JEM Developments Pty Ltd v Deputy Commissioner of Taxation; Pacifico Holdings Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 1019

New South Wales Supreme Court

CITATION : JEM Developments Pty Ltd v Deputy Commissioner of Taxation; Pacifico Holdings Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 1019

HEARING DATE(S) : 3 September 2007 JUDGMENT OF : Hammerschlag J

EX TEMPORE JUDGMENT DATE : 3 September 2007

DECISION : The originating process dismissed. Plaintiff in each case to pay the costs of the defendant.

CATCHWORDS : CORPORATIONS – Applications to set aside statutory demand – plaintiffs failed to meet low threshold for establishing genuine dispute – Applications dismissed

LEGISLATION CITED : Income Tax Assessment Act 1997 (Cth) Taxation Administration Act 1953 (Cth)

CASES CITED : Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743 John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250

JEM Developments Pty Ltd (ACN 066 774 507) PARTIES : Deputy Commissioner of Taxation Pacifico Holdings Pty Ltd (ACN 097 243 322) Deputy Commissioner of Taxation

FILE NUMBER(S) : SC 3042/2007; 3043/2007

COUNSEL : J. Pope (Solicitor) (Plaintiffs) B.L. Jones (Solicitor) (Defendant)

SOLICITORS : Pope & Spinks (Plaintiffs) Australian Taxation Office (Defendant)

- 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST

HAMMERSCHLAG J

3 SEPTEMBER 2007

3042/2007 JEM DEVELOPMENTS PTY LTD –v- DEPUTY COMMISSIONER OF TAXATION 3043/2007 PACIFICO HOLDINGS PTY LTD –V- DEPUTY COMMISSIONER OF TAXATION EX TEMPORE JUDGMENT 1 HIS HONOUR: These are applications to set aside statutory demands addressed, respectively, to Jem Developments Pty Ltd and Pacifico Holdings Pty Ltd. The applications were heard together by consent and evidence in one is evidence in the other. 2 Each of the statutory demands is dated 14 May 2007. Service of the demands is not in issue and no defect in them is asserted. 3 They claim an amount specified in the schedule to be the running balance account deficit debt as at 14 May 2007 in respect of amounts due under the "BAS" provisions, as defined in subs 995-1(1) of the Income Tax Assessment Act 1997 (Cth), and the general interest charge payable under s 8AAZF of the Taxation Administration Act 1953 (Cth). 4 The only evidence on behalf of the respective plaintiffs is the affidavit of David Peter Shalala, the director of Pacifico Holdings, which is a partner of Jem Developments. The body of the affidavit says as follows: "3. The demand is in dispute concerning the amount of tax to which the plaintiff is liable. 4. I believe that the demand made by the defendant of the plaintiff in its statutory demand is incorrect and does not properly take into account credits to which the plaintiff is entitled. The plaintiff has consulted accountants, which are presently engaged in reconciliation of the taxation liabilities of the plaintiff. 5. At the time of making this affidavit I do not know the amount of tax to which plaintiff is liable to the defendant. I believe it to be substantially less than that which has been claimed in the Statutory Demand." 5 It is not necessary to repeat in any detail the test which is to be applied by the Court on applications of this type. The test is a low one, by no means difficult to meet. However, it is incumbent upon a plaintiff to establish that there is a genuine dispute, which means that it be one which is bona fide and truly exists in fact and that the grounds for alleging it are real and not spurious, hypothetical, illusory or misconceived. 6 Good faith means arguable on the basis of facts asserted with sufficient particularity to enable the Court to determine that the claim is not fanciful: Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743. 7 In this case, the plaintiff companies have failed to meet even that low threshold. There is a statement of a belief on the part of Mr Shalala that the amount claimed is in excess of that to which the defendant is entitled. No basis for the assertion is given. No basis is provided for any meaningful assessment of the value of the claimed credits. 8 The affidavit evidence amounts to no more than a bald assertion by the deponent that there is a bona fide dispute, or offsetting claim: see John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250. 9 There is in evidence a certificate pursuant to s 8AAZJ of the Taxation Administration Act 1953, that the amount claimed is owing. The plaintiff companies have gone no distance toward rebutting the prima facie presumption to which that certificate gives rise. There is no evidence that the assessments upon which the statutory demands are based are challenged. 10 The plaintiff in each case has failed to meet the required threshold. The originating process is dismissed. 11 The plaintiff in each case is to pay the costs of the defendant. **********