Anthony Warner and Steven Kugel were appointed liquidators of a group of companies (the “TJT” companies) as a result of creditors’ voluntary liquidations.
Prior to the liquidators’ appointment, the ATO had commenced a review of the TJT companies and identified various tax debts owing to the ATO. Notices were issued to the liquidators under section 264 of the ITAA and section 353-10 of the TAA to provide information and to produce documents. Although the liquidators complied with the notices to produce information, they refused to comply with the notices to produce documents. There were numerous letters exchanged between the solicitors for the liquidators and the ATO in which the liquidators’ solicitors advised the ATO of their clients’ position. Their position was that the Deputy Commissioner was a creditor of the TJT companies and that section 486 of the Corporations Act requires a creditor to obtain an order from the Court if it wishes to inspect the companies’ records held by the liquidator. The liquidators’ solicitors stated that the liquidators would only comply with the ATO notices if ordered to do so by a Court. They suggested that the Commissioner apply for such an order.
The Commissioner’s solicitors refuted the arguments and stated that the notices remained effective and had to be complied with.
A number of letters were exchanged with each party reiterating its respective position.
The Commissioner instituted proceedings on 6 June 2014 seeking declaratory relief and an order for costs against the liquidators. Subsequently, the solicitors for the liquidators wrote to the Commissioner reiterating their earlier position but stating that they objected to a costs order being made against them. The letter went on to state that, if the Commissioner did not seek a costs order, the liquidators would file a submitting appearance only and would take no active role in the proceedings.
On 19 June 2014, the Commissioner responded reiterating his position on the substantive issue. The Commissioner also indicated that the Court would be assisted by the appearance of a contradictor in the proceedings and that if the liquidators merely filed a submitting appearance, there was a risk that the court may decide there was no justiciable controversy. The letter concluded by stating that the Commissioner would agree to orders that each party pay their own costs on the condition that the liquidators take an active role in the proceedings.
No response was provided by the liquidators. Subsequently, the liquidators filed a submitting appearance.
A directions hearing was held at which the Court indicated that it would be assisted by having a contradictor appear. The Commissioner wrote to the liquidators reiterating his earlier offer as to costs in exchange for the liquidator’s active participation in the hearing. No response was provided by the liquidators.
The Commissioner then arranged for amicus curiae to make submissions as a contradictor in the proceedings.