By Andrew Behman, an Associate of Matthews Folbigg, in our Insolvency, Restructuring and Debt Recovery Group
In a recent matter which we acted for the Defendant (In the matter of Precise Training Pty Ltd [2018] NSWSC 1383), we successfully defended an application to set aside a creditor’s statutory demand issued by the Chief Commissioner of State Revenue (“the Commissioner“) against Precise Training Pty Ltd, the Plaintiff.
Facts
The Commissioner issued a number of assessments for payroll tax to Precise Training in 2015 as a member of a larger tax group. Precise Training disputed the assessments and lodged an objection on 10 December 2015. The Commissioner disallowed the objection and proceeded to enter into negotiations for payment of the assessments.
Precise Training lodged a second objection on 18 July 2016 and requested that the Commissioner undertake not to commence recovery proceedings while the second objection was being decided and the parties were in negotiations.
On 10 November 2016, the Commissioner responded to the request for an undertaking advising that “recovery proceedings have been on hold” while the objection is being decided and the parties are in discussions to settle the disputed assessments.
Just prior to the Commissioner disallowing the second objection on 29 November 2016, Precise Training then made a formal settlement offer. Despite several attempts over a period of almost 1.5 years, Precise Training could not obtain a direct response to its settlement offer.
The Commissioner then served Precise Training with a creditor’s statutory demand on 7 March 2018.
Precise Training applied to set aside the statutory demand on the basis that:
- negotiations were ongoing because the Commissioner had not responded to the offer it made in November 2016, the offer had not expired and it made several attempts to contact the Commissioner following up on the offer;
- the Commissioner was estopped from issuing the statutory demand because of the statement made in its letter dated 10 November 2016.
Was there a genuine dispute?
Although it is generally a low bar to establish a genuine dispute of a debt, the Court found that there was no genuine dispute because the statement made by the Commissioner only stated what its present position was (i.e. that recovery proceedings have been on hold) and made no representation about what the Commissioner would do in the future.
In any event, the provisions of the Taxation Administration Act 1996 (NSW) provide that an assessment is taken to be correct unless it is set aside.
Some other reason to set aside the statutory demand
The Court found that because the statement made by the Commissioner did not meet the bar of a genuine dispute, it plainly could not meet the bar for being some other reason to set aside the statutory demand.
Interestingly, the Court indicated that even if it found that there was some other reason to set aside the statutory demand, it would have only done so on the basis that Precise Training paid into Court the amount of the assessments pending determination of its proposed proceedings to review the objection decisions.
The lesson
Be careful about what you say and promises you make to your creditors about holding any action to recover your debt. Matthews Folbigg are able to assist and act on your behalf to recover debts and can also provide debt recovery guidance or advice to your accounts department.
If you would like more information or advice in relation to insolvency, restructuring or debt recovery practice and procedure, contact Andrew Behman on (02) 9806 7490 or email abehman@matthewsfolbigg.com.au, or a Principal of the Matthews Folbigg Insolvency, Restructuring & Debt Recovery Group:
Jeffrey Brown on (02) 9806 7446 or jeffreyb@matthewsfolbigg.com.au
Stephen Mullette on (02) 9806 7459 or stephenm@matthewsfolbigg.com.au
