Deputy Commissioner of Taxation v Ong

[2013] FCCA 1250

FEDERAL CIRCUIT COURT OF AUSTRALIA

DEPUTY COMMISSIONER OF TAXATION v ONG [2013] FCCA 1250

Catchwords:
BANKRUPTCY – Creditors petition – notice of objection – where debtor owed applicant creditor judgment debt – where separate account set up for judgment debt – where debtor claimed credit on other account not credited to debt – where amounts in fact credited – whether balance of accounts in credit – whether respondent the proprietor of company that incurred debts – whether to grant sequestration order.

Legislation:  

Bankruptcy Act 1966 (Cth) s.52

Applicant: DEPUTY COMMISSIONER OF TAXATION

Respondent: VAN HUNG ONG

File Number: SYG 2316 of 2012

Judgment of: Judge Raphael

Hearing date: 26 August 2013

Date of Last Submission: 26 August 2013

Delivered at: Sydney

Delivered on: 26 August 2013

REPRESENTATION

Solicitors for the Applicant: Australian Taxation Office Legal Services Branch

For the Respondent: In person

ORDERS

1. Notice of objection dismissed.

2. Permission to amend creditor’s petition granted.

3. Requirement to serve amended petition dispensed with.

4. A sequestration order be made against the estate of Van Hung Ong.

5. The Applicant Creditor’s costs be fixed in the amount of $3,827.45 be paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966 (Cth).

THE COURT NOTES THAT

1. The date of the act of bankruptcy is 12 June 2012.

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT SYDNEY

SYG 2316 of 2012

DEPUTY COMMISSIONER OF TAXATION

Applicant

And

VAN HUNG ONG

Respondent

REASONS FOR JUDGMENT

1. This is the hearing of the creditor’s petition brought by the Deputy Commissioner of Taxation against Van Hung Ong.  The Commissioner, in his petition that was presented on 17 October 2012, claimed that Mr Ong owed him $178,078.58.  A bankruptcy notice was issued against Mr Ong, which was required to be served by substituted service.  The notice was served on him on 14 May 2012, and required him to make a payment of some $32,000 by 4 June 2012.  Mr Ong brought proceedings for the setting aside of that bankruptcy notice, and those proceedings were heard before Registrar Wall of this court, who determined on 12 June 2012 to dismiss that application.  That is the date of the act of bankruptcy.  Since that date, the Commissioner has determined that further sums are owed, bringing the total amount to the $178,078.58. 

2. The amount initially owed to the Commissioner was owed by a business known as Vina World Travel that the Commissioner maintains Mr Ong was the proprietor of.  The original debt of $162,022.34, obtained in the District Court of New South Wales on 13 February 2008, was based upon some assessments that Mr Ong objected to.  As a result of the Commissioner’s consideration of those objections, the amount of the judgment debt was considerably reduced.  It was further reduced by other credits that came into the account of the Commissioner, so that, by the time the bankruptcy notice came to be issued, the amount outstanding was only the $32,000 referred to. 

3. When the matter came before Registrar Wall, Mr Ong raised, so I am advised, an argument concerning credits which he believed had not been taken into account by the Commissioner.  It would appear, from the evidence that I have heard today, mostly contained in the affidavit of Debbie D’Cruz affirmed on 16 August 2013, that for reasons of his own, the Commissioner kept two accounts in relation to this debtor.  After he obtained the judgment, he created a judgment account which was separate from the running account for the business.  At some stage, upon inquiry from Mr Ong, he was given information that seemed to indicate he had credits with the Commissioner.  He produces one such document indicating the business has a credit of $14,236.42, and another where it suggests that the credit was $47,097 as at 6 January 2010.  Whilst it is quite understandable that Mr Ong was thus confused, the fact is that what the Commissioner then did was to credit these amounts against the judgment account debit.  And these amounts, together with other amounts paid by the business or representing credits due to it, reduced the judgment debt to the sum of $32,000-odd.  This is all explained in the affidavit of Ms D’Cruz, who exhibits therein the running account. 

4. Notwithstanding that Mr Ong has had the services of an accountant for some years, and that these movements on the accounts appear to have been explained to him in some detail by the Commissioner, as evidenced by the exhibit DD8 to the affidavit, Mr Ong still maintains that he is in credit to the Commissioner.  Unfortunately, apart from those two documents that I have referred to, he has produced nothing else that would convince me that this is the case.  As explained to Mr Ong by the court, it is not normal for the court to go behind a judgment such as this, particularly when that has already been done by a registrar in connection with the bankruptcy notice.  But it was prepared to do it in this instance so that Mr Ong could get a clear understanding of why he is so indebted. 

5. Mr Ong’s second ground of objection to the making of a sequestration order against him is that, he says, he has not been the owner of the business since 2004.  In this regard, he has produced an extract from the business name service of New South Wales Fair Trading.  And that certainly indicates that business known as Vina World Travel was owned by a person who Mr Ong claims was his daughter from 8 April 2004 until 27 April 2009.  However, in Ms D’Cruz’s affidavit, she has extracted some other information more directly related to the Australian business number that Vina World Travel actually used on its letterhead.  The ABN from New South Wales Fair Trading, is 35-473-279-256.  The one used on the letterhead, which can be found at page 23 of the exhibits to Ms D’Cruz’s affidavit as DD6, shows an ABN of 93-569-778-872.  That is the one that Ms D’Cruz investigated.  It shows that Mr Van Hung Ong was the owner of the entity from 2000 until 5 January 2011.

6. In addition, Ms D’Cruz has extracted from Centrelink some further information which Mr Ong had given to it.  At page 18 of the exhibits, in annexure DD4, it indicates that Mr Ong owns Vina World Travel/Aus New Zealand Holidays 100 per cent.  There was also produced to me letters from Vina World Travel, signed by Mr Ong as manager, to the Taxation Office, dealing with the business’ taxation difficulties.  Mr Ong has at all times indicated to the Commissioner that he was the person responsible for the taxation affairs of the business.

7. A debtor who files a notice of objection takes over the burden of establishing those matters contained in his grounds of objection.  And whilst his obligation is only to establish them upon the balance of probabilities I am unable to say that Mr Ong has satisfied me to the standard that he is not the proprietor of the Vina World Travel or that he was not the proprietor at the relevant times.  I do not know what the relationship is between the business number referred to in the extract from the New South Wales Department of Fair Trading might be to the business;  that was for Mr Ong to establish, not for me to guess, or for Mr Akbar, who appears for the Commissioner, to assume.

8. It is for these reasons that I have come to the view that the notice of objection must be dismissed. In those circumstances I allow the petition to be amended by altering the date of the act of bankruptcy in paragraph 4 to 12 June 2012. I dispense with the requirement to serve the amended petition. I am satisfied that the respondent committed the act of bankruptcy alleged in the petition as amended. I am satisfied of the proof of the other matters required by s.52 of the Bankruptcy Act 1966 (Cth). I make a sequestration order against the estate of Mr Van Hung Ong.

9. I order that the applicant’s costs be fixed in the sum of $3,827.45 and paid from the estate of the respondent in accordance with the Act. Under the Bankruptcy Regulations a copy of the sequestration order must be given to the official receiver in Sydney within 21 days. The court notes the date of the act of bankruptcy is 12 June 2012.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Judge Raphael.

Associate: 

Date:  30 August 2013