D.C.T. v S. Wright

[2004] FMCA 236

FEDERAL MAGISTRATES COURT OF AUSTRALIA

D.C.T. v S. WRIGHT [2004] FMCA 236

BANKRUPTCY – Creditor’s petition – whether an adjournment should be granted pending sale of property to pay tax liability.

Applicant: DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent: SUSAN MAREE WRIGHT

File No: MZ 199 of 2004

Delivered on: 19 April 2004

Delivered at: Melbourne

Hearing Date: 19 April 2004

Judgment of: Bryant CFM

REPRESENTATION

Counsel for the Applicant: Mr A.W. Ellis

Solicitors for the Applicant: Australian Taxation Office

Counsel for the Respondent: Mr Harris

Solicitors for the Respondent: Nil

ORDERS

1. That the application be adjourned to 17 May 2004 at 9.45 am.

2. That the applicant's costs in respect of each of the matters is to be reserved.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ 199 of 2004

DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Applicant

and

SUSAN MAREE WRIGHT

Respondent

REASONS FOR JUDGMENT

Introduction

1. I have before me today two creditors petitions, the applicant being the Australian Taxation Office in each one and the respondents being respectively David Edward Wright and Susan Maree Wright.  The respondents are husband and wife and they are seeking an adjournment of the petition today and it is agreed that I should deal with both matters together.  Mr Ellis appears for the applicant, (the creditor) and Mr Harris appears as amicus curiae for the respondents, (the debtors).

2. In relation to David Wright, the judgment from which the Bankruptcy Notice and subsequently the act of bankruptcy by the debtors was committed is a County Court default judgment for $106,675.29 which was made on 5 March 2002.  The judgment upon which the Bankruptcy Notice was issued in respect of Susan Wright and the act of bankruptcy subsequently committed is an order made in the Magistrates Court on 15 July 2003 for $38,112.78.

3. As far as the debtor, David Wright is concerned, the petition was presented on 6 October 2003 and was first before the court on 13 November 2003.  It has been adjourned on a number of occasions, some adjournments being by consent and some being by order of the court.

4. Insofar as Susan Wright is concerned, the petition was presented on 24 February 2004 and the first hearing was on 1 April 2004.  The basis upon which the adjournment is sought today is that the debtor Susan Wright is the sole proprietor of a property in Mount Eliza.  In short, she proposes that part of that property be sold and the proceeds used to satisfy the debt of both herself and of her husband.  From the evidence available which I have seen, the property has a value, it would seem, of at least $1.3 million and is encumbered by a mortgage of $940,000 so that there is an equity of at least $360,000.

5. Sometime in 2003 part of the property was sold for $250,000.  This was a tennis court which required the plan of subdivision being accepted.  There was an objection by a neighbour and some consequential delay caused.  Subsequently the council required some changes which resulted in the purchaser asking for an extra two metres of land and then some haggling over the price.  This has also led to delays in completing the sale.  Subsequently, apparently last week, the original contract was rescinded by Ms Wright and a new offer had been made for about $100,000, more than the previous one.

6. The debtors now say that they are in a position to proceed with the sale and that on execution of new contracts they will forward a copy to the Australian Taxation Office and they will be taking over the application for the two lots subdivision forthwith to ensure that it proceeds with expedition.  It is the proposal of Ms Wright that from the proceeds of sale the liabilities of both herself and her husband be discharged.  In addition, they have apparently made an offer to pay $1500 per month until the application goes through and will be able to make a further payment when the deposit is released.  They are seeking to have the petition adjourned for about month, at which time they will have a binding contract in relation to the sale.

7. The creditor asserts first, that although both say that they are solvent, it is really only Ms Wright who is solvent consequential upon her ownership of the Mount Eliza property.  There is no evidence, it is contended, and I agree, that Mr Wright is solvent.  The creditor also contends that as far as Mr Wright is concerned, the petition has now been adjourned on a number of occasions, it having been presented in October last year, and that it cannot reasonably be said that he can procure sufficient to pay off his debt within a relatively short time.  It is contended for the creditor that the original contract has now been rescinded and all that remains is the possibility of another contract.  The prejudice, it is contended, there will be to the creditor, is that the judgment was obtained on 5 March 2002 and there have already been a number of adjournments and the creditor wishes to proceed.

8. There is no suggestion by the creditor that the debtors are not bona fide in the intention to sell the property, nor that Ms Wright is not bona fide in her contention that the debt of each of them will be repaid.  Having regard to what has occurred and what I find to be their bona fide wish to realise sufficient to pay their debts, it has to some extent been beyond their control and, in my view, a further adjournment of a month would be reasonable for them to obtain a binding contract with a new purchaser and for the arrangements for settlement and the other offers in relation to payments to be put in place.

9. Whilst there is, I accept, no evidence regarding Mr Wright's other liabilities, there is similarly no evidence to suggest that there are other liabilities and it would seem to me that the most likely way that the creditor is going to be paid at the present time is by sale of this property.  Accordingly, in my view, it is appropriate to adjourn the matter for a further period of one month.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Bryant CFM

Associate:  Peter Smith

Date:  21 April 2004