JOHN SHEAHAN AS LIQUIDATOR OF ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) (ACN 007 769 557) and ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) (ACN 007 769 557) v ATSIKBASIS NOMINEES NO. 2 PTY LTD

Counsel for the Defendants/Cross-Plaintiffs Mr D Bennett QC with Mr P Adams and Mr P Quinn on the hearing of the applications:

Solicitor for the Defendants/Cross-Plaintiffs: Nick Xenophon & Co

Counsel for the First, Second and Third Cross-Defendants: Mr P O'Sullivan QC with Mr D Blight

Solicitor for the First, Second and Third Cross-Defendants: Gilchrist Connell

Counsel for the Fourth Cross-Defendant: Mr T Cox SC

Solicitor for the Fourth Cross-Defendant: Cosoff Cudmore Knox

Counsel for the Commissioner of Taxation: Ms S Maharaj QC

Solicitor for the Commissioner of Taxation: Australian Government Solicitor

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 131 of 2012

IN THE MATTER OF ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) BETWEEN: JOHN SHEAHAN AS LIQUIDATOR OF ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) (ACN 007 769 557)

ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) (ACN 007 769 557)

AND: ATSIKBASIS NOMINEES NO. 2 PTY LTD (ACN 100 537 415) AS TRUSTEE OF THE ATSIKBASIS FAMILY SETTLEMENT NO. 2

MANUEL ATSIKBASIS AND MARIA ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE MANUEL ATSIKBASIS FAMILY SUPERANNUATION FUND

NICHOLAS ATSIKBASIS AND FOTINA ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE NICHOLAS ATSIKBASIS FAMILY SUPERANNUATION FUND

SPIROS ATSIKBASIS, MARIA ATSIKBASIS, PANAGIOTIS (PETER) ATSIKBASIS AND AIKATERINI ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE PETER & KATHY ATSIKBASIS SUPERANNUATION FUND

MESSARIUS NOMINEES PTY LTD (ACN 100 537 442) AS TRUSTEE OF THE MANUEL ATSIKBASIS FAMILY TRUST NO. 2

NICHOLAS ATSIKBASIS AND FOTINA ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE FOTINA ATSIKBASIS FAMILY TRUST

MACOBU NOMINEES PTY LTD (ACN 100 537 460) AS TRUSTEE OF THE SPIROS ATSIKBASIS FAMILY TRUST NO. 2

JUDGE: BESANKO J DATE OF ORDER: 19 November 2013 WHERE MADE: ADELAIDE

(1) The requirement in Rule 30.01(2) of the Federal Court Rules 2011 (Cth) be dispensed with. (2) The following question(s) be heard separately from any other questions: 2.1 Is the second plaintiff liable to the Commissioner of Taxation for a general interest charge from 8 January 2007 to the date of default under the Deed of Settlement made between the second plaintiff and others and the Deputy Commissioner of Taxation on or about 30 April 2008 ("Deed of Settlement")? 2.2 Subject to the answer that may be given to question 1, is the second plaintiff liable to the Commissioner of Taxation for the general interest charge from 19 February 2004 in the case of the assessments made in 2004 and 10 June 2005 in the case of assessments made in 2005, to the date of default under the Deed of Settlement under the statutory rate fixed in accordance with Part IIA of the Taxation Administration Act 1953 (Cth), or at the concessional rate? (3) The Commissioner of Taxation be joined to this proceeding for the purposes of the defendants' application for a separate question. (4) The separate question(s) be answered as follows: 4.1 No. 4.2 Subject to the answer to 4.1, at the concessional rate. (5) Liberty to any party to make any application for costs within 28 days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION SAD 131 of 2012

IN THE MATTER OF ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) BETWEEN: JOHN SHEAHAN AS LIQUIDATOR OF ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) (ACN 007 769 557)

ATSIKBASIS NOMINEES PTY LTD (IN LIQUIDATION) (ACN 007 769 557)

AND: ATSIKBASIS NOMINEES NO. 2 PTY LTD (ACN 100 537 415) AS TRUSTEE OF THE ATSIKBASIS FAMILY SETTLEMENT NO. 2

MANUEL ATSIKBASIS AND MARIA ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE MANUEL ATSIKBASIS FAMILY SUPERANNUATION FUND

NICHOLAS ATSIKBASIS AND FOTINA ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE NICHOLAS ATSIKBASIS FAMILY SUPERANNUATION FUND

SPIROS ATSIKBASIS, MARIA ATSIKBASIS, PANAGIOTIS (PETER) ATSIKBASIS AND AIKATERINI ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE PETER & KATHY ATSIKBASIS SUPERANNUATION FUND

MESSARIUS NOMINEES PTY LTD (ACN 100 537 442) AS TRUSTEE OF THE MANUEL ATSIKBASIS FAMILY TRUST NO. 2

NICHOLAS ATSIKBASIS AND FOTINA ATSIKBASIS IN THEIR CAPACITY AS TRUSTEES OF THE FOTINA ATSIKBASIS FAMILY TRUST

MACOBU NOMINEES PTY LTD (ACN 100 537 460) AS TRUSTEE OF THE SPIROS ATSIKBASIS FAMILY TRUST NO. 2

JUDGE: BESANKO J DATE: 19 november 2013 PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 On 5 November 2013 I delivered reasons for judgment in respect of two applications in this proceeding, namely, an application by the defendants and cross-plaintiffs for the hearing of a separate question under rule 30.01(1) of the Federal Court Rules 2011 (Cth) and an appeal by the defendants under s 1321 of the Corporations Act 2001 (Cth): Sheahan, in the matter of Atsikbasis Nominees Pty Ltd (in Liquidation) (No 4) [2013] FCA 1148. The main issue in the case of both applications was the proper amount of the Commissioner of Taxation's proof of debt in the liquidation of the second plaintiff. I gave the parties the opportunity to consider the appropriate orders in light of my reasons. 2 The parties remained in dispute about one matter of substance and that concerned the proper construction of clause 1.6 of the Deed of Settlement. They were also in dispute about the question of costs.

Clause 1.6 of the Deed of Settlement 3 The Commissioner submits that clause 1.6 did not operate to reduce to nil the general interest charge ("GIC") for the period from January 2007 to the date of default because it only "operated" with respect to additional tax imposed or arising by reason of the assessments issued by the Commissioner on 3 October 2008. In other words, it only operated in relation to income tax assessments "to be issued pursuant to this Deed of Settlement". As a matter of law, GIC only begins to accrue when the amount becomes due and payable to the Commissioner. The effect of the Commissioner's construction of clause 1.6 is to give it no practical operation because GIC would not otherwise be payable for the period referred to in the clause on additional amounts payable under assessments issued pursuant to the Deed of Settlement. The Commissioner submits that in the circumstances, and having regard to my previous reasons, the proper amount of his proof of debt is $1,370,970.06. 4 The defendants submit that this construction of clause 1.6 is not correct. The defendants submit that January 2007 was when the parties to the Deed began negotiating and this assertion was accepted by the Commissioner. The effect of clause 1.6 was to give the taxpayers a complete holiday from any form of GIC for the period from January 2007 to the date the taxpayers were liable to make payments under the agreed terms of settlement. The defendants submit that the correct amount of the Commissioner's proof of debt is $1,262,279.98. The Commissioner in fact contends that if the defendants' construction is correct, the figure is slightly lower ($1,261,398.96) and as the Commissioner is in effect the "claimant", I will take the Commissioner's lower figure. 5 The Commissioner's construction of clause 1.6 gives the clause no effective work to do and should be avoided unless the words are intractable. The clause, like other clauses in the Deed, is not a model of clear drafting. However, when read in context, I think the meaning of clause 1.6 is clear. 6 I think clause 1.6 does provide for a holiday from all GIC during the period identified and that the defendants' construction is correct. The Deed itself embodies a compromise on the part of both the taxpayers and the Commissioner and the agreement was that the compromise was in part to be embodied in amended assessments to be issued (clauses 1.1, 1.11, 1.12 and 1.13). Clause 1.3 is subject to clause 1.6 (among other clauses) because it provides an exception or qualification to the otherwise general obligation in clause 1.3. The third dot point in the Schedule (set out in my previous reasons at [21]) I think makes it clear that the intent of clause 1.6 was that the taxpayers were not to pay any GIC between two points in time being Janaury 2007 and the date of default under the assessments issued in 2008. 7 The proper amount of the Commissioner's proof of debt is $1,261,398.96.

Costs 8 The defendants seek their costs against the Commissioner from the date he was joined as a party to the interlocutory process (i.e., 11 October 2013). I see no reason not to make such an order. The Commissioner had an interest in the matter and he appeared and opposed the defendants' appeal. The cross-respondents in SAD 131 of 2012 should also have their costs as they had an undoubted interest in the determination of the appeal. I think the costs orders should be made in the appeal proceeding because the costs order will run from the date of the Commissioner's joinder to that proceeding. I will reserve to any party the right to make any further application for costs in either proceeding within a period of 28 days.

Orders 9 The orders I will make in this proceeding are as follows: (1) The requirement in Rule 30.01(2) of the Federal Court Rules 2011 (Cth) be dispensed with. (2) The following question(s) be heard separately from any other questions: 2.1 Is the second plaintiff liable to the Commissioner of Taxation for a general interest charge from 8 January 2007 to the date of default under the Deed of Settlement made between the second plaintiff and others and the Deputy Commissioner of Taxation on or about 30 April 2008 ("Deed of Settlement")? 2.2 Subject to the answer that may be given to question 1, is the second plaintiff liable to the Commissioner of Taxation for the general interest charge from 19 February 2004 in the case of the assessments made in 2004 and 10 June 2005 in the case of assessments made in 2005, to the date of default under the Deed of Settlement under the statutory rate fixed in accordance with Part IIA of the Taxation Administration Act 1953 (Cth), or at the concessional rate? (3) The Commissioner of Taxation be joined to this proceeding for the purposes of the defendants' application for a separate question. (4) The separate question(s) be answered as follows: 4.1 No. 4.2 Subject to the answer to 4.1, at the concessional rate. (5) Liberty to any party to make any application for costs within 28 days. 10 I will make the following orders in SAD 140 of 2010: (1) The appeal by the appellants against the liquidator's decision to admit the Commissioner of Taxation's proof of debt dated 24 September 2013 ("Commissioner's proof of debt") be allowed. (2) The said decision by the liquidator be modified so that the Commissioner's proof of debt be admitted in the sum of $1,261,398.96. (3) The Commissioner of Taxation pay the appellants' costs of the appeal from 11 October 2013. (4) The Commissioner of Taxation pay the costs of the appeal of the following parties: Rankines Solicitors, Rankine Tucker Lawyers, Fox Tucker Lawyers and Merchant Accounting Partners Pty Ltd from 11 October 2013. (5) Liberty to any party to make any further application for costs within 28 days. I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.