Deputy Commissioner of Taxation v Apostolovski (No.3)
[2009] FMCA 762
•31 July 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DEPUTY COMMISSIONER OF TAXATION v APOSTOLOVSKI (No.3) | [2009] FMCA 762 |
| BANKRUPTCY – Creditor’s petition – requirements of section 52 of the Bankruptcy Act. |
| Bankruptcy Act 1966 (Cth), ss.44, 52, 54 Taxation Administration Act 1953 (Cth), s.250 |
| Australia and New Zealand Banking Group Ltd v Coutts (2003) 201 ALR 728 Day, in the matter of Gould v Gould [2000] FCA 1377 Deputy Commissioner of Taxation v Apostolovski [2009] FMCA 641. Deputy Commissioner of Taxation v White [2009] FMCA 239 McIntosh v Shashoua (1931) 46 CLR 494 Re Bowen; Ex parte Debtor [1924] B & CR 32 Re Dolman and Others; Ex parte Elder Smith Goldsbrough Mort Ltd (1967) 10 FLR 384 Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 Westpac Banking Corporation v Carver and Another (2003) 126 FCR 113 |
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | PETER APOSTOLOVSKI |
| File Number: | SYG2638 of 2008 |
| Judgment of: | Barnes FM |
| Hearing date: | 31 July 2009 |
| Delivered at: | Sydney |
| Delivered on: | 31 July 2009 |
REPRESENTATION
| Solicitors for the Applicant: | Craddock Murray Neuman |
| Counsel for the Respondent: | Mr P Kintominas |
| Solicitors for the Respondent: | Charles K Tsalidis |
ORDERS
A Sequestration Order be made against the estate of Peter Apostolovski.
The Applicant Creditor’s costs (including reserved costs, if any) be taxed in accordance with the Federal Court Rules and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966.
A copy of this order is to be provided to the Official Receiver in Sydney within two (2) days.
The sequestration order be stayed for a period of twenty-one (21) days.
The respondent file a Statement of Affairs in accordance with section 54 of the Bankruptcy Act 1966.
The Court notes that the date of the act of bankruptcy is 1 July 2008.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG2638 of 2008
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| PETER APOSTOLOVSKI |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This matter comes before me as the hearing of an amended creditor's petition. The applicant (the Deputy Commissioner of Taxation) filed and presented a creditor's petition on 13 October 2008 seeking that a sequestration order be made against the estate of Peter Apostolovski. The creditor now relies on an amended creditor's petition filed with leave of the Court on 10 July 2009.
I am satisfied on the basis of the affidavits filed by the creditor with proof of matters required under s.52(1) of the Bankruptcy Act1966 (Cth), in particular, the matters stated in the creditor's petition as verified and with service of the original petition. Service of the amended petition was dispensed with by orders made by this Court on 10 July 2009. The bankruptcy notice was issued on 19 May 2008 and served on 10 June 2008.
The only requirement that was in issue under s.52(1) is the requirement in s.52(1)(c): “the fact that the debt or debts on which the petitioning creditor relies is or are still owing”. Consideration of this issue requires me to refer to the circumstances in which leave was granted to the applicant to file an amended creditor's petition, addressed in my judgment in Deputy Commissioner of Taxation v Apostolovski [2009] FMCA 641. The applicant had presented a creditor's petition seeking that a sequestration order be made against the estate of the respondent in which it was claimed that he owed to the applicant the amount of $144,855.52 being the amount of a judgment obtained in the District Court of New South Wales on 30 May 2007 together with interest thereon. This was the debt relied on in the bankruptcy notice that formed the basis for the creditor's petition. The creditor's petition was based on an alleged failure by the respondent to comply with the requirements of that bankruptcy notice by 1 July 2008.
This matter has been before the Court on a considerable number of occasions. During that time the respondent has made payments to the Deputy Commissioner of Taxation (the DCT). After the issue of the bankruptcy notice, the respondent filed some outstanding business activity statements and other returns with the DCT. It is not disputed that amounts had been tendered to the DCT that would be sufficient to satisfy the judgment debt. The solicitor for the DCT indicated on the last occasion that those amounts would be applied to the debt, but sought leave to file an amended creditor's petition on the basis that there were other debts owed to the applicant by the respondent that constituted liquidated sums, due and payable as at the time of the date of the act of bankruptcy, beyond that specified in the original creditor's petition. Leave was sought to amend the petition to enable the petitioning creditor to rely on further debts in the order of $120,583.49.
The various kinds of debts relied on were described in an affidavit of Helen Margaret Randall sworn on 5 May 2009 and filed on 6 May 2009. They included liability for goods and services tax and income tax instalments, in relation to which an issue arose as to whether it could be said that those amounts were liquidated sums due and payable as at the time of the act of bankruptcy. The respondent took issue with this proposition but did not refer to any authority or relevant provisions in the income tax legislation. I found that, based on the submissions put by the parties at that time and the provisions of the relevant legislation cited by the applicant, including the Income Tax Assessment Act 1997 (Cth), A New Tax System (Goods and Services Tax Act) 1999 (Cth) and the Taxation Administration Act 1953 (Cth), there was, at the least, an arguable case that such debts did meet these requirements. Having regard to decisions of the Federal Court in relation to the circumstances in which leave should be granted to amend a creditor's petition (in particular Australia and New Zealand Banking Group Ltd v Coutts (2003) 201 ALR 728) I found that it was appropriate that an amendment should be allowed to enable the real questions to be determined. I indicated that the issue could be considered in full and determined on the hearing of the creditor's petition.
A notice of opposition filed by the respondent on 17 December 2008 contended that the respondent was solvent. No evidence is relied on in support of that ground. Notwithstanding the absence of any amended notice of opposition, in light of the issues raised in relation to the application to amend the creditor’s petition I allowed counsel for the respondent to address such issues on the hearing of the petition.
Counsel for the respondent expressed a general concern about the possibility that, in the absence of returns and some form of assessment or estimate by the DCT, the amounts of goods and services tax and income tax instalments could be regarded as due and payable and a liquidated sum as at the date of the act of bankruptcy (in contrast to the position in relation to income tax where liability is said to be dependent on a notice of assessment, see Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256).
While counsel for the respondent suggested that as a matter of principle it would not be appropriate or rational for such debts to be regarded as due and payable, s.250-10(2) in Part 4 of Chapter 4 of Schedule 1 to the Taxation Administration Act sets out provisions that specify when tax-related liabilities (including liabilities for goods and services tax and income tax instalments), become due and payable and s.255-5(1) provides that an amount of a tax-related liability that is due and payable is a debt due to the Commonwealth and is payable to the DCT.
While I had allowed for the possibility in my judgment that there may be other provisions in the taxation legislation relevant to the time at which the debts sought to be relied on by the DCT became due and payable, no provisions of the relevant legislation were referred to by the respondent. There is, however, unchallenged affidavit evidence before the Court from the applicant that such debts were due and payable as at 1 July 2008 and that they remain due and payable.
In any event, while counsel for the respondent expressed concern about the time at which goods and service tax and income tax instalments become due and payable, it was not disputed that the portion of the debt that consists of a running balance account deficit debt in the amount of $7,009.60 was a liquidated sum that was due and payable as at the date of the act of bankruptcy. Hence, strictly speaking, it is not necessary for me to determine whether the other debts relied on by the applicant satisfy the requirements of s.44 the Bankruptcy Act, as I am satisfied that the requirements of s.44, in relation to the conditions on which a creditor may petition, are met by the running balance account deficit debt that was a liquidated sum due and payable as at 1 July 2008. It is not in dispute that 1 July 2008 is the date of bankruptcy. I am satisfied that there is owing by the respondent to the petitioning creditor a debt that amounts to $2,000 that as at the date of the act of bankruptcy was a liquidated sum due and payable, that the act of bankruptcy on which the petition was founded was committed within six months before the presentation of the original petition and that such debt is still owing (s.52(1)(c)).
Hence it is neither necessary or appropriate to determine what is said to be the “novel” issue of whether debts consisting of a liability for goods and services tax and income tax instalments were due and payable at a time prior to the lodgement of business activity statements or assessment by the DCT, given these findings and in circumstances where the opposing argument was put in general terms and I was not directed to any provisions of the relevant legislation contrary to the contentions and provisions relied on by the applicant on the last occasion.
In relation to s.52(2)(a), there is no evidence as to the respondent’s financial position before the Court. It is appropriate to take into account those debts that are presently due and payable, whatever the position might have been at the date of the act of bankruptcy, in considering whether or not the respondent is able to pay his debts. There is no evidence before the Court to establish that the respondent is able to pay his debts and I am not satisfied of this within s.52(2)(a).
It was put to me by the respondent that I should be satisfied that for other sufficient cause a sequestration order ought not to be made and, on that basis, that I should dismiss the petition. It was submitted that were the respondent to be given a further period of time he would be able to pay the $7,009 running balance account deficit debt and hence, it was suggested, remove the basis for the amended creditor's petition. In the alternative it was submitted by the respondent that there should be a further adjournment, as it was possible that this amount could be paid. This was opposed by the applicant.
I am not persuaded that it is appropriate that there be such a further adjournment. A creditor is not obliged to accept a tender of payment (see McIntosh v Shashoua (1931) 46 CLR 494) or an offer of payment but may seek to pursue the creditor’s petition (see Deputy Commissioner of Taxation v White [2009] FMCA 239). I have had regard to the fact that the discretion to adjourn or dismiss a petition is a wide discretion, but also that it must be exercised in light of all of the circumstances, including the history of this matter. I also bear in mind that there should be full evidence before me in relation to the debtor's position, including the debtor's solvency (see Re Bowen; Ex parte Debtor [1924] B & CR 32). There is no evidence in that regard before me. Hence I am unable to consider the issue of whether there are any other creditors. The only evidence before me is the evidence from the DCT in relation to the substantial debt that is presently due to the DCT.
Having regard to all of the circumstances, including the argument put in relation to the those aspects of the tax liability that were disputed by the respondent, the time at which this issue was raised and the need to have regard to the prima facie interest of a creditor where the requirements of s.52(1) are made out that a sequestration order be made (see Re Dolman and Others; Ex parte Elder Smith Goldsbrough Mort Ltd (1967) 10 FLR 384), I am not persuaded that it has been established that there is other sufficient cause such as to warrant the exercise of my discretion not to make a sequestration order.
Nor, having regard to the interests of the parties and the interests of the public, am I persuaded that I should grant an adjournment, bearing in mind particularly that, as stated in Re Bowen; Ex parte Debtor [1924] B & CR 32, on a debtor's application for an adjournment the Court should be put in possession of all possible information as to the position of the debtor. While it was suggested that the respondent could give evidence that he was able to pay the $7,009, even if that were to be the case, that is a long way from putting before the Court evidence of solvency. The respondent had the opportunity to put such evidence before the Court prior to the hearing but did not do so. In all the circumstances and having regard to what has occurred in the past and the previous adjournments that have been allowed, I am satisfied of the matters in s.52(1) and, on the evidence before me, I am not persuaded that it is appropriate that the petition either be dismissed or that there be a further adjournment.
Accordingly, as I am satisfied that the debtor committed the act of bankruptcy alleged in the petition as amended and with proof of the other matters required by s.52 of the Bankruptcy Act, a sequestration order should be made against the estate of Peter Apostolovski.
RECORDED : NOT TRANSCRIBED
The respondent seeks a stay of the sequestration order having foreshadowed an intention to appeal. I have considered the particular circumstances of this case. There was no appeal or application for leave to appeal in relation to my judgment of 10 July 2009 as had been foreshadowed. However there is no suggestion that the applicant creditor would suffer prejudice by a stay of the sequestration order for a short period of time. There is no suggestion that the property of the bankrupt is in jeopardy (although there is no evidence before me in relation to the existence of other creditors). I consider that in the particular circumstance of this case it is appropriate to stay proceedings under the sequestration order under s.52(3) (see Westpac Banking Corporation v Carver and Another (2003) 126 FCR 113) for a period of 21 days so that the respondent has time, after considering my judgment in written form, to formulate precisely any grounds of appeal and to file an appeal. However a stay may be granted upon terms and conditions. It should be on the basis that the respondent is obliged to file a statement of affairs, as required under s.54 (as discussed by Emmett J in Day, in the matter of Gould v Gould [2000] FCA 1377 at [22] – [23]).
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Barnes FM
Associate:
Date: 13 August 2009
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