Dawson, Re R.B. Ex Parte Commissioner of Taxation

[1986] FCA 215

Re: ROBERT BRIAN DAWSON formerly known as RAYMOND BRIAN DURSTON
Ex Parte: DEPUTY COMMISSIONER OF TAXATION
No. P704 of 1985
Bankruptcy

COURT

FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
Jenkinson J.

CATCHWORDS

Bankruptcy - creditor's petition - numerous adjournments - challenge to underlying debt - declaratory orders - arrangement with creditor to pay debt - obtaining funds to pay debt - refusal of further adjournment.

Bankruptcy Act, 1966 - ss. 52(2)(b), 154(1)

HEARING

MELBOURNE

#DATE 20:3:1986

JUDGE1

The debtor, by his legal representatives, has on and since 12 February - when, I think, I first dealt with this proceeding - been seeking a delay, a deferment of the hearing of the petition, so that the possibility may be maintained of establishing that the underlying debts, which found this proceeding, are not, in truth, debts because the assessments which create them are erroneous assessments.

1. And there have been applications to defer, also, so that the debtor can take steps to see whether or not he may be able, by arrangement with the creditor, to pay the money claimed and, also, there have been applications for adjournment so that the debtor may, without arrangement with the creditor, get the money necessary to pay out the whole of the moneys claimed.

2. In the course of this series of events since 12 February issues were isolated and tried before me: broadly speaking, the issue as to whether or not any of the assessments could now be challenged, and on 4 March I, after trial of the issue, determined that none of those assessments could now be challenged.

3. That conclusion influenced me both to refuse further adjournment of the hearing of the petition - further deferment of the hearing - and would undoubtedly have its influence, if and when I hear the petition, in relation to the question as to whether, in the terms of section 52(2)(b), there were any sufficient cause for refusing to make the sequestration order, if I were otherwise satisfied of the matters that have to be shown to justify the making of a sequestration order. So that the conclusion that I came to, as to whether or not the assessments could be questioned, was a conclusion which clearly had its influence in bringing about refusals of adjournments, and would have its influence on the outcome of the hearing of the petition in certain events: if, broadly speaking, otherwise a case were made for the making of a sequestration order.

4. I did not, on reflection, give effect to those conclusions by any order, although I had, on 4 March, contemplated the making of declaratory orders. Mr. Franzi, today, appears for the debtor, and seeks to persuade me to make declaratory orders so that his client will be able to challenge the correctness of the conclusions to which I came, and I think I should accede to that application, lest, possibly, his client is deprived of an opportunity that he ought to have to challenge the conclusion.

5. For the reasons I have indicated, I think it unlikely that he would suffer any prejudice if I were to decline to make a declaratory order. But I think no harm, except my own error of law, will follow if I do make the order, and I will make it.

6. Then Mr. Franzi says that the hearing of the petition should be now adjourned so that the correctness of the declaration, which I am proposing to make, can be challenged by way of appeal, and he says that unless that is done, his client will be, or may be, deprived of the fruits of a successful appeal.

7. He contemplates that if the declaratory order is found to have been wrong, either in law or in fact, but, in the meantime, a sequestration order has been made, his client will have suffered a detriment which cannot be cured after the sequestration order has been made.

8. I do not think that the refusal of further adjournment would have that effect if the error - whatever it may prove to be - which made it wrong to make the declarations made it also wrong to make the sequestration order, assuming that a sequestration order is made before the appeal has been heard and determined. It is almost certain that either by way of appeal or by a proceeding founded on section 154(1)(a) of the Bankruptcy Act, the sequestration order can also be got rid of.

9. Of course, Mr. Durston suffers prejudice in the sense that every litigant who is the victim of a mistake in the decision suffers a prejudice, until appellate or other processes have corrected the error, but I do not think he suffers any more than that.

10. On the other side, this is a case in which the very clearest indication was given late last year that the time had come for the hearing of this petition. I refer to what happened when the matter came before Mr. Justice Sheppard. That indication has never been - no doubt or question has ever been raised by the court about that since.

11. It has been made clear by the court to Mr. Durston, and those who have represented him since the latter part of 1985, that the time had come for the hearing and determination of this petition. Subject, of course, to Mr. Durston showing at any particular point in the process that there was some good reason to interrupt that process of hearing.

12. Of course, if I had come to the conclusion that the assessments were assessments that might have been challenged, that would have been something to weigh in consideration of the question whether there ought to be a delay in the hearing of the petition, but subject to something being shown to justify delay of the hearing, the court has made it clear for perhaps four months, that the petition should be heard, and Mr. Durston and those advising him have been able to determine the course which he would take in the light of that, and in those circumstances, in my opinion, the time has come for the hearing of the petition to proceed.

13. It is said today - and I think, perhaps, for the first time - that if Mr. Durston had 30 days, there is a high probability that he would at the end of the 30 days - he not being a bankrupt, of course - be able to pay the amount claimed by the petitioning creditor in full.

14. I am not persuaded that there is any real likelihood that 30 days grace would bring about that result. But quite apart from that consideration, I am of the opinion that the history of the course which events have taken since Mr. Justice Sheppard dealt with the matter late last year, it such that the court, in any event, ought not to grant a further adjournment of the hearing.

15. It is to be borne in mind that the scheme of the bankruptcy legislation is informed by a policy against lengthy delay between the institution of the bankruptcy proceeding and its determination, and weight must be given to that policy.

16. It is also, of course, to be borne in mind that if, as it is claimed, there is the prospect of payment in full within so short a time as 30 days, section 154(1)(b) is available. Accordingly, I propose to make the following orders.

17. I declare that, 1, an objection in writing which was contained in the documents of which copies are exhibits GRF2 and GRF4 to the affidavit of Geoffrey Raymond Flynn, sworn 19 February 1986, against each of the assessments of which copies of the notices are exhibits A, B, C, D, and E to the affidavit of the debtor sworn 28 February 1986, was lodged by the debtor in 1984.
    
    2, the Commissioner of Taxation disallowed each of the said objections.
    
    3, the said commissioner served the debtor by post in June 1984 with written notice of his decision to disallow each of the said objections.
    
    4, no request of a kind specified in section 187(1) of the Income Tax Assessment Act 1936 was made by or on behalf of the debtor in respect of any of the said objections within 60 days after the service to which reference is made in paragraph 3 of this order.

18. Then an order that the hearing of the petition proceed forthwith.

19. I will order that the petition and subsequent proceedings be amended by substituting in the title thereof for the words "Raymond B. Durston" the words "Robert Brian Dawson, formerly known as Raymond Brian Durston," and I will dispense with further verification and service with respect to the amendment.

20. I am satisfied that a sequestration order should be made. There will be a sequestration order on the ground of the debtor's failure to comply on or before 16 April 1985 with the requirements of the bankruptcy notice. There will be an order that the petitioning creditor's costs of and incidental to the petition including reserved costs be taxed.