Deputy Commissioner of Taxation v Douglas

[2021] FCCA 1356

FEDERAL CIRCUIT COURT OF AUSTRALIA

Deputy Commissioner of Taxation v Douglas [2021] FCCA 1356

File number(s):

MLG 2793 of 2018

Judgment of:

JUDGE MCNAB

Date of judgment:

7 June 2021

Catchwords:

BANKRUPTCY – application by respondent to review Registrar’s decision – reasons for review of the Registrar’s decision are obscure – no evidence that the respondent is solvent – no basis to show there was an error in the decision of the Registrar – no basis to show the Registrar erred in being satisfied of the matters referred to in the creditor’s petition – no basis which shows sufficient cause for why the sequestration order made by the Registrar should not have been made – application dismissed – respondent to pay applicant’s costs of the application to review.

Legislation:

Bankruptcy Act 1966 (Cth) ss 40, 52.

Bankruptcy Regulations 1996 (Cth) r 16.01.

Number of paragraphs:

20

Date of last submission/s:

7 June 2021

Date of hearing:

7 June 2021

Place:

Melbourne

Counsel for the Applicant:

Mr H Mazloum

Solicitor for the Applicant:

Hunt & Hunt Lawyers

The Respondent:

No Appearance

ORDERS

MLG 2793 of 2018

BETWEEN:

DEPUTY COMMISSIONER OF TAXATION

Applicant

AND:

STEPHEN DOUGLAS

Respondent

ORDER MADE BY:	JUDGE MCNAB
DATE OF ORDER:	7 JUNE 2021

THE COURT ORDERS THAT:

1.The interim application filed 16 October 2019 be dismissed.

2.The Orders of Registrar Gitsham of 26 September 2019 are affirmed.

3.The costs of the Deputy Commissioner of Taxation (including reserved costs) in relation to the interim application filed 16 October 2019 be taxed and paid from the Estate of Mr Stephen Ross Douglas in accordance with the Bankruptcy Act 1966.

REASONS FOR JUDGMENT
(Delivered Ex Tempore – Revised From Transcript)

Judge McNab:

INTRODUCTION

1. By an application in a case filed on 16 October 2019, the Respondent seeks to review a decision of the Court (by Registrar’s Order) made on 26 September 2019 where the Court ordered that:

   1. The estate of STEPHEN ROSS DOUGLAS be sequestrated under the Bankruptcy Act 1966.

   2. The Applicant creditor’s costs fixed in the sum of $6,877.38 be paid from the estate of the Respondent debtor in accordance with the Bankruptcy Act 1966.

   The Court notes that the date of the act of bankruptcy is 19 March 2019.

   The Court also notes that a consent to act as trustee signed by Simon Patrick Nelson has been filed under section 156A of the Bankruptcy Act 1966.

2. By his application the Respondent sets out the basis of the review in the following terms:

   1.That the Sequestration orders be quashed. Due to the decision of the Registrar of the Court being considered by us to be Ultra vires, in that it exceeds jurisdiction, contravenes procedural requirements, contains ambiguity, uses misnomers, is a denial of rights and demonstrates a complete disregard for the rules of natural justice, the decision is considered by us to be invalid and ought to be quashed for the aforesaid reasons.

   CONSIDERATION

3. I am satisfied that the bankruptcy notice (No. BN 220959) and the creditor’s petition were properly served on the Respondent in accordance with r16.01 of the Bankruptcy Regulations 1996 (Cth). The bankruptcy notice was served on the Respondent on 24 February 2018 and the creditor’s petition was served on him on 9 June 2019. The debt particularised in the creditor’s position comprises:

   (1)$38,967.60 due under a final judgment of the Magistrates’ Court of Victoria made on 29 August 2017;

   (2)$1,516 being further interest on the judgment debt for the period 30 August 2017 to 18 January 2018; and

   (3)an additional debt of $235,490.69, comprised of income tax in the sum of $46,256.88 and a Running Balance Account deficit debt of $189,233.81.

4. I am satisfied that the judgment debt which was referred to in the creditor’s petition is due and payable and has not been set aside. I am also satisfied of the requirements of s40 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”), and I refer to the affidavit of debt filed by the Applicant on 4 June 2021.

5. In my view, the debt which was set out in the creditor’s petition is properly particularised and there is no evidence that it has been set aside. There is no evidence that has been led by the Respondent which would indicate there is any reason to go behind the judgment debt, and there has been no evidence led by the Respondent suggesting that he disputes the judgment debt.

6. The Respondent’s reasons for review of the orders of Registrar Gitsham, as set out above, are obscure. It seems that the Respondent purports to invoke s52(2) of the Bankruptcy Act as a ground upon which he seeks to review Registrar Gitsham’s decision. Subsection 52(2) provides as follows:

   (2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

   (a) that he or she is able to pay his or her debts; or

   (b)  that for other sufficient cause a sequestration order ought not to be made;

   it may dismiss the petition.

7. There is no basis before the Court to exercise its discretion to set aside the creditors’ petition on the grounds of solvency, and there is no evidence before the Court that the Respondent is solvent. Indeed, the last evidence filed in respect of the Respondent’s solvency is in an affidavit filed on 12 September 2019, where the Respondent states that he has “assets of twenty-one silver dollars and one gold sovereign”. The Respondent has since filed (or provided to the Court) thirteen affidavits, including eights affidavits since filing his application to review Registrar decision on 1 August 2019. There is no further evidence adduced in those affidavits which demonstrates the Respondent is solvent. There are also no other submissions put by the Respondent which show that the Respondent is solvent.

8. The Respondent has filed a number of affidavits in support of various applications to adjourn the hearing of this application on the grounds of ill health.

9. In respect of the hearing held today, the Respondent relies upon an affidavit of 2 June 2021, which has been provided to the Court. That affidavit has not being filed as at the time of this hearing, but the Court will treat it as filed for the purpose of the Respondent’s application.  By that affidavit, the Respondent sets out that he is in significantly poor health, and he has attached a medical certificate dated 3 April 2021 which says he is unfit to participate in legal proceedings.

10. At [13] – [15] of that affidavit, the Respondent states that:

    13. For the abovementioned reasons [ill health] I am unfit to participate in Court proceedings.

    14. Also, for the above mentioned reasons [ill health], I have handed over any and all legal matters to the trustee of the DOUGLAS Stephen Ross Estate Trust, Keith-charles, Yesurun, to be handled directly by him.

    15. I consent to any and all parties in any matters to contact the Trustee, Keith-charles, Yesurun.

11. Mr Yesurun attended the hearing today, informing the Court that he appeared on behalf of the Stephen Douglas Trust and on behalf of the Respondent himself. He repeatedly failed to provide his name and address to the Court. At the outset of the hearing, the following interaction between the Court and Mr Yesurun occurred:

    His Honour:     […] Is there any appearance on behalf of the respondent?

    Mr [Yesurun]: Yes, yes, I’m here. I’m here on behalf of the Douglas Stephen Ross estate. I’m his trustee and also the personal representative for the man, Stephen Ross Douglas.

    (See Transcript, page 2, line 3 – 8)

12. During the course of the hearing, Mr Yesurun failed to identify himself properly, after being asked to do so by the Court, which is set out in the transcript as follows:

    His Honour:     […] So what orders are you seeking today, Mr Charles?

    Mr [Yesurun]: No, not Mr Charles. Just Keith.

    His Honour:     Listen - - -

    Mr [Yesurun]: Before this - - -

    His Honour: - - - I’m not interested in any of this other business, what is your name and what’s your address?

    Mr [Yesurun]: My name – you can refer to me as Keith Charles and with a bit of respect, thank you. I am here present today as the trustee of the Douglas Stephen Ross Estate and I’m also the personal representative – been appointed the personal representative by the man known as Stephen Ross to contact via the name Stephen Ross Douglas.

    (See Transcript, page 5, line 19 – 35)

13. Another interaction between the Court and Mr Yesurun during the course of the hearing occurred as follows:

    His Honour:     What’s your name and what’s your address?

    Mr [Yesurun]:  I was sent an email to be – to be in this court ... it’s Keith Charles, and it’s the occupant of the office of trustee at ... dot com.

    (See Transcript, page 9, line 5 – 7)

14. I refer to an affidavit of Ms Jessica Egger filed on 4 June 2021, who is a Solicitor employed by Hunt & Hunt Lawyers, who are the solicitors representing the petitioning creditor. At [2] of her affidavit, Ms Egger makes reference to [13] – [15] of the Respondent’s affidavit filed on 2 June 2021, as set out above. At [3] of her affidavit, Ms Egger states that:

    2.On 4 June 2021, I searched the records of Victorian Legal Services for the Commissioner and have ascertained that Keith-Charles Yesurun is not registered as a lawyer in the State of Victoria.

15. A copy of Ms Egger’s search is annexed to the affidavit.

16. At [5] of her affidavit, Ms Egger states that:

    5. On 4 June 2021, I searched the Register of Trustees maintained by the Australian Financial Security Authority and ascertained that Keith-Charles Yesurun is not registered as a trustee.

17. Again, a copy of Ms Egger’s search is annexed to the affidavit.

18. Mr Yesurun has no standing to appear on behalf of the Respondent.

19. In my view, the material filed by the Respondent does not disclose that there was any error in the decision of Registrar Gitsham or that the Registrar erred in being satisfied of the matters referred to in the creditor’s petition. There are no other submissions put by the Respondent which shows sufficient cause for why the sequestration order should not have been made.

20. In those circumstances, I dismiss the Respondent’s application for review filed on 16 October 2019 and make orders that:

    (1)the orders of Registrar Gitsham of 26 September 2019 are affirmed; and

    (2)the Applicant’s costs (including reserved costs) in relation to Respondent’s application are to be taxed and paid from the Estate of the Respondent in accordance with the Bankruptcy Act.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McNab.

Associate:

Dated:       22 June 2021