Keith, in the matter of Club Decor Pty Ltd (In Liquidation) (ACN 006 096 493) and in the matter of CDE Constructions Pty Ltd (In Liquidation) (ACN 110 337 493)
[2008] FCA 595
•29 April 2008
FEDERAL COURT OF AUSTRALIA
Keith, in the matter of Club Décor Pty Ltd (In Liquidation) (ACN 006 096 493) and in the matter of CDE Constructions Pty Ltd (In Liquidation) (ACN 110 337 493) [2008] FCA 595
GREGORY JOHN KEITH AND ANDREW STEWART REED HEWITT (AS LIQUIDATORS OF CLUB DECOR PTY LTD (IN LIQUIDATION)) and GREGORY JOHN KEITH AND ANDREW STEWART REED HEWITT (AS LIQUIDATORS OF CDE CONSTRUCTIONS PTY LTD (IN LIQUIDATION)) v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA and COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v SCOTT LAFFERTY VID 450 OF 2007
GORDON J
29 APRIL 2008
MELBOURNE
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 450 OF 2007
KEITH, IN THE MATTER OF CLUB DÉCOR PTY LTD (IN LIQUIDATION) (ACN 006 096 493) AND IN THE MATTER OF CDE CONSTRUCTIONS PTY LTD (IN LIQUIDATION) (ACN 110 337 493)
BETWEEN:
GREGORY JOHN KEITH AND ANDREW STEWART REED HEWITT (AS LIQUIDATORS OF CLUB DECOR PTY LTD (IN LIQUIDATION))
First PlaintiffsGREGORY JOHN KEITH AND ANDREW STEWART REED HEWITT (AS LIQUIDATORS OF CDE CONSTRUCTIONS PTY LTD (IN LIQUIDATION))
Second PlaintiffsAND:
COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
DefendantAND BETWEEN:
COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
PlaintiffAND:
SCOTT LAFFERTY
Defendant
JUDGE:
GORDON J
DATE OF ORDER:
29 APRIL 2008
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.Pursuant to s 588FF(1)(a) of the Corporations Act 2001 (Cth) (“the Act”), the Defendant (“the Commissioner”) pay to Club Décor Pty Ltd (in liquidation) the sum of $267,691.93, together with the interest in the sum of $54,708.24.
2.Pursuant to s 588FF(1)(a) of the Act, the Commissioner pay to CDE Constructions Pty Ltd (in liquidation) the sum of $5,742.01, together with the interest in the sum of $592.76.
3.There be no orders as to costs as between the Plaintiffs and the Commissioner.
4.Pursuant to s 588FGA(3) of the Act, Scott Lafferty pay to the Commissioner the sum of $261,787.64.
5.Scott Lafferty pay the Commissioner’s costs of and incidental to the Commissioner’s interlocutory process dated 19 October 2007.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
VID 450 OF 2007
KEITH, IN THE MATTER OF CLUB DÉCOR PTY LTD (IN LIQUIDATION) (ACN 006 096 493) AND IN THE MATTER OF CDE CONSTRUCTIONS PTY LTD (IN LIQUIDATION) (ACN 110 337 493)
BETWEEN:
GREGORY JOHN KEITH AND ANDREW STEWART REED HEWITT (AS LIQUIDATORS OF CLUB DECOR PTY LTD (IN LIQUIDATION))
First PlaintiffsGREGORY JOHN KEITH AND ANDREW STEWART REED HEWITT (AS LIQUIDATORS OF CDE CONSTRUCTIONS PTY LTD (IN LIQUIDATION))
Second PlaintiffsAND:
COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
DefendantAND BETWEEN:
COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
PlaintiffAND:
SCOTT LAFFERTY
Defendant
JUDGE:
GORDON J
DATE:
29 APRIL 2008
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
On 28 May 2007, Gregory John Keith and Andrew Stewart Reed Hewitt (“the liquidators”), in their capacities as liquidators of Club Décor Pty Ltd (in liquidation) (“Club Décor”), made an application by originating process under s 588FF(1) of the Corporations Act 2001 (Cth) (“the Act”), seeking an order that the Commissioner of Taxation of the Commonwealth of Australia (“the Commissioner”), pay the sum of $544,883.87 to the liquidators as a voidable transaction within the meaning of s 588FE(2) of the Act. On 19 June 2007, the liquidators amended the proceeding in their capacity as liquidators of CDE Constructions Pty Ltd (in liquidation) (“CDE”) seeking an order that payments totalling $11,484.02 made by CDE to the Commissioner were a voidable transaction within the meaning of s 588FE(2) of the Act.
On 19 October 2007, the Commissioner made application by interlocutory process under s 588FGA of the Act for a declaration and an order that it be entitled to be indemnified by Scott Lafferty (a director of Club Décor), in respect of any loss or damage to it resulting from any order of this Court made in favour of the liquidators of Club Décor against the Commissioner under s 588FF of the Act.
On 7 December 2007, the matter came before me for directions. At that directions hearing the liquidators and the Commissioner were represented. Mr Lafferty appeared in person “on behalf of Club Décor”. Orders were made at that time relating to discovery, amended defences to be filed by the Commissioner to the primary claim and, most significantly, an order that by no later than 14 January 2008, Mr Lafferty file and serve a defence and any affidavit material upon which he intended to rely in defence of the interlocutory process (Order 3). The other orders which were made can be put to one side.
Order 3 of the orders made on 7 December is important because, first, s 588FGA of the Act provides that:
(1) This section applies if the Court makes an order under section 588FF against the Commissioner of Taxation because of the payment of an amount in respect of a liability under any of the following provisions of the Income Tax Assessment Act 1936:
…(2) 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.
…(4) The Court may, in the proceedings in which it made the order against the Commissioner, order a person to pay to the Commissioner an amount payable by the person under subsection (2).
The provisions referred to in s 588FGA(1) apply and Mr Lafferty was a director of Club Décor at the time Club Décor made each payment. The second significant matter is that s 588FGB of the Act provides a defence in respect of proceedings under s 588FGA. Order 3 provided Mr Lafferty with the opportunity to file a defence and any affidavit material that would satisfy the defence provisions set out in s 588FGB. He did not avail himself of that opportunity.
Ms Soldatic, a senior litigator for the Commissioner, gave evidence before me that since January 2007 she has had responsibility for this matter on behalf of the Commissioner. She in fact appeared for the Commissioner at the directions hearing on
7 December 2007.
Of particular significance is that at the directions hearing on 7 December 2007, she obtained from Mr Lafferty both his mobile telephone number and his home address and, having obtained that information, has sent to Mr Lafferty each of the court documents which have been filed in this proceeding including, most significantly, the listing for trial. The listing recorded that the matter was set down for trial today - 29 April 2008. Further, Ms Soldatic gave evidence that in early April, probably 3 April 2008, she telephoned Mr Lafferty to inquire whether he was aware of the trial date to which he responded that he was but did not know if he would attend. He further informed Ms Soldatic he would await the outcome of the trial before determining his own financial position. In addition, Ms Soldatic also tried to telephone Mr Lafferty yesterday and again this morning, but the telephone rang out.
These facts are relevant because I have had handed to me proposed orders by consent that pursuant to s 588FF(1)(a) of the Act, the Commissioner pay to Club Décor a sum of $267,691.93, together with interest in the sum of $54,708.24 and secondly, pursuant to the same section, to pay to CDE the sum of $5,742.01 together with interest in the sum of $592.76. Having proposed those orders by consent, the Commissioner has moved for orders against Mr Lafferty arising out of the interlocutory process. First, pursuant to s 588FGA(3) of the Act that Mr Lafferty pay the Commissioner the sum of $261,787.64 and, secondly, an order that Mr Lafferty pay the Commissioner’s costs of and incidental to that interlocutory process.
In the circumstances, and having regard to the opportunities afforded Mr Lafferty to defend the interlocutory process and to appear at the trial, it is appropriate in my view that those orders be made.
I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gordon. Associate:
Dated: 29 April 2008
Counsel for the Plaintiffs: Mr H. Austin Solicitor for the Plaintiffs: Deacons Counsel for the Defendant and the Plaintiff (Interlocutory Process): Mr P. Crutchfield Solicitor for the Defendant and the Plaintiff (Interlocutory Process): ATO Legal Services Branch Defendant to the Interlocutory Process: No Appearance
Date of Hearing: 29 April 2008 Date of Judgment: 29 April 2008
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