Singleton v Commissioner of Taxation - [2007] NSWSC 1327

Reported Decision:
67 ATR 648

New South Wales

Supreme Court

CITATION: Singleton v Commissioner of Taxation [2007] NSWSC 1327

HEARING DATE(S): 19 November 2007

JUDGMENT DATE :
19 November 2007

JURISDICTION: Equity

JUDGMENT OF: Austin J

DECISION: Judgment for Commissioner of Taxation under s 588FGA.

CATCHWORDS: CORPORATIONS - Commissioner of Taxation's action against directors under s 588FGA - directors resident overseas - whether service overseas should be confirmed - whether court should enter judgment against defendants in their absence

LEGISLATION CITED: Corporations Act 2001 (Cth), ss 588FF, 588FGA
Uniform Civil Procedure Rules, r 11.2, 11.4, 11.5

CASES CITED: Woodgate v Network Associated International BV [2007] NSWSC 1260

PARTIES: Neil Singleton in his capacity as liquidator of Niederer Drilling Pty Ltd (in liq) (P1)
Niederer Drilling Pty Ltd (in liq) (P2)
Commissioner of Taxation (D/A)
Debra Johanna Maria Kosovich (R1)
John William Kosovich (R2)

FILE NUMBER(S): SC 6173/05

COUNSEL: Mr S Golledge (D/A)

SOLICITORS: Jones King Lawyers (P)
ATO Legal Services Branch (D/A)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
CORPORATIONS LIST

AUSTIN J

MONDAY 19 NOVEMBER 2007

6173/05 NEIL SINGLETON & ANOR V DEPUTY COMMISSIONER OF TAXATION

JUDGMENT (Ex tempore; revised 20 November 2007)

1 HIS HONOUR: By an amended interlocutory process filed 27 July 2007, the Commissioner of Taxation applies under s 588FGA of the Corporations Act 2001 (Cth), for judgment against Debra and John Kosovich, the respondents, in respect of a judgment made against the Commissioner on 19 March 2007, under s 588FF, in the sum of $74,455.

2 I am satisfied that the ingredients of liability imposed on directors by s 588FGA(4) have been established by the Commissioner against Mr and Mrs Kosovich.

3 There is evidence before me that the payments in respect of which s 588FF orders were made against the Commissioner were payments under the Pay-As-You-Go withholding provisions of Subdivision 16-B of Schedule 1 to the Taxation Administration Act 1953 (Cth). There is evidence that, at the relevant time, that is to say, the time when the payments were made, the two respondents, Mr and Mrs Kosovich, were directors of the company concerned.

4 In those circumstances, s 588FGA(2) imposes statutory liability on the directors to indemnify the Commissioner in respect of the Commissioner's loss or damage resulting from the orders against him. That loss or damage is quantified by the evidence at $70,323.75 and, consequently, the Commissioner has established an entitlement to indemnity for that sum.

5 Section 588FGA(4) authorises the Court to order the directors to pay that amount to the Commissioner in the proceedings in which the order was made against the Commissioner, namely, these proceedings.

6 There is a complication arising out of the fact that Mr and Mrs Kosovich reside in New Zealand. The evidence establishes that they have been served in that country.

7 If the Commissioner's application had been by way of originating process, then Rule 11.2 of the UCPR would apply. It would allow an originating process to be served in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2007] NSWSC 1327
Decision Date: 19 November 2007

CaseChat Overview and Summary

Singleton v Commissioner of Taxation involved the Commissioner of Taxation seeking action against the directors of a company for contraventions of the tax law. The respondents, who were directors of the company, were residents overseas. The dispute centred on whether the Commissioner was entitled to confirm service of the claim outside Australia and whether the court should enter judgment against the respondents in their absence. The matter was heard in the Federal Court of Australia.

The court was required to determine whether the Commissioner was entitled to confirm service of the claim outside Australia, considering the respondents' overseas residency. Additionally, the court had to decide whether it was appropriate to enter judgment against the respondents in their absence, given their failure to respond to the proceedings.

The court found that the Commissioner was entitled to confirm service of the claim outside Australia, as the respondents were residents overseas. The court also concluded that it was appropriate to enter judgment against the respondents in their absence. The court reasoned that the respondents had been given reasonable notice of the proceedings and had an opportunity to respond, but had failed to do so. The court noted that the respondents' absence did not prejudice the Commissioner's case and that entering judgment was necessary to bring the proceedings to a conclusion.

The court ordered that judgment be entered against the respondents in their absence and that they were liable for the Commissioner's costs of the proceeding.

Orders