Deputy Commissioner of Taxation v Caporale
[2012] FMCA 206
•16 March 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DEPUTY COMMISSIONER OF TAXATION v CAPORALE | [2012] FMCA 206 |
| BANKRUPTCY – Contested creditor’s petition – unpaid tax – taxpayer objecting to assessments – second such objection – no reason to delay making a sequestration order. |
| Bankruptcy Act 1966 (Cth), s.52 |
Caporale v Commissioner of Taxation [2012] FCA 86
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | DOMENICA CAPORALE |
| File Number: | SYG 2628 of 2011 |
| Judgment of: | Driver FM |
| Hearing date: | 16 March 2012 |
| Delivered at: | Sydney |
| Delivered on: | 16 March 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Ms M Agbinya ATO Legal Services Branch |
| Appearing for the Respondent: | Ms R Caporale |
ORDERS
A sequestration order is made against the estate of Domenica Caporale.
The petitioning creditor’s costs, including reserved costs, if any, be fixed in the sum of $3,523 and paid in accordance with the Bankruptcy Act 1966 (Cth).
The Court notes that the date of the act of bankruptcy is 8 August 2011, noting that time for compliance with the bankruptcy notice was extended from 1 August 2011.
Pursuant to s.52(3) of the Bankruptcy Act 1966 (Cth), proceedings are stayed for a period of 21 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2628 of 2011
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| DOMENICA CAPORALE |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me a creditor’s petition filed on 17 November 2011 seeking a sequestration order against the estate of Domenica Caporale and consequential orders. The petition is supported by the verifying affidavits contained within it as well as the following affidavits - the affidavit of service of the creditor’s petition made on 2 December 2011 by Norman John Chisholm, the affidavit of service of the bankruptcy notice supporting the petition made on 6 September 2011 by Frank Hoare, the affidavit of final search by Marian Agbinya made on 16 March 2012 and the affidavit of final debt by Claudio Casonato made on 15 March 2012. That affidavit establishes that the amount of $722,271.48 remains outstanding. I also have before me a statement of costs incurred by the petitioning creditor.
The petition is opposed by Ms Caporale who was represented by her daughter by leave. A notice stating grounds of opposition to the petition was filed on 5 March 2012. That notice states that the debtor has lodged new objections to the tax assessments leading to the judgment debt and seeks an adjournment to allow this to proceed, and to place a stay on enforcement of the creditor’s petition.
The notice of objection states that the debtor is waiting for the Deputy Commissioner to issue a decision on new objections to the tax assessments and the debtor anticipates that upon the decision of the Deputy Commissioner she will lodge an application to the Administrative Appeals Tribunal (“the AAT”) to review any refusal decision. The debtor is seeking an adjournment of the creditor’s petition to provide natural justice to her and to allow the process of assessment and, if necessary, review at the AAT to take its course.
The debtor also notes that she is considering an appeal against the Federal Court of Australia decision rejecting an appeal against an earlier decision of the AAT. The notice of objection is supported by the affidavit of Domenica Caporale made on 29 February 2012 and the affidavit of Rosa Caporale made on the same day.
The parties were before me last year in relation to an application to set aside the bankruptcy notice which now supports the petition. I rejected that application on the basis that the debtor had applied to the AAT to review the assessments leading to the judgment debt, but had been unsuccessful. I was not persuaded that the then-pending appeal to the Federal Court against the decision of the AAT was a reason to set aside, or extend time for compliance with, the bankruptcy notice, as that appeal was limited to questions of law in relation to the AAT decision. In the result, the Federal Court dismissed the appeal[1].
[1] Caporale v Commissioner of Taxation [2012] FCA 86
As Ms Rosa Caporale conceded in argument, the option now being pursued by her on behalf of her mother is the only effective option to seek to deal further with the taxation assessments in issue. The solicitor for the Deputy Commissioner submits, and I accept, that the debtor is now out of time to seek further consideration of objections to those assessments. The notice of objection to the creditor’s petition anticipates a negative decision in relation to the latest attempt to lodge objections against the assessments.
As Ms Rosa Caporale also concedes, the process she is pursuing of raising new objections against the assessments would not support a decision by the Court to dismiss the petition. She is seeking a deferral of a decision on the creditor’s petition.
At the start of the hearing today, Ms Rosa Caporale sought an adjournment of the hearing. I declined that request on the basis that several adjournments had already been granted and that I could consider the objection on the basis that it sought a deferral of a decision on the petition.
I am persuaded on the basis of the material relied upon by the Deputy Commissioner of taxation that a prima facie case has been established for the making of the orders sought in the petition. The grounds for delay raised in the notice of objection are not persuasive. In the first place, objections have previously been raised against the taxation assessments in issue and rejected both by the Deputy Commissioner and by the AAT. An appeal on a question of law was also unsuccessful.
The debtor is considering the possibility of a further appeal but no appeal has, at this stage, been lodged. Ms Rosa Caporale put to me that the new objections raise new matters of substance relating to what appears to have been the mixing of business and private affairs which has, in her mind, led the Deputy Commissioner to inappropriately impose taxation liabilities on her mother that should have been liabilities of the business partnership which her mother and her father formally operated.
I accept that the business affairs of Mr and Mrs Caporale Senior seem to have been quite complex. The Deputy Commissioner has issued assessments following a review of the relevant facts and circumstances. That assessment has not been found wanting by the AAT.
I have formed the view that further delay in dealing with the petition would not be productive. While one is sympathetic to the position of an elderly woman facing bankruptcy, that is the consequence of the examination of the taxation affairs of her and the business of her and her husband, and her inability to pay tax found to be due and payable.
I am satisfied that the debtor committed the act of bankruptcy alleged in the petition, and I am satisfied with the proof of the other matters of which s.52(1) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) requires proof.
I will order that a sequestration order is made against the estate of Domenica Caporale. The petitioning creditor’s costs, including reserved costs, if any, will be fixed in the sum of $3,523 and should be paid in accordance with the Bankruptcy Act. The Court notes that the date of the act of bankruptcy is 8 August 2011, noting that time for compliance with the bankruptcy notice was extended from 1 August 2011.
The Bankruptcy Act permits the Court to stay all proceedings under a sequestration order for a period of 21 days. I will order that pursuant to s.52(3) of the Bankruptcy Act, proceedings are stayed for a period of 21 days.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Driver FM
Date: 21 March 2012