In the matter of Riva NSW Pty Limited [2015] NSWSC 2020

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Riva NSW Pty Limited [2015] NSWSC 2020 Hearing dates: 16 March 2015 Date of orders: 16 March 2015 Decision date: 16 March 2015 Jurisdiction: Equity Before: Brereton J Decision: Statutory demand varied; time for compliance extended. Catchwords: CORPORATIONS – creditor's statutory demand – setting aside creditor's statutory demand – grounds for application confined to those raised by s 459G application – whether genuine dispute as to the existence or amount of debt – where review proceedings before NSW Civil and Administrative Tribunal settled reducing applicant's indebtedness – held, statutory demand to be varied to reflect reduced indebtedness. Legislation Cited: (Cth) Corporations Act 2001, s 459F, s 459G, s 459H, s 459J (Cth) Taxation Administration Act 1953 (NSW) Taxation Administration Act 1996, s 94 Cases Cited: Deputy Commissioner of Taxation v Broadbeach Properties Pty Limited [2008] HCA 41; (2008) 237 CLR 473 Category: Principal judgment Parties: Riva NSW Pty Limited ACN 113881815 (plaintiff) Chief Commissioner of State Revenue (defendant) Representation: Counsel: R Newton (plaintiff) J Brown (defendant)

Solicitors: Zali Burrows Lawyers (plaintiff) Matthews Folbigg Pty Ltd (defendant) File Number(s): 2014/283919

Judgment (ex tempore) 1. HIS HONOUR: On or about 5 September 2014, the defendant Chief Commissioner of State Revenue served on the plaintiff company Riva NSW Pty Limited a creditor's statutory demand dated 3 September 2014 demanding the amount of $77,805.83 which comprised assessments for land tax for each of the years 2007 through 2014, together with interest on the unpaid tax and a service fee. By originating process filed on 26 September 2014, Riva applies, pursuant to (Cth) Corporations Act 2001, s 459G, for an order setting aside the statutory demand. 2. Although reference was made, in the course of argument, to s 459J and although that section is referred to, albeit in parentheses, in the originating process, no reader of the s 459G affidavit of Mr Farrell sworn 26 September 2014 would have apprehended that an issue as to "defect" in the demand was being raised. Indeed, it would have been impossible to do so, because the demand itself was not identified or referred to in that affidavit. As it seems to me, the affidavit was effective within the Graywinter principle to raise only the question of disputed debt under s 459H, and did not extend to raise an issue as to any defect in the demand under section 459J. 3. The debts being land tax debts are the subject of the (NSW) Taxation Administration Act 1996. 4. The assessments for 2007 through 2011 were issued on 29 November 2011; the assessment for 2012 was issued on 25 January 2012; and the assessment for 2013 was issued on 10 January 2013. Once those assessments were issued, the tax the subject of the assessment became due and payable. The plaintiff lodged objections, apparently, on 27 July 2013 and possibly in earlier correspondence, to those assessments. The commissioner rejected those objections in a letter dated 4 March 2014, which, however, Mr Ferella says the plaintiff did not receive until 12 September 2014, when a copy was provided after he took issue with the creditor's statutory demand. However, Taxation Administration Act, s 94, provides that the fact that an objection is pending does not in the meantime affect the assessment or decision to which the objection relates and tax may be recovered as if no objection were pending. 5. After service of the creditor's statutory demand, Riva – in a sense belatedly, but if it did not receive the decision on the objection until 12 September 2014, quite promptly – made application to the New South Wales Civil and Administrative Tribunal for a review of the assessment. That application was made on 23 September 2014. However, Taxation Administration Act, s 103, provides: 103 Recovery of tax pending review (1) The fact that an application for a review is pending does not in the meantime affect the assessment or other decision to which the application for review relates and tax may be recovered as if no review were pending. (2) Nothing in this section affects any power of a court or tribunal to which an application for review under this Part is made (or can be made) to grant a stay under any other law of any such assessment or decision. which is to similar effect as the section to which I have just referred, but in connection with a review, rather than an objection. 1. The decision of the High Court of Australia in Deputy Commissioner of Taxation v Broadbeach Properties Pty Limited [2008] HCA 41; (2008) 237 CLR 473 establishes, in the context of the (Cth) Taxation Administration Act 1953 and taxation debts the subject of that Act, that provisions such as those to which I have referred mean that it is not open to a taxpayer to raise the question of "genuine dispute" about an assessed tax debt just because an objection or an application for review is pending. The plain statutory intent reflected in s 103 is that the debt be enforceable and recoverable regardless of any pending objection or review so long as the assessment stands. 2. Similarly, the High Court held that the pendency of a review application did not amount to "any other reason" within s 459J for setting aside a demand for such a debt, because of the plain legislative policy that such debts be recoverable notwithstanding pendency of a review application. 3. What makes this case different is that, prior to the matter coming on for hearing, the proceedings in NCAT were settled and, on 10 March 2015, orders were made by consent in NCAT remitting the assessments for 2007 to 2010 to the Chief Commissioner for reassessment upon a different taxpayer which appears to have been the registered proprietor of the subject land during that period, but confirming the 2011 through 2013 assessments. As a result of that order, at the date of the hearing before me, there is no longer an assessment against the plaintiff in respect of the 2007 to 2010 years. It is common ground, as I understand it, that the plaintiff is in fact not liable to land tax in respect of the subject land for those years. 4. In those circumstances, as the Court is concerned to determine whether there is a genuine dispute as to the indebtedness, as at the date of hearing of the s 459G application, it is plainly established that there is a genuine dispute, to the point that the plaintiff must be certain to succeed in respect of the assessments for those years. On the other hand, as the assessments for the later years stand, no genuine dispute in respect of those years has been established. 5. The assessments for the years 2011, 2012 and 2013, together with the interest on them, amount to $47,695.57. Applying the formula in s 459H, I must ascertain the "admitted total" which is, if I am satisfied that there is a genuine dispute about the amount of the debt, so much of the amount as the Court is satisfied is not the subject of such a dispute. I am satisfied that $47,695.57 is not the subject of a genuine dispute and is therefore the admitted total. There is no offsetting total, because no offsetting claim has been propounded. 6. Accordingly, under s 459H(4), the Court is empowered to make an order varying the demand and declaring the demand to have had effect, as so varied, as from when the demand was served on the company. It seems to me that the fact that the demand originally claimed what has turned out to be an excessive amount is no reason to decline to vary the demand but, instead, to order that it be set aside. In the absence of a genuine dispute as to the sum of approximately $47,000, the proper exercise of the discretion under s 459H(4) is to vary the demand. Any possibility of injustice in this respect would be addressed by extending the time for compliance with the demand to 21 days after the order is made, pursuant to s 459F(2)(a)(i). 7. The Court therefore orders that: 1. The creditor's statutory demand dated 3 September 2014 and served by the defendant on the plaintiff on 5 September 2014 be varied by reducing the amount of the demand to $47,695.57, being the unpaid land tax and interest thereon under the assessments for the years 2011, 2012 and 2013, and declares the demand to have had effect as so varied as from when it was served on the plaintiff company. 2. Pursuant to s 459F(2)(a)(i), the period for compliance with the demand, as so varied, be extended to 21 days from the date of this order. 3. The Court orders that the defendant pays the plaintiff's costs assessed in the sum of $16,050.