Kupang Resources Ltd v International Litigation Partners Pte Ltd

[2015] WASCA 89

Western Australia Court of Appeal

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Interrogate

Catchwords

1. Income Tax (Cth)
2. › Collection and recovery
3. › Notice to third party under s 260-5
4. › Effect of notice on rights of debtor and third party
5. › Whether notice precludes creditor from enforcing security
6. › Whether notice prevents debtor and third party from varying payment terms
7. › Taxation Administration Act 1953 (Cth), sch 1, s 260-5, s 260-15, s 260-20
1. Securities
2. › General security deed
3. › Appointment of receivers and managers
4. › Events of default
5. › Non-payment under transaction document
6. › Whether source of obligation to pay or identity of payee is determinative
7. › Whether word 'under' in default clause means 'in accordance with' or 'in connection with'
1. Securities
2. › General security deed
3. › Events of default
4. › Material adverse change
5. › Construction of material adverse change clause
6. › Whether event could have material adverse effect on business, property or financial condition
7. › Subjective and objective elements of 'reasonable opinion' requirement
1. Securities
2. › General security deed
3. › Events of default
4. › Insolvency event
5. › Whether Commissioner is 'creditor' of third party under s 260-5 notice
6. › Whether proposals for reduced or deferred payments constitute steps toward entering into arrangement with creditor

Quick Take

A s 260-5 notice under the Taxation Administration Act 1953 (Cth) does not vary, supplement or discharge the terms of agreements or security arrangements between the third party and the debtor, except as to the identity of the payee and the Commissioner's enforcement rights. The source of the obligation to pay remains the underlying contractual documents, and a failure to pay amounts due under those documents constitutes an event of default even where the third party is required to pay the Commissioner rather than the creditor. The Commissioner, having given a s 260-5 notice, is properly characterised as a statutory creditor of the third party for the purposes of insolvency event definitions in security deeds. Proposals by a debtor for reduced or deferred payments to the Commissioner constitute steps toward entering into an 'arrangement' with a creditor.