Moteca Holdings Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia
[2010] VSC 644
•20 August 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
COMMERCIAL COURT
CORPORATIONS LIST-E
No. S CI 2009 09981
| MOTECA HOLDINGS PTY LTD & ORS | Plaintiffs |
| v | |
| COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA | Defendant |
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JUDGE: | Gardiner As J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 6 August 2010 | |
DATE OF JUDGMENT: | 20 August 2010 | |
CASE MAY BE CITED AS: | Moteca Holdings Pty Ltd & Ors v Commissioner of Taxation of the Commonwealth of Australia | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 644 | |
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CORPORATIONS – External administration – Voidable preference claim against the Commissioner of Taxation – Directors of company joined pursuant to section 588 FGA of the Corporations Act 2001 (Cth) – Commissioner admits liability for part of claim against him which is not the subject of the claim under section 588 FGA against the directors – judgment given for part of claim in favour of plaintiff.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr S. J. Maiden of Counsel | Cornwall Stodart |
| For the Defendant | Mr S. Rosewarne of Counsel | Australian Taxation Office |
| For the Respondents | Mr A. Cox, Solicitor | Pointon Partners Lawyers |
HIS HONOUR:
In this proceeding, the plaintiffs, by an originating motion filed 9 November 2009, make application under s 588FA, 588FB, 588FC, 588FE and 588FF of the Corporations Act (the Act”) against the defendant, the Commissioner of Taxation of the Commonwealth of Australia (“the Commissioner”).
The plaintiffs seek among other things declarations and orders that payments totalling $675,000 made by the first plaintiff to the Commissioner in the period January to May 2008 were voidable transactions under Part 5.7B of the Corporations Act2001.
The sum of $675,000 consisted of payments made by the first named plaintiff in discharge of debts owed by it to the Commissioner in respect of (a) withholding amounts under sub‑division 16‑B in Schedule 1 to the Taxation Administration Act 1953 (‘ITW”), (b) net amounts under s 33‑5 of A New Tax System (Goods and Services) Tax Act 1999 (“GST”) and (c) general interest charges (“GIC”).
The Commissioner has admitted receipt of that sum and in a document headed “Applicant’s Points of Claim” filed 2 July 2010 at paragraph 11, identifies in a table the particular type of taxation liability to which the payments have been allocated. In respect of a payment made on 24 January 2008 of $530,000, $99,999 has been applied to discharge liability for June 2007 GST, $6,494.55 has been allocated to discharge liability for September 2007 GST, $412,365 has been allocated to discharge liability for June 2007 ITW and $11,141.45 has been allocated to GIC. The payments that followed, from 22 February 2008 to 5 May 2008, have all been allocated to discharge liability for September 2007 GST.
On 6 April 2010, the Commissioner filed an interlocutory process seeking indemnity against Julian Dominic Moss and Vincent Teubler under s 588FGA of the Corporations Act 2001. Messrs Moss and Teubler were directors of the firstnamed plaintiff at the relevant times. Section 588FGA enables the Commissioner to seek to be indemnified by the directors of the first plaintiff in respect of the Commissioner’s loss and damage resulting from any order made against the Commissioner under s 588FF of the Act rendering void payments of certain types of taxation by the insolvent company. Section 588FGA by its terms identifies the particular types of taxation liability which may be the subject of a claim under that section. Of the categories of taxation for which the plaintiffs make a claim against the Commissioner in this case, only ITW can be the subject of an order for indemnity from the former directors under s 588FGA.
The plaintiffs, relying on certain admissions made by the Commissioner, seek judgment against the Commissioner for part of their claim being the payments made between 22 February 2008 and 5 May 2008 totalling $145,000. The process pursuant to which it makes such an application has not been identified or formalised but Mr Rosewarne of Counsel, who appeared on behalf of the Commissioner did not take issue with the lack of formal process in that regard.
Mr Maiden, counsel for the plaintiffs, suggested that his clients’ application was in the nature of an application for summary judgment under Rule 22 of the Chapter I rules with the necessary adaptations being made having regard to the fact that this is a Chapter V proceeding. He referred me to the decision of Smith J in Re Estate Mortgage (in liq),[1] where his Honour allowed the Chapter I rules to be employed in a Chapter V proceeding and gave leave to issue third party proceedings. I note that under r 22.06(1) on the hearing of a summary judgment application under Chapter I, the Court “may give judgment for the plaintiff against the defendant for part of the claim to which the application relates as is appropriate having regard to the nature of relief or remedy claimed unless the defendant satisfies the Court that in respect of that claim or part a question ought to be tried or for some other reason be a trial of that claim or part”. I think however that Mr Maiden’s application is one more properly characterised as the originating process being called on for trial and judgment being sought for part of the claim by reason of the Commissioner’s admissions. As I have said, the Commissioner does not take issue with the procedural mechanism in bringing the matter before me and I intend to deal with it despite the lack of formal process.
[1](1993) 10 ACSR 204.
In support of their application, the plaintiffs rely on an affidavit of Adrian Charles Lasky sworn 23 June 2010. Mr Lasky is the solicitor having the conduct of the matter at the plaintiffs’ solicitors and he describes the general background to the matter. He makes reference to an affidavit of Mr Param Srikanthan affirmed on 24 March 2010 filed in support of the Commissioner’s interlocutory process, which sets out the allocation of the payments described above. Mr Lasky exhibits a facsimile from the Commissioner of 27 May 2010, which made an offer to consent to orders being made in the proceeding in favour of the first plaintiff for the sum of $675,000 plus interest from 19 October 2009 plus costs. I note this amounts to a complete capitulation to the plaintiffs’ claim. This offer was accepted by the Plaintiffs on 7 June 2010 and Mr Lasky forwarded minutes of consent orders to reflect this.
Difficulties were experienced in serving the interlocutory process filed by the Commissioner against Messrs Moss and Teubler and this necessitated the directions hearings in this proceeding being adjourned on several occasions. Messrs Moss and Teubler have now appeared to the interlocutory process.
In the Commissioner’s facsimile of 27 May 2010 it is stated:
We have now received instructions to consent to orders in the above proceedings that pursuant to sub-s 588F(1) (sic) of the Corporations Act2001 the Commissioner pay to Moteca Holdings Pty Ltd (formerly known as TRA Australia Pty Ltd) (the first plaintiff) the sum of $675,000 plus interest from 19 October 2009 (being the date of the letter of demand) to the date of the order plus costs, such costs to be taxed in default of agreement.
The facsimile goes on to say:
In light of the above proposed consent orders there is no need for the plaintiffs to file and serve a statement of claim in the above proceedings as suggested. However, as you are aware, due to the nature of the Commissioner’s claims against the respondents, the Court is unlikely to make these orders until the respondents have had an opportunity to be subrogated to any defence the Commissioner may had (sic) available to him: see Dean-Willcocks(as liquidator of SJP Formwork (NSW) Pty Ltd) v Commissioner of Taxation (No. 2) (2004) 49 ACSR 325.
Mr Maiden’s application is that the plaintiffs be entitled to enter judgment against the Commissioner in respect of the payments made between 22 February 2008 and 5 May 2008. These payments are for GST and are not able to be the subject of a claim by the Commissioner for statutory indemnity from Messrs Teubler and Moss under the terms of s 588FGA. He submits that the Commissioner has no defence to that part of the claim and that judgment for those payments cannot in any way prejudice the conduct of the proceedings commenced by the Commissioner against Messrs Moss and Teubler. Mr Maiden says that the plaintiffs should not be kept from their money until such time as the interlocutory proceedings have concluded as to do so would prejudice the liquidators and the unsecured creditors of the company.
Mr Rosewarne, counsel for the Commissioner, submitted that the Court ought not make such an order and that the disposal of the proceeding between the plaintiffs and the Commissioner should await the conclusion of the proceedings against Messrs Moss and Teubler under s 588FGA. He submitted that the Court should not make any order which may potentially prejudice the conduct of the proceedings under s 588FGA. He was not able to describe any specific actual or hypothetical scenario in which this could occur if I proceeded to make the order sought.
Mr Cox, counsel for Messrs Moss and Teubler, also voiced concerns that, by making such an order the conduct of his clients’ defence to the s 588FGA claim could potentially be prejudiced. He stated that to make such an order may give rise to some type of issue estoppel in particular on the issue of the insolvency of the company on and from 22 February 2008 but he was not able to articulate how this could be so given the difference in the identity of the parties.
Section 588E of the Act prescribes certain presumptions to be made in recovery proceedings. Section 588E(3) provides:
If:
(a)the company is being wound up; and
(b)it is proved, … that the company was insolvent at a particular time during the 12 months ending on the relation back day;
it must be presumed that the company was insolvent throughout the period beginning at that time and ending on that day.
In my view, that presumption is of no relevant significance here if I make orders of the type Mr Maiden seeks, which assume that insolvency has been established on and from 22 February 2008 as the remaining payment of $530,000 which is sought to be impeached was made one month or so before, on 24 January 2008.
Mr Cox’s misgivings were that by making the orders proposed by Mr Maiden it would disadvantage his clients because they would then have to approach the issue of the solvency of the company on 24 January 2008 against the background of orders of the Court which assume that the company was insolvent on and from 22 February 2008. He suggested that they would then be faced with the spectre of having to explain what event occurred between 24 January 2008 and 22 February 2008, the company plunging from solvency into insolvency. He also submitted that the Commissioner may change his mind as to the manner of allocation of the payments set out in paragraph 11 of the “Commissioner’s Points of Claim”, which would result in an amendment to the claim against his clients.
I asked Mr Rosewarne for instructions to be obtained in the course of the hearing as to whether this would conceivably occur. Mr Rosewarne indicated that the allocations had been made in accordance with the relevant regulations but he was not prepared to state that the position would not change in that regard.
In my view, the plaintiffs are entitled to judgment in respect of the payments made on and from 22 February 2008. The position of the Commissioner and the respondents is not in my view prejudiced in any relevant regard by such an order. The payment of 24 January 2008, which is the subject of the Commissioner’s claim against the directors, precedes the payments for which the plaintiffs seek judgment. Such an order would create no presumption either under s 588E or otherwise. The respondents can argue that the company was solvent on 24 January 2008 and I am not persuaded that an order as to the subsequent payments, which necessarily involves a finding of insolvency on those respective dates, affects or prejudices their ability to establish insolvency on 24 January 2008. In my view, the subsequent payments can be effectively excised. The position would clearly be different if such payments had preceded the 24 January 2008 payment but they did not.
The Commissioner has responsibly considered whether he has valid defences to the subsequent payments and as an experienced litigant in such matters has determined that he does not. Indeed he considers he has no defence to the 24 January 2008 payment but for reasons of preservation of his ability to seek indemnity from the directors will not, in my view understandably, agree to an order in that regard but that is not sought by the plaintiffs. Although the Commissioner would not indicate that it would not resile from the allocation set out in paragraph 11 of his Points of Claim, in my view as a matter of fairness he would be hard pressed to do so at this juncture and I do not consider that is likely in any event.
In my view, the plaintiffs should not be kept out of their moneys unless there is some arguable foundation. The liquidators and the creditors are entitled to judgment unless there is some arguable reason why they should not be and I do not consider any such argument is available to the Commissioner or the directors.
Accordingly, I will make orders as follows:
1.The Court declares that the following payments made by the first plaintiff to the defendant totalling $145,000 (the post‑January GST), were unfair preferences pursuant to s 588FA of the Corporations Act2001 (Cth) (the Act) in solvent transactions pursuant to s 588FC of the Act and voidable transactions pursuant to s 588FE of the Act:
(a)the payment of $10,000 received by the defendant on 22 February 2008 and applied to a debt in respect of goods and services tax;
(b)the payment of $10,000 received by the defendant on 28 February 2008 and applied to a debt in respect of goods and services tax;
(c)the payment of $10,000 received by the defendant on 7 March 2008 and applied to a debt in respect of goods and services tax;
(d)the payment of $10,000 received by the defendant on 13 March 2008 and applied to a debt in respect of goods and services tax;
(e)the payment of $10,000 received by the defendant on 20 March 2008 and applied to a debt in respect of goods and services tax;
(f)the payment of $10,000 received by the defendant on 28 March 2008 and applied to a debt in respect of goods and services tax;
(g)the payment of $10,000 received by the defendant on 4 April 2008 and applied to a debt in respect of goods and services tax;
(h)the payment of $25,000 received by the defendant on 11 April 2008 and applied to a debt in respect of goods and services tax;
(i)the payment of $25,000 received by the defendant on 17 April 2008 and applied to a debt in respect of goods and services tax; and
(j)the payment of $25,000 received by the defendant on 5 May 2008 and applied to a debt in respect of goods and services tax.
2.Pursuant to sub-s 588FF(1)(a) of the Act, the defendant pay to the first plaintiff the sum of $145,000 in respect of the post‑January GST payments.
3.Pursuant to s 58 of the Supreme Court Act 1986 (Vic) the defendant pay to the first plaintiff interest from 19 October 2009 to the date of the Order.
4.By consent the defendant file any amended points of claim against the respondents by 4.00 pm on 13 August 2010.
5.The respondents file any amended points of defence by 4.00 pm on 20 August 2010.
6.All parties get discovery by filing and serving an affidavit of documents by 4.00 pm on 3 September 2010.
7.Inspection of discovered documents is to be completed by no later than 4.00 pm on 17 September 2010.
8.Any requests for further and better particulars be filed on or before 4.00 pm on 27 August 2010.
9.Any party which has received a request for further and better particulars on or before 27 August 2010 file further and better particulars in response to that request on or before 4.00 pm on 17 September 2010.
10.Mediation is to occur on or before 14 October 2010.
11.The directions hearing be adjourned to 22 October 2010.
12.Costs reserved.
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CERTIFICATE
I certify that this and the 8 preceding pages are a true copy of the reasons for judgment of Associate Justice Gardiner of the Supreme Court of Victoria delivered on 20 August 2010.
DATED this 20 day of August 2010.
Isabelle Smith
Associate
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