Spinoccia v Challenger [2010] NSWSC 1310

New South Wales Supreme Court

CITATION : Spinoccia v Challenger [2010] NSWSC 1310 This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S) : 06/10/10

JUDGMENT DATE : 15 November 2010

JURISDICTION : Equity Division

JUDGMENT OF : Macready AsJ at 1

DECISION : I set aside the demand issued by the defendant dated 22 June 2010 and order the defendant to pay the costs of the proceedings

CATCHWORDS : Corporations. Application to set aside demand under s 459G of the Corporations Act. Consideration of whether a claim for money paid under a mistake of fact is a debt. Consideration of when a liability to pay GST becomes due. Demand set aside.

PARTIES : Spinocchia Compressor & Air Tools Sales and Service Pty Ltd v Challenger Managed Investments Limited

FILE NUMBER(S) : SC 2010/234897

COUNSEL : Mr AM Gruzman for plaintiff

SOLICITORS : Woodward Wickes Wicken Mr D Gasic for defendant

- 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

MACREADY AsJ

Monday 15 November 2010

2010/234897 SPINOCCHIA COMPRESSOR & AIR TOOLS SALES & SERVICES PTY LIMITED v CHALLENGER MANAGED INVESTMENTS LIMITED JUDGMENT 1 HIS HONOUR: This is an application under s 459 of the Corporations Act 2001 (Cth) ('the Act') to set aside a statutory demand. The demand is dated 22 June 2010 and claims the amount of $117,974.03. The description of the debt and the demand is as follows "amount paid in mistake by Perpetual Trustee Company Limited to the Company that should have been paid as GST to the ATO on the sale of the property at 2 Woodfield Boulevard Carringbah NSW 2229". 2 The plaintiff suggests that there are defects in the affidavit in support of the statutory demand that would lead to the demand being set aside and also submits that the amount sought to be recovered is not a debt but merely an unliquidated claim. Background circumstances 3 The plaintiff was the owner of land at Taren Point, NSW that was subject to a mortgage to the defendant. 4 On 2 March 2010, the defendant as mortgagee exercising its power of sale, sold the land at auction for an amount of $1,175,000 exclusive of GST. Pursuant to the contract, the deposit of $175,500 was paid to the defendant's solicitors. On settlement the defendant's solicitor received $1,180,214.34. Out of the settlement funds, the defendant received $905,674.16 in repayment of the amount due on the mortgage. In addition, the defendant's solicitors were paid $1,274.02 in payment of legal fees and $20,380.37 was drawn in payment of monies owed to a caveator. 5 On 21 April 2010, the plaintiff was paid the balance of $322,162.12. However, the amount the defendant received on settlement included an amount of GST which the defendant had collected from the purchaser of the property totalling $117,974.03. 6 The defendant's claim arises because it says that at the time it had paid the $322,162.12 to the plaintiff there was outstanding GST in relation to the sale that had not been remitted to the ATO. It is submitted that in making the payment to the plaintiff, the defendant made a mistake of fact in not appreciating that it had an obligation to pay to the ATO the GST of $117,974.03. There is no doubt that the plaintiff is properly entitled to the balance of the payment to it. 7 It is clear that neither party has paid the amount of the GST to the Australian Taxation Office. Defects in the affidavit 8 After debate and submissions the basis upon which the plaintiff said the affidavit was deficient boiled down to two points. Firstly, a matter connected to the jurat in the affidavit and secondly, the defendant did not state the source of his knowledge. 9 I will deal with the first matter. 10 The commencing part of the affidavit was as follows: "I, Joseph George Mercieca, of Level 33, 101 Collins Street, Melbourne VIC 3000, Collections Manager-Commercial Lending, say on oath: … ". 11 The jurat which followed the 12 paragraphs of the affidavit was in the following form: SWORN/AFFIRMED by the deponent at ) Melbourne ) In New South Wales ) On 21 June 2010. ) a signature . Signature of Deponent