Zampbeacon Pty Ltd v Deputy Commissioner of Taxation

[2013] VSC 546

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

S CI 2013 02757

ZAMPBEACON PTY LTD (ACN 095 369 770)	Plaintiff
v
DEPUTY COMMISSIONER OF TAXATION	Defendant

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JUDGE:	GARDINER AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	10 October 2013
DATE OF JUDGMENT:	11 October 2013
CASE MAY BE CITED AS:	Zampbeacon Pty Ltd v Deputy Commissioner of Taxation
MEDIUM NEUTRAL CITATION:	[2013] VSC 546

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CORPORATIONS — Application to set aside statutory demand pursuant to s 459G, 459H and 459J of the Corporations Act 2001 — Demand made claims for money owing on Running Balance Account generated pursuant to the Taxation Administration Act 1953 — Contention that failure by Deputy Commissioner to identify constituent parts of the debt claimed to be owing gives rise to a genuine dispute and/or some other reason why the demand should be set aside — Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Pirrie	Frenkel Partners
For the Defendant	Mr S. Linden	Australian Taxation Office Legal Services Branch

HIS HONOUR:

1. On 10 May 2013, the plaintiff (“Zampbeacon”) was served with a creditors statutory demand for payment of debt by the defendant (“the Deputy Commissioner”).  The demand was accompanied by an affidavit of Regine Soupraya sworn 8 May 2013.

1. The demand claims that the amount of $320,598.60 is owed to the Deputy Commissioner by Zampbeacon.  The schedule to the demand identifies the debt as being owing pursuant to a ‘Running Balance Account deficit debt as at 8 May 2013 in respect of amounts due under the BAS provisions as defined in sub-section 995-1(1) of the Income Tax Assessment Act 1997 … and the general interest charge payable under section 8AAZF of the Taxation Administration Act 1953 (“the TAA 1953”), being a debt due and payable by the company pursuant to section 8AAZH of the TAA 1953’.

1. On 30 May 2013, Zampbeacon Pty Ltd made application under sections 459G, 459H and 459J of the Corporations Act 2001 for orders that the demand be set aside.  The application was supported by an affidavit of its sole director Mr Zampelis sworn 30 May 2013.  The Deputy Commissioner opposes the application and relies on affidavits of Gregory Phillips sworn 1 August 2013 and 9 September 2013.

1. On 17 July 2013 I made orders by consent which included that Zampbeacon file and serve any affidavit material in reply by 28 August 2013 and that any further affidavit material on which either party sought to rely be filed and served by 11 September 2013.  I also ordered that the parties were to file and serve outlines of submissions by 3 October 2013.  I set the matter down for hearing on 10 October 2013.  Zampbeacon did not file any further affidavits or outline of submissions in compliance with those orders.

1. When the matter came on for hearing on 10 October 2013, Mr Pirrie of counsel appeared on behalf of Zampbeacon and made application for an adjournment of his client’s application.  That application was supported by an affidavit of his instructor, Anna Alevizopoulos, sworn 10 October 2013.  The application for the adjournment was opposed.  For the reasons which I orally pronounced on 10 October 2013 the application for the adjournment was refused and the application proceeded.

1. In his affidavit, Mr Zampelis states that he does not believe that Zampbeacon is indebted to the Deputy Commissioner in the amount set out in and identified in the demand. He states that the description of the debt set out in the schedule of the demand is such as to cause prejudice to Zampbeacon by reason that the Deputy Commissioner has not identified how the debt alleged is claimed to be owing, that is, what part or parts of the debt alleged on the Running Balance Account represent amounts alleged to be owing under the Goods and Services Tax provisions, the PAYG withholding provisions, the PAYG instalment provisions, the Fringe Benefits Tax instalment provisions, the Deferred Company Instalment Provisions and the General Interest Charge alleged to be payable under s 8AAZF of the TAA 1953. He asserts that the demand fails to adequately describe the debt and that there is a genuine dispute between Zampbeacon and the Deputy Commissioner with respect to and concerning the claim made in the demand.

1. Mr Phillips, who has sworn the affidavits in opposition of the application on behalf of the Deputy Commissioner, deposes in his first affidavit that he is familiar with the record system maintained by the ATO including the computer system that records tax liabilities, additional tax and penalties incurred by tax payers and payments made by tax payers in reduction and in extinguishment of their tax liabilities.  He describes the various systems which comprise that records system.

1. Mr Phillips states that the Commissioner of Taxation established a Running Balance Account in respect of the primary tax due by Zampbeacon under the Business Activity Statement (“BAS”)  provisions as defined by sub-s 995-1(1) of the Income Tax Assessment Act 1997 and in respect of primary tax debts due as administrative penalties under Pt 4-25 of Schedule 1 to the TAA 1953. He details the process by which the amount claimed on the Running Balance Account and the statutory demand has been arrived at and makes reference to the relevant provisions of the TAA 1953 in that regard.

1. Mr Phillips states that the debt identified in the Statutory Demand is made up of debts owed by Zampbeacon as at 8 May 2013 which total $320,598.60 as at that date. He exhibits a Running Balance Account statement of account in respect of the Running Balance Account deficit debt generated pursuant to s 8AAZI of the TAA 1953 dated 1 August 2013. That statement describes all of the transactions on Zampbeacon’s Running Balance Account for the period 17 October 2008 to 8 May 2013, the date of the demand.

1. In his second affidavit of 9 September 2013 Mr Phillips states that Zampbeacon lodged BAS and Income Activity Statement forms which disclose that Zampbeacon was liable for tax related liabilities under the BAS provisions.  As a result of Zampbeacon’s own lodgements, the Running Balance Account for Zampbeacon accrued certain liabilities which are now the subject of the Deputy Commissioner’s demand.  The lodgements which resulted in the ultimate liability are set out in paragraph 7 of the affidavit.  The liabilities were allocated to the Running Balance Account and were all “self-assessed” liabilities, i.e. not as a result of an audit conducted by the Deputy Commissioner.

1. The dispute which is raised by Mr Zampelis in his affidavit, that the description of the debt and the demand is not such as to enable Zampbeacon to react to the demand, was the subject of consideration by Ferguson J in the case of Australia DIS Pty Ltd v Deputy Commissioner of Taxation.[1]  That case involved a number of issues one of which whether the demand in that case, which contained a schedule identical in its terms to the Statutory Demand in this instance was defective because only one amount was claimed  in the demand despite there being a number of constituent debts making up the total.  Her Honour surveyed various authorities dealing with the issue generally at paragraphs 8 to 10.  At paragraphs 11 to 14 she concluded:

   [1][2012] VSC 331 (‘Australia DIS’).

11Part IIB of the TAA 1953 deals with running balance accounts and related matters. Under the legislation, the Commissioner is empowered to establish one or more systems of accounts for primary tax debts with each account to be known as a Running Balance Account (or RBA). The Commissioner is permitted to allocate a primary tax debt to an RBA.

12Section 8AAZA of the TAA 1953 defines “RBA deficit debt” as meaning:

[I]n relation to an RBA of an entity, means a balance in favour of the Commissioner, based on:

(a)primary tax debts that have been allocated to the RBA and that are currently payable; and

(b)payments made in respect of current or anticipated primary tax debts of the entity, and credits to which the entity is entitled under a taxation law, that have been allocated to the RBA.

13Section 8AAZH(1) of the TAA 1953 provides:

If there is an RBA deficit debt on an RBA at the end of a day, the tax debtor is liable to pay to the Commonwealth the amount of the debt.  The amount is due and payable at the end of that day.

14In my view, it is clear from these provisions that an RBA deficit debt is a single debt. In particular, the provisions use the singular rather than the plural when referring to the debt: “a balance” in s 8AAZA of the TAA 1953 and “the amount of the debt” in s 8AAZH(1). There may be parallel individual primary tax debts that have been allocated to the RBA, but this does not detract from the characterisation of the RBA deficit debt as one debt once that allocation has occurred. It is therefore not necessary for the Deputy Commissioner to specify in the statutory demand the individual primary tax debts that have been allocated to the RBA if the demand is for the RBA deficit debt.  There is no defect in the demand if only one amount is claimed.  To the extent that a contrary view might have been taken in the Global Network case, with respect, I would not agree with his Honour (emphasis added).

1. In my view the evidence of the indebtedness of Zampbeacon as revealed in the RBA statement produced at Exhibit GP-3 to Mr Phillips’ affidavit of 1 August 2013 is prima facie evidence of Zampbeacon’s indebtedness under s 8AAZI of the TAA 1953 which provides:

The production of an RBA statement:

(a)       is prima facie evidence that the RBA was duly kept; and

(b)is prima facie evidence that the amounts and particulars in the statement are correct.

Nothing in Zampbeacon’s evidence impeaches the prima facie presumption afforded by s 8AAZI to the RBA Statement put into evidence by the Deputy Commissioner.

1. The test to be applied in these types of applications has been the subject of numerous authorities.  In the case of Eyota Pty Ltd v Hanave Pty Ltd,[2] McClelland CJ of the Supreme Court of New South Wales said:

It is, however, necessary to consider the meaning of the expression “genuine dispute” where it occurs in s 459H. In my opinion that expression connotes a plausible contention requiring investigation, and raised much the same sort of considerations as the “serious question to be tried” criterion which arises on an application for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit “however equivocal, lacking precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be” not having “sufficient prima facie plausibility to merit further investigation as to [its] truth” … or “a patently feeble legal argument or an assertion of facts unsupported by evidence”…

[2](1994) 12 ACSR 785, 787.

1. In Powerhouse Australasia Pty Ltd v Viarc Pty Ltd,[3] Dodds-Streeton J, as she then was, observed at paragraph [48]:

While it is not a very exacting standard, on the other hand mere assertion of a dispute or off-setting claim, mere bluster or advancing grounds which are illusory or spurious or insufficiently particularised will not suffice.  The court must not enter into the merits of the dispute, but it is not crossing the line in relation to its legitimate role on these applications to consider evidence which “bears on whether or not the asserted dispute or off-setting claim is genuine”.  Indeed, that is its necessary function. 

[3][2006] VSC 508.

1. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd,[4] the Full Court of the Federal Court of Australia observed that for a genuine dispute to exist, it must be “bona fide and truly exist in fact” and the grounds for alleging its existence must be “real and not spurious, hypothetical, illusory or misconceived”.

   [4](1997) 76 FCR 452, 464.

1. Zampbeacon’s evidence asserts the existence of a genuine dispute but this is nowhere developed in its evidence.  The dispute which is said to arise cannot, on an application of Ferguson J’s analysis in the Australia DIS case, give rise to any basis to set aside the demand. 

1. The application should be dismissed with costs, including reserved costs.