Combis as liquidator of Seminars International Pty Ltd v Commissioner of Taxation

REASONS FOR JUDGMENT 1 Seminars International Pty Ltd (Seminars International) was wound up at the behest of the Commissioner of Taxation (Commissioner) following a failure on its part to comply with a statutory demand in respect of various revenue law debts owed to the Commonwealth of Australia and payable to the Commissioner. Mr Nick Jim Combis was appointed liquidator of Seminars International (the liquidator). 2 On 18 June this year, the liquidator sought an order against the Commissioner pursuant to s 588FF of the Corporations Act 2001 (Cth) (Corporations Act) for the payment of the sum of $125,471.40. The occasion for the liquidator seeking that relief was a claim that moneys paid by the company to the Commissioner pursuant to a repayment arrangement which had antedated liquidation was voidable as against him. 3 The Commissioner does not contest that, in the events which transpired following those repayments, a voidable transaction or transactions have arisen. Thus, inclusive of interest of $5956.62 on the sum I have mentioned, it is conceded on the part of the Commissioner that the liquidator is entitled to an order as an against the Commissioner, pursuant to s 588FF for the payment of the amount of $131,428.02. 4 In turn, the Commissioner seeks an order pursuant to s 588FGA(2) of the Corporations Act against a director of Seminars International, Mr Roger Jeffrey Davies (Mr Davies). Mr Davies has become the Second Defendant in the proceedings, pursuant to interlocutory process issued against him at the behest of the Commissioner. I note that such a practice was the subject of approval by Mackenzie J in Harris v Commissioner of Taxation [2006] QSC 108 at [25]. 5 Earlier this year I made orders providing for substituted service in respect of Mr Davies. The material read this morning on behalf of the Commissioner satisfies me that he has been served in accordance with those orders. Mr Davies has not appeared today. 6 The evidence before me establishes that, of the sum of $125,471.40 previously referred to, the sum of $68,544.94 was applied by the Commissioner to Pay As You Go (PAYG) withholding liabilities of the company to the Commonwealth under subdivision 16B of Pt 2-5 in Sch 1 to the Taxation Administration Act 1953 (Cth). The evidence further establishes that Mr Davies was a director of the company at the time when the payments were made. It is submitted, correctly, in my opinion, that the loss suffered by the Commissioner is twofold, namely: (a) the amount of the Court's repayment order in favour of the liquidator, insofar as that relates to PAYG withholding liabilities, in this case $68,544.94 (see Hillig v Commissioner of Taxation (2001) 2 QR 147); and (b) any legal costs and interest that the Commissioner has required to pay to the liquidator in consequence of the voidable preference claim brought against the Commissioner (see Commissioner of Taxation v Sims [2008] NSWCA 298 at [34]). 7 I have already referred to the amount of interest which is payable by the Commissioner to the liquidator in addition to the basic conceded amount of the preference. That interest is $5956. Proportionately, having regard to the PAYG withholding component of the preference, the interest liability in respect of which the Commissioner is entitled to indemnification is therefore $3255.50. 8 The evidence further establishes that the Commissioner has incurred the following disbursements in relation to the application brought against Mr Davies, namely: · a filing fee: $288; · a fee for attempted personal service: $46; and · a fee for the filing of the substituted service application: $288. In total: $622. 9 The Commissioner has, therefore, established a basis upon which, in my opinion, he is entitled to indemnity as a sequel to the order which I shall make against him at the behest of the liquidator. The amount of indemnity to which the Commissioner is entitled is $68,544.94 plus $3255.50. He is entitled to such an order pursuant to s 588FGA(2) of the Corporations Act. 10 The Commissioner is further entitled to an order in respect of the disbursements which I have mentioned. Because the Commissioner appeared by an officer authorised in that behalf pursuant to the Taxation Administration Act, rather than by either the Australian Government Solicitor or some other person entitled to the payment of professional costs, there can be no order in respect of professional costs. There will, therefore, be orders in terms of the drafts provided. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan.