Deputy Commissioner of Taxation v Fuz
[2012] FMCA 176
•27 February 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DEPUTY COMMISSIONER OF TAXATION v FUZ | [2012] FMCA 176 |
| BANKRUPTCY – Creditor’s petition. |
| Bankruptcy Act 1966 (Cth), s.52 |
| Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5 |
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | SHANE LEA FUZ |
| File Number: | SYG 2441 of 2011 |
| Judgment of: | Barnes FM |
| Hearing date: | 27 February 2012 |
| Delivered at: | Sydney |
| Delivered on: | 27 February 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Hunt & Hunt |
| Respondent: | In person |
ORDERS
A sequestration order be made against the estate of Shane Lea Fuz.
Under the Bankruptcy Regulations a copy of these orders be given to the Official Receiver in Sydney within two (2) days by the applicant creditor.
The applicant's creditor’s costs be fixed in the amount of $2,624.10 and be paid from the estate of the respondent debtor in accordance with the Act.
THE COURT NOTES THAT:
The date of the act of bankruptcy is 2 June 2011.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2441 of 2011
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| SHANE LEA FUZ |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
The petitioning creditor, the Deputy Commissioner of Taxation, filed and presented a creditor’s petition on 26 October 2011 seeking that a sequestration order by made against the estate of Shane Lea Fuz on the basis of what is said to be an act of bankruptcy consisting of Mr Fuz’s failure to comply by 2 June 2011 with the requirements of a bankruptcy notice served on him on 12 May 2011 or to satisfy the Court that he had a counter-claim, set-off or cross demand equal to or exceeding the amount claimed that could not have been set up in the action in which the judgment referred to in the bankruptcy notice was obtained.
The petition claims that the respondent debtor owed the sum of $51,131.01 under a final judgment obtained in the Local Court in Sydney on 27 June 2008 and that as at the time of the petition the amount owed, having regard to interest and payments, was the sum of $60,534.90. In support of the application for a sequestration order the creditor relies on what may be described as the “usual affidavits”.
The debtor filed a notice stating grounds of opposition to the petition on 22 February 2012. It is convenient to consider first the grounds raised in that notice of opposition and also raised by him in submissions today. He relies on an affidavit sworn by himself on 22 February 2012 and tendered correspondence.
The first ground in the notice of opposition is that Mr Fuz “never received notice of the hearing for judgment against [him] so [he] could state opposition to the petition, that was on the 22.10.08”.
The second and third grounds are as follows:
I have heard no word from the time I filed my lodgment in late 2007 with the tax office. I should of been able to see Jadg – Registry before bankruptsy (sic).
Wages for the 3 apprentices came out of Shane L Fuz saving, then taxed for $23,000
It appears from the documents before the Court and Mr Fuz’s oral submissions that the first ground may be intended to refer to the 2008 judgment in the Local Court that formed the basis for the bankruptcy notice, albeit the date of judgment was 27 June 2008. That judgment was a default judgment. A copy of the judgment is attached to the bankruptcy notice annexed to the affidavit of service of the bankruptcy notice sworn by Robin Spencer Brooks on 19 May 2011.
The applicant tendered in evidence some correspondence between the Australian Taxation Office and Mr Fuz from 2008 relevant to any contention that he was not on notice of the proceedings against him in the Local Court and his claim that he had “no word” since late 2007 from the ATO. Included in that correspondence is a letter to Mr Fuz from the ATO of 7 June 2008 advising that application had been made to the Local Court for judgment in connection with a Local Court statement of claim identified by number. Also before the court is a copy of a statement of claim of 1 April 2008 that was filed in the Local Court which set out the manner in which the claimed debt arose and the amount sought.
Mr Fuz was advised that it was expected that judgment would be entered by the Local Court in the sum of $51,131.01 and that interest would accrue thereafter. This is clearly a reference to the judgment on which the bankruptcy notice was based. He was informed that payment should be made within 14 days of the date of the letter and that failure to pay would result in the continuation of legal action which could ultimately result in the commencement of bankruptcy proceedings. Included in the documents tendered and consistent with the advice to Mr Fuz of 7 June 2008 is a copy of the notice of motion seeking default judgment in the Local Court for a liquidated claim filed on 13 June 2008.
In addition to a letter dated 16 April 2008 which seeks a cancellation of an ABN, an undated letter from Mr Fuz to the ATO referred to a letter of 7 June 2008 said to have been received on 19 June 2008 (before the date of judgment). As indicated the letter of notification of the ATO’s intention to seek default judgment was dated 7 June 2008. Mr Fuz’s letter referred to the ATO reference on that letter and indicated that he intended to deal with the matter as soon as possible, but that to do so needed to know which “entity” he was communicating with and its ABN. By a response of 30 June 2008 the ATO advised Mr Fuz of the details of the debt and that interest would continue to accrue and provided him with contact details.
On the material before the Court I am not satisfied that Mr Fuz was not on notice of the proceedings that led to the default judgment in the Local Court or that he had not heard from the ATO since 2007.
Mr Fuz raised some issues in the course of oral submissions today about the calculation of the amount due, apparently on the assumption that it related entirely to interest and penalties for late payment. However it is apparent from the ATO’s statement of account of September 2011 that the amount due to the ATO is a combination of income tax, interest and penalties for late payment. This indebtedness appears to relate back at least to 2002 or, on Mr Fuz’s account, 2001 to 2002. Credit has been given at various times for payments made by Mr Fuz.
Mr Fuz told the Court, and I accept, that further payments had not been made because he was not able to do so, not because he was unwilling to do so. The material before the court does not suggest or establish that there is no debt due to the petitioning creditor. I am satisfied on the basis of the evidence from the ATO that the debt on which it relies is still owing.
Mr Fuz raised a number of unfortunate events that had occurred to him in his notice of opposition, his affidavit evidence and his oral evidence, including an operation, a car accident and illnesses. He explained that he had at various times had to make payments to other persons (such as apprentices). He provided this evidence in explanation for his failure to have paid the debt due to the ATO.
First, insofar as Mr Fuz may be seen as asking the Court to go behind the default judgment obtained by the ATO in the Local Court, there is no evidence that it was obtained in circumstances of fraud or occasioned a miscarriage of justice. I have borne in mind that it was a default judgment and that in circumstances where no defence was filed to the statement of claim there was no hearing. However there is nothing before the court to suggest that it does not represent a real debt or that there are substantial reasons for questioning whether there was in truth and reality a debt due to the ATO in the sense considered in Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5.
Mr Fuz also appeared to take issue with whether or not he had been served with a copy of the affidavit of service of the bankruptcy notice sworn on 19 May 2011 at or about that time (in oral submissions). The uncontested affidavit evidence of Robin Spencer Brooks establishes service of the bankruptcy notice on 12 May 2011. It has not been established that there was a failure to serve the bankruptcy notice on Mr Fuz. Insofar as Mr Fuz takes issue with service of the affidavit of service of the bankruptcy notice, one would not expect the affidavit of service of the bankruptcy notice to be served at or about the same time as the bankruptcy notice. The affidavit of service of the creditor’s petition sworn on 14 November 2011 attests to service on 9 November 2011 on Mr Fuz of a sealed copy of a number of documents, including the creditor’s petition, the affidavit of search, and the affidavit of service of the bankruptcy notice. The petitioning creditor has established service of documents on the debtor as required under the Bankruptcy Act and Rules.
Mr Fuz had the opportunity to file a notice of opposition to the creditor’s petition and an affidavit in support and there is no substance in ground one of the notice of opposition.
In ground two Mr Fuz contended that he had heard “no word” from the time he filed his lodgement in late 2007 with the ATO and that he should have been able to see a judgment at registry before bankruptcy. As indicated, I am satisfied that he was served with the documents in support of the creditor’s petition at the latest by 9 November 2011. The issue that he raises about contact with the ATO is contrary to the documentation tendered by the ATO, in particular communications from 2008 and also contrary to letters tendered by Mr Fuz sent by Shoalcoast Community Legal Centre on his behalf to the Deputy Commissioner of Taxation. These letters all bear dates in 2010, although Mr Fuz asserts that this must be a mistake and it must mean 2011, notwithstanding that not only are the letters dated September and November 2010 but also some of these are stamped as received by the ATO with date stamps that bear dates in 2010. This ground is not made out. The issues raised by Mr Fuz do not raise any doubt as to whether or not the creditor has satisfied me of the matters in s.52(1) of the Bankruptcy Act 1966 (Cth). Nor are these concerns such as to satisfy me that for other sufficient cause a sequestration order ought not to be made.
In ground three Mr Fuz took issue with the fact that he had to pay the wages of three apprentices. He repeated that concern in his oral evidence and also in his affidavit. This may provide some explanation for the financial difficulties in which Mr Fuz finds himself. However Mr Fuz did not assert, and there is not evidence before the Court such as to suggest that he is in a position to satisfy me under s.52(2)(a) of the Bankruptcy Act that he is able to pay his debts. He told the Court quite openly that he had unsuccessfully endeavoured to obtain a loan secured on his home and that he had been unable to meet his liability to the Deputy Commissioner of Taxation. In effect, he sought that the Court not make a sequestration order on the basis of some compassionate grounds.
However, these matters are not such as to satisfy the Court that for other sufficient cause a sequestration order ought not to be made. The policy underlying the Bankruptcy Act is clear. In circumstances where the creditor has satisfied the Court of the matters in s.52(1) of the Bankruptcy Act prima facie the petitioning creditor has an interest in a sequestration order being made. This is such a case.
I am satisfied on the material before the Court of the matters in s.52(1) of the Bankruptcy Act. I am satisfied that the debtor committed the act of bankruptcy alleged in the petition in that he failed to comply on or before 2 June 2011 with the requirements of a bankruptcy notice served on him on 12 May 2011 or to satisfy the Court of a counter-claim, set-off or cross demand equal to exceeding the sum claimed that he could not have set up in the Local Court proceedings.
Being satisfied with proof of the matters required by s.52 and that the debtor committed the act of bankruptcy relied on, I have considered whether the debtor has satisfied me that he is able to pay his debts or that, for other sufficient cause, a sequestration order ought not to be made. I am not however satisfied of either of those matters on the evidence before the Court. A sequestration order should be made against the estate of Shane Lea Fuz.
RECORDED : NOT TRANSCRIBED
The petitioning creditor seeks costs in a fixed amount consistent with an affidavit to that effect. The amount sought is $2,624.10. That is on the low side of the amounts of costs that are often sought in proceedings of this nature. In all the circumstances it is appropriate to fix costs in the amount sought.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Barnes FM
Date: 12 March 2012
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