From Cox Plate glory to a $1.5 million debt bill
Racing identity and Ultra Tune owner Sean Buckley has been hit with a $1.5 million bill after losing a legal action over his investment in a failed forestry scheme.
The Victorian Supreme Court judgment, handed down on Friday afternoon, comes as the Tax Office pursues Mr Buckley for $11.5 million over a decade of allegedly unpaid income tax.
It follows the victory three weeks ago in the Cox Plate of Mr Buckley's horse, Shamus Award, earning $1.8 million in prizemoney.
Justice James Elliott rejected Mr Buckley's argument that he was not a professional investor in 2003, when he put $1.3 million into a forestry scheme run by Willmott Forests.
In applying for a $1-million loan to finance the investment, Mr Buckley signed a letter saying he had total assets of $17 million, well in excess of the $10 million required to qualify as a professional investor.
"In effect, Buckley was inviting the court to reject the information he personally provided, under his signature, in the loan application as to his assets and liabilities," Justice Elliott said.
The judge also criticised Mr Buckley's decision not to give evidence in the case.
"This is a clear instance where the court is entitled to draw an inference that, if Buckley had been called to give evidence, it would not have assisted his case," the judge said.
"It is irrefutable that Buckley ... had the power to provide more detailed and complete evidence to the court, but failed to take the opportunity to do so."
Mr Buckley invested in 170 hectares of pine trees, paying a deposit of $238,000. The remainder of the money came from a loan, obtained from a finance company related to Willmott Forests.
In his loan application, Mr Buckley said he received $585,000 a year - an income of $285,000 a year plus $300,000 in "dividends and proceeds from loans" - from his business empire.
He said he had "uncommitted monthly income" of $48,000.
Justice Elliott said Mr Buckley made the investment partly because it enabled him to claim a $1.19 million tax deduction, "significantly larger" than the $238,000 cash outlay.
Willmott collapsed in September 2010 and the loan was assigned to a subsidiary of the Commonwealth Bank, MIS Funding No.1.
"Shortly prior to this time, Buckley had defaulted under the loan agreement," Justice Elliott said.
Mr Buckley's solicitor wrote to Willmott in November 2010, saying his client was concerned that the trees were not being properly managed and would not resume paying the loan until the situation was rectified "to our client's satisfaction". "Payments were not resumed and Buckley continued to be in default," Justice Elliott said.
As of October 28 - two days after Shamus Award won the Cox Plate - Mr Buckley owed MIS Funding No.1 $1.49 million.
Since then, interest has continued to compound at 11.75 per cent or about $475 a day.
Justice Elliott ordered Mr Buckley to pay the full amount, plus interest and costs.
Mr Buckley's solicitor, Gaspare Sirianni, said the case was unrelated to the ATO's action.
"We need time to consider the judgment because it might still be open to appeal," Mr Sirianni said.
"Otherwise Mr Buckley will abide by the judgment."