Case: Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789
Outcome: referred to
Tribunal then directed particular attention to the fact that three of the companies owed a total of $1,092,000 to the Australian Taxation Office. This debt included considerable sums of unpaid tax instalments deducted from employees' salaries, goods and services taxes and income tax. The debt had accumulated since, at least, 1999. The Tribunal noted at [12] the observations of Young J in Cullen v Corporate Affairs Commission (NSW) (1988) 14 ACLR 789 at 795-6, that: "... In this Court over the last 20 years at least, Judges have been extremely reluctant to grant adjournments in winding up proceedings where it appears that there is a claim for outstanding group tax because the group tax is part of the employees' wages which have been withheld to be paid to the tax office on behalf of the employees. They are, for all intents and purposes, trust moneys which do not belong to the company. If the company directors use these monies for trading purposes, it shows a complete lack of appreciation of this situation and a serious lack of commercial morality. In England the non payment of such monies has been highlighted perhaps above all other factors as showing that a director is not fit to continue his profession ..." The Tribunal continued: "While Mr Culley may have sought negotiation's (sic) with the Australian Taxation Office it would appear that little or no payments were made to reduce the debt and it was well over two years after much of the debt was due by [one of the companies] before voluntary administration and subsequent liquidation occurred. It was noted that Mr Culley appeared to be of the view that the unpaid tax was not significant in relation to the total of his 27 year career and taxes paid. It is particularly relevant that, in the case of Austbloom, Mr Culley arranged to pay out local creditors to retain their goodwill for a successor company while leaving $121,350 owing in taxes." The Tribunal then turned to an assessment of other matters relating to the various companies of which Mr Culley had been a director. These matters were collected in a single paragraph. The terms in which the Tribunal expressed itself were the subject of criticism during argument and it is, therefore, necessary to set the paragraph out in full. The Tribunal used abbreviated titles for the companies. Oriental Experience Pty Ltd was referred to as "Oriental". Construction Resources Pty Ltd was referred to as "Resources". B.M.C. Special Projects Pty Ltd was referred to as "Special Projects". B. M. Culley &amp; Associates Pty Ltd was referred as "Associates". It will be convenient to adopt these abbreviations for the purposes of these reasons. The Tribunal said: "14. While Mr Culley may argue that the reason for the insolvency of each company were (sic) beyond his control it is not clear that appropriate action was taken in a timely manner. Mr Culley's evidence was that his primary business had been construction development. However, it would appear that the insolvencies of Resources, Special Projects and Associates resulted from these companies moving away from construction management and becoming head contractors and part owner of developments. In all cases including Oriental and Austbloom it would appear that the companies had inadequate capital to deal with losses. In Oriental and Austbloom there are clear inferences from the liquidators that these (sic) had been a failure in management and record keeping."