DCT v Bailey
[2005] FMCA 1537
•4 November 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DCT v BAILEY | [2005] FMCA 1537 |
| BANKRUPTCY ─ Creditor’s petition adjournment application ─ respondent seeks adjournment pending appeal to Federal Court from decision of Administrative Appeals Tribunal reviewing original decisions of Deputy Commissioner of Taxation which gave rise to liability underlying judgement upon which creditor’s petition is based ─ whether respondent’s estate should be sequestrated where an appeal is pending against a decision forming one of the bases of the bankruptcy proceedings ─ whether genuine dispute exists as to the respondent’s liability to the petitioning creditor ─ whether there is a dispute based on genuine and arguable grounds between the respondent and the petitioning creditor concerning the matters forming the subject of the respondent’s appeal to the Federal Court ─ whether appeal is based on genuine and arguable grounds ─ whether the appeal does no more than invite the Federal Court to engage in (impermissible) merits review. |
| Bankruptcy Act 1966 Income Tax Assessment Act 1936 (Cth) |
| Ahern v Deputy Commissioner of Taxation (Queensland) (1987) 76 ALR 137 re Rhodes; ex parte Heyworth (1884) 14 QBD 49 Bayne v Baillieu (1907) 5 CLR 64 re Verma; ex parte DCT (1985) 4 FCR 181 Adamopoulos v Olympic Airways (1990) 95 ALR 525 Farrington v Deputy Commissioner of Taxation (2002) FCA 1013 The Taxpayer v Commissioner of Taxation AAT No WT2001/1480 – 1492 Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 Minister for Immigration v Multicultural Affairs v Eshetu (1999) 197 CLR 611 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Minister for Immigration & Multicultural Affairs v Epeabaka (1999) 84 FCR 411 Xu v Minister for Immigration & Multicultural Affairs (1999) 95 FCR 425 Minister for Immigration & Multicultural Affairs v Rajalingam (1993) 93 FCR 220 Selvadurai v Minister for Immigration and Ethnic Affairs (1994) 34 ALD 347 Addo v Minister for Immigration and Multicultural Affairs (199) FCA 940 Re Minister for Immigration and Multicultural Affairs Ex Parte Durairajasingham (2000) 168 ALR 407 Emiantor v Minister for Immigration and Multicultural Affairs (1997) 48 ALD 635 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Re: MIMA: Ex parte Cohen (2001) HCA 10 Waterford v The Commonwealth (1987) 163 CLR 54 Australian Heritage Commission v Mount Isa Mines (1997) 187 CLR 297 |
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | MARK CHRISTIAN BAILEY |
| File Number: | PEG 81 OF 2004 |
| Judgment of: | Walters FM |
| Hearing date: | 22 September 2005 |
| Date of Last Submission: | 22 September 2005 |
| Delivered at: | Melbourne |
| Delivered on: | 4 November 2005 |
REPRESENTATION
| Counsel for the Applicant: | Mr Tsaknis |
| Solicitors for the Applicant: | Australian Taxation Office Legal Services Branch |
| Counsel for the Respondent: | Mr Bennett |
| Solicitors for the Respondent: | Messrs Bennett & Co |
ORDERS
A sequestration order be made against the estate of MARK CHRISTIAN BAILEY of 28 Dalmain Road, Kingsley, WA, 6026.
The applicant creditor’s costs be taxed and paid from the estate of the respondent in accordance with the Bankruptcy Act 1966.
The Court notes that the date of the act of bankruptcy is 9 February 2004.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 81 OF 2004
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| MARK CHRISTIAN BAILEY |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by Mr Bailey for an adjournment of the hearing of a creditor’s petition presented by the Deputy Commissioner of Taxation on 30 June 2004, and an application by the Deputy Commissioner for a sequestration order against Mr Bailey’s estate.
The hearing of the creditor’s petition has been adjourned before. On
11 October 2004, for example, it was adjourned pending the decision of the Administrative Appeals Tribunal in relation to Mr Bailey’s application for review of the original decisions of the Deputy Commissioner which gave rise to the liability underlying the judgment upon which the creditor’s petition was based.
On 29 June 2005, the AAT (constituted by Professor GA Barton) affirmed the objection decisions under review.
Mr Bailey has appealed against the AAT decision. The appeal was filed in the Federal Court on 17 August 2005. It is unclear when the appeal will be heard and determined.
On 21 June 2005, Registrar Jan extended the creditor’s petition to
29 June 2006. It will then lapse.
Background
In December 1999, the Australian Taxation Office issued amended assessments of income tax in respect of the years ended 30 June 1983 to 30 June 1987 inclusive, for the years ended 1989 to 30 June 1993 inclusive and for the years ended 30 June 1995 to 30 June 1997 inclusive — based on default assessments of Mr Bailey’s taxable income for those years made pursuant to s.167 of the Income Tax Assessment Act 1936 (Cth).
Mr Bailey’s objections to the amended assessments were disallowed (in full) in January 2001. He later applied to the AAT for a review of those decisions.
On 11 April 2002, the Deputy Commissioner obtained a judgment against Mr Bailey in respect of the amounts owing pursuant to the various amended assessments. The judgment was obtained in the Supreme Court of Western Australia and is in the following terms:
No defence having been served by the defendant herein, it is this day adjudged that the defendant do pay the plaintiff $1,278,311.24 and $304.70 costs.
Mr Bailey did not satisfy the judgment obtained by the Deputy Commissioner in the Supreme Court of Western Australia and, on 19 January 2004, the Deputy Commissioner served on him a bankruptcy notice dated 5 December 2003. The bankruptcy notice was founded on the judgment — although the schedule contained in the bankruptcy notice records that Mr Bailey was credited with $150,000.00 in respect of “payments made and/or credits allowed since date of judgments or orders”. The “total debt owing” in the bankruptcy notice was $1,128,615.94.
On 30 June 2004, the Deputy Commissioner filed a creditor’s petition in the Perth Registry of this Court. The creditor’s petition asserts that:
(Mr Bailey) owes (the Deputy Commissioner) the amount of $1,128,615.94 … being a judgment obtained in the Supreme Court of the State of Western Australia at Perth on 11 April 2002 for an amount of $1,278,615.94 less $150,000.00 having been credited.
The creditor’s petition and supporting documents were served on Mr Bailey on 14 July 2004.
On 2 August 2004, Registrar Jan ordered that the creditor’s petition be adjourned to 11 October 2004.
On 11 October 2004, Registrar Jan ordered (by consent) that the creditor’s petition be adjourned to 29 November 2004. On that date, it was again adjourned to 14 December 2004.
On 9 December 2004, Mr Bailey swore an affidavit in which he deposed to the fact that he was still waiting for the decision of the AAT to be handed down, and on 14 December 2004 Registrar Jan again ordered that the creditor’s petition be adjourned — this time to 22 March 2005.
The creditor’s petition was again adjourned on both 22 March 2005 and 21 June 2005. On the later of those two dates, Registrar Jan ordered that the period at the expiration of which the petition is to lapse be extended to 29 June 2006. The matter was otherwise adjourned to 19 July 2005.
From 19 July 2005 the matter was adjourned to 1 August 2005, and from there to 30 August 2005 and (ultimately) to 22 September 2005 for hearing before me.
The AAT handed down its decision on 29 June 2005. An application for extension of time to file and serve a Notice of Appeal from the AAT decision was filed in the Federal Court on 28 July 2005. On 16 August 2005, that extension was granted. The appeal itself was filed on
17 August 2005.
A further Adjournment is Sought
Mr Bailey “ … seeks a further adjournment of the hearing of the creditor’s petition (on the basis that) any application for bankruptcy prior to delivery of the decision of the Court of Appeal (which may have the effect of setting aside the debt upon which the Deputy Commissioner relies) will significantly prejudice (Mr Bailey)”.[1]
[1] See paragraph 8 of Mr Bailey’s principal submissions.
According to Mr Tsaknis (who appeared for the Deputy Commissioner):
The issue for determination is whether the creditor’s petition ought to be adjourned until the Federal Court can hear and determine an appeal against the decision of the AAT affirming the decisions of the Deputy Commissioner, which decisions formed the basis for judgment on which the petition is based. If not, (Mr Bailey) has advanced no reasons why a sequestration orders should not be made in respect of (his estate).[2]
[2] See paragraph 1 of the Deputy Commissioner’s Outline of Submissions.
The Law in Relation to an Adjournment Application
In Ahern v Deputy Commissioner of Taxation (Queensland) (1987)
76 ALR 137, the Full Court of the Federal Court said[3]:
… The court hearing a bankruptcy petition is directed by statute to require proof of the fact that the debt on which the petitioning creditor relies is still owing (s.52(1)(c)); and it is not until the court is satisfied with proof of that matter and other matters … that it may make a sequestration order against the estate of the debtor.
It is well established that a court exercising bankruptcy jurisdiction has undoubted discretion to go behind a judgment, particularly one obtained by default or compromise or where fraud or collusion is involved and inquire whether the judgment is founded on a real debt … Where the judgment is by default the court will go behind the judgment if there is a bone fide allegation that no real debt underlies the judgment … Even where the judgment was obtained following a hearing on the merits where both parties appeared, if there are substantial reasons for questioning whether behind the judgment there is in truth and reality a debt due to the petitioning creditor, the court will go behind the judgment and inquire into the consideration for it …
It is also well established that in general a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings provided that the appeal is based on genuine and arguable grounds: re Rhodes; ex parte Heyworth (1884) 14 QBD 49, Bayne v Baillieu (1907) 5 CLR 64 and re Verma; ex parte DCT (1985) 4 FCR 181.
These cases rest on the broad principle that before a person can be made bankrupt the court must be satisfied that the debt on which the petitioning creditor relies is due by the debtor and that if any genuine dispute exists as to the liability of the debtor to the petitioning creditor it ought to be investigated before he is made bankrupt. Bankruptcy is not mere inter partes litigation. It involves change of status and has quasi-penal consequences.
[3] At pp 147-8.
The approach set out above was considered and followed by the Full Court of the Federal Court in Adamopoulos v Olympic Airways (1990) 95 ALR 525. In that case, Pinkus J said[4]
… it is necessary to keep firmly in mind that the power to adjourn a bankruptcy petition is one of a discretionary kind. Where an adjournment of the petition is sought on the ground that an appeal has been instituted against the judgment debt underlying the proceedings, a variety of factors may have an important bearing on the exercise of the discretion. It may be influenced by evidence that the judgment debtor is, in any event, insolvent, by the court’s forming the opinion that the appeal, although arguable, has little chance of success, by consideration of the possibility that the costs of the appeal may significantly diminish the amount available for distribution to creditors and by other matters.
[4] At page 526.
Burchett and Gummow JJ said[5]
… An appeal against the very judgment which founds the bankruptcy notice is a matter of significance requiring advertence to the possibility that the appeal may be justified. (It is not realistic) to entertain any confidence, in other than a special case, that a trustee in bankruptcy will decide to pursue an appeal with merit. … A much more likely consequence of a sequestration order is the abandonment of the appeal, whatever its merits, and its dismissal for non-prosecution.
In Ahern’s case, the joint judgment of (the Full Court) laid down the governing principle (in relation to whether a court should proceed to sequestrate the estate of a debtor where an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings). …
It will, of course, be observed that the principle is stated in terms which acknowledge the existence of exceptions; it operates “in general” …
[5] At pp 531-2.
It follows from the above that the critical question for the Court to determine is whether there is a dispute based on genuine and arguable grounds between Mr Bailey and the Deputy Commissioner concerning the matters forming the subject of Mr Bailey’s appeal to the Federal Court.[6] Put another way, the critical question is whether Mr Bailey’s appeal is based on genuine and arguable grounds. If it is, then that is an important factor to be taken into account — along with other relevant factors — in exercising the discretion of the Court whether or not to adjourn the petition. If, on the other hand, the appeal does not have that essential quality, then the application for adjournment must be dismissed.
[6] See Farrington v Deputy Commissioner of Taxation (2002) FCA 1013 at paragraph 32.
Behind the Judgment
The judgment of the Supreme Court of Western Australia upon which the creditor’s petition is founded was obtained on 11 April 2002. No appeal has been lodged against it.
The bankruptcy notice was served on Mr Bailey on 19 January 2004, and no application has been made to set it aside. The creditor’s petition was presented on 30 June 2004. It has, of course, been extended to
29 June 2006.
The AAT decision was handed down on 29 June 2005, and Mr Bailey’s solicitors commenced appeal proceedings on 28 July 2005.
The grounds of appeal are set out in paragraph 4 of the Notice of Appeal, and are as follows:
4.1The Tribunal failed to deal with the applicant’s objections for the years 1983, 1984, 1985, 1987 as separate individual years.
4.2The Tribunal erred, in the absence of any proper basis for so doing in assessing the applicant’s evidence as to his assessable income as “a series of remarkable serendipities”.
4.3The Tribunal failed to attribute any or any sufficient weight to the fact that the applicant’s obligation to discharge the burden of proof should be viewed in the context of the applicant:
4.3.1dealing with events that occurred in excess of 30 years prior to the hearing.
4.3.2having no legal obligation to maintain any documentary or other records for the period.
4.3.3being unable by reason of the passage of time to obtain documentary or other material evidence.
4.3.4by reason of the passage of time having to contend with discharging the burden of proof where material witnesses, and in particular Mr Arthur Goode, was deceased.
4.3.5where the applicant had positively shown that documentary evidence available to him was improperly retained by former solicitors and accountants.
4.3.6where the applicant had positively established that the suggested sources of income proposed by the respondent were without factual basis.
Mr Bailey’s Submissions
The core of Mr Bailey’s submissions is contained in the following paragraphs of the submissions prepared by his solicitor, Mr Bennett[7]:
[7] Paragraph 14 (incorrectly numbered 15) of Mr Bennett’s submissions.
It is accepted that:
(1)appeals to the Federal Court and the Administrative Appeal Tribunal are limited to questions of law and not fact;
(2)essentially, the Tribunal’s decision in relation to the applicant/respondent’s objections involved factual issues;
(3)Nevertheless, questions of law can arise in this regard, namely:
3.1the question of whether there is any evidence of a particular fact is a question of law …
3.2whether a particular inference can be drawn from facts is also a question of law …
3.3an error of law arises where a Tribunal not exercising judicial power fails to consider a relevant factor in arriving at the decision or misapprehends the matter of which it has to be satisfied in reaching a decision …
3.4a failure on the part of the Tribunal to refer to a contention or to the evidence of a witness may disclose an error of law …
(4)(Mr Bailey) contends that errors of law arose in respect of the decision of the Tribunal in that:
4.1the Tribunal … described (Mr Bailey’s) evidence in chief and under cross examination as being testimony to —
a series of remarkable serendipities as to the source of his wealth.
4.2the characterisation of the evidence in this manner is unsupported by any facts.
4.3the derivation of wealth by a system of regular successful betting over a period of time of (sic.) an investment in the stock market is not a serendipity (being a fortunate accident or discovery).
(5)In paragraph 4.3 of the Notice of Appeal, (Mr Bailey) sets out the matters to which he says the Tribunal failed to have regard. As a failure to consider a relevant fact, the Tribunal erred in law. The only reference to the facts is contained in paragraph 68[8] in the sentence:
When pressed in cross-examination to explain some of the details of these transactions (Mr Bailey) was not forthcoming. He attributed this, somewhat disingenuously to the passage of time, the loss of relevant documents and the fact that he had none, or very little, knowledge of the investment decisions made by his brokers in Melbourne on his behalf.
There is no passage within the Decision dealing with the Tribunal’s assessment of (Mr Bailey) positively establishing that the suggested sources of income proposed by (the Deputy Commissioner) were without factual basis …
(7)Essentially the Tribunal has converted a finding that (Mr Bailey) failed to discharge the burden of proof by not adducing credible evidence as to the source of his unexplained wealth into a finding that there was a deliberate concealment of the source of such wealth. This is despite (Mr Bailey) positively refuting the assertions of (the Deputy Commissioner) as to the potential sources of wealth.
(8)The rejection of (Mr Bailey’s) evidence provides no basis for making a positive finding of concealment — in other words it is an inference not open on the facts as found.
(9)For the purpose of the present application, (Mr Bailey) contends that his grounds of appeal are arguable.
[8] Of the AAT’s decision.
The Deputy Commissioner’s Submissions
The Deputy Commissioner’s submissions — in response to those of
Mr Bennett set out above — were as follows:
(7)The grounds of appeal assert that the Tribunal failed to deal with (Mr Bailey’s) objections for the 1983, 1984, 1985 and 1987 years as separate individual years; that the Tribunal erred, in the absence of any proper basis, in assessing (Mr Bailey’s) evidence as to his assessable income as “a series of remarkable serendipities” and that it failed to give any or any sufficient weight to certain factors.
(8)It is to be observed that the notice of appeal does not challenge any of the propositions of law or legal analysis of the Tribunal set out in paragraphs 8, 37, 65 – 67 and 73 – 79 of its decision… As the High Court observed in Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323 at [72] in considering the significance of relevant and irrelevant considerations in the context of judicial review the grounds of review are concerned essentially with whether the decision maker properly applied the law… They are not grounds that are centrally concerned with the process of making the particular findings of fact on which the decision maker acts.
(9)The criticism of the Tribunal’s finding of fact, of the weight that it attributed to the different items of information before it and of the reasoning process adopted by it in reaching its factual conclusions even if sound (which is denied) and even if the factual conclusions arrived at by the Tribunal be wrong (which is also denied) does not establish an error of law…
(10)It is plain that the Tribunal did deal with (Mr Bailey’s) objections for the 1983, 1984, 1985 and 1987 years as separate years: Tribunal’s decision at paragraphs 10 – 38; 70 – 85.
(11)The Tribunal’s reference to “a series of remarkable serendipities” (paragraph 40 of the Tribunal’s reasons) reflected the factual circumstances provided to the Tribunal by (Mr Bailey) and set out in some detail at paragraphs 41 to 70 of the Tribunal’s reasons. Having regard to those factual matters, the categorisation of those matters as a “series of remarkable serendipities” was unexceptional. In any event, even if the Tribunal’s categorisation be incorrect, that could not, even arguably, constitute an error of law.
(12)In relation to ground 4.3.1 to 4.3.4 of the grounds of appeal, the Tribunal dealt at some length with the events going back some 30 years and the passage of time: Tribunal’s decision at paragraphs 40 – 63; 68 – 69, especially at paragraph 68.
(13)In relation to grounds 4.3.5 and 4.3.6, there is no positive finding by the Tribunal as asserted, nor has (Mr Bailey) condescended to any particulars incontrovertibly establishing the facts asserted.
(14) The Tribunal applied the (correct) test, asking itself whether (Mr Bailey) had discharged the onus of showing that the amount of his assessed income was greater than the actual amount of his taxable income: Tribunal’s reasons at paragraph 70. In so doing it rejected (Mr Bailey’s) assertions that his income came from racing windfalls and capital gains derived from the sale of shares, for the reasons that it gave, especially at paragraphs 68 – 70. In any case, a decision maker does not need to have available rebutting evidence before holding that an assertion by the applicant is not made out…
(15)Ultimately, (Mr Bailey) failed because the Tribunal accepted the credibility of other witnesses in preference to the credibility of (Mr Bailey), which it rejected: Tribunal’s reasons at paragraphs 68 – 70. A finding of credibility is a finding of fact… A finding on credibility “is the function of the primary decision-maker par excellence”…
(16)Once the Tribunal rejected (Mr Bailey’s) evidence, there was some evidence of the particular fact on which its decision that (Mr Bailey) had not discharged the onus of proof of showing that the amount of his assessed income was greater than the amount of his taxable income, was based. Provided there is some evidence on which the decision being challenged was based that will be sufficient, irrespective of how probative the evidence is…
(17)The grounds of appeal and the criticisms of the Tribunal constitute nothing more than “reasons for disagreeing with the view of the merits of the case. The merits are for the Tribunal to determine, not the Federal (Magistrates) Court”…
Discussion
I prefer Mr Tsaknis’s submissions to those of Mr Bennett. I am persuaded by them and adopt them.
While the making of findings and the drawing of inferences in the absence of evidence is an error of law[9], it is not possible to challenge an administrative decision on the ground that the findings made by the decision maker were “not open on the evidence”. The grounds on which a court of competent jurisdiction can review the AAT’s findings of fact are limited. It is not in itself an error of law for the AAT to make an incorrect finding of fact, at least where there is some material before the AAT to support the finding[10].
[9] See Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-357 per Mason CJ; MIMIA v Eshetu (1999) 197 CLR 611 at 654 (paragraph [138]) per Gummow J.
[10] See Waterford v The Commonwealth (1987) 163 CLR 54 at 77-78; Australian Heritage Commission v Mount Isa Mines (1997) 187 CLR 297 at 303.
As McHugh J said in Re: MIMA: Ex parte Cohen (2001) HCA 10 at [37]:
If an Administrative Tribunal applies a wrong legal test or asks itself or decides a wrong legal question, it may be a short step to concluding that it did not decide the question that it had to decide. But questions of fact are ordinarily for an Administrative Tribunal to determine, and so are the reasoning processes employed to make such findings. Disagreement with a finding of fact or the reason or process to find it is usually a slender ground for concluding that a Tribunal misconceived its duty.
I would add the following comments as they relate to the various proposed grounds of appeal.
Failure to Deal with Mr Bailey’s Objections for Certain Years as Separate Individual Years
This is not an issue that was pressed by Mr Bennett before me. It is clear that the AAT did, indeed, deal with them in an appropriate manner.[11]
[11] See paragraphs 10-38 and 70-85 of the AAT’s decision.
“Remarkable Serendipities”
The expression “remarkable serendipities” appears in the AAT’s decision in the following context:[12]
(Mr Bailey’s) evidence in chief was that in the period between the mid 1970s to 1983 he was involved in several activities as a result of which he was able to accumulate assets … In particular these activities included his employment at the Inglewood Swimming Pool and at the Perth Entertainment Centre, gambling, investment in shares and options and car sales …
He testified that he left school at 16 and started his working life as an apprentice printer. He was a millionaire, at least on paper, by 1981 when he was 25. He testified in chief, and under cross-examination by the respondent, to a series of remarkable serendipities as the source of his wealth. These events, according to his evidence, occurred some 20 or 30 years ago and so he had little or no recollection of the details of his good fortune.
[12] See paragraphs 39 and 40 of the AAT’s decision.
It is clear that the AAT’s use of the expression “a series of remarkable serendipities” was not made in a vacuum. The relevant evidence was set out and discussed in paragraphs 41 to 70 of the AAT’s decision. I have read those paragraphs carefully (including the lengthy quote from Mr Bailey’s witness statement appearing in paragraph 41 of the AAT’s decision) and concur with Mr Tsaknis’s submission that the categorisation of those matters as “a series of remarkable serendipities” was unexceptional. It was also unexceptionable.
A review of paragraphs 41 to 70 (inclusive) of the AAT’s decision reveals that Mr Bennett’s submission to the effect that the characterisation of Mr Bailey’s evidence in the manner complained of “ … is unsupported by any facts” is simply wrong.
Mr Bennett’s submission was that “ … the derivation of wealth by a system of regular successful betting over a period of time of an investment in the stock market is not a serendipity (being a fortunate accident or discovery)”. I do not agree — at least in Mr Bailey’s case.
Brewer’s Dictionary of Phrase and Fable (16th edition) defines “serendipity” as follows:
A happy coinage by Horace Walpole to denote the faculty of making lucky and unexpected ‘finds’ by accident. In a letter to Sir Horace Mann (28 January 1754) he says that he formed it on the title of a fairy story, The Three Princes of Serendip, because the princes were always making discoveries, by accidents and sagacity, of things they were not in quest of.
The Australian Concise Oxford Dictionary (3rd edition) defines “serendipity” as “the faculty of making happy and unexpected discoveries by accident”.
The evidence relating to the manner in which Mr Bailey allegedly accumulated his wealth does indeed involve serendipities (although, clearly, that is not all that it involves). The fact that Mr Bailey had the contacts which he alleges that he had within the horseracing industry, and the fact that they were prepared to share their inside knowledge with him (whilst — apparently — receiving nothing in return), are themselves serendipitous. Similarly, the fact that the advice that Mr Bailey allegedly received in relation to the investments that he made in shares allowed him to generate a significant profit (as opposed to the losses that many other investors incur) is also serendipitous. Whilst I accept that Mr Bailey has suffered more than his fair share of personal unhappiness, grief and emotional pain[13], there can be no doubt that Mr Bailey was — in a financial sense only, and to use a colloquialism — born under a lucky star. If his version of events is correct, then he has succeeded where many, many others have failed.
[13] See, for example, paragraphs 8 and 9 of the extract from Mr Bailey’s evidence appearing in paragraph 41 of the AAT’s decision.
It follows from the above that, in my opinion, this does not amount to a genuine or arguable ground of appeal.
Factors Affecting Mr Bailey’s Ability to Discharge the Burden of Proof
I do not propose to deal in detail with the matters referred to in paragraphs 4.3.1 to 4.3.6 (inclusive) of the grounds of appeal. In my opinion, they have been adequately dealt with in Mr Tsaknis’s submissions.
Finding as to “deliberate concealment” of Mr Bailey’s Source of Wealth
I have already set out Mr Bennett’s submissions relating to this subject. In my opinion, paragraphs 14 to 16 of Mr Tsaknis’s submissions adequately meet this argument.
Conclusion — Adjournment
In my opinion, and for the reasons set out above, there is no dispute based on genuine and arguable grounds between Mr Bailey and the Deputy Commissioner concerning the matters forming the subject of Mr Bailey’s appeal to the Federal Court. In other words, his appeal is not based on genuine and arguable grounds. In essence, the appeal does no more than invite the Federal Court to engage in (impermissible) merits review.
In reaching the above conclusion, I have borne in mind the principles contained in the passages from Ahern v Deputy Commissioner of Taxation and Adamopoulos v Olympic Airways referred to in paragraphs 20 to 22 above. Indeed, I have also reminded myself of the grave consequences of a conclusion to the effect that Mr Bailey’s application to adjourn the creditor’s petition should be dismissed.[14]
[14] See, for example, the following comment from Adamopoulos v Olympic Airways (at p. 532): “In the circumstances, it would be wrong (if not, as Bowen L.J. said in Ex parte Heyworth. In re Rhodes (1884) 14 QBD 49 at 52, "a monstrous thing") to make the appellants bankrupt upon this judgment. As was emphasized in Ahern, bankruptcy is more than the enforcement of a judgment: it adversely changes status and subjects the bankrupt to potential criminal liabilities. The court must be satisfied, when making an order of such gravity, that its foundation is secure.”
As Mr Bailey has provided no other grounds upon which the Court can properly exercise its discretion in relation to the power to adjourn the creditor’s petition, it is appropriate that the application for adjournment be dismissed.
Conclusion — Sequestration Order
Having dismissed Mr Bailey’s application to adjourn the creditor’s petition, and bearing in mind that no other grounds were relied upon in opposition to the making of a sequestration order pursuant to the creditor’s petition, I propose to make the sequestration order. There will also be an order that Mr Bailey pay the Deputy Commissioner’s costs.
I, Nicole Simmonds, certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of Walters FM
Associate:
Date: 4 November 2005
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