Nicholas Paul Driver liquidator of Tilse Building Pty Limited (In liquidation) v Commissioner of Taxation & Anor [2000] NSWCA 247

New South Wales Court of Appeal

CITATION : Nicholas Paul Driver liquidator of Tilse Building Pty Limited (In liquidation) v Commissioner of Taxation & Anor [2000] NSWCA 247 revised - 6/11/2000 FILE NUMBER(S) : CA 40693/99 HEARING DATE(S) : 15 June 2000 JUDGMENT DATE : 31 August 2000

PARTIES : Nicholas Paul Driver liquidator of Tilse Building Pty Limited (in liquidation) ACN 004 014 993 v Commissioner of Taxation and Brent Anthony TILSE and Julie Anne TILSE JUDGMENT OF : Priestley JA at 1; Meagher JA at 2; Sheller JA at 18

LOWER COURT JURISDICTION : Supreme Court - Equity Division LOWER COURT 478/97 FILE NUMBER(S) : LOWER COURT Windeyer J JUDICIAL OFFICER :

Appellant: M.K. Meek COUNSEL : First respondent: S.W. Gibb SC Second respondent: self Appellant: Sparke Helmore SOLICITORS : First respondent: Australian Government Solicitor Second respondents: Shaw Dunlop & Co. CATCHWORDS : Insolvency - s.588FE Corporation Law - "party" to a transaction - ss 172 and 221YHG(2) Income Tax Assessment Act, 1936 - illicit preferences. LEGISLATION CITED : Corporations Law s.588F; Income Tax Assessment Act, 1936, ss 172, 221 YHG(2). CASES CITED: Commissioner of Taxation v Macquarie Health Corp (1999) 17 ACLC 171; Re Emanuel (No 14) Pty Limited (in liq);Macks & Anor v Blacklaw & Shadforth Pty Limited (1997) 147 ALR 281. DECISION : Appeal dismissed with costs.

- 6 - - 8 - INSOLVENCY - S.588FE CORPORATIONS LAW - "PARTY" TO A TRANSACTION - ss 172 AND 221 YHG(2) INCOME TAX ASSESSMENT ACT 1936 - ILLICIT PREFERENCES. Facts: The plaintiff/appellant was appointed liquidator of Tilse Building Pty Limited (in liquidation) in April 1995. The Company had been insolvent since at least 29 October 1994. The liquidator sued the respondent Commissioner for declarations that the payment of two sums of money $10,000 and $84,425.40 to the Commissioner were void as against the liquidator because they were insolvent transactions under s.588FE of the Corporations Law. The nominated transactions were the application of the monies by the Commissioner under ss.172, and 221YHG(2) of the Income Tax Assessment Act, 1936 to reduce or extinguish outstanding amounts of tax payable by the Company, where the monies arose as excess funds following a request for re-assessment by the taxpayer. The liquidator is also seeking repayment of these amounts. Before Windeyer J the liquidator succeeded as to the amount of $10,000, failing in respect of the amount of $84,425.40. He now appeals. Held: By Meagher JA, Priestley, Sheller JJA agreeing: 1. The word transaction must cover a vast field for the purposes of S.588FA and necessitates a Company to be a party to the transaction. The issue is whether the action of the Commissioner by applying credits to the debts constituted an unfair preference under s.588FC of the Corporations Law. As held by his Honour, the Company was not a party to the transaction: Commissioner of Taxation v Macquarie Health Corp (1999) 17 ACLC 171. 2. Where A is a party to the payment of money to B if he promises that his associate will actually make the payment is a long way from treating a taxpayer who requests a re-assessment as a "party" to the Commissioner's behaviour after such re-assessment is made: Re Emanuel (No 14) Pty Limited (In liq); Macks & Anor v Blacklaw & Shadforth Pty Limited (1997) 147 ALR 281, considered. Order: 1. Appeal dismissed with costs.