A defendant taxpayer has been unsuccessful in his attempt to strike out the Deputy Commissioner’s amended statement of claim to seeking to enforce a judgment debt obtained against the defendant for some $47m. It was seeking to enforce the judgement against 2 properties held by the second defendant, being a related company. The defendants claimed that the Deputy Commissioner, as an unsecured creditor, did not have standing to prosecute the proceeding, and that he was required to establish something more than merely being an unsecured creditor in order to have standing.
In particular, the defendants claimed that the case was distinguishable from the decision of the Victorian Court of Appeal in Sarkis v DCT (2005) 59 ATR 33; [2005] VSCA 67. They also argued that, in any event, the Deputy Commissioner had a freezing order in his favour, which prevented the subject assets from being dealt with by both the defendants.
In summary, it was submitted by the defendants that it was preferable for such claims between a debtor and third party to be left to a neutral party who is responsible to protect the interests of all creditors, such as a receiver or trustee in bankruptcy.
However, the Supreme Court of Victoria found that the case was on “all fours” with Sarkis in which the Deputy Commissioner sought declarations that 2 of the defendants, who were judgment debtors, were beneficially entitled to land registered in the names of 2 other defendants, and that the reasons for the decision in that case met each of the defendant’s submissions.
The Court also noted that it was bound to follow the Sarkis decision.
(DCT v Karas & Ors [2013] VSC 410, Supreme Court of Victoria, Elliott J, 7 August 2013.)
[LTN 154, 12/8/13]