Deputy Commissioner of Taxation v 566 St Kilda Rd Pty Ltd [2005] FCA 1799 (9 December 2005)

Last Updated: 13 December 2005

FEDERAL COURT OF AUSTRALIA

Deputy Commissioner of Taxation v 566 St Kilda Rd Pty Ltd [2005] FCA 1799

DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v 566 ST KILDA ROAD PTY LTD
VID 1241 OF 2005

566 ST KILDA RD PTY LTD v DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA
VID 1372 OF 2005

SUNDBERG J
9 DECEMBER 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 1241 OF 2005

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA PLAINTIFF
AND:	566 ST KILDA RD PTY LTD (ACN 100 888 533) DEFENDANT
		VID 1372 OF 2005

BETWEEN:	566 ST KILDA RD PTY LTD (ACN 100 888 533) APPLICANT
AND:	DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT

JUDGE:	SUNDBERG J
DATE OF ORDER:	9 DECEMBER 2005
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. Proceeding VID 1372 of 2005 be dismissed under Order 20 rule 2 of the Rules of Court as disclosing no reasonable cause of action.
2. The applicant in VID 1372 of 2005 pay the respondent’s costs of that proceeding including the motion notice of which was filed on 8 November 2005.
3. In proceeding VID 1241 of 2005:

(a) the defendant be wound up in insolvency;
(b) Anthony D’Aloia, of D’Aloia Handberg, Level 10, 200 Queen Street, Melbourne, be appointed liquidator of the defendant, and
(c) the plaintiff’s costs be paid out of the assets of the defendant.

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 1241 OF 2005

BETWEEN:	DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA PLAINTIFF
AND:	566 ST KILDA RD PTY LTD (ACN 100 888 533) DEFENDANT
		VID 1372 OF 2005

BETWEEN:	566 ST KILDA RD PTY LTD (ACN 100 888 533) APPLICANT
AND:	DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA RESPONDENT

JUDGE:	SUNDBERG J
DATE:	9 DECEMBER 2005
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

BACKGROUND

1 The plaintiff in VID 1241 of 2005 (the Commissioner) applies to wind up the defendant (St Kilda) in insolvency under s 459P of the Corporations Act 2001 (the Act). The application was filed on 11 October 2005 and was served on St Kilda on 12 October 2005.

2 In VID 1372 of 2005 St Kilda seeks the following relief against the Commissioner:

"1. An injunction (interlocutory and permanent) restraining the Respondent from proceeding with its application for the winding up of the Applicant until the completion of the audit of the Applicant’s affairs and the correct amount of income tax, Goods and Services Tax (‘GST’) and penalty is calculated by the Respondent and definitive notices of assessment are issued.
2. A declaration that in the premises the various notices of assessment issued by the Respondent to the Applicant for income tax, GST and penalties are tentative, interim and arbitrary in nature and are not valid assessments.
3. A Declaration that in the premises the three GST assessments currently issued to the Applicant by the Respondent are tentative, interim and arbitrary in nature and are invalid.
4. A Declaration that in the premises the Respondent’s calculation of GST and BAS penalties is incorrect."

In a notice of motion filed in VID 1372 of 2005 the Commissioner seeks an order dismissing the proceeding on the ground that it discloses no reasonable cause of action, is frivolous and vexatious and an abuse of process.

3 The winding up application and the motion were heard together. St Kilda did not appear. Heard at the same time were the Commissioner’s winding up application in VID 671 of 2005 and a motion by the Commissioner under Order 20 rule 2 in VID 1184 of 2005, both affecting Katalina Park Pastoral Pty Ltd (the Katalina proceeding). These reasons for judgment should be read in conjunction with my reasons in the Katalina proceeding.

WINDING UP APPLICATION

4 The Commissioner relies on St Kilda’s failure to comply with a statutory demand. See s 459A of the Act. The demand relates to income tax debts and penalties totalling $488,225.42. St Kilda did not comply with the demand or secure or compound the amount claimed to the Commissioner’s reasonable satisfaction within twenty one days of service of the demand. No application under s 459G was made to set aside the statutory demand.

5 The winding up application is supported by the affidavit of Chantal Gardiner verifying the debt of $488,225.42 and St Kilda’s failure to comply with the demand.

6 The relevant provisions of the Act are set out in my reasons in the Katalina proceeding. St Kilda did not within the period prescribed for the purposes of s 465C file and serve notice of grounds of opposition or a verifying affidavit.

7 The Commissioner has complied with the requirements in ss 459Q and 465A of the Act.

8 There is no evidence before the Court to displace the presumption of insolvency in s 459C(2). St Kilda has not given notice of the grounds on which it opposes the application. Accordingly, s 465C prevents it opposing the application without the leave of the Court, which it has not sought. Even if it obtained leave under s 465C, s 459S disables it from opposing the application on a ground upon which it could have relied had it applied to set aside the statutory demand, except by leave. No such leave has been sought.

9 The material before the Court establishes that St Kilda is indebted to the Commissioner in a further amount totalling $120,393.44.

10 Unless St Kilda’s application to restrain the Commissioner from proceeding with the winding up application provides a reason not to make a winding up order, such an order should be made.

ST KILDA’S PROCEEDING

11 St Kilda’s statement of claim is in the same form as that in the Katalina proceeding. The summary of its contents in the reasons for judgment in the Katalina proceeding reflects St Kilda’s statement of claim save as follows:

(a) the month in (i) is July, and the amounts involved are $61,379 and $55,241;
(b) the amount in (o) is $237,166;
(c) the second month in (q) is October;
(d) the amounts in (r) are $226,619.71 and $488,225.42;
(e) the amount of the assessment in (s) is not stated;
(f) the amount in (t) is $488,225.42;

THE ASSESSMENTS

12 The assessments in question are

(a) a deemed assessment under s 166A of the Income Tax Assessment Act 1936 (the 1936 Act) in respect of the year of income ended 30 June 2003 taken to have been made by the Commissioner and served on St Kilda on 4 August 2004;
(b) a deemed assessment under s 166A of the 1936 Act in respect of the year of income ended 30 June 2004 taken to have been made by the Commissioner and served on St Kilda on 3 March 2005;
(c) GST assessments made by the Commissioner under s 22 of the Taxation Administration Act 1953 (TAA) of Toorak’s net amount for the tax periods between 1 July 2002 and 31 December 2002 and for the months of February, April, May and June 2003 (the tax periods);
(d) assessments of penalty (GST penalty assessments) made by the Commissioner for the tax periods under s 284-75(1) of Schedule 1 to the TAA.

13 Certified copies of St Kilda’s income tax returns disclose in respect of the year ended 30 June 2003 taxable income of $237,166 and tax payable of $71,149.80, and in respect of the year ended 30 June 2004 taxable income of $706,353 and tax payable of $211,833.86.

14 Certified copies of the notices of GST assessments and penalty assessments disclose that the net amounts to which St Kilda was assessed for the tax periods is $50,474, and the total penalty was $45,426.60.

THE CHALLENGE TO THE ASSESSMENTS

15 What I have said under this heading in my reasons for judgment in the Katalina proceeding is applicable to the present case.

BAD FAITH

16 What I have said under this heading in my reasons for judgment in the Katalina proceeding is applicable to the present case.

CONCLUSION

17 For the reasons I have given in the Katalina proceeding, there is no prospect of St Kilda obtaining either the injunction or the declarations sought in its application. The application is bound to fail. See General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 128-130. The relief sought by the Commissioner’s motion should be granted.

18 As appears from [8], St Kilda requires leave to oppose the winding up application. As I have said, St Kilda did not appear, and leave has not been sought. A winding up order should be made.

I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg.

Associate:

Dated: 9 December 2005

Counsel for the Plaintiff in VID 1241 of 2005 and the Respondent in VID 1372 of 2005:	J Davies SC and H Riley
Solicitor for the Plaintiff in VID 1241 of 2005 and the Respondent in VID 1372 of 2005:	Australian Government Solicitor
There was no appearance by or for the Defendant in VID 1241 of 2005 and the Applicant in VID 1372 of 2005.
Date of Hearing:	9 December 2005
Date of Judgment:	9 December 2005