Reported Decision : 67 ATR 652 (2007) 25 ACLC 1,526 New South Wales Supreme Court CITATION : Zolsan Pty Ltd v Deputy Commissioner of Taxation [2007] NSWSC 1326 HEARING DATE(S) : 3 September 2007 JUDGMENT DATE : 21 November 2007 JURISDICTION : Equity Division Corporations List JUDGMENT OF : Young CJ in Eq DECISION : Statutory demand issued by defendant to be set aside. Defendant to pay plaintiff's costs of the proceedings. CATCHWORDS : CORPORATIONS [1487]- Statutory demand- Application to set aside demand- Alleged dispute as to indebtedness- Partnership debt, but only one partner the subject of the demand- Default assessment of GST- Plaintiff fails to object to notices of assessment preceding demand- Liability for GST arises prior to issue of assessment- Plaintiff's failure to object to assessments does not mean debt must be undisputed- Possibility that debt may be successfully challenged sufficient reason to set aside demand. CORPORATIONS [1493]- Statutory demand- Application to set aside demand- Whether when debt is owed to Commonwealth, Deputy Commissioner has authority to issue statutory demand- Held demand properly made. Bankruptcy Act 1914 (UK), ss 114, 115 Bankruptcy Act 1966 (Cth), ss 45, 46 LEGISLATION CITED : Corporations Act 2001 (Cth), ss 459E, 459G, 459H, 459J, 459M, 459S, 459T, Part 5.4 Income Tax Assessment Act 1936 (Cth) Taxation Administration Act 1953 (Cth), s 8AAZJ, Part IVC, paras 100-15, 105-100 and 255-5 of Sch 1 Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 Bluehaven Transport Pty Ltd v Commissioner of Taxation (2000) 157 FLR 26 Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 Deputy Commissioner of Taxation v Stjepovic (1991) 22 ATR 366 Deputy Federal Commssioner of Taxation v Roma Industries Pty Ltd (1976) 6 ATR 54 Ex parte Clarke (1832) 1 Deacon & Chitty 546 Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 F J Bloeman Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360 Hoare Bros Pty Ltd v Commissioner of Taxation (1995) 30 ATR 220 Hoare Bros Pty Ltd v Commissioner of Taxation (1996) 62 FCR 302 James v Deputy Commissioner of Taxation (1957) 97 CLR 23 CASES CITED : Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51 Kalis Nominees Pty Ltd v Deputy Commissioner of Taxation (1995) 31 ATR 188 KW & KM Quinn Investments Pty Ltd v Deputy Commissioner of Taxation (2003) 54 ATR 206 MacCormick v Commissioner of Taxation (1984) 158 CLR 622 Moutere Pty Ltd v Deputy Commissioner of Taxation (2000) 44 ATR 263 Neutral Bay Pty Ltd v Commissioner of Taxation (2006) 205 FLR 470 Neutral Bay Pty Ltd v Deputy Commissioner of Taxation [2007] QCA 312 Nodnara Pty Ltd v Deputy Commissioner of Taxation (No 2) (1997) 97 ATC 4982 Platypus Leasing Inc v Federal Commissioner of Taxation (No 3) (2005) 59 ATR 84 Platypus Leasing Inc v Federal Commissioner of Taxation (2005) 61 ATR 239 Re W Carter Smith; Ex parte The Commissioners of Taxation (1908) 8 SR (NSW) 246 Woodgate v Davis (2002) 55 NSWLR 222 PARTIES : Zolsan Pty Limited (P) Deputy Commissioner of Taxation (D) FILE NUMBER(S) : SC 2711/07 COUNSEL : P Day (Solicitor ) (P) R S Quinn (D) SOLICITORS : Woods & Day (P) ATO Legal Services Branch (D) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION CORPORATIONS LIST YOUNG CJ in EQ Wednesday 21 November 2007 2711/07 – ZOLSAN PTY LIMITED v DEPUTY COMMISSIONER OF TAXATION JUDGMENT 1 HIS HONOUR: This is an application under s 459G of the Corporations Act 2001 (Cth) to set aside a statutory demand dated 18 April 2007. Even though the application was filed on 14 May 2007, both advocates assure me that they are satisfied it was filed within the time limited by the statute. 2 I heard the proceedings in giving some relief to the judge dealing with the Monday Corporations List on 3 September 2007. On that occasion, Mr P Day, solicitor, appeared for the plaintiff and Mr R Quinn, of counsel, appeared for the defendant. 3 The matter was thoroughly argued on all points save one on that day. The one point that was not covered was whether a Deputy Commissioner of Taxation was empowered to sign a statutory demand for a tax debt in a case where there had been no judgment for debt. Both advocates requested time to put in written submissions on this point, which request was granted. 4 When the submissions came in, I was able to resolve the point that caused me to reserve without difficulty. I will deal with it first, after noting some of the relevant legislation and uncontentious matters of fact. 5 The scheme of Part 5.4 of the Corporations Act, so far as is relevant to the present case, is that unless an alleged debtor moves to set aside a statutory demand within a very limited period and exactly follows the prescribed procedure, it will probably find that it is barred from challenging the major parts of its creditor's claim. 6 Section 459H(1) of the Act provides that the Court is to consider whether it is satisfied that there is a genuine dispute between the company and its alleged creditor about the existence or amount of a debt to which the demand relates. If the Court is satisfied that there is a genuine dispute which brings the substantiated claim below the statutory minimum, the Court is to set aside the demand (s 459H(3)) and may make such order subject to conditions (s 459M). 7 Section 459J, so far as is relevant, reads as follows: "(1) On an application under s 459G, the Court may by order set aside the demand if it is satisfied that: (a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or (b) there is some other reason why the demand should be set aside. (2) Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect." 8 In the instant case, the statutory demand was in the prescribed form 509H and claimed that Zolsan Pty Ltd "owes the Deputy Commissioner of Taxation of 567 Smollett Street, Albury ('the Creditor') the amount of $1,717,232.87, being the amount of the debt described in the Schedule." The balance of the notice was of no particular note. It bore the signature of Margaret Crawford, Deputy Commissioner of Taxation, and then this note: "The facsimile signature of Margaret Crawford Deputy Commissioner of Taxation at the Albury Branch of the Australian Taxation Office, for and on behalf of the Commonwealth of Australia, the creditor, was affixed hereto by Pamela Joy Roth a duly authorised agent of the said Deputy Commissioner of Taxation." 9 Mr Day's written submissions commenced by referring to s 459E(1) which empowers "a person" to serve on a company a statutory demand. Section 459E(2)(f) mandates that the demand must be signed by or on behalf of the creditor. "Creditor" is not defined, but s 459E(1)(a) refers to a debt that the company owes to "the person". It must follow that "the person" means "the creditor". Section 459E(5), which deals with demands relating to income tax liability, says that a demand under the section may relate to certain liabilities under the Income Tax Assessment Act 1936 (Cth); it then lists in paras (aa) to (e) eleven particular sections in the Income Tax Assessment Act. 10 Paragraph 255-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth) provides: "(1) An amount of a tax-related liability that is due and payable: (a) is a debt due to the Commonwealth; and (b) is payable to the Commissioner. (2) The Commissioner … or a Deputy Commissioner may sue in his or her official name in a court of competent jurisdiction to recover an amount of a tax-related liability that remains unpaid after it has become due and payable." 11 There is no doubt in my mind that the present liability of the plaintiff is a tax-related liability within the meaning of the Taxation Administration Act. 12 If one just looked at para 255-5 one would think that the creditor must be the Commonwealth and that the Deputy Commissioner is merely a person to whom the debt is payable so as to give a discharge to the debtor. The Deputy Commissioner may sue in her own name in a court of competent jurisdiction to recover the debt, but is this sufficient to authorise her also to issue a statutory demand? 13 Just reading the section one would have thought that the creditor clearly was the Commonwealth and not the Deputy Commissioner and that there must be some doubt as to whether the Deputy Commissioner can sign a statutory demand claiming that she is the creditor. 14 However, in Bluehaven Transport Pty Ltd v Commissioner of Taxation (2000) 157 FLR 26, G N Williams J in the Supreme Court of Queensland considered the point and clearly dismissed it. 15 That judgment is clear and well supported by reputable authority, most of which was included in the written submissions supplied by the advocates for the parties. 16 Mr Quinn relies on the way in which para 255-5 and its predecessors have been construed in the past. In James v Deputy Commissioner of Taxation (1957) 97 CLR 23, Sir Garfield Barwick, when at the bar for the debtor, took a number of technical points on one of which he succeeded. The High Court at 34-35 dealt with one of the other points in what must be obiter dicta and one of these was that it was the Crown, not the Deputy Commissioner, that was the creditor and that could issue the bankruptcy notice. The High Court (Dixon CJ, Fullagar and Kitto JJ) said at 35: "We think that the commissioner or deputy commissioner is empowered to take proceedings in bankruptcy for the recovery of the tax as a Crown debt. The officer may proceed in his own name but he sues for the Crown and as plaintiff or actor it is not in his own right but that of the Crown that he proceeds." 17 The High Court approved of what P W Street J had said in Re W Carter Smith; Ex parte The Commissioners of Taxation (1908) 8 SR (NSW) 246 where, following 19th century English authority, his Honour ruled that a legislative provision giving power to a Commissioner to recover an amount as a debt involved empowering that person to institute every sort of legal proceeding to recover that debt including issuing a bankruptcy notice. 18 Although there have been some fine distinctions made as to when a Deputy Commissioner can do things in her own right as agent for the Commonwealth and when she cannot, it is clear that so far as issuing bankruptcy proceedings or a statutory demand is concerned, a Deputy Commissioner has authority to make the demand even though the creditor is the Commonwealth. 19 There does not seem to be any particular reason why s 459E only lists certain tax liabilities. However neither advocate put much stress on this point. 20 This being so, it follows that any reference to the Deputy Commissioner being a creditor or what appears under the rubber stamp as Ms Roth's authority, cannot affect the position. 21 Accordingly, there is nothing in this objection and I do not need to consider whether, if I had found in favour of the company on this point, the problem raised would have been a mere defect or not within the meaning of s 459J(2) of the Corporations Act. 22 I had prepared my reasons for judgment and had indicated when I would deliver them, when my attention was drawn to a very recent decision of the Queensland Court of Appeal which appeared to hold that the principal authority relied upon by Mr Quinn on the main question in these proceedings was wrongly decided. I cancelled the notification of delivery of judgment and called for further submissions. 23 I am indebted to the advocates for both sides for their additional submissions and will now consider the principal argument in the case which, essentially, is that the so-called debt is illusory. 24 The alleged debt arises because the Deputy Commissioner was dissatisfied with the valuation taken by the plaintiff of its trading stock land, obtained her own valuation from a another Commonwealth department, assumed that that valuation was correct, concluded that the plaintiff had been in breach of the relevant legislation and imposed a penalty tax in addition to billing additional GST. 25 The affidavit in support of the present application says that the plaintiff disputes the debit entries on the running balance account kept by the defendant. It says that the entries were made on the basis of a valuation of land which the plaintiff was developing in partnership with another company, which valuation was quite flawed. The flawed valuation, and penalties that have been assessed on the basis that the tax is payable in accordance with the flawed valuation, mean that the debt is disputed. 26 The plaintiff says that its records show that the company obtained a valuation from a reputable valuer of its properties and made a proper GST return in accordance with those values. Later, the Deputy Commissioner obtained another valuation from another Commonwealth department which she accepted and then redetermined the GST and imposed penalties. The plaintiff says that the Commonwealth's valuation is considerably flawed. 27 However, the defendant issued three notices of assessment to the company jointly with its partner, Midwest Constructions Pty Ltd for each of the three month periods terminating on 30 September 2001, 31 December 2001 and 31 March 2002. On 31 March 2005, the defendant issued a penalty notice for alleged "false or misleading statements" with respect to Goods and Services Tax returns totalling $626,076.90. The plaintiff company and its partner objected to that lastmentioned notice, but not to the earlier ones. The objection was disallowed on 16 March 2007 and nothing further has happened following the disallowance. 28 There has been filed a certificate under s 8AAZJ of the Taxation Administration Act. This certificate was issued on 29 June 2007, after the institution of these proceedings and states that "In relation to proceedings 2711 of 2007 in the Supreme Court of NSW at Sydney for recovery of a RBA deficit debt by the Commonwealth against Zolstan Pty Limited … as at 29 June 2007, the RBA deficit debt owed by Zolstan is $1,763,116.62." Under that section, such a certificate is prima facie evidence of the matters set out therein. 29 It might be remarked that whilst the affidavit makes it clear that RBA deficit is jargon for running balance account deficit, this is not defined in the certificate. Further, the certificate refers to these proceedings as for the recovery of an RBA deficit debt, which, of course, they are not. The certificate is thus a false one and has no significance in these proceedings. 30 I should also note that although one can assume that each partner is liable for all joint debts, see eg Woodgate v Davis (2002) 55 NSWLR 222, there is no evidence as to why this case only concerns Zolstan and not Midwest as well. 31 Section 45 of the Bankruptcy Act 1966 (Cth) provides that a creditor may petition for bankruptcy of a partnership if entitled to present a petition against any partner. Subsection 2 provides that a creditor may, in respect of a partnership debt, file a bankruptcy petition against any one of the partners without including the others. 32 Section 459T of the Corporations Act corresponds to s 46 of the Bankruptcy Act. However, there is no provision in the Corporations Act corresponding with s 45(2) of the Bankruptcy Act. 33 One would have thought, on first principles, that as each partner is liable for the partnership debts, a joint creditor would be entitled to seek to wind up any corporate partner. But if this is so, what was the necessity for section 45(2) of the Bankruptcy Act and why was this provision not included in s 459T of the Corporations Act? 34 Sections 45 and 46 of the Bankruptcy Act derive from ss 114-5 of the English Bankruptcy Act of 1914. It would seem that the original section in the English Bankruptcy Act of 1849 was enacted because of the need to make provision to exclude a technical rule that had emerged in Ex parte Clarke (1832) 1 Deacon & Chitty 546. However, this provides no explanation for s 45(2). 35 There have not to my knowledge been any decisions on s 45(2) or its English equivalent. 36 The matter was not argued before me. I should not make any decision, but content myself with remarking that probably s 45(2) of the Bankruptcy Act is merely declaratory of the general law. However, if an originating process for winding up is filed, this may be a live issue. 37 The plaintiff admits that it did not, except as noted above, challenge the notices of assessment, but says that this was because the then controller of the plaintiff company was very ill (he has since died) and his children who are now in charge of it can clearly see the flaws in the valuations. These allegations have not, of course, been tested. 38 Mr Quinn relies on the long standing authority of Hoare Bros Pty Ltd v Commissioner of Taxation (1996) 62 FCR 302, a decision of the Full Federal Court, that where a person has not challenged the validity of the Commissioner's notices of assessment through the procedure set out in the Taxation Administration Act, then, so far as s 459H of the Corporations Act is concerned, the taxpayer is not able to challenge that the debt is due. 39 I followed that decision in Nodnara Pty Ltd v Deputy Commissioner of Taxation (No 2) (1997) 97 ATC 4982, and various other judges have done so as well over the last 11 years. 40 However, in Neutral Bay Pty Ltd v Commissioner of Taxation (2006) 205 FLR 470, McMurdo J in the Supreme Court of Queensland, whilst acknowledging at p 478 [27] that the Hoare Bros case had been consistently followed, said that Hoare Bros was a case dealing with income tax and its relevance to other taxes and different statutory provisions needed to be considered. 41 The Neutral Bay case was one like the present, a case involving the Goods and Services Tax. His Honour said at p 482 [41], that he must follow the Hoare Bros case so that s 459H did not apply, but he then went on to consider s 459J(1)(b) of the Act. 42 In the Neutral Bay case McMurdo J said that the discretion under s 459J(1) was a broad one and was not confined to cases where the Commissioner's conduct bears the description of unconscionability. His Honour went on to say that where the court can see that there is an unfairness in using the statutory demand procedure when there were objections to the assessments under Part IVC of the Taxation Administration Act still undecided, the demand should be set aside. 43 The Taxation authorities filed an appeal against that decision which was dismissed by the Queensland Court of Appeal (Keane, Holmes and Muir JJA) [2007] QCA 312. 44 In its further written submissions, the plaintiff merely said that I should follow the Queensland Court of Appeal. Counsel for the Deputy Commissioner put with substantial reasoning why I should treat the Queensland decision as wrong and noted that the taxation authorities were seeking advice as to whether an application might be made for special leave to appeal against it. 45 Indeed, at the original hearing, Mr Quinn strongly put that the first instance Neutral Bay case was out of line and that I should not follow it. However, he also put that the circumstances in Neutral Bay were different to the present because, in Neutral Bay, the objections against the assessments were still pending, whereas in the present case, the only objection that had been lodged had been disallowed and there had been no appeal from the disallowance. 46 Mr Quinn pointed out in his original submissions that there have been a number of cases where s 459J(1)(b) has been discussed in connection with taxation assessments. He started with the decision of Olney J in the Hoare Bros case at first instance, reported (1995) 30 ATR 220, where his Honour observed, at 228, that the fact that there remained unresolved questions relating to the company's objections to the Commissioner's assessment was not sufficient reason for making an order pursuant to s 459J(1)(b) of the Corporations Act. 47 Mr Quinn noted that, on appeal in the Hoare Bros case, the Full Federal Court said, at 317, that it would be unwise to attempt to mark out the limits of the discretion conferred by s 459J(1)(b) and, at 318, the Full Court said that it could not fault Olney J's exercise of discretion in the case before him. 48 In Moutere Pty Ltd v Deputy Commissioner of Taxation (2000) 44 ATR 263, 271-2, Austin J said [55]: "If the commissioner decides not to await the outcome of the objection, the proper course will often be for him to take proceedings for recovery of the debt rather than to summon up the spectre of liquidation by issuing a statutory demand. If the court forms the view that the commissioner has acted oppressively or unfairly by issuing a statutory demand in such circumstances, the appropriate course is for the court to set the demand aside under s 459J(1)(b). By doing so the court does not deny that the debt is recoverable although an objection has been made, by it thereby insists that the statutory demand procedure should not be used to apply pressure for payment of an amount which might ultimately be found not to be payable." 49 Mr Quinn says that, with respect to his Honour, Austin J appeared to go further than previously decided case law and extend the role which s 459(1)(b) might play in relation to a taxation liability. 50 I do not accept that submission. It is quite clear that the Moutere decision has been followed, particularly in Queensland, and even at appellate level: see KW & KM Quinn Investments Pty Ltd v Deputy Commissioner of Taxation (2003) 54 ATR 206 (McMurdo J) affirmed on appeal under the same name [2004] QCA 91 per Davies JA with whom Fryberg and Philippides JJ agreed. It was also followed in the Neutral Bay case at first instance, see p 487, and on appeal. 51 It may well be that what Austin J said is less attractive to the Commissioner than what had been said by judges such as Olney J in Kalis Nominees Pty Ltd v Deputy Commissioner of Taxation (1995) 31 ATR 188, 193, but in my view, what Austin J said was correct and in line with the broad discretion and purpose of s 459J(1)(b) of the Corporations Act. 52 I now turn to the significance of the recent Court of Appeal decision in Queensland and to its reasoning. 53 In Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485, 492, a unanimous High Court said that: "uniformity of decision in the interpretation of uniform national legislation such as [the Corporations Act] is a sufficiently important consideration to require that an intermediate appellate court - and all the more so a single judge - should not depart from an interpretation placed on such legislation by another Australian intermediate appellate court unless convinced that that interpretation is plainly wrong." 54 There is another principle which must be borne in mind and that is that where there are apparently conflicting decisions of the local Court of Appeal, a single judge first sees if the decisions may be read together, but if they cannot, then he or she is bound to apply the most recent decision. 55 I have not found any specific authority for that proposition, but it is well observed throughout this Court. However, I can see no warrant for extending it to the situation where the conflicting authorities are from different intermediate appellate courts, none of which is the local appeal court. In such a case, the judge must take into account the fact, if it be the fact, that the later court has considered the earlier decision and has, for reasons thought by it to be sufficient, not followed it. However, the judge must decide which of the two decisions is correct in his or her overall assessment. 56 In the appeal in the Neutral Bay case, the leading judgment was given by Keane JA with whom the other judges simply noted their agreement. 57 Keane JA set out the facts, a summary of the decision from which the appeal was brought and the provisions of the relevant legislation. 58 His Honour noted that McMurdo J had been invited not to follow Hoare Bros, but declined that invitation. Keane JA then stated that the trial judge had exercised his discretion under s 459J(1)(b) of the Corporations Act and held that there was good reason to set aside the statutory demands because of perceived unfairness in the likely impact of winding up upon the companies' challenges to their liabilities. 59 At [73] et seq, his Honour noted the High Court's ruling in ASC v Malborough, but said that: "the reasoning in Hoare Bros should not be followed insofar as it adds a gloss to the language of s 459H(1) of the Act which is not sustainable having regard to the terms of that provision and the terms of the taxation legislation." 60 Keane JA said that the reasoning of the Full Federal Court was flawed in a number of respects. The principal flaw was that the decision did not focus on the vital words of s 459H requiring the Court to consider whether the existence of the debt was genuinely disputed. Instead it focussed on the fact that the person disputing the debt was inhibited from succeeding on the basis of provisions of the taxation legislation. 61 This gloss on the statute was contrary to previous authority. 62 Additionally, it had to be observed that the provisions of the income tax legislation reviewed by the Full Federal Court in Hoare Bros had now materially changed. 63 Furthermore, there was a vital difference between a debt to the Commonwealth for income tax, which debt comes into being with the issue of the assessment, and a debt for GST, which arises from the operation of the Act and not the making of the assessment; see para 100-15(1) of Sch 1 to the Taxation Administration Act and also what McClellan CJ at CL said in this Court in Platypus Leasing Inc v Federal Commissioner of Taxation (2005) 61 ATR 239, 246 [37]-[42] (CA). 64 In this respect, Keane JA said, at [55], that in the Hoare Bros case, the crucial point appeared to be that an assessment of income tax fixed the liability to pay income tax and that that liability was beyond dispute until the assessment was set aside. The debt arose from the assessment, but this was not the position where, as with GST, the liability arose before any assessment issued. 65 Where a debt is disputed, as the Court of Appeal said in the Neutral Bay case at [72], it matters not that the court hearing the winding up matter may not be competent to resolve any dispute about the debt. However, the debt, if disputed, must be able to be challenged in some competent court, a matter to which I will return. 66 In any event, Keane JA said, courts must not adopt a strait-jacket approach to s 459J(1)(b) of the Corporations Act: the words "some other reason" are wide words. 67 Thus, the Queensland Court of Appeal held that the trial judge did have the discretion he held he possessed and that his exercise of that discretion was within his mandate. 68 In his further written submissions after the decision of the Queensland Court of Appeal, Mr Quinn put first that as the plaintiff had not challenged the assessments in the appropriate forum, there could be no genuine dispute. For reasons given above and below, I reject this submission. 69 Mr Quinn then put, with respect, that the Queensland Court had failed to understand the proper meaning of the word 'assessment' in connection with GST. 70 He further submitted that the Queensland Court had not considered the similarity of the GST scheme with that which had applied with sales tax and which had been treated in much the same way as income tax cases by Supreme Courts, eg by J D Phillips J in Deputy Commissioner of Taxation v Stjepovic (1991) 22 ATR 366. 71 He also put that there were a whole host of utterances, by the most eminent judges, to the effect that the scheme of taxation legislation generally is that the taxpayer has to elect to challenge the Commissioner's assessment at the time set out in the taxation legislation and that if it does not, it will not be permitted to do so later. He cited the words of Bowen CJ in Eq in Deputy Federal Commissioner of Taxation v Roma Industries Pty Ltd (1976) 6 ATR 54, 57, the words of Mason and Wilson JJ in F J Bloeman Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360, 375 and those of Brennan J in Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168, 191-2. 72 With respect, I always feel justified in treating submissions that a superior court has overlooked fundamental matters with scepticism. Whilst it is always possible for a court to overlook a point, it would be unusual for it to do so as, for instance in the present situation, not only have four of Queensland's most respected judges considered the matter, they were assisted by two sets of senior and junior counsel, each set being motivated to put before the Court any respectable argument that might gain victory for their cause. If a matter was not considered by the Court, the reason is more likely than not that counsel considered it was not sufficiently substantial. 73 Whilst I can see the other side of the matters, the reasoning of the Neutral Bay case on appeal seems to me, with respect, to be logical and correct. It refuses to be distracted from the words of the Corporations Act by the culture that has grown up over the evidentiary provisions of the taxation legislation in income tax cases. The Queensland Court fully considers the earlier decision in the Hoare Bros case, analyses it, notes the changed pattern of the tax laws, recognises the Marlborough principle and deliberately for good reasons does not follow it. 74 It is now necessary to consider whether, under either s 459H or s 459J(1)(b), the statutory demand ought to be set aside. 75 Dealing first with s 459H, can it be said that there is a genuine dispute as to the existence of the debt? 76 The key decision on what is a genuine dispute was given by M H McLelland CJ in Eq in Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785, 787: "that expression connotes a plausible contention requiring investigation … . This does not mean that the court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit … or a 'patently feeble legal argument or an assertion of facts unsupported by evidence' … . But it does mean that … a court … should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute." 77 Although the cases do not appear to deal with this point, it would seem to me that generally, the mere fact that the alleged debtor genuinely disputes the debt is insufficient if the debtor is not able, because of failure to take the appropriate action at the appropriate time, to succeed in a court if sued for the debt. 78 Thus, if the reason for disputing the debt was because the person had a set off, if the set-off was barred by the Limitation Act, it could not be said to be a case of disputed debt. 79 Further, if, when sued for a tax debt, the Commissioner could produce a certificate or rely on a provision of a tax Act which was conclusive evidence of the debt, there would not exist a case of genuine disputed debt. 80 I must therefore consider the significance of para 105-100 of Sch 1 to the Taxation Administration Act. That provision is to the broad effect that a notice of assessment is conclusive evidence that it has been properly made and that the amounts and particulars in the assessment are correct. 81 The Court of Appeal in the Neutral Bay case held that this paragraph only applied in proceedings to recover a tax and did not apply in winding up proceedings as, for this purpose, such proceedings are not so classed. 82 I must confess that I have some difficulty in appreciating the correctness of this proposition and, indeed, it seems contrary to what was held by Gzell J at first instance in Platypus Leasing Inc v Federal Commissioner of Taxation (No 3) (2005) 59 ATR 84 and by the NSW Court of Appeal in Platypus Leasing Inc v Federal Commisisoner of Taxation (2005) 61 ATR 239, [60]. 83 However, para 105-100 does not play a vital part in the present aspect of the dispute between the parties, and I consider that I should just apply the decision of an interstate appellate court on the matter, despite my misgivings. 84 In an action for debt in the common law courts, however, it might be strongly arguable that, despite the liability for GST not being based on the assessment, para 105-100 could be used to the advantage of the Deputy Commissioner. 85 That argument may or may not succeed. 86 An allied argument is that, depending on how the common law court construes the tax laws, there may be a constitutional question arising as to whether there is, in effect, the case of an invalid incontestable tax; see MacCormick v Commissioner of Taxation (1984) 158 CLR 622, 640. This passage was noted in passing by the Queensland Court of Appeal in the Neutral Bay case at [66] and must be reinforced by the attitude more recently taken by the High Court to invalidate attempts by Federal or State legislatures to impose solutions on a Chapter III Court; see eg, in a different connection, Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. 87 Furthermore, as the tax liability depends on the establishment by the Deputy Commissioner of the fact that the taxpayers' return and valuations were not properly made and relied upon. This is a question of fact to be decided at law, unless trumped by some statutory presumption. 88 The present case is different to most, if not all, previous cases in this area in that it is not a case where the Commissioner has taken action whilst applications for review of the assessment have still not been exhausted. In this case, the time for review has passed. 89 However, as we are dealing with GST and with a liability that arises dehors an assessment, in the light of the decision of the Queensland Court of Appeal, the chances of the existence of the debt being successfully challenged at law is not in the class of being feeble or non existent. 90 It follows that, either under s 459H or 459J of the Corporations Act, the statutory demand should be set aside. 91 I must note that this decision was reached after much soul searching and some vacillation. The course of decisions before the Neutral Bay case and the strictures in the Corporations Act only to allow a statutory demand to be set aside in limited situations tend towards finding for the defendant. However, the Queensland decision (which normally I should follow) says that these cases involving liability for GST are in a separate class and there are factors here which would indicate that there are some more than illusory of feeble reasons why the plaintiff company may justly be able to escape death by liquidation. 92 I did consider whether I could deal with the case by making some conditional order because it seems to me that, if possible, the dispute between the parties could be best dealt with in the final hearing of an application to wind up the company in insolvency. However, it seems to me that s 459M may not allow me to impose conditions on the Commissioner, and that s 459S(2) prevents me from allowing the statutory demand to continue if there is to be a fair trial of any winding up proceedings. 93 The Deputy Commissioner is, of course, able to bring either proceedings for debt or to wind up the company should she be so advised. It is still possible, of course, for there to be meaningful discussions to reach a commercial or merciful solution to the present problem. 94 Finally, I should note that this decision does not, apart from cases involving GST, affect the general application of Hoare Bros or the numerous decisions which state that a taxpayer who does not go through the statutory procedure for challenging assessments may find it too late to do so when served with a statutory demand. However, it must be said so far as that second part of the proposition is concerned, that following Neutral Bay, judges will consider a wider ambit of discretion than heretofore. 95 The result of the present litigation is that I order that the statutory demand be set aside and order that the defendant pay the plaintiff's costs of the proceedings. ************************* DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.