Green Invest Limited v Filippo
[2011] VSC 387
•19 August 2011
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT – LIST E
No. S CI 2011 02035
IN THE MATTER OF GREEN INVEST LIMITED
(ACN 119 031 462)
| GREEN INVEST LIMITED (ACN 119 031 462) | Plaintiff |
| v | |
| JOHN FILIPPO | Defendant |
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JUDGE: | Gardiner AsJ | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 28 June 2011 | |
DATE OF JUDGMENT: | 19 August 2011 | |
CASE MAY BE CITED AS: | Green Invest Limited v Filippo | |
MEDIUM NEUTRAL CITATION: | [2011] VSC 387 | |
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CORPORATIONS – Application to set aside statutory demand pursuant to section 459G of the Corporations Act 2001 (Cth) on basis of genuine dispute – plaintiff discharges onus that there is genuine dispute as were there matters that warranted further investigation – statutory demand set aside.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr St John Hibble | Gadens Lawyers |
| For the Defendant | Mr Matthew Stirling | Marshalls and Dent |
HIS HONOUR:
By originating process filed 2 May 2011, the plaintiff (“Green Invest”) makes application pursuant to section 459G of the Corporations Act 2001 to set aside a statutory demand dated 8 April 2011 which has been served on it by the defendant (“Mr Filippo”). The demand was received by post at the registered office of the plaintiff on 11 April 2011. In his demand, Mr Filippo claims that Green Invest is indebted to him for $48,986.68 for director’s fees for the period 23 December 2008 to 19 January 2011.
This application was heard on the same occasion as an application by Green Invest to set aside a statutory demand of the same date served by a company associated with Mr Filippo, Filippo Pty Ltd, in respect of an alleged debt for accounting fees.
In support of its application, Green Invest relies on affidavits of Ron Glen Lunt, sworn 2 May and 7 June 2011. In opposing the application Mr Filippo relies on an affidavit sworn by him on 27 May 2011.
It appears to be common ground that Mr Filippo was a director of Green Invest from 23 December 2008 until 19 January 2011 and that he was entitled to payment of $50,000 per annum for acting in that capacity. The parties however, diverge in their characterisation of the nature of Mr Filippo’s engagement and how he was to be remunerated.
In his affidavit of 7 May 2011, Mr Lunt, the Executive Director of Green Invest, states that Mr Filippo was an employee of Green Invest and his remuneration for his directorship was in the nature of a salary. Mr Lunt states that the $50,000 per annum salary was inclusive of superannuation and for that reason, Green Invest has deducted $4,044.77 from Mr Filippo’s entitlement, being the nine per cent statutory levy for superannuation.
Further, Mr Lunt deposes that Green Invest was not provided with a tax file number for Mr Filippo and, as a result it was required to deduct the maximum amount of tax (45 per cent) together with 1.5 per cent for the Medicare Levy. As a result of this, a further $29,987 was deducted from Mr Filippo’s salary.
Mr Lunt states that after service of the demand, on 27 April 2011 a cheque for $24,044.91, was tendered to Mr Filippo at his office.[1] Green Invest emphasizes that this was within the 21 day period for compliance with the demand.
[1]I note that Mr Filippo states he actually received the cheque on 29 April 2011 but this is of no significance.
In his affidavit of 7 June 2011, Mr Lunt deposes that Green Invest made a further payment, of $4,044, to Mr Filippo’s nominated superannuation fund on 13 May 2011. In that affidavit, Mr Lunt again asserts that the remuneration of Mr Filippo was inclusive of superannuation. He also asserts that, on the basis of what he has been told by the chief financial officer of the plaintiff, Mr Kirby, Green Invest was not obliged to provide Mr Filippo with a tax file number declaration form, rather it was the obligation of Mr Filippo to provide Green Invest with his tax file number.
In his affidavit in opposition to the application, Mr Filippo states that prior to service of the demand, he had received only one monthly payment of $4,164 by way of an allotment of shares in Green Invest in lieu of his cash entitlement. On 9 March 2011, he wrote to the directors of Green Invest requesting payment of director’s fees of $48,986.68. He states that a claim was only made in respect of director’s fees which did not include any entitlement to superannuation, asserting that superannuation would have been automatically payable in addition to his entitlements to remuneration as a director.
Mr Filippo deposes that there was no response to his letter of 9 March 2011 or to his solicitor’s demand of 30 March 2011 and the statutory demand was served shortly afterwards. He deposes that on 29 April 2011, he received a letter on Green Invest’s letterhead enclosing the cheque for $24,044.91 said to represent the balance of director’s fees due after deducting tax of 45 per cent, Medicare Levy of 1.5 per cent and nine per cent superannuation payable on the total due for director’s fees. The letter requested Mr Filippo to complete and return a Superannuation Choice Form and Tax File Number Declaration Form and upon which it would supply a PAYG Summary Form when required.
Mr Filippo completed those documents included in the letter and returned them on 2 May 2011, shortly after this proceeding was commenced. In that letter, Mr Filippo requested that Green Invest provide him with the difference in the income tax required to be deducted and the superannuation contribution to be remitted to his superannuation fund.
On 18 May, the solicitors for Green Invest wrote to Mr Filippo’s solicitors enclosing a copy of the cheque payable to Mr Filippo’s superannuation fund. The original of that cheque was received from Green Invest on the same day. The letter also enclosed an ATO PAYG Payment Summary Form dated 17 May 2011,which noted that tax of $20,897 had been withheld.
In his affidavit, Mr Filippo complains that Green Invest did not provide him with an Employment Declaration Form or request that he provide one to it. He denies Mr Lunt’s statement in his first affidavit that it was Mr Filippo’s responsibility to obtain such details. He complains that Green Invest has unduly withheld more than the required amount of Pay As You Go Withholding tax, even though he completed a signed Tax File Declaration Form on 2 May 2011 before, he says, Green Invest attended to payment of the tax.
Mr Filippo contends that it was never stated to him that the director’s remuneration of $50,000 per annum was inclusive of superannuation. Accordingly, he says nine per cent of that sum was payable by way of superannuation in addition to the $50,000 figure, $4,500 per annum, equating to $4,783.56 for the period he was a non executive director. Green Invest has paid only $4,044, an underpayment of $738.79.
He details what he regards as being his entitlement in the final paragraph of his affidavit and contends that $17,022.56 remains outstanding. This consists of incorrect tax being deducted of $12,239, underpayment of superannuation of $738.79 and underpayment of his gross entitlement.
The authorities concerning the appropriate principles to apply in applications under s 459G of the Corporations Act 2001 are numerous and several have been referred to in my reasons in the associated proceeding, Green Invest v Filippo Pty Ltd[2]and I will not repeat them here. I emphasise the observation made by Barrett J in Solarite Air Conditioning Limited v York International (Aust) Pty Ltd,[3] where it was observed that an applicant will fail in an application to set aside a demand only if it is found, on the hearing of its application, that the contentions upon which it seeks to rely in mounting its challenge to the demand are so devoid of substance that no further investigation is warranted. Once an applicant demonstrates that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow and the Court does not engage in any form of balancing exercise between the strengths of the competing contentions or who was more likely to ultimately succeed at a conventional trial of the creditor’s claim.
[2]No S CI 02036 of 2011
[3][2002] NSWSC 411 at [23].
I consider that the disputes Green Invest raises give rise to triable issues. These include whether the superannuation payable was included in the $50,000 remuneration from Mr Filippo as a director of Green Invest or was payable in addition to that sum. In my view this constitutes a genuine dispute both in regard to what Mr Filippo characterises as a shortfall in the superannuation paid of $738.79 and also the understatement of the gross entitlement.
As to of the sum deducted for income tax, I consider that this also gives rise to a genuine dispute as to whether Green Invest was entitled and/or obliged to deduct an amount for PAYG Withholding Tax when it made the payment to Mr Fillipo in late April. This figure has been accounted for in the sense that Green Invest has remitted or is at least became liable to remit that sum to the Australian Taxation Office when it completed a PAYG Payment Summary Form on 17 May 2011, recording tax of $20,897 being withheld but Mr Filippo contends that rather than being remitted to the Australian Taxation Office it should have been paid to him. A triable issue arises as to whether Mr Filippo’s remuneration as a director was characterised as salary, in which a deduction would have to be made by green Invest for PAYG tax, or whether the nature of his engagement should be characterised in such a way that PAYG tax was not required to be remitted. I consider that Green Invest has demonstrated that genuine disputes exist as to the debt the subject of the demand.
It is not possible for me to conclude on the evidence before me who had the responsibility to inform the Australian Taxation Office of Mr Filippo’s tax file number and whether Green Invest was under any obligation to be proactive in obtaining such details from Mr Filippo.
In the circumstances, I will make an order that the statutory demand be set aside. I will hear the parties on the question of costs. I note that a significant amount has been paid to Mr Filippo after service of the statutory demand but before the time for compliance with the demand had expired.
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