In the matter of Ursidae Pty Ltd formerly trading as Powerfab Engineering (in liquidation) v Commissioner of Taxation

[2012] NSWSC 172

Supreme Court

New South Wales

Medium Neutral Citation:	In the matter of Ursidae Pty Ltd formerly trading as Powerfab Engineering (in liquidation) -v- Commissioner of Taxation [2012] NSWSC 172
Hearing dates:	13 February 2012
Decision date:	13 February 2012
Jurisdiction:	Equity Division - Corporations List
Before:	Hammerschlag J
Decision:	Defendant is to pay to the company $196,803 plus interest and costs. The directors are to indemnify the defendant for $129,561 plus interest and costs
Catchwords:	CORPORATIONS - application by company and its liquidator under s 588FF of the Corporations Act 2001 (Cth) to recover tax paid as voidable transactions - Commissioner admits liability and seeks indemnity against directors under s 588FGA(2)
Legislation Cited:	Corporations Act 2001 (Cth) Income Tax Assessment Act 1936 (Cth) Taxation Administration Act 1953 (Cth),
Category:	Principal judgment
Parties:	Ursidae Pty Ltd formerly trading as Powerfab Engineering (in liquidation) ACN 55 103 686 988 - First Plaintiff Neil Robert Cussen in his capacity as liquidator of Ursidae Pty Ltd formerly trading as Powerfab Engineering (in liquidation) ACN 55 103 686 988 -Second Plaintiff Commissioner of Taxation - Defendant/Applicant Wayne David Slender - First Respondent Karen Gayle Slender - Second Respondent
Representation:	Counsel: T. Di Bello - Second Plaintiff C. Lee - Defendant/Applicant Solicitors: Leonard Legal - Second Plaintiff ATO Legal Services Branch - Defendant/Applicant
File Number(s):	2011/296467

EX TEMPORE JUDGMENT

1. HIS HONOUR: These are proceedings under s 588FF Corporations Act 2001 (Cth) (the Act) by a company, Ursidae Pty Limited (in liquidation) ACN 55 103 686 988 (the company), and its liquidator against the defendant, Deputy Commissioner of Taxation (the Commissioner), for orders directing the Commissioner to pay amounts earlier paid by the company to him under alleged voidable transactions within the meaning of s 588FE of the Act.

1. All references to sections are, unless otherwise stated, references to sections of the Act.

1. Under s 588FF(1)(a) where, on the application of a company's liquidator, a court is satisfied that a transaction of the company is voidable because of s 588FE, the court may make an order directing a person to pay to the company an amount equal to some or all of the money that the company has paid under the transaction. Under s 588FE(2), a voidable transaction is one which is "an insolvent transaction of the company" and which was entered into during the six months ending on "the relation-back day".

1. In this case the relation-back day is, by virtue of s 9 read with s 513A, 26 February 2010, being the date when the order for the winding up of the company was made. To be captured by the provisions, the transactions in this case must have been entered into on or after 26 August 2009, which is the case.

1. The Commissioner, in turn, seeks statutory indemnity under s 588FGA from two directors of the company, Wayne David Slender and Karen Gail Slender.

1. Sections 588FGA(1) and (2) provide that if the Court makes an order under s 588FF against the Commissioner because of the payment of an amount in respect of a liability under certain specified provisions of the Income Tax Assessment Act 1936 (Cth) or the Taxation Administration Act 1953 (Cth), each person who was a director of the company when the payment was made is liable to indemnify the Commissioner in respect of any loss or damage resulting from the order.

1. That application is supported by the liquidator's affidavit sworn 13 September 2011.

1. Directions were made for the filing of points of claim, and they were filed on 18 November 2011. In the points of claim the plaintiffs allege that:

(a)   the company was insolvent throughout the relation back period;

(b)   during that period the Commissioner received payments from the company totalling $196,803;

(c)   at the time the payments were made the company was insolvent;

(d)   the Commissioner was a creditor of the company in respect of an unsecured debt;

(e)   the payments resulted in the Commissioner receiving from the company in respect of that unsecured debt more than the amount the Commissioner would have received if each payment were set aside and the Commissioner proved for the debt in the winding up of the company; and

(f)   the payments were unfair preferences within the meaning of s 588FA or, in the alternative, uncommercial transactions within the meaning of s 588FD and under s 588FE(2) those transactions are voidable.

1. The Commissioner admits the allegations in the points of claim. The plaintiffs are entitled to judgment against the Commissioner as prayed.

1. In his claim against the directors, which is brought by interlocutory application issued on 24 October 2010, affidavit evidence led by the Commissioner establishes service of the process on the directors and their occupation of the office at the relevant time. The directors were called outside Court at the hearing but did not appear.

1. The component of the payments received by the Commissioner in respect of liability under the provisions of the Income Tax Assessment Act 1936 (Cth) and the Taxation Administration Act 1953 (Cth), specified in section 588FG(1), and for which the Commissioner is entitled to be indemnified, is established by the evidence to be $129,561. There will be an order for him to be indemnified by the directors in that amount.

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Decision last updated: 05 March 2012