore, an obligation to pay the Commissioner out of such moneys would be contrary to established legal principles.

The applicant's submission, which had been accepted by two members of the Court of Appeal, was that moneys recovered by a liquidator under section 451 of the Companies Code did not, upon recovery, become property of the company. The applicant argued that if the Commissioner's priority were to apply to these recovered moneys, it would create an obligation for the liquidator to pay the company's debt to the Commissioner from property that was not, and had never been, the company's property. This, it was submitted, was contrary to the established trend of authority, which held that such statutory priorities did not impose an obligation to pay other than out of moneys belonging to the insolvent person, as affirmed in cases such as *Commissioner of Taxation of the Commonwealth of Australia v Card*.