Deputy Commissioner of Taxation v Hancock

[2014] FCCA 1365

FEDERAL CIRCUIT COURT OF AUSTRALIA

DEPUTY COMMISSIONER OF TAXATION v HANCOCK [2014] FCCA 1365

Catchwords:
BANKRUPTCY – Whether court should direct the Official Receiver to accept a debtor’s petition against partnership – appropriate date of bankruptcy.

Legislation:

Bankruptcy Act 1966 (Cth), ss.55(3)(b), 56C

Australian Co-operative Foods Ltd v Leung [2006] FMCA 695
Greater Building Society Ltd v Hill and Ors [2012] FMCA 431
Official Receiver of the Bankruptcy District of Victoria v Walia (1997) 79 FCR 299

Applicant: DEPUTY COMMISSIONER OF TAXATION

Respondent: ANTHONY JAMES HANCOCK

File Number: PEG 286 of 2013

Judgment of: Judge Antoni Lucev

Hearing date: 26 June 2014

Date of Last Submission: 26 June 2014

Delivered at: Perth

Delivered on: 26 June 2014

REPRESENTATION

Counsel for the Applicant: Ms S Osborn

Solicitors for the Applicant: Gadens Lawyers

For the Respondent: No appearance.

ORDERS

1. The Court directs the Official Receiver to accept the debtors petition filed by Anthony James Hancock on 4 June 2014.

2. The applicant’s costs of the creditor’s petition and of this application be paid from the estate of the bankrupt in the same priority as they would have been paid had there being a successful creditor’s petition in the sum of $8516.80.

3. The date of the commencement of the bankruptcy shall be 26 April 2013.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PERTH

PEG 286 of 2013

DEPUTY COMMISSIONER OF TAXATION

Applicant

And

ANTHONY JAMES HANCOCK

Respondent

REASONS FOR JUDGMENT

(Edited ex tempore reasons)

(Corrected Judgment)

1. Before the Court today is a referral by the Official Receiver of a debtor’s petition for Anthony James Hancock (“Mr Hancock”). The referral to this Court is dated 13 June 2014 and made pursuant to s.56C of the Bankruptcy Act 1966 (Cth) (“the Act”) which provides that the Official Receiver must refer a debtor’s petition against a partnership to the Court for a direction to accept or reject the petition if either or both of two conditions are met. Those conditions being set out in s.56C(1)(a) and (b) of the Act. Section 56C of the Act is as follows: 

   56C  Referral to the Court of a debtor’s petition against a partnership

   (1)  The Official Receiver must refer a debtor’s petition against a partnership to the Court for a direction to accept or reject the petition if either or both of the following conditions are met:

   (a)  the petition was presented against the partnership by some, but not all, members of the partnership;

   (b)  there is at least one creditor’s petition pending against at least one of the members of the partnership (not counting a creditor’s petition against all the members of the partnership and no‑one else).

   …

   (2)  If the Official Receiver refers a petition to the Court because the petition was presented by some, but not all, of the members of the partnership, the Official Receiver must give notice in accordance with the regulations to the members who did not present the petition.

   (3)  After a petition has been referred to the Court, the Court must direct the Official Receiver:

   (a)  to accept the petition in the form in which it was referred to the Court; or

   (b)  to accept the petition after amending it as directed by the Court; or

   (c)  to reject the petition.

   (4)  If:

   (a)  a debtor’s petition is presented against a partnership that includes a person to whom a stay applies under a proclaimed law; and

   (b)  the person is not one of the petitioning partners;

   the Court must not give a direction in relation to the petition until the person administering the proclaimed law has had an opportunity to be heard.

   (5)  If the Court directs the Official Receiver to accept (either with or without amendments) a petition referred to the Court, the Court must specify the time of the commencement of the bankruptcy of each of the persons who becomes a bankrupt as a result of the acceptance of the petition.

2. As the Court has already indicated, there is but one debtor’s petition referred to the Court, that of Anthony James Hancock.  The Court does note, however, that there is a second debtor’s petition filed the same day as Mr Hancock’s debtor’s petition by Caroline Ann Hancock (“Mrs Hancock”), who is Mr Hancock’s spouse, and also his partner in a business and it appears that they are the only two partners of that business.

3. The history of the matter has been adverted to by counsel for the Deputy Commissioner of Taxation (“Deputy Commissioner”), who is the only person whom appears today.  Counsel for the Deputy Commissioner has indicated that there has been communication with Mr Hancock or representatives for Mr Hancock indicating that they will not be attending today.

4. The Deputy Commissioner does not oppose the Court directing the Official Receiver to accept the petition in the form in which it has been referred to the Court, pursuant to s.56C(3)(a) of the Act.

5. It is unnecessary in the circumstances to deal with the history of the matter, other than to say that, because it is a necessary precondition as a jurisdictional fact to the issuance of the direction, that there was a creditor’s petition on foot, filed on 24 October 2013.  That was adjourned on the various occasions which it came before the Registrar. The Court is told this was because of other proceedings in the Administrative Appeals Tribunal (“AAT”) in relation to the debts which found the creditor’s petition.

6. Those proceedings in the AAT having resolved adversely to the respondent debtor, the Deputy Commissioner then sought to proceed with the creditor’s petition but on the last occasion which that petition was before a Registrar of this Court on 9 June 2014 it had already become apparent and was confirmed shortly before that hearing, that Mr Hancock had filed his own debtor’s petition.

7. The Court, as it has already indicated, takes note of the fact that the Deputy Commissioner does not oppose the acceptance of the petition in the form in which it has been referred to by the Court.  The failure of the Official Receiver to attend is probably unexceptional,  the Official Receiver being likely to accept whatever directions are made by the Court and likewise the respondent. In the circumstances, the absence of both of those persons can be taken in the circumstances to implicitly connote acceptance of whatever directions and declarations the Court makes as to the acceptance of the debtor’s petition and as to the date of the act of bankruptcy.

8. The Court has reviewed the papers, both as to the creditor’s petition and the history of the matter, and the referral by the Official Receiver of the debtor’s petition of Mr Hancock to the Court, and it suffices to observe that nothing has been raised with the Court which would raise any issue in respect of the debtor’s petition as being an abuse of process or the procedures under the Act. In those circumstances, it is appropriate that the Official Receiver be directed to accept the petition. In that regard the Court refers to the Federal Court decision in Official Receiver of the Bankruptcy District of Victoria v Walia (1997) 79 FCR 299 and two decisions of the Federal Magistrate’s Court, Australian Co-operative Foods Ltd v Leung [2006] FMCA 695 and Greater Building Society Ltd v Hill and Ors [2012] FMCA 431, which though not dealing with s.56C(3)(a) of the Act, were dealing with an analogue provision in s.55(3)(b) of the Act.

9. As to the date of bankruptcy, the Court, having looked at the papers and the creditor’s petition and supporting affidavits, is satisfied that it is appropriate that there be a date for the act of bankruptcy 21 days after service of the bankruptcy notice, that date being 25 April 2013, which is obviously an Australian public holiday.  In the circumstances the Court accepts the submissions of counsel for the Deputy Commissioner that the appropriate date for the act of bankruptcy is the next working day, Friday, 26  April 2013.

10. So in those circumstances the Court will make the following orders:

    a)The Court directs the Official Receiver to accept the debtors petition filed by Anthony James Hancock on 4 June 2014;

    b)the applicant’s costs of the creditor’s petition and of this application be paid from the estate of the bankrupt in the same priority as they would have been paid had there being a successful creditor’s petition in the sum of $8516.80; and

    c)the date of the commencement of the bankruptcy shall be 26 April 2013.

11. The Court also notes, as it did earlier, that there is a debtor’s petition filed by Mrs Hancock, who is the other member of the partnership concerned.  That debtor’s petition has not been referred to the Court by the Official Receiver, and is therefore not a matter in respect of which the Court can make any directions in the circumstances. It would, however, make obvious good sense if that debtor’s petition were dealt with at the same time and in broadly the same manner as the debtor’s petition for Mr Hancock, although the Court suspects, there being no creditor’s petition against Mrs Hancock, that the date of the act of bankruptcy might be different. The Court can take that matter no further today.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev

Deputy Associate: 

Date:  30 June 2014

CORRECTIONS

1. Paragraph 9 line 4 – delete “the filing of the creditor’s petition” insert “service of the bankruptcy notice”.