FEDERAL COURT OF AUSTRALIA Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (No 12) [2012] FCA 1035 Citation: Australian Securities and Investments Commission v GDK Financial Solutions Pty Ltd (No 12) [2012] FCA 1035 Parties: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION v GDK FINANCIAL SOLUTIONS PTY LTD (ACN 085 455 311) (AND OTHERS IN ACCORDANCE WITH THE ATTACHED SCHEDULE) File number: VID 590 of 2006 Judge: DODDS-STREETON J Date of judgment: 19 September 2012 Catchwords: CORPORATIONS – unregistered managed investment scheme – authorisation of payment of tax liability from receivership account Date of hearing: Heard on the papers Date of last submissions: 15 June 2012 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 8 Solicitor for the Mews Receivers: Ashurst IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 590 of 2006 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: GDK FINANCIAL SOLUTIONS PTY LTD (ACN 085 455 311) (AND OTHERS IN ACCORDANCE WITH THE ATTACHED SCHEDULE) Defendant JUDGE: DODDS-STREETON J DATE OF ORDER: 19 SEPTEMBER 2012 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The Mews Receivers are authorised to draw from the Receivership Account (as defined in paragraph 9(b) of the Orders of the Court dated 13 March 2008) the amount of $272,095.67 on account of income tax owing to the Australian Taxation Office by the Mews Scheme for the financial years ending 30 June 2008, 30 June 2009, 30 June 2010, and 30 June 2011. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 590 of 2006 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: GDK FINANCIAL SOLUTIONS PTY LTD (ACN 085 455 311) (AND OTHERS IN ACCORDANCE WITH THE ATTACHED SCHEDULE) Defendant JUDGE: DODDS-STREETON J DATE: 19 SEPTEMBER 2012 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 By an interlocutory application dated 15 June 2012, Brian Keith McMaster and Mark Francis Xavier Mentha ("the Mews Receivers") as joint and several receivers of the Mews Scheme (as defined in the orders of Finkelstein J dated 28 November 2006 in those proceedings) and as joint and several liquidators of the third defendant ("WRVM") and the fourth defendant, The Mews Village Nominees Pty Ltd (in liquidation), sought: Authorisation to pay tax liability 4. The Mews Receivers are authorised to draw from the Receivership Account (as defined in paragraph 9(b) of the Orders of the Court dated 13 March 2008) the amount of $272,095.67 on account of income tax owing to the Australian Taxation Office by the Mews Scheme for the financial years ending 30 June 2008, 30 June 2009, 30 June 2010, and 30 June 2011. 2 The application was supported by the affidavit of Brian McMaster sworn on 15 June 2012. 3 Mr McMaster deposed that on or around 30 June 2011, the Australian Taxation Office ("the ATO") issued a private ruling with authorisation number 1011809364137 (the "ATO Ruling") which, inter alia, provided that the Mews Scheme is required to lodge tax returns. 4 Mr McMaster deposed that the Mews Receivers accordingly engaged Ernst & Young to prepare the income tax returns for the Mews Scheme for the years ending 30 June 2008, 30 June 2009, 30 June 2010, and 30 June 2011 in accordance with the ATO Ruling. 5 The following tax returns were lodged with the ATO on behalf of the Mews Scheme. (a) The financial year commencing 1 July 2007 and ending 30 June 2008. Annexed to this affidavit and marked "BKM2" is a copy of that tax return. (b) The financial year commencing 1 July 2008 and ending 30 June 2009. Annexed to this affidavit and marked "BKM3" is a copy of that tax return. (c) The financial year commencing 1 July 2009 and ending 30 June 2010. Annexed to this affidavit and marked "BKM4" is a copy of that tax return. (d) The financial year commencing 1 July 2010 and ending 30 June 2011. Annexed to this affidavit and marked "BKM5" is a copy of that tax return. 6 The net tax payable or refundable for each of the financial years ending 30 June 2008 to 30 June 2011 is calculated as follows. Financial Year ending 30 June 2008 Item Amount Total net income $188,545.00 (BKM2, page 18, item 26) Tax on net income at 46.5% $87,673.43 Less: Amounts withheld from gross interest $87,718.00 (BKM2, page 16, item 11) Net refund $44.58 Financial Year ending 30 June 2009 Item Amount Total net income $318,798.00 (BKM3, page 29, item 26) Tax on net income at 46.5% $148,241.05 Net payable $148,241.05 Financial Year ending 30 June 2010 Item Amount Total net income $128,992.00 (BKM4, page 42, item 26) Tax on net income at 46.5% $59,981.25 Net payable $59,981.25 Financial Year ending 30 June 2011 Item Amount Total net income $137,458.00 (BKM5, page 61, item 26) Tax on net income at 46.5% $63,917.95 Net payable $63,917.95 7 Mr McMaster exhibited a letter of Ernst & Young dated 10 February 2012 enclosing copies of the tax returns for the relevant years and stating that the amount payable for the years totalled $272,095.67. 8 In the light of the above, I was satisfied that it was appropriate to make the order sought. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dodds-Streeton. Associate: Dated: 19 September 2012 SCHEDULE TO PARTIES Plaintiff AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION First Defendant: GDK FINANCIAL SOLUTIONS AND INVESTMENTS COMMISSION Second Defendant: WINDSOR VILLAGE MANAGEMENT PTY LTD (IN LIQUIDATION) (ACN 088 339 913) Third Defendant: WESTERN RETIREMENT VILLAGE MANAGEMENT PTY LTD (ACN 091 443 239) Fourth Defendant: THE MEWS VILLAGE NOMINEES PTY LTD (IN LIQUIDATION) (ACN 091 526 224) Fifth Defendant: PERIDON MANAGEMENT PTY LTD (IN LIQUIDATION) (ACN 088 322 276) Sixth Defendant: ROSEDALE VILLAGE NOMINEES PTY LTD (IN LIQUIDATION) (ACN 089 667 096) Seventh Defendant: PETER HASTINGS WARNE Eighth Defendant: RENTAL FLEETS AUSTRALIA PTY LTD (ACN 082 558 978) Ninth Defendant: JOHN MONTGOMERIE Tenth Defendant: ANDREW REGINALD YEO (TRUSTEE OF BANKRUPT ESTATE OF ROHAN ELLIOT VON STANKE) Eleventh Defendant: GIUSEPPE DE SIMONE Twelfth Defendant: SEACHANGE MANAGEMENT PTY LTD (ACN 091 443 211) Thirteenth Defendant: ZMB AUSTRALIA PTY LTD (ACN 105 746 067) Fourteenth Defendant: YOUNG TURKS PTY LTD (ACN 005 872 122) Fifteenth Defendant: TOUMA PTY LTD (ACN 124 195 366) Sixteenth Defendant: PHILLIP CLEMENTS Seventeenth Defendant: AVS PROPERTY PTY LTD (ACN 094 311 645)