A taxpayer has been unsuccessful in her application to seek a stay of proceedings that were brought by the Commissioner in which he sought a declaration that a mortgage she registered over 2 of her properties was void on the basis that she entered into them with an intention to defraud her creditors, which included the Commissioner.
The taxpayer sought the stay of those proceedings pending the outcome of her “Duress Proceedings” against a bank in respect of a transaction involving a declaration of trust over certain shares she owned that was held by the Federal Court in Oswal v FCT [2013] FCA 745 to be a resettlement that triggered CGT event E1 and which exposed her to a substantial CGT liability.
The taxpayer argued before the Federal Court in the current matter that a temporary stay should be granted because the outcome of the Duress Proceedings may have a material effect on the Commissioner’s proceeding to have the mortgages declared void as the value of the shareholding subject to the resettlement would be a relevant matter in the Commissioner’s proceedings. However, the Court dismissed her application on the basis that any finding in the Duress Proceeding would be irrelevant to any finding in the Commissioner’s action to have the mortgages declared void. In short, it found that there would be “no spectre of conflicting judgments” regardless of the outcome in either proceedings.
(FCT v Oswal (No 3) [2015] FCA 276, Federal Court, Gilmour J, 27 March 2015.)
[LTN 59, 30/3/15]