Deputy Commissioner of Taxation v Russell
[2012] FMCA 598
•9 July 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DEPUTY COMMISSIONER OF TAXATION v RUSSELL | [2012] FMCA 598 |
| BANKRUPTCY – Annulment – whether second sequestration order ought to have been made. |
| Bankruptcy Act 1966, s.153B(1) |
| Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 Official Receiver (NSW), in the matter of D’Elboux [2002] FCA 510 Official Receiver v Seymour (2008) 7 ABC(NS) 14; [2008] FMCA 1614 Official Trustee in Bankruptcy v Mundy [2006] FMCA 1649 |
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| Respondent: | IAIN ANDREW RUSSELL |
| File Number: | PEG 134 of 2012 |
| Judgment of: | Lucev FM |
| Hearing date: | 9 July 2012 |
| Date of Last Submission: | 9 July 2012 |
| Delivered at: | Perth |
| Delivered on: | 9 July 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr L A Tsaknis |
| Solicitors for the Applicant: | Legal Services Branch, Australian Taxation Office |
| Counsel for the Respondent: | No appearance |
| Solicitors for the Respondent: | No appearance |
ORDERS
The bankruptcy of Iain Andrew Russell as ordered by Registrar Jan in action number PEG 20 of 2012 on 28 February 2012 be annulled forthwith pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 134 of 2012
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| IAIN ANDREW RUSSELL |
Respondent
REASONS FOR JUDGMENT
(Edited extempore reasons)
Application
The Deputy Commissioner of Taxation[1] applies to the Court for the bankruptcy of the respondent, Iain Andrew Russell, ordered by Registrar Jan on 28 February 2012 to be annulled pursuant to s.153B(1) of the Bankruptcy Act 1966 (Cth).[2]
[1] “Deputy Commissioner”.
[2] “Bankruptcy Act”.
Facts
The relevant facts are as follows:
a)a sequestration order was made against the estate of Mr Russell by Registrar Chuan Ng of this Court on 13 August 2010;[3]
b)a second sequestration order was made by Registrar Jan of this Court on the creditors petition of the Deputy Commissioner on 28 February 2012;[4]
c)a search by an officer of the Deputy Commissioner in April 2012 did not reveal the 2010 Order because the search was made by entering only the first name and surname of Mr Russell which, due to the form of that search, did not reveal the 2010 Order, and consequently the Deputy Commissioner was unaware of the 2010 Order during the process leading to the making of the 2012 Order;
d)Mr Russell is the person referred to in both the 2010 Order and the 2012 Order, and did not appear on the making of the 2012 Order, and, despite being served with the application and supporting affidavit, did not appear today;
e)the Official Trustee in Bankruptcy, as the trustee in both the 2010 and 2012 bankruptcies, has no objection to the 2012 Order being annulled;
f)the 2010 Order remains in effect;
g)the debt the subject of the 2012 Order was a provable debt at the time the 2010 Order was made; and
h)the debtor’s creditors in relation to the 2012 Order have all been advised of this annulment application, and none have appeared to oppose it.
[3] “2010 Order”.
[4] “2012 Order”.
Statutory provision
Section 153B(1) of the Bankruptcy Act provides:
If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.
It is therefore for the Deputy Commissioner to show in these proceedings that the 2012 Order ought not to have been made.
In circumstances where a second sequestration order is made in respect of an existing bankrupt estate the law is clear: whilst the existing bankruptcy continues, a bankruptcy court lacks the power to make a second sequestration order against the debtor’s estate where the creditors petition giving rise to the second sequestration order is founded, as here, on a debt which was provable in the existing bankruptcy.[5]
[5] Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 at 596 per Gibbs CJ, Murphy, Brennan and Dawson JJ; Official Receiver (NSW), in the matter of D’Elboux [2002] FCA 510 at paras.7 and 8 per Hill J; Official Trustee in Bankruptcy v Mundy [2006] FMCA 1649 at paras.15-19 per Lucev FM (“Mundy”); Official Receiver v Seymour (2008) 7 ABC(NS) 14 at 17-18 per Lucev FM; [2008] FMCA 1614 at paras.7-11 per Lucev FM.
Consideration
It is clear from the facts and the law in this case that the 2012 Order ought not to have been made, as the debt to which it pertains was provable in the existing bankruptcy. As the Deputy Commissioner’s submissions observe the facts of the present case are relatively indistinguishable from those in Mundy. In Mundy a second sequestration order was made in error, with neither applicant nor the Court being aware:
a)of the first sequestration order when the second sequestration order was made; or
b)that the debt the subject of the second sequestration order was provable in the first bankruptcy.
The Court is satisfied that the 2012 Order would not have been made had either the Deputy Commissioner or the Court been aware of the existing bankruptcy arising from the 2010 Order. The 2012 Order ought not therefore to have been made. Accordingly, an order will be made that the bankruptcy of Mr Russell based on the 2012 Order be annulled forthwith pursuant to s.153B(1) of the Bankruptcy Act 1966.
In the circumstances, there will be no order as to costs.
I certify that the preceding eight (8) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 9 July 2012
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