D.C.T. v Martin
[2007] FMCA 1538
•17 August 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| D.C.T. v MARTIN | [2007] FMCA 1538 |
| BANKRUPTCY – Creditor’s petition – opposition to making of sequestration order – onus of proof – lack of evidence to discharge onus. |
| Bankruptcy Act1966, s.52 |
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | WALTER DAVID MARTIN |
| File number: | BRG 423 of 2007 |
| Judgment of: | Wilson FM |
| Hearing date: | 17 August 2007 |
| Date of last submission: | 17 August 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 17 August 2007 |
REPRESENTATION
| Counsel for the Applicant: | N/A |
| Solicitors for the Applicant: | Australian Taxation Office |
| The Respondent in person: | Mr Martin |
ORDERS
A Sequestration Order be made against the estate of WALTER DAVID MARTIN.
The Applicant Creditor’s costs fixed in the amount of $1,215.40 be paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act1966.
The Court notes that the date of the act of bankruptcy is 11 April 2007.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 423 of 2007
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| WALTER DAVID MARTIN |
Respondent
REASONS FOR JUDGMENT
On 22 December 2006, the applicant creditor obtained a default judgment against the respondent in the Southport Magistrates Court for $36,354.09. No application has been made to set that judgment aside.
In reliance on that judgment, a bankruptcy notice was issued against the respondent. The applicant obtained an order for substituted service and the bankruptcy notice was deemed served on 21 March 2007. No application was made to set aside that bankruptcy notice nor to extend the time for compliance with it.
On 28 May 2007, the applicant filed a creditor’s petition relying on the respondent’s commission of an act of bankruptcy in failing to comply with the bankruptcy notice. Again, an order for substituted service was applied for and made, and the creditor’s petition was served on 25 July 2007.
On 31 July 2007, the respondent filed a notice stating grounds of opposition to the application for a sequestration order. The grounds specified were:
1. The amount is not owed.
2. Amounts paid have not been credited.
In support of this notice of opposition an affidavit was filed by the respondent in which he repeated the assertions in the notice stating grounds of opposition. He further deposed to the fact that, on 14 April 1997, an amount was paid of $5483, which has not been credited by the applicant. He annexed a bank statement showing a payment out of the account of this amount.
On 3 August, I made an order adjourning the application for the sequestration order and required the respondent to make, file and serve a properly particularised notice stating grounds of opposition and an affidavit deposing to those grounds by 16 August 2007.
Two documents were filed on that date by the respondent. The first, a notice stating grounds of opposition, sets out the following grounds:
(1)The respondent refutes that the applicant’s claimed amount of $36,533.37 was at any time owed due to the total agreed debt from income tax returns lodged by the applicant amounting to $4422.99, this being the total of the 1995 and 1996 returns.
(2)The respondent refutes the default assessment of $14,050.84 made by the ATO for the 1997 income tax return as this does not allow for losses incurred from the closure of businesses the respondent was liable for in the 1997 tax year.
(3)The respondent refutes any and all liability for interest on the agreed principal amount [not specified] outstanding due to payment in the amount of $7633 on 10 April 1997.
In support of this notice of stating grounds of opposition, the respondent swears that the default assessment of his 1997 income tax return was made by the applicant without taking into account losses incurred from the closure of businesses that he (the respondent) was liable for during the 1997 tax year.
The respondent deposes that he was unable to lodge his 1997 tax return due to stress caused by the closure of these businesses. The respondent further deposes that, in 1998, the applicant raided his parents’ home and seized documentation essential for the preparation of his 1997 tax return. He asserts that these documents were never returned.
The respondent asserts that the applicant seized $7633 on 10 April 1997 and that these funds have never been credited against his income tax liability. He says that these moneys were wrongly credited to accounts of his parents, $1052 to his father’s group tax account and $6621 to his mother’s group tax account.
The respondent says that he is still awaiting documentation from a bank with regards to the withdrawal of funds on 14 April 2007 and is hopeful of being able to present to the court a complete transaction record to support his assertions.
In his affidavit sworn on 31 July, the respondent refers to a payment to the applicant of $5483. He refers in his most recent affidavit to a payment on 18 April of $7633 from a Westpac account. This second payment is not referred to in the bank statement attached to the respondent’s first affidavit. It may have been paid from other funds. Even if it was, it represents a total of the two payments of a little over $13,000. The judgment was, as I have said, for $36,000.
The applicant has complied with the formal requirements of the Bankruptcy Act1966 (“the Act”) and, in my view, has proved the matters required by s.52(1) of the Act. The onus then passes to the respondent to satisfy me either that he is able to pay his debts or that, for other sufficient cause, a sequestration order ought not be made: s.52(2) of the Act.
In the present case, the applicant submits, and I accept, that neither of the respondent’s affidavits deal at all with the issue of solvency. The matters set out in s.52(2)(a) of the Act have not been satisfied.
The respondent’s complaint then comes down to the fact that the applicant wrongly issued a notice of assessment, perhaps by default, in respect of the 1997 tax year and failed to credit payments made by the respondent against income tax owed by him. Apart from assertion, there is no evidence in the respondent’s material which satisfies me that there is any evidence that there ought be a contested hearing on the issue.
I have already observed that no application was made to set aside the default judgment or the bankruptcy notice. I also observe that no objection has been made to the assessments issued by the applicant and no request has been made for any re-assessment. Given that, at its highest, the respondent’s affidavit material deposes to potential credits of a little over $13,000 and a judgment has been obtained for $36,533.37, I am not persuaded that the respondent has demonstrated that there is other sufficient cause that a sequestration order ought not be made. I therefore make such an order.
I order that the respondent pay the applicant’s costs and disbursements fixed in the amount of $1215.40, and I note that the date of the act of bankruptcy was 11 April 2007.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Wilson FM
Associate: Lynnette Chin
Date: 7 September 2007
0
0
1